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Tecogen Announces Fourth Quarter and Full Year 2016 Financial Results
Posts Revenue Growth and Gross Margin Improvement

WALTHAM, Mass., March 22, 2017 /PRNewswire/ -- Tecogen® Inc. (NASDAQ:TGEN, the "Company"), a manufacturer and installer of high efficiency, ultra-clean combined heat and power products for industrial and commercial use, reported revenues of $24,490,386 for the year ended December 31, 2016 compared to $21,442,657 for the same period in 2015, an increase of 14.2%.  Gross profit increased to $9,300,678 for 2016 compared to $7,633,226 in the prior year, a 21.8% improvement. Full year 2016 net loss improved significantly to $1,096,283 from $2,727,413 in the prior year.

The fourth quarter revenues were a record $7,111,108 delivering 66.2% revenue growth when compared to the comparable prior year quarter's revenues of $4,279,350.  Similarly, gross profit increased by 69.1% in the period to $2,703,622 for the quarter ended December 31, 2016 compared to $1,598,430 in the prior year period. Profitability was maintained in the quarter, delivering $4,556 in net income for the period, compared to a $826,228 net loss reported in the fourth quarter 2015.

Speaking about the results, co-CEO Benjamin Locke noted, "2016 represented a year of tremendous progress for Tecogen. The research and engineering team managed a new product launch with our InVerde e+ and made material progress in developing our Ultera emissions control technology for new market verticals. Similarly, the sales team's efforts at cultivating new markets and selling relationships began bearing fruit - ultimately pushing the company toward profitability in the last 6 months of the year.  Finally, our operations and executive team executed a number of strategic transactions - including the acquisition of Ilios minority interest, launch of our TTcogen joint venture with TEDOM, and planned acquisition of American DG Energy - all of which we believe have set the stage for Tecogen's next chapter of profitable growth."

2016 Major Highlights:

Financial

  • Total product revenue for the full year 2016 grew 6.6% year-on-year to $10,722,285. Product revenue growth was driven by strong sales of chiller and heat pump equipment.
  • Total service revenue for the full year 2016 was $13,768,101, showing a 20.9% growth over the $11,387,420 in reported service related revenues in 2015. Total full year service revenue benefited from 9.1% growth in services revenues (revenue from contracted maintenance and replacement parts sales) and 47.0% growth in installations revenue as the Company's turnkey installation offerings continue to gain traction with customers.
  • Full year 2016 combined gross margin was 38.0% compared to 35.6% in 2015, delivering a 240 basis point year-on-year gross margin improvement that was almost entirely driven by improved product gross margins.
  • The Company achieved full year product gross margins of 33.0%, delivering 400 basis points of improvement over 2015 product gross margin of 29.0%. Overall, product gross margins continued to benefit from management's lean manufacturing and sourcing initiatives, including volume pricing discounts.
  • Full year 2016 service gross margin was maintained at 41.9%, a 50 basis point improvement over the prior year despite significant revenue growth, demonstrating management's balanced approach to driving profitable expansion.
  • Sales backlog of equipment and installations was $11.1 million at year end 2016 compared to $11.6 million at the end of the fourth quarter of 2015, a modest decrease over prior year end backlog. Current backlog stands at $15.6 million as of March 21, 2017, ahead of the Company's stated goal of maintaining sales backlog above $10 million.

Sales & Operations

  • Launched the new InVerde e+, a second generation inverter-based 100 kW cogeneration module with multiple new and unique features, reasserting Tecogen's competitive advantage and core CHP competency and driving sales and backlog in key markets.
  • Installation revenues became an increasingly important new revenue stream and source of growth for the Company in 2016 as revenues from this category increased by 47.0% to $5,227,054, driven by further traction in turnkey initiatives.
  • First TECOCHILL sale into the indoor agriculture space, a new and rapidly growing market for the product.
  • Announced the planned acquisition of long-time on-site utility related company American DG Energy (NYSE MKT: ADGE) in an all stock transaction expected to create a fully vertically integrated clean energy company.
  • Acquired the outstanding minority interest in heat pump company Ilios Dynamics in an all stock transaction that brought the high efficiency water heater line into the Tecogen product family, rounding out the product offering.
  • TTcogen joint venture launched with European CHP-manufacturer TEDOM a.s. that brings TEDOM's line of combined heat and power units to the United States via Tecogen's nationwide sales and service network; quadrupling Tecogen's addressable market for CHP.
  • Development of our patented Ultera ultra-low emissions control system continued with highlights including:
    • Ultra Emissions Technologies Ltd. conducted multiple phases of successful emissions testing and development work for gasoline automotive application at AVL's California Technology Center. The group's results have been accepted for publication by SAE in conjunction with the annual SAE World Congress in April 2017. The joint venture company was valued at $58.2 million in its most recent round of funding and has sufficient cash on hand to pursue a wide range of development opportunities.
    • Research grant awarded by the Propane Education & Research Council (PERC) to develop Ultera for the propane powered fork truck market. The project will run for nine months and is being conducted with support from two prominent fork truck manufacturers.
    • Permit to construct granted in Southern California for the application of Ultera emissions control retrofit kits to a fleet of standby generators. Following commissioning of the units, the regulator will have 180 days to perform source testing verification and issue the final permit.

