AMERICAN DG ENERGY INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 1, 2016

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8-K - 8-K - AMERICAN DG ENERGY INCadge2016328-8kearningsrele.htm


American DG Energy Inc.
45 First Avenue, Waltham, MA 02451
t: +1 781.522.6000 f: +1 781.522.6050
info@americandg.com www.americandg.com    FOR IMMEDIATE RELEASE

Investor Contact:                        Media Contact:
John N. Hatsopoulos                        Bonnie Brown
American DG Energy Inc                    American DG Energy Inc    
781.622.1120                            781.522.6020
john.hatsopoulos@americandg.com                bonnie.brown@americandg.com


 American DG Energy Reports 2015 Financial Performance
Site improvements result in increase of 16% in total kW production

WALTHAM, Mass. - March 29, 2016 - 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 $8,556,917 for 2015, compared to $8,567,553 for 2014. GAAP diluted loss per share (EPS) was $0.11 for 2015, compared with a GAAP diluted loss per share of $0.12 for 2014. Reflecting the Company's ongoing efforts to optimize its On-Site Utility production, gross margin excluding depreciation and site impairments improved in 2015 to 33.1% versus 31.0% in 2014, a 2.1% increase and a 6.8% improvement in gross margin.

Chief Financial Officer Bonnie Brown observed, "2015 was about stabilizing our installed base of assets and executing on cost saving initiatives. Delivering stable revenue year-on-year while generating over 200 basis points of adjusted gross margin improvement despite the loss of eleven sites is a validation of both our expense reduction efforts and careful investment of shareholder capital."

In 2015, the Company began 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; this should produce a foundation of high performing assets that may be used to fund future growth.
 
Speaking about the Initiative, co-Chief Executive Officer Benjamin Locke noted, "To date, approximately half of the installed base has been addressed and we expect to complete assessment and improvement initiatives at other select installations this year. We are already seeing significant progress in operating results and profitability from sites subjected to our Initiative and are hopeful we will continue to see strong returns on invested capital as other sites are upgraded."


Major Highlights:
 
Consolidated Financial Results
•
As a result of our focused efforts to improve fleet operations consolidated EBITDA cash outflows improved by $865,148, reaching $1,148,077 in 2015, versus outflows of $2,013,225 for 2014.
•
As a result of our efforts to improve operations and efficiencies, general and administrative expenses have decreased to $2,821,321 for 2015 versus $3,238,141 for 2014, a 12.9%




improvement. Overall operating expenses improved 4.1% generating an expense reduction of $215,789.
•
Adjusted gross margin excluding depreciation and site impairment expense improved by 2.1%, hitting 33.1% for 2015 versus 31.0% for the same period in 2014. Gross margin for the full year 2015 was a loss of 2.0% compared with a profit of 1.0% in 2014, reflecting the adverse impact of increased site impairment and depreciation expense which was only partially offset by reductions 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 constant, decreasing by only $10,636, or 0.1%.
•
EuroSite Power Inc. subsidiary success:
◦
Total revenue value of all contracted EuroSite Power On-Site Utility energy agreements as of December 31, 2015 was approximately $101.1 million using various market assumptions and estimates made by management, compared to $96.6 million at year end 2014. When including agreements signed to date during 2016, total contracted value currently stands at approximately $105.95 million for 4,098 kW in total capacity.
◦
During the first quarter of 2016, our subsidiary, EuroSite Power, executed two project financing agreements with Societe Generale and Macquarie. These agreements eliminate capital constraints on projects; any project which meets the company's return hurdles may now be pursued.
◦
EuroSite Power, received $648,917 in Enhanced Capital Allowance (ECA) payments from the UK government during the year for activities undertaken in 2014. We also filed for $358,780 in ECA payments related to 2015 activities and received this allowance in Q1 2016. The ECA program is a cash energy tax incentive for energy-saving plant and machinery, which includes combined heat and power systems.

