via NewMediaWire -- Tecogen Inc. (OTCQX:TGEN, the "Company"), a
leading manufacturer of clean energy products, reported revenues of
$28.3 million for the year ended December 31, 2020 compared to
$33.4 million for 2019, a 15.5% decrease. All segments were
adversely impacted by business interruptions resulting from the
COVID-19 pandemic. Product revenues decreased to $10.5 million in
2020 from $13.0 million in 2019, and service revenues were $15.9
million in 2020 compared to $17.3 million for the same period in
2019 due to a decline in installation activity. Energy Production
revenue decreased to $1.8 million in 2020 from $3.1 million in
2019.
Key Takeaways:
- Gross profit was $10.8 million for the year ended
December 31, 2020 compared to $12.5 million for the prior
year. Gross margin for 2020 improved to 38.3% compared to 37.3% for
2019.
- Operating expenses for the 4th quarter, excluding one-time
adjustments for bad debt, goodwill impairment, and patent
write-downs, decreased 23% as compared to Q4 2019.
- Net loss was $6.2 million versus a loss of $4.7 million in 2019
primarily due to one-time goodwill impairments in both years and
increased reserves for bad debt. Net loss, exclusive of goodwill
and long-lived assets impairment and other one-time adjustments for
the year ended December 31, 2020 was $2.4 million compared to
a loss of $1.0 million for the same period in 2019.
- Cash flows provided by operations for 2020 were $1.4 million
compared to cash flows used in operations of $4.5 million in 2019,
representing a $5.9 million improvement in operating cash
flows.
- Cash and cash equivalents were $1.5 million at
December 31, 2020 compared to $0.9 million at December 31,
2019, an increase of $0.6 million.
- Executed a license agreement with Origin Engines relating to
the use of our Ultera emissions reduction technology with engines
supplied by Origin to a range of customers.
- Added U.S. Patents 10,774,720 and 10,774,724 to our
intellectual property portfolio.
Adjusted EBITDA(1) was a loss of $0.9 million and $2.2 million
for the quarter and year ended December 31, 2020,
respectively, compared to a loss of $0.3 million and $0.2 million
for the quarter and year ended December 31, 2019, respectively.
This reduction in Adjusted EBITDA was due to reduced margin on
lower revenues and increased provisions for bad debt. (Adjusted
EBITDA is defined as net income or loss attributable to Tecogen,
adjusted for interest, income taxes, depreciation and amortization,
stock-based compensation expense, unrealized gain or loss on equity
securities, goodwill impairment charges. See table following the
statements of operations for a reconciliation from net loss to
Adjusted EBITDA as well as important disclosures about the
company's use of Adjusted EBITDA.)
On January 19, 2021, we received a letter dated January 12, 2021
from Webster Bank, NA confirming that the Paycheck Protection
Program Loan granted to us on April 17, 2020 pursuant to the CARES
Act in the original principal amount of $1,874,200 together with
all accrued interest thereon was forgiven in full as of January 11,
2021. The loan forgiveness amount which aggregates to $1,886,933,
including $12,733 of accrued interest, will be recognized in the
first quarter of 2021 and will be accounted for as debt
extinguishment in our consolidated statements of operations.
On February 5, 2021, we obtained a Paycheck Protection Program
Second Draw unsecured loan through Webster Bank in the amount of
$1,874,269 pursuant to the CARES Act. We intend to use the loan
proceeds for payroll, rent, utilities and other operating expenses,
and expect to apply for forgiveness of the loan balance as
permitted under the CARES Act.
"2020 was a challenging year for many businesses," commented
Benjamin Locke, Tecogen CEO. "The COVID-19 pandemic had many
negative impacts on our business with regard to facility closures
and construction slowdowns. We took the opportunity of a
slower 2020 to reduce operational costs and strengthen our balance
sheet. We reduced our receivable and unbilled revenue balances
resulting in positive cash flows from operations. We are
beginning to see the return of normal business activities and are
encouraged that our service maintenance agreement revenues continue
to grow sequentially quarter over quarter despite the
slowdown. I am optimistic that our reduced operating costs
combined with a strengthened balance sheet positions Tecogen for a
rebound as the COVID-19 vaccine distribution progresses and normal
business activities resume."
