SOURCE: EnerNOC, Inc.

EnerNOC, Inc.

February 16, 2011 16:24 ET

EnerNOC Reports Fourth Quarter and Full Year 2010 Financial Results

Company Delivers Strong Cash Flow From Operating Activities and First Full Year of Profitability

BOSTON, MA--(Marketwire - February 16, 2011) - EnerNOC, Inc. (NASDAQ: ENOC)

--  Full year revenues increased 47% over prior year to $280.2 million
--  Fourth quarter cash flow from operating activities increased 227%
    year-over-year to $16.5 million
--  Full year cash flow from operating activities increased 458%
    year-over-year to $45.1 million
--  Full year free cash flow of $25.8 million
--  Full year GAAP net income of $9.6 million, or $0.37 per diluted share
--  Full year non-GAAP net income of $25.4 million, or $0.97 per diluted
    share
--  Capacity base expanded by 49% year-over-year to over 5,300 megawatts
    under management

EnerNOC, Inc. (NASDAQ: ENOC), a leading provider of clean and intelligent energy management applications and services, today announced financial results for the fourth quarter and year ended December 31, 2010.

"We achieved all of our 2010 strategic and financial objectives, including nearly 50% expansion of our megawatts under management, strong revenue growth, and solid gross margins, resulting in GAAP net income per diluted share of $0.37 and nearly one dollar in non-GAAP net income per diluted share," commented Tim Healy, EnerNOC's Chairman and Chief Executive Officer. "Moving forward, we expect strong utility and C&I customer demand for our offerings and robust megawatt growth in our portfolio."

Healy continued, "2011 is the first year of our next three-year operating plan, which prioritizes continued revenue and earnings growth, as well as cash flow production. We delivered on our past promises to shareholders and intend to do the same over the coming years."

Revenues for the fourth quarter of 2010 were $22.7 million, compared to $26.7 million for the same period in 2009, a decrease of $4.0 million, or 15%. Revenues for the year ended December 31, 2010 were $280.2 million, compared to $190.7 million for the year ended December 31, 2009, an increase of $89.5 million, or 47%.

GAAP net loss for the fourth quarter of 2010 was $21.2 million, or $0.86 per diluted share, as compared to GAAP net loss for the fourth quarter of 2009 of $15.2 million, or $0.64 per diluted share. GAAP net income for the year ended December 31, 2010 was $9.6 million, or $0.37 per diluted share, as compared to GAAP net loss for the year ended December 31, 2009 of $6.8 million, or $0.32 per diluted share.

Non-GAAP net loss* for the fourth quarter of 2010 was $17.1 million, or $0.69 per diluted share, as compared to non-GAAP net loss for the fourth quarter of 2009 of $11.9 million, or $0.50 per diluted share. Non-GAAP net income* for the year ended December 31, 2010 was $25.4 million, or $0.97 per diluted share, as compared to non-GAAP net income for the year ended December 31, 2009 of $7.0 million, or $0.30 per diluted share.

Adjusted EBITDA* for the fourth quarter of 2010 was negative $14.9 million, compared to negative $7.9 million in the fourth quarter of 2009. Adjusted EBITDA for the year ended December 31, 2010 was $42.8 million, compared to $20.1 million for the year ended December 31, 2009.

Cash flow from operating activities for the year ended December 31, 2010 was $45.1 million, or 16% of revenue during that period, up from $8.1 million, or 4% of revenue for the same period in 2009. The Company generated $25.8 million of free cash flow* for the year ended December 31, 2010 as compared to negative $8.8 million for the year ended December 31, 2009.

As of December 31, 2010, the Company had cash and cash equivalents totaling $153.4 million, an increase of $33.7 million from cash and cash equivalents as of December 31, 2009.

(* Please refer to the section below titled "Use of Non-GAAP Financial Measures" for non-GAAP definitions and the financial schedules attached to this press release for reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measure.)

Other Fourth Quarter and Recent Highlights

--  Increasing demand response megawatts under management to over 5,300 as
    of December 31, 2010, up from over 3,550 as of December 31, 2009.

--  Increasing the number of commercial, institutional, and industrial
    demand response customers to approximately 3,600 customers and sites
    to approximately 8,600 as of December 31, 2010, up from 2,800 customers
    and 6,500 sites as of December 31, 2009.

--  Dispatching demand response resources in its network over 220 times
    during the year, maintaining the Company's 2010 average event
    performance of over 100% based on nominated versus delivered capacity.

