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EnerNOC Reports Third Quarter 2012 Results



EnerNOC Reports Third Quarter 2012 Results

EnerNOC Increases Guidance for FY2012 and FY2013 Following Strong Third
Quarter

BOSTON, Nov. 5, 2012 (GLOBE NEWSWIRE) -- EnerNOC, Inc. (Nasdaq:ENOC) (the
"Company"), a leading provider of energy management applications, services and
products, today announced financial results for the third quarter ended
September 30, 2012.

"We had a strong summer operationally, delivering a record 85 GWh of demand
response with average performance above 100%," said Tim Healy, Chairman and
CEO of EnerNOC. "Our financial performance this quarter is a result of our
industry-leading big data platform for energy management, portfolio management
expertise, and ongoing profitability initiatives. Based on our success
managing our portfolio in the PJM Interconnection region under new measurement
and verification rules, coupled with strong pricing tailwinds, favorable
capacity auction results, and our increased focus on operational excellence,
we are raising the midpoints of our guidance for 2012 and 2013."

Third Quarter 2012 Financial Summary

                                       

In thousands, except per share amounts          Q3 2012         Q3 2011
Revenues                                        $ 177,947       $ 169,183
Net Income                                                       
GAAP                                            $ 60,348        $ 46,878
Non-GAAP*                                       $ 65,497        $ 52,107
Adjusted EBITDA*                                $ 69,080        $ 60,737
                                                                 
Diluted Net Income per Share (EPS)                               
GAAP                                            $ 2.21          $ 1.77
Non-GAAP*                                       $ 2.40          $ 1.96
Cash Flow from Operations                       $ 8,625         $ 8,714
Free Cash Flow*                                 $ 6,007         $ 5,686
                                                                 
*Refer to discussion of non-GAAP financial measures below under "Use of
Non-GAAP Financial Measures"

Third Quarter 2012 and Recent Highlights

  * Dispatched a record volume of demand response capacity across 47 demand
    response markets delivering an average performance of over 100%;
     
  * Released the next significant version of the Company's energy management
    applications platform providing new Automated Fault Detection (AFD)
    functionality, as well as enhanced business intelligence for energy users
    and demand response program support for utilities;
     
  * Increased demand response megawatts under management to approximately
    8,500 as of September 30, 2012;
     
  * Increased the number of commercial, institutional, and industrial
    DemandSMART customers to approximately 5,800 and sites to approximately
    13,500 as of September 30, 2012;
     
  * Completed the installation phase of a $10 million EfficiencySMART
    data-driven energy management application for the Massachusetts Department
    of Energy Resources;
     
  * Strengthened the Company's internal regulatory compliance program,
    including the hiring of a director of regulatory compliance; and
     
  * Announced additional expansion in Australia and New Zealand as EnerNOC was
    selected to deliver demand response to TransGrid and Genesis Energy,
    respectively.

Third Quarter 2012 Financial Highlights

Revenues – Revenues for the third quarter totaled $177.9 million, compared
with $169.2 million in the third quarter of 2011, an increase of 5.2%,
primarily due to an increase in revenue from the Company's Western Australia
demand response capacity program. As a result of recent changes to certain PJM
program rules, all 2012 revenues from the Company's PJM Emergency Load
Response Program (ELRP) were recognized during the three months ended
September 30, 2012, compared to the four months ended September 30,
2011. However, the increase in third quarter ELRP revenues due to the change
in timing of revenue recognition was more than offset by the decrease in the
Company's 2012 PJM ELRP MW delivery obligation coupled with less favorable
pricing in this program.

  * DemandSMART revenues were $169.7 million, representing 95% of total
    revenue and a 4.8% increase from the same quarter last year.
     
  * EfficiencySMART, SupplySMART, CarbonSMART and Other revenues for the third
    quarter were $8.3 million, an increase of 13.4% from the same quarter last
    year.

Gross profit and gross margin – Gross profit for the third quarter was $95.0
million, compared with $84.8 million in the third quarter of 2011, an increase
of 12.0%. Gross margin increased to 53.4% from 50.1% in the third quarter of
2011, primarily due to improved management of the Company's portfolio of
demand response capacity, including the Company's participation in incremental
auctions and lower costs associated with C&I contracts.