Sales and Operations Highlights
- Sales backlog of product and installation projects was $8.3
million on December 31, 2020. Product and installation backlog
was $9.3 million as of March 9, 2021.
- Commissioned 26 InVerde units for operation in Toronto,
Canada.
- Established Teaming Agreement with Ainsworth, a Toronto based
company providing high quality technical trade services
establishing Tecogen as its preferred CHP partner.
- Sold five Tecochill chillers to cannabis cultivation facilities
in Massachusetts and New Jersey, bringing the total number of
cannabis cultivation facilities using our equipment to twenty.
Research and Development Highlights
In 2020, Company R&D expense amounted to $767 thousand for
product development and improvement, product certifications, and
patents. Key activities are summarized below.
- Issued policy paper entitled "Building Electrification Policy
and Combined Heat and Power Relevance." The paper gives an in-depth
analysis of why electrification policy is generally
counterproductive to its carbon reduction goals when compared to
combined heat and power (CHP) systems.
- Extended the program with our research subcontractor, Southwest
Research Institute (SwRI), to produce full size catalyst elements
for evaluation in our engine test laboratory. The advanced
formulation, which we believe is patentable, developed by SwRI has
shown superior performance in their test simulations of the Ultera
process for a range of pollutants, including nitrogen oxides but
with a potential for significantly reduced cost.
- Executed a license agreement with Origin Engines relating to
the use of Tecogen’s Ultera emissions reduction technology with
engines they supply to a range of customers including forklift
trucks.
- The Propane Education and Research Council
(PERC) displayed a forklift truck retrofitted with an
Ultera emissions control system at MODEX 2020, the leading trade
show showcasing material handling technology.
- Awarded runner-up for best presentation of forklift technology
at the World LP Gas Association’s Global Technology Conference, an
annual international forum to highlight new innovations in propane
technologies.
- Received order from a Southern California water district for
the design (Phase 1) and manufacture (Phase 2) of an Ultera
after-treatment system for two new 800-horsepower Caterpillar
natural gas engines to drive municipal water pumps. Both
systems are expected to ship in Q1 2021.
- Validated core patent for Ultera emissions reduction technology
in 19 EU countries, including the United Kingdom, Germany and
France, all key markets for potential commercialization.
- Two additional patents issued for our Ultera emissions
reduction technology entitled “NOx Reduction Using a Dual-Stage
Catalyst System with Intercooling in Vehicle Gasoline Engines under
Real Driving Conditions” (US patent No. 10,774,720) and “Dual Stage
Internal Combustion Engine Aftertreatment System Using Exhaust Gas
Intercooling and Charger Driven Air Ejector” (US Patent No.
10,774,724)
Conference Call Scheduled for Today at 11:00 am
ETTecogen will host a conference call today to discuss the
fourth quarter and year end results beginning at 11:00 a.m.
ET. To listen to the call dial (877) 407-7186 within
the US and Canada or (201) 689-8052 from other international
locations. Participants should ask to be joined to
the Tecogen year-end 2020 earnings call. We suggest call
participants begin dialing at least 10 minutes before the scheduled
starting time. The earnings press release will be available on the
Company website at www.Tecogen.com in the "News and Events" section
under "About Us." The earnings conference call will be webcast
live. To view the associated slides, register for and listen to the
webcast, go to http://ir.tecogen.com/ir-calendar. Following the
call, the webcast will be archived for 14 days.
The earnings conference call will be recorded and available for
playback one hour after the end of the call. To listen to the
playback, dial (877) 660-6853 within the U.S. and
Canada, or (201) 612-7415 from other international
locations and use Conference Call ID#:
13672659.
