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World Energy Solutions Reports Record Revenue for Q4 and Full-Year 2012



World Energy Solutions Reports Record Revenue for Q4 and Full-Year 2012

Quarterly and Annual Revenues Surge 91% and 55%, Respectively; Total Backlog
Surpasses $46M

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

Operating Results

  * 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."

Financial Review

Full-Year 2012

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.

Q4 2012

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,
                         2012         2011           2012         2011
GAAP net income (loss)    $ 7,535,933  $ (1,343,021) $  5,290,692  $ (46,477)
Add: Interest expense,    272,451      43,172         547,075      1,526
net
Add: Income taxes         (7,551,636)  116,474        (7,479,136)  138,224
(benefit)
Add: Amortization of      945,728      603,591        3,022,097    1,347,135
intangibles
Add: Amortization of      11,785       22,864         42,289       126,953
other assets
Add: Depreciation         58,722       48,981         217,235      146,946
Non-GAAP EBITDA           $ 1,272,983  $ (507,939)    $ 1,640,252  $ 1,714,307
Non-GAAP EBITDA per       $ 0.11       $ (0.04)       $ 0.14       $  0.16
share
Add: Stock-based          146,216       120,923       465,835      609,820
compensation
Non-GAAP adjusted EBITDA  $ 1,419,199  $ (387,016)    $ 2,106,087  $ 2,324,127
Non-GAAP adjusted EBITDA  $ 0.12       $ (0.03)       $ 0.18       $ 0.22
per share
Dilutive                  12,057,083   11,513,481     11,958,689    10,583,630
weighted-average shares

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
                     December 31,                    December 31,
                     2012           2011            2012          2011
                                                    $ 31,778,837  $ 20,524,567
Revenue              $   10,194,377 $     5,344,427
                                                    10,069,357    4,009,995
Cost of revenue      3,454,546      1,102,636
                                                    21,709,480    16,514,572
Gross profit         6,739,831         4,241,791
                                     
Sales and marketing  4,310,808      3,245,794       15,482,723     10,631,035
expenses
 
General and                                         7,927,889     5,790,264
administrative        2,178,932      2,179,372
expenses
                                     
Operating income     250,091         (1,183,375)    (1,701,132)    93,273
(loss)
                                     
Interest expense,      (272,451)    (43,172)         (547,075)     (1,526)
net
Other income         6,657          —               59,763        —
                                     
Income (loss) before  (15,703)       (1,226,547)     (2,188,444)    91,747
income taxes
Income tax expense    (7,551,636)    116,474         (7,479,136)  138,224
(benefit)
                                                     $ 5,290,692   $ (46,477) 
Net income (loss)    $   7,535,933  $  (1,343,021)
 
Net income (loss)                                                  
per share:
 Net income (loss)
per share – basic    $       0.63   $    (0.12)      $ 0.44        $ —
and diluted
 
Weighted average                                    11,901,172    10,521,910
shares outstanding –  11,938,435     11,513,481
basic
 
Weighted average                                    11,958,689    10,521,910
shares outstanding – 12,057,083      11,513,481
diluted
                                                                   

                                       

SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET
                                                      
                                                     December 31, 2012
Assets                                                
 Cash and cash equivalents                           $   3,307,822
 Trade accounts receivable, net                      7,242,603
 Other current assets                                2,148,719
 Property and equipment, net                         639,839
 Goodwill                                            16,167,834
 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
Stockholders' equity                                 26,710,127
  Total liabilities and stockholders' equity         $ 55,130,662

CONTACT: Jim Parslow
         World Energy Solutions, Inc.
         (508) 459-8100
         jparslow@worldenergy.com
        
         or
        
         Dan Mees
         World Energy Solutions, Inc.
         (508) 459-8156
         dmees@worldenergy.com
        
         Susan Forman
         Dian Griesel Inc.
         (212) 825-3210
         sforman@dgicomm.com
        
         or
        
         In Canada:
         Craig Armitage
         The Equicom Group
         (416) 815-0700 x278
         carmitage@equicomgroup.com

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