    Conference Call Scheduled for Today at 11:00 am ET
    Tecogen will host a conference call today to discuss the fourth quarter and year end results beginning at 11:00 a.m. ET.  To listen to the call dial (888) 349-0103 within the U.S., (855) 669-9657 from Canada, or (412) 902-0129 from other international locations. Participants should ask to be joined to the Tecogen Inc. call.  We suggest call participants begin dialing at least 10 minutes before the scheduled starting time. The conference call will be recorded and available for playback one hour after the end of the call. Alternately, to register for and listen to the live webcast, go to http://www.tecogen.com/webcast.

    The earnings press release and supplemental earnings call slides will be available on the Company website at www.Tecogen.com in the "Investor Relations" section under "Financial Results" (http://ir.tecogen.com/financial-results).

    About Tecogen

    Tecogen manufactures, installs, and maintains high efficiency, ultra-clean combined heat and power products including natural gas engine-driven cogeneration, air conditioning systems, and high-efficiency water heaters for residential, commercial, recreational and industrial use. The company is known for cost efficient, environmentally friendly and reliable products for energy production that, through patented technology, nearly eliminate criteria pollutants and significantly reduce a building's carbon footprint.

    In business for over 20 years, Tecogen has shipped more than 2,500 units, supported by an established network of engineering, sales, and service personnel across the United States. For more information, please visit www.tecogen.com.

    Forward Looking Statements
    This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties.  Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company's website and in Securities and Exchange Commission filings.  The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise.  The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

    Tecogen Media & Investor Relations Contact Information:
    John N. Hatsopoulos
    P: 781.622.1120
    E: john.hatsopoulos@tecogen.com

     

    TECOGEN INC
    CONSOLIDATED BALANCE SHEETS
    As of December 31, 2016 and 2015



    2016


    2015

    ASSETS




    Current assets:




    Cash and cash equivalents

    $

    3,721,765



    $

    5,486,526


    Short-term investments, restricted



    294,802


    Accounts receivable, net

    8,630,418



    5,286,863


    Unbilled revenue

    2,269,645



    1,072,391


    Inventory, net

    4,774,264



    5,683,043


    Due from related party

    260,988



    1,177,261


    Deferred financing costs



    48,989


    Prepaid and other current assets

    401,876



    353,105


    Total current assets

    20,058,956



    19,402,980






    Property, plant and equipment, net

    517,143



    543,754


    Intangible assets, net

    1,065,967



    1,044,611


    Goodwill

    40,870



    40,870


    Other assets

    2,058,425



    58,425


    TOTAL ASSETS

    $

    23,741,361



    $

    21,090,640






    LIABILITIES AND STOCKHOLDERS' EQUITY




    Current liabilities:




    Accounts payable

    $

    3,367,481



    $

    3,311,809


    Accrued expenses

    1,378,258



    1,066,860


    Deferred revenue

    876,765



    996,941


    Total current liabilities

    5,622,504



    5,375,610






    Long-term liabilities:




    Deferred revenue, net of current portion

    459,275



    273,162


    Senior convertible promissory note, related party

    3,148,509



    3,000,000


    Total liabilities

    9,230,288



    8,648,772






    Commitments and contingencies








    Stockholders' equity:




    Tecogen Inc. stockholders' equity:




    Common stock, $0.001 par value; 100,000,000 shares authorized; 19,981,912 and 18,478,990 issued and outstanding at December 31, 2016 and 2015, respectively

    19,982



    18,479


    Additional paid-in capital

    37,334,773



    34,501,640


    Accumulated deficit

    (22,843,682)



    (21,682,437)


    Total Tecogen Inc. stockholders' equity

    14,511,073



    12,837,682


    Noncontrolling interest



    (395,814)


    Total stockholders' equity

    14,511,073



    12,441,868






    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

    $

    23,741,361



    $

    21,090,640


     

    TECOGEN INC.
    CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Three Months Ended December 31, 2016 and 2015
    (unaudited)



    2016


    2015

    Revenues




    Products

    $

    3,196,376



    $

    1,310,931


    Services

    3,914,732



    2,968,419


    Total revenues

    7,111,108



    4,279,350






    Cost of sales




    Products

    2,153,995



    1,096,616


    Services

    2,253,491



    1,584,304


    Total cost of sales

    4,407,486



    2,680,920






    Gross profit

    2,703,622



    1,598,430






    Operating expenses




    General and administrative

    2,096,131



    2,055,351


    Selling

    419,171



    347,497


    Research and development

    142,368



    (19,118)


    Total operating expenses

    2,657,670



    2,383,730






    Loss from operations

    45,952



    (785,300)






    Other income (expense)




    Interest and other income

    2,413



    2,389


    Interest expense

    (43,809)



    (43,318)


    Total other expense, net

    (41,396)



    (40,929)






    Loss before income taxes

    4,556



    (826,229)


    Consolidated net loss

    4,556



    (826,229)






    Less: Loss attributable to the noncontrolling interest



    27,960


    Net loss attributable to Tecogen Inc.

