Exhibit 99.1
POWERSECURE REPORTS THIRD QUARTER 2013 RESULTS
—Record revenues of $81.5 million reflect 84 percent growth y-o-y—
—225 percent y-o-y growth in energy efficiency revenues—
—72 percent y-o-y growth in utility infrastructure revenues—
—62 percent y-o-y growth in distributed generation revenues—
—55 percent y-o-y organic revenue growth—
—37 percent y-o-y growth in backlog to $240 million—
Wake Forest, N.C. – November 6, 2013 – PowerSecure International, Inc. (NYSE: POWR) today reported its third quarter 2013 results. Highlights include:
| | • | | Revenues increase 84.3 percent y-o-y to $81.5 million |
| | • | | Operating margin expands 6.2 percentage points y-o-y to 7.3 percent |
| | • | | Operating margin expands 2.7 percentage points y-o-y on non-GAAP basis (see non- |
| | • | | GAAP discussion and reconciliation, below) |
| | • | | EPS increases by $0.14 y-o-y from $0.03 to $0.17 |
| | • | | EPS increases by $0.09 y-o-y from $0.08 to $0.17 on non-GAAP basis (see non-GAAP discussion and reconciliation, below) |
| | • | | Adjusted EBITDA increases 122 percent y-o-y to $8.0 million (see non-GAAP discussion and reconciliation below) |
“We saw strong top and bottom line growth across our business in the 3rd quarter as our robust organic growth was enhanced by our successful acquisitions, and we continue to execute in delivering best-in-class solutions and service to customers,” said Sidney Hinton, chief executive officer of PowerSecure.
“Our record revenues and further operating margin expansion highlight our execution and, combined with our strong revenue backlog of $240 million, provide us with confidence that PowerSecure is exceptionally positioned for continued success,” Hinton added.
Third Quarter 2013:
PowerSecure’s third quarter 2013 (3Q 2013) revenues of $81.5 million increased $37.3 million, or 84.3 percent, over revenues in the third quarter of 2012 (3Q 2012). This increase was driven by a 62.2 percent year-over-year (y-o-y) increase in revenues from distributed generation products, a 72.1 percent y-o-y increase in revenues from utility infrastructure products and services, and a 225 percent y-o-y increase in revenues from energy efficiency products and services.
In total, $24.5 million of the y-o-y revenue growth was organic growth from our existing operations, representing a 55 percent increase, and the remaining $12.7 million of the y-o-y revenue growth was related to our recently acquired Solais and ESCO operations (for which no revenues were recognized in the prior year period).
| | | | | | | | | | | | | | | | |
| | | | | | | | | Variance | |
| ($ in 000’s) | | 3Q13 | | | 3Q12 | | | $ | | | % | |
Revenue by Product/Service | | | | | | | | | | | | | | | | |
Distributed Generation | | | 40,648 | | | | 25,060 | | | | 15,588 | | | | 62.2 | % |
Utility Infrastructure | | | 24,166 | | | | 14,038 | | | | 10,128 | | | | 72.1 | % |
Energy Efficiency | | | 16,696 | | | | 5,138 | | | | 11,558 | | | | 225.0 | % |
| | | | | | | | | | | | | | | | |
Total Revenue | | | 81,510 | | | | 44,236 | | | | 37,274 | | | | 84.3 | % |
Gross margin as a percentage of revenue was 26.3 percent in 3Q 2013 compared to 31.4 percent in 3Q 2012. The y-o-y gross margin decrease was due to the growth of our utility infrastructure, solar, and ESCO revenues in 3Q 2013, which are generally our lowest gross margin product and service categories. In addition, we realized inefficiencies in our utility infrastructure unit related to the advanced deployment of crews in anticipation of being selected for a significant long-term revenue opportunity with a major new utility partner. We anticipate some continued inefficiencies from these excess crews to negatively impact our gross margins during the fourth quarter of 2013 and the first quarter of 2014. A separate press release announcing our selection for this opportunity was issued today in conjunction with this earnings release.
