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WALTHAM, Mass., August 9, 2023 - Tecogen Inc. (OTCQX:TGEN), a leading manufacturer of clean energy products, reported revenues of $6.7 million and a net loss of $0.8 million for the quarter ended June 30, 2023 compared to revenues of $6.4 million, and a net loss of $0.9 million in 2022. For the six months ended June 30, 2023 revenues were $12.1 million and the net loss was $2.3 million compared to revenues of $13.9 million, and net loss of $0.8 million for the same period in 2022.

"We saw an increase in revenues compared to both Q1 2023 and Q2 2022 of 25% and 5% respectively. Our sales backlog has increased from $7.1 million at the end of Q1 to $8.3 million at the end of Q2 to $11.3 million today. This backlog does not include our recurring service revenue. The Aegis service contract acquisition meant we had service revenues of almost $4 million this quarter or a 30% increase. We finished the quarter with $1.87 million in cash as we generated cash from operations in Q2 2023 and H1 2023. Overall we made substantial progress towards turning around the business and meeting the objectives we set out earlier in the year." commented Abinand Rangesh, Tecogen's Chief Executive Officer.

•Gross profit for the second quarter of 2023 was $2.8 million compared to $2.7 million in the second quarter of 2022. Gross margin was 42.0% in the first quarter compared to 42.1% for the same period in 2022. Products margin increased to 33.8% from 33.0%, while Services margin decreased to 47.5% from 51.7%, due to higher labor and material costs. In particular, as supply chain constraints for engines eased, we performed significant engine related replacements and upgrades which negatively impacted Service margins.

•Gross profit for H1 2023 decreased to $4.9 million compared to $5.8 million in the same period in 2022, a decrease of $0.9 million. Gross margin decreased to 40.6% in the first half of 2023 compared to 41.8% for the same period in 2022 due to higher labor and material costs which reduced Products margin to 31.9% from 32.9% and Services margin to 46.2% from 52.4%. In particular, as supply chain constraints for engines eased, we performed a significant number of engine replacements in H2 2023 which negatively impacted Service margins. Energy Production margin deceased to 36.9% from 40.4% due to decreased runtime at the sites.

Adjusted EBITDA(1) was negative $592 thousand for the second quarter of 2023 compared to a negative $651 thousand for the second quarter of 2022. Adjusted EBITDA(1) was negative $1.9 million for the first half of 2023 compared to negative $448 thousand for the first half of 2022. (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 and other non-cash non-recurring charges or gains including abandonment of intangible assets and the extinguishment of debt. See the table following the Condensed Consolidated Statements of Operations for a reconciliation from net income (loss) to Adjusted EBITDA, as well as important disclosures about the company's use of Adjusted EBITDA).

Tecogen will host a conference call on August 10, 2023 to discuss the second quarter results beginning at 9:30 AM eastern time. To listen to the call please dial (877) 407-7186 within the U.S. and Canada, or (201) 689-8052 from other international locations. Participants should ask to be joined to the Tecogen Second Quarter 2023 earnings call. Please begin dialing 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 https://ir.tecogen.com/ir-calendar. Following the call, the recording will be archived for 14 days.

Tecogen Inc. designs, manufactures, sells, installs, and maintains high efficiency, ultra-clean, cogeneration products including 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 nearly eliminate criteria pollutants and significantly reduce a customer’s carbon footprint.

This 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, our Quarterly Reports on Form 10-Q and on our Form 8-K, 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 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.


