Tecogen Announces First Quarter 2016 Results

WALTHAM, Mass., May 11, 2016 /PRNewswire/ -- Tecogen^® Inc. (NASDAQ: TGEN), a manufacturer and installer of high efficiency, ultra-clean combined heat and power products including natural gas engine-driven cogeneration, air conditioning systems, and high-efficiency water heaters for industrial and commercial use, reported revenues of $5,075,515 for the quarter ended March 31, 2016 compared to $6,103,434 for the same period in 2015, a decrease of 17%.  Recent challenging market conditions carried through into the first quarter from the back half of last year and were not helped by a temporary delay of incentive programs in New Jersey for CHP and New York for chillers.

Gross profit was $1,719,344 for the quarter ended March 31, 2016 compared to $2,224,975, a decrease of 23% over the prior year.  On a combined basis, operating expense fell to $2,626,210 for the first quarter 2016 from $2,844,584 in the first quarter of 2015, a 7.7% improvement and in line with management's goal to deliver full year operating expense near $10 million.

Revenue results were helped by 9.5% growth in services related revenues over the prior year period that was more than offset by a decline in product sales. Total service revenue growth benefited from increasing penetration in service contracts and favorable operating metrics for the installed fleet.  This positive services momentum was partially offset by a decline in installation related revenues as project delays continued in a number of key markets.  Conversely, product sales revenues suffered in the period, posting a decline over the prior year comparable quarter of 36%.  This decline in total product revenue was impacted by a 12.2% decline in chiller and heat pump sales as well as a decline in cogeneration sales.

Speaking about the quarter, co-Chief Executive Officer Benjamin Locke noted, "Through disciplined control of operating expenses and product cost, we are setting the stage for improved margins as we continue our existing sales of CHP systems, heat pumps, and chillers.  Also, our new InVerde e+ that launched this spring is helping reestablish our unique advantage in the New York City marketplace, and our partnership with a gas company is already leading to excellent Ilios projects being developed.  We believe all of these developments represent compelling new initiatives to drive growth and shareholder value in the years to come. Longer term, we expect the continued tightening of emissions regulations across the country (similar to the strict standards we have today in Southern California) will grant out Ultera-equipped technology significant competitive advantage."

Major Highlights:

Financial

• Gross margin in the first quarter 2016 decreased to 33.9% compared to 36.5% in 2015.  Margins benefited from continued product-related cost control initiatives but this progress was more than offset by a decline in service margins.  Service margins were impacted by a cost-overrun related to a single legacy installation project; processes are in place to prevent such overruns in the future.
• Gross profit for the first quarter of 2016 was $1,719,344 compared to $2,224,975, a 20% decline when compared to the same period in 2015.
• General & administrative expense fell 13.0% to $1,892,220 for the quarter compared to $2,174,747 in the prior year period ended March 31, 2015.  This improvement is a demonstration of management's disciplined expense control and effectiveness of the operating efficiency program.
• On a combined basis, operating expense fell to $2,626,210 for the first quarter 2016 from $2,844,584 in the first quarter of 2015, a 7.7% improvement and in line with management's goal to deliver full year operating expense near $10 million.
• Consolidated net loss, attributable to Tecogen, for the three months ended March 31, 2016 was $893,168 compared to $617,464 for the same period in 2015.
• Net loss per share was $0.05 and $0.04 for the three months ended March 31, 2016 and 2015, respectively.

Sales & Operations

• Current sales backlog of equipment and installations as of Friday May 6, 2016 was $13.1 million.  In line with the Company's goal of consistently delivering quarter-end product backlog greater than $10 million. For the quarter ended March 31, 2016, backlog was $11.5 million, significant growth over the $10.9 million in backlog reported at the same time last year.
• InVerde e+ launched with many notable features unique to Tecogen including rapid emergency power blackstart capability, best in class electrical efficiency, and seamless integration capability with battery or renewable power systems.
• Executed an agreement with a regional gas company to sell Tecogen chillers and heat pumps exclusively via the gas company partner in their territory, delivering strong synergies for both the gas company and Tecogen.
• As a result of rigorous engineering and site analysis work by the Tecogen team, we won a 900 kW multi-unit order worth approximately $2 million from a large international engineering company.  The equipment is intended for installation in various locations throughout a Long Island school district and includes engineered accessories, load modules and a long term service agreements.
• Emissions development progress continued with the completion of phase one testing of the Ultera technology by AVL's California Technology Center.
• Roll out began for Tecogen's new remote real time monitoring solution, powered by GE Equipment Insight,  with the technology installed and running on the first machines.  Our technology department also completed the launch of the mobile app for use by the service team and is receiving excellent feed-back to date.
• Although down on a year-on-year basis, product revenue posted 10% growth over the previous quarter ended December 31, 2015.  Product revenue was helped by a pick-up in cogeneration product sales and a significant improvement in chiller sales over the prior quarter.

Conference Call Scheduled for Today at 11:00 am ET
Tecogen will host a conference call today to discuss the first quarter results beginning at 11:00 am eastern time.  To listen to the call dial (888) 349-0103 within the U.S., (855) 669-9657 from Canada, or (412) 902-0129 from other international locations.  Participants should ask to be joined to the Tecogen Inc. call.  Please 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 conference call will be recorded and available for playback one hour after the end of the call.  The earnings conference call will also be webcast live. To view the associated slides, register for and listen to the webcast, go to http://investors.tecogen.com/webcast.  Following the call, the webcast will be archived for 30 days.

The earnings conference call will be recorded and available for playback one hour after the end of the call through Wednesday, May 18^th, 2016.  To listen to the playback, dial (877) 344 7529 within the U.S., (855) 669-9658 from Canada, or (412) 317-0088 outside the U.S. and use Replay Access Code 10084852.  Following the call, the webcast will be archived for 30 days.

About Tecogen
Tecogen manufactures, installs, and maintains high efficiency, ultra-clean, combined heat and power products including natural gas engine-driven cogeneration, air conditioning systems, and high-efficiency water heaters for residential, commercial, recreational and industrial use.  The company is known for cost efficient, 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 20 years, Tecogen has shipped more than 2,300 units, supported by an established network of engineering, sales, and service personnel across the United States. For more information, please visit www.tecogen.com.

Forward Looking Statements
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties.  Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company's website and in Securities and Exchange Commission filings.  The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

SOURCE Tecogen Inc.

Related Links

http://www.tecogen.com