Tecogen Inc (TGEN) 2021 Q3 法說會逐字稿

Greetings, and welcome to the Tecogen's Third Quarter 2021 Earnings Call. (Operator Instructions) Please note that this conference is being recorded. 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.

Good morning. This is Jack Whiting, General Counsel and Secretary of Tecogen. Please note, this call is being recorded and will be archived on the Investors section of our website at tecogen.com for 2 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.

I'd 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 in the 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 any 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. Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures is provided in the press release regarding our third quarter 2020 earnings and in the Investors section of our website.

I'll now turn the call over to Benjamin Locke.

Thank you, Jack.

Before we get started, I wanted to just tell everyone, our investors and employees who are veterans, thank you on Veterans Day, a very important day for all of you. So anyone on the call that's a veteran, we all appreciate your service.

So starting off the agenda on Slide 4. 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 to turn the call over to the operator for questions. As a reminder, this presentation will be available for download in the Presentations section of our Investor web page.

Turning to Slide 5. I'd like to provide a short overview of Tecogen. Tecogen sells and maintains clean and efficient energy systems that 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 thousands of these systems, and we have a steady recurring revenue stream through our 11 service centers that provide maintenance to these customers.

Turning to Slide 6. Many of our distributed generation systems operate as microgrids, with the ability to maintain operation during the grid outage. Tecogen ranked third in the 2019 study for the number of microgrid systems deployed in the United States, and our presence in the microgrid 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 reduced 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 chiller 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 agriculture facilities. And lastly, our Ultera emissions technology is recognized as a cost-effective solution for reducing Co, NOx 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 shipped, we've saved over 200,000 tons of CO2, generated more than 2.1 billion kilowatt hours of 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 3 main revenue streams, shown on Slide 8. Our product sales consist of sales of co-generation units, microgrid 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 our 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 I will 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 of 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 $5.02 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 faced 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 agricultural 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. Services gross margin increased 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 are 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 the 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% 5-year CAGR growth in controlled environment agriculture.

We are 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 remains 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 improved margins in both our product and service segments. These operational and manufacturing improvements are our 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 they relate to distributed generation in microgrids. First, in addition to maintaining our core co-generation sales, our goal is to focus on clean cooling applications where there's 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 and are 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 have 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 are making progress on the development of our hybrid give air cool chiller, which will fill the gap in our Tecochill offering. This will substantially expand the sales potential for Tecochill in 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 microgrids, in combination with battery and solar, have compelling economics in certain geographies.

Our proprietary inverter and microgrid controls are designed to manage multiple distributed energy sources, whether that source is our CHP systems, battery storage, solar, or any other distributed generation resource. Our inverter can seamlessly integrate these sources and control the best operational strategy for integrating sources based on energy rates, time of day and/or the fuel mix of the 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 our sales outside of North America.

With that, I'd like to turn the call over to questions.

Thank you. (Operator Instructions) Our first question comes from Amit Dayal with H.C. Wainwright.

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 are taking up on there. In a few quarters from now, if you assume some of these supply chain challenges normalize, how should we think about revenue run rates, et cetera? Any outlook would be very helpful.

And I'll give an answer, and then 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 and lead-times are longer. And therefore, we take note and we start ordering smarter and have order up 2 levels, adjustments and things like that.

Some of the supply chain issues are more troubling, people increasing prices and lead-times, et cetera, that are excessive, and those suppliers we're taking much more seriously. And again, we spent a lot of management's time working on these things.

And I think the answer to you, Amit, is we feel pretty comfortable that we've 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 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'm looking at Abinand now, 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 couple of different things that happened at the same time that meant orders were delayed. But one key thing, 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.

So 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 being much of an issue, going forward. Beyond that, again, we're safety-stocking 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 controlled environment agriculture, we have pricing power. And we offer the customers 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 side, as well.

So we, hopefully, will be able to maintain margins. But again, we'll keep investors updated as things change, going forward.

And just one kind of a follow-up. In the last quarter, you had highlighted working 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 off by a year, Amit. Yes, you're exactly right. We are developing this air cooled chiller. I mentioned it in my remarks as the hybrid drive. But the rollout of that is going to be next year at this time. This conference call next year, you'll hopefully hear me talking about how we've got one installed in a pilot, and then maybe a few others up and ready to go. But that development is going to take just a few more months.

And it's 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, 3 or 4 times out of 5 they have an air-cooled chiller system that they're using. They don't 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 want 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 all this cannabis people. They want to be up and running quickly. And we can get a megawatt to them very, very fast. And with people's expectations of facilities starting and everything, that's very advantageous to us. So everything I just mentioned about supply chain, and Abinand mentioned, it's really also a focus 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 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, and we're going to continue aiming for profitability, right, with what we have. And I think we can achieve that.

And maybe 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? Any color on what sort of attach rates you get with those efforts, if that is in 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 equipment is running to do it. And customers understand that having us maintain it the best way for them to get their savings. So I would say close to 100%, with very few exceptions, carry along a service contract.

