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Edited Transcript of TGEN earnings conference call or presentation 12-Nov-19 4:00pm GMT

Q3 2019 Tecogen Inc Earnings Call

Waltham Dec 4, 2019 (Thomson StreetEvents) -- Edited Transcript of Tecogen Inc earnings conference call or presentation Tuesday, November 12, 2019 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Benjamin M. Locke

Tecogen Inc. - CEO & Director

* Bonnie Jean Brown

Tecogen Inc. - Principal Financial Officer, CAO, Treasurer & Secretary

* Robert A. Panora

Tecogen Inc. - President & COO

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Conference Call Participants

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* Joseph Vidich

Manalapan Oracle Capital Management Llc - Managing Member

* Michael Zuk

Oppenheimer & Co. Inc., Research Division - Research Analyst

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Presentation

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Operator [1]

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Greetings and welcome to the Tecogen Third Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Bonnie Brown, Chief Accounting Officer, Treasurer and Secretary. Thank you. You may begin.

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Bonnie Jean Brown, Tecogen Inc. - Principal Financial Officer, CAO, Treasurer & Secretary [2]

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Thank you, operator. Good morning, and thank you all for joining our third quarter 2019 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 archived on the Investors section of our website for 14 days following the call. A copy of the press release regarding our third quarter earnings is also available in the Investors section of our website.

Before we begin, let me briefly cover our safe harbor statement. Various remarks that 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 Securities and Exchange Commission and available in the Investors section of our website under the heading SEC Filings. We may elect to update forward-looking statements at some point in the future. We specifically disclaim any obligation to do so. Therefore, you should not rely on any forward-looking statements as representing our views as of any date subsequent to today.

During this call, we will refer to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is available in our earnings press release and in the Investors section of our website.

I'll now turn the call over to Ben for a business update.

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [3]

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Thank you, Bonnie. As 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 third quarter of 2019 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 may be 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 third quarter of 2019 saw revenues of $8.7 million compared to $7.9 million in the third quarter of 2018, a 9% increase quarter-over-quarter. The net loss for the quarter was $586,000 compared to a loss of $603,000 in the third quarter of 2018. The quarter saw a drop in our overall margins to 33% versus 36% quarter-over-quarter. I will talk about the reasons for this dip in margins later in the call.

The end result was a gross profit of $2.8 million, which is relatively flat quarter-over-quarter. Adjusted EBITDA of negative $422,000 for the quarter, but as you can see from the chart, trailing 4 quarters' adjusted EBITDA remains positive. Working capital increased to $15 million as compared to $13 million in the third quarter of 2018.

Moving on to Slide 7. Our top-level revenue increase of 9% was in large part due to an increase in our chiller sales, which showed 94% growth for the quarter, while cogeneration sales were mostly flat. Gross profits were up for both products and services but down in energy production as a result of the sale of certain cogeneration assets earlier this year. And as I mentioned, our gross margin for the quarter dropped to 33% as a result of lower product and service margins. The drop in product margins was a combination of lower product margin on our first Tecofrost sale and a onetime adjustment to year-to-date product manufacturing labor, which is recognized in the third quarter.

Going forward, we expect to achieve our normal product margin for the Tecochill product in the future and future sales and adjustments to product manufacturing from previous quarters are not anticipated going forward. The drop in service margins was related to a complex turnkey installation project in Manhattan that exceeded initial budgets and additional service time was needed to get the project operational. The project is now complete, and we expect our service and install margins to improve to normal levels in the coming quarters.

With regard to expenses, we are carefully prioritizing our resources, and we're able to reduce our G&A expenses by almost 10%, while still increasing selling expenses by 15% and R&D by 30%. While G&A varies from quarter-to-quarter, we believe our expense reductions in G&A will translate to future quarters. Despite the revenue increase in expense reductions, our loss for the quarter was $586,000, a slight improvement over the third quarter of 2018 and largely because of our reduced margins for the quarter as I described.

