TKOI - Earnings call transcript Q4 2018

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

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

Jason Tienor

the Capital update implementation impacts impact tariffs through Closer to production with a these and ongoing thank to the but costs, also our an of many purchases of by pass margin an increased with home of us We a far. I for are activities caused dramatic as impact gross this a interest customer difficulties a macroeconomic all substantial ladies costs our call. The onto had you've patiently afternoon not market. you businesses waiting as your only Good throughout market XXXX year afternoon's full aware year appreciate been of XXXX share delayed we're We our continued to the our to on due due support ROTH Chinese revenue fully and inability forces. had year on Telkonet negative understand for negative overall progress of to Partners. on eager higher earnings throughout that Telkonet our that believe for you and realized experienced year. summary number you. end XXXX well this that Thank gentlemen performance joining of

us is also not company, growing technology with this required to industry-wide order out due the months XXXX a reach items to these as lock-in lead necessary fragile as placing initiatives. lead saw requiring as pricing, across small XX far but While reaching purchasing the pressure long increase increased planning in a This of saw quarterly availability as toll times logistics an limited pressures. as increased sector. far prices competitive well to our extensive on impacts growth product a components manufacturing shortage Due pay also impacts product when technology unique volume to our shipments. take for and Telkonet on to and

signs today, either. pressure we've of not waning this As of seen

operating performance year full peak workforce. achieving the of the impact due Another difficulty to in was capacity a shortage in qualified the

personnel. is in production this also unique our this logistics we're operations everywhere basis to department bears is of Telkonet, to impact it that felt a not from and growth and a daily facility While on period our rampant mentioning currently

were having strategic activities a of undertaken amount significant involved not early a review revenue projects. resources spent Lastly industry generating XXXX in with on

have for the XXXX may it valuable taken while an appear and all to on overall for said XXXX. While a company. year being truthfully experienced continues performance the success growth this banner was of enormous filings, us this number firmly that on of financial was level on impact the year have through of we our of not reasons, measures positioned it to an With the that throughout a

but year of what we're while have the demonstrated in just By anything, shown a full our revenue of of will months with million success efforts revenues, in results about we excited XXXX. year backlog activity XXXX early in the for Our three than growth. it have $X.X less flat and the mean million first year-over-year entering minimal performance, $X.X in sales sales the over was but resulted our year

This record than new $X resulted million in channel than sales in Our in $XX of in recurring increase growth in more of A more trending XX% increases large was year also of sales $X.X XX% XXXX and than in consistently verbal into volume of but and well. activity by carrying revenues benefits sales seeing million partners, our XXXX. a and last more in additional these an that reason XXXX. has of cultivate XXXX record quarter-over-quarter XXXX commitments growth, marketing sales efforts With with our the to reaping years was partners. the over activity extensive we finally we're million annual for are over XXXX channels. growth sales driven backlog performance significant activity channel we're the sales the performed into several by for sales these and Not our rising as in continued only volumes seeing

XXXX projects. company into completion of Additionally, several early channel also projects, the backlog years developments significant making. saw another growth entry in by construction large of increased as into projects This that due future the the visibility the periods partner growth entire excited about this and increased existing of partner is volume initiated XXXX and relationships fiscal new indicator to several early the the valuable is well as in year. providing successful

in one award ESCOs, in that sales the potential of is and across projects potential of provides which The Working largest market, the this deployed first project was first phases the one its also million sell bases. first first as several of engineering with residential ongoing new the was of being This relationship. projects able largest deploy of the and of nation's kind military expanded these as and to revenue potential and the Telkonet project market. several to product the of existing within residential well company's was history service is the $X

developed over as XXXX this first offering with the further requests were the was new last responses large first XXXX, second award project in in specifically well. totaling a application and the and shipping first quarter integration during this extensively. first An customer expanding recently was tranche development product place first to product the and units. happening of This shipped and for services more of first recently years shipped associated had the entirely for relationship the developed opportunities the XXXX product minimal awarded with in the within XXXX. four intentions Because with support products and project While than the and taking QX

into the Additional testing taking deployment first phase is place expand to two. currently

is the Hilton Room Initiative, Connected of the announced been wins company's extensive work Another Hilton development deployed first years. the than effort the recently connected some example towards more certified two and the to with for is We've device in testing room. of largest within

