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TI

TECOGEN INC. (TGEN)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue rose 54.3% year over year to $7.29 million, while net loss narrowed modestly to $1.46 million; gross margin compressed to 33.8% amid hybrid chiller ramp costs and service inefficiencies in Manhattan/NJ .
  • Strategic progress: received first LOI for a 100+MW data center pilot (potential to 500+MW), with evaluation of 6 STx chillers in Phase 1A; management expects LOI to convert to a PO later this year .
  • Liquidity/capacity: raised $18.2 million in July to scale manufacturing and marketing; slides indicate ~$18.6 million cash post-capital raise versus $1.64 million cash at 6/30 (pre-raise) .
  • Near-term catalysts: conversion of LOI to PO, Vertiv marketing rollout in Q3/Q4, and closing $2.5–$3.5 million of cannabis projects deferred from Q2 to Q3/Q4 .

What Went Well and What Went Wrong

What Went Well

  • Data center momentum: “We received our first LOI…for a 100+MW data center with the potential to be a 500+MW site. The customer expects to evaluate 6 STx chillers during the first phase…We expect the LOI to convert to a PO later this year” (CEO) .
  • Top-line strength from Products: product revenue jumped to $3.16 million driven by chiller and cogeneration deliveries (including hybrid-drive air-cooled chiller) .
  • Liquidity and scale plans: $18.2 million raised in July to fund factory output and marketing; capacity roadmap to 80–100 chillers with contract manufacturing and 200+ with added capacity .

What Went Wrong

  • Gross margin decline to 33.8% (vs. 44.0% LY; 44.3% prior quarter) due to higher material/labor in Products/Services and early hybrid chiller build costs .
  • Service margin pressure from Manhattan/NJ: ~$400k increased costs (including ~$120k engine upgrades and ~$130k overtime) plus operational inefficiencies .
  • Energy Production revenue fell 63.8% YoY on contract expirations and temporary shutdowns; overall OpEx rose 9% on staffing/recruiting and sales costs .

Financial Results

Summary Financials (Quarterly)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD)$4,727,787 $7,277,770 $7,294,820
Gross Profit ($USD)$2,079,155 $3,221,040 $2,462,492
Gross Margin %44.0% 44.3% 33.8%
Operating Loss ($USD)$(1,473,967) $(594,244) $(1,411,862)
Net Loss ($USD)$(1,538,796) $(659,922) $(1,464,105)
EPS ($)$(0.06) $(0.03) $(0.06)
Adjusted EBITDA ($USD)$(1,296,569) $(381,394) $(1,160,898)

Segment Revenues

SegmentQ2 2024Q1 2025Q2 2025
Products ($USD)$119,673 $2,533,809 $3,155,323
Services ($USD)$4,126,517 $4,245,022 $3,965,168
Energy Production ($USD)$481,597 $498,939 $174,329
Total Revenue ($USD)$4,727,787 $7,277,770 $7,294,820

Segment Gross Margin

SegmentQ2 2024Q1 2025Q2 2025
Products Gross Margin %-43% 41% 29%
Services Gross Margin %47% 47% 38%
Energy Production Gross Margin %41% 38% 25%
Total Gross Margin %44% 44% 34%

Estimates vs. Actuals (Q2 2025)

MetricQ2 2025 ConsensusQ2 2025 Actual
Revenue ($USD)N/A*$7,294,820
EPS ($)N/A*$(0.06)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Gross Margin TargetOngoingTarget >40% Target >40% reiterated Maintained
Manufacturing CapacityFY2025+Factory 40–60 chillers/year; with contract mfg 80–100; add capacity 200+ Scale-up plan funded by $18.2m capital raise to increase factory output and marketing Raised capacity plans (funded)
Data Center Pilot LOI2H 2025—LOI for 100+MW DC; expect conversion to PO later this year New milestone
Vertiv Marketing RolloutQ3–Q4 2025—Vertiv expects to start releasing marketing program in Q3/Q4 New
Cannabis Projects ClosingQ3–Q4 2025—$2.5–$3.5 million expected to close Q3/Q4 (delayed from Q2) New
Balance Sheet / Debt2025Related party notes outstanding May repay note early to have no debt and clean balance sheet Improved outlook

