EnerNOC Reports Results For Second Quarter Of 2016

EnerNOC Reports Results For Second Quarter Of 2016

August 2, 2016

 

BOSTON, Aug. 02, 2016 (GLOBE NEWSWIRE)—EnerNOC, Inc. (Nasdaq:ENOC), a leading provider of energy intelligence software (EIS) and demand response solutions, today announced results for the second quarter ended June 30, 2016.

"We posted strong financial results for the quarter and we are increasing our full year outlook for the second consecutive period," said Tim Healy, Chairman and CEO of EnerNOC. "With continued solid execution in demand response and a sharper focus in software as we divest non-core assets, we are well positioned as the trusted technology partner of enterprises to manage their comprehensive energy strategy."

Summary Financial Results        
In thousands              
  Q2 2016   Q2 2015   YTD 2016   YTD 2015
Revenue              
Software $ 16,232     $ 19,908     $ 33,265     $ 37,325  
Demand Response 116,462     52,592     152,809     85,726  
Total Revenue $ 132,694     $ 72,500     $ 186,074     $ 123,051  
               
Net Income (Loss) $ 102     $ (18,780 )   $ (40,436 )   $ (69,082 )
Net Income (Loss) Per Diluted Share $ 0.00     $ (0.66 )   $ (1.40 )   $ (2.45 )
               
Cash Used in Operations $ (16,403 )   $ (5,216 )   $ (46,150 )   $ (23,668 )
Free Cash Flow 1, 2 $ (21,123 )   $ (11,300 )   $ (55,261 )   $ (34,958 )
Adjusted EBITDA1              
Software adjusted EBITDA $ (20,030 )   $ (15,000 )   $ (38,037 )   $ (35,246 )
Demand Response adjusted EBITDA 27,965     13,613     24,481     7,197  
Corporate unallocated expenses (4,536 )   (4,808 )   (10,207 )   (8,159 )
Consolidated adjusted EBITDA1, 3 $ 3,399     $ (6,195 )   $ (23,763 )   $ (36,208 )
                               
1 Refer to "Statement of Use of Non-GAAP Measures" for non-GAAP definitions and refer to the financial schedules attached to this press
release for a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
2 Free cash flow does not include cash received for the sale of service lines and assets. Prior period results have been updated to conform with
current period presentation.
Consolidated adjusted EBITDA excludes gain on the sale of service lines and assets. Prior period results have been updated to conform with
current period presentation.
 

Recent Highlights

  • We expanded our demand response contract with Consumers Energy, Michigan's largest utility. Under the new contract, Consumers Energy will extend the benefits of demand response to more of its commercial and industrial customers, delivering up to 40 megawatts of demand response capacity into the Midcontinent Independent System Operator (MISO) market. This will be the first time a demand response portfolio powered by EnerNOC's technology will participate in the MISO market.
  • We completed the sale of a utility services business for a net selling price of $14 million. The business provides utilities with advisory services that are non-core to our strategy.
  • We restructured our utility customer engagement software business unit and are currently holding the business for sale. Following our exit from the utility customer engagement market, our software business will be focused exclusively on enterprise customers.
  • We appointed Bill Sorenson Chief Financial Officer of the Company effective August 22, 2016. Sorenson will succeed Neil Moses, who plans to retire in early 2017.

Company Issues Third Quarter Guidance and Updates Full Year 2016 Guidance

The Company today issued guidance for the third quarter of 2016 and updated its previously issued guidance for the full year. The Company's guidance is based on the current indications for its business, which may change at any time.

  Guidance for Quarter Ending
September 30, 2016
Total Revenue (in millions) $141-$161
Software Revenue $16-$19
Demand Response Revenue $125-$142
GAAP Net Income Per Diluted Share $0.00-$0.24
Consolidated adjusted EBITDA1 (in millions) $15-$22
   
1 Refer to "Statement of Use of Non-GAAP Measures" for non-GAAP definitions and refer to the financial schedules attached to this press release for a
reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
 

 

  Guidance for the Year Ending December 31, 2016
  Issued on May 5, 2016   Issued on Aug 2, 2016
Total Revenue (in millions) $365-$395   $370-$400
Software Revenue $72-$77   $67-$72
Demand Response Revenue $293-$318   $303-$328
GAAP Net Loss Per Diluted Share ($3.25)-($2.90)   ($2.95)-($2.60)
Consolidated adjusted EBITDA1 (in millions) ($40)-($30)   ($35)-($25)
Software adjusted EBITDA1 (in millions) ($65)-($60)   ($65)-($60)
Demand Response adjusted EBITDA1 (in millions) $45-$50   $50-$55
Corporate unallocated expenses1 (in millions) ~($20)   ~($20)
       
1 Refer to "Statement of Use of Non-GAAP Measures" for non-GAAP definitions and refer to the financial schedules attached to this press release for a
reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.
 