Operating expenses – Third quarter operating expenses were $35.7 million, an
increase of 5.4% from the third quarter of 2011, driven primarily by an
increase in headcount from 587 full-time employees to 660 full-time employees.
This increase was partially offset by improved operating leverage and improved
overall cost management.

Income tax benefit – Income tax benefit for the third quarter was $0.7
million. The income tax benefit primarily represents the reversal of the
income tax provision recorded during the first six months of 2012 as a result
of a change in the Company's ability to reliably estimate its annual effective
tax rate. The Company expects an overall tax provision for the full year 2012
of approximately $1.5 million.

Net income– GAAP net income for the third quarter was $60.3 million, compared
to net income of $46.9 million for the third quarter of 2011. GAAP earnings
per share for the third quarter of 2012 was $2.21 per diluted share, compared
to $1.77 for the third quarter of 2011. Excluding stock-based compensation and
amortization expense related to acquired intangible assets, non-GAAP net
income was $65.5 million or $2.40 per diluted share, compared to $52.1 million
and $1.96 per diluted share for the same quarter last year.

Capital expenditures – Capital expenditures for the third quarter were $2.6
million, a 13.5% year-over-year decrease, partially due to a decrease in the
Company's equipment costs per customer site installation.

Cash and cash equivalents – Cash and cash equivalents as of September 30, 2012
grew to $93.2 million from $87.3 million as of December 31, 2011, primarily
driven by net cash provided by operating activities.

Financial Outlook

The Company currently expects to deliver the following financial results for
the years ending December 31, 2012 and December 31, 2013:

Full Year 2012: The Company expects full year 2012 revenues to be in the range
of $270 million to $280 million, compared to its previously published 2012
guidance range of $260 million to $280 million. GAAP net loss for 2012 is
expected to be in the range of $0.80 to $0.95 per basic and diluted share,
compared to the Company's previously published 2012 guidance range of a net
loss of $1.00 to $1.40 per basic and diluted share. These revised estimates
continue to be based on basic and diluted weighted average shares outstanding
of 26.6 million. Full year 2012 Adjusted EBITDA is expected to be between $15
million and $20 million, compared to the Company's previously published 2012
guidance range of $5 million to $20 million. The Company expects stock-based
compensation expense to be approximately $14 million, amortization of
acquisition related intangibles expense to be approximately $7 million,
depreciation expense to be approximately $18 million, and interest and other
expense, net, to be between $0 and $0.5 million. The estimated provision for
income taxes is expected to be approximately $1.5 million.

Full Year 2013: The Company expects full year 2013 revenues to be in the range
of $360 million to $400 million, compared to its previously published guidance
range of $350 million to $400 million. GAAP net income for 2013 is expected to
be in the range of $0.50 to $0.75 per diluted share, compared to the Company's
previously published 2013 guidance range $0.15 to $0.75 per diluted share.
These revised estimates are based on diluted weighted average shares
outstanding of 28 million compared to 27.7 million diluted shares used as the
basis for the Company's previously published guidance. Full year 2013 Adjusted
EBITDA is expected to be between $60 million and $75 million, compared to the
Company's previously published guidance range of $50 million to $75 million.
The Company expects stock-based compensation expense to be between $12 million
and $14 million, amortization of acquisition related intangibles expense to be
approximately $7 million, depreciation expense to be between $20 million and
$23 million, and interest and other expense, net, to be between $1 million and
$2 million. The estimated provision for income taxes is expected to be between
$6 million and $8 million.

These statements are forward-looking and actual results may differ materially.
These statements are based on information available as of November 5, 2012,
and the Company assumes no obligation to publicly update or revise its
financial outlook. Investors are reminded that actual results may differ from
these estimates for the reasons described below and in the Company's filings
with the Securities and Exchange Commission.

The Company's projected net loss/income in 2012 and 2013 does not reflect any
foreign exchange gains or losses. The 2012 and 2013 earnings outlook also does
not take into account the potential impact of any future acquisitions or
divestitures, including potential non-recurring acquisition related expenses
or asset impairments. The outlook also does not take into account the effect
of a public offering or other financing arrangement or debt restructuring that
could impact outstanding shares and thereby the Company's EPS outlook.

