SOURCE: Telkonet, Inc.

Telkonet, Inc.

November 12, 2015 08:00 ET

Telkonet Announces Third Quarter 2015 Results

Year-to-Date Revenue Grows 3%, Gross Profit Rises 21% and Adjusted EBITDA Increases 99%; Teleconference and Webcast to Be Held Today at 4:30 PM ET

MILWAUKEE, WI--(Marketwired - Nov 12, 2015) -  Telkonet, Inc. (OTCQB: TKOI), creator of the EcoSmart platform of intelligent in-room automation solutions designed to optimize comfort, energy efficiency and operational analytics in support of the emerging Internet of Things (IoT) today announced financial results for the third quarter ended September 30, 2015. Telkonet management will hold a teleconference and webcast to discuss these results with the financial community today, at 4:30 PM ET/3:30 PM CT.

Jason Tienor, Telkonet's CEO commented, "Our gross profit increased 21%, Adjusted EBITDA has nearly doubled growing 99%, and we are profitable on a GAAP net income basis on moderate revenue growth for the year to date period after recovering from a slow first quarter. A deliberate focus to increase product sales of our EcoSmart energy management platform, which has higher gross margins than our HSIA products, has contributed to continued improvement in these profit metrics."

Mr. Tienor continued, "While we're pleased with our steadily improving profit metrics, our goal is to grow top line revenue faster and there have been a number of key indicators in the quarter and during the year that demonstrate our commitment and progress towards sales acceleration, which will result in further multiplying our earnings results. First, we've increased investments in R&D to launch new products including the EcoTouch next generation wireless thermostat. Furthermore, we've augmented our sales organization, adding a director of sales and marketing, two channel account managers and an account executive for direct sales. Additionally, during the third quarter we partnered with Deutsche Asset & Wealth Management to design, implement and fund energy savings upgrades for commercial properties, focusing on buildings 100,000 square feet or larger with annual utility bills of $500,000 or more and offering a 100% savings guarantee, because of the ROI EcoSmart can deliver. Just last quarter, we partnered with Samsung to release and deploy the fully integrated Smart Hospitality Room, and with several large ESCO partners, to market and promote our EcoSmart platform throughout their hospitality sales channel. Through these new product launches, new sales hires and new partnerships, we are well positioned for sustainable, rapid, profitable growth moving forward."

Highlights

  • Year to Date Revenue increased 3% year over year to $11.4 million.
  • Year to Date Recurring Revenue was $3.1 million or 27% of total revenue, up 10% year over year.
  • Year to Date Gross Profit increased by $1.1 million or 21%.
  • Year to Date Gross Margins expanded to 56%, compared to 48%.
  • Year to Date Net Income was $48,853, compared to a loss of ($176,373)
  • Year to Date Adjusted EBITDA increased $0.2 million or 99% to $0.5 million.
  • EcoSmart revenue comprised 56% of total revenue for the quarter, highest percentage in Company history.
  • Partnered in Q3 with Deutsche Asset & Wealth Management to design, implement and fund energy savings upgrades for commercial properties

Teleconference and Webcast

Date: Today, November 12, 2015
Time: 4:30 p.m. Eastern Time (3:30 pm CT, 1:30 pm PT)
Investor Dial-In (Toll Free): 877-407-0782
Investor Dial-In (International): 201-689-8567
Live Web Cast: http://www.investorcalendar.com/IC/CEPage.asp?ID=174490

A replay of the teleconference will be available until November 26, 2015, which can be accessed by dialing (877) 660-6853 if calling within the United States or (201) 612-7415, if calling internationally. Please enter conference ID # 13624172 to access the replay.

NON-GAAP Financial Measures

Telkonet will post to the Company's investor relations web site (www.telkonet.com) any reconciliation of differences between non-GAAP financial information that may be required in connection with issuing the Company's financial results.

The Company, as is common in its industry, uses adjusted EBITDA, a non-GAAP measurement gauge to demonstrate earnings exclusive of interest and non-cash events. The Company manages its business based on its cash flows. The Company, in its daily management of its business affairs and analysis of its monthly, quarterly and annual performance, makes its decisions based on cash flows, not on the amortization of assets obtained through historical activities. The Company, in managing its current and future affairs, cannot affect the amortization of the intangible assets to any material degree, and therefore uses adjusted EBITDA as its primary management guide. Adjusted EBITDA is not, and should not be considered, an alternative to net income (loss), income (loss) from operations, or any other measure for determining operating performance of liquidity, as determined under accounting principles generally accepted in the United States (GAAP). In assessing the overall health of its business for the periods ended September 30, 2015 and 2014, the Company excluded items in the following general category described below:

  • Stock-based compensation: The Company believes that because of the variety of equity awards used by companies, varying methodologies for determining stock-based compensation and the assumptions and estimates involved in those determinations, the exclusion of non-cash stock-based compensation enhances the ability of management and investors to understand the impact of non-cash stock-based compensation on our operating results. Further, the Company believes that excluding stock-based compensation expense allows for a more transparent comparison of its financial results to the previous year.

