World Energy Solutions Announces Record Q1 Revenue and Backlog

World Energy Solutions Announces Record Q1 Revenue and Backlog

WORCESTER, Mass., May 14, 2013 (GLOBE NEWSWIRE) -- World Energy Solutions,
Inc. (Nasdaq:XWES), a leading energy management services firm, today announced
financial results for the first quarter ended March 31, 2013.

Financial Highlights (All figures are in US dollars; comparisons of
performance are made between Q1 2013 results and Q1 2012 results, unless
otherwise noted.)

Record Q1 Revenue and Backlog

  *Quarterly revenue increased 27% to $8.7 million
  *Annualized backlog increased 23% to $23.8 million
  *Total backlog plus deferred revenue rose 27% to $50.2 million

Operating Results

  *EBITDA grew 161% to $0.4 million
  *Net loss was ($1.0 million), or ($0.08) per share
  *Gross margins were 74%

Liquidity and Balance Sheet

  *Cash flow from operations was $0.7 million, up $1.2 million
  *Free cash flow was $4.6 million for the 12-months ended March 31, 2013
  *Cash and cash equivalents were $2.1 million

Business Highlights

  *Energy Procurement:

    *The large commercial & industrial (LCI) team ran a successful
      multi-state aggregation for a Fortune 100 company; notched new hospital
      wins with channel partner GNYHA; and made inroads in Texas with a
      successful auction for Abilene Independent School District
    *Wholesale posted its second best quarter ever, executing major
      electricity and natural gas buys for utilities in the Northeast, Midwest
      and Mid-Atlantic
    *Government supported the 19th RGGI auction and continued to grow the
      Federal Government's Natural Gas Acquisition Program (NGAP)
    *Mid-market experienced strong sales in the Southwest, key renewals in
      the Northeast

  *Energy Efficiency Services:

    *Grew revenue 57% over Q1 2012
    *Drove cross-sell leads in CT and MA

"We delivered strong results in the first quarter, despite the challenges of
rising commodity prices and the previously announced changes to our mid-market
business," said Phil Adams, CEO of World Energy Solutions. "Revenue grew 27%,
reflecting the addition of NEP, strong growth in our Energy Efficiency
Services segment, increased traction in our cross-sell efforts, near record
performance from our Wholesale team, and new customer wins across our Retail
Energy Procurement business. World Energy's fundamentals and long-term outlook
remain strong, and our results continue to validate our transition from an
auction-based, procurement-only company to one offering a broader range of
energy management services.

"For 2013, our plan calls for top-line growth of 20%, EBITDA increasing by
over 50%, and cash generation sufficient to meet our working capital
requirements and to retire the obligations incurred from our acquisitions. We
expect net loss to remain on par with 2012's results, reflecting the impact of
the revenue recognition policy change we announced last quarter that defers
certain revenue to the future while expensing channel and sales commission as
cash is received or contracts are booked."

Financial Review

Revenue for the three months ended March 31, 2013 rose 27% over the same
period last year to $8.7 million, reflecting significant increases in both
Energy Procurement and Energy Efficiency Services. Energy Procurement grew
24%, reflecting the acquisition of NEP in Q4 2012 and continued execution in
the Company's base business. Energy Efficiency Services grew 57%, as the
Company continued to execute under the four utility efficiency program
designations it was awarded in 2012 and capitalized on cross-sell
opportunities.

Gross margins were 74% for the quarter compared to 73% for the same period
last year, reflecting an increase in Energy Procurement gross margins. Energy
Procurement gross margins increased 4% to 83% as a result of increased revenue
with costs only slightly increasing over Q1 2012. Energy Efficiency Services
gross margins were 20% compared to 27% in Q1 2012, reflecting increased
payroll costs associated with additional project managers in Q1 2013 and, to a
lesser extent, slightly lower margins on projects completed in Q1 2013 versus
Q1 2012. Operating expenses as a percentage of sales decreased 3% to 81% as
the growth in revenue exceeded the increase in costs. The increase in
operating expenses was primarily due to higher payroll, commissions and
intangible assets related to the NEP acquisition and general headcount
increases in the Company's sales, marketing and back office operations. As a
result, the Company's operating margin improved 4% to (7)% and EBITDA* margin
was 5% compared to 2% in the prior year quarter.

At March 31, 2013, the Company had cash and cash equivalents of $2.1 million,
compared with $3.3 million at December 31, 2012 and $2.4 million at March 31,
2012. The decrease in cash and cash equivalents during the quarter was
primarily due to $1.4 million of contingent consideration payments and $0.5
million of principal payments on long-term debt offset by cash flow from
operations of $0.7 million. Cash flow from operations increased $1.2 million
compared to Q1 2012. Free cash flow* was $4.6 million for the 12-months ended
March 31, 2013, a 22% increase over the same period in the prior year. The
Company continues to maintain its $2.5 million line-of-credit and has not
borrowed against that facility to date.