Moving on to Slide 8. Our backlog currently stands at $22.6 million as of yesterday, November 11. As I mentioned in our earning release, we have taken a careful look at the insulation portion of our backlog, which stood at $16 million in our second quarter call. While we are very confident in our turnkey installation segment for cogeneration, we found ourselves embarking on larger, more complex installations, which are challenging, particularly in New York City. As such, we have revised the scope of a large turnkey project with an ESCO in New York to supply only the cogeneration systems and associated accessories and engineering support for the project, leaving the installation portion to be contracted directly by the ESCO.

As such, we have eliminated approximately $8 million of installation services from backlog. However, we were able to backfill that drop in backlog with an increase in product backlog, which now stands at $14.6 million as compared to $12 million in product backlog in the last call. And I am pleased to report that we have included in the product backlog a large order for upwards of 3 megawatts of InVerde cogeneration equipment expected in the fourth quarter. These units will ship over the first 2 or 3 quarters of 2020 to a mostly new geography for us. I will talk more about this order when finalized later this quarter but it would ultimately result in the establishment of an 11th service center located in this new territory.

I would also like to point out a significant increase in our outdoor growing segment backlog, which was much smaller in the previous quarter. Despite quarter-to-quarter variations, the indoor cultivation segment has proven to be tremendously successful for our chiller products. Our chillers are unique, cost-effective solutions to reducing electric costs for these facilities, and the transactional nature of chiller sales is reflected in how quickly the orders come in, get built and sold, sometimes all within the span of a quarter.

And lastly, as I've said previously, our backlog consists of products and installation revenues and does not contain our recurring maintenance contract revenues, which is a consistent contributor each quarter. Again, this is very important when considering the prospect of additional expansion of our service segment into this new geography.

Moving to Slide 9. I want to reemphasize key achievements for the company and how they relate to our plans going forward. First, as mentioned, we adjusted our sales strategy to have a renewed focus on our chiller product. I'm quite happy with the results of this effort thus far with chiller sales outpacing cogeneration sales for the first time this quarter. Chiller sales are much more defined and transactional than cogeneration projects, and having the first Tecochill sale completed in the quarter is the first steps towards confirming the value proposition and developing additional sales for us in industrial refrigeration systems, a new market vertical for us.

Next, we have evaluated our installation services business, and going forward, we are limiting the scope of cogeneration installations to manageable projects with less risk in terms of size, cost and complexity. While this may result in overall revenues from some cogeneration projects to drop, the revenue we do receive for products and engineered accessories will be much higher margin since installation and construction revenue is typically low margin. Reducing our installation services also frees up cash and management resources to be focused on our core product sales, engineering support and Ultera emissions development.

Next, as Bob will talk about in a few minutes, we are continuing to see exciting results with our Ultera emissions technology. Our collaboration with Mitsubishi Caterpillar Forklift America, or MCFA, saw an important technical achievement towards the goal of developing a cost-effective retrofit for forklifts to attain near-zero emissions and certifications. We are also seeing additional orders for our Ultera retrofit to large water pumping engines in California, which Bob will also touch on.

And lastly, we are seeing excellent growth in our core business that I expect to carry into 2020. We expect continued robust sales of our Tecochill products for indoor growing and other facilities with high electric cooling costs, and the Tecofrost product is already gaining traction in industries such as food processing, wineries, professional ice rinks and agricultural packaging. And the expected shipment of over 3 megawatts of cogeneration equipment into a new territory will open up additional sales opportunities in that area.

Overall, I think we have successfully adjusted our focus to maximize our competitive advantages in cogeneration and gas engine chiller systems, reduced our exposure to large installation construction projects and demonstrated the viability of retrofitting forklift engines with Ultera to obtain near-zero emission certification.

With that, I'd like to turn the call over to Bonnie, who will cover more detail on our financials, followed by Bob, who will describe our emissions progress in more detail. Bonnie?

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Bonnie Jean Brown, Tecogen Inc. - Principal Financial Officer, CAO, Treasurer & Secretary [4]

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Thank you, Ben. Slide 10 contains some highlights of our third quarter 2019 year-on-year financial results. Total revenue for the quarter was $8.7 million, an increase of 9.2% year-over-year. Product revenue for the quarter increased by 37%, with revenue from chiller sales increasing 94%. Service revenue increased by 14%, with maintenance contracts leading with a 19% increase. Revenue from energy production for the quarter was $632,000, a reduction from the previous year's total by $828,000. This decline is attributable to sales of certain of the company's energy-producing assets and the seasonality of those assets that the company retained versus those sold. Collectively, both asset groups, meaning those retained by the company and those we sold and now manage, performed on par with the previous year. However, the equipment sold and managed is more concentrated in chillers, which proportionally elevates revenue derived from these assets in the warmer months.

