NORCROSS, Ga., Nov. 9, 2011 (GLOBE NEWSWIRE) -- Comverge, Inc. (Nasdaq:COMV), the leading provider of Intelligent Energy Management (IEM) solutions for Residential and Commercial & Industrial (C&I) customers, today announced its third quarter 2011 financial and operating results.
- Five percent consolidated revenue growth year over year, on a comparable basis
- Sales momentum continues with new wins in residential and C&I
- Increased adoption of IntelliSOURCE, with 18 utilities now using Comverge's enterprise software platform
- C&I expansion accelerated with a 75 percent year over year growth in facilities under management
- Strong quarterly financial results, including gross margin expansion to 34 percent, $4.7 million of operating cash flow and continued progress on our expense reduction initiative
"We had another solid quarter, as we expanded gross margins and continued to demonstrate improved operating leverage in our business," commented R. Blake Young, Comverge's president and chief executive officer. "We are gaining momentum in the market as evidenced by our recent contract wins, and we continue to grow our pipeline, which we believe provides a good foundation as we head into 2012. With our corporate consolidation initiative behind us, we are seeing greater efficiency in our operations, resulting in improved operating leverage as expenses are controlled and margins improve. Our residential and commercial and industrial businesses both continue to perform well and this revenue diversity is a strength of our business model."
Financial Summary
Third quarter revenues for 2011 were $48.6 million compared
to $51.7 million in the third quarter of 2010, a 6 percent
decrease. The decrease in revenue is primarily related to
$5.8 million in revenues from PJM capacity programs that were
recognized in the second quarter of 2011, whereas all PJM
capacity programs revenues were recognized in the third
quarter of 2010. If all PJM capacity programs revenues were
recognized in the third quarter 2011, revenue growth would
have been 5 percent.
Gross margin for the third quarter of 2011 was 34 percent compared to 31 percent in the third quarter of 2010. The gross margin expansion was primarily the result of improved performance in residential turnkey and VPC programs.
Adjusted EBITDA for the third quarter of 2011 was $1.6 million compared to $1.0 million for the third quarter of 2010. Comverge defines adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation expense.
Net loss for the third quarter of 2011 was $0.9 million, or $0.04 per basic and diluted share, compared to a net loss of $1.4 million, or $0.06 per basic and diluted share for the third quarter of 2010.
Excluding stock-based compensation charges, amortization expense of acquisition-related assets, and change in acquisition-related deferred income taxes, non-GAAP net loss for the third quarter of 2011 was $0.2 million, or $0.01 per basic and diluted share, compared to a non-GAAP net income of $0.2 million, or $0.01 per basic and diluted share, for the same period in 2010.
Please refer to the financial schedules attached to this press release for reconciliation of GAAP to non-GAAP Adjusted EBITDA, net loss and net loss per share.
Payments from long-term contracts, which represent an estimate of total payments that Comverge expects to receive under long-term agreements with customers were $541 million for the third quarter 2011.
Annual Guidance
The company expects 2011 annual revenues to range from $136 to $141 million.
Business Highlights:
- Comverge has made significant progress on the expense reduction initiative the company announced back in July and continues to expect that it will deliver more than $4 million in lower expenses on a full year run rate in 2012.
- Tampa Electric selected IntelliSOURCE for its enhanced automated residential price response program.
- Comverge reduced more than 16 gigawatt hours of electricity demand during the 2011 summer cooling season.
- Duquesne Light Company, a leader in the transmission and distribution of electric energy in southwestern Pennsylvania, selected Comverge to help optimize residential and small commercial customers' summer peak energy usage.
- C&I customers under management grew by 75 percent year over year.
- Total megawatts (MW) under management as of September 30, 2011 and September 30, 2010 were as follows:
September 30, 2011 |
September 30, 2010 | |
Megawatts under long-term contracts, with regulatory approval* | 736 | 910 |
Megawatts under open market programs | 1,868 | 1,504 |
Megawatts to be provided under turnkey programs | 690 | 690 |
Megawatts managed for a fee | 437 | 437 |
Total megawatts | 3,731 | 3,541 |
*In the third quarter of 2010, Comverge had 155 MW under a long-term contract with NV Energy that is no longer in effect for 2011.
