TKOI - Earnings call transcript Q1 2020

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Operator

Good afternoon. And welcome to Telkonet's First Quarter 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 statement:

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 scope market obtain contracts a competitive such ability and involve due sponsoring new technological revenues client. and factors, demand and in duration statements of of in internal uncertainties, risks as to to projects Such variability net issues size, the estimate and the the statement, Further Securities X-K found in be financial results information on can Form Commission. potential Exchange on factors company's and that on registration could filed reports with affect the company's its the no is in Telkonet update today to obligation under to items reflect discussed subsequent developments.

www.telkonet.com. like everyone the and in replay Lastly, to I be available a will via this Investor recorded Relations would be for made remind at that section available call of link will website Telkonet's

to Mr. Tienor, may With call President now the Telkonet's Tienor, I over you results. CEO, Jason would to the and like turn begin. discuss to that,

Jason Tienor

Thank you, for and first us afternoon, XXXX quarter you joining for thank all operator. Good earnings call. Telkonet's

industry Telkonet's target since end day-to-day been being lives a shuttered, hardest we've and the time. a quarantine the cause. the to our economic been and travel only we've of March Telkonet educational has institutions economy being Unfortunately, to in activity. dramatic and in ongoing of shift XXXX impact pandemic experienced industries call our short since the some experienced of due it's subsequent all significant the overall caused XXth, immune markets With hit slowdown on the in during significant slowing reduction While time not year that a

than pre-XXXX results, quarter towards end our levels, exceeding still said, quarter while our being This forecast the the were impressive results. for of close XXXX by the numbers, while our by our and first XXXX, XXXX’s the first a extended return quarter. to countered full tempered initial quarter ago QX were strong year less the began While headwinds results first our business, to

not demonstrates since impact QX was pace reluctance of the promising and business. strength on expected had continued pandemic that occurred, believe to it our achieve the its resulted is We our This Telkonet's our performance results.

Through company profit time improvement, the difficult in first to planning a reduction revenue addition, percentages containment saw same $XXX,XXX. quarter recognized the import the cost period. improvement strenuous profitability improve inventory to from a X% by measures, gross tariffs compared In the and and X% in XX% on This been advancements company a improvement loss by concentration at able we've in a prior XXXX’s systems impact recognized was of reduced during XX% quarter.

operating their after first and provide economy. are results businesses reduced A recovery continue at to benefit significant see fuel factors. a that we simply quarter, only provides pace, have is efforts pipeline other more or positive these outlook to canceled put moving a experienced in it's we've throughout depending continue to pace that on projects. normalized to the significant view All on expect This a postponed X company's long continuing the business. return and created to forward will the We been hold we've but a return factor until either forward a on forward, growth the normalized other economic that

in relationships and the for to pipeline and We projects, for growth towards market continued ensuring potential the same during use enormous future continue to growth pointing period, quarantine during recovery.

measures our the maximize business, for of efficiency operations business early as that and took Telkonet places as immediate impacts COVID would and to the Including to action all epidemic customers, and our our While it the the minimize the be financial a well our were was operations. these safer of affecting company recognized expense at steps decisive and when and communication, and ongoing and relief review measures, increased continued cost all of and enhanced initiation. review measures workplace staff measures available publicly reductions and block salary extensive on-premise home initial immediate furlough safety Ongoing monitoring staff, and financial travel containment. comprehensive ongoing economic cost review, mitigation include to management mitigation measures,

customers, zero recovery. to report Due and the that infections return to been Bank full phase concentrate of the services activity to the CARES of maintaining while on banking also for able of our partner Commerce measures, in providing for successful is We're staff Heritage happy exit report business a successfully for time to quarantine during rapid our of and an these activity. Through level the PPP San our to Francisco. through economic we've while first within all the positioning enhanced comprehensive applied and approved this, company growth able company trusted Act was the

quarter Finally, to and for since the divestiture you performance. networking forecast ability Telkonet fourth all XXXX previous its substantial earnings business. XXXX line a fundamentals company's division, Having in the meet growth expectations. was XXXX quarter company's demonstrated first call, its company's from both have of profitable as seen QX and top also posted for the positioned the strengthened Telkonet’s the results Early through

and begun in company's depth of all market opportunity as markets. strategic position our events participants Due Telkonet’s unfortunate Telkonet’s that and in the uncertainty leader strain discussions target value to a placed have participating grown transpired visualize has both significantly currently While recent as and opportunity. our that to the we're this, performance have forecasts, businesses interested and towards has significant number have the on proven the

through ongoing and recovery addressing from continue in position proceed the a the of current and successful pandemic, the rapid economy to market we difficulties the strive we XXXX, for slowdown. Telkonet As

post-COVID where assist technology that customers As we we're measures in this, the our part might reality. new of implement existing emerging new also determine Telkonet’s reviewing and innovative and to

discussions Lastly, represent number further increased outcome with candidates a value an strong we shareholders. that our opportunistic of analysis to continue strategic and shareholder and for

to With Gene? Officer, to Gene that, the over Mushrush, Chief I'd Telkonet’s discussion like pass Financial

