WORCESTER, Mass., April 16, 2013 (GLOBE NEWSWIRE) -- World Energy Solutions, Inc. (Nasdaq:XWES), a leading energy management services firm, today announced financial results for the fourth quarter and fiscal year ended December 31, 2012.
Financial Highlights (All figures are in US dollars and compare the fourth quarter and annual 2012 results to the corresponding periods in the prior year.)
Record Revenue and Record Backlog
- Annual revenue grew 55% to $31.8 million; 27% organic growth
- Annualized backlog increased 27% to $24.6 million
- Total backlog rose 33% to $46.5 million
- Q4 revenue climbed 91% to $10.2 million; 65% organic growth
- EBITDA for the year was $1.6 million; EBITDA for Q4 was a record $1.3 million
- Net income for both the year and the quarter benefitted from the one-time release of the Company's tax valuation allowance, resulting in:
- Net income for the year of $5.3 million, or $0.44 per share; net income for the quarter of $7.5 million, or $0.63 per share
- Without this one-time benefit, net loss for the year was ($2.2 million), or ($0.18) per share; net loss for the quarter was ($0.02 million), or ($0.00) per share
- Gross margins for the year were 68%
- 81% in Energy Procurement
- 27% in Energy Efficiency Services
Liquidity and Balance Sheet
- Cash and cash equivalents at year end were $3.3 million, up from $1.8 million in 2011
- Deferred revenue and customer advances increased $4.4 million
- Cash flow from operations was $2.4 million for the quarter; $3.8 million for the year
Product Line and Other Highlights
- Acquired Northeast Energy Partners (NEP) in Q4, adding 2,000 mid-market procurement customers in incentives-rich energy efficiency territories
- Topped $7 million in Energy Efficiency Services sales, attaining profitability in this segment in first full year of operation
- Launched new Bill Management solution.
"First, I want to thank investors for their patience," said Phil Adams, CEO, World Energy Solutions. "Since going public in 2006, we had reliably executed every filing on time and without incident. As we explained in a prior announcement, the delay in filing our Q4/FY2012 earnings resulted from a change in our revenue recognition policy for mid-market transactions. Over the last 50 days, our finance and legal team has made a tireless effort to assess, correct and issue our filings by today's deadline.
"Now onto the current status of our business. I am pleased to report that World Energy had a very strong year, highlighted by record revenue and backlog. In Q4, we achieved record EBITDA. Our strategy is working. We have successfully evolved our solution set beyond auction-based energy procurement to the broader energy management space, while continuing to roll up our fragmented industry, supplementing organic growth with our NEP acquisition."
For the full year ended December 31, 2012, revenue increased by 55% to $31.8 million. This growth reflects significant increases in both of the Company's segments – Energy Procurement and Energy Efficiency Services. Energy Procurement grew 20% for the year reflecting a full year of contribution from our 2011 acquisitions, the inclusion of NEP's results since its October 3, 2012 acquisition and continued execution in the Company's base business. In its first full year of operation our Energy Efficiency Services segment grew to $7.3 million in revenue from $51,000 in 2011 due to contributions from our acquisition of Northeast Energy Solutions in October 2011 and projects completed by our internal efficiency group.
Gross margins were 68% for the year ended 2012, reflecting the change in revenue mix. Energy Procurement gross margins remained strong at 81%, unchanged from 81% last year, despite the deferral of certain mid-market revenue to future periods. The increase in operating expenses includes a full year of costs related to our 2011 acquisitions, the acquisition of NEP and non-recurring charges of $0.5 million related the relocation of the Company's corporate and Ohio offices and a channel partner advance. Operating expenses as a percentage of sales decreased 7% to 73%. Operating margin was (5)%, versus break even in 2011, and EBITDA* margin was 5% compared to 8% last year as the increases in operating expenses were only partially offset by the increase in revenue.
Revenue for the three months ended December 31, 2012 rose 91% over the same period last year to $10.2 million reflecting significant increases in both Energy Procurement and Energy Efficiency Services. Energy Procurement grew 32% for the quarter, reflecting the acquisition of NEP in Q4 2012, a full quarter of contribution from GSE and continued execution in the Company's base business. The Company's Energy Efficiency Services segment contributed $3.2 million to Q4 2012 revenue versus only $51,000 in Q4 last year representing contributions from both the acquisition of Northeast Energy Solutions in October 2011 and projects completed by the Company's internal efficiency group.