Operations

•
During 2015, based on our Initiative, we focused the majority of our efforts on four cornerstone sites who make up 37% of the fleet. Overall we increased production by 32% and reduced routine maintenance costs at these sites.
•
We realized a substantial increase in production of 16%, measured in kWh, from our fleet as a result of our Initiative.
•
Revenue for the year was attributable to the following core markets:
Hospitality

25
%
Fitness
24
%
Housing
17
%
Health Care
14
%
Education
14
%
Other
6
%
Total
100
%






•
The revenue was distributed by energy type as is outlined in the following table:
Electricity
63
%
Thermal
27
%
Cooling
10
%
Total
100
%
    
•
In total, as of December 31, 2015, we operated 121 systems totaling 8,323kW of installed capacity with a total approximate lifetime contract value of $263.5 million.
•
We have a backlog of 20 systems, on a consolidated basis, as of December 31, 2015.


American DG Energy will hold its earnings conference call today, March 29, 2016 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. Please note this quarter there will be no question and answer session following management's presentation of prepared remarks. Alternately, to register for and listen to the live webcast, please go to https://www.webcaster4.com/Webcast/Page/416/13054.

The earnings conference call will be recorded and available for playback one hour after the end of the call through Tuesday April 5, 2016. 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 10079907. 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, 2015
 
December 31, 2014
ASSETS
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
5,587,528

 
$
11,825,915

Accounts receivable, net
937,706

 
1,140,811

Unbilled revenue
12,468

 
12,533

Due from related party
99,548

 
39,682

Inventory
1,112,853

 
1,153,927

Prepaid and other current assets
752,397

 
852,069

Total current assets
8,502,500

 
15,024,937

Property, plant and equipment, net
25,467,049

 
24,885,155

Accounts receivable, long-term
—

 
3,600

Other assets, long-term
52,829

 
92,148

TOTAL ASSETS
$
34,022,378

 
$
40,005,840

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
575,248

 
$
605,530

Accrued expenses and other current liabilities
544,624

 
485,570

Due to related party
1,171,863

 
630,805

Total current liabilities
2,291,735

 
1,721,905

Long-term liabilities:
 
 
 
Convertible debentures
1,585,264

 
1,645,444

Convertible debentures due related parties
17,030,070

 
15,864,215

Warrant liability
—

 
6,780

Note payable - related party
2,000,000

 
3,000,000

Other long-term liabilities
—

 
2,227

Total liabilities
22,907,069

 
22,240,571

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 and 52,140,001 issued and outstanding at December 31, 2015 and 2014, respectively
50,684

 
52,140

Additional paid-in capital
49,641,620

 
49,854,998

Accumulated deficit
(40,662,814
)
 
(35,232,411
)
Total American DG Energy Inc. stockholders’ equity
9,029,490

 
14,674,727

Noncontrolling interest
2,085,819

 
3,090,542

Total stockholders’ equity
11,115,309

 
17,765,269

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
34,022,378

 
$
40,005,840





CONSOLIDATED STATEMENTS OF OPERATIONS
For the years ended December 31,
 
2015
 
2014
Revenues
 

 
 

Energy revenues
$
7,829,022

 
$
7,808,933

Turnkey & other revenues
727,895

 
758,620

 
8,556,917

 
8,567,553

Cost of sales
 
 
 
Fuel, maintenance and installation
5,726,026

 
5,914,525

Site impairments
865,596

 
723,438

Depreciation expense
2,134,471

 
1,843,817

 
8,726,093

 
8,481,780

Gross profit (loss)
(169,176
)
 
85,773

Operating expenses
 
 
 
General and administrative
2,821,321

 
3,238,141

Selling
1,172,909

 
1,078,351

Engineering
1,003,918

 
897,445

 
4,998,148

 
5,213,937

Loss from operations
(5,167,324
)
 
(5,128,164
)
Other income (expense)
 
 
 
Interest and other income
199,221

 
92,928

Interest expense
(1,276,963
)
 
(1,402,493
)
Debt conversion inducement expense
—

 
(324,977
)
Loss on extinguishment of debt
—

 
(533,177
)
Change in fair value of warrant liability
6,780

 
125,485

 
(1,070,962
)
 
