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TI

TECOGEN INC. (TGEN)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered sequential improvement: revenue $6.08M (+3% YoY), gross margin 45% (+500 bps YoY), and net loss narrowed to $1.19M ($0.05/share) from $1.85M ($0.07/share) in Q4 2023, aided by stronger Services and Energy margins and lower inventory provisions .
  • Services remained the growth engine: $4.08M (+13.7% YoY), with steady 51% gross margin; Energy Production grew to $0.55M (+1.6% YoY) with margin expansion to 39% (+900 bps YoY) .
  • Strategic catalysts: signed global marketing partnership with Vertiv (No.1 data center thermal management), closed a small data center InVerde project in CT, and highlighted the potential for single data center projects to drive $13–$16M revenue and inflect profitability; backlog at $12.2M; YE cash $5.41M (currently ~$4M) supported by customer deposits .
  • Guidance tone: management expects higher 2025 revenues vs prior years and continued sequential improvements; formal numeric guidance not issued. Adjusted EBITDA breakeven targeted at ~$30M revenue; Q4 adjusted EBITDA loss was $0.69M .
  • Estimate comparison: S&P Global consensus for EPS and revenue was not available for Q4; thus no beat/miss determination. Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

  • Services strength and margin resilience: Services revenue rose 13.7% YoY to $4.08M, with gross margin steady at 51% as pricing and cost management held; management emphasized expanding recurring cash flow streams from Service and Energy .
  • Energy Production margin expansion: Energy Production revenue increased to $0.55M (+1.6% YoY), with gross margin improving to 39% (+900 bps YoY) due to better run hours and rates .
  • Strategic data center progress: signed Vertiv partnership, closed a small CT data center project, and highlighted a 50MW sample site that could add $13–$16M revenue, positioning Tecogen’s Tecochill as a path to freeing up power and lowering cooling costs (“We couldn’t have a better partner in the data center space”) .

What Went Wrong

  • Products weakness and factory move impacts: Product revenue fell 18% YoY in Q4 to $1.44M; FY 2024 Products revenue declined 50% due to production constraints during the move and restart inefficiencies .
  • One-time charges in Q4: Opex included a $109K credit loss provision tied to a hospital bankruptcy and a $217K goodwill impairment (ADGE contracts end-of-life), which weighed on operating loss and adjusted EBITDA .
  • Full-year losses still elevated: FY 2024 net loss of $4.76M (vs $4.60M in FY 2023) and adjusted EBITDA loss of $3.63M (vs $2.58M), reflecting reduced Products revenue from the factory relocation despite Services margin expansion .

Financial Results

Sequential Comparison (Q2–Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD)$4,727,787 $5,630,130 $6,075,522
Gross Margin %44% 44% 45%
Total Operating Expenses ($USD)$3,553,122 $3,354,137 $3,871,459
Operating Loss ($USD)$(1,473,967) $(873,223) $(1,137,012)
Net Loss ($USD)$(1,538,796) $(930,408) $(1,186,067)
Diluted EPS ($USD)$(0.06) $(0.04) $(0.05)
Adjusted EBITDA ($USD)$(1,296,793) $(746,000) $(691,894)

YoY Comparison (Q4 2023 vs Q4 2024)

MetricQ4 2023Q4 2024
Revenue ($USD)$5,898,313 $6,075,522
Gross Margin %39.8% 45.0%
Operating Loss ($USD)$(1,815,324) $(1,137,012)
Net Loss ($USD)$(1,846,397) $(1,186,067)
Diluted EPS ($USD)$(0.07) $(0.05)
Adjusted EBITDA ($USD)$(526,739) $(691,894)

Segment Breakdown (Q4 2024)

SegmentRevenue ($USD)Gross Margin %
Products$1,441,909 31%
Services$4,083,492 51%
Energy Production$550,121 39%
Total$6,075,522 45%

KPIs and Balance Sheet Highlights

KPIValueNotes
Backlog$12.2M Additional >$3M expected in Q2
Cash (12/31/24)$5,405,233 Supported by deposits; current ≈ $4M
Deferred Revenue (Current)$6,701,131 Reflects customer prepayments
Adjusted EBITDA Breakeven Target~$30M revenue Strategic milestone
Gross Margin Target>40% Achieved in Q4 (45%)

Estimates vs Actuals (S&P Global)

MetricQ4 2024 ConsensusQ4 2024 Actual
Revenue ($USD)n/a*$6,075,522
Primary EPS ($USD)n/a*$(0.05)

*Values retrieved from S&P Global. Coverage appears limited; consensus not available for TGEN in Q4 2024.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025NoneManagement expects higher revenues vs prior years; continued sequential improvements Directional raised (no numeric range)
Adjusted EBITDA BreakevenOngoing~$30M revenue targetReiterated ~$30M revenue breakeven Maintained
Backlog AdditionsQ2 2025None>$3M projects expected to enter backlog New directional
Products/ServicesNear-termQ3 call forecast Q4 >$6MAchieved Q4 >$6M; expects sequential increases from here Achieved; maintained trajectory
Formal Quantitative Guidance——Not provided—