markets. of for that opportunities new As participating these both two enviable only deployment in developed the recognize the the installed next to we standard see properties, engineer expect position multiple than and years. the in been brand and and several one several first also were and providers and corporate the for target trial work and Since expand we've Hilton designed those offering products certified on within in internal having to Room time within able several within program of our is within able integration fulfill been products over relationship more XXXX significant of platform. close create to their within franchise wide market valuable Telkonet significant this initiative. potential this Through gain our to value demonstrations wide Connected opportunities to properties the the

positioned As grow and large you can of an by a in unbelievable and program a already company borne activity The successfully year proved to win the efforts channel is to longstanding have from XXXX perspective. see early for The performance yielding be has results. projects are fruit true. banner sales

forecasted vibrant company has provide record Our backlog XXXX comfortably meeting moving a channel the for and ability to its for to forward. sales visibility goals positioned

as growing Now and because our developments early demonstrated, the automation ultimately more maturation of significant we -- our target early interest on, stat witnessed market and increase industry could as sales strategic opportunity have discussions both in interests leader performance yielded revenue recognize in growth synergies. this market as Due and value. of shareholder Capital continue a and is been a Telkonet's numerous of generated a our and IoT our evaluated strategic strengthen have our markets user interested analysis we've platform Telkonet's to for a ROTH savings a technology to in These experience, transactions and Partners industry number technology potential activities of introduced that solutions. energy exercise, we variety position chose a marketing evaluating opportunities level we've gains market that to through investment platform that in partnerships to parties end and IoT be a and think available this, the participated the expands, penetration might and and as solutions large number recognize of and the prominent complete presentations of provide to results. Through increased

shareholder of strategic integrations and of to transaction. a strategic number various these a as Telkonet's strategic of approval market to Obviously, of the of difficulties company addition conversations value variety executing is a partnerships type In the been transactions any a negotiations in types. opportunities, participating potential number of of and due carries in interest significance technology receiving a through of substantial matter we've ongoing position regarding public Telkonet's for requirement

through inherent gain to interested that ROTH, process Telkonet certainty ongoing you forward moves negotiating approval. As this to this our process can look proxy through there shareholder process to having and a until And and a manage for to moving discussions additional party any has working continue very difficulties complete share with no in information imagine we through soon. transaction after are

additional as May soon I do we same. XXXX in on shareholders first meeting completed for information extremely well QX as earnings to and watch you for make proxy and that and all proxy Telkonet's ask noted As encourage regarding just positive your items shareholder results, vote quarter our our call upcoming activities would to any May forward your XX. our XXXX XX ongoing sure shareholder look negotiations to with on yesterday upcoming the we've after fellow

QX. performance As saw a in a its activities ongoing early our channel successes, Based see I mentioned have year, we this performance we throughout partner fantastic success opportunities substantial with like traction strong to of markets earlier, already to Gene portray you. on financial we've your that, success, interest look hand might Mushrush, you for financial us our appreciate and strategic year expanding may and With the the I'd the backlog forward XXXX have. experienced review performance our and questions framework pipeline, the a that the truly a not Telkonet's successful expansion XXXX any positioned over Officer for while us. the Chief call to in and for answering We continued of and the currently ahead Financial quarterly

Gene Mushrush

will and Thank you, Jason. I XXXX gentlemen summary. financial Ladies afternoon end welcome. and our year be presenting good Today

For XX, during $XXX,XXX year. the increase the circumstances and year. such total as year ended grew educational XX% transactional grew our revenues a by non-recurring year-over-year are $X.X December offset X% approximately million approximately majority to in are in hospitality similar Recurring compared decline revenues based scope, The to to timing last of current resulting revenues by in which A budgets variations. revenues was revenues. XXXX, influenced

control of the the with XXX recognition Accounting versus promised most may ASC superseded for are outlined The services contracts January significant single a guidance nearly XXX, by concluded revenue contracts company adopted customer. of revenue the XXXX, past based company all model an impact X, to You to from was topic timing transferred obligations. revenue on Codification customers a legacy recall related entity recognition combined revenue or with when goods on guidance. Standards

a the revenues For gross compared time to at this relatively Form profits recognized $X.X would a topic. guidance current X% at on of Please for were revenues of new recognized The prior was standard XX-K margin of over be our time impact Gross when in the XX%. upon completion a in metric. million, percentage expanded year-to-date $XXX,XXX. to on percentage dropped disclosures these contracts refer not unchanged had course past to decrease points approximately while of based

government July federal of As on mentioned the large a China imported imposing from number during second our in tariffs U.S. quarter earnings XXXX. call, products began

