SOURCE: World Energy Solutions

World Energy Solutions

May 05, 2011 07:31 ET

World Energy Solutions Reports Third Consecutive Quarter of Net Income and Record Revenue

Subsequent to Quarter End Firm Raises $5.3 Million

WORCESTER, MA--(Marketwire - May 5, 2011) - World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced financial results for the first quarter ended March 31, 2011. In Q1 2011, World Energy delivered record quarterly revenue, its third consecutive quarter of net income, and its sixth straight of positive adjusted EBITDA.

Financial Highlights (All figures are in US dollars and compare Q1 2011 results to Q1 2010.)

Revenue and Backlog

-- Quarterly revenue increased 12% to $4.9 million
-- Annualized backlog increased 22% to $13.8 million
-- Total backlog rose 18% to $25.1 million

Operating Results

-- Net income was $0.3 million, or $0.03 per share
-- Adjusted EBITDA* grew 71% to $0.7 million
-- Gross margins were 80%, up from 78%

Liquidity and Balance Sheet

-- Cash and cash equivalents were $2.7 million, up 92%
-- The Company renewed its $3.0 million credit facility with Silicon
   Valley Bank
-- Subsequent to quarter end, the Company raised $5.3 million through a
   registered equity offering

Product Line Highlights

-- Robust revenue and significant customer wins across product lines
-- Wholesale customers increased 27% to 71; channel partners grew 39%
   to 143
-- The Company successfully launched its Seven Levers of Energy 
   Management(TM) strategic framework and Virtual Energy Audit(TM)
   efficiency product

"Our core business continues to perform very well, as evidenced by our first quarter results and gains we are making in the market, including taking significant customers from our competitors," said Richard Domaleski, CEO of World Energy Solutions. "In addition, we formally launched our new strategic framework -- the Seven Levers of Energy Management -- that provides customers a clear and comprehensive approach to manage their energy costs.

"This framework not only differentiates us in the energy management space, it also provides a compelling context for future investments and new product development at the Company. A good example of this is our new Virtual Energy Audit™ product, which helps customers meet government mandates for greener commercial buildings at a fraction of the time and cost of traditional manual audits. And with our recently completed raise of $5.3 million, World Energy now has over $8M in cash to pursue acquisitions and accelerate growth."

Financial Review

For the three months ended March 31, 2011, revenue increased by 12% over Q1 2010 to $4.9 million. This growth mainly reflects increased auction activity in the Company's Retail product line, including new customer wins with a concentration in the Pennsylvania electricity market, as well as further growth in its channel partner network.

Gross margin improved 2% to 80% compared to Q1 2010, and operating expenses as a percentage of sales decreased to 75% as the Company continued to benefit from the operating leverage in its business model. As a result, the Company's operating margin jumped eight basis points to a positive 5%, up from a negative 3% in the prior period. Net income increased $0.4 million to $0.3 million, or $0.03 per share, compared with a net loss of $(0.1) million, or $(0.01) per share, in Q1 2010.

At March 31, 2011, the Company had no bank debt and cash and cash equivalents of $2.7 million, compared with $1.4 million at March 31, 2010. The increase in cash and cash equivalents was primarily due to cash generated from adjusted EBITDA* of $2.3 million over the past four quarters. The Company also renewed its $3.0 million credit facility with Silicon Valley Bank for 12 months through March 6, 2012. The Company has not taken any advances against this credit facility to date.

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 March 31, 2011 included commodity backlog of $24.1 million and $12.8 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, May 5, 2011, at 10:00 a.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 1-877-407-9210 (domestic) or 1-201-689-8049 (international). A replay will be available two hours after the completion of the call, and for one month following the call, by dialing 1-877-660-6853 for domestic participants or 1-201-612-7415 for international participants, and entering account #286 and conference ID #371617 when prompted. Participants may also access a live webcast of the conference call through the investor relations section of World Energy's website, www.worldenergy.com. 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 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, net interest and income tax expense.

Management believes it is useful to exclude depreciation, amortization, net interest and income tax expense 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 this non-GAAP measure for internal reporting and bank reporting purposes. World Energy provides this non-GAAP financial measure in addition to GAAP financial results, because management believes that this non-GAAP financial measure provides 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.

This non-GAAP financial measure is not prepared in accordance with GAAP. This measure 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) prepared in accordance with GAAP.

Whenever World Energy reports non-GAAP financial measures, a reconciliation of the non-GAAP financial measure 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 is shown below:

                                                 Three Months Ended
                                          --------------------------------
                                           March 31, 2011   March 31, 2010
                                          ---------------  ---------------
GAAP net income (loss)                    $       250,089  $      (128,444)
  Add: Interest (income) expense, net             (13,443)           1,260
  Add: Income tax expense                           7,250                -
  Add: Share-based compensation                   141,192          144,638
  Add: Amortization                               279,473          360,524
  Add: Depreciation                                35,480           30,720
                                          ---------------  ---------------

Non-GAAP adjusted EBITDA                  $       700,041  $       408,698
                                          ===============  ===============

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 Energy Exchange® supports the ground-breaking Regional Greenhouse Gas Initiative's (RGGI) cap and trade program for CO2 emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those indicated in the forward-looking statements. 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.


                       WORLD ENERGY SOLUTIONS, INC.

        SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

Revenue                                         $   4,918,388 $  4,408,106

Cost of revenue                                     1,000,532      949,565
                                                ------------- ------------

Gross profit                                        3,917,856    3,458,541

Sales and marketing                                 2,456,221    2,500,722

General and administrative                          1,217,739    1,085,003
                                                ------------- ------------

Operating income (loss)                               243,896     (127,184)

Interest income (expense), net                         13,443       (1,260)
                                                ------------- ------------

Income (loss) before income taxes                     257,339     (128,444)

Income tax expense                                      7,250            -
                                                ============= ============

Net income (loss)                               $     250,089 $   (128,444)
                                                ============= ============

Net income (loss) per common share - basic &
 diluted                                        $        0.03 $      (0.01)
                                                ============= ============

Weighted average shares outstanding - basic         9,199,205    9,016,711
                                                ============= ============

Weighted average shares outstanding - diluted       9,224,744    9,016,711
                                                ============= ============



              SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET

                                                            March 31, 2011
                                                           ----------------
Assets
  Cash and cash equivalents                                $      2,729,395
  Trade accounts receivable, net                                  3,358,535
  Other current assets                                              305,921
  Property and equipment, net                                       256,631
  Goodwill                                                        3,178,701
  Other assets                                                    4,316,048
                                                           ----------------
    Total assets                                           $     14,145,231
                                                           ================

Liabilities and stockholders' equity
  Accrued commissions                                      $      1,019,951
  Accounts payable and accrued liabilities                        1,326,536
  Other current liabilities                                         151,464
                                                           ----------------
    Total current liabilities                                     2,497,951
  Total long-term liabilities                                             -
  Stockholders' equity                                           11,647,280
                                                           ----------------
    Total liabilities and stockholders' equity             $     14,145,231
                                                           ================

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

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