EnerNOC, Inc.
Nov 3, 2016

EnerNOC Reports Results for Third Quarter of 2016

Company Increases Full-Year Adjusted EBITDA Outlook by $18 Million

BOSTON, Nov. 03, 2016 (GLOBE NEWSWIRE) -- EnerNOC, Inc. (Nasdaq:ENOC), a leading provider of energy intelligence software (EIS) and demand response solutions, today announced results for the third quarter ended September 30, 2016.

"We delivered another quarter of strong financial results as our demand response business performed very well during its seasonally important third quarter," said Tim Healy, Chairman and CEO of EnerNOC. "With accelerating momentum in our demand response business and the announced restructuring of our software business, we are taking important steps toward maximizing the value of our assets."

Summary Financial Results    
In thousands       
 Q3 2016 Q3 2015 YTD 2016 YTD 2015
Revenue       
Software$18,729  $18,028  $51,994  $55,353 
Demand Response149,052  199,296  301,861  285,022 
Total Revenue$167,781  $217,324  $353,855  $340,375 
        
Net Income (Loss)$20,625  $12,987  $(19,811) $(56,095)
Net Income (Loss) Per Diluted Share$0.65  $0.44  $(0.68) $(1.98)
        
Cash (Used in) Provided by Operations$(18,738) $5,442  $(64,888) $(18,226)
Free Cash Flow 1, 2$(23,315) $(992) $(78,576) $(35,950)
Adjusted EBITDA1       
Software adjusted EBITDA$(10,583) $(13,842) $(48,620) $(49,088)
Demand Response adjusted EBITDA46,299  49,433  70,780  56,630 
Corporate unallocated expenses(4,239) (3,884) (14,446) (12,043)
Consolidated adjusted EBITDA1, 3$31,477  $31,707  $7,714  $(4,501)
                

1 Refer to "Statement on 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 from the sale of businesses. Prior period results have been updated to conform to current period presentation.
3 Consolidated adjusted EBITDA excludes gains on the sale of businesses. Prior period results have been updated to conform to current period presentation.

Recent Highlights 

Company Issues Fourth Quarter Guidance and Updates Full Year 2016 Guidance

The Company today issued guidance for the fourth 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
December 31, 2016
Total Revenue (in millions)$40-$50
Software Revenue$15-$20
Demand Response Revenue$25-$30
GAAP Net Income Per Diluted Share($1.29)-($1.09)
Consolidated adjusted EBITDA1 (in millions)($22)-($16)

1 Refer to "Statement on 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 Aug 2, 2016 Issued on Nov 3, 2016
Total Revenue (in millions)$370-$400 $394-$404
Software Revenue$67-$72 $67-$72
Demand Response Revenue$303-$328 $327-$332
GAAP Net Loss Per Diluted Share($2.95)-($2.60) ($1.99)-($1.79)
Consolidated adjusted EBITDA1 (in millions)($35)-($25) ($15)-($9)
Software adjusted EBITDA1 (in millions)($65)-($60) ($58)-($55)
Demand Response adjusted EBITDA1 (in millions)$50-55 $63-$66
Corporate unallocated expenses1 (in millions)~($20) ~($20)

1 Refer to "Statement on 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 +1.800.230.1074 and using access code "ENOC". The conference call may be accessed outside of the United States by dialing +1.612.288.0329 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 404078 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
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Revenues:       
Software$18,729  $18,028  $51,994  $55,353 
Demand Response149,052  199,296  301,861  285,022 
Total revenues167,781  217,324  353,855  340,375 
Cost of revenues96,965  143,146  211,090  208,645 
Gross profit70,816  74,178  142,765  131,730 
Operating expenses:       
Selling and marketing20,008  22,397  70,540  74,563 
General and administrative20,331  26,707  75,688  83,450 
Research and development6,352  6,626  22,029  21,812 
Gains on sale of businesses(2,229)   (19,605) (2,991)
Restructuring charges2,933    6,627   
Total operating expenses47,395  55,730  155,279  176,834 
Income (loss) from operations23,421  18,448  (12,514) (45,104)
Other income (expense), net(279) (2,814) (613) (5,766)
Interest expense(1,835) (2,253) (5,456) (6,785)
Income (loss) before income tax21,307  13,381  (18,583) (57,655)
Benefit from (provision for) income tax(689) (417) (1,271) 1,523 
Net income (loss)20,618  12,964  (19,854) (56,132)
Net loss attributable to noncontrolling interest(7) (23) (43) (37)
Net income (loss) attributable to EnerNOC, Inc.$20,625  $12,987  $(19,811) $(56,095)
        
