Tecogen Inc. (TGEN) Q3 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the Tecogen Third Quarter 2021 Earnings Call. [Operator Instructions] On the call with us today we have Benjamin Locke, CEO; Robert Panora, COO and President; Abinand Rangesh, CFO and Jack Whiting, General Counsel and Secretary. I will now turn the call over to Jack Whiting. Thank you.

Good morning. This is Jack Whiting, General Counsel and Secretary, Tecogen. Please note this call is being recorded and will be archived on the Investors section of our website at tecogen.com for two weeks. The press release regarding our third quarter 2021 earnings and the presentation provided this morning are available in the Investors section of our website as well. 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 10-Q under the caption Risk Factors, which are on file with the Securities and Exchange Commission and available on our 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 the 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 GAAP. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our third quarter 2021 earnings and in the Investors section of our website. I will now turn the call over to Benjamin Locke.

Thank you, Jack. Before we get started, I’d wanted to just tell everyone, our investors and employees, who are veterans, thank you on Veterans Day and very important day for all of you. So anyone on the call is a veteran, we all appreciate your service. So starting off on the agenda on slide four, we’ll start with a brief company overview, followed by a detailed review of our third quarter results. We’ll then discuss the key takeaways from earnings, then turn the call over to the operator for questions. As a reminder, this presentation will be available for download in the presentation section of our investor webpage. Turning to slide 5, I’d like to provide a short overview of Tecogen. Tecogen sells and maintains clean and efficient energy systems to provide resiliency and energy savings to customers, while reducing greenhouse gas emissions for a cleaner environmental footprint. Our solutions help industries and facilities reach their environmental goals while providing resiliency to grid outages. As seen on this map Tecogen has deployed 1000s of these systems, and we have a steady recurring revenue stream to our 11 service centers to provide maintenance to these customers. Turning to slide 6, many of our distributed generation systems operate as micro grids with the ability to maintain operation during the grid outage. Tecogen ranked third in the 2019 study for the number of micro grid systems deployed in the United States and our presence in the micro grid market has grown since the study was released. In addition to our distributed generation systems, Tecogen offers industrial scale chillers with lower operating costs and reduce greenhouse gas footprint than traditional electric chillers. These systems are sought after for process cooling and in healthcare applications and we’ve had particular success with our clean cooling products for use in controlled environment agriculture. These indoor grow operations use a tremendous amount of power in order to maintain ideal growth conditions. Our chillers substantially reduced the amount of electric capacity needed to operate these facilities while simultaneously providing heat for facility dehumidification. As our earnings press release indicated, we currently have 13,000 tons of our clean chillers in controlled agricultural facilities. And lastly, our Ultera emissions technology is recognized as a cost effective solution for reducing CO and OX and hydrocarbon emissions across a wide variety of engine platforms and sizes. Slide 7 provides some interesting facts about our clean energy systems that we’ve deployed so far. As I mentioned, with over 3,000 units shift, we’ve saved over 200,000 tons of Co2, generated more than 2.1 billion kilowatt hours electricity from over 52 million hours of runtime. These numbers of course continue to increase as we deploy more of our clean energy systems to customers. Before I turn the call over to Abinand to review our third quarter results in more detail, I’d like to remind investors of our three main revenue streams shown on slide 8. Our product sales consists of sales of cogeneration units, micro grid systems, and chillers to a range of markets, including multi unit residential buildings, hospitals, industrial processing, and indoor cultivation. Our services revenue primarily consists of contracted maintenance and parts with a small component of installation services. And our third revenue stream is from energy sales whereby we sell electricity and thermal energy produced by our equipment on site to customer facilities. With that, I’d like to turn the call over to Abinand to review our numbers in more detail and then we’ll have some additional comments on takeaways for the quarter. Abinand?