Non-GAAP financial measures for 3Q 2012 exclude a $1.5 million pre-tax charge related to a Restructuring and Cost Reduction Plan that was initiated during 3Q 2012, to position the company for enhanced operating margins in future periods (see non-GAAP discussion and reconciliation).
Operating expenses for 3Q 2013 as a percentage of our revenues were 19.0 percent, a decrease of 11.2 percentage points on a GAAP basis compared to 30.3 percent in 3Q 2012, and a decrease of 7.8 percentage points excluding the $1.5 million 3Q 2012 charge, as the company leveraged operating expenses against a greater level of revenues.
Operating expenses for 3Q 2013 were $15.5 million, compared to $13.4 million in 3Q 2012. Excluding the $1.5 million charge in 3Q 2012, operating expenses in 3Q 2012 were $11.8 million. The $3.7 million y-o-y increase in operating expenses consists primarily of $2.8 million of incremental operating expenses in 3Q 2013 related to our recent ESCO and Solais acquisitions. The remaining y-o-y increase in our operating expenses is primarily due to an increase in selling expenses related to our significantly higher revenues and backlog, depreciation from our investments in company-owned distributed generation systems and utility infrastructure equipment, and increases in personnel and equipment to drive and support our growth.
Operating margin as a percentage of revenue increased 6.2 percentage points to 7.3 percent in 3Q 2013 from 1.1 percent in 3Q 2012. Excluding the 3Q 2012 charge, operating margin increased 2.7 percentage points. The increase in operating margin was a result of the significant revenue growth achieved with substantially lower growth in operating expenses.
Our recent acquisitions have provided additional opportunities to restructure and realign our operations to increase operating margins in our energy efficiency product and service lines in particular, as well as other cost reduction opportunities. This includes manufacturing and sourcing synergies that our Solais acquisition is expected to bring to our existing LED lighting operations, and other cost reduction opportunities. In contemplation of these opportunities, we commenced developing plans to integrate and streamline the operations and product offerings within our energy efficiency product area primarily, and to a lesser extent other areas of the company. Our intention is to eliminate certain duplicative facilities, re-source certain of our energy efficiency inventory suppliers, reduce the number of energy efficiency product offerings, and reduce personnel levels. We currently expect that this restructuring will result in a total charge of between $4 million and $6 million during the fourth quarter 2013 and the first quarter of 2014. In addition, these actions may result in additional charges related to goodwill or intangible impairment, the amount of which, if any, is not determinable at this time.
Diluted GAAP earnings per share (EPS) from continuing operations increased to $0.17 in 3Q 2013, compared to $0.03 in 3Q 2012. Non-GAAP EPS from continuing operations increased to $0.17 in 3Q 2013, compared to $0.08 in 3Q 2012.
The company completed the third quarter of 2013 with $54.1 million in cash and cash equivalents, zero drawn on its $20 million revolving credit facility and $26.2 million of term debt outstanding.
The company’s capital expenditures during Q3 2013 were $0.9 million, with $0.6 million of this capital invested to deploy systems to support PowerSecure-owned long-term recurring revenue distributed generation projects, and the remaining $0.3 million primarily invested in the purchase of equipment for its growing utility infrastructure business.
The company’s revenue backlog stands at $240 million, as of the date of this release. This includes new business from awards announced on September 19, 2013 and October 2, 2013, and an additional $17 million of new business the company has been awarded since October 2, 2013. The company’s revenue backlog represents revenue expected to be recognized after September 30, 2013, for periods including the fourth quarter of 2013 onward.
This backlog figure compares to the revenue backlog of $245 million announced in the company’s second quarter 2013 earnings release issued on August 7, 2013, which represented revenue expected to be recognized after June 30, 2013, and $175 in revenue backlog announced in the company’s 3Q 2012 earnings release issued on November 7, 2012.