Additional Information
Comverge will host a conference call to discuss its third
quarter of 2011 financial and operational results at 4:30
p.m. (EST) on Wednesday, November 9, 2011. An earnings
release will be issued after market close on the same day. To
participate in the call, please dial 877-334-1969 or
760-666-3589 for international participants.
Additionally, the results will be reported in the Investor Relations section on Comverge's website at http://ir.comverge.com. An audio replay of the call will be available beginning November 9, 2011 at 7:30 p.m. and available until November 12, 2011 at 12:00 a.m. ET (midnight) by dialing in 855-859-2056 or 404-537-4306 for international participants and using conference code number 18367680. A replay of the call will be available online until November 8, 2012 at http://ir.comverge.com
Additional financial information can be found in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which has been filed today with the Securities and Exchange Commission.
About Comverge
With more than 500 utility and 2,100 commercial customers, as
well as five million deployed residential devices, Comverge
brings unparalleled industry knowledge and experience to
offer the most reliable, easy-to-use, and cost-effective
intelligent energy management programs. We deliver the
insight and control that enables energy providers and
consumers to optimize their power usage through the
industry's only proven, comprehensive set of technology,
services and information management solutions. For more
information, visit www.comverge.com.
Caution Regarding Forward Looking Statements
This release contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements in this release are not historical facts, do not constitute guarantees of future performance and are based on numerous assumptions which, while believed to be reasonable, may not prove to be accurate. These forward looking statements include projected contracted revenues, projected regulatory changes or approvals, the amount of revenue and megawatts that will be generated by long-term contracts or open market programs, expected reductions in annual costs and expenses, corresponding future growth associated with the new initiative, expectations regarding achieving profitability in the future, updated guidance as to our projected financial results, and certain assumptions upon which such forward-looking statements are based. The forward-looking statements in this release involve a number of factors that could cause actual results to differ materially, including risks associated with Comverge's business involving our products, the development and distribution of our products and related services, regulatory changes or grid operator rule changes, regulatory approval of our contracts, economic and competitive factors, our key strategic relationships, and other risks more fully described in our Quarterly Report on Form 10-Q filed today. Comverge assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
Regulation G Disclosure - Non-GAAP Financial Information
Non-GAAP financial measures are based upon our unaudited consolidated statements of operations for the periods shown, giving effect to the adjustments shown in the reconciliations set forth below. This presentation is not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, Comverge believes that non-GAAP reporting, giving effect to the adjustments shown in the reconciliations below, provides meaningful information and therefore uses it to supplement its GAAP reporting and internally in evaluating operations, managing and benchmarking performance. The Company has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the reconciliations below, and to provide an additional measure of performance.