Tecogen had a very challenging third quarter due to supply chain issues that resulted in some orders slipping into Q4, 2021. We had begun safety stocking critical and long lead time components starting in the second quarter in anticipation to supply chain problems. Despite our efforts, we experienced product delays from a small number of critical vendors. We have now received adequate supply of most of these critical parts to carry out production through Q1, 2022. Therefore, we do not anticipate further disruption of product shipments for the fourth quarter and the first quarter next year. Although revenues were down, the paycheck protection loan forgiveness and the employee retention credit resulted in fully diluted net income of $0.14 per share for the year to date and $0.06 for the third quarter of 2021, which compares to a loss of $0.08 per share and $0.01 per share respectively in 2020. Q3 revenue was $5.2 million compared to $7.2 million during the same period in 2020. This 30% decline was mostly due to the decline in product and installation revenue. I will discuss the revenue by segment in more detail in a later slide. The gross margin increased to 47% from 39% as this was favorably impacted by our sales mix, and continued product improvements that have resulted in lower warranty costs. Operational expenses were 8.6% higher compared to Q3, 2020 at $3.25 million. This increase was primarily due to higher selling expenses related to sales commissions to our manufacturers’ reps. Our operating loss was $910,000 compared to $207,000 during the same period last year, driven predominantly by the significantly lower revenue. Net income was $1.46 million compared to a loss of $232,000 in the same period last year. EBITDA was positive $1.59 million compared to a loss of $117,000 during the same period in 2020. This was predominantly due to the paycheck protection loan forgiveness and the employee retention credit. The adjusted EBITDA was negative $197,000 as the paycheck protection loan forgiveness is removed from the calculation. Products revenue decreased by 31%, as already mentioned, we face some supply chain constraints. Our product revenue was reduced by $1.5 million as one large chiller order was delayed and will ship in the fourth quarter. However, we are encouraged by the increase in backlog especially in the controlled environment agriculture sector. Our gross profit margins also increased to 45% quarter-to-quarter. Service revenue declined 31% compared to Q3, 2020. Installation services were down 96% as many of our larger turnkey projects are complete or close to completion. Over the last year and going forward, we have actively chosen to limit the number of new installation projects so that we can concentrate on the higher margin segments of our business. Our service contracts and parts business actually increased 6% compared to Q3, 2020, helped by our operations in Canada. Service’s gross margin increase to 48% due to reduced lower margin installation activities. Energy production decreased by 14%, this reduction was primarily due to seasonality and some sites being taken down for site related improvements. The gross profit margin remained constant at 46% compared to Q3, 2020. I will now hand the call back to Ben to talk about the backlog.

Thanks, Abinand. Turning to slide 12, I’ll discuss what I feel important takeaways for the quarter. First, we continue to see a gradual recovery from the economic challenges due to COVID in each of our business segments. While our product sales are still down from pre-COVID levels, we are seeing backlog continue to grow up 12% from year end. Importantly, we are seeing the backlog increase in the business areas that are scalable for our clean cooling solutions with about half of the backlog in controlled environment agriculture. As I mentioned in the press release yesterday, controlled environment agriculture is a fast growing industry as a need for large volume year long growth of high value crops increases. We have demonstrated the Tecogen solution for high value crops such as cannabis, where we have over 13,000 tons of Tecochill capacity, and expect further penetration into high intensity food production, which is the main driver for the projected 19% five year CAGR growth in controlled environment agriculture. We’re also expanding our chiller sales network by adding manufacturers’ representatives and sales agents in geographies and markets where we see the most growth potential for our cooling products. These sales partners are an important way to cost effectively reach customers for our products and establish long term sales networks in new and expanding geographies. Next, our cash position remained stable with quarter end cash balance and equivalent of $3.35 million. And as Abinand mentioned, the corporate improvements we implemented during COVID continue to contribute to improve margins in both our product and service segments. These operational and manufacturing improvements are key to maintaining high margins while we meet our backlog, which is currently at 11.4 million and consists almost entirely of products. Turning to slide 13, I’d like to provide an update on our pathway to growth which I shared earlier in the year. The plan is focused on optimizing operations in our core business, expanding our Tecochill product line and market potential and taking advantage of emerging energy policies as it relate to distributed generation in micro grids. First, in addition to maintaining our core cogeneration sales, our goal is to focus on clean cooling applications where there is a simultaneous cooling and dehumidification load. This could be controlled environment agriculture as I mentioned earlier, but there are many other industries such as food processing, that have similar requirements in our candidates for our clean cooling solutions. We will continue focusing on cannabis cultivation, given the abundance of activity in that space and our already dominant position in some regional markets. And I’ve set a goal for ourselves to have at least 30% market share of cannabis cultivation in facilities over 10,000 square feet of canopy. Next, we’re making progress on the development of a hybrid drive air cooled chiller, which was fill the gap in our Tecochill offering. This will substantially expand the sales potential for Tecochill and many of our markets such as indoor cultivation and hospitals, where an air cooled chiller system is needed. Our goal is to have the hybrid drive product ready for market by late 2022 and we are currently generating interest for potential sponsors to support the effort. And lastly, we see a promising opportunity for our technology as it relates to the new U.S. vision for energy and infrastructure now that the bill is finally passed where micro grids in combination with battery and solar have compelling economics in certain geographies. Our proprietary inverter and micro grid controls are designed to manage multiple distributed energy sources whether that sources are CHP systems, battery storage, solar or any other distributed generation resource, our inverter can seamlessly integrate the sources and control the best operational strategy for integrating sources based on energy rates, time of day, and/or the fuel mix of utility. I hope to have more detail and milestones to announce as we strive to meet these goals. Our overall strategy is to grow the company in a sustainable way in areas that are consistent with the changing energy trends in national policy, and eventually scale ourselves outside of North America. With that, I’d like to turn the call over to questions.