Company to Host Live Conference Call and Webcast

The Company's management team plans to host a live conference call and webcast at 9:00 a.m. eastern time today to discuss financial results and management's outlook for the business. The conference call may be accessed in the United States by dialing +1.800.230.1059 and using access code "ENOC". The conference call may be accessed outside of the United States by dialing +1.612.332.0226 and using access code "ENOC". The conference call will be simultaneously webcast on the Company's investor relations website, which can be accessed at http://investor.enernoc.com. A replay of the conference call will be available approximately one hour after the call by dialing +1.800.475.6701 or +1.320.365.3844 and using access code 397874 or by accessing the webcast replay on the Company's investor relations website.

About EnerNOC

EnerNOC is a leading provider of energy intelligence software (EIS) and demand response solutions. With capabilities to better address budgets and procurement, utility bill management, facility analysis and optimization, sustainability and reporting, project tracking, and demand management, EnerNOC's SaaS platform helps enterprises control energy costs, mitigate risk, and streamline compliance and sustainability reporting. EnerNOC also offers access to more demand response programs worldwide than any other provider, providing enterprises a valuable payment stream to further enhance bottom line results and utilities and grid operators a reliable, cost-effective demand-side resource. For more information, visit www.enernoc.com.

EnerNOC, Inc. 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, and the future growth and success of the Company's energy intelligence software and demand response solutions, 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.

 

EnerNOC, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
               
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2016   2015   2016   2015
Revenues:              
Software $ 16,232     $ 19,908     $ 33,265     $ 37,325  
Demand Response 116,462     52,592     152,809     85,726  
Total revenues 132,694     72,500     186,074     123,051  
Cost of revenues 81,531     33,543     114,125     65,499  
Gross profit 51,163     38,957     71,949     57,552  
Operating expenses:              
Selling and marketing 25,517     23,670     50,532     52,166  
General and administrative 27,441     28,453     55,357     56,743  
Research and development 7,634     7,735     15,677     15,186  
Gain on sale of service lines and assets (17,376 )   (2,991 )   (17,376 )   (2,991 )
Restructuring charges 3,694         3,694      
Total operating expenses 46,910     56,867     107,884     121,104  
Income (loss) from operations 4,253     (17,910 )   (35,935 )   (63,552 )
Other income (expense), net (3,421 )   1,705     (334 )   (2,952 )
Interest expense (1,844 )   (2,240 )   (3,621 )   (4,532 )
Loss before income tax (1,012 )   (18,445 )   (39,890 )   (71,036 )
Benefit from (provision for) income tax 1,109     (345 )   (582 )   1,940  
Net income (loss) 97     (18,790 )   (40,472 )   (69,096 )
Net loss attributable to noncontrolling interest (5 )   (10 )   (36 )   (14 )
Net income (loss) attributable to EnerNOC, Inc. $ 102     $ (18,780 )   $ (40,436 )   $ (69,082 )
               
Net income (loss) attributable to EnerNOC, Inc. per
common share
             
Basic $ 0.00     $ (0.66 )   $ (1.40 )   $ (2.45 )
Diluted $ 0.00     $ (0.66 )   $ (1.40 )   $ (2.45 )
               
Weighted average number of common shares used in
computing net income (loss) per share attributable
to EnerNOC, Inc.
             
Basic 29,114,200   28,327,867   28,962,021   28,172,398
Diluted 29,569,321   28,327,867   28,962,021   28,172,398

 

EnerNOC, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share data)
(unaudited)
  June 30, 2016   December 31, 2015
ASSETS      
Current assets:      
Cash and cash equivalents $ 95,123     $ 138,120  
Trade accounts receivable, net 33,301     43,355  
Unbilled revenue 10,341     70,101  
Capitalized incremental direct customer contract costs 6,857     33,917  
Prepaid expenses and other current assets 14,225     8,118  
Assets held for sale 7,470      
Total current assets 167,317     293,611  
       