	June 30, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,871,063	$	1,913,969

Accounts receivable, net	5,614,291		6,714,122
Unbilled revenue	1,748,336		1,805,330
Employee retention credit receivable	46,148		713,269
Inventories, net	12,027,525		10,482,729


Prepaid and other current assets	467,390		401,189
Total current assets	21,774,753		22,030,608
Long-term assets:
Property, plant and equipment, net	1,352,318		1,407,720
Right of use assets	920,690		1,245,549
Intangible assets, net	2,421,379		997,594

Goodwill	3,129,147		2,406,156


Other assets	201,898		165,230
TOTAL ASSETS	$	29,800,185	$	28,252,857

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:



Accounts payable	4,212,914		3,261,952
Accrued expenses	2,554,000		2,384,447
Deferred revenue, current	2,086,174		1,115,627
Lease obligations, current	513,811		687,589
Acquisition liabilities, current	649,241		—

Unfavorable contract liability, current	213,559		236,705
Total current liabilities	10,229,699		7,686,320

Long-term liabilities:

Deferred revenue, net of current portion	154,149		371,823
Lease obligations, net of current portion	459,372		623,452
Acquisition liabilities, net of current portion	1,643,567		—
Unfavorable contract liability, net of current portion	490,802		583,512
Total liabilities	12,977,589		9,265,107




Stockholders’ equity:
Tecogen Inc. shareholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 24,850,261 issued and outstanding at June 30, 2023 and December 31, 2022	24,850		24,850
Additional paid-in capital	57,456,945		57,351,008


Accumulated deficit	(40,551,687)		(38,281,548)
Total Tecogen Inc. stockholders’ equity	16,930,108		19,094,310
Non-controlling interest	(107,512)		(106,560)
Total stockholders’ equity	16,822,596		18,987,750

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	29,800,185	$	28,252,857


	Three Months Ended
	June 30, 2023		June 30, 2022
Revenues
Products	$	2,445,631	$	3,010,115
Services	3,952,971		3,050,191
Energy production	350,156		354,287
Total revenues	6,748,758		6,414,593
Cost of sales
Products	1,618,456		2,015,466
Services	2,075,869		1,473,586
Energy production	220,007		222,092
Total cost of sales	3,914,332		3,711,144
Gross profit	2,834,426		2,703,449

Operating expenses
General and administrative	2,917,283		2,824,832
Selling	480,786		503,601
Research and Development	236,556		194,853
Gain on disposition of assets	(19,950)		(2,500)

Total operating expenses	3,614,675		3,520,786
Loss from operations	(780,249)		(817,337)


Other income (expense)
Interest and other income (expense), net	(21,061)		(1,265)
Interest expense	(1,857)		(12,733)



Unrealized gain on investment securities	37,497		—
Total other income (expense), net	14,579		(13,998)

Loss before provision for state income taxes	(765,670)		(831,335)
Provision for state income taxes	9,614		6,500
Consolidated net loss	(775,284)		(837,835)

Income attributable to the non-controlling interest	(4,826)		(18,383)
Net loss attributable to Tecogen Inc.	$	(780,110)	$	(856,218)

Net loss per share - basic	$	(0.03)	$	(0.03)
Net loss per share - diluted	$	(0.03)	$	(0.03)
Weighted average shares outstanding - basic	24,850,261		24,850,261
Weighted average shares outstanding - diluted	24,850,261		24,850,261





	Three Months Ended
	June 30, 2023		June 30, 2022
Non-GAAP financial disclosure (1)
Net loss attributable to Tecogen Inc.	$	(780,110)	$	(856,218)
Interest expense, net	1,857		12,733
Income taxes	9,614		6,500
Depreciation & amortization, net	185,175		95,985
EBITDA	(583,464)		(741,000)



Stock based compensation	28,589		89,893
Unrealized gain on investment securities	(37,497)		—

Adjusted EBITDA	$	(592,372)	$	(651,107)