Thank you. And at this time, we will be conducting our question and answer session. [Operator Instructions] Our first question comes from Amit Dayal with H.C. Wainwright. Please state your question.

Thank you for taking the questions. So in the post pandemic environment Ben how should we think about business normalizing for you guys given some of these supply chain challenges are continuing to prevail in the market right now? On the one hand, the product side looks like it’s getting better than what it was a few quarters ago. And on the service side, you’re making changes to the type of contracts you’re taking up on that. In a few quarters from now if he assumes only supply chain challenges normalized, like how should we think about revenue run rates, etc? Any outlook would be very helpful. Thank you.

Sure. And I’ll give an answer. And I’ll let Abinand maybe fill in some color because he’s been wrestling with some of these supply chain issues certainly, and some of them are temporal, certainly shortages, that in lead times are longer and therefore we take note, and we start ordering smarter and have order up to levels adjustments and things like that. Some of the supply change issues are more troubling people being able to increasing prices and lead times, etc, that are excessive and those suppliers were taking much more seriously. And again, we spent a lot of management’s time working on these things. And I think the answer to that Amit is we feel pretty comfortable that we have faced up to all the supply chain issues. We’re adjusting to them sometimes changing vendors, trying out different vendors, accepting some price increases and passing them on where we have to. But I think that this quarter was particularly troubling to be sure. They all kind of came together. I don’t think that’s going to be the case in the next few quarters. I think we’ve got I’m looking at Abinand and he can fill in some color. I think we feel pretty good about those particular vendors that were giving us problems that we’ve got workarounds for them.

Yes, I definitely agree with Ben on that. I mean, this quarter, there were a couple of different things that happened at the same time that meant orders were delayed. But one key thing about, just because of the nature of our product mix we always tend to have some of the longer lead time items in stock. We tend to buy to make sure that we can move quickly, especially when it comes to things like the cannabis sector, where sometimes orders can move very quickly and we want to make sure that we’re forecasting accurately. We actually have enough material for a lot of the orders that we’re producing in Q4 as well as Q1. We don’t see that much of an issue going forward. Beyond that, again, we’re safety talking a lot of this. The bigger issue is going to be more in terms of pricing and what we see from vendors going past Q1, Q2, 2022. But one big advantage that we have in sort of the markets that we’re operating in is that, especially when it comes to control environment agriculture we have pricing power. And we offer the customer so much in the way of savings that if we do see increases in supply chain we have some ability to pass some of that on to end in terms of raising prices on our site as well. So we hopefully will be able to maintain margins. But again, we’ll keep investors updated as things change going forward.

Just one kind of the last quarter you had highlighted looking on a larger air-cooled chiller with development expected to be completed this quarter, is that done now? And are you in a position to start marketing that product?

Yes, you’re exactly right, we are developing this air-cooled chiller that I mentioned in my remarks is the hybrid drive. But the rollout of that’s going to be next year at this time. This conference call next year, you hopefully hear me talking about how we’ve got one installed and a pilot and maybe a few others up and ready to go. But that development is going to take just a few more months. And it’s a very important for our business, especially as I mentioned, maybe when we talked last time Amit, when we go to sell our chillers to indoor cultivation or hospitals or whatever three or four times out of five, they have an air cooled chiller system that they’re using. They don’t use have a cooling tower, they don’t use this, the same type of Tecochill that we have now. And so now with this new product that we’ll have starting next year we’ll be able to address those as well, so really doubling down on our clean cooling there. And one more thing I wanted to get to on the supply chain Amit it’s very important for us to project to customers’ ability to perform quickly. And in fact, that’s the case with a lot of this cannabis people. They want to be up and running quickly and we can get a megawatt to them very, very fast in what’s people’s expectations of facility starting and everything that’s very advantageous to us. So everything I just mentioned about supply chain and Abinand mentioned, it’s really also focused to make sure that we can be nimble, because that really works in our favor.