The company’s $240 million revenue backlog and the estimated timing of revenue recognition are outlined below, including “project-based revenues” expected to be recognized as projects are completed, and “recurring revenues” expected to be recognized over the life of the underlying contracts:
Revenue Backlog expected to be recognized after September 30, 2013
| | | | | | | | |
| | | Anticipated | | | Estimated Primary | |
Description | | Revenue | | | Recognition Period | |
Project-based Revenue — Near term | | $ | 116 million | | | | 4Q13 through 2Q14 | |
Project-based Revenue — Long term | | $ | 48 million | | | | 3Q14 through 2016 | |
Recurring Revenue | | $ | 76 million | | | | 4Q13 through 2020 | |
| | | | | | | | |
Revenue Backlog expected to be recognized after September 30, 2013 | | $ | 240 million | | | | | |
Note: Anticipated revenue and estimated primary recognition periods are subject to risks and uncertanities as indicated in the Company’s safe harbor statement, below. Consistent with past practice, these figures are not intended to constitute the Company’s total revenue over the indicated time periods, as the Company has additional, regular on-going revenues. Examples of additional, regular recurring revenues include revenues from engineering fees, and service revenue, among others. Numbers may not add due to rounding.
Orders in the company’s revenue backlog are subject to delay, deferral, acceleration, resizing or cancellation from time to time, and estimates are utilized in the determination of the backlog amounts. Given the irregular sales cycle of customer orders, and especially of large orders, the revenue backlog at any given time is not necessarily an accurate indication of our future revenues.
Conference Call Information
The company will host a conference call commencing today at 8:30 a.m. Eastern time. The conference call will be webcast live and can be accessed from the Investor Relations section of the company’s website athttp://www.powersecure.com.
The call can also be accessed by dialing 888-713-4217 (or 617-213-4869 if dialing internationally) and providing pass code 26350745. If you are unable to participate during the live webcast, a replay of the conference call will be available approximately two hours after the completion of the call through midnight on November 20, 2013. To listen to the replay, dial 888-286-8010 (or 617-801-6888 if dialing internationally), and enter passcode 68896264. In addition, the webcast will be archived on the company’s website.
About PowerSecure
PowerSecure International, Inc. is a leading provider of utility and energy technologies to electric utilities, and their industrial, institutional and commercial customers. PowerSecure provides products and services in the areas of Interactive Distributed Generation® (IDG®), energy efficiency and utility infrastructure. The company is a pioneer in developing IDG® power systems with sophisticated smart grid capabilities, including the ability to 1) forecast electricity demand and electronically deploy the systems to deliver more efficient, and environmentally friendly, power at peak power times, 2) provide utilities with dedicated electric power generation capacity to utilize for demand response purposes and 3) provide customers with the most dependable standby power in the industry. Its proprietary distributed generation system designs utilize a range of technologies to deliver power, including renewables. The company’s energy efficiency business develops energy efficient lighting technologies that improve the quality of light, including its proprietary EfficientLights® LED lighting products for grocery, drug and convenience stores, and its SecureLite area light and PowerLite street lights for utilities and municipalities.
PowerSecure also provides electric utilities with transmission and distribution infrastructure maintenance and construction services, and engineering and regulatory consulting services. Additional information is available atwww.powersecure.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements other than statements of historical facts, including but not limited to statements concerning the outlook for the company’s future revenues, earnings, margins, cash resources and cash flow and other financial and operating information and data; the company’s future business operations, strategies and prospects; the company’s cost reduction plan; and all other statements concerning the plans, intentions, expectations, projections, hopes, beliefs, objectives, goals and strategies of management, including statements about other future financial and non-financial items, performance or events and about present and future products, services, technologies and businesses; and statements of assumptions underlying the foregoing.
