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American DG Energy Reports 2016 Financial Performance

American DG Energy Reports 2016 Financial Performance


WALTHAM, Mass., March 21, 2017 /PRNewswire/ — American DG Energy Inc. (NYSE MKT: ADGE) the “Company”, an On-Site Utility provider offering clean electricity, heat, hot water and cooling solutions to hospitality, healthcare, housing and fitness facilities, reported total revenues of $6,141,749 for 2016, compared to $6,358,196 for 2015. GAAP diluted loss per share (EPS) was $0.01 for 2016, compared with a GAAP diluted loss per share of $0.11 for 2015. Reflecting the Company’s ongoing efforts to optimize its On-Site Utility production, gross margin excluding depreciation and site impairments improved in 2016 to 39.9% versus 36.1% in 2015, a 3.8 percentage point increase and a 10.5% improvement in gross margin.

Chief Financial Officer Bonnie Brown observed, “In the past year we worked hard to set American DG on the path toward financial stability.  The elimination of our substantial debt and the sale of the majority of our interest in EuroSite Power freed the company to focus resources on improving the core U.S. business. This renewed focus is evident in the substantial improvement in results.”




Beginning in 2015 and continuing into 2016, the Company has been executing an initiative (the “Initiative”) to more effectively invest its capital behind improving the performance of its existing installed base of assets. The goal of the Initiative is to make strategic capital improvements aimed at increasing productivity of the existing portfolio while optimizing the Company’s margins and increasing cash flow. The results of this Initiative are producing a foundation of high performing assets that may be used to fund future growth.

Speaking about the company’s performance, Co-Chief Executive Officer Benjamin Locke noted, “The Company’s improved balance sheet and fleet operating metrics combine to make American DG Energy an attractive asset – the value of which was realized in the proposed acquisition by Tecogen Inc. Pending regulatory and shareholder approval, we look forward to combining forces to create the leading vertically integrated cogeneration company in the U.S. later this year.”

Major Highlights:

Consolidated Financial Results

  • On November 1, 2016, the Company’s Board of Directors approved a definitive agreement whereby Tecogen Inc would acquire all of the outstanding shares of American DG in a stock-for-stock merger. Under the agreement, each share of American DG common stock will be exchanged for 0.092 shares of Tecogen common stock, valuing American DG at an approximately 27% premium to the Company’s closing share price on that day. This agreement is subject to a vote of security holders of both companies. The transaction is also subject to other customary closing conditions and is expected to close in the first half of 2017.
  • Through a series of transactions the Company has removed its $19.4 million in convertible debentures using a combination of EuroSite Power common stock and approximately $3 million in cash to repay this debt in full.
  • As a result of the convertible debenture transactions, as of June 30, 2016 the Company no longer consolidates with EuroSite Power and has presented its former subsidiary as discontinued operations in the accompanying financial statements.
  • Also, as a result of the payoff of convertible debentures, the Company borrowed $850,000 from its Co-CEO, John Hatsopoulos. This loan carries 6% interest and matures on May 25, 2018.
  • As a result of our focused efforts to improve fleet operations, adjusted EBITDA cash flows improved by $941,000, reaching positive cash inflows of $118,105 in 2016, versus outflows of $822,895 for 2015.
  • As a result of our efforts to improve operations and efficiencies, general and administrative expenses have decreased to $1,878,008 for 2016 versus $1,937,299 for 2015, a 3.1% improvement. General and administrative expenses for the year ended December 31, 2016 included approximately $270,000 of one-time expenses incurred in connection with the proposed merger with Tecogen.
  • Overall operating expenses improved 24.1% generating an expense reduction of $817,669.
  • Adjusted gross margin excluding depreciation expense improved by 5.3%, reaching 31.7% for 2016 versus 26.4% for the same period in 2015. Gross margin for the full year 2016 was 2.1% compared with the (0.8)% gross margin reported in 2015, reflecting the benefit from site improvements and reduction in fuel, maintenance and installation related expense.
  • While eleven sites were removed from our fleet as a result of the reorganization with ADGNY, LLC, our revenues remained relatively level, decreasing by only $216,447, or 3.4%.