One thing I wanted to add Ben on the air cooled chiller, I think it’s essentially an increment to what we’re already doing. It allows us to address markets that we’re not doing right now. But the reality is we still have a long, we have a lot of potential even in the markets that we can address right now. So it’s not something that we’re essentially basing our strategy of profitability based on a new product coming out. We believe that with what we’re doing right now in the markets that we can address that we should and we’re going to continue aiming for profitability with what we have, and I think we can achieve that.

Thanks and really just a question on sort of attaching service offerings to the product offering is this typically customers who buy the products also sign up for the service part of it, like any color what sort of attach rates you get with those efforts, if that is the mode of execution?

Yes. It’s close to 100% Amit of service contracts come with our equipment. The savings and all the great benefits that we offer customers, you need to make sure that equipments running to do it and customers understand that having us maintain it the best way to for them to get their savings. So I would say close to 100%, with very few exceptions, carry along the service contract.

Understood. Thank you for that. I’ll take my other questions offline. Thank you so much.

Thank you. Our next question comes from Michael Zuk. Please go ahead with your question.

Good morning, everybody. Happy Veteran’s Day. Ben could you give us a little more color on the status of your manufacturer’s rep system where the kind of the geographies are and where you’re trying to add reps and then after you do that, give us an update on the California opportunities for you.

Sure. So with regard to the reps and this is mostly associated with our chillers as I think I’ve said in many calls before generally sold through manufacturer’s representatives, and we’ve got reps, we’ve got many chiller reps in place, some more effective than others. So part of this exercise is looking at the reps that are very effective, our one rep in New Jersey is very effective. And then looking at other geographies where we’re not having as much success and deciding if we want to maybe change reps or work more with that rep. So the geography generally is the northeast, of course, from right down to Florida. And we’ve got reps sprinkled out throughout there. In the Midwest certainly the cannabis, the states that have recreational cannabis are areas where we’re looking to increase our rep presence for the very reasons I just mentioned about control, the chillers for controlled environment agriculture. And then of course, layered on to that Mike are the sales agents and reps are very geography based, as you might know state by state or region by region whereas sales agents of roam around. And we’ve also been getting the sales to these project developers or energy engineers that understand our products and can move them forward to different customers. So we’re increasing that base as well. Mike, you’ll probably seeing announcements over the next few months as we get a few more reps on board. That’s a good thing. Again, it’s all kind of necessary for us to expand our sales network through reps. Getting thing back to California, California has a lot of opportunities and certainly the cannabis opportunity there exists a lot different in California, because you can grow outside in California. You can’t grow outside here in Massachusetts, least you can’t for much of the year. And in California, the way they’re doing permitting is a bit different. But we’re getting a hang of that. We’ve got some contacts on the ground there in California that are helping us find different facilities and then in terms of the overall market for California in terms of micro grids, etc. I think this infrastructure bill is going to have some aspects of it that will be helpful to us. Still gas generation is very much frowned upon in California, as you know, Mike, and I’m not sure if we’re ever going to get past that. But I think our inverter controls and our ability to integrate distributed generation and battery, etc, is going to be the way that we start to make more penetration in California. You want to add anything to that Abinand?

Yes. The only thing I want to add to that, Mike is that traditionally, the reps have been very geography specific as Ben mentioned, but I think what we’ve been doing more recently finding some reps that have specialism in certain industries that are very advantageous to us because one of the issues that typically comes up with reps is that they have an air conditioning or a much broader range of skills which doesn’t always fit as well for our chillers, large chillers they offer a customer huge advantage when you can use both the cooling and the hot water especially when they’re doing dehumidification. And that requires a rep that either has more of an industrial focus or an industry such as cannabis focus, and some of the reps that will be that we’re working with and working on right now might even operate across state lines but have much more expertise in one sector. And I think that’s how we think we’re going to be much more successful as we try and grow in some of these market segments.

And then in the past you’ve mentioned that you’re trying to enter the Texas market, any progress in the Texas marketplace?

