SOURCE: World Energy Solutions

World Energy Solutions

March 08, 2012 08:00 ET

World Energy Solutions Achieves Record Revenue, Profit and Backlog

Completes Three Strategic Acquisitions

WORCESTER, MA--(Marketwire - Mar 8, 2012) - World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced financial results for the fourth quarter and fiscal year ended December 31, 2011.

Financial Highlights (All figures are in US dollars and compare the fourth quarter and annual 2011 results to the corresponding periods in the prior year.)

Record Revenue and Record Backlog

  • Annual revenue grew 17% to $21.1 million
  • Q4 revenue increased 20% to $5.9 million
  • Annualized backlog increased 38% to $19.3 million
  • Total backlog rose 33% to $34.9 million

Operating Results

  • Net income for the year was a record $0.5 million, or $0.05 per share
  • Adjusted EBITDA* was $2.9 million for the year
  • Gross margins for the year increased 2% to 81%
  • Net loss for the fourth quarter was ($0.8) million, or ($0.07) per share, mainly reflecting non-recurring transaction costs for acquisitions
  • Adjusted EBITDA for the fourth quarter was $0.2 million, marking the 9th consecutive quarter of positive Adjusted EBITDA

Liquidity and Balance Sheet

  • Cash from operations was $1.8 million for the quarter; $3.6 million for the year
  • Cash and cash equivalents at year end were $1.8 million, with no bank debt
  • Subsequent to year end, expanded credit facility with SVB to $5 million

Product Line Highlights

  • Completed three acquisitions: Co-eXprise's energy procurement business, Northeast Energy Solutions, and GSE Consulting
  • Channel partners grew 39% to 187
  • Wholesale customers increased 19% to 81

"2011 was a transformational year for World Energy," said Richard Domaleski, CEO of World Energy Solutions. "We posted record revenue and record net income -- a full year of profitability -- and completed our 9th consecutive quarter of positive adjusted EBITDA. We exit the year with our highest levels of both annual and total backlog. Additionally, we advanced our leadership in energy management and seeded future growth through a series of strategic moves, culminating in the acquisition of three companies in late 2011, which together have brought us new customers, capabilities and revenue streams.

"Looking across the business today, World Energy has never been stronger. We are gaining market share with a differentiated offering that is clearly resonating with customers; successfully renewing contracts with, and deepening our penetration of, existing accounts; and continuing to expand our network of regional and national channel partners. And now with our newly acquired teams rapidly gaining traction in their respective markets, we reiterate our expectation to grow revenue by 40-60% in 2012, with profit increasing at an even faster rate."

Financial Review

Full-Year 2011

For the full year ended December 31, 2011, revenue increased by 17% to $21.1 million. This growth reflects increased auction activity in our Retail product line and contributions from our recently completed acquisitions. The performance of our Retail line reflected new customer wins with a concentration in the Pennsylvania electricity market, revenue related to an agreement with one of our energy suppliers for the payment of all future amounts due to us subsequent to August 1, and further growth in our channel partner network.

Gross margin percentage for 2011 was 81% compared to 79% in the same period last year as we continued to benefit from the operating leverage in our business model. Total operating expenses for 2011 increased 14% due to higher third-party and internal commission expense directly associated with the 17% increase in revenue, $0.7 million of transaction and $0.4 million of amortization costs related to the acquisitions, and an investment of $0.3 million to build our energy efficiency group. Adjusted EBITDA increased 44% for the year to $2.9 million, or $0.27 per share, compared to $2.0 million, or $0.22 per share, in 2010. Adjusted EBITDA margin was 14% in 2011 compared to 11% in 2010. Net income for 2011 was $0.5 million, or $0.05 per share, compared with a net loss of $0.1 million, or $(0.01) per share, in 2010. This improvement was driven by the increase in revenue and the 2% rise in gross margin percentage.

Q4 2011

Revenue for the three months ended December 31, 2011 rose 20% over the same period last year to $5.9 million reflecting the initial contribution from our acquisitions and increased auction activity in our Retail electricity product line.

