EnerNOC, Inc.
Nov 5, 2015

EnerNOC Reports Results for Third Quarter of 2015

BOSTON, Nov. 05, 2015 (GLOBE NEWSWIRE) -- EnerNOC, Inc. (Nasdaq:ENOC), a leading provider of energy intelligence software (EIS), today announced results for the third quarter ended September 30, 2015.

"Transformation continued to be the main theme during the third quarter," said Tim Healy, Chairman and CEO of EnerNOC. "New customer successes, key account expansions, and growing market interest in our EIS solutions underscored the progress we are making with our strategy. The challenging grid operator markets that weighed on our financial results did not impact our EIS momentum and we remain at the forefront of this exciting new enterprise software category."

Summary Financial Results    
In Thousands, Except Per Share Amounts    
     
 Q3 2015Q3 20149M 20159M 2014
Revenue$217,324 $329,422 $340,375 $425,985 
Net Income (Loss)    
GAAP$12,987 $96,673 $(56,095)$38,875 
Non-GAAP1$21,417 $100,322 $(27,127)$56,271 
Net Income (Loss) Per Basic Share    
GAAP$0.46 $3.48 $(1.98)$1.38 
Non-GAAP1$0.75 $3.61 $(0.96)$2.00 
Net Income (Loss) Per Diluted Share    
GAAP$0.44 $3.11 $(1.98)$1.33 
Non-GAAP1$0.74 $3.50 $(0.96)$1.93 
     
Cash Flow Provided by (Used in) Operations$3,771 $22,949 $(18,226)$28,320 
Free Cash Flow1$(992)$17,324 $(32,959)$16,910 
Adjusted EBITDA1$31,707 $125,153 $(1,510)$90,441 
     
1Refer 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.


Recent Highlights


Company Issues Fourth Quarter Guidance and Updated Full Year Guidance

The Company today issued guidance for the fourth quarter of 2015 and updated its previously issued guidance for the full year. The Company's guidance is based on current trends and management's current expectations for the Company's business, which may change at any time.

    Guidance for Quarter Ending
December 31, 2015
Total Revenue (in millions)  $50-$60
GAAP Net Loss Per Diluted Share  ($1.43)-($1.29)
Non-GAAP Net Loss Per Diluted Share1  ($1.13)-($0.97)
Adjusted EBITDA1 (in millions)  ($23.5)-($18.5)
(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 Year Ending
December 31, 2015
 Issued on August 6, 2015Issued on November 5, 2015
Total Revenue (in millions)$410-$430$390-$400
Grid Operator Revenue$270-$280$255-$260
Utility Revenue$70-$75~$60
Enterprise Revenue$70-$75$75-$80
GAAP Net Loss Per Diluted Share($3.12)-($3.02)($3.43)-($3.29)
Non-GAAP Net Loss Per Diluted Share1($1.72)-($1.61)($2.10)-($1.94)
Adjusted EBITDA1 (in millions)($14)-($10)($25)-($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 (800) 230-1766 (domestic) or (612) 288-0337 (international) 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 two hours after the call by dialing (800) 475-6701 or (320) 365-3844 and using access code 371495, or by accessing the webcast replay on the Company's investor relations website.