Not so much to-date, Mike. The electric rates, the spark spreads not tremendously compelling down there. I’m really trying to stay focused on those areas where I know I can get sales and you’ve probably heard me say focus 20 times now already in this 26 minutes we bought on the call here because that’s really what we’re about right now Mike focusing on those areas where we can, we know we can sell product is good uptake for it and other cannabis, food processing etc and not try to get have our resources get tapped in the areas where it might be a little less so. So Texas, it could be a good market for us. But I’d much rather focus on the areas that are really delivering good results for us.

Well then give us a little update. I know that we’ve made a commitment to Florida. How are we doing there?

Great, great, very good. In fact, as you know, Mike, we got our service center down there. And there’s a, in fact in Florida is where we have our controlled environment agriculture facilities that are non cannabis. There are lettuce growers down there, looking to expand in there, so I absolutely believe that you’re going to see more activity for us in Florida. And I would love to see our service center expand get another person there, and maybe another person after that, because as you know, Mike, that’s how you grow a territory. So Florida is looking very good. I’m very happy about that.

And then final question on geography, I’m always interested in geography. How are we doing in Canada? I know that we had some growth facilities. Pending in Canada, any additional development there?

Yes. Well, of course, the main nexus of systems we have is in the Toronto area. We’ve got a very large residential complex with what 29 units or so I believe running. And there are some cannabis opportunities there. But it’s a little more challenging up there with the cannabis, different country, different regulations. I think you’re going to see some little bit of decent growth in that Toronto area. But it’s I think we’re going to see more certainly in the indoor cultivation growth here in the United States.

And then about the potential for vegetable, indoor in Canada would seem to me, that’d be a natural market?

Sure, yes. And if there’s areas where the spark spread works in our favor, for those production, then absolutely. And as I mentioned, your food production is going to be the big driver for all of these facilities eventually and pot is good and hemp and some of these other industrial crops. But ultimately, the driver for old population and food production worldwide and when you start to get into those areas, of course, that’s very scalable. So it’s no baby steps, Mike, I think, we’re well on our way, we’ve got a really good dominant position already in indoor growth facilities. I’m here in Massachusetts, we have well over 75% or 50%, market share anyways. And that’s what we’re striving for in some of these other states. So it’s very scalable. And I’m hopefully going to do more of it. And we’ll see if Canada gives us an opportunity to do that.

And then one final question. With regard to our existing fleet, particularly on the chilling side, are we having much success in upgrading the 15, 20, 25 year old systems?

I’m glad you asked that question, because the answer, there’s definitely yes. A lot of our, especially the health care facilities we have actually, if you look at our backlog right now, some of the amount there in the healthcare sector is upgrades from older systems. We continue to do that. Customers are very pleased with the savings that they get from our existing systems. And most of them end up when the chiller gets to end of life, just purchasing new systems from us. And we definitely have quite a few of those projects in the pipeline as well.

Well, congratulations on all the progress that’s been made despite the challenging environment in which we’ve been operating, hopefully 2022 will loosen up some of the restrictions and let us move forward with some of our new product offerings. Congratulations on a good nine months.

Thank you. [Operator Instructions] Our next question comes from Alexander Blanton with Clear Harbor Asset Management. Please state your question.

That’s Clear Harbor. Clear Harbor. C-l-e-a-r. Good morning. I wanted to ask you about the vehicle and engine pollution developments. You haven’t updated us on that?

Sure Mike, Ultera. So the update we gave last call we have our licensing arrangement with origin engine, of course. And that’s still progressing. In terms of Ultera Mike we’re going to let origin guide that and they’ve done a good job and they’re trying to work with sponsors like the propane council, for example, to get some of their testing done to have their near zero emission engine with Ultera on it. And we’re letting them do their thing. And I think that’s important for us because again, getting back to focus Mike I’m trying to marshal and focus all have our resources on the plan to get us the product sales and to get the profitability and everything I just kind of mentioned. Ultera is going to come along. And I bet I might have a few words to say about it. But not much has occurred since the last time we had our earnings call except that origin continues to make progress and I think the propane council was waiting for the infrastructure bill to be passed before they offered any Origin, any support of that effort. But my goal was to not have to divert much of our resources until I see something really tangible and material for the company.

