EX-99.1 2 ex991q32016.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
logoa01.jpg
EnerNOC Media Relations:
Sarah McAuley
617.532.8195
Investor Relations:
Christopher Sands
617.692.2569
EnerNOC Reports Results for Third Quarter of 2016
Company Increases Full-Year Adjusted EBITDA Outlook by $18 Million
Boston, November 3, 2016 -- 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 Response
149,052

 
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 EBITDA
46,299

 
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
•
Achieved third quarter year-over-year Subscription Software revenue growth of 47%.
•
Surpassed 1,000 megawatts of enrolled demand response capacity in Korea, marking the first time we have eclipsed that milestone in an international market.
•
Signed demand response contracts with Consolidated Edison, First Energy, Southern California Edison, and Pacific Gas & Electric under innovative energy initiatives in New York, Pennsylvania, and California.
•
Completed the sale of our utility customer engagement software platform. With the sale, we have narrowed the focus of our subscription-based energy intelligence software business to exclusively serve enterprise customers.
•
Commenced a restructuring plan designed to materially reduce our operating expenses, primarily related to our subscription-based energy intelligence software business.


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 Response
149,052

 
199,296

 
301,861

 
285,022

Total revenues
167,781

 
217,324

 
353,855

 
340,375

Cost of revenues
96,965

 
143,146

 
211,090

 
208,645

Gross profit
70,816

 
74,178

 
142,765

 
131,730

Operating expenses:
 
 
 
 
 
 
 
Selling and marketing
20,008

 
22,397

 
70,540

 
74,563

General and administrative
20,331

 
26,707

 
75,688

 
83,450

Research and development
6,352

 
6,626

 
22,029

 
21,812

Gains on sale of businesses
(2,229
)
 
—

 
(19,605
)
 
(2,991
)
Restructuring charges
2,933

 
—

 
6,627

 
—

Total operating expenses
47,395

 
55,730

 
155,279

 
176,834

Income (loss) from operations
23,421

 
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 tax
21,307

 
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.
 
 
 
 
 
 
 
Basic
29,349,772

 
28,507,939

 
29,188,693

 
28,282,647

Diluted
34,326,256

 
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, net
56,967

 
43,355

Unbilled revenue
72,123

 
70,101

Capitalized incremental direct customer contract costs
1,389

 
33,917

Prepaid expenses and other current assets
15,879

 
8,118

Total current assets
227,857

 
293,611

 
 
 
 
Property and equipment, net
43,098

 
49,653

Goodwill and intangible assets, net
78,649

 
94,099

Deposits and other assets
3,852

 
6,351

Total assets
$
353,456

 
$
443,714

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
973

 
$
6,002

Accrued capacity payments
80,582

 
104,278

Accrued expenses and other current liabilities
30,118

 
38,792

Deferred revenue
9,436

 
55,631

Total current liabilities
121,109

 
204,703

 
 
 
 
Deferred revenue
3,305

 
3,696

Other liabilities
7,415

 
9,118

Convertible senior notes
114,205

 
111,254

Total long-term liabilities
124,925

 
124,068

 
 
 
 
Total EnerNOC, Inc. stockholders' equity
107,166

 
114,644

Non-controlling interest
256

 
299

Total stockholders' equity
107,422

 
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:
•
Management defines consolidated adjusted EBITDA as net income (loss) attributable to EnerNOC, Inc., excluding depreciation, amortization and asset impairments; stock-based compensation, gains on the sale of businesses; direct and incremental expenses/gains associated with acquisitions, divestitures, reorganizations and settlements; restructuring charges; interest and other income (expense), net; and benefit from (provision for) income tax.
•
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.
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 solutions
9,840

 
8,398

 
27,568

 
25,874

Professional services
1,668

 
4,714

 
5,460

 
15,245

Total Software Revenues
18,729

 
18,028

 
51,994

 
55,353

 
 
 
 
 
 
 
 
Demand Response
 
 
 
 
 
 
 
Grid operator
121,500

 
171,928

 
252,985

 
237,281

Utility
27,552

 
27,368

 
48,876

 
47,741

Total Demand Response Revenues
149,052

 
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 EBITDA
46,299

 
49,433

 
70,780

 
56,630

Corporate unallocated expenses
(4,239
)
 
(3,884
)
 
(14,446
)
 
(12,043
)
Consolidated adjusted EBITDA 1
31,477

 
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 3
2,229

 
—

 
19,605

 
2,991

Direct and incremental (expenses) gains associated with acquisitions, divestitures, reorganizations and settlements 4
3,525

 
(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
)
1 
Consolidated adjusted EBITDA excludes gains on the sale of businesses. Prior period results have been updated to conform to current period presentation.
2 
Restructuring charges include employee related severance and retention costs, asset impairments, and contract termination costs.
3 
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.
4 
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.
5 
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 Amounts
Low
High
Low
High
 
Low
High
Low
High
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-Diluted
29.4

29.4

 
 
 
29.1

29.1