Property and equipment, net 44,009     49,653  
Goodwill and intangible assets, net 80,696     94,099  
Deposits, other assets, and deferred tax assets 5,979     6,351  
Total assets $ 298,001     $ 443,714  
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 1,405     $ 6,002  
Accrued capacity payments 47,299     104,278  
Accrued payroll and related expenses 13,273     18,058  
Accrued expenses and other current liabilities 15,086     20,734  
Deferred revenue 14,269     55,631  
Liabilities held for sale 915      
Total current liabilities 92,247     204,703  
       
Deferred revenue 3,448     3,696  
Other liabilities and deferred tax liabilities 7,591     9,118  
Convertible senior notes 113,203     111,254  
Total long-term liabilities 124,242     124,068  
       
Stockholders' equity:      
Common stock 31     30  
Additional paid-in capital 382,757     377,473  
Accumulated other comprehensive loss (6,768 )   (8,524 )
Accumulated deficit (294,771 )   (254,335 )
Total EnerNOC, Inc. stockholders' equity 81,249     114,644  
Non-controlling interest 263     299  
Total stockholders' equity 81,512     114,943  
Total liabilities and stockholders' equity $ 298,001     $ 443,714  
       

 

EnerNOC, Inc.
Condensed Consolidated Statements of Cash Flow Data
(in thousands)
(unaudited)
    Three Months Ended
June 30,
  Six Months Ended
June 30,
Condensed Consolidated Statements of Cash Flow Data   2016   2015   2016   2015
Cash used in operating activities   $ (16,403 )   $ (5,216 )   $ (46,150 )   $ (23,668 )
Cash provided by (used in) investing activities   8,099     (2,969 )   3,490     (83,535 )
Cash used in financing activities   (824 )   (1,119 )   (1,496 )   (2,130 )
Effects of exchange rate changes on cash and cash equivalents (148 )   431     1,159     (1,463 )
Net change in cash and cash equivalents   (9,276 )   (8,873 )   (42,997 )   (110,796 )
Cash and cash equivalents at beginning of period   104,399     152,428     138,120     254,351  
Cash and cash equivalents at end of period   $ 95,123     $ 143,555     $ 95,123     $ 143,555  

 

 EnerNOC, Inc.
Statement on Use of Non-GAAP Financial Measures

To supplement the Company's consolidated financial statements presented on a GAAP basis, the Company discloses certain non-GAAP measures, including consolidated adjusted EBITDA and free cash flow, that exclude certain amounts. These non-GAAP measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States.

The GAAP measure most comparable to consolidated adjusted EBITDA is GAAP net income (loss) attributable to EnerNOC, Inc. and the GAAP measure most comparable to free cash flow is cash flows provided by (used in) operating activities. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measures are included below.

Management uses these non-GAAP measures when evaluating the Company's operating performance and for internal planning and forecasting purposes. Management believes that such measures help indicate underlying trends in the 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, management considers consolidated adjusted EBITDA to be an important indicator of the Company's operational strength and performance of the business and a good measure of the Company's historical operating trend. In addition, management considers free cash flow to be an indicator of the Company's operating trend and performance of the business.

The following is an explanation of the non-GAAP measures that management utilizes, including the adjustments that management excluded as part of the non-GAAP measures:

  • Management defines consolidated adjusted EBITDA as net income (loss) attributable to EnerNOC, Inc., excluding depreciation, asset impairments and amortization, stock-based compensation, gains on sale of service lines and assets, direct and incremental expenses related to acquisitions and divestitures, restructuring charges, gains on early extinguishment of debt, interest expense, income taxes and other income (expense), net.
     
  • Management defines free cash flow as net cash provided by (used in) operating activities, less capital expenditures. Management defines capital expenditures as purchases of property and equipment, which includes capitalization of internal-use software development costs.

Consolidated adjusted EBITDA and free cash flow may have limitations as analytical tools. 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.

 

EnerNOC, Inc.  
Reconciliation of Free Cash Flow  
(in thousands)  
(unaudited)  
  Three Months Ended   Six Months Ended   
  June 30, June 30,  
  2016   2015   2016   2015  
Net cash used in operating activities $ (16,403 )   $ (5,216 )   $ (46,150 )   $ (23,668 )  
Subtract: Purchases of property and equipment (4,720 )   (6,084 )     (9,111 )     (11,290 )  
Free cash flow 1 $ (21,123 )   $ (11,300 )   (55,261 )   $ (34,958 )  
   
1 Free cash flow does not include cash received for the sale of service lines and assets. Prior period results have been updated to conform with
current period presentation.
 