About Tecogen
Tecogen Inc. designs, manufactures, sells, installs, and
maintains high efficiency, ultra-clean, cogeneration products
including natural gas engine-driven combined heat and power, air
conditioning systems, and high-efficiency water heaters for
residential, commercial, recreational and industrial use. The
company provides cost effective, environmentally friendly and
reliable products for energy production that, through patented
technology, nearly eliminate criteria pollutants and significantly
reduce a customer’s carbon footprint.
In business for over 35 years, Tecogen has shipped more than
3,000 units, supported by an established network of engineering,
sales, and service personnel across the United States. For more
information, please visit www.tecogen.com or contact us for a
free Site Assessment.
Tecogen, InVerde e+, Ilios, Tecochill, Tecopower, Tecofrost and
Ultera are registered trademarks of Tecogen Inc.
Forward Looking StatementsThis press release
and any accompanying documents, contain “forward-looking
statements” which may describe strategies, goals, outlooks or other
non-historical matters, or projected revenues, income, returns or
other financial measures, that may include words such as "believe,"
"expect," "anticipate," "intend," "plan," "estimate,"
"project," "target," "potential," "will," "should," "could,"
"likely," or "may" and similar expressions intended to identify
forward-looking statements. These statements are only predictions
and involve known and unknown risks, uncertainties, and other
factors that may cause our actual results to differ materially from
those expressed or implied by such forward-looking statements.
Given these uncertainties, you should not place undue reliance on
these forward-looking statements. Forward-looking statements speak
only as of the date on which they are made, and we undertake no
obligation to update or revise any forward-looking statements.
In addition to those factors described in our Annual Report on
Form 10-K and our Quarterly Reports on Form 10-Q under “Risk
Factors”, among the factors that could cause actual results to
differ materially from past and projected future results are the
following: fluctuations in demand for our products and services,
competing technological developments, issues relating to research
and development, the availability of incentives, rebates, and tax
benefits relating to our products and services, changes in the
regulatory environment relating to our products and services,
integration of acquired business operations, and the ability to
obtain financing on favorable terms to fund existing operations and
anticipated growth.
In addition to GAAP financial measures, this press release
includes certain non-GAAP financial measures, including adjusted
EBITDA which excludes certain expenses. We use Adjusted
EBITDA as an internal measure of business operating performance and
believe that the presentation of non-GAAP financial measures
provides a meaningful perspective of the underlying operating
performance of our current business and enables investors to better
understand and evaluate our historical and prospective operating
performance by eliminating items that vary from period to period
without correlation to our core operating performance and
highlights trends in our business that may not otherwise be
apparent when relying solely on GAAP financial measures.
Tecogen Media & Investor Relations Contact
Information: Benjamin LockeP:
781-466-6402 E: benjamin.locke@tecogen.com
TECOGEN INC
CONSOLIDATED BALANCE SHEETSAs of
December 31, 2020 and 2019 (unaudited)
|
2020 |
|
2019 |
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
1,490,219 |
|
|
$ |
877,676 |
|
Accounts receivable, net |
8,671,163 |
|
|
14,569,397 |
|
Unbilled revenue |
4,267,249 |
|
|
5,421,811 |
|
Inventory, net |
7,168,596 |
|
|
6,405,229 |
|
Prepaid and other current assets |
597,144 |
|
|
635,034 |
|
Total current
assets |
22,194,371 |
|
|
27,909,147 |
|
Property, plant
and equipment, net |
2,283,846 |
|
|
3,465,948 |
|
Right of use
assets |
1,632,574 |
|
|
2,173,951 |
|
Intangible
assets, net |
1,360,319 |
|
|
1,593,781 |
|
Goodwill |
2,406,156 |
|
|
5,281,867 |
|
Other assets |
196,387 |
|
|
691,941 |
|
TOTAL
ASSETS |
$ |
30,073,653 |
|
|
$ |
41,116,635 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Note payable, current portion |
$ |
837,861 |
|
|
$ |
— |
|
Revolving line of credit, bank |
— |
|
|
2,402,384 |
|
Accounts payable |
4,183,105 |
|
|
5,271,756 |
|
Accrued expenses |
1,993,471 |
|
|
2,599,366 |
|
Deferred revenue |
1,294,157 |
|
|
2,635,619 |
|
Lease obligations, current |
506,514 |
|
|
536,443 |
|
Total current
liabilities |
8,815,108 |
|
|
13,445,568 |
|
Long-term
liabilities: |
|
|
|
Deferred revenue, net of current portion |
115,329 |
|
|
145,464 |
|
Note payable, net of current portion |
1,036,339 |
|
|
— |
|
Lease obligations, long-term |
1,222,492 |
|
|
1,637,508 |
|
Unfavorable contract liability, net |
1,617,051 |
|
|
2,534,818 |
|
Total
liabilities |
12,806,319 |
|
|
17,763,358 |
|
Commitments and
contingencies (Note 11) |
|
|
|
Stockholders’
equity: |
|
|
|
Tecogen Inc.