Alex, I think just to dive in a little more in terms of the band, we’ve made quite a bit of progress on the Ultera technology side, and I think we’re going to see some improvements in terms of what some of the newer catalysts technology is going to do for our own products. But with regards to the fork truck market and some of the other non-road markets there’s a lot of moving pieces right now. And it’s hard to tell whether this will be a material impact to the business in the long run. And I think it’s one of those things, the way we’re looking at it as a company is it’s a potential upside that could happen. We’re hoping that NOx and CO would be regulated in much stronger terms going forward, because these are especially NOx is a huge greenhouse gas contributor and we can do it better in combination with the field. But it’s not something that we’re focusing a lot of resources on. If Perkins up funding the origin, development of the new engine, and it goes forward and they have a lot of customers for it wonderful. But if it doesn’t happen, it’s going to be, it’s shipped with every one of our products. Every one of the markets that we’re operating in are getting more stringent in terms of air permits. So it gives us a lot of advantages. So you’re seeing a lot of Ultera’s system ship, just not licensed right now.

I also wanted to ask about the infrastructure bill. You did talk about that. But the goals of reducing carbon footprint in terms of the carbon from buildings, it would seem to mean that there’s a big market for you there. What is in that bill that moves that forward specifically, the building, the reduction of the carbon footprint of buildings?

Well, there’s a lot of things in that bill. Mike, I’m not sure if he actually looked at it.

This is Alex.

Alex sorry. Yes. There’s a lot in that bill that are on buildings. I think the one thing that I’m really focused on is the micro grid piece, which is 15, some enormous number. And the way we’re going to participate in that Alex, as I mentioned, I think is going to be with our inverter being able to manage multiple distributed generation sources meaning that again, it’s our engine could be running and we could be importing a little bit of power from the grid, our engine could be off and we could be powering the building from a solar array or we could be doing some ratio between the two because our inverter controllers are smart enough to distinguish what’s the best operational strategy. So those types of demonstration projects, I think, are that are going to come out of the infrastructure bill what I’m eyeballing to be a good fit for us. Now overall buildings in general, like a big multi unit residential building in New York. Now, how is the infrastructure bill going to kind of help that? I don’t think there’s anything specific about that. I think it’s more about efficiency measures, and improving technologies and allowing a boiler efficiencies, etc. to allow these buildings to reduce their footprint as best as possible. I mean, every building is going to be a different.

So that’s the bill that’s already been passed. But what about, is there anything in the new bill, the reconciliation bill to $2 trillion? Is there anything in that bill that will affect you?

Alex I’m going to be honest with you, I would have to really dig down and find that the real specifics that are notionally important to me. I’ve not done that yet. I know the very broad levels. Again, the micro grid pieces is something that I’m very focused on. But I would have to get back to you with the exact about that.

Alex the main thing here, most of the bill, the benefits to these things are done as tax credits and only some of our customers can take advantage of that. What we are seeing as we’ve seen with New York, for example, the local 97 there’s a lot of more regional levels which are more punitive for actually being high emitters. I mean, we’re seeing that in Boston. We’re seeing it, more and more regional places are starting to implement that kind of regulation. And that actually helps us substantially because every one of our products, if you’re able to use the heat and the carbon accounting is done properly we almost always reduces Co2 emissions and other greenhouse gas emissions. And therefore, we’ll save customers money against any potential penalties. So those are much more likely to be drivers in terms of what local regions do. The question is whether there will be other restrictions that will prevent units from being installed or not. But right now, our existing fleet, definitely saving customers against penalties in places like New York.

Finally do you have any guidance for the fourth quarter in terms of sales considering the fact that there were projects that were delayed into the fourth quarter from the third? What does that mean for fourth quarter?

Yes. Alex, as you know, I don’t think I’ve ever given any specific guidance about future quarter production, sales, etc. But I’m feeling pretty confident to the fourth quarter is going to be better than the third quarter.

Are you going to publish a transcript of this call on your website? Do you do that?

Yes. 48 hours.

And that will be up there for how long?

For 48 hours, sorry two weeks Alex. Two weeks.

Wouldn’t it be good to keep it there for a year or two?

Maybe Alex we will take that offline. We’ve talked about this before.

Two weeks is not a long time for people to get caught up.

Thank you. There are no further questions at this time. I’ll turn it back to management for closing remarks.

Well, I thank you all for listening to the call. Again, thank you to all our veterans here on Veterans Day and I look forward to talking to investors for a year end results fourth quarter and year end at the beginning of next year. Thank you all, bye, bye.

Thank you. This concludes today’s call. All participants disconnect. Have a good day.