Tecogen Inc (TGEN, Financial) released its 8-K filing on November 14, 2024, detailing its financial results for the third quarter ended September 30, 2024. The company, known for its high-efficiency, ultra-clean cogeneration products, operates through three segments: Products, Services, and Energy Production.
Financial Performance Overview
For the third quarter of 2024, Tecogen Inc reported revenues of $5.63 million, a 20.8% decrease from $7.11 million in the same period of 2023. The company also reported a net loss of $0.93 million, widening from a net loss of $0.48 million in the previous year. This decline in revenue and increased net loss were primarily attributed to the relocation of manufacturing operations, which disrupted production capacity.
Segment Analysis and Challenges
The Products segment experienced a significant revenue drop of 52.7%, generating $1.39 million compared to $2.94 million in the prior year. This was due to the relocation of manufacturing operations, which required construction activities that temporarily reduced production capacity. Conversely, the Services segment saw a slight increase in revenue to $3.85 million, supported by acquired Aegis maintenance contracts. The Energy Production segment also grew by 17.3%, reaching $389 thousand, driven by increased run hours at certain sites.
Financial Achievements and Industry Context
Despite the challenges, Tecogen Inc achieved a gross margin increase to 44.1% from 41.1% in the previous year, thanks to reduced service contract labor and material costs. This improvement in gross margin is crucial for the company as it navigates operational disruptions and aims to enhance profitability in the competitive industrial products sector.
Key Financial Metrics
Operating expenses rose slightly by 1.8% to $3.35 million, while the loss from operations increased to $0.87 million from $0.37 million in the previous year. Adjusted EBITDA was negative $0.75 million, compared to negative $0.18 million in the third quarter of 2023, reflecting the impact of decreased revenue and increased operating expenses.
Our business development efforts over the last 15 months are showing results. Our backlog has jumped to $10.8m and we expect further orders before year end," commented Abinand Rangesh, Tecogen's Chief Executive Officer.
Balance Sheet and Cash Flow Insights
As of September 30, 2024, Tecogen Inc's cash balance stood at $1.28 million, bolstered by $1.0 million in additional funding from related parties. The company used $117 thousand in cash from operations and invested $839 thousand in property, plant, and equipment during the nine months ended September 30, 2024. The balance sheet reflects total assets of $27.48 million, with current liabilities of $11.84 million.
Strategic Outlook and Future Prospects
Tecogen Inc is optimistic about future growth, with plans to close its first data center projects by early 2025. The company is positioning its high-efficiency natural gas chillers as a solution for data centers facing power shortages, offering a potential revenue stream by converting cooling expenses into computing power sales.
Overall, while Tecogen Inc faces short-term operational challenges, its strategic initiatives and backlog growth indicate potential for recovery and expansion in the coming quarters. Investors and stakeholders will be keenly observing the company's ability to capitalize on these opportunities and improve its financial performance.
Explore the complete 8-K earnings release (here) from Tecogen Inc for further details.