While our overall operating expenses decreased by $76,000 or 2%, G&A expenses decreased $249,000 or 9.6%, while selling and R&D expenses both increased year-over-year as we invest in our future. Net loss attributable to the company for the quarter was $586,000 compared to a loss of $603,000 for the third quarter of '18, an improvement of 3% year-over-year. As Ben discussed earlier, our backlog has remained sizable and is currently at $23 million, positioning the company for long-term growth.

Slide 11 presents a reconciliation of adjusted non-GAAP EBITDA for the third quarter and first 9 months of 2019 compared to those same periods in 2018, which has been referenced throughout our presentation and in our earnings release. Adjusted EBITDA is a non-GAAP measure that management uses as an important metric.

As shown on Slide 11, after adding back interest, taxes, depreciation and amortization to net loss attributable to Tecogen, we come to EBITDA, which for the third quarter of 2019 was negative $464,000 compared to negative $390,000 for the third quarter of 2018. After adding back noncash adjustments of stock-based compensation, mark-to-market adjustment, creating the unrealized loss on investment securities, a goodwill impairment charge and the nonrecurring merger-related expenses from the prior year, we reached non-GAAP adjusted EBITDA. For Q3 2019, adjusted EBITDA was negative $422,000 compared to negative $259,000 for the third quarter of 2018, with the primary differences being depreciation and amortization, net and merger-related costs, both of which were larger add-backs in 2018. Year-to-date adjusted EBITDA for the 9 months ended September 30, 2013 (sic) [2019] was positive $51,000 compared to negative $285,000 for the same period in 2018, an improvement of $336,000.

Now I'll turn the call over to Bob for a technology update.

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Robert A. Panora, Tecogen Inc. - President & COO [5]

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Good morning, everyone, and thank you, Bonnie. Let me begin with the fork truck program. As we discussed previously, we have been working with the propane industry and with MCFA, Mitsubishi Caterpillar, a well-known manufacturer of -- in the Americas of both electric and propane fork trucks. Our objective has been to adopt -- adapt Ultera to propane forklift trucks. If successful, our technology would provide propane fuel trucks with an answer to their electric counterparts relative to emissions. Emissions from forklift trucks are of heightened concern due to their frequent application indoors. In our last meeting -- in our last earnings call, rather, I discussed our progress relating to the final stage of the development work: tuning the engine to optimize the Ultera process. Midyear, we had made some progress in retuning through several iterations with a Japanese manufacturer. In further collaborations with a technical specialist from the engine company, a Mitsubishi affiliate, and 2 engineers from MCFA, we achieved results that were highly successful in suppressing NOx emissions.

Let me speak to that just for a moment. The chart presented in Slide 12 shows the positive impact of retuning. The red data plot is the NOx emissions versus time for a typical test after the retuning. As shown, the NOx output is minimal, averaging about 5 parts per million, which is far less than the factory standard emissions output of 125 parts per million over the same test course. With the retuning, we have a high degree of confidence that the engine would be successful in being certified to the California near-zero standard.

Following the recent collaboration with MCFA, we repeated the testing to prove test reproducibility and then prepared a summary for their management. We are awaiting formal review and discussion of next steps. There are several other areas of Ultera activities that are ongoing that I can report on as well today. We mentioned in our last call that we received a purchase order for 2 scaled-up Ultera kits from a SoCal water district. Phase 1, the system design based on a Caterpillar 800-horsepower engine was completed and approved by the district. The second phase, in order for the Ultera kits, is expected in early 2000.

We recently received an inquiry from a second Southern California Water District regarding an Ultera emissions control system for its gas engines. The water district is resisting electrification of its pump drives to reduce operating cost and to reduce the impact of forest fire-related issues in the region. We are encouraged by positive reviews regarding Ultera and expect that the need to mitigate the impact of fires may accelerate demand for Ultera.