SCHEDULE 1 | ||||
COMVERGE, INC. | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(In thousands, except share and per share data) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||
2011 | 2010 | 2011 | 2010 | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Revenue | ||||
Product | $ 5,414 | $ 5,798 | $ 17,768 | $ 16,553 |
Service | 43,189 | 45,937 | 81,915 | 65,610 |
Total revenue | 48,603 | 51,735 | 99,683 | 82,163 |
Cost of revenue | ||||
Product | 4,397 | 4,588 | 14,214 | 12,594 |
Service | 27,612 | 30,928 | 49,767 | 43,278 |
Total cost of revenue | 32,009 | 35,516 | 63,981 | 55,872 |
Gross profit | 16,594 | 16,219 | 35,702 | 26,291 |
Operating expenses | ||||
General and administrative expenses | 10,410 | 10,496 | 31,803 | 27,808 |
Marketing and selling expenses | 5,107 | 4,634 | 15,395 | 13,478 |
Research and development expenses | 1,216 | 1,664 | 3,317 | 4,572 |
Amortization of intangible assets | 106 | 536 | 579 | 1,608 |
Operating loss | (245) | (1,111) | (15,392) | (21,175) |
Interest and other expense, net | 612 | 214 | 2,264 | 567 |
Loss before income taxes | (857) | (1,325) | (17,656) | (21,742) |
Provision for income taxes | 18 | 55 | 51 | 170 |
Net loss | $ (875) | $ (1,380) | $ (17,707) | $ (21,912) |
Net loss per share (basic and diluted) | $ (0.04) | $ (0.06) | $ (0.71) | $ (0.89) |
Weighted average shares used in computation | 24,914,085 | 24,718,710 | 24,861,031 | 24,638,815 |
SCHEDULE 2 | ||||
COMVERGE, INC. | ||||
SEGMENT INFORMATION | ||||
(In thousands) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||
2011 | 2010 | 2011 | 2010 | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Revenue: | ||||
Residential Business | $ 16,764 | $ 12,859 | $ 50,850 | $ 34,795 |
Commercial & Industrial Business | 31,839 | 38,876 | 48,833 | 47,368 |
Total Revenue | $ 48,603 | $ 51,735 | $ 99,683 | $ 82,163 |
Cost of Revenue: | ||||
Residential Business | $ 10,377 | $ 8,933 | $ 30,913 | $ 23,438 |
Commercial & Industrial Business | 21,632 | 26,583 | 33,068 | 32,434 |
Total Cost of Revenue | $ 32,009 | $ 35,516 | $ 63,981 | $ 55,872 |
Gross Profit: | ||||
Residential Business | $ 6,387 | $ 3,926 | $ 19,937 | $ 11,357 |
Commercial & Industrial Business | 10,207 | 12,293 | 15,765 | 14,934 |
Total Gross Profit | $ 16,594 | $ 16,219 | $ 35,702 | $ 26,291 |
SCHEDULE 3 | ||
COMVERGE, INC. | ||
CONSOLIDATED BALANCE SHEETS | ||
(In thousands) | ||
September 30, 2011 |
December 31, 2010 | |
(unaudited) | ||
Assets | ||
Cash and cash equivalents | $ 25,505 | $ 7,800 |
Restricted cash | 4,755 | 1,736 |
Marketable securities | - | 27,792 |
Billed accounts receivable, net | 18,709 | 14,433 |
Unbilled accounts receivable | 16,691 | 17,992 |
Inventory, net | 9,968 | 9,181 |
Deferred costs | 4,871 | 1,712 |
Other current assets | 1,251 | 2,056 |
Total current assets | 81,750 | 82,702 |
Restricted cash | 719 | 3,733 |
Property and equipment, net | 26,460 | 22,480 |
Intangible assets, net | 3,570 | 3,816 |
Goodwill | 499 | 499 |
Other assets | 464 | 927 |
Total assets | $ 113,462 | $ 114,157 |
Liabilities and Shareholders' Equity | ||
Accounts payable | $ 3,131 | $ 8,455 |
Accrued expenses | 27,808 | 17,375 |
Deferred revenue | 14,040 | 5,821 |
Current portion of long-term debt | 3,000 | 3,000 |
Other current liabilities | 8,282 | 7,962 |
Total current liabilities | 56,261 | 42,613 |
Deferred revenue | 421 | 1,662 |
Long-term debt | 24,000 | 21,750 |
Other liabilities | 1,659 | 2,074 |
Total long-term liabilities | 26,080 | 25,486 |
Common stock | 25 | 25 |
Additional paid-in capital | 265,101 | 262,226 |
Treasury stock | (325) | (257) |
Accumulated deficit | (233,654) | (215,947) |
Accumulated other comprehensive income (loss) | (26) | 11 |
Total shareholders' equity | 31,121 | 46,058 |
Total liabilities and shareholders' equity | $ 113,462 | $ 114,157 |
SCHEDULE 4 | ||||
COMVERGE, INC. | ||||
STATEMENTS OF CASH FLOWS | ||||
(In thousands) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||
2011 | 2010 | 2011 | 2010 | |
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |
Cash flows from operating activities | ||||
Net loss | $ (875) | $ (1,380) | $ (17,707) | $ (21,912) |
Adjustments to reconcile net loss to net cash from operating activities: | ||||
Depreciation | 718 | 390 | 1,821 | 966 |
Amortization of intangible assets and capitalized software | 448 | 709 | 1,268 | 2,121 |
Stock-based compensation | 605 | 1,010 | 2,763 | 2,335 |
Other | 304 | 521 | 1,232 | 1,022 |
Changes in operating assets and liabilities | 3,464 | (909) | 7,493 | 5,565 |
Net cash provided by (used in) operating activities | 4,664 | 341 | (3,130) | (9,903) |
Cash flows from investing activities | ||||
Change in restricted cash | (1,120) | (852) | (5) | 362 |
Maturities/sales of marketable securities, net | - | 3,259 | 27,724 | 12,314 |
Purchases of property and equipment | (3,150) | (1,849) | (9,152) | (5,765) |
Net cash provided by (used in) investing activities | (4,270) | 558 | 18,567 | 6,911 |
Cash flows from financing activities | ||||
Borrowings (repayment) of debt facility, net | 3,750 | (750) | 2,250 | (2,250) |
Other | (18) | (185) | 44 | (431) |
Net cash provided by (used in) financing activities | 3,732 | (935) | 2,294 | (2,681) |
Effect of exchange rate changes on cash and cash equivalents | (26) | - | (26) | - |
Net change in cash and cash equivalents | 4,100 | (36) | 17,705 | (5,673) |
Cash and cash equivalents at beginning of period | 21,405 | 10,432 | 7,800 | 16,069 |
Cash and cash equivalents at end of period | $ 25,505 | $ 10,396 | $ 25,505 | $ 10,396 |
For Schedules 5 and 6, see footnote (1) Reconciliation of Non-GAAP Financial Measures to comparable U.S. GAAP measures which follows Schedule 6.
SCHEDULE 5 | ||||
COMVERGE, INC. | ||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO THE MOST | ||||
DIRECTLY COMPARABLE GAAP FINANCIAL MEASURE | ||||
(In thousands) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||
2011 | 2010 | 2011 | 2010 | |
Net loss | $ (875) | $ (1,380) | $ (17,707) | $ (21,912) |
Depreciation and amortization | 1,166 | 1,099 | 3,089 | 3,087 |
Interest expense, net | 711 | 235 | 2,300 | 592 |
Provision for income taxes | 18 | 55 | 51 | 170 |
EBITDA | 1,020 | 9 | (12,267) | (18,063) |
Non-cash stock compensation expense | 605 | 1,010 | 2,763 | 2,335 |
Adjusted EBITDA | $ 1,625 | $ 1,019 | $ (9,504) | $ (15,728) |
SCHEDULE 6 | ||||
COMVERGE, INC. | ||||
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO THE MOST | ||||
DIRECTLY COMPARABLE GAAP FINANCIAL MEASURE | ||||
(In thousands) | ||||
Three Months Ended September 30, |
Nine Months Ended September 30, | |||
2011 | 2010 | 2011 | 2010 | |
Net loss | $ (875) | $ (1,380) | $ (17,707) | $ (21,912) |
Non-cash stock compensation expense | 605 | 1,010 | 2,763 | 2,335 |
Amortization of intangible assets from acquisitions | 103 | 532 | 570 | 1,596 |
Change in acquisition-related deferred income taxes | 7 | 55 | 28 | 170 |
Non-GAAP net income (loss) | $ (160) | $ 217 | $ (14,346) | $ (17,811) |
Net loss per share (basic and diluted) | $ (0.04) | $ (0.06) | $ (0.71) | $ (0.89) |
Non-cash stock compensation expense | 0.02 | 0.05 | 0.11 | 0.10 |
Amortization of intangible assets from acquisitions | - | 0.02 | 0.02 | 0.06 |
Change in acquisition-related deferred income taxes | - | - | - | 0.01 |
Non-GAAP net income (loss) per share (basic and diluted) | $ (0.01) | $ 0.01 | $ (0.58) | $ (0.72) |
Weighted average shares used in computation (basic) | 24,914,085 | 24,718,710 | 24,861,031 | 24,638,815 |
Weighted average shares used in computation (diluted) | 24,914,085 | 25,047,449 | 24,861,031 | 24,638,815 |
(1) Reconciliation of Non-GAAP Financial Measures to Comparable U.S. GAAP Measures
Pursuant to the requirements of Regulation G, the Company has provided a reconciliation of each non-GAAP financial measure used in this earnings release and related conference call or webcast to the most directly comparable financial measure prepared in accordance with accounting principles generally accepted in the United States ("GAAP"). The reconciliation for historic non-GAAP measures is provided herein on a quantitative basis.