--  Announcing selection to participate in UK Power Networks' Low Carbon
    London project.

--  Joining the OpenADR Alliance, an industry group created to foster the
    development and adoption of Open Automated Demand Response standards.

--  Announcing the release of EfficiencySMART™, a suite of data-driven
    energy efficiency applications and services -- including
    EfficiencySMART Commissioning, EfficiencySMART Insight -- that drive
    C&I energy savings.

--  Signing a contract with existing corporate customer, Stop & Shop, to
    deliver data-driven energy efficiency and visibility through the
    EfficiencySMART Insight application.

--  Completing the acquisitions in January of Global Energy Partners, a
    California-based energy efficiency and demand response program
    management firm, and M2M Communications, an Idaho-based wireless
    technology solutions provider to the demand response and energy
    efficiency markets.

--  Announcing in February selection for a program with Bonneville
    Power Administration.

Financial Outlook

The Company currently expects to deliver the following financial results for the quarter ending March 31, 2011 and the year ending December 31, 2011:

First Quarter 2011: The Company expects first quarter 2011 revenue to be in the range of $25 million to $31 million. First quarter GAAP net loss is expected to be in the range of $0.85 to $1.05 per basic and diluted share. GAAP net loss includes an estimated stock-based compensation expense of $4.8 million and an estimated amortization of acquisition-related intangibles expense of $1.6 million, net of an estimated $1.0 million of tax effects. First quarter non-GAAP net loss per share is expected to be in the range of $0.64 to $0.84 per basic and diluted share. These estimates are based on basic and diluted weighted average shares outstanding of 25.1 million shares, and the non-GAAP estimate includes the per share impact of the adjustments for the estimated stock-based compensation and amortization expenses, net of tax effects discussed above.

Full Year 2011: The Company expects full year 2011 revenue to be in the range of $300 million to $320 million. GAAP net income is expected to be in the range of $0.25 to $0.50 per diluted share. GAAP net income includes an estimated stock-based compensation expense of $16.6 million and an estimated amortization of acquisition-related intangibles expense of $7.2 million, net of an estimated $3.8 million of tax effects. Non-GAAP net income per share is expected to be in the range of $0.97 to $1.23 based on diluted weighted average shares outstanding of 27.5 million shares, and includes the adjustments for the estimated stock-based compensation and amortization, net of tax effects discussed above.

These statements are forward-looking and actual results may differ materially. These statements are based on information available as of February 16, 2011, and the Company assumes no obligation to publicly update or revise its financial outlook. Investors are reminded that actual results may differ from these estimates for the reasons described below and in the Company's filings with the Securities and Exchange Commission.

Webcast Reminder

The Company will host a conference call today, February 16, 2011 at 4:30 p.m., Eastern Time, to discuss the Company's fourth quarter and full year 2010 operating results, as well as other forward-looking information about the Company's business. Domestic callers may access the earnings conference call by dialing 877-837-3911 (International callers, dial 973-796-5063). Investors and other interested parties may also go to the Investor Relations section of EnerNOC's website at http://investor.enernoc.com/webcasts.cfm for a live webcast of the conference call. Please access the website at least 15 minutes prior to the call to register, download, and install any necessary audio software. A replay of the conference call will be available on the Company's website noted above or by phone (dial 800-642-1687 and enter the pass code 41091717) until February 23, 2011 and the webcast will be archived on EnerNOC's website for a period of three months.

About EnerNOC

EnerNOC unlocks the full value of energy management for our utility and commercial, institutional, and industrial (C&I) customers by reducing real-time demand for electricity, increasing energy efficiency, improving energy supply transparency in competitive markets, and mitigating emissions. We accomplish this by delivering world-class energy management applications including DemandSMART™, comprehensive demand response; EfficiencySMART™, data-driven energy efficiency; SupplySMART™, energy price and risk management; and CarbonSMART™, enterprise carbon management. Our Network Operations Center (NOC) continuously supports these applications across thousands of C&I customer sites throughout the world. Working with more than 100 utilities and grid operators globally, we deliver energy, ancillary services, and carbon mitigation resources that provide cost-effective alternatives to investments in traditional power generation, transmission, and distribution. For more information, visit www.enernoc.com.

