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EnerNOC Reports Results for Second Quarter of 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 Response116,462 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 EBITDA27,965 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.
3 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 Response116,462 52,592 152,809 85,726
Total revenues132,694 72,500 186,074 123,051
Cost of revenues81,531 33,543 114,125 65,499
Gross profit51,163 38,957 71,949 57,552
Operating expenses:
Selling and marketing25,517 23,670 50,532 52,166
General and administrative27,441 28,453 55,357 56,743
Research and development7,634 7,735 15,677 15,186
Gain on sale of service lines and assets(17,376) (2,991) (17,376) (2,991)
Restructuring charges3,694 3,694
Total operating expenses46,910 56,867 107,884 121,104
Income (loss) from operations4,253 (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 tax1,109 (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.
Basic29,114,200 28,327,867 28,962,021 28,172,398
Diluted29,569,321 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, net33,301 43,355
Unbilled revenue10,341 70,101
Capitalized incremental direct customer contract costs6,857 33,917
Prepaid expenses and other current assets14,225 8,118
Assets held for sale7,470
Total current assets167,317 293,611
Property and equipment, net44,009 49,653
Goodwill and intangible assets, net80,696 94,099
Deposits, other assets, and deferred tax assets5,979 6,351
Total assets$298,001 $443,714
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable$1,405 $6,002
Accrued capacity payments47,299 104,278
Accrued payroll and related expenses13,273 18,058
Accrued expenses and other current liabilities15,086 20,734
Deferred revenue14,269 55,631
Liabilities held for sale915
Total current liabilities92,247 204,703
Deferred revenue3,448 3,696
Other liabilities and deferred tax liabilities7,591 9,118
Convertible senior notes113,203 111,254
Total long-term liabilities124,242 124,068
Stockholders' equity:
Common stock31 30
Additional paid-in capital382,757 377,473
Accumulated other comprehensive loss(6,768) (8,524)
Accumulated deficit(294,771) (254,335)
Total EnerNOC, Inc. stockholders' equity81,249 114,644
Non-controlling interest263 299
Total stockholders' equity81,512 114,943
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 Information2016 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 EBITDA27,965 13,613 24,481 7,197
Corporate unallocated expenses(4,536) (4,808) (10,207) (8,159)
Consolidated adjusted EBITDA 13,399 (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 assets17,376 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 tax1,109 (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 AmountsLowHighLowHigh LowHighLowHigh
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
29.529.5 29.229.2


EnerNOC Media Relations: Sarah McAuley 617.532.8195 news@enernoc.com Investor Relations: Christopher Sands 617.692.2569 ir@enernoc.com

Source:EnerNOC, Inc.