About EnerNOC

EnerNOC is a leading provider of cloud-based energy intelligence software (EIS) and services to thousands of enterprise customers and utilities globally. EnerNOC's EIS solutions for enterprise customers improve energy productivity by optimizing how they buy, how much they use, and when they use energy. EIS for enterprise includes budgeting and procurement, utility bill management, facility optimization, visibility and reporting, project tracking, demand management, and demand response. EnerNOC's EIS solutions for utilities help maximize customer engagement and the value of demand-side resources, including demand response and energy efficiency. EnerNOC supports customer success with its world-class professional services team and a Network Operations Center (NOC) staffed 24x7x365. 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 related 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  Nine Months Ended 
September 30,  September 30,
   2015     2014     2015     2014  
Revenues:       
Grid operator$ 173,374    $ 291,848   $ 238,632    $ 350,592  
Utility  27,160      27,741     50,498      50,011  
Enterprise  16,790      9,833     51,245      25,382  
Total revenues  217,324      329,422     340,375      425,985  
Cost of revenues  143,146      168,564     208,645      232,505  
Gross profit  74,178      160,858     131,730      193,480  
Operating expenses:       
Selling and marketing  22,397      18,972     74,563      56,997  
General and administrative  26,707      24,472     83,450      72,340  
Research and development  6,626      5,260     21,812      15,432  
Gain on sale of service line    -      (359      -      (3,737 
Gain on sale of assets    -       -     (2,991    (2,171 
Total operating expenses  55,730      48,345     176,834      138,861  
Income (loss) from operations  18,448      112,513     (45,104    54,619  
Other expense, net  (2,814    (2,224    (5,766    (1,276 
Interest expense  (2,253    (1,523    (6,785    (2,576 
Income (loss) before income tax  13,381      108,766     (57,655    50,767  
(Provision for)/benefit from income tax  (417    (12,111    1,523      (11,950 
Net income (loss)  12,964      96,655     (56,132    38,817  
Net loss attributable to noncontrolling interest    (23)    (18)      (37)    (58) 
Net income (loss) attributable to EnerNOC, Inc.$ 12,987    $ 96,673   $ (56,095  $ 38,875  
        
Net income (loss) per common share attributable to EnerNOC, Inc.       
Basic$ 0.46    $ 3.48   $ (1.98  $ 1.38  
Diluted$ 0.44    $ 3.11   $ (1.98  $ 1.33  
        
Weighted average number of common shares used in computing net income (loss) per share attributable to EnerNOC, Inc.    
Basic  28,507,939     27,795,154     28,282,647     28,075,291  
Diluted  34,623,574     31,434,164     28,282,647     30,074,187  


EnerNOC, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except par value and share data)
(unaudited)
 September 30,
2015
 December 31,
2014
    
ASSETS   
Current assets:   
Cash and cash equivalents$141,940  $254,351 
Trade accounts receivable, net   61,206    40,875 
Unbilled revenue   111,835    97,512 
Capitalized incremental direct customer contract costs   21,047    7,633 
Prepaid expenses and other current assets   25,480    19,950 
Total current assets$361,508  $420,321 
    
Property and equipment, net   51,750    50,458 
Goodwill and intangible assets, net   207,518    146,050 
Deposits and other assets   7,606   7,873 
Total assets$628,382  $624,702 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$2,242  $9,250 
Accrued capacity payments   130,479    92,332 
Accrued payroll and related expenses   18,862    18,446 
Accrued expenses and other current liabilities   25,970    28,724 
Deferred revenue   36,138    13,738 
Total current liabilities$213,691  $162,490 
    
Deferred tax liability   16,878    16,449 
Deferred revenue, long-term   6,509    5,816 
Other liabilities   9,341    8,919 
Convertible senior notes, net   141,971    138,908 
Total long-term liabilities   174,699    170,092 
    
Stockholders' equity:   
Common stock, $0.001 par value; 50,000,000 shares authorized, 30,830,238 and 
29,833,578 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively
   31    30 
Additional paid-in capital   374,583    365,855 
Accumulated other comprehensive loss   (9,471)  (4,752)
Accumulated deficit   (125,355)  (69,260)
Total EnerNOC, Inc. stockholders' equity   239,788    291,873 
Non controlling interest   204    247 
Total stockholders' equity   239,992    292,120 
Total liabilities and stockholders' equity$628,382  $624,702 
    


EnerNOC, Inc.
Condensed Consolidated Statements of Cash Flow Data
(in thousands)
(unaudited)
        
