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Tecogen, Inc. (TGEN)
Q1 2018 Earnings Conference Call
May 15, 2018 11:00 AM ET
Bonnie Brown – Chief Accounting Officer
Benjamin Locke – Chief Executive Officer
Robert Panora – President and Chief Operating Officer
Amit Dayal – H.C. Wainwright
Patrick Murphy – Maxim Group
Roger Liddell – Clear Harbor Asset Management
Alex Blanton – Clear Harbor Asset Management
Previous Statements by TGEN
» Tecogen's (TGEN) CEO John Hatsopoulos on Q4 2017 Results - Earnings Call Transcript
» Tecogen's (TGEN) CEO John Hatsopoulos on Q3 2017 Results - Earnings Call Transcript
» Tecogen's (TGEN) CEO John Hatsopoulos on Q1 2017 Results - Earnings Call Transcript
I’d now like to turn the conference over to your host, Ms. Bonnie Brown, Chief Accounting Officer. Please go ahead.
Thank you, Hector. Good morning, and thank you all for joining our first quarter 2018 earnings call. On the call with me today are Benjamin Locke, our CEO and Robert Panora, our President and Chief Operating Officer.
Before we begin, I'd like to read our safe harbor statement. This conference call and any accompanying documents containing 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 belief, 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 we believe that the presentation of non-GAAP financial measures provides a meaningful perspective of the underlying operating performance of our current business and enable 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.
I'll now turn the call over to call over to Ben for business update.
Thank you Bonnie. As the agenda on Slide 4 indicates, I will start by reviewing the company's performance and financial results for the quarter along with recent achievements and accomplishments. Bob will then give an overview of our emissions technology development followed by Bonnie with more detail on the financials. I would then have some final remarks before we take questions.
As always, I'd like to start off by reminding those who maybe new to our company about Tecogen’s core business model shown on Slide 5, heat, power and cooling that is cheaper, cleaner and more reliable. Our proprietary technology for improving efficiency, emissions and grid resiliency is truly disruptive to traditional methods of heating, cooling and powering buildings and infrastructure.
Turning to Slide 6, the first quarter of 2018 continued our trend of profitability with revenues of just under $10.2 million and almost 49% increase over the first quarter of 2017. This brings our trailing four quarters revenue to $36.5 million and represents the sixth quarter of profitability over the past seven quarters, with the exception being in Q2 of 2017 when we completed the ADG acquisition. And importantly, we achieved adjusted EBITDA of $304,000 in the first quarter compared to $191,000 in the first quarter of 2017. This is our seventh consecutive quarter of positive adjusted EBITDA which further demonstrates the sustained success we have achieved over the past 21 months.
Moving on to Slide 7. You can see that the positive results carried all the way to the bottom line with net income for the first quarter coming in at $21,000. While this is lower than our profit of $45,000 in the first quarter of 2017, it was tempered by unrealized loss in our EuroSite Holdings of around $20,000, and approximately $10,000 non-recurring cost related to the ADG acquisition.
Looking at the different components of revenue, product sales increased 31% in the first quarter of 2018 to $3.67 million, as compared to product revenues of $2.8 million in Q1 of 2017. The growth was a result of strong ongoing orders from both new customers and existing customers with a noticeable increase in chiller sales, which I will talk about in just a few minutes.
Service and installation revenue increased to $4.7 million for the quarter, a 17% increase over the first quarter of 2017. Turnkey installations have been a key driver in this segment as more customers recognize that Tecogen installations ensure the best quality and economic savings that could be achieved for a project.