The Company is presenting projected net loss/income for both 2012 and 2013
without the impact of those items because it is currently unable to estimate
the amount of those items and it believes that presenting net loss/income
without taking them into account presents investors with meaningful
information about the Company's projected operating performance for 2012 and
2013.

Webcast Reminder

The Company will host a live webcast and conference call today, November 5,
2012 at 5:00 p.m., Eastern Time, to discuss the Company's third quarter 2012
operating results, as well as other forward-looking information about the
Company's business. Visit the Investor Relations section of EnerNOC's website
at http://investor.enernoc.com/webcasts.cfm for a live webcast of the
conference call. Domestic callers may access the earnings conference call by
dialing 877-837-3911 (International callers, dial 973-796-5063). Please access
the website at least 15 minutes prior to the call to register, download, and
install any necessary audio software. A replay of the conference call will be
available on the Company's website noted above or by phone (dial 855-859-2056
and enter the pass code 48741667) until November 12, 2012 and the webcast will
be archived on EnerNOC's website for a period of twelve months.

About EnerNOC

EnerNOC unlocks the full value of energy management for our utility and
commercial, institutional, and industrial (C&I) customers by reducing
real-time demand for electricity, increasing energy efficiency, improving
energy supply transparency in competitive markets, and mitigating emissions.
We accomplish this by delivering world-class energy management applications
and services including DemandSMART™, comprehensive demand response;
EfficiencySMART™, continuous energy savings; SupplySMART™, energy price and
risk management; and CarbonSMART™, enterprise carbon management. Our Network
Operations Center (NOC) continuously supports these applications across
thousands of C&I customer sites throughout the world. We work with more than
100 utilities and grid operators globally to deliver energy, ancillary
services, and carbon mitigation resources that provide cost-effective
alternatives to investments in traditional power generation, transmission, and
distribution. For more information, visit www.enernoc.com.

The EnerNOC, Inc. logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5804

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, the market opportunity for the Company's
energy management applications, services and products  and the future growth
and success of such applications, services and products in general, 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.

Use of Non-GAAP Financial Measures

To supplement the financial measures presented in EnerNOC's press release and
related conference call or webcast in accordance with accounting principles
generally accepted in the United States ("GAAP"), EnerNOC also presents
non-GAAP financial measures relating to non-GAAP net income, non-GAAP net
income per share, adjusted EBITDA, and free cash flow.

A "non-GAAP financial measure" refers to a numerical measure of the Company's
historical or future financial performance, financial position, or cash flows
that excludes (or includes) amounts that are included in (or excluded from)
the most directly comparable measure calculated and presented in accordance
with GAAP in the Company's financial statements. EnerNOC provides the non-GAAP
measures listed above as additional information relating to EnerNOC's
operating results as a complement to results provided in accordance with GAAP.
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.

The non-GAAP measures used in this press release and related conference call
or webcast differ from GAAP in that they exclude expenses related to
stock-based compensation, amortization expense related to acquisition-related
intangible assets, as well as in certain measures, the related impact of these
adjustments on the provision for income taxes. In addition, investors should
note the following:

  * EnerNOC defines "non-GAAP net income" as net income before expenses
    related to stock-based compensation and amortization expenses related to
    acquisition-related intangible assets, net of related tax effects.
     
  * EnerNOC defines "Adjusted EBITDA" as net income, excluding depreciation,
    amortization, stock-based compensation, interest, income taxes and other
    income (expense). Adjusted EBITDA eliminates items that are either not
    part of the Company's core operations or do not require a cash outlay,
    such as stock-based compensation. Adjusted EBITDA also excludes
    depreciation and amortization expense, which is based on the Company's
    estimate of the useful life of tangible and intangible assets. These
    estimates could vary from actual performance of the asset, are based on
    historic cost incurred to build out the Company's deployed network, and
    may not be indicative of current or future capital expenditures.
     
  * EnerNOC defines "free cash flow" as net cash provided by operating
    activities less capital expenditures. EnerNOC defines "capital
    expenditures" as purchases of property and equipment, which includes
    capitalization of internal-use software development costs.

