Q1 2020 Earnings Call
Greetings and welcome to the pickup in first quarter 2020 earnings conference at this time, all participants are in listen only mode.
Question answer session will follow the formal presentation, if youd like to register question at any time. Please press star one on your telephone keypad.
I'd, which require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder, this conference is being recorded.
Pleasure to introduce your host Ms., Bonnie Brown, Chief Accounting officer. Thank you you may now be good.
[music].
Thank you Donna good morning, and thank you all for joining our first quarter 2020 earnings call on the call with me today, our bedroom unlock our CEO, Robert Sonora, President and Chief operating Officer.
Whitening, our general counsel in Secretary.
Please note. This call is being recorded and will be archived on the investor section of our website 14 days following the call a copy of the press release regarding our first quarter earnings is also available on the Investor section of our website.
Before we begin let me briefly cover our safe Harbor statement.
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 as indicated by these forward looking statements as result of various important factors.
Including those discussed in the company's most recent annual report on form 10-K in quarterly reports on form 10-Q under the caption risk factors, which are on file with the FCC available investor section of our website under the heading at decent size.
Well, 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 that.
During this call will hurt your certain financial measures in the claims.
After the accounting principles or gap.
Conciliation of these non-GAAP financial measures most directly comparable GAAP measures.
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Mr sketch Nobel website.
I'll turn the call them sensible thing about that.
[noise]. Thank you Bonnie.
So the agenda on slide four indicate.
I'll start with a brief company overview.
Followed by a summary of the company's performance and results for the first quarter of 20 Twond.
Bonnie will then discuss the financials on a little more detail and then I'll provide some overall take away from the core.
Bob will then going to give an overview of our emissions technology development efforts.
And then I'll conclude talking more about our plans for 2020 in light of the called it pandemic well of course take questions afterwards.
I want to start off by reminding our investors about Teco gents core business model shown on slide five.
<unk> power and cooling that as efficient clean and reliable.
He couldn't clean reliable distributed generation systems use natural gas propane syn gas or renewable natural gas efficiently and cleanly as an alternative to using expensive and sometimes unreliable electricity heat and power buildings and infrastructure.
As large facility strive to reduce operational costs improved greenhouse gas emissions and become resiliency grid outages Tecogen systems are increasingly sought after to meet these goals.
We have differentiate ourselves from other onsite generation technologies by virtue of our clean proprietary near zero emission system called Altera.
Our exclusive Microgrid technology.
Our corporate longevity, and our comprehensive factory service presence.
The inverted system isn't the only micro grid enabled CHP system using a permanent magnet generator operating a variable speed with an integrated onboard inverter key features that are opening new markets for us.
Our Chico chilled and Teco Frost natural gas Chillers have no other equivalent competitors and are increasingly becoming the design basis for many facilities with large cooling refrigeration needs.
Ultimately our equipment provides a reliable alternative to the electric grid.
It's concerns about about electric reliability and cost, particularly in the current environment, our systems provide resiliency to power outages another great disruptions.
Turning to slide checks.
First quarter of 2020 saw revenues of 7.9 million compared to 8.2 million into first quarter of 2019, a 3% decrease quarter over quarter.
This decline is due to a few factors, including a 40% or 490000 dollar reduction in any of your production revenue as we sold a portion of the energy production fleet last year.
And our product revenues were adversely impacted by the return of three chillers shipped in the fourth quarter of 2019.
Due to the customer losing financing.
Absent the return.
The first quarter project revenues were a little over 3.4 million, which would've been a 13% increase quarter over quarter.
The quarter saw overall margins come in at 35% versus 36% year over year.
Well I'm not happy with this overall margin number I am happy to see our profit margins rebound to 39% from 36% previously and both year over year in quarter over quarter.
The softer overall margins in Q1 of 2020 are mainly attributable to lower margins in our service segment, which is comprised of maintenance services and installation services.