Net income (loss) attributable to EnerNOC, Inc. per common share       
Basic$0.70  $0.46  $(0.68) $(1.98)
Diluted$0.65  $0.44  $(0.68) $(1.98)
        
Weighted average number of common shares used in computing net income (loss) per share attributable to EnerNOC, Inc.       
Basic29,349,772 28,507,939 29,188,693 28,282,647
Diluted34,326,256 34,623,574 29,188,693 28,282,647
        


EnerNOC, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
 September 30,
2016
 December 31,
 2015
ASSETS   
Current assets:   
Cash and cash equivalents$81,499  $138,120 
Trade accounts receivable, net56,967  43,355 
Unbilled revenue72,123  70,101 
Capitalized incremental direct customer contract costs1,389  33,917 
Prepaid expenses and other current assets15,879  8,118 
Total current assets227,857  293,611 
    
Property and equipment, net43,098  49,653 
Goodwill and intangible assets, net78,649  94,099 
Deposits and other assets3,852  6,351 
Total assets$353,456  $443,714 
    
LIABILITIES AND STOCKHOLDERS' EQUITY   
Current liabilities:   
Accounts payable$973  $6,002 
Accrued capacity payments80,582  104,278 
Accrued expenses and other current liabilities30,118  38,792 
Deferred revenue9,436  55,631 
Total current liabilities121,109  204,703 
    
Deferred revenue3,305  3,696 
Other liabilities7,415  9,118 
Convertible senior notes114,205  111,254 
Total long-term liabilities124,925  124,068 
    
Total EnerNOC, Inc. stockholders' equity107,166  114,644 
Non-controlling interest256  299 
Total stockholders' equity107,422  114,943 
Total liabilities and stockholders' equity$353,456  $443,714 
    


EnerNOC, Inc.
Condensed Consolidated Statements of Cash Flow Data
(in thousands)
(unaudited)
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
Condensed Consolidated Statements of Cash Flow Data 2016 2015 2016 2015
Cash (used in) provided by operating activities $(18,738) $5,442  $(64,888) $(18,226)
Cash provided by (used in) investing activities 5,351  (5,346) 8,841  (88,881)
Cash used in financing activities (506) (201) (2,002) (2,331)
Effects of exchange rate changes on cash and cash equivalents 269  (1,510) 1,428  (2,973)
Net change in cash and cash equivalents (13,624) (1,615) (56,621) (112,411)
Cash and cash equivalents at beginning of period 95,123  143,555  138,120  254,351 
Cash and cash equivalents at end of period $81,499  $141,940  $81,499  $141,940 
                 


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. 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 flow provided by (used in) operating activities. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP measures are included below.

Use and Economic Substance of Non-GAAP Financial Measures
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 liquidity 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:

Material Limitations Associated with the Use of Non-GAAP Financial Measures
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 used by other companies, even where similarly titled, 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
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
Net cash used in operating activities$(18,738) $5,442  $(64,888) $(18,226)
Subtract: Purchases of property and equipment and capitalization of internal use software(4,577) (6,434) (13,688) (17,724)
Free cash flow 1$(23,315) $(992) $(78,576) $(35,950)
                

1 Free cash flow does not include cash received from the sale of businesses. Prior period results have been updated to conform to current period presentation.