EnerNOC's management uses these non-GAAP measures when evaluating the
Company's operating performance and for internal planning and forecasting
purposes. EnerNOC's management believes that such measures help indicate
underlying trends in the Company's 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, EnerNOC's management considers non-GAAP net income or loss to be an
important indicator of the overall performance of the Company because it
eliminates certain of the more significant effects of its acquisitions and
related activities and non-cash compensation expenses. In addition, EnerNOC's
management considers adjusted EBITDA to be an important indicator of the
Company's operational strength and performance of its business and a good
measure of the Company's historical operating trend. Moreover, EnerNOC's
management considers free cash flow to be an indicator of the Company's
operating trend and performance of its business.

                                                                  
                                                                  
EnerNOC, Inc.
SELECTED FINANCIAL INFORMATION
(in thousands, except share and per share data)
                                                                  
EnerNOC, Inc.
Condensed Consolidated Statements of Income
(Unaudited)
                                                                  
                                                                  
                      Three Months Ended September Nine Months Ended September
                      30,                          30,
                      2012           2011          2012          2011
Revenues                                                          
DemandSMART            $ 169,658      $ 161,874     $ 213,586     $ 240,268
EfficiencySMART,
SupplySMART,           8,289          7,309         22,084        19,581
CarbonSMART and other
Total revenues         177,947        169,183       235,670       259,849
Cost of revenues       82,947         84,351        126,437       142,079
Gross profit           95,000         84,832        109,233       117,770
 Operating expenses:                                              
Selling and marketing  13,424         14,591        41,342        39,798
General and            18,351         15,960        52,880        48,172
administrative
Research and           3,914          3,310         11,536        9,892
development
Total operating        35,689         33,861        105,758       97,862
expenses
Income from            59,311         50,971        3,475         19,908
operations
Other income           619            (2,471)       1,316         (2,485)
(expense), net
Interest expense       (300)          (397)         (1,197)       (798)
Income before income   59,630         48,103        3,594         16,625
tax
Benefit from
(provision for)        718            (1,225)       (95)          (1,992)
income tax
Net income             $ 60,348       $ 46,878      $ 3,499       $ 14,633
                                                                  
Net income per common                                             
share
Basic                  2.26           1.83          0.13          0.57
Diluted                2.21           1.77          0.13          0.55
                                                                  
Weighted average
number of common                                                  
shares outstanding
Basic                  26,653,252     25,683,177    26,470,634    25,491,362
Diluted                27,325,949     26,538,278    27,069,569    26,498,620

                                                              
 
EnerNOC, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
                                                              
                                                              
                                          September 30, 2012 December 31, 2011
ASSETS                                                        
Current assets                                                
Cash and cash equivalents                  $ 93,168           $ 87,297
Restricted cash                            100                158
Trade accounts receivable, net of
allowance for doubtful accounts of $318    53,796             23,977
and $192 at September 30, 2012 and
December 31, 2011, respectively
Unbilled revenue                           76,023             64,448
Capitalized incremental direct customer    5,239              5,416
contract costs
Deposits                                   2,449              14,050
Prepaid expenses and other current assets  5,897              7,257
Total current assets                       236,672            202,603
Property and equipment, net of
accumulated depreciation of $63,577 and    34,700             36,636
$51,400 at September 30, 2012 and
December 31, 2011, respectively
Goodwill                                   79,481             79,213
Customer relationship intangible assets,   23,129             26,993
net
Other definite-lived intangible assets,    4,312              5,524
net
Capitalized incremental direct customer    4,442              3,056
contract costs, long-term
Deposits and other assets                  8,108              1,235
Total assets                               $ 390,844          $ 355,260
LIABILITIES AND STOCKHOLDERS' EQUITY                          
Current liabilities                                           
Accounts payable                           $ 2,672            $ 3,799
Accrued capacity payments                  69,548             58,332
Accrued payroll and related expenses       11,184             11,937
Accrued expenses and other current         9,288              6,107
liabilities
Accrued performance adjustments            719                6,045
Deferred revenue                           18,584             10,544
Total current liabilities                  111,995            96,764
Long-term liabilities                                         
Deferred acquisition consideration         525                500
Accrued acquisition contingent             409                336
consideration
Deferred tax liability                     2,647              2,646
Deferred revenue                           12,053             6,810
Other liabilities                          1,151              464
Total long-term liabilities                16,785             10,756
Commitments and contingencies (Notes 7     --                 -- 
and 8)
Stockholders' equity                                          
Undesignated preferred stock, $0.001 par
value; 5,000,000 shares authorized; no     --                 -- 
shares issued
Common stock, $0.001 par value;
50,000,000 shares authorized, 28,919,110
and 27,306,548 shares issued and           29                 27
outstanding at September 30, 2012 and
December 31, 2011, respectively
Additional paid-in capital                 340,326            329,817
Accumulated other comprehensive loss       (641)              (955)
Accumulated deficit                        (77,650)           (81,149)
Total stockholders' equity                 262,064            247,740
Total liabilities and stockholders'        $ 390,844          $ 355,260
equity