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
AI/Data Center InitiativesSigned Vertiv partnership; closed small CT data center project; targeting colocation/hyperscale; sample site economics promising First LOI for 100+MW pilot; two quoted projects for 60–100 chillers; multiple earlier-stage large projects; LOI expected to convert to PO later this year Accelerating
Vertiv PartnershipMarketing agreement signed; sales team training planned Vertiv marketing plan finalized; expects releases in Q3/Q4 Execution progressing
Tariffs/MacroLimited tariff impacts; potential net benefit vs. alternatives No new tariff changes noted; focus on capacity scaling Stable
Manufacturing CapacityNew factory (2024); ready for growth Capacity roadmap (40–60 → 80–100 → 200+); additional staffing increased OpEx Scaling (near-term cost impact)
Service Margins/OperationsServices margin ~51% in Q4; improved YoY Service margin decline due to Manhattan/NJ issues; protocols implemented to restore profitability Mixed; addressing
LiquidityCash $5.41m at YE 2024; $4.07m at Q1 Raised $18.2m; ~$18.6m cash post-raise; cash $1.64m at quarter-end pre-raise Improved
Product PerformanceProduct margins improved Q1; Energy Production margins up Hybrid chiller initial shipments at lower margin; expected margin improvement with volume Short-term pressure; medium-term positive

Management Commentary

  • “We received our first LOI for a great pilot project…100+MW data center…potential to be a 500+MW site…evaluate 6 STx chillers…We expect the LOI to convert to a PO later this year and we hope to grow with this customer.” — Abinand Rangesh, CEO .
  • “Product margin was lower because we started shipping the hybrid air-cooled chiller…first few units had higher costs due to low volume purchasing and as our team gained experience…We expect the hybrid chiller margin to increase with volume production.” — CEO .
  • “Overall service margin declined because of one region — Manhattan and NJ…bulk oil system upgrades…increase service intervals by 150% to 200%…we have implemented new protocols to restore this territory to profitability.” — CEO .
  • “To provide the necessary capital to scale our business, we also raised $18.2 million in July…used to increase factory output and for marketing.” — CEO .

Q&A Highlights

  • The Q2 2025 earnings call transcript was not available. Slides furnished as Exhibit 99.2 indicate forthcoming detail on data center decision criteria and operational protocols; we will update Q&A themes after the transcript is posted .

Estimates Context

  • S&P Global shows no Wall Street consensus for Q2 2025 EPS or revenue; coverage appears limited for TGEN’s size and listing. Actual revenue was $7.29 million and EPS was $(0.06). Values retrieved from S&P Global; consensus unavailable* .
    Values retrieved from S&P Global.*

Key KPIs

KPIQ2 2024Q1 2025Q2 2025
Cash & Cash Equivalents ($USD)$1,351,270 at YE 2023 baseline (context) $4,066,793 $1,640,864 (pre-July raise)
Cash Post-Capital Raise ($USD)——~$18,600,000 post-raise (slides)
Backlog ($USD)$12.2m at Q4 context $10.8m at Q1 (slides) $4.7m (excluding LOI)
Total OpEx ($USD)$3,553,122 $3,815,284 $3,874,354
Weighted Avg Shares (basic)24,850,261 24,954,928 25,250,217

Why Results Look This Way

  • Gross margin compression is tied to hybrid chiller early-stage production costs (low-volume purchasing/learning curve) and service inefficiencies in Manhattan/NJ; both are transitory per management, with actions to restore margins and expected product margin improvement as volume scales .
  • Energy Production headwinds reflect prior contract expirations and temporary site repairs—not core demand weakness for Products/Services—and should normalize as sites return to operation .
  • Higher OpEx is deliberate to support manufacturing and engineering staffing ahead of anticipated data center demand, funded by the July capital raise .

Actionable Implications

  • Near-term trading: stock likely sensitive to milestones—conversion of the 100+MW LOI to PO, Vertiv’s Q3/Q4 marketing execution, and delivery progression of hybrid chillers; headline risk around margin trajectory should moderate as volume ramps .
  • Medium-term thesis: data center chiller opportunity (projects with 60–100 chillers each and dual power source architecture) and capacity scale plans can shift revenue mix toward higher-product volumes and lift margins as manufacturing learning curves flatten .
  • Monitor service margin remediation in Manhattan/NJ and Energy Production site restorations for confirmation of margin recovery and recurring revenue stability .
  • Liquidity is adequate post-raise to fund working capital and capacity expansion; watch cash conversion on backlog/LOIs and any early debt repayment .
  • Expect estimate coverage to remain thin; investors should anchor on company-provided milestones and sequential margin progression rather than consensus screens (consensus unavailable via S&P Global)*.

Values retrieved from S&P Global.*