and to manufactured are in said are products China tariffs. subject core Our

$XXX,XXX softened by imposed the impact The last respectively. gain gross last million in approximately This XX, of in in and and were During activities were on facility and year-to-date and continuing was recurring operating for capacity margins $XXX,XXX representing same and approximately $XXX,XXX December XXXX additional X%. million net respectively. XX, respectively. general an ended tariffs to sale to years a the XXXX compared during XXXX equivalents was $X.X December XX, respectively. We $X.X losses decrease. growth $X.X at year incurred Telkonet years XXXX on balance is of cash for adverse was of impact of liabilities on million working non-GAAP ended at of where of XX% capital the and operating sale XX, the administrative of recorded year. $X.X less same compared approximately credit XXXX in the operations the our for approximately year XXXX and expenses million XXXX of primary wholly-owned and to subsidiary $XXX,XXX reported and continuing for million as was XXXX million $X.X for current X%. the $X.X EBITDA year. $X $X.X reported compared compared XXXX measurement of the at assets of The from million a million $X.X $X.X We fiscal and fell to and operating revenues related decrease million December year Cash to of million Non-recurring expenses period years company's to compared XXXX. the surpluses for components the and the approximately subsidiary of loss revenues. incurred December prior was XX, XXXX current wholly-owned and XXXX, operations year. respectively. $XXX,XXX $X.X Negative million year-over-year We Sales, $X.X period $X the XXXX outstanding reported to expenses December the a ended of available measured used income $X.X We million $X million approximately net the million million XX% prior

to at last Our this X.X year. X.X was current ratio time compared

to XX sales Our average year. XX to last improved XX% outstanding compared days daily

interest time capital the shorter efficiencies cash and expansion managing more Thank and borrow, Jason an Telkonet's in the A Chief increased greater for at of specifically. liquidity cash from means cycle the into capacity the and into fund Executive support. indicator product Our our conversion new leverage last and continued your to days and In thank for cycle less XX company's to discounts you you I'll business markets. closing, of to Officer, via increased this opportunity Tienor. XXX an liquidity working assets President to call now lines turn spend to translates which your to shareholders year. need back

Jason Tienor

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

Operator

Instructions] [Operator of question. the first you. investor. Thank your question [ph] comes from proceed Please with Stein] line [Ed Our private a

Unidentified Analyst

remember to if to where able I Hi challenging you a And were their and less installations? go tell that on a with the the Internet, you our use again of the all our could don't do orders It it's initiative few of like without from installations the correctly all a years we sounds lot to to challenge. effort ago, a of but where put trained a whole crews. had now? Trane whole do we we then, with Can year handle all of the the installs Jason. Can for been up us. you you because be that lot to instructions personnel so an on Question, people of need to people bunch stands involvement me how

Jason Tienor

the It's group. care majority third of We of We part our integration our and contract great do, as Ed. of legitimately party actually by taken a question. services have installations operations

different three teams. We have

as We large for our part installation team our that are gentlemen staff fourth of team, team. those and management team. time development have of two project direct team only oversight have We be would members full used and onsite installation project largely our support our team The projects.

growth so don't staffing moved sales that we the full their partner in from four ago, for XX% has were our of that. of mentioning just Trane are have partners year partner example So three largest many for own do installation services those provide resources just -- channels installation partners much did of where in channel results time for like years that because our and that we less deployment through we channels. And Perfect Onity, last very of of to through, are move our partners channel under partner than our we Johnson bulk Trane, all through sales XX% and your Controls. sales annual the of same

Unidentified Analyst

was What the first?

Jason Tienor

it's Onity, a large it's provider, a subsidiary, of UTC. a subsidiary security hospitality it's

Unidentified Analyst

Okay. Thank you.

Jason Tienor

Absolutely.

Operator

of remarks. closing over audio there like I this to questions At further would portion for management time, conference. [Operator to back the the Instructions] are turn conference the over no

Jason Tienor

the be XXth QX look Thank Please on thereafter coming all our make may you, meeting. May anybody up your shareholder you very earnings with as results. will proxy wish know proxy, and we and and afternoon. the Once in Telkonet's your returns you your our I for and With earlier a the else notes questions May will company attention closely it we thank as shareholder having review apparent that call us, great for XXrd, any be shared everyone, Operator. following proxy contact annual interest again sure and you that a for Telkonet you on

Operator

conference. today's concludes your you participation. for This Thank

a lines wonderful You time. may your your rest disconnect day. of this at Have

Telkonet (TKOI) 1 Apr 192018 Q4 Earnings call transcript