Safe Harbor Statement

Statements in this press release regarding management's future expectations, beliefs, intentions, goals, strategies, plans or prospects, including, without limitation, statements relating to the Company's future financial performance on both a GAAP and non-GAAP basis, demand for the Company's offerings, projected megawatt growth in the Company's portfolio, and the future growth and success of the Company's clean and intelligent energy management applications and services in general, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements can be identified by terminology such as "anticipate," "believe," "could," "could increase the likelihood," "estimate," "expect," "intend," "is planned," "may," "should," "will," "will enable," "would be expected," "look forward," "may provide," "would" or similar terms, variations of such terms or the negative of those terms. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to under the section "Risk Factors" in EnerNOC's most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, as well as other documents that may be filed by EnerNOC from time to time with the Securities and Exchange Commission. As a result of such risks, uncertainties and factors, the Company's actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. EnerNOC is providing the information in this press release as of this date and assumes no obligations to update the information included in this press release or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Use of Non-GAAP Financial Measures

To supplement the financial measures presented in EnerNOC's press release and related conference call or webcast in accordance with accounting principles generally accepted in the United States ("GAAP"), EnerNOC also presents non-GAAP financial measures relating to non-GAAP net income or loss, non-GAAP net income or loss per share, adjusted EBITDA and free cash flow.

A "non-GAAP financial measure" refers to a numerical measure of the Company's historical or future financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP in the Company's financial statements. EnerNOC provides the non-GAAP measures listed above as additional information relating to EnerNOC's operating results as a complement to results provided in accordance with GAAP. The non-GAAP financial information presented here should be considered in conjunction with, and not as a substitute for or superior to, the financial information presented in accordance with GAAP and should not be considered measures of the Company's liquidity. There are significant limitations associated with the use of non-GAAP financial measures. Further, these measures may differ from the non-GAAP information, even where similarly titled, used by other companies and therefore should not be used to compare the Company's performance to that of other companies.

The non-GAAP measures used in this press release and related conference call or webcast differ from GAAP in that they exclude expenses related to stock-based compensation, amortization expense related to acquisition-related intangible assets, as well as in certain measures, the related impact of these adjustments on the provision for income taxes. In addition, investors should note the following:

--  EnerNOC defines "non-GAAP net income (loss)" as net income (loss)
    before expenses related to stock-based compensation and amortization
    expenses related to acquisition-related intangible assets, net of
    related tax effects.

--  EnerNOC defines "Adjusted EBITDA" as net income (loss), excluding
    depreciation, amortization, stock-based compensation, interest, income
    taxes and other income (expense).  Adjusted EBITDA eliminates items
    that are either not part of the Company's core operations or do not
    require a cash outlay, such as stock-based compensation. Adjusted
    EBITDA also excludes depreciation and amortization expense, which is
    based on the Company's estimate of the useful life of tangible and
    intangible assets. These estimates could vary from actual performance
    of the asset, are based on historic cost incurred to build out the
    Company's deployed network, and may not be indicative of current or
    future capital expenditures.

--  EnerNOC defines "free cash flow" as net cash provided by (used in)
    operating activities less capital expenditures.  EnerNOC defines
    "capital expenditures" as purchases of property and equipment, which
    includes capitalization of internal-use software development costs.
    Capital expenditures are disclosed in the Company's Statement of Cash
    Flows in the Company's most recent Annual Report on Form 10-K filed
    with the Securities and Exchange Commission.

EnerNOC's management uses these non-GAAP measures when evaluating the Company's operating performance and for internal planning and forecasting purposes. EnerNOC's management believes that such measures help indicate underlying trends in the Company's business, are important in comparing current results with prior period results, and are useful to investors and financial analysts in assessing the Company's operating performance. For example, EnerNOC's management considers non-GAAP net income (loss) to be an important indicator of the overall performance of the Company because it eliminates the effects of events that are either not part of the Company's core operations or are non-cash compensation expenses. In addition, EnerNOC's management considers adjusted EBITDA to be an important indicator of the Company's operational strength and performance of its business and a good measure of the Company's historical operating trend. Moreover, EnerNOC's management considers free cash flow to be an indicator of the Company's operating trend and performance of its business.