With that, I'll return the call over to Ben for his final words.

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [6]

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Thanks, Bob. Moving on to Slide 14. I wanted to give a little more color on our core business outlook and how our products can uniquely meet the goals of grid resiliency, greenhouse gas reductions and cost savings. First, as we've seen in California, grid resiliency is becoming more important when building owners and operators decide how to heat, cool and power their facilities. While traditional on-site systems provide some degree of resiliency from grid outages, our InVerde cogeneration system with inverter-based interconnect, variable speed operation, permanent magnet generator technology and search microgrid capabilities sets Tecogen apart from any other competitor. But more importantly, particularly in California, where on-site cogeneration systems can only offset a portion of the electric bill, our chiller systems can provide the same reduction in grid dependency, while offsetting the entire cost of the electricity for traditional chillers.

Also, our chillers are often a more practical and manageable alternative to cogeneration installations, which sometimes are cost-prohibitive. We are seeing a renewed interest in California for the Tecochill and Tecofrost products as a way to reduce the facility's baseline electric load, allowing smaller and less capital-intensive backup systems to carry residual facility loads during an outage. We are also seeing new interest in our Ultera retrofits of natural gas engine generator systems. As you recall, we retrofitted a group of natural gas engine generators in Los Angeles County with the company's Ultera emissions control system, allowing them to run the generators without any restrictions from the local air quality management district. I invite anyone who is interested to read our application on other subjects seen here. The project Bob describes, retrofitting Caterpillar engines for water pumping districts, demonstrates the viability of this opportunity in California. To help take advantage of the California opportunity, we are engaging a leading HVAC rep firm to carry our Tecofrost product and expand our Tecochill sales in California. This will supplement our current sales team, which manages additional cogeneration reps, sales agents and our 2 service centers in California.

Next, as I repeated, we will continue to leverage our competitive advantage more broadly in the chiller market with Tecochill and Tecofrost. We expect continued sales in the key markets for our chillers, such as indoor growing, and are optimistic about making inroads with Tecofrost in the new markets for industrial refrigeration systems.

And lastly, we are excited about the potential for expanding our products and maintenance services into a new territory with a large cogeneration order expected in the fourth quarter. Such a large population of the units would result in establishing our 11th service center, which will provide the company with another steady, reliable source of service revenues and associated margins. We are already proactively planning for this new service center and look forward to conveying updates as they occur.

Moving on to Slide 15. In closing, I would like to reiterate the key value proposition of Tecogen's clean, reliable distributed generation systems: first, our systems use abundant and inexpensive gas efficiently and cleanly to meet the energy and resiliency needs of large facilities. As these facilities strive to reduce operational costs, improve greenhouse gas emissions and become resilient to grid outages, Tecogen systems are increasingly sought after to meet these goals; next, we have differentiated ourselves from other on-site generation technologies by virtue of our unique and proprietary product technology, longevity and comprehensive factory service presence. Our InVerde product is the only microgrid-enabled CHP system using a permanent magnet generator, offering a variable speed with an integrated onboard inverter, key features that will optimize economics and savings for customers. Our Tecochill and Tecofrost natural gas chillers have no other competitors and are increasingly becoming the design basis for many facilities with large cooling or refrigeration needs; next, we are focusing on the business segments that deliver the best margins and profitability for the company. We continue to increase resources for product sales in Ultera R&D, while carefully reducing our G&A cost to maximize profitability going forward; and lastly, we continue to make excellent progress demonstrating Ultera as a viable, cost-effective way to obtain fuel cell-like emissions on a wide variety of engine platforms. From GM engines to Ford engines, Generac generator engines, Caterpillar engines, and more recently, with the Mitsubishi engine on the forklift project. The result of our retrofits on these engines is the same: near-zero emissions on par with the fuel cell.

We think our message is reaching a larger investor audience and look forward to sharing another update in the fourth quarter earnings call next year. With that, I'll turn it over to the operator for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Michael Zuk with Oppenheimer.

