EnerNOC Reports Fourth Quarter and Full Year 2010 Financial Results

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

Marketwired

BOSTON, MA--(Marketwire - 02/16/11) - EnerNOC, Inc. (NASDAQ:ENOC - News)

 
-- 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 - News), 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 OutlookThe 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 ReminderThe 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 EnerNOCEnerNOC 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 StatementStatements 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 MeasuresTo 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:


Contact:
Investors
Will Lyons
(617) 532.8104
ir@enernoc.com
Media
Brian Bowen
(617) 532.8109
news@enernoc.com
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