SOURCE: EnerNOC, Inc.

EnerNOC, Inc.

May 04, 2011 16:02 ET

EnerNOC Reports First Quarter 2011 Financial Results

Company Expands Customer Network to More Than 10,000 Sites; Strengthens Strategic Position and Enhances Long-Term Visibility

BOSTON, MA--(Marketwire - May 4, 2011) - EnerNOC, Inc. (NASDAQ: ENOC), a leading provider of clean and intelligent energy management applications and services, today announced financial results for the first quarter ended March 31, 2011.

"With strong sales performance, we achieved our first gigawatt sales quarter and enlisted our 10,000th site into our network. We also made several key acquisitions that we are excited to fully integrate into EnerNOC this year. These and other strategic developments during the quarter enhance our competitive differentiation and position us for long-term success in the energy management industry," commented Tim Healy, EnerNOC's Chairman and Chief Executive Officer.

Revenues for the first quarter of 2011 were $31.8 million, compared to $28.1 million for the same period in 2010. Gross profit for the first quarter of 2011 was $12.6 million, or 39.5% of revenue.

GAAP net loss for the first quarter of 2011 was $19.3 million, or $0.76 per basic and diluted share, compared to GAAP net loss for the first quarter of 2010 of $14.2 million, or $0.59 per basic and diluted share. Non-GAAP net loss* for the first quarter of 2011 was $14.6 million, or $0.58 per basic and diluted share, compared to non-GAAP net loss for the first quarter of 2010 of $9.8 million, or $0.41 per basic and diluted share.

Adjusted EBITDA* for the first quarter of 2011 was negative $10.3 million, compared to negative $7.4 million in the first quarter of 2010.

Cash flow from operating activities for the first quarter of 2011 was negative $5.7 million, compared to positive $3.1 million in the first quarter of 2010. The Company incurred negative $9.2 million of free cash flow* for the quarter ended March 31, 2011, compared to negative $2.5 million for the quarter ended March 31, 2010.

As of March 31, 2011, the Company had cash and cash equivalents totaling $102.6 million, a decrease of $50.8 million from cash and cash equivalents as of December 31, 2010. The majority of this change in cash and cash equivalents was due to acquisitions completed in the first quarter of 2011.

(*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 a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.)

Other First Quarter 2011 and Recent Highlights

  • Increasing demand response megawatts under management to approximately 6,300 as of March 31, 2011.

  • Increasing the number of commercial, institutional, and industrial DemandSMART customers to approximately 3,900 customers and sites to approximately 10,100 as of March 31, 2011.

  • Completing the acquisitions of Global Energy Partners and M2M Communications, as well as a small international demand response provider.

  • Announcing selection for an innovative project with Bonneville Power Administration and signing a new contract with Tampa Electric Company to extend the Company's existing Networked Demand Response program for five years.

  • Announcing a contract with Southern California Edison (SCE), an Edison International company, to deliver EnerNOC's EfficiencySMART™ data-driven energy efficiency application to SCE customers through December 31, 2012.

  • Entering into a $75 million senior secured revolving credit facility with Silicon Valley Bank and TD Bank in April 2011. The Company anticipates using this new facility to fund its other credit requirements to grid operators and utilities.

Financial Outlook

The Company currently expects to deliver the following financial results for the quarter ending June 30, 2011 and the year ending December 31, 2011:

Second Quarter 2011: The Company expects second quarter revenue to be in the range of $55 million to $65 million. The Company also expects second quarter GAAP net loss to be in the range of $0.47 to $0.57 per basic and diluted share and non-GAAP net loss to be in the range of $0.26 to $0.36 per basic and diluted share based on basic and diluted weighted average shares outstanding of 25.6 million shares. Non-GAAP net loss reflects adjustments for an estimated tax-effected stock-based compensation expense of $4.0 million and an estimated tax-effected amortization of acquisition-related intangibles expense of $1.4 million, which are included in GAAP net loss.

