Energy Efficiency Reimagined NASDAQ: TGEN 2nd Quarter 2018 Earnings Review� August 14, 2018
Participants Benjamin Locke Chief Executive Officer Robert Panora President & Chief Operating Officer Bonnie Brown Chief Accounting Officer �2
Safe Harbor Statement This presentation and 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 presentation includes certain non-GAAP financial measures, including adjusted EBITDA which excludes certain expenses as described in the presentation. 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. �3
Earnings Call Agenda Benjamin Locke Introduction Second Quarter Review Why Tecogen Recent Achievements Robert Panora Technology Update Bonnie Brown Financial Review Benjamin Locke Opportunities and Outlook Q&A �4
Advanced Modular Cogeneration Systems Heat, Power, and/or Cooling that is Cheaper! Industry leading efficiency Cleaner! Lower emissions thanks to efficiency and emissions technologyMore reliable! Real time monitoring enables prompt service All of Tecogen’s equipment is powered by internal combustion engines that use clean, abundant natural gas and is equipped with Tecogen’s patented Ultera emissions system �5
Sustained Positive Financial Results Adjusted EBITDA* T4Q Total (solid line) & Average (dotted line) - $Thousands $2,000,000 2Q ‘18 Revenues of $8.5 million� $1,000,000 Record T4Q revenue of $37.4 million� Revenue growth on T4Q basis year over year of $0 32.8%� -$1,000,000 Record T4Q gross profit of $14.1 million� Sustained step change to profitability originally -$2,000,000 achieved in 3Q’16� -$3,000,000 T4Q Adjusted EBITDA* of $803K for 2Q’18 vs. -$4,000,000 $817K for 2Q’17� 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 ADG Energy production revenue contributed $669K to Gross Profit Total T4Q Adjusted EBITDA Average T4Q Adjusted EBITDA *Adjusted EBITDA is defined as net income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, unrealized gain or loss on securities, stock based compensation expense, and one-time Sustained step change merger related expenses. to profitability �6
2Q’18 Summary of Results YoY Increase $ in thousands 2Q’18 2Q’17 Comments (Decrease) Revenue Products $ 2,484 $ 3,116 $ (633) -20.3% Service 4,461 3,700 761 20.6% Gaining traction with turnkey installations Energy Production 1,508 774 734 94.8% Full quarter of ADG operations in 2018 Total Revenue 8,453 7,591 863 11.4% Gross Profit Products $ 992 $ 1,150 $ (159) Service 1,500 1,393 108 Energy Production 669 444 225 Total Gross Profit 3,160 2,987 174 5.8% Additional gross profit from increased sales Gross Margin: % Products 39.9% 36.9% 3.0% Stronger margins in both cogen and chiller sales Service 33.6% 37.6% -4.0% Installation business brings tighter profit than contract maintenance Energy Production 44.3% 57.3% -13.0% Energy production margin is in line with long term expectations Total Gross Margin 37.4% 39.3% -2.0% Operating Expenses General & administrative $ 2,751 $ 2,406 $ 344 Q2'18 Includes core operating expenses for ADG's operations Selling 635 608 28 Additional selling efforts Research and development 410 219 191 R&D activities in connection with the forktruck project Total Operating Expenses 3,796 3,232 563 17.4% Net loss/Comprehensive loss (754) (518) (236) Additional R&D and selling expenses account for this difference Adjusted EBITDA (see reconciliation) $ (330) $ 64 $ (394) See detailed reconciliation Strong Q2 revenue Consistently strong G&A increase from investments in ADG and growth gross margin R&D �7
Other Notable Achievements Products� ▪ Obtained UL 1741SA “smart inverter” certification – required in California� ▪ Upgraded Tecopower CHP system with higher efficiency, lower sound, better economics� ▪ Initiated product development efforts to expand Tecogen gas cooling technology offering� Sales� ▪ Continued orders for cogeneration and chillers for indoor growing facilities� ▪ Additional chiller sales to ice rinks, school system, gas company headquarters� ▪ Project initiated with prominent ESCO to NJ high school system providing microgrid-enabled CHP system� ▪ Competed engineering design for 1 MW trigeneration system with ESCO partner� Emissions� ▪ US patent granted for Sulphur resistant catalyst coating� ▪ Japanese patent obtained for Ultera process� ▪ Positive PERC fork-truck results in favorable decision by engine manufacturer to proceed� ▪ Ongoing project with Research Lab partner on catalyst optimization �8
Product and Installation Backlog 2Q Historic Backlog $16,000,000 Backlog Breakdown by Customer $12,000,000 $8,000,000 $4,000,000 $0 Q2 2014 Q2 2015 Q2 2016 Q2 2017 Q2 2018 Backlog at qtr end Backlog related revenue Quarter-end backlog of $14.2 million on 6/30/18 versus $12.7 million on 6/30/17. Backlog as of August 10, 2018 at $21.3 million �9