Gross margin percentage was 81% for both quarterly periods. Total operating expenses for the three months ended December 31, 2011 increased 51%, primarily due to $0.6 million of transaction and $0.4 million of amortization costs associated with the acquisitions, increased internal and third party commission expense resulting from the 20% increase in revenue, and investments of $0.2 million in our energy efficiency group. Adjusted EBITDA for the quarter was $0.2 million, or $0.02 per share, compared to $0.8 million, or $0.09 per share, in 2010. Adjusted EBITDA Margin was 3% in the fourth quarter of 2011 compared to 17% in the fourth quarter of 2010. Net loss for the quarter was $0.8 million, or $0.07 per share, compared with a net income of $0.4 million, or $0.04 per share, in Q4 2010.

At December 31, 2011, we had no bank debt and cash and cash equivalents of $1.8 million, compared with $3.6 million at December 31, 2010. During 2011 we raised $5.3 million in net proceeds from the sale of common stock and generated $3.6 million from cash flow from operations. These increases were offset by $10.4 million paid for acquisitions. Subsequent to year end, we expanded our credit facility with Silicon Valley Bank. This expanded facility increases the total commitment to $5.0 million, consisting of a 4-year, $2.5 million term loan and a $2.5 million line-of-credit. The term loan is interest only for 9 months followed by 39 equal principal payments through February 2016. The terms under the line-of-credit remained substantially the same as under the existing facility with a revised maturity date of March 15, 2013. There have been no borrowings under the revised line-of-credit.

Note: Backlog relates to contracts in force on a given date representing transactions between bidders and listers on our platform related to commodity brokerage assuming listers consume energy at their historical usage levels or deliver credits at expected levels. Total backlog represents the revenue that the Company would derive over the remaining life of those contracts. Annualized backlog represents the revenue that the Company would derive from those contracts within the 12 months following the date on which the backlog is calculated. Total and annualized backlog at December 31, 2011 included commodity backlog of $33.9 million and $18.3 million, respectively. In addition, total and annualized backlog include contracted management fees between World Energy and energy consumers for energy management and auction administration services of $1.0 million that are expected to be received over the following 12 month period. These management fees can be terminated within 30 days per the terms of the contracts.

Conference Call & Webcast
World Energy will hold a conference call today, March 8, 2012, at 10:00 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 1 (800) 774-6070 (domestic) and enter passcode 7674 892#. International participants may access the call by dialing 1 (630) 691-2753 and entering passcode 7674 892#. A replay will be available two hours after the completion of the call, and for one week following the call, by dialing 1 (888) 843-7419 for domestic participants or 1 (630) 652-3042 for international participants, and entering passcode 7674 892# when prompted. Participants may also access a live webcast of the conference call through the investor relations section of World Energy's website, Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 365 days.

* Non-GAAP Financial Measures

World Energy continues to provide all information required in accordance with GAAP and also provides certain non-GAAP financial measures. A "non-GAAP financial measure" refers to a numerical measure of the Company's historical performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable financial measure calculated and presented in accordance with GAAP in the Company's financial statements. World Energy provides adjusted EBITDA, adjusted EBITDA as a percentage of revenue and adjusted EBITDA / share as additional information relating to our operating results. This non-GAAP measure excludes expenses related to share-based compensation, depreciation related to our fixed assets, amortization expenses associated with acquisition-related assets and capitalized software and other assets, net interest and income taxes.

Management believes it is useful to exclude depreciation, amortization, net interest and income taxes as these are essentially fixed amounts that cannot be influenced by management in the short term. In addition, management believes it is useful to exclude share-based compensation as this is not a cash expense.

Management uses these non-GAAP measures for internal reporting and bank reporting purposes. World Energy provides these non-GAAP financial measures in addition to GAAP financial results, because management believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts in helping them to better understand the Company's operating results and underlying operational trends. It also provides a consistent basis for comparison across accounting periods.

These non-GAAP financial measures are not prepared in accordance with GAAP. These measures may differ from the 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. There are significant limitations associated with the use of non-GAAP financial measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income (loss), operating income margin and net income (loss) per common share prepared in accordance with GAAP.