Full Year 2011: The Company expects full year 2011 revenues to be in the range of $300 million to $320 million. The Company also expects GAAP net income to be in the range of $0.25 to $0.50 per diluted share and Non-GAAP net income per share to be in the range of $0.97 to $1.23 based on diluted weighted average shares outstanding of 27.5 million shares. Non-GAAP net income reflects adjustments for an estimated tax-effected stock-based compensation expense of $14.6 million and an estimated tax-effected amortization of acquisition-related intangibles expense of $5.3 million, which are included in GAAP net income.

These statements are forward-looking and actual results may differ materially. These statements are based on information available as of May 4, 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 live webcast and conference call today, May 4, 2011 at 5:00 p.m., Eastern Time, to discuss the Company's first quarter 2011 operating results, as well as other forward-looking information about the Company's business. Visit the Investor Relations section of EnerNOC's website at http://investor.enernoc.com/webcasts.cfm for a live webcast of the conference call. Domestic callers may access the earnings conference call by dialing 877-837-3911 (International callers, dial 973-796-5063). 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 63474225) until May 11, 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.

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.
              Condensed Consolidated Statements of Operations
                                (Unaudited)


                                                      Three Months Ended
                                                          March 31,
                                                    ----------------------
                                                       2011        2010
                                                    ----------  ----------

Revenues                                            $   31,762  $   28,121
Cost of revenues                                        19,201      18,546
                                                    ----------  ----------
 Gross profit                                     .     12,561       9,575

Operating expenses:
 Selling and marketing                                  11,587       9,114
 General and administrative                             16,313      13,749
 Research and development                                3,232       2,057
                                                    ----------  ----------
   Total operating expenses                             31,132      24,920
                                                    ----------  ----------
Loss from operations                                   (18,571)    (15,345)
Other income                                               128           3
Interest expense                                          (163)        (25)
                                                    ----------  ----------
   Loss before income tax                              (18,606)    (15,367)
(Provision for) benefit from income tax                   (666)      1,167
                                                    ----------  ----------
   Net loss                                         $  (19,272) $  (14,200)
                                                    ==========  ==========

Basic and diluted net loss per share                $    (0.76) $    (0.59)
                                                    ==========  ==========

Weighted average number of basic and diluted
 shares                                             25,248,650  24,051,114
                                                    ==========  ==========




                              EnerNOC, Inc.
                  Condensed Consolidated Balance Sheets
                                (Unaudited)



                                                   March 31,   December 31,
                                                      2011         2010
                                                  -----------  -----------
ASSETS
Current assets
  Cash and cash equivalents                       $   102,642  $   153,416
  Restricted cash                                         277        1,537
  Trade accounts receivable, net of allowance for
   doubtful accounts of $150 at March 31, 2011 and
   December 31, 2010                                   27,502       22,137
  Unbilled revenue                                     30,122       73,144
  Inventory                                               357            -
  Prepaid expenses, deposits and other current
   assets                                              11,004        6,707
                                                  -----------  -----------
    Total current assets                              171,904      256,941
  Property and equipment, net of accumulated
   depreciation of $39,808 and $36,309 at
   March 31, 2011 and December 31, 2010,
   respectively                                        34,896       34,690
  Goodwill                                             64,885       24,653
  Definite-lived intangible assets, net                24,897        5,823
  Indefinite-lived intangible assets                      920          920
  Deposits and other assets                             3,592        2,872
                                                  -----------  -----------
    Total assets                                  $   301,094  $   325,899
                                                  ===========  ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
  Accounts payable                                $       410  $       111
  Accrued capacity payments                            40,925       65,792
  Accrued payroll and related expenses                  7,424       11,135
  Accrued expenses and other current liabilities        7,876        9,307
  Accrued acquisition contingent consideration              -        1,500
  Deferred revenue                                      9,196        5,540
  Current portion of long-term debt                        27           37
                                                  -----------  -----------
    Total current liabilities                          65,858       93,422
Long-term liabilities
  Deferred acquisition consideration                    3,998            -
  Deferred tax liability                                1,476        1,141
  Deferred revenue, long-term                           2,314        4,696
  Other liabilities                                       500          514
                                                  -----------  -----------
    Total long-term liabilities                         8,288        6,351
Commitments and contingencies                               -            -
Stockholders' equity
Undesignated preferred stock, $0.001 par value;
 5,000,000 shares authorized; no shares issued              -            -
Common stock, $0.001 par value; 50,000,000 shares
 authorized, 26,397,332 and  25,155,067 shares
 issued and outstanding at March 31, 2011 and
 December 31, 2010, respectively                           26           25
Additional paid-in capital                            314,034      293,942
Accumulated other comprehensive loss                      (74)         (75)
Accumulated deficit                                   (87,038)     (67,766)
                                                  -----------  -----------
    Total stockholders' equity                        226,948      226,126
                                                  -----------  -----------
    Total liabilities and stockholders' equity    $   301,094  $   325,899
                                                  ===========  ===========




