Tecogen Increases Backlog to $14 Million
Tecogen Inc. (TGEN – $5.10), which designs, manufactures and installs industrial and commercial Combined Heat and Power (CHP) systems, ended its second quarter with a record backlog of $14 million. This represents more than 20% growth over the $11.5 million backlog at the end of the prior quarter, and is even up 50% compared with the backlog reported at the same time last year.
Moreover, the backlog does not include service contract revenues, which were more than one third of the Company’s revenues in fiscal year 2015.
All in all, the $14 million mark number is significantly above Tecogen’s goal of delivering quarter-end product backlog greater than $10 million.
Many New Project Wins
The strong backlog increase was bound to occur, thanks to an impressive number of projects wins in the past quarter. The Company sold an InVerde e+ 100kW CHP unit to Silver Towers, a luxury 277-unit residential building in Queens, New York late June. In addition, it sold a chiller to Stanley Black & Decker for use in their manufacturing plant in Reynosa, Mexico; two CM-75 CHP systems to a new multi-family residential building in Jersey City, NJ; and another CM-75 CHP to a state university in New England.
And in April, Tecogen was awarded an approximately $2 million contract for the sale of multiple CHPs to a school district in Long Island, NY. The order included a mix of InVerde 100 kW and CM-75 kW CHP units, as well as load modules, factory engineered accessories, and long-term service agreements.
Northeast Buildings & Facilities Management Show
And it doesn’t stop there. Tecogen does everything in its power to increase sales and to demonstrate potential customers its technologies and capabilities. For example, it recently attended the 11th annual Northeast Buildings & Facilities Management Show & Conference.
Held in Massachusetts at the Boston Convention & Exhibition Center, the event featured about 300 exhibitors displaying products and services necessary for the operation, management, maintenance and renovation of buildings and facilities in the greater New England region. Tecogen’s portfolio of clean power solutions obviously fitted right in.
This was also one of the first events that featured the TTcogen joint venture equipment. In fact, the booth had a banner that exhibited the Micro T35 35kW CHP unit, which is suited for a smaller apartment or commercial building. We heard that the technology attracted lots of interest.
The Company didn’t announce if the show resulted in any orders, but since it was held right at the end of the second quarter, any additional sales resulting from the show ended up on top of the $14 million backlog.
Using its patented Ultera emissions control technology to cut emission of harmful pollutants (including NOx, CO, and hydrocarbons) down to near-zero levels, on par with fuel cells, Tecogen’s equipment is among the cleanest and most reliable solutions for clean power generation available today.
With emissions regulations getting stricter in many parts of the world, potential customers are realizing that they need the best materials available on the market in order to continue to comply. This is a trend that won’t be reversed and it will take competitors many years to reach the low emissions level where Tecogen is at today. Consequently, the Company stands to benefit significantly from these developments.
In fact, the trend is already showing with the rising backlog. Tecogen’s management and sales team are doing an excellent job by continually having a backlog higher than $10 million.
In business for over 20 years, the Company has shipped more than 2,300 units that together have already generated over 7 billion kilowatt hours of energy at residential, commercial, recreational and industrial facilities.
In addition, we expect a lot from the recently formed JV TTcogen, which offers a complete package of 27 different CHP modules, making it the premier packaged CHP provider with the widest range available in the United States. Buy recommendation.
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What are the differences between Tecogen and EuroSite Power? Both manufacture CHP units.
Although Tecogen and EuroSite Power both are CHP related, they are two very different companies.
Tecogen manufactures, sells and maintains CHPs, chillers and high-efficiency water heaters. This is a stable, yet growing, part of the Company, as proven by its backlog. We also expect a lot from the recent JV with Tedom (TTcogen), because now they can offer a complete package of 27 different CHP modules ranging in size from 35 kW up to 4 MW. TTcogen is the premier packaged CHP provider with the widest product range available in the United States.
This alone is enough to make Tecogen an attractive investment. However, what makes the Company super interesting is its Ultera emissions control technology. This is a muffler-like kit that dramatically reduces the harmful emissions such as NOx, CO, and hydrocarbons from a CHP engine.
In 2012, a 75 kW CHP unit equipped with the Ultera system became the first unit to obtain a conditional air permit in Southern California, an area with one of the strictest emissions regulations worldwide. Since then, the Ultera technology has been installed on hundreds of cogeneration systems and functions impeccably. There is no comparable technology on the market today.
The Company, with its Ultratek JV, is now testing the Ultera on vehicles. Initial tests on a gasoline powered light duty vehicle conclusively proved the Ultera technology to be highly effective in reducing pollutants. If further tests continue to be as successful as the initial one, and if they can make this into a commercial product, this product will be worth hundreds of millions if not billions.
EuroSite Power, on the other hand, does not manufacture CHPs. It installs, owns, and operates CHPs at third party facilities (usually hospitals, schools, leisure centers, etc) in Europe. These CHPs can be manufactured by Tecogen, but also by other companies, such as Tedom.
So for example, EuroSite could replace an old boiler at a facility with a brand new CHP. In that case, EuroSite would pay for the CHP, the entire installation, maintenance during the entire contract duration (usually 15 years) and the cost of natural gas that the machine uses.
EuroSite will, in return, charge the customer an amount which is 5 to 15 percent less than what the customer would pay a regular energy provider. Over the 15-year contract term a customer will typically save between US$250,000 and US$3,250,000 per building.
What makes EuroSite Power very attractive is that its revenues are somewhat predictable thanks to the long term contracts that it closes with customers. In addition, the Company is close to turning cash flow positive. It needs approximately an additional 800kW of new contracts and then it will cross that line.
Very good news is also that the Company recently started offering its services across mainland Europe. Before, it only offered its services in the UK. So also in this case a very positive outlook.
My apologies for my lengthy reply, but you asked a very good question that deserved a thorough answer.