EX-99.1 2 ex991q22016.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
EnerNOC Media Relations:
Sarah McAuley
617.532.8195
Investor Relations: Christopher Sands 617.692.2569 ir@enernoc.com 
EnerNOC Reports Results for Second Quarter of 2016
Boston, August 2, 2016 -- 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 Response
116,462

 
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 EBITDA
27,965

 
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.
3Consolidated 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 Response
116,462

 
52,592

 
152,809

 
85,726

Total revenues
132,694

 
72,500

 
186,074

 
123,051

Cost of revenues
81,531

 
33,543

 
114,125

 
65,499

Gross profit
51,163

 
38,957

 
71,949

 
57,552

Operating expenses:
 
 
 
 
 
 
 
Selling and marketing
25,517

 
23,670

 
50,532

 
52,166

General and administrative
27,441

 
28,453

 
55,357

 
56,743

Research and development
7,634

 
7,735

 
15,677

 
15,186

Gain on sale of service lines and assets
(17,376
)
 
(2,991
)
 
(17,376
)
 
(2,991
)
Restructuring charges
3,694

 
—

 
3,694

 
—

Total operating expenses
46,910

 
56,867

 
107,884

 
121,104

Income (loss) from operations
4,253

 
(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 tax
1,109

 
(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.
 
 
 
 
 
 
 
Basic
29,114,200

 
28,327,867

 
28,962,021

 
28,172,398

Diluted
29,569,321

 
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, net
33,301

 
43,355

Unbilled revenue
10,341

 
70,101

Capitalized incremental direct customer contract costs
6,857

 
33,917

Prepaid expenses and other current assets
14,225

 
8,118

Assets held for sale
7,470

 
—

Total current assets
167,317

 
293,611

 
 
 
 
Property and equipment, net
44,009

 
49,653

Goodwill and intangible assets, net
80,696

 
94,099

Deposits, other assets, and deferred tax assets
5,979

 
6,351

Total assets
$
298,001

 
$
443,714

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
1,405

 
$
6,002

Accrued capacity payments
47,299

 
104,278

Accrued payroll and related expenses
13,273

 
18,058

Accrued expenses and other current liabilities
15,086

 
20,734

Deferred revenue
14,269

 
55,631

Liabilities held for sale
915

 
—

Total current liabilities
92,247

 
204,703

 
 
 
 
Deferred revenue
3,448

 
3,696

Other liabilities and deferred tax liabilities
7,591

 
9,118

Convertible senior notes
113,203

 
111,254

Total long-term liabilities
124,242

 
124,068

 
 
 
 
Stockholders' equity:
 
 
 
Common stock
31

 
30

Additional paid-in capital
382,757

 
377,473

Accumulated other comprehensive loss
(6,768
)
 
(8,524
)
Accumulated deficit
(294,771
)
 
(254,335
)
Total EnerNOC, Inc. stockholders' equity
81,249

 
114,644

Non-controlling interest
263

 
299

Total stockholders' equity
81,512

 
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
June 30,
 
Six Months Ended 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
June 30,
 
Six Months Ended June 30,
Segment Information
 
2016
 
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 EBITDA
27,965

 
13,613

 
24,481

 
7,197

Corporate unallocated expenses
(4,536
)
 
(4,808
)
 
(10,207
)
 
(8,159
)
Consolidated adjusted EBITDA 1
3,399

 
(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 assets
17,376

 
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 tax
1,109

 
(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 Amounts
Low
High
Low
High
 
Low
High
Low
High
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
29.5

29.5

 
 
 
29.2

29.2