Technology Update Topics Topics of Discussion Forklift trucks Automotive Miscellaneous! - Patents! - UL 1741 SA! �10
Forklift Truck Project Update PERC research program successfully completed� Exceptional test results� Near Zero NOx levels achievable with simple engine control tuning (reprogramming)� Review and demo at Tecogen May 23� Manufacturer and PERC� Manufacturer decision to Move Forward� Apply engineering resources to upgrade prototype at Tecogen� Return to Manufacturer for operational tests at their facility� World LPG (Propane) Forum Paper Accepted � Presentation October in Houston� � � �11
Miscellaneous Automotive Ongoing work at research institute on catalyst optimization Japan Patent for Ultera granted Patent for Ultera catalyst material granted by USPO Specialized anti-corrosion composite material Successfully used in field trials Critical for many fuels containing sulfur UL 1741 SA InVerde e+ certification attained in July Bellwether in Distributed Generation (DG) relationship with utilities Establishes technical foundation for utility command and control of DG resources DG units transition to networked resource for grid support and maintenance Awaiting Outcome… State of California research application �12
2Q ‘18 Financial Metrics: Revenues, Margins, Growth Quarter Ended June 30, YoY % of Total Four diverse revenue streams providing 11.4% $ in thousands 2018 2017 Growth Rev growth year over year� Revenue Cogeneration $ 1,289 $ 1,838 -29.9% 15.2% Product gross margin grew to 39.9%, Chiller 1,195 1,278 -6.5% 14.1% showing 8% improvement� Total Product Revenue 2,484 3,116 -20.3% 29.4% Service Contracts and Parts 2,165 2,223 -2.6% 25.6% Long term service contracts provide steady Installation Services 2,297 1,477 55.5% 27.2% Total Service Revenue 4,461 3,700 20.6% 52.8% cash flow� Energy Production 1,508 774 94.8% 17.8% Total Revenue $ 8,453 $ 7,591 11.4% 100.0% Turnkey installation included in service Cost of Sales Products $ 1,492 $ 1,966 -24.1% operations facilitates both product and Services 2,962 2,307 28.4% service revenue� Energy Production 840 331 154.0% Total Cost of Sales $ 5,294 $ 4,604 15.0% Energy production revenue from ADGE Gross Profit $ 3,160 $ 2,987 5.8% 37.4% sites provided $1.5 million of stable and Net loss attributable to Tecogen Inc. $ (754) $ (294) Net loss to 2017 Comprehensive loss $ (754) $ (518) $ (236) reliable cash flow with gross margin of Gross Margin 44.3%� Products 39.9% 36.9% Services 33.6% 37.6% Overall gross margin of 37.4%� Aggregate Products and Services 35.9% 37.3% Energy Production 44.3% 57.3% Total revenue growth on a T4Q basis of 33% Overall 37.4% 39.3% �13
Consistent Financial Progress Weekly Backlog Data: Product and Installation Services ADJUSTED EBITDA* 2Q ‘18 Compared to 2Q ‘17 $ Millions $ 22.0 Adjusted EBITDA 2Q'18 2Q'17 Non-GAAP financial disclosure $ 16.5 Net loss attributable to Tecogen Inc. $ (754,350) $ (293,540) Interest & other expense, net 64,014 30,685 $ 11.0 Income tax expense 38,864 - Depreciation & amortization, net 187,069 178,595 $ 5.5 EBITDA (464,403) (84,260) 00 Stock based compensation 38,062 48,842 Aug-18 Mar-18 Oct-17 May-17 Dec-16 Jul-16 Jan-16 Aug-15 Mar-15 Merger related expenses 96,800 99,773 Adjusted EBITDA $ (329,541) $ 64,355 Steady growth in the backlog *Adjusted EBITDA is defined as net income (loss) attributable to Tecogen Inc, adjusted for interest, depreciation and amortization, translates directly to revenue growth stock based compensation expense, unrealized gain or loss on equity securities and merger related expenses. �14
Consistent Financial Progress Revenue: Trailing 4 Quarters 18,000,000 13,500,000 9,000,000 4,500,000 00 2014 Q1 2014 Q3 2015 Q1 2015 Q3 2016 Q1 2016 Q3 2017 Q1 2017 Q3 2018 Q1 Product Service Energy Energy production revenue Declining operating costs as a percent acquired in May, 2017 of revenue demonstrates scalability with revenue growth �15
2018 Outlook Continue highlighting Tecogen as the most cost-effective, economically superior cogeneration technology� Establish Tecogen’s gas engine cooling technology as the best alternative to costly electric cooling technology. � Take proactive advantage of evolving utility environment via “smart inverter” certification� Energy Efficiency Reimagined Initiate fork truck follow-on project with partner� Initiate next phase of vehicle emissions project �16
Q&A Company Information Tecogen, Inc 45 First Ave Waltham, MA 02451 www.Tecogen.com Contact information Benjamin Locke, CEO 781.466.6402 Benjamin.Locke@Tecogen.com� John Hatsopoulos� 781.622.1120 John.Hatsopoulos@Tecogen.com �17