Forward-looking statements are not guarantees of future performance or events and are subject to a number of known and unknown risks, uncertainties and other factors that are difficult to predict and could cause actual results to differ materially from those expressed, projected or implied by such forward-looking statements. Important risks, uncertainties and other factors include, but are not limited to, the on-going volatility in the economy, financial markets and business markets and impact of fiscal and budgetary deadlines, and the effects thereof on the company’s markets and customers, the demand for its products and services, and the company’s access to capital; the size, timing and terms of sales and orders, including the company’s revenue backlog discussed in this press release, and the risk of customers delaying, deferring or canceling purchase orders or making smaller purchases than expected; the potential adverse financial and reputational consequences that can result from safety risks and hazards such as accidents inherent in the company’s operations; the impact of the company’s recent acquisitions of the ESCO, Solais and Encari businesses; the company’s ability to reduce and control its costs and expenses; the timely and successful development, production and market acceptance of new and enhanced products, services and technologies of the company; the ability of the company to obtain adequate supplies of key components and materials of sufficient reliability and quality for its products and technologies on a timely and cost-effective basis and the effects of related warranty claims and disputes; the ability of the company to successfully expand its core distributed generation products and services, to successfully develop and achieve market acceptance of its new energy-related businesses, to successfully expand its recurring revenue projects, to manage its growth and to address the effects of any future changes in utility tariff structures and environmental requirements on its business solutions; the effects of competition; changes in customer and industry demand and preferences; the ability of the company to continue the growth and diversification of its customer base; the ability of the company to attract, retain, and motivate its executives and key personnel; changes in the energy industry in general and the electricity, oil, and natural gas markets in particular, including price levels; the effects of competition; the ability of the company to secure and maintain key contracts and relationships; the effects of pending and future litigation, claims and disputes; and other risks, uncertainties and other factors identified from time to time in its reports filed with or furnished to the Securities and Exchange Commission, including the company’s most recent Annual Report on Form 10-K, as well as subsequently filed reports on Form 10-Q and Form 8-K, copies of which may be obtained by visiting the investor relations page of the company’s website atwww.powersecure.com or the SEC’s website atwww.sec.gov.
Accordingly, there is no assurance that the results expressed, projected or implied by any forward-looking statements will be achieved, and readers are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements in this press release speak only as of the date hereof and are based on the current plans, goals, objectives, strategies, intentions, expectations and assumptions of, and the information currently available to, management. The company assumes no duty or obligation to update or revise any forward-looking statements for any reason, whether as the result of changes in expectations, new information, future events, conditions or circumstances or otherwise.
Contact:
John Bluth
PowerSecure International, Inc.
(919) 453-2103
PowerSecure International, Inc.
Consolidated Statements of Income (unaudited)
($000’s except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | Sept 30, | | | Sept 30, | | | Sept 30, | | | Sept 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Revenue | | | 81,510 | | | | 44,236 | | | | 196,654 | | | | 115,288 | |
Cost of sales | | | 60,060 | | | | 30,360 | | | | 141,581 | | | | 79,653 | |
| | | | | | | | | | | | | | | | |
Gross Profit (excluding depreciation and amortization) | | | 21,450 | | | | 13,876 | | | | 55,073 | | | | 35,635 | |
| | | | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | | | | |
General and administrative | | | 11,511 | | | | 9,012 | | | | 33,854 | | | | 26,750 | |
Selling, marketing, and service | | | 2,073 | | | | 1,615 | | | | 5,563 | | | | 4,039 | |
Depreciation and amortization | | | 1,925 | | | | 1,211 | | | | 5,190 | | | | 3,432 | |
