WORCESTER, MA--(Marketwire - Nov 1, 2012) - World Energy Solutions, Inc. (
Financial Highlights (All figures are in US dollars and compare the three months ended September 30, 2012 results to the same period in 2011, unless otherwise noted.)
Revenue and Backlog
- Quarterly revenue increased 51% to a record $8.5 million
- Annualized backlog increased 46% to $20.7 million
- Total backlog rose 65% to $38.6 million
- Net income was $0.4 million, or $0.03 per share
- EBITDA was $1.2 million
- Gross margins were 69%
- 83% in Energy Procurement
- 22% in Energy Efficiency Services
Liquidity and Balance Sheet
- Cash from operations was $0.4 million
- Cash and cash equivalents were $3.0 million
- Solid execution across the Company's Energy Procurement business:
- Won new C&I accounts, including cross-sell opportunities
- Continued to grow GSA Natural Gas Acquisition Program
- Renewed several key accounts
- Growing traction in new product lines:
- Accelerated growth of Energy Efficiency Services product line
- Continued success in Mid-Market
- Investment in Mid-Market and Energy Efficiency teams
- Subsequent to quarter end, World Energy acquired Northeast Energy Partners (NEP), a CT-based energy procurement firm specializing in the mid-market
"We had another very strong quarter, once again delivering record revenue and profitable growth, while also making a strategically significant acquisition," said Phil Adams, CEO, World Energy Solutions. "I am particularly proud of our results given the recent rise in energy prices and some deals that pushed into Q4. Our Efficiency team had excellent growth, and together with our newest acquisition, NEP, we see significant opportunity to cross-sell in Connecticut and Massachusetts.
"With these results, we remain on track to hit our revenue and EBITDA growth targets for the year, and we have done so while building out our teams and making strategic acquisitions to position the Company for strong growth into 2013 and beyond."
For the nine months ended September 30, 2012, revenue increased by 63% to $24.7 million, due to the Company's acquisitions completed in Q4 2011 and increased auction activity in our Retail product line. Revenue from the Company's Energy Procurement segment increased 36%, reflecting the addition of the energy procurement businesses of Co-eXprise and GSE and continued execution in the Company's base business. The comparable 2011 nine-month revenue total included a $0.7 million one-time, upfront payment from one of our energy suppliers. The Company's Energy Efficiency Services segment contributed 17% of year-to-date revenue.
Gross margins were 73% for the first nine-months of 2012, reflecting the change in revenue mix. Energy Procurement gross margins remained strong at 83% compared to 81% in the same period last year, while Energy Efficiency Services gross margins were 25%. Energy Efficiency Services gross margins reflect equipment, material and direct labor costs associated with completed projects. Operating expenses as a percentage of sales decreased 5% to 68% as the Company continued to benefit from the operating leverage in its business model. As a result, the Company's operating margin was 5%, a 3% decrease from the first nine-months of 2011, and EBITDA* margin was 14% compared to 15% last year. The increase in operating expenses includes non-recurring charges of $0.5 million related to severance, the relocation of the Company's corporate and Ohio offices, and a channel partner advance. Excluding the non-recurring charges, operating and EBITDA* margins would have been 7% and 16%, respectively.
Revenue for the three months ended September 30, 2012 rose 51% over the same period last year to $8.5 million, due to the Company's acquisitions and increased auction activity in our Retail product line. Revenue from the Company's Energy Procurement segment increased 16%, reflecting the addition of the energy procurement businesses of Co-eXprise and GSE and continued execution in the Company's base business. The Energy Procurement results for the third quarter of 2011 reflected the $0.7 million one-time, upfront supplier payment mentioned above. The Company's Energy Efficiency Services segment contributed 23% of Q3 2012 revenue.
Gross margins were 69% for the quarter, reflecting the change in revenue mix. Energy Procurement gross margins remained strong at 83% compared to the same gross margin percentage last year, while Energy Efficiency Services gross margins were 22%. Operating expenses as a percentage of sales decreased 5% to 63% as the Company continued to benefit from the operating leverage in its business model. As a result, the Company's operating margin was 6% compared to 15% in the third quarter of 2011, and EBITDA* margin was 14% compared to 21% in the prior year quarter. The increase in operating expenses includes non-recurring charges of $0.1 million related to the relocation of the Company's corporate and Ohio offices. Excluding these non-recurring charges, operating and EBITDA* margin would have been 6% and 14%, respectively. Operating income for the third quarter of 2011 included $0.5 million from the upfront supplier payment discussed above, net of internal and third party commission expense.