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 commission
that the Company would derive over the remaining life of those contracts.
Annualized backlog represents the commission 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, 2013 included
commodity backlog of $43.1 million and $23.0 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, May 14, 2013, at 10:00 a.m.
(ET) to discuss its financial results and other corporate developments. To
access the conference call by telephone, dial 1 (888) 517-2458 (domestic) or 1
(847) 413-3538 (international) and enter passcode 6462953#. 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 6462953#
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 30 days.

* Non-GAAP Financial Measures

World Energy provides all information required in accordance with GAAP and
also provides certain "non-GAAP financial measures." A non-GAAP financial
measure refers to a numerical financial measure that is 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, adjusted EBITDA and free cash flow 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 expense related to acquisition-related assets and
other assets, interest expense on bank borrowings, notes payable to sellers
and contingent consideration, interest income on invested funds and notes
receivable, and income taxes.

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 defines free cash flow as net cash provided by operating activities
less capital expenditures. Management defines capital expenditures as
purchases of property and equipment, which includes capitalization of
internal-use software development costs.

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,
                                  2013           2012
GAAP net loss                      $(956,885)     $(783,064)
Add: Interest expense              202,737        89,444
Add: Income taxes                  131,305        27,500
Add: Amortization of intangibles   974,758        759,247
Add: Amortization of other assets  8,507          12,937
Add: Depreciation                 55,669         53,550
Non-GAAP EBITDA                   $416,091       $159,614
Non-GAAP EBITDA per share          $0.03          $0.01
Add: Share-based compensation      145,986        119,541
Non-GAAP adjusted EBITDA          $562,077       $279,155
Non-GAAP adjusted EBITDA per share $0.05          $0.02
Weighted average diluted shares    12,077,901     11,983,573
                                                

                    Reconciliation of Free Cash  Reconciliation of Free Cash
                   Flow                         Flow for
                    for Three Months Ended March Twelve Months Ended March 31,
                    31,
                   2013         2012            2013           2012
Net cash provided                                            
by (used in)
operating           $665,397     $(492,266)      $4,944,211     $3,787,237
activities
Less: Purchases of                                           
property and
equipment           (9,216)      (31,615)      (381,507)      (44,235)
Free cash flow      $656,181     $(523,881)     $4,562,704     $3,743,002

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. The Company has based these forward-looking
statements on its current expectations and projections about future events,
including without limitation, its expectations of backlog and energy prices.
Although the Company believes that the expectations underlying any of its
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: the Company's revenue and
backlog are dependent on actual future energy purchases pursuant to completed
procurements; the demand for the Company's 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 other factors outside the Company's control that affect
transaction volume in the electricity market. Additional risk factors are
identified in the Company's Annual Report on Form 10-K for the year ended
December 31, 2012 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. The Company undertakes 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,
                                                       2013       2012
Revenue                                                 $8,657,482 $6,793,407
Cost of revenue                                         2,233,151  1,823,413
Gross profit                                            6,424,331  4,969,994
Sales and marketing                                     4,978,081  3,814,183
General and administrative                              2,061,673  1,875,037
Operating loss                                         (615,423) (719,226)
Interest expense, net                                   (202,737)  (89,444)
Other income (expense)                                  (7,420)    53,106
Loss before income taxes                                (825,580)  (755,564)
Income tax expense                                      131,305    27,500
Net loss                                                $(956,885) $(783,064)
                                                                 
Net loss per common share – basic and diluted           $(0.08)   $(0.07)
Weighted average shares outstanding – basic and diluted 11,966,108 11,869,648

  
  SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET
  
                                                     March 31, 2013
  Assets                                              
  Cash and cash equivalents                           $2,103,246
  Trade accounts receivable, net                      7,246,357
  Other current assets                                2,464,042
  Property and equipment, net                         604,425
  Goodwill                                            16,167,834
  Intangible and other assets, net                    18,782,525
  Long-term portion of deferred tax asset             5,769,175
  Total assets                                        $53,137,604
                                                     
  Liabilities and stockholders' equity                
  Accrued commissions                                 $1,354,544
  Accounts payable and accrued liabilities            7,608,456
  Deferred revenue and customer advances              2,167,799
  Notes payable and current portion of long-term debt 3,460,127
  Total current liabilities                           14,590,926
  Deferred revenue and customer advances              4,142,703
  Long-term debt                                      8,437,888
  Stockholders' equity                                25,966,087
  Total liabilities and stockholders' equity          $53,137,604

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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