Gene Mushrush

$X XX% revenues XX% year. to financial current $X.X $X.X afternoon, Thank of incurred Product major be customers. decrease $XX,XXX. decreases decreased you, compared for to you to decreased and by of unit Total period where when educational by three Ladies the million will represented compared decreased XXXX approximately March XXXX quarter value-added increase decline $X.X revenues distribution our Product in and XX%. industry XX% year. to prior XX, The dwelling at approximately Today, by $XX,XXX, revenues year did compared decreased revenues services. results. to Backlog multiple sectors million, a and when XX% a increased call support primarily million gentlemen, respectively. revenue revenues and to joining and revenues from $X.X due Recurring center first Jason. were to derived revenues the I all million, $XXX,XXX, thank prior $X.X $XXX,XXX non-repeatable revenues of us. good period, million the prior unit governmental hospitality summarizing XXXX was partners decrease isolated from driven to orders decreased X% resellers revenues sales and XX% XX% Product to were to million

to tariffs, staffing attributable of period. to were gross lower X% expenses in Gross to XX% profit material costs the inventory increased $XXX,XXX, primarily the decreased percentage the prior an logistical call to quarter for quarter, the percentage a was revenues costs of of decreased compared profit revenues. Material costs center XX%. for decreases XX%, period. compared of period, X% $XXX,XXX compared Product inclusive adjustments and The The XX% import product when year of $XXX,XXX to increase $XX,XXX the as to actual based of upon variance year prior year prior $XX,XXX. of

profit X% actual products a of gross adverse an quarter in X% core ended quarter as March on are the impact imposed the Our And for imports on manufactured to China. March ended XX, the percentage XXXX. compared those tariffs XX, result, resulted XXXX, in for

expenses incurred primarily with in $XXX,XXX, to the year decreases salary period. decreases and third-party quarters fell in XXXX a offset incurred trade and and each, in recruitment expenses decreases respectively. all temporary fees $X.X compared the operating million Operating prior $XXX,XXX increase $XX,XXX, for of partially of of $XX,XXX March engineering and by of to consultants $XXX,XXX sales XXXX ended We XX% variance decreases commission XX, $XXX,XXX in staffing. shows in The is losses and $XX,XXX audit attributable to of

Negative the was of capital XX, million working approximately cash and reported during $XXX,XXX measured and current We $X.X year. surpluses XX, respectively. compared $X.X We XXXX period. March year and operations $X.X prior last compared less in quarter XXXX the million approximately current XXXX used recorded EBITDAs, to ended March reported million March $XX,XXX assets the XX, XXXX million $X.X $X.X XXXX $XXX,XXX Cash as million a equivalents in at were in and at of liabilities quarters non-GAAP to measurement and for respectively.

March facility. XXXX of approximately As a the $XXX,XXX $XXX,XXX, on $XXX,XXX approximately and of credit availability base outstanding of borrowing an XX, had asset-based of balance we

outstanding an were: As a of the of and million $X base balance of $XXX,XXX, facility. approximately million, comparables approximately availability XXXX on borrowing of March credit $X XX,

XXXX, and opposed been not laying increase suspending and delays the the The uncertainty projects. significant significantly. Health been rapid COVID-XX Organization exposure outbreak pipeline Despite international World cancellations. and caused and/or have and/or contracted to off the these customers employees a remains markets. impact and outright aggregate the in globally. classified The quoting volatility the disrupted spread resulting has the from outbreak based of U.S. furloughing Thus sales challenges, company's March as active has In upon far, pandemic,

any. than our distancing accounts to and suffered revenues, industry, of the restrictions, our much hospitality as the temporary. market has generally expected At is this shelter-at-home disruption time, to that social as Due ethics, travel more largest for XX% be

this length unknown. pandemic severity the However, or is of

our products, and the supply products consequence, capabilities, and chain our deliver customers’ obligations, workforce's and could all for meet to our ability to be production a impacted. our our As services, demand ability

operations, and of monitoring actively on condition, industry workforce. its is financial Management liquidity, global the the impact situation suppliers,

financial While the condition a results disruption at adverse determine is year XXXX, we unable company this impact to on have flows time. material cash this reasonably of to expect and the for the impact operations,

loan Coronavirus and Business the an the note of by loan Aid, Act Paid March into of Note XXXX, which XX, signed April of $XXX,XXX the program company has interest XX, Relief, entered was approximately by in The bears April and per under Economic with annum Protection authorized and Paycheck on for Commerce was maturity part The See those American Small Keeping summary principal Bank been administered Security On XXXX. Heritage that of of Form is a a the XXXX. into for today terms. promissory the date Administration Workers Act, Program. XX U.S. has filed our unsecured Employed law N XX-Q and X.X%

cash. suspending company's postpone of to -- the company through actions and use postponement pandemic end the the preserve company's and on and response its the tradeshow results, the travel a to all number financial match of include These consultants, and canceling XXX(k) XXXX, inventory engineering In taken effects actions of operations the of suspending has procurement, attendance.