        
 Three Months Ended Nine Months Ended
 September 30,  September 30,
  2015   2014   2015   2014 
Cash provided by (used in) operating activities$3,771   $22,949  $(18,226) $28,320 
Cash used in investing activities   (3,675)  (10,559)    (88,881)  (52,068)
Cash (used in) provided by financing activities   (201)  125,553     (2,331)  121,105 
Effects of exchange rate changes on cash and cash equivalents   (1,510)  (631)    (2,973)  (331)
Net change in cash and cash equivalents$(1,615) $137,312  $(112,411) $97,026 
Cash and cash equivalents at beginning of period   143,555    108,903     254,351    149,189 
Cash and cash equivalents at end of period$141,940   $246,215  $141,940   $246,215 


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 that exclude certain amounts, including non-GAAP net (loss) income attributable to EnerNOC, Inc., non-GAAP net (loss) income per share attributable to EnerNOC, Inc., adjusted EBITDA and free cash flow. 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 non-GAAP net (loss) income attributable to EnerNOC, Inc. is GAAP net (loss) income attributable to EnerNOC, Inc.; the GAAP measure most comparable to non-GAAP net (loss) income per share attributable to EnerNOC, Inc. is GAAP net (loss) income per share attributable to EnerNOC, Inc.; the GAAP measure most comparable to adjusted EBITDA is GAAP net (loss) income 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 non-GAAP net (loss) income attributable to EnerNOC, Inc. to be an important indicator of the overall performance 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, management considers 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. Moreover, 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 non-GAAP net income (loss) attributable to EnerNOC, Inc. as net income (loss) attributable to EnerNOC, Inc. before accretion expense related to the debt-discount portion of interest expense associated with the convertible note issuance, stock-based compensation, direct and incremental expenses related to acquisitions or divestitures, direct and incremental expenses related to restructuring, and amortization expenses related to acquisition-related intangible assets, net of related tax effects.

-- Management defines adjusted EBITDA as net income (loss) attributable to EnerNOC, Inc., excluding depreciation, amortization, stock-based compensation, direct and incremental expenses related to acquisitions or divestitures, direct and incremental expenses related to restructuring, interest, income taxes and other expense, net.

-- Management defines free cash flow as net cash provided by (used in) operating activities, less capital expenditures, plus net cash provided by (used in) the sale of assets or disposals of components of an entity. Management defines capital expenditures as purchases of property and equipment, which includes capitalization of internal-use software development costs.

Non-GAAP net (loss) income attributable to EnerNOC, Inc., non-GAAP net (loss) income per share attributable to EnerNOC, Inc., 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 Non-GAAP Measures To Nearest GAAP Measures
Reconciliation of Non-GAAP Net Income Attributable to EnerNOC, Inc. And Net Income Per Share Attributable to EnerNOC, Inc.
 
(in thousands, except share and per share data)
(Unaudited)
 Three Months Ended September 30, 
  2015   2014  
     
GAAP net income attributable to EnerNOC, Inc.$12,987   $96,673  
ADD: Stock-based compensation expense 3,656    4,135  
ADD: Amortization expense of acquired intangible assets 3,662    2,391  
ADD: Direct and incremental expenses related to acquisitions or divestitures (1) 69    197  
ADD: Debt discount portion of interest expense related to convertible notes   1,043    474  
ADD: Income tax effect on Non-GAAP adjustments   -     (3,548) 
Non-GAAP net income attributable to EnerNOC, Inc.$21,417   $100,322  
     
GAAP net income per basic share attributable to EnerNOC, Inc.$0.46   $3.48   
ADD: Stock-based compensation expense 0.13    0.15   
ADD: Amortization expense of acquired intangible assets 0.13    0.09   
ADD: Direct and incremental expenses related to acquisitions or divestitures (1)   -       0.01   
ADD: Debt discount portion of interest expense related to convertible notes   0.03      0.01   
ADD: Income tax effect on Non-GAAP adjustments   -       (0.13) 
Non-GAAP net income per basic share attributable to EnerNOC, Inc.$0.75   $3.61  
     
GAAP net income per diluted share attributable to EnerNOC, Inc.$0.44   $3.11  
Impact of including interest expense and excluding incremental shares from convertible notes (2) 0.01    0.27  
ADD: Stock-based compensation expense 0.13    0.13  
ADD: Amortization expense of acquired intangible assets 0.13    0.08  
ADD: Direct and incremental expenses related to acquisitions or divestitures (1)   -     0.01  
ADD: Debt discount portion of convertible debt   0.03    0.02  
ADD: Income tax effect on Non-GAAP adjustments   -     (0.12) 
Non-GAAP net income per diluted share attributable to EnerNOC, Inc.$0.74   $3.50   
 
(1) Represents costs primarily related to acquisitions for third party professional services (legal, accounting, valuation) and severance.
 