Operations

  • As the operations team has been focused on metering for demand capture since March 2016, our demand revenue captured for the year of 2016 was approximately $279,000 compared to $104,000 for 2015, an increase of 168%.
  • Through improved operations, fuel costs were reduced by 4%, thus improving gross profit.
  • Revenue for the year was attributable to the following core markets:

Hospitality

16

%

Fitness

17

%

Housing

19

%

Health Care

19

%

Education

17

%

Other

12

%

Total

100

%

 

  • The revenue was distributed by energy type as is outlined in the following table:

Electricity

51

%

Thermal

35

%

Cooling

14

%

Total

100

%

           

  • In total, as of December 31, 2016, we operated 92 systems totaling 5,445kW of installed capacity.

American DG Energy will hold its earnings conference call today, March 21, 2017 at 11:00 a.m. Eastern Time. To listen, call (866) 364-3819 within the U.S., (855) 669-9657 from Canada, or (412) 902-4209 from other international locations.  Participants should reference American DG Energy to access the call. We suggest you begin dialing at least 10 minutes before the scheduled starting time. Alternately, to register for and listen to the live webcast, please go to https://www.webcaster4.com/Webcast/Page/416/20033.

The earnings conference call will be recorded and available for playback one hour after the end of the call through Tuesday, March 28, 2017.  To listen to the playback, call (877) 344-7529 within the U.S. (855) 669-9658 from Canada, or +1 (412) 317-0088 from other international locations and reference Replay Access Code 110102545. Following the call, the webcast will be archived for 30 days.

About American DG Energy
American DG Energy supplies low-cost energy to its customers through distributed power generating systems. We are committed to providing institutional, commercial and small industrial facilities with clean, reliable power, cooling, heat and hot water at lower costs than charged by local utilities – without any capital or start-up costs to the energy user – through our On-Site Utility energy solutions. American DG Energy is headquartered in Waltham, Massachusetts. Learn more about how American DG Energy reduces energy costs at www.americandg.com or follow us on Facebook and Twitter.

FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve a number of risks and uncertainties. Important factors could cause actual results to differ materially from those indicated by such forward-looking statements, as disclosed on the Company’s website and in Securities and Exchange Commission filings. This press release does not constitute an offer to buy or sell securities by the Company, its subsidiaries or any associated party and is meant purely for informational purposes. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made.

CONSOLIDATED BALANCE SHEETS

December 31, 2016

December 31, 2015

ASSETS

Current assets:

Cash and cash equivalents

$

338,627

$

4,999,709

Accounts receivable, net

815,748

633,924

Unbilled revenue

18,797

12,468

Due from related party

87,845

99,548

Inventory

128,680

975,760

Current assets of discontinued operations

1,450,034

Assets held for sale

946,883

Prepaid and other current assets

299,667

331,057

Total current assets

2,636,247

8,502,500

Property and equipment, net

15,831,160

17,950,787

Long-term assets of discontinued operations

7,527,266

Investment securities

637,651

Other assets, long-term

41,825

TOTAL ASSETS

$

19,105,058

$

34,022,378

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

270,078

$

162,976

Accrued expenses and other current liabilities

522,525

257,810

Due to related party

127,904

1,171,863

Current liabilities of discontinued operations

699,086

Total current liabilities

920,507

2,291,735

Long-term liabilities:

Loan due to related party

850,000

Convertible debentures due related parties

16,078,912

Long-term liabilities of discontinued operations

4,536,422

Total liabilities

1,770,507

22,907,069

Commitments and contingencies (Note 13)

Stockholders’ equity:

American DG Energy Inc. stockholders’ equity:

Common stock, $0.001 par value; 100,000,000 shares authorized; 50,684,095 issued and outstanding at December 31, 2016 and 2015

50,684

50,684

Additional paid-in capital

58,823,704

49,641,620

Accumulated other comprehensive loss-investment securities

(136,848)

Accumulated deficit

(41,381,221)

(40,622,774)

Total American DG Energy Inc. stockholders’ equity

17,356,319

9,069,530

Noncontrolling interest in discontinued operations

1,944,236

Noncontrolling interest

(21,768)

101,543

Total stockholders’ equity

17,334,551

11,115,309

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

19,105,058

$

34,022,378

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended December 31,

2016

2015

Revenues

Energy revenues

$

5,565,909

$

5,684,774

Turnkey & other revenues

575,840

673,422

6,141,749

6,358,196

Cost of sales

Fuel, maintenance and installation

3,689,294

4,064,145

Site impairments

503,072

618,661

Depreciation expense

1,820,391

1,728,762

6,012,757

6,411,568

Gross profit (loss)

128,992

(53,372)