And this case, while our maintenance service margins were good for the quarter. Our installation services margins were poor due to the initial challenges of construction works at the onset of the cold that pandemic.
I'll talk more about our margins in a few minutes.
On the expense side, our DNA was slightly higher than the first quarter 2019, but lower than last quarter Q4.
We expect further reductions in RG going forward DNA going forward as we continue to improve many of our business practices.
What's happened to see operational cash flows a positive 1.1 million for the first quarter 2020, as compared to negative cash flows of minus $600000 and the first quarter of 2019.
And as we indicated in our earnings release, we consolidated our intellectual property for the remaining altera patents well ending other patent applications, resulting in a one time non cash write down of 180000.
[noise]. The end result was a net loss of 1.2 million for the quarter compared to a loss of 3.3 million in the first quarter of 2019.
Adjusted EBITDA minus 817000 as compared to when adjusted EBITDA of 678000 in Q1 of 29 team.
Please recall the first quarter of 2019 income and adjusted EBITDA included some onetime accounting treatments of goodwill impairment relating to the selling of certain age certain energy generating assets that previous quarter.
So while the first quarter loss at face value seems discouraging I think it's very important to emphasize our core business segments did well and did not suffer any precipitous precipitous drop offs in the first quarter.
Despite the challenges due to the cobot pandemic, we do not expect any significant disruption in our core business going forward.
I'll talk more about our outlook for the rest of 2020 in a few minutes, but first I'd like to turn it over to Bonnie for a little bit more detail on the financials Bonnie.
Yeah.
Thank you Ben.
On slide seven.
Contain some highlights of our first quarter 2020 year on year financial results.
Total revenue for the quarter, 21st quarter, 2020 was 8 million compared to 8.2 million for Q1, 29 teens, a decrease of 3% year over year.
This decrease is due to the sale energy producing assets in the first quarter 2019, which caused our energy production revenue to decrease by 490000 as well as the large sale return of Chillers, a 655000, which directly impacted our product radnets.
That's right to say overturned combined product and service from the sale increased by 4%.
Product revenues were highlighted by cogeneration sales with an increase of 78% year over year, what chiller sales decreasing resulting in overall decrease at 9% year over year.
Product revenue.
Excluding the impact of the sale returned 655000, our product sales would have been 3.4 million, representing an increase of 13%.
Service revenue increased by 14% long term.
Maintenance contract, increasing 5% and installation revenue increasing 28%.
Overall gross margin for the first quarter of 20 to 20 was 35% compared to 36% to the same period and 29 team.
Operating expenses, excluding goodwill impairment in the gain on sale of assets from the prior year.
Increased by 216000, the abandonment of being tangible assets of 180000 accounts for the major majority of this increase.
Net loss attributable to the company for the quarter was 1.2 million compared to 3.3 million for the first quarter of 29 team.
<unk> loss.
Included a 3.7 million good long form in the 1.1 million gain on the sale of energy producing.
Slide eight presented for your reference and shows reconciliation.
Non-GAAP adjusted EBITDA for the first quarter of 2020 comparative to the same period and 29 team, which has been reps I love the presentation.
There are usually when they do fundamentally important metric.
Now I'll turn the call back then.
Awesome.
Thanks Bonnie.
First and most importantly, despite the loss in the quarter, we did not see a significant drop in our core business revenue segments.
We shipped 3.4 million of equipment in the quarter, but unfortunately had to account for the return of the equipment from the previous quarter.
We do not expect any significant decline in shipments into second quarter. Despite the Kobe challenges.
With regard to energy production traction we expected that he decrease in revenue compared to the first quarter of 29 team as a result of selling some of the assets to a third party but.
But the remaining assets, we own did and we'll continue to produce consistent high margin revenues for the company going forward.
Next getting back to our service revenues and margins, we continue to see growth in our service revenues every quarter as almost everything we ship has a corresponding do maintenance service contract.
We also continue to provide installation services within our service segment, although we scaled back these turnkey services in late 2019.
