• | Gross profit for the first quarter of 2017 was $2,914,673 compared to $1,719,344 in the first quarter of 2016, an increase of 69.5% versus the prior year. This substantial growth was generated by improvement in both top line revenues and gross margins. |
• | Gross margin in the first quarter 2017 increased to 42.6% compared to 33.9% in 2016. Margins benefited from improvement in both service and product gross margins. |
• | Services gross margin improved to 46.1% in the period compared to the 35.8% in the prior year. Services gross margin was helped by continued cost control as well as increasing penetration of our high-margin, high-value add, 'turnkey lite' offering on the installation side. |
• | Product gross margin was 37.4% for first quarter 2017 compared to 31.5% in first quarter of 2016. Product gross margin was primarily helped by the materials and supplier arrangements put in place over the past several quarters as well as by the product mix shift toward our new InVerde e+ model. |
• | On a combined basis, operating expense rose to $2,836,971 for the first quarter of 2017 from $2,626,210 in the first quarter of 2016. |
• | Consolidated net income, attributable to Tecogen, for the three months ended March 31, 2017 was $44,787 compared to a consolidated net loss of $893,168 for the same period in 2016. |
• | Net income per share was $0.00 compared to a net loss of $0.05 for the three months ended March 31, 2017 and 2016, respectively. |
• | Product sales revenues were higher in the period, posting 23.9% growth over the prior year comparable quarter. Higher cogeneration product sales more than delivered the entirety of the growth in product revenues, partially offsetting a year-on-year decline in chiller and heat pump sales. Variations in product mix are typical from quarter to quarter as customer orders for different products are not entirely predictable. |
• | Services revenues grew 43.8% year-on-year, benefiting from increasing penetration in service contracts and favorable operating metrics for the installed fleet as well as an active period for installations work. Continued penetration of our 'turnkey lite' offering, which includes custom value-added engineering design work as well as custom factory engineered accessories and load modules, has been a strong source of services revenue growth and is expected to continue to develop as an important revenue stream. |
• | Current sales backlog of equipment and installations as of Monday May 8, 2017 was $14.3 million, driven by strong traction in the InVerde product line and Installation services. As of March 31, 2017 backlog was $13.6 million in line with the Company’s goal of consistently delivering quarter-end product backlog greater than $10 million. |
• | TTcogen, our joint venture with Czech CHP-manufacturer TEDOM, continued to make steady progress toward building product awareness and establishing what we hope will be profitable relationships with key partners. |
• | ULTRATEK - Automotive emissions development work has continued under Tecogen’s shared venture, Ultratek. This quarter, data from our AVL testing of a small, advanced European vehicle was presented at the SAE International World Congress in Detroit, MI. The remarkable performance of Ultera in reducing the pollution levels of these vehicles has been described in our recent paper published through SAE International and available through our web site here. Since the Ultratek formation, we have been awarded two additional Ultera related patents, while filing recently for three others specifically involving the integration of the technology to gasoline vehicles. In upcoming months we anticipate continued progress as we pursue further enhancements of the technology and engage with the automotive industry. |
• | PERC - As reported in the last quarter of 2016, we received research grant funding from the Propane Education and Research Council (PERC) to demonstrate the viability of our emissions technology in fork trucks. The program’s goal is to develop a retrofit emissions system for fork trucks to reduce their emissions to levels more acceptable for air quality in indoor work environments. This quarter, testing is currently underway utilizing a donated fork truck from a major manufacturer that has expressed strong interest in Ultera and has agreed to assist our research effort. The company also recruited an experienced powertrain engineer to lead the effort, Allan Welch. Mr. Welch’s credentials are summarized in our February 22, 2017 press release. |
• | CA Air Permit for Ultera on Standby Generators - We are actively completing the installation of the Ultera kits on the generators located in Southern California. We anticipate commissioning these units in the third quarter of 2017, while demonstrating groundbreaking engine compliance to these ultra-stringent emissions. |
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,148,753 | $ | 3,721,765 | |||
Accounts receivable, net | 9,102,078 | 8,630,418 | |||||
Unbilled revenue | 2,347,055 | 2,269,645 | |||||
