Telkonet, Inc. (AMEX:TKO), the leading provider of innovative, centrally
managed solutions for integrated energy management, networking, building
automation and proactive sup****t services, announced today first quarter
results for the period ended March 31, 2008.
The results of operations include the acquisitions of EthoStream, LLC,
Smart Systems International and New****t Telecommunications Co, (acquired
by MSTI Holdings, Inc.) on March 9, March 15, 2007, and July 18, 2007,
respectively and also includes the operations of the Company's
majority-owned subsidiary MSTI Holdings, Inc. (OTCBB: M****) or "MST".
For the 2008 first quarter, Telkonet, Inc. had revenue of $5.0 million,
an increase of 298% compared to $1.2 million in the 2007 first quarter.
The increase was a result of both organic growth in the Company's energy
and hospitality management businesses and growth from acquisitions.
Excluding revenue from its MST subsidiary, Telkonet had revenue of $4.0
million, compared to $0.8 million in the year-earlier period. Gross
profit was $1.1 million, compared to a loss of $(0.07) million in the
year-earlier period. All of the profit was generated from Telkonet's
operations. Selling, General and Administrative expenses were $3.6
million, compared to $4.3 million in the 2007 first quarter. Excluding
Selling, General and Administrative expenses from its MST subsidiary,
Telkonet's Selling, General and Administrative expenses were $2.5
million in the 2008 first quarter, compared to $3.5 million in the 2007
first quarter.
Telkonet (excluding the results of MST) had a negative adjusted EBITDA
(Earnings Before Interest, Taxes, Depreciation and Stock-based
compensation), a non-GAAP measure, of $(2.0) million in the 2008 first
quarter, compared to negative adjusted EBITDA of $(3.8) million in the
2007 first quarter.
Telkonet, Inc. re****ted a first quarter 2008 net loss of $(5.1) million,
or $(0.07) per share, compared to a net loss of $(5.4) million or
$(0.09) per share in the 2007 first quarter. 2008 quarterly results were
also impacted by a non-cash expense of $1.6 million related to the
reduction of the exercise price of investor warrants previously issued
in a price placement. The loss also included $(0.9) million from MST,
net of minority interest, and additional expenses of $0.6 million
related to interest expense, net of interest income, non-cash
stock-based compensation and depreciation and amortization, while the
2007 first quarter loss included $0.3 million related to interest
expense, net of interest income, non-cash stock compensation and
depreciation and amortization.
Telkonet currently has a record backlog. It has contracts and monthly
services in place for more than 2,400 hotels which are expected to
generate approximately $3.6 million in annual recurring sup****t and
Internet advertising revenue. The Company has also received certain
purchase orders relating to a major utilities energy management
initiative offered through two providers. The order backlog from one of
these utility's purchase orders, which is expected to increase, is
currently expected to generate approximately $0.6 million in revenue,
with committed future sales expected to generate $4.5 million in revenue
for products and services to be provided through March 2010.
In addition, the Company recently partnered with a similar energy
efficiency program in Wisconsin, estimated to achieve 5,000 rooms and
establish offerings within utility programs nationally. The Company has
also contracted with a national hotel operator to install energy
management devices in approximately 16,000 rooms, with revenue
anticipated to be $3.8 million. The current order backlog for this
contract is expected to generate $2.5 million in revenue, which is
expected to be recognized through the 2008 third quarter.
"During the first quarter, we focused on near-term revenue generating
op****tunities which have already begun to yield results, as reflected by
the sequential increase in Telkonet's revenue," said Jason Tienor,
Telkonet's president and CEO. "In particular, we have targeted the
energy management and hospitality markets, where we have built an
increase in pipeline, which will translate into revenue this year.
Several of the sales we expected to complete during the first quarter
will be recognized in the second quarter due to delays in receiving
product ****pments from China.
Our recent launch of the next-generation 200Mbps Telkonet Series 5(TM)
powerline communications (PLC) system has begun to see adoption and we
have installed in several large west coast substations thus far. Our
high-speed Internet access (HSIA) also continues to gain traction, as
demonstrated by wins in the hospitality and education sectors. Our focus
on driving near-term profitability has also seen us reduce operating
expenses, through the closing of our Las Vegas office and reducing
personnel costs. We remain focused on reaching profitability, and
believe our backlog gives us excellent visibility into the future."
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