Telkonet Inc reports 181% Net Income decline in 2018 while 6.5 pp EBITDA Margin growth from -41.5% to -35.0%
04/01/2019 • About Telkonet Inc (
$TKOI) • By InTwits
Telkonet Inc reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- The company operates at negative EBITDA Margin: -35.0%
- Telkonet Inc motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2014-2018 was 0.0% while average EBITDA Margin was -26.8% for the sames years
- Telkonet Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.9%.
- The company has unprofitable business model: ROIC is -36.3%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Telkonet Inc's Revenue increased slightly on 1.8%. Revenue growth showed acceleration in 18Q4 - it increased 8.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin jumped on 358 pp from -332% to 25.5% in 2018. During 2014-2018 EBITDA Margin bottomed in 2016 at -47.1% and was growing since that time.
Gross Margin decreased slightly on 1.7 pp from 46.4% to 44.7% in 2018. During 2014-2018 Gross Margin topped in 2015 at 50.2% and was declining since that time. SG&A as a % of Revenue decreased on 9.1 pp from 66.6% to 57.4% in 2018. During 2014-2018 SG&A as a % of Revenue topped in 2016 at 76.8% and was declining since that time.
Net Income margin dropped on 81.0 pp from 45.2% to -35.8% in 2018.
Investments (CAPEX, working capital and M&A)
In 2018 Telkonet Inc had CAPEX/Revenue of 0.12%. Telkonet Inc's CAPEX/Revenue showed almost no change from 2015 to 2018. Average CAPEX/Revenue for the last three years was 1.0%.
Return on investment
The company operates at negative ROIC (-36.3%) and ROE (-51.2%). ROIC increased on 3.2 pp from -39.5% to -36.3% in 2018. ROE dropped on 119 pp from 67.7% to -51.2% in 2018. During the last 5 years ROIC bottomed in 2016 at -54.7% and was growing since that time.
Leverage (Debt)
Debt level is -11.4x Net Debt / EBITDA and Debt / EBITDA. Debt dropped on 82.2% while cash dropped on 44.2%.
Telkonet Inc has no short term refinancing risk: cash is higher than short term debt (3,851.8%).
Financial and operational results
FY ended 12/31/2018
Telkonet Inc ($TKOI) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 14.797 | 7.528 | 8.256 | 8.283 | 8.432 | 1.8% |
| Gross Profit | 7.239 | 3.775 | 4.106 | 3.845 | 3.770 | -2.0% |
| SG&A | 5.366 | 5.123 | 6.337 | 5.513 | 4.844 | -12.1% |
| EBITDA | 0.560 | -2.953 | -3.889 | -3.438 | -2.954 | |
| Net Income | 0.043 | -0.189 | -1.376 | 3.746 | -3.017 | -180.5% |
Balance Sheet
|
|---|
| Cash | 1.128 | 0.680 | 0.792 | 8.386 | 4.679 | -44.2% |
| Short Term Debt | 0.908 | 0.995 | 1.159 | 0.682 | 0.121 | -82.2% |
| Long Term Debt | 0.114 | 0.000 | 0.000 | 0.000 | 0.000 | |
Cash flow
|
|---|
| Capex | 0.121 | 0.042 | 0.037 | 0.211 | 0.010 | -95.2% |
Ratios
|
|---|
| Revenue growth | 6.5% | -49.1% | 9.7% | 0.3% | 1.8% | |
| EBITDA growth | -188.1% | -627.2% | 31.7% | -11.6% | -14.1% | |
|
|---|
| Gross Margin | 48.9% | 50.2% | 49.7% | 46.4% | 44.7% | -1.7% |
| EBITDA Margin | 3.8% | -39.2% | -47.1% | -41.5% | -35.0% | 6.5% |
| SG&A, % of revenue | 36.3% | 68.1% | 76.8% | 66.6% | 57.4% | -9.1% |
| Net Income Margin | 0.3% | -2.5% | -16.7% | 45.2% | -35.8% | -81.0% |
| CAPEX, % of revenue | 0.8% | 0.6% | 0.4% | 2.6% | 0.1% | -2.4% |
|
|---|
| ROIC | 4.3% | -43.3% | -54.7% | -39.5% | -36.3% | 3.2% |
| ROE | -2.0% | -5.0% | -36.2% | 67.7% | -51.2% | -118.9% |
| Net Debt/EBITDA | -0.2x | | | | |
Telkonet Inc ($TKOI) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 2 | 3 | 1 | 2 | | -16.1% | 40.0% | -28.1% | 8.1% |
| EBITDA | -1 | -0 | -1 | -0 | | | | | |
| Net Income | -1 | -0 | -1 | -0 | | -120.9% | | | |
Balance Sheet
|
|---|
| Cash | 8 | 6 | 5 | 5 | | -24.1% | -32.6% | -43.3% | -44.2% |
| Short Term Debt | 1 | 0 | 0 | 0 | | 1,177.8% | | 219.9% | -82.2% |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 34.3% | 51.5% | 35.1% | 49.1% | | -11.4% | 3.2% | -5.2% | -1.7% |
| EBITDA Margin | -72.6% | -6.5% | -87.0% | -13.5% | | -6.0% | 33.9% | -44.3% | 6.3% |
| Net Income Margin | -73.8% | -6.9% | -87.5% | -14.4% | | -369.7% | 33.1% | -56.0% | 4.7% |
Peers in Communications Equipment
Below we provide Telkonet Inc benchmarking against other companies in Communications Equipment industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.3% | 5.6% | 3.5% |
|---|
| Telkonet Inc ($TKOI) | | -49.1% | 9.7% | 0.3% | 1.8% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 41.4% | 41.3% | 43.7% | 41.0% | 40.5% |
|---|
| Telkonet Inc ($TKOI) | 48.9% | 50.2% | 49.7% | 46.4% | 44.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 6.1% | 5.9% | 6.5% | 5.4% |
|---|
| Telkonet Inc ($TKOI) | 3.8% | -39.2% | -47.1% | -41.5% | -35.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.3% | 2.3% | 2.0% | 1.8% | 1.7% |
|---|
| Telkonet Inc ($TKOI) | 0.8% | 0.6% | 0.4% | 2.6% | 0.1% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 1.2% | 2.3% | 2.4% | 2.2% | 0.7% |
|---|
| Telkonet Inc ($TKOI) | 4.3% | -43.3% | -54.7% | -39.5% | -36.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (46 companies) | -0.8x | -0.7x | -0.9x | -0.7x | -0.1x |
|---|
