EnerNOC, Inc.
Nov 7, 2011

EnerNOC Reports Third Quarter 2011 Financial Results

Execution in New and Existing Markets Driving Continued Strong Growth

BOSTON, MA -- (MARKET WIRE) -- 11/07/11 -- EnerNOC, Inc. (NASDAQ: ENOC), a leading provider of clean and intelligent energy management applications and services, today announced financial results for the third quarter ended September 30, 2011.

"We had a very strong summer, responding to more than 225 demand response dispatches," said Tim Healy, EnerNOC's Chairman and Chief Executive Officer. "During the third quarter, we broadened our product portfolio and geographic footprint, which now includes 230 megawatts of instantaneous demand response in Alberta, Canada and New Zealand. We also established our leadership in Australia through one of our largest acquisitions to date. These results are strong indicators that demand response is becoming an integral resource in electricity markets throughout the world and that we are at the forefront of this important activity."

Healy continued, "The broader energy management opportunity also continues to grow, with our platform now collecting several gigabytes of energy data every day. Increasingly more of that data is related to our energy efficiency applications, an area of continued momentum and excitement for the Company."

Revenues for the third quarter of 2011 were $169.2 million, compared to $162.8 million for the same period in 2010. Gross profit for the third quarter of 2011 was $84.8 million, or 50.1% of revenues, compared to $77.7 million, or 47.7% of revenues, for the same period in 2010.

GAAP net income for the third quarter of 2011 was $46.9 million, or $1.77 per diluted share, compared to GAAP net income for the third quarter of 2010 of $43.9 million, or $1.67 per diluted share. Non-GAAP net income* for the third quarter of 2011 was $52.1 million, or $1.96 per diluted share, compared to non-GAAP net income for the third quarter of 2010 of $47.6 million, or $1.81 per diluted share.

Adjusted EBITDA* for the third quarter of 2011 was $60.7 million, compared to $55.9 million in the third quarter of 2010.

Cash flow from operating activities for the third quarter of 2011 was $8.7 million, compared to $17.7 million in the third quarter of 2010. The Company generated $5.7 million of free cash flow* for the quarter ended September 30, 2011, compared to $14.4 million for the quarter ended September 30, 2010. The primary driver of the year-over-year variance is timing differences between revenue recognition and cash receipt in several demand response markets. The Company still expects to generate between $10 million and $20 million of free cash flow for the year ending December 31, 2011.

As of September 30, 2011, the Company had cash and cash equivalents totaling $77.4 million, a decrease of $76.0 million from cash and cash equivalents as of December 31, 2010. During the nine months ended September 30, 2011, the Company utilized $69.0 million of net cash related to acquisitions.

(*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 a reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures.)

Third Quarter 2011 Highlights

Recent Developments

The Federal Energy Regulatory Commission (FERC) issued an order on November 4, 2011 to clarify rules related to the measurement and verification of demand response resources in the PJM Interconnection (PJM) capacity market. The order preserves PJM's original market rules for the full compliance period of the 2011-12 delivery year, while accepting PJM's proposal going forward, subject to conditions, including requiring PJM to submit a compliance filing with the FERC by January 3, 2012 that (i) includes the development of an interim mechanism to protect demand response suppliers' reasonable reliance expectations regarding capacity compliance measurement and verification for the 2012-13 delivery year through the 2014-15 delivery year and (ii) explains how PJM will preserve the benefits of aggregation. In addition, FERC encouraged further examination of the limitations of peak load contribution (PLC) as a baseline methodology in order to develop a more dynamic baseline methodology in the future.

Financial Outlook

The Company currently expects to deliver the following financial results for the quarter and year ending December 31, 2011:

The Company expects full year 2011 revenues to be in the range of $282.5 million to $297.5 million. The Company expects a GAAP net loss per share in the range of $0.25 to $0.50 based on basic and diluted weighted average shares outstanding of 25.7 million, and non-GAAP net income per share in the range of $0.28 to $0.53 based on diluted weighted average shares outstanding of 26.9 million. Non-GAAP net income reflects adjustments for an estimated stock-based compensation expense of $14.0 million and an estimated amortization of acquisition-related intangibles expense of $6.6 million, which are included in GAAP net income.