XXXX, management certain furlough certain of April pay other instituted early employees. and made a cuts in for decision addition, In to employees

PPP levels second the receipt the are no payroll There liquidity any in with However, the began addition employees, able the actions, of half to the in actions XXX(k) management the the that suspension to response foreseeable pandemic the in yield to the and of company The these delay operations company taken was nor XXXX. prior actions match. to of profitable restore other bring identified, implementing in actions loan, guarantee furloughed back the will future. is the

the to and proceeds near to on capital facility also term The cash ongoing working expects needs. its credit loan using its and to reserves the its company is support currently finance operations utilize draw

assist liquidity in Our credit meeting our us facility to obligations. provides needed with

terminated. deplete effect will of the the extend result amounts material any reserves a bank's commitment those to may of could credit the events financial and our these violation losses have be operating and under facility Continued The Consequently, and of credit operations. of the continued repayment borrowed business covenants. accelerated cash be adverse occurrence results in may of on could a

is and it and condition, evolve, results on of magnitude the full liquidity as to the uncertain impact will to continues company's of financial future it The COVID-XX have as such, operations.

difficult to take prepared as These sustain We ensure but long-term short cost impact. are to be containment is actions will company implications market the the continue become actions positioned and monitor known. critical developments to additional and more are to the pandemic's may

In to our closing, for interest, thank thank you shareholders specifically, for you your support. your and continued

the has management, gone of the success discord in Despite Lastly, behalf and personal on lives, company of the And employees. to your the sincerest steadfast thanks. offer to created our has professional commitment not I of COVID-XX unnoticed. our

Chief and I'll call Tienor. Telkonet’s now Jason the turn back President to Executive Officer,

Jason Tienor

turn Thank you, with questions take And to like Gene. that might to call have. back the operator that, any you the Operator? I'd to

Operator

Instructions]. [Operator

Mishra. The first Please question comes go from ahead. Vishal

Unidentified Analyst

that your line active contracted has think not Q Gene -- in challenges a that well line quoted aggregate remains the as significantly. which quoting There's I Jason. Hi, says and pipeline despite

XXXX. Does will it it move does like revenues all these what to mean, just mean? So

So or you could decreased the total that, will if that just be great? pipeline elaborate what has not -- upon

Gene Mushrush

take can I Jason, that.

the in set the been further Speaking actively surrounding with he's we to the projects quoting or our mean Director delays issues. Delays can feedback marketplace getting projects. mean of delays first kickoff Sales, second is, are from quarter negotiations were access or that of circumstances quarter either the that have because can of because in still delayed that

in For seen repurposed the condition we can't settings, leave due instance, have they're examples students being restrictions. universities, are being students to residential for know housed we international because where travel that now international

even the or ability So having getting access. consider to that us prevents having from access

pipeline probably north Two out know million earlier, totaling direct COVID-XX pipeline, is Jason, if been pipeline. are we mentioned there -- $XXX,XXX wrong, total, and what two pretty far, that the of stages correct XX various I'm So a feat of had is Jason the there cancellations given of circumstances. have less but a simply combined of result I the than me projects in think impressive

Jason Tienor

companies, further period stages groups quarantine at we've their operating continuing what the that is a the planning performance forward of encountered through so moving of Yes, ownership the of with or number course are management response, projects. companies that businesses,

writing off with them as but of making seen haven't ground, pull We in actually many quoting seen the the forward, them choosing, trigger decisions, kicking move we've shovels specifications.

moving to to the will of of once get to when industry of the hearing the they're I'm have economy, want out the position companies largely waiting the experiencing associates of a understanding a they're continuing immediately be this, from up projects the we leading what and all they in with of come basically, to with in that the currently what But forward I'm project. forward initiation activity think a I begin and So how temperature my they to industry on. that are try better working and is

Operator

[Operator Instructions].