Whenever World Energy reports non-GAAP financial measures, a reconciliation of the non-GAAP financial measures to the most closely applicable GAAP financial measure will be made available. Investors are encouraged to review these reconciliations to ensure they have a thorough understanding of the reported non-GAAP financial measures and their most directly comparable GAAP financial measures. Reconciliation of GAAP net income (loss) to adjusted EBITDA and the calculation of adjusted EBITDA margin and adjusted EBITDA per share are shown below:

Three Months Ended,

Twelve Months Ended,
December 31, 2011 December 31, 2010 December 31, 2011 December 31, 2010
GAAP net income (loss) $ (781,003 ) $ 381,779 $ 515,541 $ (99,087 )
Add: Interest (income) expense, net 43,172 (8,637 ) 1,526 (8,682 )
Add: Income taxes 116,474 138,224
Add: Share-based compensation 120,923 129,337 609,820 671,323
Add: Amortization of intangibles 603,591 239,361 1,347,135 1,026,890
Add: Amortization of other assets 22,863 53,828 126,953 267,601
Add: Depreciation 48,982 33,336 146,946 139,612
Non-GAAP adjusted EBITDA $ 175,002 $ 829,004 $ 2,886,145 $ 1,997,657
Non-GAAP adjusted EBITDA / Revenue 3.0 % 16.9 % 13.7 % 11.1 %
Non-GAAP adjusted EBITDA / Share $ 0.02 $ 0.09 $ 0.27 $ 0.22
Weighted Average Shares - Diluted 11,535,106 9,198,720 10,583,630 9,182,767

About World Energy Solutions, Inc.
World Energy Solutions, Inc. (NASDAQ: XWES) is an energy management services firm that brings together the passion, processes and technologies to take the complexity out of energy management and turn it into bottom-line impact for the businesses, institutions and governments we serve. To date, the Company has transacted more than $20 billion in energy, demand response and environmental commodities on behalf of its customers, creating more than $1 billion in value for them. World Energy is also a leader in the global carbon market, where its World Green Exchange® supports the ground-breaking Regional Greenhouse Gas Initiative's (RGGI) cap and trade program for CO2 emissions. For more information, please visit

This press release contains forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events, including without limitation, our expectations of backlog and energy prices. Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: our revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for our services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; and there are factors outside our control that affect transaction volume in the electricity market. Additional risk factors are identified in our Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

Three Months Ended
December 31,
Twelve Months Ended
December 31,
2011 2010 2011 2010
Revenue $ 5,906,445 $ 4,914,584 $ 21,086,585 $ 17,984,662
Cost of revenue 1,102,636 939,532 4,009,995 3,715,869
Gross profit 4,803,809 3,975,052 17,076,590 14,268,793
Sales and marketing 3,245,794 2,399,593 10,631,035 9,483,350
General and administrative 2,179,372 1,202,317 5,790,264 4,893,212
Operating income (loss) (621,357 ) 373,142 655,291 (107,769 )
Interest income (expense), net (43,172 ) 8,637 (1,526 ) 8,682
Income (loss) before income taxes (664,529 ) 381,779 653,765 (99,087 )
Income tax expense (benefit) 116,474 -- 138,224 --
Net income (loss) $ (781,003 ) $ 381,779 $ 515,541 $ (99,087 )
Earnings (loss) per share:
Earnings (loss) per share - basic and diluted $ (0.07 ) $ 0.04 $ 0.05 $ (0.01 )
Weighted average shares outstanding - basic 11,513,481 9,107,943 10,521,910 9,067,834
Weighted average shares outstanding - diluted 11,513,481 9,198,720 10,583,630 9,067,834
December 31, 2011
Cash and cash equivalents $ 1,837,801
Trade accounts receivable, net 4,057,215
Other current assets 680,461
Property and equipment, net 426,403
Goodwill 11,817,236
Other assets 15,005,424
Total assets $ 33,824,540
Liabilities and stockholders' equity
Accrued commissions $ 970,185
Accounts payable and accrued liabilities 5,745,689
Notes payable 3,000,000
Other current liabilities 330,848
Total current liabilities 10,046,722
Total long-term liabilities 2,596,699
Stockholders' equity 21,181,119
Total liabilities and stockholders' equity $ 33,824,540

Contact Information

  • For additional information, contact:

    Jim Parslow
    World Energy Solutions, Inc.
    (508) 459-8100
    Email Contact


    Dan Mees
    World Energy Solutions, Inc.
    (508) 459-8156
    Email Contact

    Erika Moran
    The Investor Relations Group
    (212) 825-3210
    Email Contact


    Craig Armitage
    The Equicom Group
    (416) 815-0700 x278
    Email Contact