These statements are forward-looking and actual results may differ materially. These statements are based on information available as of November 7, 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 Reminder

The Company will host a live webcast and conference call today, November 7, 2011 at 9:00 a.m., Eastern Time, to discuss the Company's third quarter 2011 operating results, as well as other forward-looking information about the Company's business. Visit the Investor Relations section of EnerNOC's website at http://investor.enernoc.com/webcasts.cfm for a live webcast of the conference call. Domestic callers may access the earnings conference call by dialing 877-837-3911 (International callers, dial 973-796-5063). 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 855-859-2056 and enter the pass code 22011790) until November 15, 2011 and the webcast will be archived on EnerNOC's website for a period of three months.

About EnerNOC

EnerNOC 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 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, contracted revenues that the Company expects to earn, the Company's ability to enhance shareholder value, the future growth and success of the Company's clean and intelligent energy management applications and services, and the future growth of the demand response industry 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.

Contracted Revenues

Contracted Revenues represent EnerNOC's estimate of total payments that it currently expects to earn in connection with providing energy efficiency services under currently executed contractual arrangements. As of the date of this press release, EnerNOC expects the majority of this Contracted Revenue to be earned by December 31, 2013.

Assumptions Regarding Contracted Revenues:

Contracted Revenues estimated from EnerNOC's executed contracts have been prepared by management and are based upon contractual terms and a number of assumptions, including:

-- EnerNOC's ability to deliver the energy efficiency savings that it has committed to provide; and

-- EnerNOC's contracts not being terminated, modified or delayed or becoming subject to governmental regulation that could materially and adversely affect EnerNOC's interests

Any differences among these assumptions, other factors, and EnerNOC's actual experiences may result in actual revenues earned in future periods differing from management's current estimate of Contracted Revenues to be earned. In management's view, such information was prepared on a reasonable basis, reflects the best currently available estimates and judgments, and, to the best of management's knowledge and belief, presents the assumptions and considerations on which EnerNOC bases its belief that it can earn such Contracted Revenues.

Use of Non-GAAP Financial Measures

To 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'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)



                Condensed Consolidated Statements of Income

                                (Unaudited)



                            Three Months Ended         Nine Months Ended

                               September 30,             September 30,

                         ------------------------  ------------------------

                             2011         2010         2011         2010

                         -----------  -----------  -----------  -----------

Revenues                 $   169,183  $   162,798  $   259,849  $   257,467

Cost of revenues              84,351       85,062      142,079      141,164

                          ----------   ----------   ----------   ----------

    Gross profit              84,832       77,736      117,770      116,303

Operating expenses:

  Selling and marketing       14,591       12,487       39,798       33,132

  General and

   administrative             15,960       14,254       48,172       41,155

  Research and

   development                 3,310        3,197        9,892        7,748

                          ----------   ----------   ----------   ----------

    Total operating

     expenses                 33,861       29,938       97,862       82,035

                          ----------   ----------   ----------   ----------

Income from operations        50,971       47,798       19,908       34,268

Other (expense) income,

 net                          (2,471)          42       (2,485)          31

Interest expense                (397)        (195)        (798)        (686)

                          ----------   ----------   ----------   ----------

    Income before income

     tax                      48,103       47,645       16,625       33,613

Provision for income tax      (1,225)      (3,779)      (1,992)      (2,869)

                          ----------   ----------   ----------   ----------

    Net income           $    46,878  $    43,866  $    14,633  $    30,744

                          ==========   ==========   ==========   ==========



Income per common share

    Basic                $      1.83  $      1.76  $      0.57  $      1.25

                          ==========   ==========   ==========   ==========

    Diluted              $      1.77  $      1.67  $      0.55  $      1.18

                          ==========   ==========   ==========   ==========



Weighted average number

 of common shares

 outstanding

    Basic                 25,683,177   24,864,755   25,491,362   24,650,453

    Diluted               26,538,278   26,215,766   26,498,620   26,013,402



                               EnerNOC, Inc.