Adjusted EBITDA and other non-GAAP financial measures should not be considered in isolation from, or as a substitute for, a measure of financial performance prepared in accordance with GAAP. Further, investors are cautioned that there are inherent limitations associated with the use of the non-GAAP financial measure as an analytical tool. In particular, the non-GAAP financial measure is not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measure reflect the exclusion of items that are recurring and will be reflected in the Company's financial results for the foreseeable future. The Company compensates for these limitations by providing specific information in the reconciliation included in this press release regarding the GAAP amounts excluded from the non-GAAP financial measure. 

ABOUT TELKONET

Telkonet is a leading provider of intelligent automation solutions throughout commercial markets worldwide. The Internet of Things (IoT), offer considerable energy cost reductions, staff productivity enhancements and carbon footprint reductions through intelligent networked communications, improved asset utilization and data analytics. IoT platforms like Telkonet's EcoSmart enable users to achieve savings, value and service through networked connectivity providing monitoring, control, analytics, convenience and the ability to participate with the emerging Smart Grid through automated demand response initiatives. Telkonet serves vertical markets that have established the company as a leading networking, efficiency and energy management technology provider. Those markets consist of Hospitality, Education, Military, Government, Healthcare and Public Housing. Telkonet's business divisions include EcoSmart, a networked automation platform featuring Recovery time technology offering cost savings, energy reductions, optimized asset utilization and improved comfort, and EthoStream®, one of the largest hospitality High-Speed Internet Access networks in the world providing public Internet access to more than 8 million monthly users.

For more information, visit www.telkonet.com.

For news updates as they happen, follow @Telkonet on Twitter.

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www.telkonet.com

FORWARD LOOKING STATEMENTS

Statements included in this release may constitute forward-looking statements within the meaning of the 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 revenue due to variability in size, scope and duration of projects, and internal issues in the sponsoring client. Further information on potential factors that could affect the Company's financial results, can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and in its Reports on Forms 8-K filed with the Securities and Exchange Commission (SEC).

   
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA  
(Unaudited)  
   
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
    2015   2014   2015   2014  
                           
Net income (loss)   $ 269,420   $ 382,750   $ 48,853   $ (176,373 )
Interest expense, net     16,283     6,072     50,786     24,796  
Provision for income taxes     51,312     68,706     154,836     171,330  
Depreciation and amortization expense     67,494     69,525     205,515     205,711  
EBITDA     404,509     527,053     459,990     225,464  
Adjustments:                          
Stock-based compensation expense     3,390     4,202     10,983     10,843  
Adjusted EBITDA   $ 407,899   $ 531,255   $ 470,973   $ 236,307  
                           
                           
                           
   
TELKONET, INC.  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(UNAUDITED)  
   
    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2015     2014     2015     2014  
Revenues, net:                                
Product   $ 2,979,834     $ 3,122,164     $ 8,289,596     $ 8,251,764  
Recurring     1,077,586       960,509       3,097,844       2,816,874  
Total Net Revenue     4,057,420       4,082,673       11,387,440       11,068,638  
                                 
Cost of Sales:                                
Product     1,513,727       1,674,172       4,286,144       5,000,490  
Recurring     253,394       266,136       727,665       783,521  
Total Cost of Sales     1,767,121       1,940,308       5,013,809       5,784,011  
                                 
Gross Profit     2,290,299       2,142,365       6,373,631       5,284,627  
                                 
Operating Expenses:                                
Research and development     373,710       347,344       1,128,596       962,849  
Selling, general and administrative     1,512,080       1,267,968       4,785,045       4,096,314  
Depreciation and amortization     67,494       69,525       205,515       205,711  
Total Operating Expenses     1,953,284       1,684,837       6,119,156       5,264,874  
                                 
Income from Operations     337,015       457,528       254,475       19,753  
                                 
Other Income (Expenses):                                
Interest income (expense), net     (16,283 )     (6,072 )     (50,786 )     (24,796 )
Total Other Income (Expense)     (16,283 )     (6,072 )     (50,786 )     (24,796 )
                                 
Income (Loss) Before Provision for Income Taxes     320,732       451,456       203,689       (5,043 )
                                 
Provision for Income Taxes     51,312       68,706       154,836       171,330  
Net Income (Loss)     269,420       382,750       48,853       (176,373 )
                                 
Accretion of preferred dividends and discount     -       (36,166 )     (18,253 )     (107,890 )
Net income (loss) attributable to common stockholders   $ 269,420     $ 346,584     $ 30,600     $ (284,263 )
                                 
Net income (loss) per common share:                                
Net income (loss) attributable to common stockholders per common share - basic   $ 0.00     $ 0.00     $ 0.00     $ (0.00 )
Net income (loss) attributable to common stockholders per common share - diluted   $ 0.00     $ 0.00     $ 0.00     $ (0.00 )
                                 
Weighted Average Common Shares Outstanding - basic     126,411,243       125,035,612       125,499,195       125,035,612  
Weighted Average Common Shares Outstanding - diluted     128,929,552       126,814,401       125,539,532       125,035,612  
                                 

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