                               EnerNOC, Inc.
                      SELECTED FINANCIAL INFORMATION
            (in thousands, except for share and per share data)

                               EnerNOC, Inc.
                  Consolidated Statements of Operations
                                (Unaudited)


                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

Revenues                    $   22,690  $   26,733  $  280,157  $  190,675
Cost of revenues                18,668      17,983     159,832     104,215
                            ----------  ----------  ----------  ----------
 Gross profit                    4,022       8,750     120,325      86,460

Operating expenses:
 Selling and marketing          11,263      10,021      45,436      39,502
 General and administrative     13,462      11,155      53,576      44,407
 Research and development        2,349       2,077      10,097       7,601
                            ----------  ----------  ----------  ----------
   Total operating expenses     27,074      23,253     109,109      91,510
                            ----------  ----------  ----------  ----------
(Loss) income from
 operations                    (23,052)    (14,503)     11,216      (5,050)
Other (expense) income            (116)        104         (85)         98
Interest expense                   (32)        (33)       (718)     (1,544)
                            ----------  ----------  ----------  ----------
   (Loss) income before
    income tax                 (23,200)    (14,432)     10,413      (6,496)
Benefit from (provision
 for) income tax                 2,033        (771)       (836)       (333)
                            ----------  ----------  ----------  ----------
   Net (loss) income        $  (21,167) $  (15,203) $    9,577  $   (6,829)
                            ==========  ==========  ==========  ==========

(Loss) income per share:
  Basic                     $    (0.86) $    (0.64) $     0.39  $    (0.32)
                            ==========  ==========  ==========  ==========
  Diluted                   $    (0.86) $    (0.64) $     0.37  $    (0.32)
                            ==========  ==========  ==========  ==========

Weighted average number of
 common shares outstanding
  Basic                     24,688,865  23,727,647  24,611,729  21,466,813
                            ==========  ==========  ==========  ==========
  Diluted                   24,688,865  23,727,647  26,054,162  21,466,813
                            ==========  ==========  ==========  ==========




                               EnerNOC, Inc.
                        CONSOLIDATED BALANCE SHEETS
                              (in thousands)
                                (Unaudited)


                                                     December 31,
                                            ------------------------------
                                                 2010            2009
                                            --------------  --------------
Assets
Current assets
   Cash and cash equivalents                $      153,416  $      119,739
   Restricted cash                                   1,537               -
   Trade accounts receivable, net of
    allowance for doubtful accounts of $150
    and $57 at December 31, 2010 and
    2009, respectively                              22,137          17,421
   Unbilled revenue                                 73,144          40,388
   Prepaid expenses, deposits and other
    current assets                                   6,707           4,725
                                            --------------  --------------
      Total current assets                         256,941         182,273
   Property and equipment, net of
    accumulated depreciation of $36,309
    and $22,420 at December 31, 2010 and
    2009, respectively                              34,690          31,344
   Goodwill                                         24,653          22,553
   Definite-lived intangible assets, net of
    accumulated amortization of $3,111
    and $1,659 at December 31, 2010 and
    2009, respectively                               5,823           7,075
   Indefinite-lived intangible assets                  920               -
   Deposits and other assets                         2,872           3,903
   Restricted cash                                       -           7,874
                                            --------------  --------------
      Total assets                          $      325,899  $      255,022
                                            ==============  ==============
Liabilities and Stockholders' Equity
Current liabilities
   Accounts payable                         $          111  $           55
   Accrued capacity payments                        65,792          40,534
   Accrued payroll and related expenses             11,135           9,688
   Accrued expenses and other current
    liabilities                                      9,307           3,706
   Accrued acquisition contingent
    consideration                                    1,500           1,455
   Deferred revenue                                  5,540           2,119
   Current portion of long-term debt                    37              36
                                            --------------  --------------
      Total current liabilities                     93,422          57,593
Long-term liabilities
   Long-term debt, net of current portion                -              37
   Deferred tax liability                            1,141             654
   Deferred revenue, long-term                       4,696           1,200
   Other liabilities                                   514             563
                                            --------------  --------------
      Total long-term liabilities                    6,351           2,454
Stockholders' equity
Common stock                                            25              24
Additional paid-in capital                         293,942         272,350
Accumulated other comprehensive loss                   (75)            (56)
Accumulated deficit                                (67,766)        (77,343)
                                            --------------  --------------
      Total stockholders' equity                   226,126         194,975
                                            --------------  --------------
      Total liabilities and stockholders'
       equity                               $      325,899  $      255,022
                                            ==============  ==============





                               EnerNOC, Inc.
                          Cash Flow Information
                              (in thousands)
                                (Unaudited)