                   Condensed Consolidated Balance Sheets

                                (Unaudited)





                                                    September     December

                                                     30, 2011     31, 2010

                                                   -----------  -----------

ASSETS

Current assets

  Cash and cash equivalents                        $    77,420  $   153,416

  Restricted cash                                           93        1,537

  Trade accounts receivable, net of allowance for

   doubtful accounts of $249 and $150 at September

   30, 2011 and December 31, 2010, respectively         45,327       22,137

  Unbilled revenue                                     101,595       73,144

  Inventory                                                323            -

  Prepaid expenses, deposits and other current

   assets                                               11,037        6,707

                                                    ----------   ----------

  Total current assets                                 235,795      256,941

  Property and equipment, net of accumulated

   depreciation of $47,676 and $36,309 at

   September 30, 2011 and December 31, 2010,

   respectively                                         38,495       34,690

  Goodwill                                              75,023       24,653

  Customer relationship intangible assets, net          30,075        2,494

  Other definite-lived intangible assets, net            7,050        3,329

  Indefinite-lived intangible assets                       530          920

  Deposits and other assets                             16,258        2,872

                                                    ----------   ----------

    Total assets                                   $   403,226  $   325,899

                                                    ==========   ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

  Accounts payable                                 $       439  $       111

  Accrued capacity payments                             88,896       65,792

  Accrued payroll and related expenses                  12,230       11,135

  Accrued expenses and other current liabilities        12,156        9,307

  Accrued acquisition contingent consideration               -        1,500

  Deferred revenue                                       7,340        5,540

  Current portion of long-term debt                          7           37

                                                    ----------   ----------

    Total current liabilities                          121,068       93,422

Long-term liabilities

  Deferred acquisition consideration                     4,218            -

  Accrued acquisition contingent consideration,

   long-term                                               303            -

  Deferred tax liability                                 2,155        1,141

  Deferred revenue, long-term                            6,428        4,696

  Other liabilities                                        481          514

                                                    ----------   ----------

    Total long-term liabilities                         13,585        6,351



Stockholders' equity

Undesignated preferred stock, $0.001 par value;

 5,000,000 shares authorized; no shares issued               -            -

Common stock, $0.001 par value; 50,000,000 shares

 authorized, 26,785,657 and 25,155,067 shares

 issued and outstanding at September 30, 2011 and

 December 31, 2010, respectively                            27           25

Additional paid-in capital                             323,257      293,942

Accumulated other comprehensive loss                    (1,578)         (75)

Accumulated deficit                                    (53,133)     (67,766)

                                                    ----------   ----------

    Total stockholders' equity                         268,573      226,126

                                                    ----------   ----------

    Total liabilities and stockholders' equity     $   403,226  $   325,899

                                                    ==========   ==========



                               EnerNOC, Inc.

                           Cash Flow Information

                                (Unaudited)







                                            Nine Months Ended September 30,

                                           --------------------------------

                                                 2011             2010

                                           ---------------  ---------------

Cash flows provided by operating

 activities                                $        16,766  $        28,662

Cash flows used in investing activities            (94,088)         (10,544)

Cash flows provided by financing

 activities                                          1,861            3,473

Effects of exchange rate changes on cash              (535)              (9)

                                            --------------   --------------

Net change in cash and cash equivalents    $       (75,996) $        21,582

                                            ==============   ==============





                               EnerNOC, Inc.

        NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATION

                                (Unaudited)





                                           Three Months Ended September 30,

                                                2011             2010

                                          ---------------- ----------------

                                           (In thousands, except share and

                                                   per share data)



GAAP net income                           $         46,878 $         43,866

ADD: Stock-based compensation                        3,221            3,664

ADD: Amortization expense of acquired

 intangible assets                                   2,008              353

LESS: Income tax effect on Non-GAAP

 adjustments(1)                                          -             (319)

                                           ---------------  ---------------

Non-GAAP net income                       $         52,107 $         47,564

                                           ===============  ===============



GAAP net income per basic share           $           1.83 $           1.76

ADD: Stock-based compensation                         0.12             0.15

ADD: Amortization expense of acquired

 intangible assets                                    0.08             0.01

LESS: Income tax effect on Non-GAAP

 adjustments(1)                                          -            (0.01)

                                           ---------------  ---------------

Non-GAAP net income per basic share       $           2.03 $           1.91

                                           ===============  ===============



GAAP net income per diluted share         $           1.77 $           1.67

ADD: Stock-based compensation                         0.12             0.14

ADD: Amortization expense of acquired

 intangible assets                                    0.07             0.01

LESS: Income tax effect on Non-GAAP

 adjustments(1)                                          -            (0.01)