 
EnerNOC, Inc.
Supplemental Financial Schedule of Segment Results
(in thousands)
(unaudited)
 
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
Segment Information 2016 2015 2016 2015
Revenues:       
Software       
Subscription software$7,221  $4,916  $18,966  $14,234 
Procurement solutions9,840  8,398  27,568  25,874 
Professional services1,668  4,714  5,460  15,245 
Total Software Revenues18,729  18,028  51,994  55,353 
        
Demand Response       
Grid operator121,500  171,928  252,985  237,281 
Utility27,552  27,368  48,876  47,741 
Total Demand Response Revenues149,052  199,296  301,861  285,022 
        
Consolidated Revenues$167,781  $217,324  $353,855  $340,375 
        
Segment Adjusted EBITDA 1:       
Software adjusted EBITDA$(10,583) $(13,842) $(48,620) $(49,088)
Demand Response adjusted EBITDA$46,299  $49,433  $70,780  $56,630 
                

1 Refer to the following table, "Reconciliation of Consolidated Adjusted EBITDA," for a reconciliation of segment adjusted EBITDA to net income (loss) attributable to EnerNOC, Inc., which is the most directly comparable GAAP financial measure.

EnerNOC, Inc.
Reconciliation of Consolidated Adjusted EBITDA
(in thousands)
(unaudited)
 Three Months Ended
September 30,
 Nine Months Ended
September 30,
 2016 2015 2016 2015
        
Software adjusted EBITDA$(10,583) $(13,842) $(48,620) $(49,088)
Demand Response adjusted EBITDA46,299  49,433  70,780  56,630 
Corporate unallocated expenses(4,239) (3,884) (14,446) (12,043)
Consolidated adjusted EBITDA 131,477  31,707  7,714  (4,501)
Depreciation, amortization and asset impairments 5(7,418) (9,511) (25,888) (29,259)
Stock-based compensation(3,452) (3,655) (10,236) (11,385)
Restructuring charges 2(2,933)   (6,627)  
Gains on sale of businesses 32,229    19,605  2,991 
Direct and incremental (expenses) gains associated with acquisitions, divestitures, reorganizations and settlements 43,525  (70) 2,961  (2,913)
Interest and other income (expense), net(2,114) (5,067) (6,069) (12,551)
Benefit from (provision for) income tax(689) (417) (1,271) 1,523 
Net income (loss) attributable to EnerNOC, Inc.$20,625  $12,987  $(19,811) $(56,095)
                

Consolidated adjusted EBITDA excludes gains on the sale of businesses. Prior period results have been updated to conform to current period presentation.
Restructuring charges include employee related severance and retention costs, asset impairments, and contract termination costs.
The nine month period ended September 30, 2016 includes gains on the sale of a professional services business and a utility customer engagement software business. Prior year periods include a gain on the sale of a demand response resource.
Includes expenses that are direct and incremental to business acquisitions and divestitures, including third party professional fees for legal, accounting and valuation services; employee related costs associated with reorganizing the business; and a gain recorded in the three and nine months ended September 30, 2016 associated with the recovery of an escrow settlement claim.
Includes impairments of equipment excluded from restructuring charges.

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
 December 31, 2016 December 31, 2016
   Per Diluted Share   Per Diluted Share
In Millions, Except Per Share AmountsLowHighLowHigh LowHighLowHigh
Adjusted EBITDA:         
Software adjusted EBITDA     ($58)($55)  
Demand Response adjusted EBITDA     $63 $66   
Corporate unallocated expenses     ($20)($20)  
Consolidated adjusted EBITDA($22)($16)   ($15)($9)  
          
Reconciling Adjustments:         
Depreciation, amortization & asset impairments$10 $10    $36 $36   
Stock-based compensation$3 $3    $13 $13   
Restructuring charges$1 $1    $8 $8   
Gains on sale of businesses$0 $0    ($20)($20)  
Direct and incremental expenses (gains) associated with acquisitions, divestitures, reorganizations and escrow settlements$0 $0    ($3)($3)  
Interest and other income (expense), net$2 $2    $8 $8   
Provision for income taxes$0 $0    $1 $1   
          
Projected GAAP Net Income (Loss) attributable to EnerNOC, Inc.($38)($32)($1.29)($1.09) ($58)($52)($1.99)($1.79)
          
Weighted Average Number of Common Shares Outstanding-Diluted29.4 29.4        29.1 29.1   
          

 

EnerNOC Media Relations:
Sarah McAuley
617.532.8195
news@enernoc.com

Investor Relations:
Christopher Sands
617.692.2569
ir@enernoc.com