shareholders’ equity: |
|
|
|
Common stock, $0.001 par value; 100,000,000 shares authorized;
24,850,261 and 24,849,261 issued and outstanding at December 31,
2020 and 2019, respectively |
24,850 |
|
|
24,849 |
|
Additional paid-in capital |
56,814,428 |
|
|
56,622,285 |
|
Accumulated deficit |
(39,529,621) |
|
|
(33,379,114) |
|
Total Tecogen
Inc. stockholders’ equity |
17,309,657 |
|
|
23,268,020 |
|
Noncontrolling
interest |
(42,323) |
|
|
85,257 |
|
Total
stockholders’ equity |
17,267,334 |
|
|
23,353,277 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
30,073,653 |
|
|
$ |
41,116,635 |
|
TECOGEN
INC
CONSOLIDATED STATEMENTS OF OPERATIONSFor the
Three Months Ended December 31, 2020 and 2019 (unaudited)
|
2020 |
|
2019 |
Revenues |
|
|
|
Products |
$ |
1,781,188 |
|
$ |
3,717,631 |
Services |
3,434,631 |
|
4,304,189 |
Energy production |
441,295 |
|
690,124 |
Total Revenues |
5,657,114 |
|
8,711,944 |
Cost of
sales |
|
|
|
Products |
1,175,018 |
|
2,379,755 |
Services |
1,857,727 |
|
2,773,732 |
Energy production |
281,758 |
|
295,620 |
Total Cost of Sales |
3,314,503 |
|
5,449,107 |
Gross profit |
2,342,611 |
|
3,262,837 |
Operating
expenses |
|
|
|
General and administrative |
2,833,965 |
|
2,707,338 |
Selling |
571,141 |
|
617,527 |
Research and development |
125,707 |
|
376,651 |
Gain on sales of assets |
(32) |
|
— |
Long-lived asset impairment |
71,963 |
|
— |
Goodwill impairment |
2,875,711 |
|
— |
Total operating
expenses |
6,478,455 |
|
3,701,516 |
Loss from
operations |
(4,135,844) |
|
(438,679) |
Other income
(expense) |
|
|
|
Interest and other expense |
(14,432) |
|
143 |
Interest expense |
(4,741) |
|
(38,304) |
Total other
expense, net |
(19,173) |
|
(38,161) |
Loss before
income taxes |
(4,155,017) |
|
(476,840) |
Income tax
provision |
2,380 |
|
(473) |
Consolidated net
loss |
(4,157,397) |
|
(476,367) |
(Income) loss
attributable to the noncontrolling interest |
95,084 |
|
(9,197) |
Net loss
attributable to Tecogen Inc |
$ |
(4,062,313) |
|
$ |
(485,564) |
Net loss per
share - basic and diluted |
$ |
(0.16) |
|
$ |
(0.02) |
Weighted average
shares outstanding - basic and diluted |
24,850,261 |
|
24,844,674 |
Non-GAAP
financial disclosure (1) |
|
|
|
Net loss
attributable to Tecogen Inc |
$ |
(4,062,313) |
|
$ |
(485,564) |
Interest expense, net |
4,741 |
|
38,161 |
Provision for income taxes |
2,380 |
|
(473) |
Depreciation and amortization, net |
120,186 |
|
74,254 |
EBITDA |
(3,935,006) |
|
(373,622) |
Stock-based compensation |
58,632 |
|
42,860 |
Unrealized loss on securities |
— |
|
— |
Inventory write down |
— |
|
— |
Long-lived asset impairment |
71,963 |
|
— |
Goodwill impairment |
2,875,711 |
|
— |
Adjusted
EBITDA |
$ |
(928,700) |
|
$ |
(330,762) |
TECOGEN INC
CONSOLIDATED STATEMENTS OF OPERATIONSFor the
Years Ended December 31, 2020 and 2019(unaudited)
|
2020 |
|
2019 |
Revenues |
|
|
|
Products |
$ |
10,534,096 |