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
AI/Data CentersIntroduced data center strategy; highlighted power constraints and modular solutions; targeted $2M avg projects; payback driven by opening sooner Signed global Vertiv partnership; closed CT cloud storage project; enterprise site in Manhattan; working 3–5 multi-unit projects; single 50MW site could add $13–$16M revenue Accelerating engagement and channel leverage
Supply Chain & ManufacturingFactory move caused near-zero Products revenue in Q2; restart in Q3; cash constraints limited shipments New factory ready (overhead cranes); focus on improving manufacturing efficiencies and margins as volume scales Capacity restored; scaling planned
Backlog & CashBacklog ~$6M (Q2), $10.8M (Q3); planned private placement; customer deposits expected Backlog $12.2M; >$3M pipeline entering Q2; YE cash $5.41M; current ~$4M; extended related party notes to 2026 Strengthening backlog; liquidity supported by deposits
Regulatory/MacroAnti-gas headwinds in NY/MA; pivot to gas-friendly regions and new segments (CEA, industrial) Data center emissions managed via Ultera; made-in-USA supply less tariff-sensitive Mitigating regulatory risk; value proposition clarified
Services & Recurring RevenuePrice increases; testing product improvements to lengthen service intervals; services margins improving Recurring revenue >$18M in 2024; service margins 51% Q4; interval improvements continue Improving recurring margin profile

Management Commentary

  • “We recently signed a global partnership with Vertiv… we closed an InVerde project with a small data center in CT, and our backlog is strong… our overall gross profit margin also expanded by 5% points to 45%” .
  • “Our recurring revenue from service and energy has also grown to greater than $18 million for 2024… we expect to see higher revenues in 2025 compared to previous years” .
  • On Tecochill’s value: “Compared to an electric chiller, the Tecochill has both a lower annual operating cost and frees up power… Tecogen chillers are made in the U.S.A., so we are less susceptible to tariffs” .
  • On Vertiv: “They’re arguably the largest data center supplier… this relationship… is a precursor to a larger supply agreement” .
  • Closing tone: “We couldn’t have a better partner… Margins are also expanding across the board… I’m very optimistic about what the future brings” .

Q&A Highlights

  • Vertiv go-to-market strategy and competitive advantage: Management affirmed Vertiv will market Tecogen’s solutions through established channels and relationships, enhancing stakeholder influence across large colocation projects .
  • Capacity and supply chain support: Vertiv to assist with supply chain; potential for licensing or broader supply agreements over time to meet global demand .
  • ROI for data centers: Payback can be under 2 years from monetizing freed electrical capacity; faster deployment than grid upgrades or on-site generation .
  • Las Vegas Convention Center project: Part of central chiller plant to reduce peak demand charges; includes a 10-year prepaid warranty/service (~$2M) in backlog .
  • Financing and marketing: Private placement targeted at existing shareholders; multi-channel marketing via reps in cannabis/healthcare/data centers and targeted digital outreach .

Estimates Context

  • S&P Global consensus for Q4 2024 EPS and revenue was not available; we observe zero or missing coverage in the data pull, so no beat/miss determination can be made. Values retrieved from S&P Global.*
  • Implication: Given micro-cap status and limited coverage, models may need to be established or updated post-Vertiv partnership and data center traction.

Key Takeaways for Investors

  • Services-led resilience with improving margins provides a stabilizing base while Products rebuild post-factory move; recurring revenue >$18M in 2024 underpins cash generation focus .
  • Data center cooling is a meaningful optionality: even one mid-sized project ($13–$16M) could materially impact profitability; the Vertiv partnership accelerates access and credibility in hyperscale/colocation markets .
  • Near-term trading setup: Q4 sequential improvement and backlog strength could support narrative momentum; watch for additional data center awards, LVCC execution milestones, and Services margin expansion as catalysts .
  • Medium-term thesis: Achieving ~$30M revenue breakeven hinges on scaling Products volume and converting the AI/data center pipeline; Vertiv channel leverage and U.S.-made Tecochill differentiation (emissions, install speed, total cost) are strategic edges .
  • Risk checks: Anti-gas regulations in certain regions, project timing/permit risks, and capital needs to scale production; management has extended related-party notes (to 2026) and relies on customer deposits to bridge working capital .
  • Watchlist metrics: Sequential revenue trajectory, Products volume/margins, Services margin sustainability (~50%+), backlog conversion pace, cash/deferred revenue trends, and any formalized supply/licensing agreement with Vertiv .
  • Validation points: Track concrete order announcements, especially multi-unit data center wins and LVCC delivery milestones; confirm continued YoY gross margin expansion and narrowing losses as volume returns .

Footnote: *Values retrieved from S&P Global.