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Michael Zuk, Oppenheimer & Co. Inc., Research Division - Research Analyst [2]

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Ben, Bob and Bonnie, on Page 10, you have the gross margin for the quarter and then you have the gross margin comparison for the third quarter in September of last year. What's your goal in the next 2 or 3 quarters of restoring the historic margins? Do you think you can do that in 2 quarters or 3 quarters? Or give us a little color on how you're approaching that.

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [3]

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Yes. Mike, a good question. I've always given the guidance of our margins of between 35% and 40%, which is why I kind of took exception of this past quarter and wanted to give the detail that I did in explaining why we fell beneath that. I think those things that we saw, certainly the first Tecofrost sale, the first one that we knew was going to be a little bit less margin. And then this accounting thing was a onetime event. So we -- our goal is to get right back into our 35% to 40% margin range in the coming quarters.

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Michael Zuk, Oppenheimer & Co. Inc., Research Division - Research Analyst [4]

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Yes. And then the backlog, right now, seems to be down a little bit. Is that because we have a lot of projects in the bidding process that haven't signed? Or where are we there with regard to improving the backlog?

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [5]

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Yes. I'd say the biggest change in the backlog, Mike, is this $8 million of installation revenue that we took out of it. And if we had kept that in there, just add $8 million to our backlog, and that's what you'd see up on the screen. But as I said, I think our experience has been -- and with these projects, particularly in New York, and the larger and complex, more complex they get, we start to get a little bit out of our comfort zone. And so we realize that with this one particular project that I mentioned in New York that had costs that went high. And so this project that we removed the $8 million of backlog on, I think, is a wise decision for us to not get more entrenched into these construction jobs in New York, which can be very difficult sometimes. And instead focus just on our products and engineering services. Now we'll always still have installations occurring. I'm not saying we're going to remove our installations, but certainly doing a YMCA in Connecticut is different than doing a 1-megawatt tri-gen system in New York. So we're trying to be practical. And the main reason you saw that reduction in the backlog is that $8 million of install that we took out.

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Michael Zuk, Oppenheimer & Co. Inc., Research Division - Research Analyst [6]

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Does this mean then that we're going to change the focus of our sales efforts more to getting involved with the engineering and architectural firms at the get-go from a project rather than coming in and trying to sell product after the engineering is almost completed?

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [7]

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Not so much. I mean we are still already quite involved in the early stages of these projects, making sure. And in fact, that's the key to success, really, is to make sure that you're in the design basis for these projects ahead of time. But it just means when the bidding becomes to happen, our scope of services will be in the cogeneration equipment, the accessories and engineering support, and we will not include in our bid, sometimes for these more complex projects, the installation side of things, instead referring some other -- that 2 other companies that do installations, et cetera.

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Michael Zuk, Oppenheimer & Co. Inc., Research Division - Research Analyst [8]

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And then one final question. What's the duration goal on our service contracts? Is it 3 years, 5 years, 10 years?

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Robert A. Panora, Tecogen Inc. - President & COO [9]

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We don't...

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [10]

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Yes, yes. So typically, our service contracts could be anywhere from 1 year, but certainly, I think the norm, certainly for New York jobs, has been 5 years. And with some incentive programs, for example, the New Jersey incentive program, that contract is required to be 10 years. So the service contracts tend to be secured for a long period of time on a case-by-case basis. But generally speaking, we try to lock them up to be as long as possible.

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Operator [11]

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(Operator Instructions) Ladies and gentlemen, there are no additional -- we do have one question that just came in. One moment. Our question comes from Joe Vidich with Manalapan Oracle Capital.

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Joseph Vidich, Manalapan Oracle Capital Management Llc - Managing Member [12]

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I was wondering if you could just talk a little bit more about your sales efforts in California, especially regarding the C&I marketplace out there. I know I just -- as a point of reference, I was listening to Generac's call and they're saying they're seeing a tremendous demand for their product and they're filing for emissions waivers. And I was just wondering what you guys are seeing and how you're focusing on that market.

