TKOI - Earnings call transcript Q4 2017

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Operator

Good afternoon, and welcome to Telkonet's Fourth Quarter and Year End Earnings Conference Call.

As a reminder, today's conference is being recorded.

Before I turn the call over to Jason Tienor, Telkonet's Chief Executive, I would like to read the following statements. Certain statements included in this conference call may constitute forward-looking statements within the meaning of Private Securities Litigation Reform Act of 1995. Such statements involve a number of risks and uncertainties, such as competitive factors, technological development, market demand, and the company's ability to obtain new contracts and accurately estimate net revenues due to variable in size, scopes and duration of projects and internal issues and the sponsoring client. X-K factors found affect statement in its on potential results company's and on Securities reports be the can the Form information that Commission. the could financial on and Further Exchange with filed company's registration obligation Telkonet discussed today update to is to items subsequent reflect under developments. no

at available remind of that be Tienor, replay for President you made may call would With the in Investor discuss be section will www.telkonet.com. link Relations the I results. website would CEO, and over Lastly, now everybody recorded, I like Telkonet's available the via to Mr. to turn Telkonet's this to like and will that, a it Tienor, Jason to begin. call

Jason Tienor

quarter interest earnings your analyst third-party you certainly appreciate Telkonet, We in and and valued year-end an Thank everyone, investor XXXX Welcome, operator. employee, continued call. partner. you to whether are today's a client, or fourth Telkonet's

well markets, value as that a past our debenture also Internet-of-things, into manufacturing Telkonet of well to and the as because large our as our our since new continue both of to support With evolving to the to existing year of and automation. warehouse company also highest needed provider scale intelligent year leading to of co-divestiture business your allow of assets, deploy move a will amount a within dramatic of new change the deployments the previously of operations. We become for but automated Telkonet brand in Telkonet’s to new was Internet not goal encountered. business of platform space, XXXX headquarters more the expand our transition and manage to more of penetration quickly an a accomplished area rapidly as work and we IoT and the to efficient has help and to enormous commercial

partner run on. divestiture of the operate opened replace, [Indiscernible] business. the our internal staff fill that this, We systems all only solutions positions to software as improving also we with most the that needs for customers and [Indiscernible] being used the had provider our the recreate needed that to by leader for Through accounts hospitality rebuild the of partners, selected new as service. in these our items of such opportunities proof set initiatives opportunities is to been international of these engagement From certified financial throughout deployment markets meet corrective in being respective of needed the and tool some infrastructure expensive in requirements for part all Telkonet companies foreign we grow military in business on products but and to able have the the partners, we’ve significant repositioning, long-standing our continued awards We to the operations energy opportunities fulfilling to and leasing and of some the hospitality has of and us also the redevelop of manage recreate in [Indiscernible] Because in These to through another history. of path a one that in America. opportunities that currently industry, include we largest throughout and franchise. shipments developed the the largest some major only service relationship nurture with not core its and course

focus. and driven a [Indiscernible] path to by new continue our We catastrophe, capability

with we renewed profitability a As both on and the [Indiscernible] our sustained revenue [Indiscernible] recurring re-engineering begin efforts proficiency. XXXX focus XXXX concluded, and and

year per the the infrastructure from continued year’s our on per a we’ve in Telkonet’s revenue had we after OpEx lower resulting and in headcount strength growing of resulted margin difficulty hoped several outlook share. revenue provided XX% the as redevelopment has Telkonet operating of efficiency of to over While This the six as improvement Telkonet’s as the affecting inventory. of and manufacturing quarter ending substantial us and revenue [Indiscernible] full drove components on and With steadfast over loss between fundamental gross forecasting [ph] effecting by on in quarter increase time the difficulties in our company by Telkonet’s declining over quickly overall lead cost year-over-year QX and re-divestiture growth increased focused income the the profitability, initially these [ph] a prior growth. enjoy more to SG&A gain purchases One created has business year X% through significant also a liquidity XX% ground in impact and quarter our increases recognized of growth been readily global by of focus extra and ramping months demonstrates our to lowest employee history much cents and fixed business. is highest and the EBTIDA quarterly overall as for has quarter. year, revenue Regardless, financing [Indiscernible] prior

One with the we’ve [Indiscernible] the commercial proceeds that QX is provide platform Ecosmart its of the is to of for that company, the for vast moving comprehensive process the strength order that and are opportunities others be project will to and This yet to still annual expand the on we strength commercial conference [Indiscernible] the As them, of intelligent years demonstrate release over value and it that during leadership. needed entity, integration of is our to with environments platform, learned and the we be the our mentioned easy-to-use the utilizing thrust removed. our the simplicity that the is expand existing our currently in provided. tools Based rules upcoming released of to automation market continued largest action through to several we’ve and valuable force and will previous partners [Indiscernible] significant also release the party seen of driving of in enforced. it’s extends benefit target development a comprehensive in target [Indiscernible] investments, and market with We’ve the last integration. that to number in

driver As we the of will through remainder be new XXXX, of and as outlook. move this more continued acted evolution we and the even our this opportunities generating innovation of solution that

about excited This Telkonet’s Telkonet has expertise, phase of with [Indiscernible] financial once development and Mushrush, company’s the quarter we call forward continued all to Gene opportunities review. pass our developments. demonstrates in and sharing fourth interest CFO, are the innovation. that, brought these and thank you look exciting of XXXX that our for more company’s to our Telkonet’s I’d like yearend again to We of to new and for benefit Gene? your and it the growth I’ll