Gross margins were 66% for the quarter compared to 79% last year, reflecting the change in revenue mix. Energy Procurement gross margins remained strong at 83% compared to 81% in Q4 2011, while Energy Efficiency Services gross margins were 30% compared to (70)% in Q4 2011. Operating expenses as a percentage of sales decreased 38% to 64% due to the significant revenue contribution from the Company's Energy Efficiency segment compared to the fourth quarter last year. As a result, the Company's operating margin was 2% compared to (22)% in the fourth quarter of 2011, and EBITDA* margin was 12% compared to (10)% in the prior year quarter. The increase in operating expenses includes the addition of NEP, including amortization expense, and non-recurring charges of $0.2 million related to that acquisition. Operating expenses for the fourth quarter of 2011 included $0.7 million related to acquisition costs.
At December 31, 2012, the Company had cash and cash equivalents of $3.3 million, compared with $3.0 million at September 30, 2012 and $1.8 million at December 31, 2011. The increase in cash and cash equivalents during the quarter was primarily due to cash generated from EBITDA* of $1.3 million and cash received from $1.1 million of deferred revenue and advance payments. These increases were offset by $2.0 million of payments against notes payable related to the 2011 acquisition of NES. The Company has short-term commitments of $1.6 million remaining from its 2011 acquisitions, which were paid during the first quarter of 2013. In addition, the Company has $1.0 million of long-term earn-out obligations remaining related to the 2011 acquisitions. In conjunction with the Company's acquisition of NEP in October 2012, it borrowed an additional $8.0 million in long-term debt with Silicon Valley Bank and Massachusetts Capital Resources Company and $2.0 million in the form of seller note with NEP. Of these amounts, $2.0 million of the long-term debt and $1.5 million of the seller note is due in 2013. In addition, NEP can earn a maximum $3.2 million, of which $2.5 million is due in cash in contingent consideration in 2013 if certain performance requirements are met. The Company currently forecasts its operating cash flow will be adequate to meet these obligations when due. The Company has not borrowed against its $2.5 million line-of-credit.
Note: Backlog relates to contracts in force on a given date representing transactions between bidders and listers on our platform related to commodity brokerage assuming listers consume energy at their historical usage levels or deliver credits at expected levels. Total backlog represents the commissions that the Company would derive over the remaining life of those contracts. Annualized backlog represents the commissions that the Company would derive from those contracts within the 12 months following the date on which the backlog is calculated. Total and annualized backlog at December 31, 2012 included commodity backlog of $45.7 million and $23.8 million, respectively. In addition, total and annualized backlog include contracted management fees between World Energy and energy consumers for energy management and auction administration services of $0.8 million that are expected to be received over the following 12-month period. These management fees can be terminated within 30 days per the terms of the contracts.
Conference Call & Webcast
World Energy will hold a conference call today, April 16, 2013, at 5:00 p.m. (ET) to discuss its financial results and other corporate developments. To access the conference call by telephone, dial 1-800-774-6070 (domestic) or 1-630-691-2753 (international) and enter passcode 9895528#. A replay will be available two hours after the completion of the call, and for one month following the call, by dialing 1-888-843-7419 for domestic participants or 1-630-652-3042 for international participants, and entering passcode 9895528# when prompted. Participants may also access a live webcast of the conference call through the investor relations section of World Energy's website, www.worldenergy.com. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 90 days.
* Non-GAAP Financial Measures
World Energy continues to provide all information required in accordance with GAAP and also provides certain non-GAAP financial measures. A "non-GAAP financial measure" refers to a numerical measure of the Company's historical performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable financial measure calculated and presented in accordance with GAAP in the Company's financial statements. World Energy provides EBITDA and adjusted EBITDA as additional information relating to our operating results. These non-GAAP measures exclude expenses related to share-based compensation, depreciation related to our fixed assets, amortization expenses associated with acquisition-related assets and capitalized software, net interest and income tax expense.
Management believes it is useful to exclude depreciation, amortization, net interest and income tax expense as these are essentially fixed amounts that cannot be influenced by management in the short term. In addition, management believes it is useful to exclude share-based compensation as this is not a cash expense.
Management uses these non-GAAP measures for internal reporting and bank reporting purposes. World Energy provides these non-GAAP financial measures in addition to GAAP financial results, because management believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts in helping them to better understand the Company's operating results and underlying operational trends. It also provides a consistent basis for comparison across accounting periods.
