WORCESTER, MA -- (Marketwire) -- 05/03/12 -- World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced financial results for the first quarter ended March 31, 2012.
Financial Highlights (All figures are in US dollars; comparisons of performance are made between Q1 2012 results and Q1 2011 results.)
Record Revenue and Backlog
Liquidity and Balance Sheet
Product Line and Other Highlights
"World Energy is off to an exceptional start in 2012, adeptly integrating and leveraging the acquisitions we made in 2011 to post record quarterly revenue and EBITDA," said Richard Domaleski, CEO of World Energy Solutions. "By building on this performance and further applying our proven business model, we expect to realize significant scale in our mid-market and efficiency offerings. For this and other reasons, we continue to see 2012 as a breakout year for World Energy."
For the three months ended March 31, 2012, revenue increased by 61% over Q1 2011 to $7.9 million primarily due to a full quarter of contributions from the Company's acquisitions completed in Q4 2011 and increased auction activity in our Retail product line. Revenue from the Company's Energy Procurement segment increased 45%, reflecting the addition of the energy procurement business of Co-eXprise and the acquisition of GSE and continued execution in the Company's base business. The Company's Energy Efficiency Services segment contributed 10% of first quarter revenue, primarily related to the acquisition of NES.
Gross margin declined 3% to 77% compared to Q1 2011, reflecting the change in product mix in the Company's business. Energy Procurement margins were 83% compared to 80% in the first quarter of 2011, while Energy Efficiency Services margins were 27% for the quarter. Energy Efficiency Services margins reflect equipment, material and direct labor costs associated with completed projects. Operating expenses as a percentage of sales decreased 3% to 72% as the Company continued to benefit from the operating leverage in its business model. As a result, the Company's operating margin was 5%, consistent with Q1 2011, and EBITDA margin was 16%, an increase of 5% from 11% in the same period last year.
At March 31, 2012, the Company had cash and cash equivalents of $2.4 million, compared with $2.7 million at March 31, 2011 and $1.8 million at December 31, 2011. The increase in cash and cash equivalents during the quarter was primarily due to proceeds from our term note, cash generated from EBITDA of $1.3 million and $0.8 million of cash from the sale of the Company's investment in Retroficiency. Proceeds from the $2.5 million term note from Silicon Valley Bank ("SVB") were primarily used to pay contingent consideration associated with the NES and GSE acquisitions. The Company also renewed its line-of-credit with SVB for 12 months through March 15, 2013. There were no advances against the line-of-credit at March 31, 2012.
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 revenue that the Company would derive over the remaining life of those contracts. Annualized backlog represents the revenue 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 March 31, 2012 included commodity backlog of $36.5 million and $18.5 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 $0.9 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, May 3, 2012, at 10:00 a.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 7674 892#. A replay will be available two hours after the completion of the call, and for one week following the call, by dialing 1 (888) 843-7419 for domestic participants or 1 (630) 652-3042 for international participants, and entering passcode 7674 892# 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. They also provide 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 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 to EBITDA and adjusted EBITDA is shown below:
Three Months Ended, ------------------------------ March 31, 2012 March 31, 2011 -------------- -------------- GAAP net income $ 349,920 $ 250,089 Add: Interest (income) expense, net 89,444 (13,443) Add: Income tax expense 27,500 7,250 Add: Amortization of intangibles 759,247 239,361 Add: Amortization of other assets 12,937 40,112 Add: Depreciation 53,550 35,480 -------------- -------------- Non-GAAP EBITDA $ 1,292,598 $ 558,849 Add: Share-based compensation 119,541 141,192 -------------- -------------- Non-GAAP adjusted EBITDA $ 1,412,139 $ 700,041 ============== ==============
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 $20 billion in energy, demand response and environmental commodities on behalf of its customers, creating more than $1 billion in value for them. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the ground-breaking Regional Greenhouse Gas Initiative's (RGGI) cap and trade program for CO2 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; 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 March 31, ------------------------------ 2012 2011 -------------- -------------- Revenue $ 7,926,391 $ 4,918,388 Cost of revenue 1,823,413 1,000,532 -------------- -------------- Gross profit 6,102,978 3,917,856 Sales and marketing 3,814,183 2,456,221 General and administrative 1,875,037 1,217,739 -------------- -------------- Operating income 413,758 243,896 Other income (expense), net (36,338) 13,443 -------------- -------------- Income before income taxes 377,420 257,339 Income tax expense 27,500 7,250 ============== ============== Net income $ 349,920 $ 250,089 ============== ============== Net income per common share - basic & diluted $ 0.03 $ 0.03 ============== ============== Weighted average shares outstanding - basic 11,869,648 9,199,205 ============== ============== Weighted average shares outstanding - diluted 11,983,573 9,224,744 ============== ============== SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET March 31, 2012 -------------- Assets Cash and cash equivalents $ 2,403,744 Trade accounts receivable, net 5,099,472 Other current assets 961,255 Property and equipment, net 404,468 Goodwill 13,419,725 Other assets 11,916,315 -------------- Total assets $ 34,204,979 ============== Liabilities and stockholders' equity Accrued commissions $ 1,047,602 Accounts payable and accrued liabilities 4,883,734 Notes payable and current portion of long-term debt 3,256,410 Other current liabilities 13,797 -------------- Total current liabilities 9,201,543 Total long-term liabilities 3,276,644 Stockholders' equity 21,726,792 -------------- Total liabilities and stockholders' equity $ 34,204,979 ==============