Tecogen Inc.

Greetings and welcome to the TCAGEN Q1 2023 conference call. At this time, all participants are on a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. With us today are Abinan Rangish, CEO and CFO, Roger DeShane, CAO, and Jack Whiting, General Counsel and Secretary. It is now my pleasure to introduce your host, Mr. Jack Whiting. Thank you. Please go ahead.

Good morning. This is Jack Whiting, General Counsel and Secretary at TQGEN. Please note this call is being recorded and will be archived on the investor section of our website at tqgen.com. The press release regarding our first quarter 2023 earnings and the presentation provided this morning are available in the investor section of our website. I would like to direct your attention to our safe harbor statement included in the earnings press release and presentation. 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 10Q 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. While 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 gaps. The reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our first quarter 2023 earnings and in the investor section of our website. I'll now turn the call over to Abhinav Rangesh.

Thank you, Jack. Welcome to TicoGen's first quarter 2023 earnings call. Today's agenda, I will start out with a progress update. In the last call, I laid out both a short and medium term plan. In the short term, we are focused on stabilizing the business, in particular with regards to cash. We are also building out the sales and distribution channels so the revenue can grow. I'd like to start with this update and then cover the 2021, I mean 2023 results. Although we saw a decline at the end of 2022, I'm happy to note that our Q1 2023 revenue was 35% higher than Q4 2022. I expect revenue for every subsequent quarter from this point forward to be better than the last. We have successfully integrated the service contracts we acquired from Aegis and are now starting to derive revenue from them. The sales team has been working diligently to expand the sales pipeline. We have added nearly 35% more deals into the sales pipeline than in Q4. Although not yet in our backlog, We have also been working on some larger projects that cumulatively make up more than 20 units. We are optimistic these will close and ship later in the year. Our cash position remains stable. We finished the quarter with $1.6 million. Our cash position today is over $2 million. We also expect further cash to free up as inventory levels reduce when we ship more units in Q2 and Q3. Lastly, we are still owed $1.8 million in NYSERDA rebates, which we expect to collect over the upcoming quarters. Lastly, we are working on obtaining the first purchase orders for the air-cooled chiller. Although our typical sales cycle is greater than a year, during the last investor update call, I had set a target of the first purchase order by August. We are well on our way to achieving that. Before I move on to results, I know some investors have asked about the ransomware attack the company experienced two weeks ago. We caught it quickly and were able to restore all files from backup. The attack happened on Friday the 28th, and we were fully operational on Monday. Our key systems are on the cloud, so we're unaffected. Our cybersecurity vendor doesn't believe any files were copied from the network, but we have provided all employees identity theft insurance just in case. I'd like to do a quick recap of our products and our business model before Roger reviews the results. We have three value propositions for end customers. The first is power generation and resiliency. This is electrical cogeneration for energy savings and in some cases for backup power in the event of a blackout. We use a natural gas engine to generate electricity and use the engine heat to produce hot water for the building. We are twice as efficient as an equivalent fossil fuel power plant as we are able to use the heat, so we have a much lower greenhouse gas footprint. The second is our clean cooling products. These products generate chilled water and hot water simultaneously. In applications that require climate control, such as healthcare, CEA, et cetera, we are the cheapest source of producing cooling and humidity control. Typically, the highest cooling load occurs in summertime, when natural gas prices are lowest, so we also offer customers substantial energy savings. In addition to energy savings, our chillers require little to no electricity to operate, so are ideal for applications where utilities are unable to supply sufficient power. As with electrical cogeneration, our greenhouse gas footprint is cleaner than an equivalent electric chiller and boiler combination, since most fossil fuel power plants are not utilizing the waste heat. Both our electrical code generation and clean cooling products benefit from a 40% investment tax credit that reduces the payback substantially. Our last value proposition to customers is our long-term service and asset management services. Our service centers provide end-to-end maintenance and allow customers to maximize their energy savings. Our typical maintenance contracts run for longer than 10 years and we also provide ancillary services to maintain balance of plan. This is an area that our strategy will focus heavily on. We plan to increase the range of services that we offer and also increase the number of sites that we service. We have three revenue segments. Our product revenue consists of sales of cogeneration units, microgrid systems, and chillers to a range of markets and customers. Our services revenue primarily consists of our contracted operations and maintenance services. Our energy production revenue stream is from energy sales, including sales of electricity and thermal energy produced by our equipment onsite at customer facilities. I've also had some questions from investors on our business model, so I'd like to highlight some key points of the way we operate. When we look at the core of our business, we make money by selling product and then obtaining cash flow for many years as a result of the service contracts that are sold with the unit. Over time, this makes the business significantly more valuable. This is the reason that we took on additional service contracts from AGES and plan to keep expanding the service business as much as possible. At this point, I would like to hand over to Roger to talk about the Q1 2023 results.