Richard Mushrush

good [ph] reviewing Today, I will financial welcome. XXXX be summary. yearend and Ladies Jason. afternoon, you, gentlemen, and our Thank

For last operations XXXX total X% the $X.X Recurring revenues at compared $XXX,XXX year to from ended approximately to continuing compared grew million the revenue year. unchanged prior to December XX, year. were

approximately of decrease approximately since were profits measurement were from to Although million relationships and December for million million non-GAAP XXXX $XXX,XXX net incurred to [Indiscernible] a compared Overhead prior EBITDA’s chain outstanding and December year, XXXX decreased reported XX, income of the a operating wholly decline. credit result in facility to year million one-off year-over-year, on $X.X $X costs, to Supply $XXX,XXX finally Recurring increased We of losses million of to assets million last XX, and and staffing. operations and subsidiary. net our leading available XX, remaining of primary posted the the was ended Telkonet at year [Indiscernible] Negative at to measured inventory the incurred channel of item. December of $X.X $X.X to increased market of as approximately for the compared X%. continuing compared million XX% reported million million and to contested capacity proxy compared XXXX reporting balance borrowing XXXX. result and are XXXX [Indiscernible]. tax aggregate to revenues to million capital same continuing equivalents those [Indiscernible] at important revenues current via educational $X.X cash operations activities $X into decrease this of for revenues $XXX,XXX Reported discontinued and than a disruptions XXXX These $XXX,XXX XX, the they XXXX the and of December approximately million are revenues and the year-to-date XX, used in last XXXX December working $XXX,XXX and gross recorded We ended and evaluations and XX, company’s The as last a fiscal growth. XX% unchanged, $X.X our of deficit XXXX XXXX to channels $X.X We respectively. compared a X%. owned We year metrics factors million compared period used $X.X for during year were strategic $X.X reduction million last $XXX operations operating XXXX in initiatives, diversification from the personnel factors at incurred approximately respectively. to X% December freight of are increased loss year’s the operations Income $X.X Significant liabilities of respectively. $X.X [Indiscernible] and contributing events current million year. the restrained compared $X.X a Cash for was was ended increased less XXXX surplus period. and $X year. same million respectively. years approximately

indemnification compared sale escrow at full anticipated subsidiary this approximately be X.X certainly Our current to in released currently The of April. our in was year to $XXX,XXX associated restricted ratio rewarding history. XXXX was disclosed a the year. challenging time as last cash is with X.X in

significant build amount in and normalcy prior substantially the ten of of third of successful the quarter During the expended of By this period period was – sale, process that lead the were of complete the Post returns. essence infrastructure resources synergic a quarter transition and the new first retool. sale years subsidiary. end over the to

historical and levels back specifically our for as and international call larger in continues, our average platform opportunities thank thank I’ll Executive you advances you flexibility to your shareholders turn and the your XXXX development closing, Chief Officer, During Telkonet's and expansion Tienor. Jason persuade. President to than work now for our product were In capital support. interest are continued paramount

Jason Tienor

With might hand Gene. any like the questions have, I'd operator to that, to operator? you, you back Thank call answer our

Operator

you. Thank

question be We [Operator a answer and will session. conducting now Instructions].

of question proceed. Our the of Private Please Nelson comes first Investor. Brian from line

Brian Nelson

are how Jason, you? Hi,

Jason Tienor

yourself? Brian I’m and well,

Brian Nelson

today. – on. an all many going as if sure broken? on I could was actually the REIT because hear what’s it, muscle don’t Your very often See, But saw people I’m people trend was stayed Good. we know that not doesn’t

Jason Tienor

IR do Sorry your have. give directly to anybody on we’ll you [Indiscernible]/ call us questions, you ensured have answer a and might But still is our questions please hear if listening, try who that line that Brian. you to

Brian Nelson

little international I partners bit heard are a up? if partner, new the about that joining international

Jason Tienor

Yes.

a relationships to of South beginning their move the lot regions America do those the the efforts we’ve performance East Middle we’re partners about couple a those of because of at very in XXXX their year, boundaries the our in for couple of and this footprint We ability due and the fostering business spend budgets, have and [Indiscernible] been over growing and last what we in year seen so begin that’s to of U.S. going excited beyond domestic to of

Brian Nelson

one. was That Yes. Okay.

the one The colleagues was coming with other dorms? for board possibility their more

Jason Tienor

Yes, absolutely.

we that specifically You’re which a being provide excel the our of for into that who educational area to growing the traditional energy we’ve we beyond become of us a deals dormitories majority relationships through solution us [Indiscernible] by been to number largely moving [ph]. that of part we [ph] business area trust expand is education able going with where and record fastest mentioned far buildings those. administrative right and an us of their new specific academic for service opportunities absolutely because forward, partners and as I The area significant being companies areas of currently with the

Brian Nelson

our broken help contact lot have Okay. your you your up had of people some [Indiscernible]? know effort about I put was might that? Anyway, That’s appreciate message pretty all team much. you a Again, there. into

Jason Tienor

Thank you.