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [13]

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Yes. It's a good question. Certainly, something that's gotten a lot of attention, unfortunately for the wrong reasons of these tragic wildfires, but obviously, bringing to light the need for resiliency to those grid interruptions. And certainly, backup generators, I did also listen to Generac's call. And they are endeavoring to get a lot of these generators and those are typically end up being the small kind of household generators, I think, is the segment that they're mostly addressing. I was carefully trying to see what their larger generator output was for these things. But it's an opportunity. As I mentioned, certainly, cogeneration is something that's first to mind when people think about resiliency. It's a little bit like when we embarked on this -- the marijuana indoor growing, where they would have tremendous power needs, they couldn't get that power from traditional methods, so they sought cogeneration. But after we spoke with them and trying to drill a little bit deeper into the problem, where we ended up with many of these facilities was instead addressing their cooling loads, taking their cooling loads off the grid, and then that leaves a very manageable amount of electricity service needed from the utility that could be put on cogen certainly. But from a cost-effective standpoint, might be better off towards just a standby generator. So I think the way we're differentiating ourselves for this opportunity in California, while we're certainly pushing the cogeneration, where we can really differentiate ourselves is getting in and getting people electric loads -- their cooling loads off electric and onto our gas systems, and then that kind of enables them to be a little bit more pragmatic about residual -- whatever residual power that they have.

In terms of the sales activity, as I mentioned, we've got -- we've had, of course, our California West Coast offices out there. We have 2 service centers and a West Coast sales presence. But we're engaging with these rep firms. And I say rep firms, I'm sure you understand what manufacturers' representatives are. They're a more cost-effective way to sell your product. And in fact, reps are traditionally used in the HVAC industry more than direct sales, more than anything else. So we're engaging with this rep company to really try to uncover the opportunities for resiliency in the California -- like the Central Valley region, where there's so many wineries and, like, produce manufacturers that have a lot of electric equipment relying on that grid. And if we can get that swapped over to gas, then their exposure to grid outages is much less.

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Joseph Vidich, Manalapan Oracle Capital Management Llc - Managing Member [14]

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Right, right, right. Yes, that's definitely a big market. Could we also just -- in terms of the Ultera emissions and for the propane forklifts, what's the next step here? You're -- I guess, you're going to have a meeting this coming month, is -- can you explain a little bit?

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Robert A. Panora, Tecogen Inc. - President & COO [15]

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Right. This is Bob -- sure, Joe. This is Bob Panora. We had to visit -- it wasn't that long ago, it was very recent, that people from Japan and so forth came to our facility, worked out the retuning and then they went back, and there were some calls back and forth between them and management. But what management was looking for was a summary report, which we got to them, I don't think it was much more than a week ago. And what I presume is going to happen is there'll be some dialogue between the folks in Texas and the folks at Mitsubishi in Japan, and then we'll have a discussion that'll say, if we're going to go forward, how do we go forward? Do we go forward with certification of that engine? Which I think it could be done based on the test results. I think it is highly likely it could be certified pretty much just the way we tuned it. So I don't want to predict what they're going to say, but I think the body language I got from the internal people who were here, and their feedback back and forth was generally positive. So I think they can decide to certify an engine or they can decide to develop a prototype that would be maybe a field test or something like that of a number of them that would be tested to see, which is what I think they would do. But we don't know. We're waiting for some people to come back from vacation here, and then we'll resume the dialogue.

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Joseph Vidich, Manalapan Oracle Capital Management Llc - Managing Member [16]

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Right. So is it your intention to monetize the product through license? Is that how you're approaching it? Or what's the road map for...

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Robert A. Panora, Tecogen Inc. - President & COO [17]

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We have a couple of options and that's one of them, of course. And we don't really know which one is going to fit this particular market the best, and I wouldn't want to say how it would be done, but that's obviously one way of doing it.

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Operator [18]

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Thank you. Ladies and gentlemen, there are no further questions at this time. I'll turn the call back to management for closing remarks. Thank you.

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Benjamin M. Locke, Tecogen Inc. - CEO & Director [19]

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Well, thank you all for joining us on the call. As I mentioned, I hope to be -- I hope you'll be seeing more news from Tecogen in the coming weeks and months until we get together again for our fourth quarter earnings next year. So thank you very much.

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Operator [20]

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Thank you. This concludes today's conference. All parties may disconnect. Have a great day.