At September 30, 2012, the Company had cash and cash equivalents of $3.0 million, compared with $3.6 million at June 30, 2012 and $1.8 million at December 31, 2011. The decrease in cash and cash equivalents during the quarter was primarily due to a $1.0 million payment against notes payable from the 2011 acquisition of NES and a $0.8 million increase in accounts receivable, both offset by cash generated from EBITDA* of $1.2 million. The Company has short-term commitments of $3.8 million related to acquisitions, including Notes payable to sellers of $2.0 million due in the fourth quarter of 2012 and potential contingent consideration payments of $1.8 million due in the first quarter of 2013 if certain performance requirements are met. The Company forecasts its operating cash flow will be adequate to meet these obligations when due. The Company has not borrowed against its $2.5 million line-of-credit and is in compliance with all covenants.
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 September 30, 2012 included commodity backlog of $37.7 million and $19.8 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 $0.9 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, November 1, 2012, at 5:00 p.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 1-888-517-2458 (domestic) or 1-847-413-3538 (international) and enter passcode 9895528#. 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 9895528# 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 90 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 the presentation of net income 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||Nine Months Ended|
|September 30,||September 30,|
|GAAP net income||$||365,035||$||855,144||$||858,150||$||1,296,544|
|Add: Interest (income) expense, net||86,917||(14,183||)||274,624||(41,646||)|
|Add: Income taxes||22,500||7,250||72,500||21,750|
|Add: Amortization of intangibles||618,228||264,821||2,076,369||743,544|
|Add: Amortization of other assets||8,833||27,751||30,504||104,089|
|Add: Share-based compensation||120,175||171,389||319,619||488,897|
|Non-GAAP adjusted EBITDA||$||1,277,131||$||1,343,113||$||3,790,279||$||2,711,143|
|GAAP net income||$||365,035||$||855,144||$||858,150||$||1,296,544|
|Add: Non-recurring charges||73,169||--||515,435||--|
|Non-GAAP net income||$||438,204||$||855,144||$||1,373,585||$||1,296,544|
|Dilutive weighted-average shares||11,946,504||10,809,144||11,945,177||10,247,294|
|Non-GAAP earnings per share||$||0.04||$||0.08||$||0.12||$||0.13|
About World Energy Solutions, Inc.
World Energy Solutions, Inc. (
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.
|WORLD ENERGY SOLUTIONS, INC.|
|SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
|Three Months Ended |
|Nine Months Ended |
|Cost of revenue||2,632,913||970,846||6,614,811||2,907,359|
|Sales and marketing expenses||3,638,961||2,512,191||11,171,915||7,385,241|
|General and administrative expenses||1,769,718||1,293,822||5,748,957||3,610,892|
|Interest income (expense), net||(86,917||)||14,183||(274,624||)||41,646|
|Income before income taxes||387,535||862,394||930,650||1,318,294|
|Income tax expense||22,500||7,250||72,500||21,750|
|Net Income per share:|
|Net Income per share - basic and diluted||$||0.03||$||0.08||$||0.07||$||0.13|
|Weighted average shares outstanding - basic||11,904,469||10,762,417||11,888,660||10,187,755|
|Weighted average shares outstanding - diluted||11,946,504||10,809,144||11,945,177||10,247,294|
|SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET |
|September 30, 2012|
|Cash and cash equivalents||$||3,014,090|
|Trade accounts receivable, net||6,661,605|
|Other current assets||1,030,545|
|Property and equipment, net||614,313|
|Liabilities and stockholders' equity|
|Accounts payable and accrued liabilities||6,161,097|
|Notes payable and current portion of long-term debt||2,641,025|
|Other current liabilities||14,501|
|Total current liabilities||9,917,479|
|Total long-term liabilities||2,904,653|
|Total liabilities and stockholders' equity||$||35,331,138|