Inventory, net | 6,075,277 | 4,774,264 | |||||
Due from related party | 336,693 | 260,988 | |||||
Prepaid and other current assets | 601,437 | 401,876 | |||||
Total current assets | 20,611,293 | 20,058,956 | |||||
Property, plant and equipment, net | 548,111 | 517,143 | |||||
Intangible assets, net | 1,094,747 | 1,065,967 | |||||
Goodwill | 40,870 | 40,870 | |||||
Other assets | 2,128,300 | 2,058,425 | |||||
TOTAL ASSETS | $ | 24,423,321 | $ | 23,741,361 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | 4,011,804 | 3,367,481 | |||||
Accrued expenses | 1,153,864 | 1,378,258 | |||||
Deferred revenue | $ | 907,445 | $ | 876,765 | |||
Total current liabilities | 6,073,113 | 5,622,504 | |||||
Long-term liabilities: | |||||||
Deferred revenue, net of current portion | 489,959 | 459,275 | |||||
Senior convertible promissory note, related party | 3,148,712 | 3,148,509 | |||||
Total liabilities | 9,711,784 | 9,230,288 | |||||
Commitments and contingencies (Note 6) | |||||||
Stockholders’ equity: | |||||||
Tecogen Inc. stockholders’ equity: | |||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 20,043,052 and 19,981,912 issued and outstanding at March 31, 2017 and December 31, 2016, respectively | 20,043 | 19,982 | |||||
Additional paid-in capital | 37,490,389 | 37,334,773 | |||||
Accumulated deficit | (22,798,895 | ) | (22,843,682 | ) | |||
Total stockholders’ equity | 14,711,537 | 14,511,073 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 24,423,321 | $ | 23,741,361 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Revenues | |||||||
Products | $ | 2,807,347 | $ | 2,266,148 | |||
Services | 4,039,420 | 2,809,367 | |||||
Total revenues | 6,846,767 | 5,075,515 | |||||
Cost of sales | |||||||
Products | 1,756,849 | 1,552,716 | |||||
Services | 2,175,245 | 1,803,455 | |||||
Total cost of sales | 3,932,094 | 3,356,171 | |||||
Gross profit | 2,914,673 | 1,719,344 | |||||
Operating expenses | |||||||
General and administrative | 2,208,905 | 1,892,220 | |||||
Selling | 447,452 | 515,032 | |||||
Research and development | 180,614 | 218,958 | |||||
Total operating expenses | 2,836,971 | 2,626,210 | |||||
Income (loss) from operations | 77,702 | (906,866 | ) | ||||
Other income (expense) | |||||||
Interest and other income (expense) | (1,213 | ) | 2,891 | ||||
Interest expense | (31,702 | ) | (42,381 | ) | |||
Total other expense, net | (32,915 | ) | (39,490 | ) | |||
Income (loss) before income taxes | 44,787 | (946,356 | ) | ||||
Consolidated net income (loss) | 44,787 | (946,356 | ) | ||||
Less: Loss attributable to the noncontrolling interest | — | 53,188 | |||||
Net income (loss) attributable to Tecogen Inc. | $ | 44,787 | $ | (893,168 | ) | ||
Net income (loss) per share - basic | $0.00 | $ | (0.05 | ) | |||
Net income (loss) per share - diluted | $0.00 | $ | (0.05 | ) | |||
Weighted average shares outstanding - basic | 20,037,795 | 18,478,990 | |||||
Weighted average shares outstanding - diluted | 20,317,142 | 18,478,990 |
March 31, | |||||||
2017 | 2016 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Consolidated net income (loss) | $ | 44,787 | $ | (946,356 | ) | ||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||||||
Depreciation and amortization | 64,281 | 65,456 | |||||
Recovery of inventory reserve | (36,000 | ) | 14,000 | ||||
Stock-based compensation | 48,842 | 27,243 | |||||
Non-cash interest expense | 203 | 12,382 | |||||
Loss on sale of assets | 2,909 | 640 | |||||
Provision for losses on accounts receivable | — | (6,154 | ) | ||||
Changes in operating assets and liabilities | |||||||
(Increase) decrease in: | |||||||
Short term investments | — | (73 | ) | ||||
Accounts receivable | (471,660 | ) | (595,293 | ) | |||
Unbilled revenue | (77,410 | ) | 213,121 | ||||
Inventory, net | (1,265,013 | ) | 367,511 | ||||
Due from related party | (75,705 | ) | 582,662 | ||||
Prepaid expenses and other current assets | (199,561 | ) | (1,786 | ) | |||
Other non-current assets | (69,875 | ) | — | ||||
Increase (decrease) in: | |||||||
Accounts payable | 644,323 | (934,598 | ) | ||||
Accrued expenses | (224,394 | ) | 13,109 | ||||
Deferred revenue | 61,364 | 37,021 | |||||
Net cash used in operating activities | (1,552,909 | ) | (1,151,115 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (73,330 | ) | (47,371 | ) | |||
Purchases of intangible assets | (53,608 | ) | (27,959 | ) | |||
Net cash used in investing activities | (126,938 | ) | (75,330 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Payment of stock issuance costs | — | (6,150 | ) | ||||
Proceeds from the exercise of stock options | 106,835 | — | |||||
Net cash provided by financing activities | 106,835 | (6,150 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (1,573,012 | ) | (1,232,595 | ) | |||
Cash and cash equivalents, beginning of the period | 3,721,765 | 5,486,526 | |||||
Cash and cash equivalents, end of the period | $ | 2,148,753 | $ | 4,253,931 | |||
Supplemental disclosures of cash flows information: | |||||||
Cash paid for interest | $ | 31,150 | $ | 29,999 |