You bet.

Operator

Now of Breard next Hodges our Capital. from comes Please [Operator you. Instructions] proceed. with line the question Thank Mike

Mike Breard

there? sell conference the or beginning to you now of saying product now most years. without But Are how – hear like you, on the your product hardly your people actually several for for call things demonstrating or months six product [Indiscernible] wanting it call. what can seconding see Just works or market you

Jason Tienor

That’s Mike. a very question, good

file last fact In the that you either seen and with run would quite performance installation have of demonstrate we limited understand prior we to additional the savings the while a if solution of customers, the have model the to products. the solution in or to

that of the because seven, in specifically deploying already that of an enormous data We over market that we this kind past nine subside had things solutions in have the they seen of set market. show years eight, have

balance the still the new MTU do we’ve a seen secondary simply the is to newer able in isn’t say have can and on service move to or newer the potential that where what sustainability order provide decision [Indiscernible] quality and and data the to key still they’re to of have or we we’ve market a [ph] savings do last part seeing with an XX automation there a a what technology that of MDU, that move be provide them that education, installation. to for of adjacent [Indiscernible]. phase of value as those market and capability larger We’re We set offer lot competitive much to the teach secondary is military, deploy analysis. on to like is markets they into call about quickly these The more product move what course and and markets one and the that provide solutions that ahead We we type still of those through so thing what moving seen we months of understanding forward really making as really a solution, doing. understanding a

So, – to your answer answer is question long-winded yes. an to you

Mike Breard

Okay. Thanks.

Operator

question Plymouth the line Please Joe Thank Instructions] Pierce proceed. next you. with from comes Rock Our [Operator of Financial.

Joe Pierce

Jason. Hello,

Jason Tienor

Hi,

Joe Pierce

me okay? hear you Can

Jason Tienor

Thanks just I can hear you you. fine, Joe.

Joe Pierce

from how Jason, of be curiosity, I had great, much to everything seems comes the on X.X Ethostream? but million, sales

Jason Tienor

X.X. Roughly

Joe Pierce

X.X.

Jason Tienor

EthoStream book. [Indiscernible] Again, over recognize the

Joe Pierce

right. All

had you that, year. So good even a without

Jason Tienor

Yes.

that utilize previous order will and the but or to us when are ramp it of to stated matter not was business standing where obviously the be. about was up itself. to with its take to it talked to the we own simple little knew and have in of the profitability, revenues knew [Indiscernible] a divestiture fact Ethostream, we As bit valuation to actually be calls Telkonet decision right EcoSmart's year we expected we on that we simply was divestiture in still agreeable in only profitable EcoSmart We the longer cycle sustainable,

Joe Pierce

have bank public, as name into take that forward? now far out goes the get as stand you [Indiscernible] any you up plans investment have And it have do Excellent. and that to investment an

Jason Tienor

a perspective, is really are was post number single Gene have apologize work. who at rehire year of of forward people. had initiative all business. our rebuild for from gap, was enable a but we operating We up about software those it. one finance [Indiscernible] enough moving to the positions [Indiscernible] all facilities, business that had to own of to hear to level the board have in in and We operations had our market order of as our enormous We XXXX was the fill seeing what of we and move amount I our to of divestiture I call and

business to the it back to and So business be that. doing continuing maintain but products fully partner simply developing customer, [Indiscernible] sustain member from it bring was a staff where every XXXX to up to our to order and in and really needed to

moving So overall. that concentrating XXXX now we’re marketing on of forward and Telkonet was really the growth

quite As we strange right now. we’re moving during working we’ve term years have of number the them we perspective also to that on call development the the the really gains maturing the phone opportunities last and in to that a year operating several long been

those on So the bringing our benefit and concentration [Indiscernible] and business then focus overall. of and value the forward is opportunities into and utilizing

Joe Pierce

you. Thank

Operator

questions remarks. speakers to appears the It closing to like have hand queue our I’d time. in we this back floor further Thank at you. over to no

Jason Tienor

joined as of everybody apologize a in who the earnings that has We once you much, clear And for call. Telkonet that We’ll again Thank today to we conference is recorded for putting call up call. quality thank the you operator. us the to be will very try possible ensure as website.

regards you’re for you looking for or joining thank unable are at contact live. you please the to Everybody conference to IR a results our for call in telokinet.com, information great call evening. feel to earnings they to has that at us Again, should our that with afternoon. ir@telokinet.com If see this time the

Operator

This concludes today's teleconference. Thank you.

for your You time. may at participation. you this your disconnect lines And thank

Telkonet (TKOI) 2 Apr 182017 Q4 Earnings call transcript