(2,042,234
)
Loss before benefit for income taxes
(6,238,286
)
 
(7,170,398
)
Benefit for income taxes
352,571

 
645,040

Consolidated net loss
(5,885,715
)
 
(6,525,358
)
Loss attributable to noncontrolling interest
455,312

 
636,464

Net loss attributable to American DG Energy Inc.
$
(5,430,403
)
 
$
(5,888,894
)
 
 
 
 
Net loss per share - basic and diluted
$
(0.11
)
 
$
(0.12
)
Weighted average shares outstanding - basic and diluted
50,689,633

 
50,999,408

 
 
 
 
Non-GAAP financial disclosure
 
 
 
Loss from operations
$
(5,167,324
)
 
$
(5,128,164
)
Depreciation & other non-cash expense
2,185,603

 
1,888,102

Site Impairments
865,596

 
723,438

Stock based compensation
299,189

 
475,899

Adjusted EBITDA
(1,816,936
)
 
(2,040,725
)
Grants, tax rebates, UK ECA and incentives
668,859

 
27,500

Net EBITDA cash outflows
$
(1,148,077
)
 
$
(2,013,225
)




CONSOLIDATED STATEMENTS OF CASH FLOWS 
For the years ended December 31,
 
2015
 
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net loss
$
(5,430,403
)
 
$
(5,888,894
)
Loss attributable to noncontrolling interest
(455,312
)
 
(636,464
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation
2,185,603

 
1,888,102

Gain attributable to distribution of nonmonetary assets to noncontrolling interest
(157,870
)
 
—

Loss on extinguishment of debt
—

 
533,177

Non-cash site impairments
865,596

 
723,438

Provision for losses on accounts receivable
84,274

 
49,322

Amortization of deferred financing costs
60,807

 
48,176

Amortization of convertible debt premium
(96,288
)
 
(109,332
)
Decrease in fair value of warrant liability
(6,780
)
 
(125,485
)
Non-cash interest expense
1,191,333

 
1,319,418

Stock-based compensation
299,189

 
475,899

Non-cash debt conversion inducement expense
—

 
324,977

Changes in operating assets and liabilities:
 
 
 
(Increase) decrease in:
 
 
 
Accounts receivable and unbilled revenue
122,496

 
(159,881
)
Due from related party
(59,767
)
 
264,606

Inventory
41,074

 
1,092,408

Prepaid and other current assets
78,184

 
(798,263
)
Increase (decrease) in:
 
 
 
Accounts payable
(30,282
)
 
(265,549
)
Accrued expenses and other current liabilities
69,684

 
20,610

Due to related party
541,058

 
452,589

Other long-term liabilities
(2,227
)
 
8,486

Net cash used in operating activities
(699,631
)
 
(782,660
)
CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(4,061,931
)
 
(5,649,433
)
Proceeds on sale of property and equipment
4,650

 
—

Cash paid in connection with ADGNY reorganization
(100,000
)
 
—

Net cash used in investing activities
(4,157,281
)
 
(5,649,433
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from issuance of convertible debentures
—

 
1,450,000

Proceeds from sale of common stock, net of costs
—

 
3,269,275

Proceeds from sale of subsidiary common stock, net of costs
—

 
1,486,329

Proceeds from note payable related party
—

 
3,000,000

Payments made on note payable - related party
(1,000,000
)
 
—

Purchases of common stock, net of costs
(152,377
)
 
(450,696
)
Share repurchases by subsidiary
—

 
(42,902
)
Distributions to noncontrolling interest
(229,098
)
 
(258,289
)
Net cash provided by (used in) financing activities
(1,381,475
)
 
8,453,717

Net increase (decrease) in cash and cash equivalents
(6,238,387
)
 
2,021,624

Cash and cash equivalents, beginning of the period
11,825,915

 
9,804,291

Cash and cash equivalents, end of the period
$
5,587,528

 
$
11,825,915








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