                                                Year Ended December 31,
                                            ------------------------------
                                                 2010            2009
                                            --------------  --------------

Cash provided by operating activities       $       45,148  $        8,086
Cash used in investing activities                  (15,424)        (29,172)
Cash provided by financing activities                3,974          80,013
Effects of exchange rate changes on cash               (21)             30
                                            --------------  --------------
Net change in cash and cash equivalents     $       33,677  $       58,957
                                            ==============  ==============





                               EnerNOC, Inc.
 NON-GAAP NET (LOSS) INCOME AND NET (LOSS) INCOME PER SHARE RECONCILIATION
                  (in thousands, except per share data)
                                (Unaudited)


                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

GAAP Net (loss) income      $  (21,167) $  (15,203) $    9,577  $   (6,829)
  ADD: Stock-based
   compensation                  4,074       3,138      15,742      13,134
  ADD: Amortization expense
   of acquired intangible
   assets                          343         178       1,452         692
  LESS: Income tax effect
   of Non-GAAP adjustments (1)    (387)          -      (1,380)          -
                            ----------  ----------  ----------  ----------
Non-GAAP Net (loss) income  $  (17,137) $  (11,887) $   25,391  $    6,997
                            ==========  ==========  ==========  ==========

GAAP Net (loss) income
 per basic share            $    (0.86) $    (0.64) $     0.39  $    (0.32)
  ADD: Stock-based
   compensation                   0.17        0.13        0.64        0.61
  ADD: Amortization expense
   of acquired intangible
   assets                         0.01        0.01        0.06        0.04
  LESS: Income tax effect
   of Non-GAAP adjustments (1)   (0.01)          -       (0.06)          -
                            ----------  ----------  ----------  ----------
Non-GAAP Net (loss) income
 per basic share            $    (0.69) $    (0.50) $     1.03  $     0.33
                            ==========  ==========  ==========  ==========

GAAP Net (loss) income
 per diluted share          $    (0.86) $    (0.64) $     0.37  $    (0.32)
  ADD: Stock-based
   compensation                   0.17        0.13        0.60        0.61
  ADD: Amortization expense
   of acquired intangible
   assets                         0.01        0.01        0.05        0.04
  LESS: Income tax effect
   of Non-GAAP adjustments (1)   (0.01)          -       (0.05)          -
  LESS: Dilutive impact on
   weighted average
   common stock equivalents          -           -           -       (0.03)
                            ----------  ----------  ----------  ----------
Non-GAAP Net (loss) income
 per diluted share          $    (0.69) $    (0.50) $     0.97  $     0.30
                            ==========  ==========  ==========  ==========

Weighted average number of
 common shares outstanding
  Basic                     24,688,865  23,727,647  24,611,729  21,466,813
  Diluted                   24,688,865  23,727,647  26,054,162  23,021,435

(1)  Represents the increase in the income tax provision recorded for the
three months and year ended December 31, 2010 based on our effective rate
for the three months and year ended December 31, 2010, respectively.





                               EnerNOC, Inc.
                     RECONCILIATION OF ADJUSTED EBITDA
                                (Unaudited)


                              Three Months Ended          Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

Net (loss) income           $  (21,167) $  (15,203) $    9,577  $   (6,829)
Add back:
  Depreciation and
   amortization                  4,073       3,476      15,866      12,049
  Stock-based compensation       4,074       3,138      15,742      13,134
  Other expense (income)           116        (104)         85         (98)
  Interest expense                  32          33         718       1,544
  (Benefit from) provision
   for income tax               (2,033)        771         836         333
                            ----------  ----------  ----------  ----------
Adjusted EBITDA             $  (14,905) $   (7,889) $   42,824  $   20,133
                            ==========  ==========  ==========  ==========




                               EnerNOC, Inc.
                      RECONCILIATION OF FREE CASH FLOW
                                (Unaudited)


                              Three Months Ended         Year Ended
                                 December 31,            December 31,
                            ----------------------  ----------------------
                               2010        2009        2010        2009
                            ----------  ----------  ----------  ----------

Net cash provided by
 operating activities       $   16,486  $    5,044  $   45,148  $    8,086
Subtract:
  Purchases of property and
   equipment                    (4,111)     (3,665)    (19,394)    (16,901)
                            ----------  ----------  ----------  ----------
Free cash flow              $   12,375  $    1,379  $   25,754  $   (8,815)
                            ==========  ==========  ==========  ==========

Contact Information