                              EnerNOC, Inc.
                          Cash Flow Information
                                (Unaudited)


                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
Cash flows (used in) provided by operating
 activities                                       $    (5,688) $     3,122
Cash flows used in investing activities               (46,016)      (6,978)
Cash flows provided by financing activities             1,030        1,506
Effects of exchange rate changes on cash                 (100)          (5)
                                                  -----------  -----------
Net change in cash and cash equivalents           $   (50,774) $    (2,355)
                                                  ===========  ===========




                              EnerNOC, Inc.
          NON-GAAP NET LOSS AND NET LOSS PER SHARE RECONCILIATION
                                (Unaudited)

                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------


GAAP net loss                                     $   (19,272) $   (14,200)
ADD: Stock-based compensation                           3,482        4,346
ADD: Amortization expense of acquired intangible
 assets                                                 1,152          388
LESS: Income tax effect on Non-GAAP
 adjustments(1)                                             -         (360)
                                                  -----------  -----------
Non-GAAP net loss                                 $   (14,638) $    (9,826)
                                                  ===========  ===========

GAAP net loss per basic share                     $     (0.76) $     (0.59)
ADD: Stock-based compensation                            0.14         0.18
ADD: Amortization expense of acquired intangible
 assets                                                  0.04         0.01
LESS: Income tax effect on Non-GAAP
 adjustments(1)                                             -        (0.01)
                                                  -----------  -----------
Non-GAAP net loss per basic share                 $     (0.58) $     (0.41)
                                                  ===========  ===========

GAAP net loss per diluted share                   $     (0.76) $     (0.59)
ADD: Stock-based compensation                            0.14         0.18
ADD: Amortization expense of acquired intangible
 assets                                                  0.04         0.01
LESS: Income tax effect on Non-GAAP
 adjustments(1)                                             -        (0.01)
                                                  -----------  -----------
Non-GAAP net loss per diluted share               $     (0.58) $     (0.41)
                                                  ===========  ===========

Weighted average number of common shares
 outstanding
Basic                                              25,248,650   24,051,114
Diluted                                            25,248,650   24,051,114

(1)  Represents the reduction in the income tax benefit recorded for the
three months ended March 31, 2010 based on our effective rate for the three
months ended March 31, 2010.  The non-GAAP adjustments would have no impact
on the provision for income taxes recorded for the three months ended March
31, 2011.




                              EnerNOC, Inc.
                    RECONCILIATION OF ADJUSTED EBITDA
                                (Unaudited)


                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
Net loss                                          $   (19,272) $   (14,200)
Add back:
  Depreciation and amortization                         4,777        3,619
  Stock-based compensation expense                      3,482        4,346
  Other income                                           (128)          (3)
  Interest expense                                        163           25
  Provision for (benefit from) income tax                 666       (1,167)
                                                  -----------  -----------
Adjusted EBITDA                                   $   (10,312) $    (7,380)
                                                  ===========  ===========




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


                                                     Three Months Ended
                                                          March 31,
                                                  ------------------------
                                                      2011         2010
                                                  -----------  -----------
Net cash (used in) provided by operating
 activities                                       $    (5,688) $     3,122
Subtract:
  Purchases of property and equipment                  (3,464)      (5,596)
                                                  -----------  -----------
Free cash flow                                    $    (9,152) $    (2,474)
                                                  ===========  ===========

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