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Tecogen Inc. (TGEN)
Q4 2018 Earnings Conference Call
March 27, 2019 12:00 PM ET
Bonnie Brown - CAO, Treasurer and Secretary
Benjamin Locke - CEO
Robert Panora - President and COO
Conference Call Participants
James Jang - Maxim Group
Amit Dayal - HC Wainwright
Roger Liddell - Clear Harbor Asset Management
Previous Statements by TGEN
» Tecogen Inc. (TGEN) CEO Benjamin Locke on Q3 2018 Results - Earnings Call Transcript
» Tecogen Inc.'s (TGEN) CEO Benjamin Locke on Q2 2018 Results - Earnings Call Transcript
» Tecogen's (TGEN) CEO Benjamin Locke on Q1 2018 Results - Earnings Call Transcript
It is now my pleasure to introduce your host Bonnie Brown, CAO, Treasurer and Secretary. Thank you, Bonnie, you may begin.
Thank you, Jessie. Good morning and thank you all for joining our year-end 2018 earnings call. On the call with me today are Benjamin Locke, our CEO; and Robert Panora, our President and Chief Operating Officer. Please note, this call is being recorded and will be achieved on the Investor section of our website for 30 days following the call. A copy of the press release regarding our year-end 2018 earnings is also available in the Investor section of our website.
Before we begin, let me briefly cover our safe harbor statement. Various remarks we may make about the Company's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the Company's most recent annual report on Form 10-K and quarterly reports on Form 10-Q under the caption Risk Factors, which are on file with the SEC and available in the Investor section of our website under the heading SEC filings.
We may elect to update forward-looking statements at some in the future. We specifically disclaim any obligation to do so. Therefore, you should not rely in any forward-looking statements as representing our views as of any date subsequent to today. During this call, we will refer certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. Reconciliation of these GAAP financial measures to the most directly comparable GAAP measures is available in our earnings press release and in the Investor section of our website.
I'll now turn the call over to Ben for a business update.
Thank you, Bonnie. So, at the agenda on Slide 4 indicates. I'll start with a brief Company overview, followed by a top level review of the Company's performance and financial results for the fourth quarter and full year 2018 along with recent achievements and accomplishments. Bonnie will then discuss the financials in more detail, followed by Bob, who will give an overview of our emissions technology development efforts. I will 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 the traditional methods of heating, cooling and powering buildings and infrastructure.
Turning to Slide 6. The fourth quarter of 2018 saw revenues of 9.3 million, a 17.3% increase over the third quarter of 2018 and 9.2% decrease over the fourth quarter of 2017. Despite the drop in revenues quarter-over-quarter, our adjusted EBITDA came in at 502,000 for the quarter versus 533,000 for the fourth quarter of 2017. Our gross margin for the quarter improved to 40% versus 37% in the fourth quarter of 2017.
Also notable in the quarter was an increase in chiller sales, which I will talk more about later in the call and growth in our service maintenance revenue as we bring more systems with maintenance contracts online. Also in the quarter, we recognized the goodwill impairment a 4.4 million. This was due to the acquisition of the ADG assets in corresponding accounting treatment. Bonnie will address this more in her discussion.
For the year, 2018 saw record revenues of 35.9 million, an 8% increased over 2017. Gross margins for 2018 came in at 38% versus 39% in 2017 and adjusted EBITDA for 2018 was 217,000 versus 1.1 million in 2017. And as I've mentioned in previous calls, we are seeing tremendous traction in our chiller, Tecochill chiller systems as evidenced by a record 7.2 million in chiller sales in the year.
Again, I will talk more of our plans to further increase chiller sales and the reasons for it later in the call. Overall, as the chart indicates, we've come a long way in the past few years, more than doubling sales and tripling process over the past 4 years.
Moving on to Slide 7 and looking more closely at the fourth quarter, you can see the revenue mix, a drop in product sales compared to the fourth quarter of 2017, which was a breakout quarter from the introduction of the upgraded InVerde e+. As I'll discuss later, we had deliberately shifting some sales resources to our chiller products to adjust the changing market needs for our equipment.
As I said before and repeat again, a chiller can accomplish just as much grid size savings and greenhouse gas benefits as a cogeneration unit. So from a product mix standpoint, we are fine selling more chillers to meet the energy saving needs of customers over cogeneration when the situation calls for it. And as I mentioned, our fourth quarter adjusted EBITDA of $502,000 benefited from our margins of 40%.