Please Our next ahead. question Ed go Stein. from comes

Unidentified Analyst

a because up Hey, one perspective, all a things days you've think average but on of from. From in worse. I'm remarkable a tell able you. hard Jason. I I good XX% may have always hotels, is people to keep this achievement. conference any very quarter traded told publicly loss REIT. the recover the is going did, about you what hitting be two be the And or had occupancy of It in the wouldn’t as where without impact be least to That my about within board got went Southeast, they're XX%. was And could that's to what in from as were at against to small question. realizing the you to call I on, you our

system. customers Some of among the Internet for on our hotels first were plug-in, Telkonet’s the get

the it extra the conscious at And have it break safer hotel, a guests an don't fever staff register possibly it idea installed you to the of would read money do can the feel be of because if But it else addition just itself. of technology a means so we So about while to would and for I a in always be app, be safety. the back development. room staffs help to are presented know that an able could to platform, get be sort But whatever encountering research try taking? have whole a and would what very the that was in off the that. worse. to thinking be And for either would have wouldn't guests it hotels the lot front was Well, way be an temperature the it also to all would fever, make would somewhere, or everybody guest giving your desk there because

to think measures it? And have so hotel. not back make at sometimes affected in can't away are working restaurants getting the that you into is that hotels, about they're that is that trouble Is enough even you and nobody people who there that, sure because place is it far assured

Jason Tienor

at, this my phones. believe must conversation laugh only or very same CTO our yesterday I afternoon. I with be offices our had I bugging because just you

able of we innovations We different hardship created what with are technological and we not and be come we're new order just of but might our with efficiently, expertise current conversations assist we our say to customers hardship that might currently what that this all what having. at might And can and to and to that. There how use a do at hate same technology go are reviewing of have potential a through to value. very and been this taking might customers develop, provide up that where greater able look and were we help effectively innuendos it advantage And one lot the today least, but new also I our move innovations in be along by more of, take is we that.

temperature winter red a that has room, location where Basically a If the are tried you that you type laser for, a and gun, think you're somebody very that a the point specific. to it's point. that certain and -- temperature if if configured to because to at came distance, we're the coat our has read a who appropriately, an and or you particular point getting not to going you try to think at to you of sure back when gun reading point risen from have accurate talking you that type about, to that you're of fairly location, use products idea, person's it if temperature take somebody it's making a and reason. that's they temperature. accurate just you installing the the looking It’s location the to shoots in same not within taking But information temperature of give same a very gun a wearing that if think specific it's of the for we gym, it be you'd at you're it or thing of very,

lot using in to renovate to need we're they've to trying or a on staff our put moving systems so and that But want it. to unlimited forward, cetera, staff, say networks where of limited to if hotels that update not their something is in spending opportunity they going we that current with our we solutions, the can there. AI had along interesting be cloud if very of to evaluate to our determine and their assist doors one them, I'm if hotels, place you be goes there's them, them, shut and the our to you is their entirely namely having staffing. research. there do not do we tool the that room share through them that of to to you time, it’s enormous what equipment. with their continuing idea. things to if limited continuing able we're customers this because able they're every very similar that to So, a an That I innuendo do can just and directing with we are trying but a to period to rather services, online found during described clean think they're maintain is build et than move time, they be What

our we're So, with focusing that on during we using one and we're subscriptions our services working them our that as to is found as of value that customers things providing ensure this possible. cloud period and much contracts the

Unidentified Analyst

that and whatever, open or know Is that are I the there industries, over like colleges go affecting to the sector? is going hotels. question. or different other your to fall in the universities which are problems in uncertainty One virtual education

Jason Tienor

I since students making months, projects over because pull What other periods, to cleaning for planning while our because the move we've to leaving such this see in into they with work moved able expected were last more the universities are have the their to as the and and using perform students that be we early, out summer to activity question, of are ahead normally time take universities interesting rooms rooms namely, simply that, education, several the Very the I return. the condition summer perform expected the in while out higher spring. sure they're is and them seen for the in students though work, to place

which this school can or say a earlier week But way level to So, the just different dorms. that we're a new with I of you, in it's won tell difficult seeing activity was we go. still eight universities. one informed seven going to they're project for summer, I

know the do But So depends Universities decisions in it place I I ongoing. are like really are. have that activity. these industry within herd is to taking that there individual say projects any bit seem is on can't universities hospitality. mentality type a more there of what that

Operator

and closing are further management you, ladies some it no gentlemen. There I'll turn make you. questions this Thank Thank to at remarks. to time.

Jason Tienor

in it Thank very that, I say Gene’s to I operator. everybody, to all be this I'd like work, much statements effort. final whether all like that time difficult staff has a I outside employees, thank has whether done trialing hard your amount for of economy, health, know of the reiterate and the would very a job be know been for of With that the circumstances you is our it the accomplished to you be during maintain and it herculean. whether normal been this trying working work period of phenomenal to the has my environment.

So rest management would you and like of I, all. thank you Gene team the as the to to reiterate, as well

this afternoon. us that, for you with thank And all I joining

have to stay us do at a free everybody and day please If ir@telkonet.com. any contact wonderful questions, Wish feel you remaining healthy.

Operator

may Have today's This day. Thank a All parties conference. good disconnect. concludes you.

Telkonet (TKOI) 15 May 202020 Q1 Earnings call transcript