Some of the ongoing turnkey and turnkey installations, particularly in New York were adversely impacted by the onset of the cobot pandemic in March resulting in project delays and lower installation margins for the quarter.
As workarounds for things like permits inspections and entry and egress limitations were addressed.
We anticipate our installation services margins will improve so we understand construction activity still has significant limitations as result of the pandemic.
With regard to the rest of 2020, we understand that it is an unprecedented time for many businesses in industries due to cold it and we are adjusting our own plans accordingly.
Certainly many of our sales and marketing activities have been curtailed as virtually every trade show in industry event has been canceled or delayed.
In response, we have been fast adapting to implement alternative sales and marketing activities, such as virtual lunch and learns webinars and online meetings.
Fortunately many of the industries and people are sales and engineering teams interact with on a daily basis are similarly, working from home. So we can still conduct business remotely.
As such I am still confident we can be profitable in the coming quarters.
We have affirmed our part backlog in light of the pandemic, which I will detail in a moment.
We have improved our product margins in our energy production margins and expect improvement on our service margins going forward.
The addition of our 11th service Center in Toronto is already resulting a new service contracts as our press release. This morning indicates.
And our service revenues in Toronto will grow even further as the units we're shipping to Canada become operational later this year.
And importantly, we're conducting all of our business activities with a careful eye on operational cash flows.
As investors May have noticed earlier this week in this week, we ended our line of credit agreement with Webster back.
We were very fortunate to have this line of credit to help cash flows in the past two years, but the debt cost and restrictions that came with a line of credit were substantial.
We made the decision last week and a line of credit in order to reduce debt cost and eliminate accounting complexities that came with it and focusing on maximizing our operational cash flows.
As the press release indicated we have sufficient capital to maintain our operations through 2020.
[noise] as interest rates are at rock bottom, we will keep our options open for a more cost effective line of credit if the opportunities available to us in the future.
Turning to future growth opportunities well some activity has been delayed due to cold, but we still expect to make progress on these initiatives in 2020.
Bob will give a quick update on the forklift program shortly but essentially were delayed until travel restrictions aren't used and collaborative work and could you can't continue with Mitsubishi.
With regard to our plans to expand our gas cooling segment, we are already working with filter emison to jointly market Chico Cho our gas engine refrigeration system and are engaged in discussions with other potential partners to help expand the market for I guess cooling products.
I hope to have an update on our partnership plan soon.
And lastly, we're identifying new geography said have favorable market conditions for our equipment.
Our expansion into Florida last year, and our recent expansion into Toronto. This year is a blueprint for additional expansion to other north American geographies.
I expect additional updates on our efforts to establish new markets for our systems and the coming months.
Turning to slide 10.
Current backlog stands at 12.7 million as of earlier. This week. This week consisting of a little over 10 million in product and two and a half million and installation services.
It is my expectation that the backlog will continue to grow as hopefully the coated pandemic subsides and business returns to normal.
And lastly, as I've said previously our backlog consists of products and installation search revenues and does not contain our recurring long term maintenance contract revenues, which is a consistent contributor each quarter again. This is very important when considering the expected new revenue contribution from our New Toronto Service Center later this.
This year.
With that I'd like to turn the call over the Bob will describe our mission is progress in more detail and then we'll take then I'll return to the call Bob.
Hi, good morning, and thank you Ben.
As I reported in April and is that vendors referenced a m. CFA was planning precertification testing this month.
The independent Laboratory, Texas SW Alright.
Also the propane education and research Council Perk the trade Commission that funded the work originally had confirmed that they will fund the S. W are like deficit.
Which I believe is a very positive development.
However, and due to the cobot travel restrictions the work has been postponed as a testing required and engineering specialists for Ms should be she in Japan to be on hand to perform the engine tuning adjustments.
As such we will continue to be on hold the program waiting for the travel.
Restrictions to be restored from Japan.