Our next question comes from Michael Zuk.

Ben, could you give us a little more color on the status of your manufacturer rep system, where 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.

So with regard to the reps, and this is mostly associated with our chillers; chillers, as I think I've said in many calls before, are generally sold through manufacturers' 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, and our 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, right down to Florida. And we've got reps sprinkled 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 the chillers for controlled environment agriculture.

And then, of course, layered on to that, Mike, are these sales agents. And reps are very geography-based, as you might know, state-by-state or region-by-region, whereas sales agents can roam around. And we've also been getting these sales. These are 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 see 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 back to California, California is a lot of opportunity. 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, at 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 microgrids, et cetera, 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, et cetera, is going to be the way that we start to make more penetration in California. Do you want to add anything 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 is finding some reps that have specialisms 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, because our chillers 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 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 spread's 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've been on the call here, because that's really what we're about right now, Mike, focusing on those areas where we know we can sell a product. There's good uptake for it, cannabis, food processing, et cetera, and to not try to have our resources get tapped into 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.

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've got our service center down there. And in fact, in Florida is where we have our controlled environment agriculture facilities that are non-cannabis. There's lettuce growers down there looking to expand, and expand with our equipment. 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 then 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 grow facilities pending in Canada. Any additional development there?

Yes. Well, of course, the main nexus of systems we have is in the Toronto area, where 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 a little bit of decent growth in that Toronto area, but I think we're going to see more, certainly, the indoor cultivation growth here in the United States.

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

Sure. And if there's areas where the spark spread works in our favor for those production, then absolutely. And as I mentioned, food production is going to be the big driver for all of these facilities, eventually, pot is good and hemp and some of these other industrial crops. But ultimately, the driver is world population and food production worldwide. And when you start to get into those areas, of course, that's very scalable.

So it's baby steps, Mike. I think we're well on our way. We've got a really good dominant position already in indoor grow facilities. I mean, 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.

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?

Mike, I'm glad you asked that question because the answer there is definitely yes. A lot of our especially the healthcare 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 the 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. And hopefully, 2022 will loosen up some of the restrictions and let us move forward with some of our new product offerings.

(Operator Instructions) Our next question comes from Alex Blanton with Clean (sic) [Clear] Harbor Asset Management.

That's Clear Harbor. Clear Harbor, C-L-E-A-R.

I wanted to ask you about the vehicles and engine pollution developments. You haven't updated us on that yet.

Sure, Mike (sic) [Alex], Ultera. Yes. 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 of 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 Abinand 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 Origin any support of that effort.

But my goal is to not have to divert much of our resources until I see something really tangible and material for the company. Abinand, do you want to fill in a bit?

Yes. Alex, I think, just to dive in a little more in terms of the -- we've made quite a bit of progress on the actual technology side, and I think we're going to see some improvements in terms of what some of the newer catalyst technologies are 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 especially NOx is a huge greenhouse gas contributor, and we can do it better in combination with the CO, but it's not something that we're focusing a lot of resources on.

If FERC ends 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 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, but it gives us a lot of advantages. So you're seeing a lot of Ultera systems shipped, 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 me that there's a big market for you there. What is in that bill that moves that forward specifically the reduction of the carbon footprint of buildings?

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

This is Alex.

Alex, sorry. Yes. There's a lot in that bill that are on building. I think the one thing that I'm really focused on is the microgrid piece, which is, what, $15 billion or something like that, 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, 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 2 because our inverter controls are smart enough to distinguish what's the best operational strategy. So those type of demonstration projects I think 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 help that? I don't think there's anything specific about that. I think it's more about efficiency measures and improving technologies, boiler efficiencies, et cetera, to allow these buildings to reduce their footprint as best as possible. I mean, every building is going to be different.

So that's the bill that's already been passed. But is there anything in the new bill, the reconciliation bill, $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 the real specifics that are notionally important to me. I've not done that yet. I know the very broad levels. Again, the microgrid piece is something that I'm very focused on. But I would have to get back to you with the exacts about that.

Yes. 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, right, as you've seen with New York, for example, with the local law 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 reduce 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'll be other restrictions that will prevent units from being installed or not. But right now, our existing fleet definitely is saving customers against penalties in places like New York.

And finally, do you have any guidance for the fourth quarter in terms of sales, considering the fact that there were a project or projects that were delayed into the fourth quarter from the third? What does that mean for the fourth quarter?

Yes. Well, Alex, as you know, I don't think I've ever given any specific guidance about future quarter production and sales, et cetera. But I'm feeling pretty confident that 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?

2 weeks, Alex, 2 weeks.

Wouldn't it be good to keep it there for a year or 2?

Maybe, Alex, let's take that off-line. We've talked about this before.

Okay. 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, 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 our year-end results, our fourth quarter and year-end at the beginning of next year. Thank you all. Bye-bye.

Thank you. This concludes today's call. All parties may disconnect. Have a good day.