    $

    4,556



    $

    (798,269)






    Net loss per share - basic

    $



    $

    (0.05)






    Weighted average shares outstanding - basic

    19,964,319



    17,704,896


     

     

    TECOGEN INC
    CONSOLIDATED STATEMENTS OF OPERATIONS
    For the Years Ended December 31, 2016 and 2015



    2016


    2015

    Revenues




    Products

    $

    10,722,285



    $

    10,055,237


    Services

    13,768,101



    11,387,420


    Total revenues

    24,490,386



    21,442,657






    Cost of sales




    Products

    7,189,225



    7,137,149


    Services

    8,000,483



    6,672,282


    Total cost of sales

    15,189,708



    13,809,431






    Gross profit

    9,300,678



    7,633,226






    Operating expenses




    General and administrative

    7,994,361



    7,997,512


    Selling

    1,636,704



    1,687,479


    Research and development

    667,064



    591,585


    Total operating expenses

    10,298,129



    10,276,576






    Loss from operations

    (997,451)



    (2,643,350)






    Other income (expense)




    Interest and other income

    11,988



    14,334


    Interest expense

    (175,782)



    (171,944)


    Total other expense, net

    (163,794)



    (157,610)






    Loss before income taxes

    (1,161,245)



    (2,800,960)


    Consolidated net loss

    (1,161,245)



    (2,800,960)






    Less: Loss attributable to the noncontrolling interest

    64,962



    73,547


    Net loss attributable to Tecogen Inc.

    $

    (1,096,283)



    $

    (2,727,413)






    Net loss per share - basic and diluted

    $

    (0.06)



    $

    (0.16)






    Weighted average shares outstanding - basic and diluted

    19,295,922



    16,860,453


     

    TECOGEN INC
    CONSOLIDATED STATEMENTS OF CASH FLOWS
    For the Years Ended December 31, 2016 and 2015


    CASH FLOWS FROM OPERATING ACTIVITIES:

    2016


    2015




    Net loss

    $

    (1,161,245)



    $

    (2,800,960)


    Adjustments to reconcile net loss to net cash used in operating activities:




    Depreciation and amortization

    264,005



    271,727


    Loss (gain) on disposal of asset

    640



    (4,631)


    Provision for losses on accounts receivable

    (19,245)




    (Recovery) for inventory reserve

    (27,000)



    (7,000)


    Stock-based compensation

    165,931



    199,500


    Non-cash interest expense

    49,532



    50,202


    Changes in operating assets (increase) decrease in:




    Short-term investments, restricted

    294,802



    290,900


    Accounts receivable

    (3,324,310)



    (536,426)


    Inventory

    935,779



    (1,585,822)


    Unbilled revenue

    (1,197,254)



    (375,479)


    Due from related party

    916,273



    (577,010)


    Prepaid expenses and other current assets

    (48,771)



    (4,237)


    Other assets



    (5,100)


    Changes in operating liabilities increase (decrease) in:




    Accounts payable

    55,672



    895,496


    Accrued expenses

    311,398



    58,707


    Deferred revenue

    65,937



    (603,626)


    Net cash used in operating activities

    (2,717,856)



    (4,733,759)


    CASH FLOWS FROM INVESTING ACTIVITIES:




    Purchases of property and equipment

    (139,725)



    (69,582)


    Disposal of property and equipment



    16,874


    Purchases of intangible assets

    (119,665)



    (133,032)


    Investment in Ultra Emissions Technologies, Ltd.

    (2,000,000)




    Net cash used in investing activities

    (2,259,390)



    (185,740)


    CASH FLOWS FROM FINANCING ACTIVITIES:




    Payments for debt issuance costs

    (2,034)




    Proceeds on notes payable

    150,000




    Payments for share issuance

    (31,053)




    Proceeds from sale of common stock, net of costs



    8,859,767


    Proceeds from exercise of stock options

    395,572



    360,225


    Proceeds from exercise of warrants

    2,700,000




    Net cash provided by financing activities

    3,212,485



    9,219,992


    Net increase (decrease) in cash and cash equivalents

    (1,764,761)



    4,300,493


    Cash and cash equivalents, beginning of the year

    5,486,526



    1,186,033


    Cash and cash equivalents, end of the year

    $

    3,721,765



    $

    5,486,526



    Supplemental disclosure of cash flow information:


    Cash paid for interest  

    $

    126,250



    $

    121,742


    Stock exchange for non-controlling interest in Ilios  

    $

    330,852



    $


     

    SOURCE Tecogen Inc.

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