Second I'm here, the California wanted district with plans to order to 800 horsepower altera kits as a put the project out to bid with our updated pricing we expect the water in August.
Lastly, we announced in January that our base Altera Cottons was granted in the U.
We have registered this patent in 19 countries, there, including UK, France and Germany.
At the same time, we evaluated on secondary on current patent applications in a good every process.
And elected to just discontinue some of these.
We believe that the legal effort would soon be entering more costly phase well not necessarily well not really being necessary to protect our altera IP.
Disrupt resulted as Ben mentioned in $880000 write off non cash write off.
And that concludes my update you know, we turn the discussion back Tibet [noise].
[noise] Thanks, Bob.
So moving to slide 12, I want to give some more thoughts on our core business outlook for 2020.
And how we expect to continued growth given the sudden an unprecedented changes in the business climate due to the called pandemic.
First in terms of our product sales segment, we're still seeing demand for our products. Despite the pandemic.
Well a few projects experience some delays for the most part our backlog of products and expected to ship as planned for the rest of the year.
And as the economy hopefully begins the restart in the coming months I anticipate a renewed focus on energy cost savings and resiliency as driving forces that will create more demand for our products.
With natural gas prices at record those were assuming you are seeing even more favorable economics for our equipment and we are expanding our sales outreach to new geographies in North America, such as Toronto.
We are continuing to evaluate new geographical regions for our equipment. Following our model of establishing an initial population of equipment followed by establishment of a service center and the new region, which builds customer confidence and ultimately leads to more sales.
And although we had a bit about drop off in chiller sales in the first quarter, we still see our chillers as one of the best ways to enter new markets. Since we have no other comparable competitor.
Chillers are also typically specify by engineers and manufacturers Representatives and are there for a much more transactional and predictable in terms of project closing.
And through our partnership with filter, we're seeing strong interest in our teco across product in industrial refrigeration systems, a new market vertical for us.
And of course as I mentioned previously we are focusing on maintaining our strong product margins for all of our systems going forward.
With regard to our service segment, we have seen quarter over quarter growth and our service segment almost every quarter.
We believe the expansion of our maintenance services to new geographies will further accelerate growth for the company, particularly with the expected startup of the cogeneration equipment currently being shipped and installed in Toronto.
And I will add that our remote monitoring our remote monitoring capabilities, which we call CHP insight has improved our ability to troubleshoot and service units more efficiently all with the goal of maximizing unit Runtimes and therefore service revenues.
We are continuing to scale back on our large turnkey installation projects in favor of selling engineered accessories with our equipment, which our design in configured for ease of installation by a third party contractor.
We are currently winding down some of our larger existing turnkey projects, though some are delayed due to the coke due to the Corbett pandemic.
Going forward, we plan to continue to shift away from larger turnkey installation projects, but still continue with more manageable installations with less construction risk.
And lastly, we are eager to reserve resume our altera development work with Mitsubishi wants travel restrictions or east and our continued to identify new opportunities for all of <unk>, our altera emissions technology.
Before I turn the call over to the operator for questions I want it to address the question, which is perhaps on many investors minds, which is our stock price.
We are fully aware of the drastic decline in our stock price and feel strongly that the company is significantly undervalued at our current price.
Despite the loss for the quarter. The company is still an excellent position to succeed going forward as our business fundamentals are a sound as ever.
Product sales are continuing and we're seeing growth opportunities in new geographies for our products.
Our service segment continues to grow each quarter and our new Toronto Service Center is expected to add significant revenue and margin later this year.
Our energy production assets provide annuity type revenues with high margins each quarter.
And our all our altera emissions offers tremendous upside to the company as we plan to continue our work with Mitsubishi.
We have also made significant improvements to our business practices practices, resulting in positive operational cash flows.
Our balance sheet sufficient for us to maintain operations through 2020.
We are excited to accomplish the goals I outlined for the rest of year and hope that our shareholders recognize these achievements and our stock price price improves accordingly.