Operating expenses

General and administrative

1,878,008

1,937,299

Selling

41,504

694,101

Engineering

649,181

754,962

2,568,693

3,386,362

Loss from operations

(2,439,701)

(3,439,734)

Other income (expense)

Interest and other income

21,837

193,691

Interest and other expense

(1,062,582)

(1,234,725)

Gain on extinguishment of debt

182,887

Gain on deconsolidation

3,887,098

Held for sale fair value adjustment

(743,770)

Change in fair value of warrant liability

6,780

2,285,470

(1,034,254)

Loss from continuing operations before provision for state income taxes

(154,231)

(4,473,988)

Provision for state income taxes

(60,572)

(27,605)

Loss from continuing operations

(214,803)

(4,501,593)

Loss from discontinued operations (see Note 4)

(1,219,256)

(1,384,122)

Consolidated net loss

(1,434,059)

(5,885,715)

(Income) loss attributable to noncontrolling interest

675,612

455,312

Loss attributable to American DG Energy Inc

$

(758,447)

$

(5,430,403)

Other comprehensive loss – unrealized loss on securities

$

(136,848)

$

Comprehensive loss

$

(895,295)

$

(5,430,403)

Income (loss) per share from continuing operations attributable to American DG Energy Inc. – basic and diluted

$

0.01

$

(0.09)

Loss per share from discontinued operations attributable to American DG Energy Inc. – basic and diluted

$

(0.02)

$

(0.02)

Net loss per share – basic and diluted

$

(0.01)

$

(0.11)

Weighted average shares outstanding – basic and diluted

50,684,095

50,689,633

Non-GAAP financial disclosure

Loss from operations

$

(2,439,701)

$

(3,439,734)

Depreciation

1,861,232

1,776,048

Site Impairments

503,072

618,661

Stock based compensation

193,502

222,130

Adjusted EBITDA

$

118,105

$

(822,895)

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended December 31,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$

(758,447)

$

(5,430,403)

  Income attributable to noncontrolling interest

58,236

223,837

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

1,861,232

1,776,048

Gain attributable to distribution of nonmonetary assets to noncontrolling interest

(157,870)

Loss from discontinued operations

485,408

704,973

Non-cash site impairments

503,072

618,661

Provision (recovery) for losses on accounts receivable

(120,000)

84,274

Amortization of deferred financing costs

41,825

60,807

Gain on extinguishment of debt

(182,887)

Decrease in fair value of warrant liability

(6,780)

Non-cash interest expense

726,247

1,191,333

Stock-based compensation

193,502

222,130

Gain on deconsolidation of subsidiary

(3,887,098)

Fair value adjustment on assets held for sale

743,770

Changes in operating assets and liabilities:

(Increase) decrease in:

Accounts receivable and unbilled revenue

(68,153)

273,614

Due from related party

11,703

(59,767)

Inventory

(843,573)

78,242

Prepaid and other current assets

31,390

(261,010)

Increase (decrease) in:

Accounts payable

107,102

(104,487)

Accrued expenses and other current liabilities

264,715

(86,878)

Due to related party

(1,043,959)

541,058

Other long-term liabilities

(2,227)

Net cash used in operating activities

(1,875,915)

(334,445)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(254,927)

(2,238,084)

Proceeds on sale of property and equipment

10,250

4,650

Cash paid in connection with ADGNY reorganization

(100,000)

Purchase of investment securities from related party

(150,000)

Net cash used in investing activities

(394,677)

(2,333,434)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on convertible debentures due related party

(3,058,943)

Proceeds from loan from related party

850,000

Purchases of common stock, net of costs

(152,377)

Distributions to noncontrolling interest

(181,547)

(229,098)

Net cash used in financing activities

(2,390,490)

(381,475)

Net decrease in cash and cash equivalents

(4,661,082)

(3,049,354)

Cash and cash equivalents, beginning of the period

4,999,709

8,049,063

Cash and cash equivalents, end of the period

$

338,627

$

4,999,709

Supplemental disclosures of cash flows information:

Cash paid during the period for:

Income taxes

$

83,044

$

48,824

Non-cash investing and financing activities:

Distribution of nonmonetary assets

$

$

340,069

         Conversion of subsidiary convertible debentures to common stock of subsidiary

$

2,420,046

$

         Settlement of convertible debentures with common stock of subsidiary

$

13,783,721

$

 





Source: PR Newswire

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