These non-GAAP financial measures are not prepared in accordance with GAAP. These measures may differ from the 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. There are significant limitations associated with the use of non-GAAP financial measures. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the presentation of net income prepared in accordance with GAAP.
Whenever World Energy reports non-GAAP financial measures, a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure will be made available. Investors are encouraged to review these reconciliations to ensure they have a thorough understanding of the reported non-GAAP financial measures and their most directly comparable GAAP financial measures. Reconciliation of GAAP net income (loss) to EBITDA and adjusted EBITDA is shown below:
|Three Months Ended||Twelve Months Ended|
|December 31,||December 31,|
|GAAP net income (loss)||$ 7,535,933||$ (1,343,021)||$ 5,290,692||$ (46,477)|
|Add: Interest expense, net||272,451||43,172||547,075||1,526|
|Add: Income taxes (benefit)||(7,551,636)||116,474||(7,479,136)||138,224|
|Add: Amortization of intangibles||945,728||603,591||3,022,097||1,347,135|
|Add: Amortization of other assets||11,785||22,864||42,289||126,953|
|Non-GAAP EBITDA||$ 1,272,983||$ (507,939)||$ 1,640,252||$ 1,714,307|
|Non-GAAP EBITDA per share||$ 0.11||$ (0.04)||$ 0.14||$ 0.16|
|Add: Stock-based compensation||146,216||120,923||465,835||609,820|
|Non-GAAP adjusted EBITDA||$ 1,419,199||$ (387,016)||$ 2,106,087||$ 2,324,127|
|Non-GAAP adjusted EBITDA per share||$ 0.12||$ (0.03)||$ 0.18||$ 0.22|
|Dilutive weighted-average shares||12,057,083||11,513,481||11,958,689||10,583,630|
About World Energy Solutions, Inc.
World Energy Solutions, Inc. (Nasdaq:XWES) is an energy management services firm that brings together the passion, processes and technologies to take the complexity out of energy management and turn it into bottom-line impact for the businesses, institutions and governments we serve. To date, the Company has transacted more than $40 billion in energy, demand response and environmental commodities on behalf of its customers, creating more than $2 billion in value for them. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the Regional Greenhouse Gas Initiative (RGGI), the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. For more information, please visit www.worldenergy.com.
This press release contains forward-looking statements. The words "anticipates," "believes," "estimates," "expects," "intends," "may," "plans," "projects," "will," "would" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events, including without limitation, our expectations of backlog and energy prices. Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: our revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for our services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company's historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and there are factors outside our control that affect transaction volume in the electricity market. Additional risk factors are identified in our Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.
|WORLD ENERGY SOLUTIONS, INC.|
|SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS|
| Three Months Ended |
| Twelve Months Ended |
|$ 31,778,837||$ 20,524,567|
Cost of revenue
Sales and marketing expenses
General and administrative expenses
Operating income (loss)
Interest expense, net
Income (loss) before income taxes
|Income tax expense (benefit)||(7,551,636)||116,474||(7,479,136)||138,224|
Net income (loss)
|$ 5,290,692||$ (46,477)|
Net income (loss) per share:
|Net income (loss) per share – basic and diluted||$ 0.63||$ (0.12)||$ 0.44||$ —|
Weighted average shares outstanding – basic
Weighted average shares outstanding – diluted
|SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET|
|December 31, 2012|
| Cash and cash equivalents |
Trade accounts receivable, net
Other current assets
| $ 3,307,822 |
|Property and equipment, net||639,839|
|Intangible and other assets, net||19,778,865|
|Long-term portion of deferred tax asset||5,844,980|
|Total assets||$ 55,130,662|
Liabilities and stockholders' equity
|Accrued commissions||$ 1,052,802|
|Accounts payable and other liabilities||10,650,933|
|Notes payable and current portion of long-term debt||3,460,127|
|Total current liabilities||15,163,862|
|Total long-term liabilities||13,256,673|
|Total liabilities and stockholders' equity||$ 55,130,662|
CONTACT: Jim Parslow World Energy Solutions, Inc. (508) 459-8100 firstname.lastname@example.org or Dan Mees World Energy Solutions, Inc. (508) 459-8156 email@example.com Susan Forman Dian Griesel Inc. (212) 825-3210 firstname.lastname@example.org or In Canada: Craig Armitage The Equicom Group (416) 815-0700 x278 email@example.com
Source:World Energy Solutions, Inc.