With that I'd like to turn it over to the operator for questions.
Thank you the floor is now open for questions. If he would like to ask a question. Please press star one on your telephone keypad at this time.
In total indicate your line is the question Q.
Let's start to if he would like to remove your question from the Q for participants using speaker equipment, and maybe necessary to pick up your handset before pressing the star.
Once again, that's star one to register questions at the time.
First question is coming from.
H.C. Wainwright. Please go ahead.
Thank you name it Marty Hi, Hi, Ben how are you.
Thank you.
[laughter] <unk> return journeys be re purposed censorship dr. new customers.
Yes, absolutely Oh, we we take the equipment back and their chillers and they'll find a home without question.
Got it.
You know.
Your your early here from a bid.
You were relatively upbeat and you know you're still are.
Between April and now it's almost like a month and I have seen or when you have the prior group you know you're becoming a bit more conservative with respect to the gritty dirty outlook.
Did you have burned for you or are you still sort of you know in the same.
You know rynja of expectations.
Yeah.
Yeah.
Certainly the timing of some of the activity that I'd hope to see in 2020, I'm starting to be a little bit more conservative on <unk>, but from what I like where I wasn't April I mean things are changing fast or as you know with it so but what that said I I think it's just timing. It's not a question of of are they going to happen. It's just it just one.
And so again, we we went through our backlog pretty rigorously and found a few things that slip up but but by and large everything is still gonna. It happened that we expect to happen. It's just the timing of it may be a a little bit altered and then with regard to our you know are off to kind of our business practice and <unk> expense side of thing.
I mean, I think we're being real practical about you know a in about you know the future and making sure that we are in a good position you know staffing or an expense wise and particularly on our operating cash flows to be able to go through the year successfully so I'm a wall I, maybe sound a little bit more conservative I actually.
I'm very confident about our ability now to make it through the year. We're in good shape and I got I know the numbers are difficult to match up to this but it really wasn't such a bad quarter for us.
So anyway yeah.
Yeah. Thank you for that color I mean, given the circumstances.
[noise].
The numbers weren't in my opinion, but a bad either.
How should we think about you know you organizing you'll see he'll go for its going forward. One is a challenge of trying to do all of this works really but then the other challenges. Some states are open. Some aren't you know what is your exposure to states that are open new associates that aren't <unk>.
Sure I.
I think.
We have been able to do our business activities what went to all the states were closed and then in a little improve of course, some states opened but but even if all the states would stay I stay continued close I think I got into the community in which we work.
The oh up or particularly on the engineering community is all very eager to show that they can continue to work. This way you know and so I'm almost seeing it and almost extra eagerness of of the folks that we talk with on the phone.
To make business happened despite the stay at home orders and so that's my long way of saying is we are watching obviously state by state how those stay at home orders are lifted, but I am I'm very impressed with our the ability of our team in the colleagues that we worked with to continue did work you even with that stay at home water in place.
No. That's maybe one final one for me on the margin side I mean, I know, there's there should be expectations on some level of pressure but.
Do you think you'll be able to them in doing their margins. During this a you know there must be or.
Yes, yes, yes, I do and I I I mentioned that little bit in the call you know I I fear recall, a I meant we had a a little bit of a hiccup with our product margins I'm in the fourth quarter actually in the third quarter.
But we we improved upon in the fourth quarter and then it really kind of hit this quarter you know our product margins are right back up what they ought to be no, 39% I'd like to see him at 40%, but I think our product margins are absolutely in good shape. Our energy production margins are going to be good those that the systems that we inherited of course.
That we got from 80, GE and we approved upon our a humming along very nicely I'm. A couple of them have have had some operational restrictions because of the cold it but by and large I think our energy production margins are still gonna be strong <unk>.
The service margins are the ones of course that I addressed in this call and of course, our maintenance services margin. You know these are on our actual surface contracts are very very very good. They have always been good. It's installation services piece that we've been struggling with and I think I'm, hoping the worst is done we still have a couple of lingering construction projects.