|
$ |
12,977,896 |
Services |
15,883,302 |
|
17,307,718 |
Energy production |
1,837,181 |
|
3,140,834 |
Total Revenues |
28,254,579 |
|
33,426,448 |
Cost of
sales |
|
|
|
Products |
6,473,768 |
|
8,385,574 |
Services |
9,783,652 |
|
10,808,142 |
Energy production |
1,169,645 |
|
1,753,980 |
Total Cost of Sales |
17,427,065 |
|
20,947,696 |
Gross profit |
10,827,514 |
|
12,478,752 |
Operating
expenses |
|
|
|
General and administrative |
10,311,086 |
|
10,380,143 |
Selling |
2,593,168 |
|
2,685,200 |
Research and development |
767,323 |
|
1,460,096 |
Gain on sales of assets |
(11,367) |
|
(1,081,304) |
Long-lived asset impairment |
251,906 |
|
— |
Goodwill impairment |
2,875,711 |
|
3,693,198 |
Total operating
expenses |
16,787,827 |
|
17,137,333 |
Loss from
operations |
(5,960,313) |
|
(4,658,581) |
Other income
(expense) |
|
|
|
Interest and other income |
(2,479) |
|
933 |
Interest expense |
(125,824) |
|
(101,851) |
Unrealized loss on investment
securities |
(98,404) |
|
(19,680) |
Other expense,
net |
(226,707) |
|
(120,598) |
Loss before
income taxes |
(6,187,020) |
|
(4,779,179) |
State income tax
provision |
30,171 |
|
15,194 |
Consolidated net
loss |
(6,217,191) |
|
(4,794,373) |
Loss attributable
to the noncontrolling interest |
66,684 |
|
85,354 |
Net loss
attributable to Tecogen Inc. |
$ |
(6,150,507) |
|
$ |
(4,709,019) |
Net loss per
share - basic and diluted |
$ |
(0.25) |
|
$ |
(0.19) |
Weighted average
shares outstanding - basic and diluted |
24,850,258 |
|
24,839,957 |
Non-GAAP
financial disclosure (1) |
2020 |
|
2019 |
Net income (loss)
attributable to Tecogen Inc |
$ |
(6,150,507) |
|
|
$ |
(4,709,019) |
|
Provision for
income taxes |
30,171 |
|
|
15,194 |
|
Interest expense,
net |
125,824 |
|
|
100,918 |
|
Depreciation and
amortization, net |
414,127 |
|
|
437,102 |
|
EBITDA |
(5,580,385) |
|
|
(4,155,805) |
|
Stock-based
compensation |
190,944 |
|
|
163,464 |
|
Unrealized loss
on investment securities |
98,404 |
|
|
118,084 |
|
Goodwill
impairment |
2,875,711 |
|
|
3,693,198 |
|
Asset
impairment |
251,906 |
|
|
— |
|
Adjusted
EBITDA |
$ |
(2,163,420) |
|
|
$ |
(181,059) |
|
TECOGEN INCCONSOLIDATED
STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2020
and 2019(unaudited)
|
2020 |
|
2019 |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Consolidated net
loss |
$ |
(6,217,191) |
|
|
$ |
(4,794,373) |
|
Adjustments to
reconcile net loss to net cash used in operating activities: |
|
|
|
Depreciation, accretion and amortization, net |
414,127 |
|
|
437,102 |
|
Long-lived asset impairment |
251,906 |
|
|
— |
|
Gain on sale of assets |
(11,367) |
|
|
(1,081,304) |
|
Provision for losses on accounts receivable |
656,397 |
|
|
48,000 |
|
Provision for inventory reserve |
86,000 |
|
|
— |
|
Unrealized loss on investment securities |
98,404 |
|
|
19,680 |
|
Stock-based compensation |
190,944 |
|
|
163,464 |
|
Goodwill impairment |
