Tecogen Inc.

Greetings and welcome to TCOGEN third quarter 2024 conference call. At this time, all participants are on a listen-only mode. A 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. I would now like to turn the conference over to your host, Jack Whiting. Thank you. You may begin.

This morning, this is Jack Whiting, General Counsel and Secretary of TECAGEN. This call is being recorded and will be archived on our website at tegagen.com. The press release regarding our third quarter 2024 earnings and the presentation provided this morning are available in the investor section of our website. I'd like to direct your attention to our safe harbor statement included in our earnings press release and presentation. Various remarks that we make about the company's expectations, plans, and prospects constitute forward-looking statements. for purposes of the Safe Harbors provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by forward-looking statements as a result of various factors, including those discussed in the company's most recent annual and quarterly reports on Forms 10-K and 10-Q, under the caption, Risk Factors Filed with the Securities Exchange Commission, and available in the Investor section on our website under the heading SEC Filings. While we may elect to update forward-looking statements, we specifically disclaim any obligation to do so, so you should not rely on any forward-looking statements as represented in our views as of any future date. During this call, we will refer to certain financial measures not prepared in accordance with generally accepted accounting principles or GAAP, reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures provided in the press release regarding our third quarter 2024 earnings and on our website. I will now turn the call over to Abhinav Rangesh, TQGEN's CEO, who will provide an overview of third quarter 2024 activity and results, and Roger Deschenes, TQGEN's CAO, who will provide additional information regarding third quarter 2024 financial results. Thank you, Jack.

Today, I'd like to start by giving a quick business update. I'd also like to talk a little bit more about data centers. I know we covered some of this in the last call. take a little bit of a deeper dive into this. And then Roger will talk to us about the third quarter results. Then I'll summarize and we'll go to questions and answers. During the last call, I mentioned that we would be receiving multiple orders over the upcoming months. Our backlog has grown from just over 5 million at the end of Q3 to more than 10 million today. We're also expecting a further $2 million of orders before year end. With the orders in hand and our new factory location and operation, we plan to ramp up manufacturing sequentially each quarter. I'm forecasting quarterly revenue greater than 6 million in Q4, greater than 7 million in Q1, and higher Q2 onwards. We also hope to close the first of our data center projects by early 2025. As a recap, until AI came along, data centers had plenty of power and cooling. only made up a small portion of the electrical load. Now with AI, chips use so much electricity that data centers are finding themselves short of power. As we've been attending data center trade shows, potential customers and engineers are showing significant interest in our chiller solution in particular because of some key trends in the data center industry. First, AI chips are getting more powerful. so the current method of cooling server rooms is going to be insufficient. Going forward, chips will be immersed in liquid and the data center cooling will make up 30% or more of the electrical load. As the processing capacity of chips increases annually, so will the amount of heat generated. The first set of liquid cool chips are likely to come online next year, but I believe this is just the start of the trend for power-hungry chips that need more and more cooling. Second, we are likely to see existing data centers expand or switch to accommodate AI applications. It is easier to expand or repurpose an existing data center because the lead time to build a new data center can be multiple years. For these data centers, every megawatt of power that can be made available for computing is additional revenue that can be sold to data center tenants at a premium. Rather than use electrical power for non-revenue generating loads like cooling, A data center can free up electrical capacity by switching the cooling to TECAgen's high efficiency natural gas chillers. Not only is our chiller the fastest way to increase available power, as it is an easy swap with an electrical chiller, but it is also cheaper than building an onsite power plant of equivalent capacity. Our systems are also cleaner than buying electrical power from the grid and can be zero carbon if combined with carbon capture. After freeing up capacity with our chillers, customers can always add power generation such as our inverting. Therefore, all indications are positive that data centers will be a great growth area for us. I will update investors as we close projects and make further inroads into this market. Now let's take a more detailed look at backlog and cash. Currently, the backlog is 10.8 million including a $2 million 10-year extended warranty. The backlog is a mix of segments, some cannabis, some residential, and a significant chiller project for the iconic Las Vegas Convention Center. We haven't issued a press release on this project yet, as the customer only made their final decision earlier this week. Our chillers will be part of the massive central plant to a central chiller plant that cools all the conventions that happen in Las Vegas. We have also seen revival in cannabis projects for both cogen and chillers. We expect further orders in this space before year end. We've also been successful in diversifying our projects outside New York and the Northeast. Our backlog includes projects in Nevada, Florida, and we also shipped units to Missouri. Our cash position at quarter end was 1.2 million and it's presently 1.1 million. We expect customer deposits over the upcoming two months. With the orders in hand on the orders that we are expecting over the upcoming months, my next focus will be on operations. Looking out to the next 12 months as a company, we need to achieve the following. Now that we have the orders, we need to increase product shipments to reach profitability. The key to doing this will be material management so that our labor force can build and ship products without delays. On the service side, we've been testing operational improvements on two Inverday test sites. Preliminary results indicate a 50% increase in time between oil changes. We plan to deploy this new lubrication system to all our Inverday sites over the next 12 months, as it will result in lower cost of service, increased uptime, and increase service bandwidth. Lastly, we need to increase marketing to data centers and get our first few projects sold. To achieve the above objectives, I'd like to strengthen TecaGen's balance sheet. Having additional capital at this juncture will be instrumental to execution. Therefore, I plan to raise $2 million through a private placement targeted only at existing shareholders. If any of you are interested in participating, please reach out to me. As a recap, 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'll now hand over to Roger to review the financials.