That we're trying to close out and you know it's tough to get you know con Ed inspectors to the building and everyone is trying to come up with workarounds and on the construction side of things, but I think we're gonna see that improved as well in the second quarter as we kind of work out some of those king. So I think the entire construction industry really got caught off guard well everybody did of course with that.
Pandemic, but I think we're starting to get finding work around for some of these construction issue. So that's a long answer on that but I think our margins I'm very confident about our margins going forward.
Thank you for that then that's when I go back in queue. Thank you.
Okay. Thanks summit.
Once again, ladies and gentlemen that star one to register a question at the time. Our next question is coming from Alex.
Clear Harbor asset management. Please go ahead.
Hi, Alex I can you hear me yeah, I can hear your great. Okay.
Okay I just wanted to point out that Oh this question of construction.
Governor Cuomo it has said that.
As the different regions.
You have stayed open up.
Your first activities that they're going to allow our.
Manufacturing and construction.
Right, Yeah, and Apple watch, we're fortunate that construction et cetera and question here are very very large parsed portion of our revenue I mean, it's our main thing is our products and our services and those and of course, our energy production.
It's just a couple of these turnkey project. So what so we are following that pretty closely and I don't expect any any too much more delays, it's particularly as the a us against that and as you start to open up.
They're basing that he's basically got judgment on.
Two factors, how essential is the activity and how risky is it.
So they've determined that manufacturing construction have.
More essential and less risky then.
One job to restaurants and things like that [laughter].
And now it's just to be clear, it's not so much getting people to work its its things like getting the this city inspector to common sign off on the permit for it. It's getting you know it's things like that its logistical things sometimes that become the bug would not so much that the guys coming up in the polymer and they electrician showing up because as you said I think there is there is.
There is a a an allowance for construction to continue as you just mentioned, but it does sometimes it's a little little logistical things like getting a permit signed off and therefore, we can't you know showed that incremental amount of progress I'm on the job. So those little things that were struggling or but as I said I'm I'm feeling good that though isn't going to work out in the and the it's certainly in the second call.
Uh huh.
Along those lines of Ah Ah logistics why is it that is engineer from.
That's a vicious in Japan.
She had come over here and doing his work.
I can't answer for Mitsubishi decision. They just said they did not want to travel until you know the restrictions or I'm going of insurance restriction in their company or or actual travel restrictions, but I think they've just said, they're not traveling and not much I can say to that.
Oh, So you don't know whether as a company restriction or government restrictions I didn't question. It Alex They just said and you know.
We're not we're not going to be able to travel told the restrictions are lifted I assumed it was you know government, but I don't know that could be just the company.
Okay.
I thought maybe there there could get the dispensation or something for it but.
You said.
You did got a and I thought this was perhaps the most important they you said.
They are you said do not you do not expect any significant disruption in core business going forward. Despite <unk>.
<unk>.
Ah why didn't qualify or core.
Uh huh.
Well I know that.
What are the non core activities that are not included states well that Alex when I talk about our core business.
I I generally and speaking of a again, though the revenue producing things I mean, obviously altera produces some revenue, but but oh altera is not something that we generally report revenues and expenses against Altera is something that's a cut it kinda has a optionality upside to the company and so I I'm.
That's not saying all terrorists not core of course, it's very important too as far as our business, but I have my own mine I kind of identify core business as a as those things that we report on on from a revenue standpoint, each quarter again being our our product sales are out our services in our energy production and Alice I I am I I want to put you.
Back in acute because I want to move onto the next questions, but and if you have some more questions I'm, perhaps you can jump back into the queue did I just want to make sure that we address we allow somebody's other folks on the line to ask questions.
Great. Thank you.
Thanks Al Thanks, Alex.
Thanks.
And it's coming from a private investor. Please go ahead.
Good morning, a better than Bob.
Hi, Mike I want to criteria.
One of a direct question toward New York City.