                                           ---------------  ---------------

Non-GAAP net income per diluted share     $           1.96 $           1.81

                                           ===============  ===============



Weighted average number of common shares

 outstanding

Basic                                           25,683,177       24,864,755

Diluted                                         26,538,278       26,215,766



                                           Nine Months Ended September 30,

                                          ---------------------------------

                                                2011             2010

                                          ---------------- ----------------

                                           (In thousands, except share and

                                                   per share data)



GAAP net income                           $         14,633 $         30,744

ADD: Stock-based compensation                       10,488           11,668

ADD: Amortization expense of acquired

 intangible assets                                   4,533            1,109

LESS: Income tax effect on Non-GAAP

 adjustments(2)                                          -           (1,091)

                                           ---------------  ---------------

Non-GAAP net income                       $         29,654 $         42,430

                                           ===============  ===============



GAAP net income per basic share           $           0.57 $           1.25

ADD: Stock-based compensation                         0.41             0.47

ADD: Amortization expense of acquired

 intangible assets                                    0.18             0.04

LESS: Income tax effect on Non-GAAP

 adjustments(2)                                          -            (0.04)

                                           ---------------  ---------------

Non-GAAP net income per basic share       $           1.16 $           1.72

                                           ===============  ===============



GAAP net income per diluted share         $           0.55 $           1.18

ADD: Stock-based compensation                         0.40             0.45

ADD: Amortization expense of acquired

 intangible assets                                    0.17             0.04

LESS: Income tax effect on Non-GAAP

 adjustments(2)                                          -            (0.04)

                                           ---------------  ---------------

Non-GAAP net income per diluted share     $           1.12 $           1.63

                                           ===============  ===============



Weighted average number of common shares

 outstanding

Basic                                           25,491,362       24,650,453

Diluted                                         26,498,620       26,013,402



(1) Represents the increase in the income tax provision recorded for the

 three months ended September 30, 2010 based on our effective rate for the

 three months ended September 30, 2010, respectively. The non-GAAP

 adjustments would have no impact on the provision for income taxes

 recorded for the three months ended September 30, 2011.



(2) Represents the reduction in the income tax benefit recorded for the

 nine months ended September 30, 2010 based on our effective rate for the

 nine months ended September 30, 2010, respectively. The non-GAAP

 adjustments would have no impact on the provision for income taxes

 recorded for the nine months ended September 30, 2011.



                               EnerNOC, Inc.

                     RECONCILIATION OF ADJUSTED EBITDA

                                (Unaudited)



                              Three Months Ended       Nine Months Ended

                                September 30,            September 30,

                           -----------------------  -----------------------

                               2011        2010         2011        2010

                           ----------- -----------  ----------- -----------

Net income                 $    46,878 $    43,866  $    14,633 $    30,744

Add back:

  Depreciation and

   amortization                  6,545       4,463       16,509      11,793

  Stock-based compensation

   expense                       3,221       3,664       10,488      11,668

  Other expense (income)         2,471         (42)       2,485         (31)

  Interest expense                 397         195          798         686

  Provision for income

   taxes                         1,225       3,779        1,992       2,869

                            ----------  ----------   ----------  ----------

Adjusted EBITDA            $    60,737 $    55,925  $    46,905 $    57,729

                            ==========  ==========   ==========  ==========



                               EnerNOC, Inc.

                      RECONCILIATION OF FREE CASH FLOW

                                (Unaudited)



                            Three Months Ended         Nine Months Ended

                               September 30,             September 30,

                         ------------------------  ------------------------

                             2011         2010         2011         2010

                         -----------  -----------  -----------  -----------

Net cash provided by

 operating activities    $     8,714  $    17,686  $    16,766  $    28,662

Subtract:

  Purchases of property

   and equipment              (3,028)      (3,244)     (15,172)     (15,283)

                          ----------   ----------   ----------   ----------

Free cash flow           $     5,686  $    14,442  $     1,594  $    13,379

                          ==========   ==========   ==========   ==========



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Contact:

Investors

Will Lyons

(617) 532.8104

ir@enernoc.com



Media

Sarah McAuley

(617) 532.8195

news@enernoc.com



Source: EnerNOC, Inc.

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