Tecogen's Q2 2025 Earnings Call: Key Contradictions in Manufacturing, Supply Chain, and Financial Strategy

Manufacturing and supply chain optimization, Vertiv's role in supply chain and marketing, data center cooling opportunities, quoting activity and order delays, and Vertiv's financial support and investment are the key contradictions discussed in Tecogen's latest 2025Q2 earnings call.



Data Center Strategy Progress:
- Tecogen signed its first Letter of Intent with a 100-megawatt-plus data center, with plans to deliver 6 STx chillers in Q4 or early next year, part of the first phase of the project.
- The progress is attributed to Tecogen's effective marketing efforts and the strong demand for energy efficiency solutions in the data center market.

Challenges in Cost Control:
- The company shipped the first units of the hybrid chiller, which had lower margins due to higher labor costs and low-volume purchases.
- Efforts are underway to improve efficiency and volume production to reduce costs in the future.

Services Segment Margin Decline:
- The Services segment experienced a decline in gross profit margins due to increased travel times and overtime labor hours, especially in Manhattan and New Jersey.
- This was primarily due to increased travel time post-COVID and higher overtime hours during the summer months.

Product Innovation and Market Demand:
- Tecogen introduced a new dual-power source data center-specific chiller to address customer demand for a 300-ton chiller that can operate on both natural gas and electricity.
- This innovation is fully customer-driven, focusing on space utilization, resiliency, and fuel flexibility, with potential for increased market share.

Capacity and Financial Positioning:
- Current cash is at $18.7 million, with a backlog of $4.7 million and expected cannabis project closures of $2.5 million-$3.5 million in Q3 and Q4.
- The company is focused on converting larger leads into orders, potentially securing multiple large projects to scale production capabilities.