The non-GAAP measures used in this earnings release and related conference call differ from GAAP in that they exclude certain expenses required by GAAP, such as depreciation, amortization, interest expense and stock-based compensation. The Company's basis for these adjustments is described below. Management uses these non-GAAP measures for internal reporting and forecasting purposes. The Company has provided these non-GAAP financial measures in addition to GAAP financial results because it believes that these non-GAAP financial measures provide useful information to certain investors and financial analysts for comparison across accounting periods not influenced by certain non-cash items that are not used by management when evaluating the Company's historical and prospective financial performance.
Management uses these non-GAAP financial measures when evaluating the Company's operating performance and believes that such measures are useful to investors and financial analysts in assessing the Company's operating performance due to the following factors:
-
EBITDA is a common alternative measure of performance used
by investors, financial analysts and rating agencies to
assess operating performance for companies in our industry.
Depreciation is a necessary element of our costs and our
ability to generate revenue. We do not believe that this
expense is indicative of our core operating performance
because the depreciable lives of assets vary greatly
depending on the maturity terms of our VPC contracts. The
clean energy sector has experienced recent trends of
increased growth and new company development, which have
led to significant variations among companies with respect
to capital structures and cost of capital, which affect
interest expense. Management views interest expense as a
by-product of capital structure decisions and, therefore,
it is not indicative of our core operating performance.
-
We define Adjusted EBITDA as EBITDA before stock-based
compensation expense. Management does not believe that
stock-based compensation is indicative of our core
operating performance because stock-based compensation is
the result of stock-based incentive awards which require a
non-cash expense to be recorded in the financial
statements. Management uses EBITDA and Adjusted EBITDA as
part of internal reporting and forecasting and believes it
is helpful in analyzing operating results.
-
We believe that the presentation of non-GAAP net loss,
which is a measure that adjusts for the impact of
stock-based compensation expense and amortization expense
for acquisition-related assets, provides investors and
financial analysts with a consistent basis for comparison
across accounting periods and, therefore, is useful to
investors and financial analysts in helping them to better
understand the Company's operating results and
underlying operational trends.
-
Although stock-based compensation is an important aspect of
the compensation of our employees and executives,
stock-based compensation expense is generally fixed at the
time of grant, then amortized over a period of several
years after the grant of the stock-based award, and
generally cannot be changed or influenced by management
after the grant.
- We do not acquire intangible assets on a predictable cycle. Amortization costs are fixed at the time of an acquisition, are then amortized over a period of several years after the acquisition, and in some cases, the remaining value of acquired intangibles and goodwill is decreased due to impairment charges. In addition to amortization expense, the Company records tax expense related to tax deductible goodwill, arising from certain prior acquisitions. These expenses generally cannot be changed or influenced by management after the acquisition.
These non-GAAP financial measures are not prepared in accordance with GAAP. 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. There are significant limitations associated with the use of non-GAAP financial measures. The additional 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 (such as net loss and net loss per share) and should not be considered measures of the Company's liquidity.
CONTACT: Investor Relations Jason Cigarran VP, Marketing and Investor Relations 678-823-6784, invest@comverge.comSource: Comverge, Inc.
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