Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tecogen Inc (TGEN, Financial) is exploring new markets, particularly in the data center sector, which could significantly boost future growth.
- The company has developed innovative solutions like DTx engine-driven chillers and inverter-based systems that cater to the specific needs of data centers.
- Tecogen Inc (TGEN) has a growing backlog, currently just shy of $6 million, with an additional $5 million to $7 million in prospective orders expected by the end of September.
- The company has positive cash flow from operations in the first half of 2024, despite significant expenditures on factory relocation and fit-out.
- Tecogen Inc (TGEN) has increased its service revenue by 4.4% quarter over quarter, driven by acquired maintenance contracts, and plans to improve margins with price adjustments and product improvements.
Negative Points
- Tecogen Inc (TGEN) experienced a 30% decrease in revenues for the second quarter of 2024 compared to the same period in 2023, primarily due to a lack of production capacity.
- The company reported a net loss of $1.54 million for the second quarter, which is a significant increase from the $780,000 loss in the second quarter of 2023.
- Product revenue decreased by 95% quarter over quarter, negatively impacting gross margins due to warranty costs and unabsorbed direct labor.
- The company faces challenges from anti-fossil fuel regulations in key markets like New York City and Boston, which have led to a sharper-than-expected decline in product revenue.
- Tecogen Inc (TGEN) had to draw an additional $500,000 from its line of credit due to delays in cash collection, impacting its cash position.
Q & A Highlights
Q: Can you provide details on the three projects you expect to finalize this quarter?
A: Abinand Rangesh, CEO: The $5 million to $7 million expected this quarter includes multiple projects, with only one related to data centers. The rest are in power-constrained or gas-friendly areas. I can't disclose the exact dollar volume for the data center projects yet.
Q: What is the average size in dollar volume of the data center projects you are targeting?
A: Abinand Rangesh, CEO: Most data center projects are around $2 million each, with some larger and some smaller. They often happen in phases, allowing for modular expansion as needed.
Q: Have you completed any data center projects before?
A: Abinand Rangesh, CEO: We have done one small data center project years ago. The current demand is driven by the need for quick deployment and modular solutions, which is a shift from previous requirements.
Q: What are data centers currently doing if they are not using your equipment?
A: Abinand Rangesh, CEO: Many are buying power from the grid, but as they change operations, they need more power and cooling, which the grid can't always provide.
Q: What is the payback period for data centers using your equipment versus buying power from the grid?
A: Abinand Rangesh, CEO: The payback is primarily in opening the data center earlier, often a year sooner. Economically, it can pay for itself in under two years due to the revenue generated by early operation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