(2) The calculation of non-GAAP net income per diluted share adjusted for the impact of the numerator and denominator is as follows:
(a) The numerator includes interest expense related to convertible notes of $2,118 for the three months ended September 30, 2015 and $980 for the three and nine months ended September 30, 2014.
(b) The denominator excludes incremental shares from the assumed conversion of the convertible notes: 5,774,928 for the three months ended September 30, 2015 and 2,761,922 and 930,758 for the three and nine months ended September 30, 2014.


EnerNOC, Inc.
Reconciliation Of Non-GAAP Measures To Nearest GAAP Measures
Reconciliation of Non-GAAP Net (Loss) Income Attributable to EnerNOC, Inc. And Net (Loss) Income Per Share Attributable to EnerNOC, Inc.
 
(in thousands, except share and per share data)
(Unaudited)
 Nine Months Ended September 30,
  2015   2014 
    
GAAP net (loss) income attributable to EnerNOC, Inc.$(56,095) $38,875 
ADD: Stock-based compensation expense 11,386    12,161 
ADD: Amortization expense of acquired intangible assets 11,607    6,753 
ADD: Direct and incremental expenses related to acquisitions or divestitures (1) 1,672    1,556 
ADD: Direct and incremental expenses related to restructuring (2) 1,240    - 
ADD: Debt discount portion of interest expense related to convertible notes   3,063    474 
ADD: Income tax effect on Non-GAAP adjustments   -     (3,548)
Non-GAAP net (loss) income attributable to EnerNOC, Inc.$(27,127) $56,271 
    
GAAP net (loss) income per basic share attributable to EnerNOC, Inc.$(1.98) $1.38 
ADD: Stock-based compensation expense 0.40   $0.43 
ADD: Amortization expense of acquired intangible assets 0.41   $0.24 
ADD: Direct and incremental expenses related to acquisitions or divestitures (1) 0.06   $0.06 
ADD: Direct and incremental expenses related to restructuring (2) 0.04    - 
ADD: Debt discount portion of interest expense related to convertible notes   0.11    0.02 
ADD: Income tax effect on Non-GAAP adjustments   -     (0.13)
Non-GAAP net (loss) income per basic share attributable to EnerNOC, Inc.$(0.96) $2.00 
    
GAAP net (loss) income per diluted share attributable to EnerNOC, Inc.$(1.98) $1.33 
ADD: Stock-based compensation expense 0.40   $0.42 
ADD: Amortization expense of acquired intangible assets 0.41   $0.23 
ADD: Direct and incremental expenses related to acquisitions or divestitures (1) 0.06   $0.05 
ADD: Direct and incremental expenses related to restructuring (2) 0.04    - 
ADD: Debt discount portion of convertible debt   0.11    0.02 
ADD: Income tax effect on Non-GAAP adjustments   -    $(0.12)
Non-GAAP net (loss) income per diluted share attributable to EnerNOC, Inc.$(0.96) $1.93  
 
(1) Represents costs primarily related to acquisitions for third party professional services (legal, accounting, valuation) and severance.
 
(2) Represents costs associated with reorganizing the business for our continued enterprise and utility focus.