Given the financial upheaval in New York City, with regard to property or rent Oh collections and capital spending do you see any interruption in our ability to obtain contracts to convert.
Existing facilities.
Into a more efficient system that we offer that's the first part of the question of the second part of the question is what's the situation with regard to new gas Hookups, and New York City.
Sure.
On the on the first part of the question.
I I I'm, you know New York has been a a very a prime market for us historically and I think is still going to be my own opinion, Alex I think theres Theres I know, it's got to even more of a need for our systems I think the resiliency kind of comes in with these types of activities. So I think you're gonna see people certainly wanting to save money and certainly wanted.
To be have more resiliency now where I do think maybe we'll see a change is the ability of buildings to finance these things out whereas in the past the majority of a a of owners would choose the by the equipment and on it. So they can keep all the savings.
But I think going forward, you, you're probably going to see more financing opportunities for buildings to opt to put in these these energy saving money saving and resiliency measures at zero cost.
But of course is the energy production model that we're all very familiar with I I can I see that coming back and I'm. We're very fortunate that we have you know a handful of of a project finance partners that we've worked with a previously in and that our Oh, we will plan on working with again, so that we can perhaps look at this new opportunity of.
Installing our systems under a project finance deal I think that's something you might see more of an a little bit of nuance part of the answer to that first question too. Mike is you know where neat we're starting to outpace New York with some of these new markets I mean, I I I think some people get concerned that New York shuts down any.
We shut down and that's not the case at all you know we have of course, many many facilities and on and end up projects in New York, but we're finding a traction for our systems again as I said in my prepared remarks outside of those core markets you know in Toronto and then the mid Western United States in certainly in Florida, where we stop us.
Our service center.
We're finding more activities in those areas. So I I I don't think investors should get too concerned about a specific downturns and just new York as it relates to our business since I think we've diversified our our products in our sales I'm well beyond New York and the past year I get to getting to the second half of your question about new new gas connections.
I think we're seeing some easement in terms of gas connection certainly national grid and Con Ed have reached some type of agreements to allow new gas connections I don't have any more detailed the not about region by region, except to say that we're seeing some of these new permits start to get issued.
And then one additional I'll follow up or can you give us a little bit more color on activities in Florida.
Yeah, Yeah. That's it's you know a it's a great opportunity for us in Florida, I'm not only is gas.
That's very very inexpensive, but you have the gas utilities down there and then I spend a lot of my time, Mike I talking to the gas utilities, because they we have a shared goal you know to to put calling on gas to take cooling off of electric and put it on gas and there are they're up the gas companies down there that under that now understand gas cool.
Doing better you know we spend a lot of time trying to educate these folks and and therefore now they they have their own teams that can go out and look for opportunities to switched from electric cooling the gas cooling. So I'm I think we're having good success in Florida, you probably saw we shipped a few more chillers down there a recently certainly the chillers are real good.
Economics, or the Cogent, maybe we'll follow but right now I think a Florida is really a shining star for us in terms of growth I'm very happy that we established a service center there last year, when we did and so yeah, Florida in and it's not just Florida of course, Alex its surrounding areas that weekend 'em. We can reach from that service center that I think is.
There's good opportunity for us.
Well congratulations I think the progress is happening maybe not as quickly as we would hope, but it looks like things are heading into right direction on but enthusiastic that we'll have a pretty good year.
Great. Thanks, Mike always nice to hear from you.
Thanks, Mike.
At this time I'd like to turn the floor back over to management for closing comments.
[noise]. Thank you operator, well I'd like to thank all of you for joining the call a I certainly hope that all of our investors and listeners are are safe and relatively secure from this pandemic a we hear a t. cogen or are doing our best in a we're very happy that we're all healthy and and surviving this and looking forward hopefully a quick recovery.
So thank you for your time and I look forward to talking to one our next earnings call.
Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect your lines.
Capped at this time and have a wonderful day.
[music].
[noise] [noise].
[noise].