                                                               
 
EnerNOC, Inc.
Cash Flow Information
(Unaudited)
                                                               
                                                               
                                                               
                                               Nine Months Ended September 30,
                                               2012           2011
Cash flows provided by operating activities     $ 12,866       $ 16,766
Cash flows used in investing activities        (7,147)        (94,088)
Cash flows provided by financing activities    141            1,861
Effects of exchange rate changes on cash and   11             (535)
cash equivalents
Net change in cash and cash equivalents         $ 5,871        $ (75,996)

                                                                    
                                                                    
EnerNOC, Inc.
RECONCILIATION OF NON-GAAP MEASURES TO NEAREST GAAP MEASURES
(In thousands, except share and per share data)
                                                                    
Reconciliation of Non-GAAP Net Income and Net Income per Share
                                                                    
                             Three Months Ended        Nine Months Ended
                             September 30,             September 30,
                             2012         2011         2012        2011
GAAP net income               $ 60,348     $ 46,878     $ 3,499     $ 14,633
ADD: Stock-based             3,341        3,221        10,018      10,488
compensation (1)
ADD: Amortization expense of
acquired intangible assets   1,808        2,008        5,438       4,533
(1)
Non-GAAP net income           $ 65,497     $ 52,107     $ 18,955    $ 29,654
                                                                    
GAAP net income per diluted   $ 2.21       $ 1.77       $ 0.13      $ 0.55
share
ADD: Stock-based             0.12         0.12         0.37        0.40
compensation (1)
ADD: Amortization expense of
acquired intangible assets   0.07         0.07         0.20        0.17
(1)
Non-GAAP net income per       $ 2.40       $ 1.96       $ 0.70      $ 1.12
diluted share
                                                                    
Weighted average number of                                          
common shares outstanding
Diluted                      27,325,949   26,538,278   27,069,569  26,498,620
                                                                    
(1) The non-GAAP adjustments would have no impact on the (benefit from)
provision for income taxes recorded for the three or nine months ended
September 30, 2012 or 2011, respectively.

                                                                  
                                                                  
Reconciliation of Adjusted EBITDA
                                                                  
                                                                  
                                Three Months Ended Nine Months Ended September
                                September 30,      30,
                                2012       2011    2012          2011
Net income                       $ 60,348  46,878   $ 3,499       $ 14,633
Add back:                                                         
Depreciation and amortization   6,428      6,545   18,852        16,509
Stock-based compensation        3,341      3,221   10,018        10,488
expense
Other (income) expense          (619)      2,471   (1,316)       2,485
Interest expense                300        397     1,197         798
(Benefit from) provision for    (718)      1,225   95            1,992
income tax
Adjusted EBITDA                  $ 69,080  60,737   $ 32,345      $ 46,905

                                                                  
 
Reconciliation of Free Cash Flow
                                                                  
                                                                  
                                Three Months Ended Nine Months Ended September
                                September 30,      30,
                                2012      2011     2012          2011
Net cash provided by operating   $ 8,625   $ 8,714  $ 12,866      $ 16,766
activities
Subtract:                                                         
Purchases of property and        (2,618)   (3,028)  (11,752)      (15,172)
equipment
Free cash flow                   $ 6,007   $ 5,686  $ 1,114       $ 1,594
                                                                  

CONTACT: Media Relations:
         Sarah McAuley
         (+1) 617.532.8195
         news@enernoc.com
        
         Investor Relations:
         Jennifer Varley
         (+1) 617.532.8104
         ir@enernoc.com

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