EnerNOC, Inc.    
Reconciliation of Adjusted EBITDA    
(in thousands)    
(unaudited)    
        
 Three Months Ended  Nine Months Ended 
 September 30,  September 30,
  2015   2014   2015   2014 
Net income (loss) attributable to EnerNOC, Inc.$12,987   $96,673  $(56,095) $38,875 
Add back:       
Depreciation and amortization 9,511   7,960   29,259   23,167 
Stock-based compensation expense 3,656   4,135   11,386   12,161 
Direct and incremental expenses related to acquisitions or divestitures (1) 69   197   1,672   1,556 
Direct and incremental expenses related to restructuring (2) -   -   1,240   - 
Other expense, net (3) 2,814   2,224   5,766   1,276 
Interest expense 2,253   1,523   6,785   2,576 
Provision for (benefit from) income tax (4) 417    12,441     (1,523)  10,830 
Adjusted EBITDA$31,707   $125,153  $(1,510) $90,441 
        
(1) Includes third party professional service costs such as legal, accounting and valuation, and compensation, severance and related costs.
(2) Represents costs associated with reorganizing the business for our continued enterprise and utility focus.
(3) Other expense primarily relates to foreign currency losses.
(4) Excludes discrete tax benefit of ($330) and discrete tax provision of $1,120 recorded during the three and nine months ended September 30, 2014 related to the sale of the Utility Solutions Consulting business component.



Reconciliation of Free Cash Flow
(in thousands)
(unaudited)
        
 Three Months Ended  Nine Months Ended 
 September 30,  September 30,
  2015   2014   2015   2014 
Net cash provided by (used in) operating activities$3,771   $22,949  $(18,226) $28,320 
Add: Net cash provided by the sale of assets or disposals of components of an entity   -     -   2,991    6,446 
Subtract: Purchases of property and equipment (4,763)  (5,625)  (17,724)  (17,856)
Free cash flow$(992) $17,324  $(32,959) $16,910 
        


Non-GAAP Financial Guidance

This press release also includes estimates of future adjusted EBITDA and non-GAAP net loss per diluted share attributable to EnerNOC, Inc. A reconciliation of these amounts to the nearest expected GAAP results, is presented below:

 Three Months Ended Twelve Months Ended
 December 31, 2015 December 31, 2015
   Per Diluted Share   Per Diluted Share
In Millions, Except Per Share AmountsLowHighLowHigh LowHighLowHigh
          
Projected GAAP Net Income (Loss)$(40.8)$(36.8)$(1.43)$(1.29) $(97.0)$(93.0)$(3.43)$(3.29)
          
Adjustments:         
Stock-based compensation$3.6 $4.1 $0.12 $0.14  $15.0 $15.5 $0.53 $0.55 
Amortization expense of acquired intangible assets$3.7 $3.7 $0.13 $0.13  $15.3 $15.3 $0.54 $0.54 
Direct and incremental expenses1$0.3 $0.3 $0.01 $0.01  $3.2 $3.2 $0.11 $0.11 
Accretion expense related to the debt-discount portion of interest associated with convertible note issuance$1.0 $1.0 $0.04 $0.04  $4.1 $4.1 $0.15 $0.15 
Projected Non-GAAP Net Income (Loss)$(32.2)$(27.7)$(1.13)$(0.97) $(59.4)$(54.9)$(2.10)$(1.94)
          
Adjustments:         
Depreciation$5.8 $6.3    $23.5 $24.0   
Interest and other expense, net2$1.9 $1.9    $11.4 $11.4   
Provision for income taxes$1.0 $1.0    $(0.5)$(0.5)  
Adjusted EBITDA$(23.5)$(18.5)   $(25.0)$(20.0)  
          
Weighted Average Number of Common Shares Outstanding-Diluted 28.5  28.5     28.3  28.3   
1 "Direct and incremental expenses" includes third party professional service costs such as legal, accounting and valuation, and compensation, severance and other costs related to acquisitions, divestitures and restructuring activities
2 "Interest and other expense, net" is net of "accretion expense related to the debt-discount portion of interest associated with convertible note issuance".

 

EnerNOC Media Relations:
Robin Deliso
617.692.2601
news@enernoc.com

Investor Relations: 
Christopher Sands 
617.692.2569 
ir@enernoc.com