 
EnerNOC, Inc.
Supplemental Financial Schedule of Segment Results
(in thousands)
(unaudited)
  Three Months Ended   Six Months Ended  
  June 30,   June 30,  
Segment Information 2016   2015   2016   2015  
Revenues:                    
Software                
Subscription software $ 5,569     $ 4,831     $ 11,745     $ 9,318    
Procurement solutions   8,795       8,855       17,728       17,476    
Professional services   1,868       6,222       3,792       10,531    
Total Software Revenues   16,232       19,908       33,265       37,325    
                     
Demand Response                    
Grid operator   104,673       41,545       131,485       65,291    
Utility   11,789       11,047       21,324       20,435    
Total Demand Response Revenues   116,462       52,592       152,809       85,726    
                                 
Consolidated Revenues $ 132,694     $ 72,500     $ 186,074     $ 123,051    
                                 
Segment Adjusted EBITDA:                
Software adjusted EBITDA $ (20,030 )   $ (15,000 )   $ (38,037 )   $ (35,246 )  
Demand Response adjusted EBITDA   27,965       13,613       24,481       7,197    
                                 

 

EnerNOC, Inc.
Reconciliation of Consolidated Adjusted EBITDA
(in thousands)
(unaudited)
  Three Months Ended
June 30,
  Six Months Ended
June 30,
  2016   2015   2016   2015
               
Software adjusted EBITDA $ (20,030 )   $ (15,000 )   $ (38,037 )   $ (35,246 )
Demand Response adjusted EBITDA 27,965     13,613     24,481     7,197  
Corporate unallocated expenses (4,536 )   (4,808 )   (10,207 )   (8,159 )
Consolidated adjusted EBITDA 1 3,399     (6,195 )   (23,763 )   (36,208 )
Depreciation, asset impairment, and amortization (8,783 )   (9,914 )   (18,470 )   (19,748 )
Stock-based compensation expense (3,669 )   (3,321 )   (6,784 )   (7,730 )
Gain on sale of service lines and assets 17,376     2,991     17,376     2,991  
Restructuring charges (3,694 )       (3,694 )    
Direct and incremental expenses of acquisitions and divestitures 2 (371 )   (1,461 )   (564 )   (2,843 )
Interest and other income (expense), net (5,265 )   (535 )   (3,955 )   (7,484 )
Benefit from (provision for) income tax 1,109     (345 )   (582 )   1,940  
Net income (loss) attributable to EnerNOC, Inc. $ 102     $ (18,780 )   $ (40,436 )   $ (69,082 )
 
1 Consolidated adjusted EBITDA excludes gain on the sale of service lines and assets. Prior period results have been updated to conform with
current period presentation.
2 Includes costs that are direct and incremental to business acquisitions and divestitures, including third party professional fees for legal,
accounting and valuation services.
 

Non-GAAP Financial Guidance

This press release also includes estimates of future consolidated adjusted EBITDA. A reconciliation of these amounts to the nearest expected GAAP results is presented below:

  Three Months Ended   Twelve Months Ended
  September 30, 2016   December 31, 2016
      Per Diluted Share       Per Diluted Share
In Millions, Except Per Share Amounts Low High Low High   Low High Low High
Adjusted EBITDA:                  
Software adjusted EBITDA           ($ 65 ) ($ 60 )    
Demand Response adjusted EBITDA           $ 50   $ 55      
Corporate unallocated expenses           ($ 20 ) ($ 20 )    
Consolidated adjusted EBITDA $ 15     $ 22           ($ 35 ) ($ 25 )    
                           
Reconciling Adjustments:                          
Depreciation and asset impairments $ 6     $ 6           $ 26   $ 26      
Amortization $ 3     $ 3           $ 11   $ 11      
Stock-based compensation expense $ 3     $ 3           $ 14   $ 14      
Direct and incremental expenses of acquisitions,
divestitures and restructuring
$ 1     $ 1           $ 6   $ 6      
Net gain on sale of assets or service lines $ 0     $ 0           ($ 17 ) ($ 17 )    
Interest and other income (expense), net $ 2     $ 2           $ 9   $ 9      
Provision for income taxes $ 0     $ 0           $ 2   $ 2      
                           
Projected GAAP Net Income (Loss) attributable to
EnerNOC, Inc
$ 0     $ 7     $ 0.00     $ 0.24       ($ 86 ) ($ 76 ) ($ 2.95 ) ($ 2.60 )
                   
Weighted Average Number of Common Shares
Outstanding-Diluted
29.5 29.5       29.2 29.2    

 

 

Enel Media Relations
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F +39 06 8305 3771
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EnerNOC Media Relations
Sarah McAuley
(617) 32-8195
news@enernoc.com