	Six Months Ended
	June 30, 2023		June 30, 2022
Revenues
Products	$	4,155,767	$	6,949,596
Services	7,089,144		5,967,471
Energy production	883,665		935,849
Total revenues	12,128,576		13,852,916
Cost of sales
Products	2,831,024		4,660,221
Services	3,813,471		2,840,338
Energy production	557,746		558,119
Total cost of sales	7,202,241		8,058,678
Gross profit	4,926,335		5,794,238
Operating expenses
General and administrative	5,709,766		5,298,735
Selling	1,000,856		1,004,692
Research and development	465,658		334,988
Gain on disposition of assets	(19,950)		(36,445)
Gain on termination of unfavorable contract liability	—		(71,375)
Total operating expenses	7,156,330		6,530,595
Loss from operations	(2,229,995)		(736,357)
Other income (expense)
Interest and other income (expense), net	(20,231)		(15,416)
Interest expense	(2,272)		(13,561)



Unrealized gain on investment securities	37,497		37,497
Total other income (expense), net	14,994		8,520
Loss before provision for state income taxes	(2,215,001)		(727,837)
Provision for state income taxes	32,252		10,430
Consolidated net loss	(2,247,253)		(738,267)
Income attributable to non-controlling interest	(22,886)		(28,542)
Net loss attributable to Tecogen Inc.	$	(2,270,139)	$	(766,809)



Net income loss per share - basic	$	(0.09)	$	(0.03)
Net income loss per share - diluted	$	(0.09)	$	(0.03)
Weighted average shares outstanding - basic	24,850,261		24,850,261
Weighted average shares outstanding - diluted	24,850,261		28,250,261


	Six Months Ended
	June 30, 2023		June 30, 2022
Non-GAAP financial disclosure (1)
Net loss attributable to Tecogen Inc.	$	(2,270,139)	$	(766,809)
Interest expense, net	2,272		13,561
Income taxes	32,252		10,430
Depreciation & amortization, net	291,095		217,718
EBITDA	(1,944,520)		(525,100)

Stock based compensation	105,937		185,600
Unrealized gain on marketable securities	(37,497)		(37,497)

Gain on termination of unfavorable contract liability	—		(71,375)

Adjusted EBITDA	$	(1,876,080)	$	(448,372)

In addition to reporting net income, a U.S. generally accepted accounting principle (“GAAP”) measure, this news release contains information about Adjusted EBITDA (net income (loss) attributable to Tecogen Inc adjusted for interest, income taxes, depreciation and amortization, stock-based compensation expense, unrealized gain or loss on investment securities, goodwill impairment charges and other non-cash non-recurring charges including abandonment of certain intangible assets and extinguishment of debt), which is a non-GAAP measure. The Company believes Adjusted 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. Adjusted 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.


	Six Months Ended
	June 30, 2023		June 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$	(2,247,253)	$	(738,267)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	291,095		217,718
Stock-based compensation	105,937		185,600
Provision for doubtful accounts	44,000		46,000


Gain on disposition of assets	(19,950)		(36,445)

Unrealized gain on investment securities	(37,497)		(37,497)
Gain on termination of unfavorable contract liability	—		(71,375)


Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable	755,831		(444,541)
Employee retention credit receivable	667,121		562,752
Unbilled revenue	56,994		1,117,057
Inventory	(1,133,618)		(438,102)


Prepaid assets and other current assets	(66,201)		(22,618)
Other assets	325,688		308,282
Increase (decrease) in:
Accounts payable	839,784		(247,876)
Accrued expenses and other current liabilities	178,241		(74,490)
Deferred revenue	752,873		(589,158)
Other liabilities	(359,369)		(316,217)
Net cash provided by (used in) operating activities	153,676		(579,177)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(19,607)		(209,034)
Payment for business acquisition	(170,000)		—
Purchases of intangible assets	—		(29,505)
Proceeds from disposition of assets	16,863		67,169

Distributions to non-controlling interest	(23,838)		(32,809)


Net cash used in investing activities	(196,582)		(204,179)
CASH FLOWS FROM FINANCING ACTIVITIES:







Net cash provided by financing activities	—		—
Change in cash and cash equivalents	(42,906)		(783,356)
Cash and cash equivalents, beginning of the period	1,913,969		3,614,463
Cash and cash equivalents, end of the period	$	1,871,063	$	2,831,107