2,875,711 |
|
|
3,693,198 |
|
Non-cash interest expense |
51,190 |
|
|
43,669 |
|
Changes in
operating assets and liabilities: |
|
|
|
(Increase) decrease in: |
|
|
|
Accounts receivable |
5,555,235 |
|
|
(440,945) |
|
Inventory, net |
(849,367) |
|
|
(110,367) |
|
Unbilled revenue |
1,154,562 |
|
|
(528,452) |
|
Due from related party |
— |
|
|
9,405 |
|
Prepaid expenses and other current assets |
37,889 |
|
|
(9,545) |
|
Other non-current assets |
825,817 |
|
|
(317,970) |
|
Increase (decrease) in: |
|
|
|
Accounts payable |
(1,088,651) |
|
|
(1,881,574) |
|
Accrued expenses and other current liabilities |
(524,358) |
|
|
380,993 |
|
Deferred revenue |
(2,100,011) |
|
|
(115,223) |
|
Net cash provided
by (used in) operating activities |
1,407,237 |
|
|
(4,484,242) |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Purchases of property and equipment |
(59,952) |
|
|
(95,643) |
|
Proceeds on sale of property and equipment |
26,335 |
|
|
5,000,000 |
|
Purchases of intangible assets |
(123,252) |
|
|
(110,683) |
|
Payment of stock issuance costs |
— |
|
|
(2,700) |
|
Distributions to non-controlling interest |
(60,896) |
|
|
(84,505) |
|
Net cash (used
in) provided by investing activities |
(217,765) |
|
|
4,706,469 |
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
(Payments) proceeds on revolving line of credit, net |
(2,452,329) |
|
|
349,280 |
|
Proceeds from note payable |
1,874,200 |
|
|
— |
|
Proceeds from exercise of stock options |
1,200 |
|
|
33,617 |
|
Net cash (used
in) provided by financing activities |
(576,929) |
|
|
382,897 |
|
Change in cash
and cash equivalents |
612,543 |
|
|
605,124 |
|
Cash and cash
equivalents, beginning of the year |
877,676 |
|
|
272,552 |
|
Cash and cash
equivalents, end of the year |
$ |
1,490,219 |
|
|
$ |
877,676 |
|
TECOGEN INC
(1) Non-GAAP Financial
MeasuresIn addition to reporting net income, a U.S.
generally accepted accounting principle (“GAAP”) measure, this news
release contains information about EBITDA (net income (loss)
attributable to Tecogen Inc adjusted for interest, depreciation and
amortization, stock based compensation expense, goodwill
impairment, one-time inventory adjustment and merger related
expenses), which is a non-GAAP measure. The Company
believes EBITDA allows investors to view its performance in a
manner similar to the methods used by management and provides
additional insight into its operating results. EBITDA is
not calculated through the application of
GAAP. Accordingly, it should not be considered as a
substitute for the GAAP measure of net income and, therefore,
should not be used in isolation of, but in conjunction with, the
GAAP measure. The use of any non-GAAP measure may
produce results that vary from the GAAP measure and may not be
comparable to a similarly defined non-GAAP measure used by other
companies.
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