Restructuring and cost reduction charges | | | 0 | | | | 1,548 | | | | 0 | | | | 1,548 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 15,509 | | | | 13,386 | | | | 44,607 | | | | 35,769 | |
| | | | | | | | | | | | | | | | |
Operating income (loss) | | | 5,941 | | | | 490 | | | | 10,466 | | | | (134 | ) |
Other income (expense) | | | | | | | | | | | | | | | | |
Gain on sale of unconsolidated affiliate | | | 0 | | | | 0 | | | | 0 | | | | 1,439 | |
Interest income and other income | | | 21 | | | | 22 | | | | 61 | | | | 67 | |
Interest expense | | | (262 | ) | | | (114 | ) | | | (497 | ) | | | (338 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) before income taxes | | | 5,700 | | | | 398 | | | | 10,030 | | | | 1,034 | |
Income tax expense (benefit) | | | 2,227 | | | | 119 | | | | 3,906 | | | | 347 | |
| | | | | | | | | | | | | | | | |
Net income (loss) from continuing operations | | | 3,473 | | | | 279 | | | | 6,124 | | | | 687 | |
Discontinued operations—income (loss) from operations (net of tax) | | | 0 | | | | 11 | | | | 0 | | | | 78 | |
Discontinued operations—gain on sale (net of tax) | | | 0 | | | | 0 | | | | 0 | | | | 0 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | | 3,473 | | | | 290 | | | | 6,124 | | | | 765 | |
Net loss attributable to noncontrolling interest | | | 0 | | | | 192 | | | | 181 | | | | 757 | |
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to PowerSecure International, Inc. | | | 3,473 | | | | 482 | | | | 6,305 | | | | 1,522 | |
| | | | | | | | | | | | | | | | |
Summary of Amounts Attributable to PowerSecure International, Inc. shareholders | | | | | | | | | | | | | | | | |
Income (loss) from continuing operations (net of tax) | | | 3,473 | | | | 471 | | | | 6,305 | | | | 1,444 | |
Income (loss) from discontinued operations (net of tax) | | | 0 | | | | 11 | | | | 0 | | | | 78 | |
| | | | | | | | | | | | | | | | |
Net income (loss) attributable to PowerSecure International, Inc. | | | 3,473 | | | | 482 | | | | 6,305 | | | | 1,522 | |
| | | | | | | | | | | | | | | | |
EARNINGS PER SHARE AMOUNTS (“E.P.S”) ATTRIBUTABLE TO POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS: | | | | | | | | | | | | | | | | |
Continuing Operations | | | | | | | | | | | | | | | | |
Basic | | | 0.17 | | | | 0.03 | | | | 0.33 | | | | 0.08 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 0.17 | | | | 0.03 | | | | 0.32 | | | | 0.08 | |
| | | | | | | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | | | | | | | |
Basic | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 0.00 | | | | 0.00 | | | | 0.00 | | | | 0.00 | |
| | | | | | | | | | | | | | | | |
Net Income | | | | | | | | | | | | | | | | |
Basic | | | 0.17 | | | | 0.03 | | | | 0.33 | | | | 0.08 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 0.17 | | | | 0.03 | | | | 0.32 | | | | 0.08 | |
| | | | | | | | | | | | | | | | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | | | | | | | | | |
Basic | | | 20,325 | | | | 18,676 | | | | 19,205 | | | | 18,807 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 20,654 | | | | 18,793 | | | | 19,528 | | | | 18,925 | |
| | | | | | | | | | | | | | | | |
PowerSecure International, Inc.
Condensed Consolidated Balance Sheets (unaudited)
($000’s)
| | | | | | | | |
| | | Sept 30, | | | December 31, | |
| | | 2013 | | | 2012 | |
ASSETS | | | | | | | | |
CURRENT ASSETS: | | | | | | | | |
Cash and cash equivalents | | | 54,132 | | | | 19,122 | |
Trade receivables, net of allowance for doubtful accounts | | | 79,997 | | | | 57,147 | |
Inventories | | | 25,741 | | | | 20,327 | |
Income taxes receivable | | | 0 | | | | 592 | |
Deferred tax asset, net | | | 803 | | | | 803 | |
Prepaid expenses and other current assets | | | 1,703 | | | | 1,285 | |
| | | | | | | | |
Total current assets | | | 162,376 | | | | 99,276 | |
| | | | | | | | |
PROPERTY, PLANT, AND EQUIPMENT: | | | | | | | | |
Equipment | | | 53,339 | | | | 48,447 | |
Furniture and fixtures | | | 530 | | | | 375 | |
Land, building, and improvements | | | 6,021 | | | | 5,907 | |
| | | | | | | | |
Total property, plant, and equipment at cost | | | 59,890 | | | | 54,729 | |
Less accumulated depreciation and amortization | | | 16,436 | | | | 12,152 | |
| | | | | | | | |
Property, plant, and equipment, net | | | 43,454 | | | | 42,577 | |
| | | | | | | | |
OTHER ASSETS: | | | | | | | | |
Goodwill | | | 28,162 | | | | 12,884 | |
Restricted annuity contract | | | 2,502 | | | | 2,447 | |
Intangible rights and capitalized software, net of accum amort | | | 6,567 | | | | 1,328 | |
Deferred tax asset, net | | | 43 | | | | 0 | |
Other assets | | | 1,195 | | | | 635 | |
| | | | | | | | |
Total other assets | | | 38,469 | | | | 17,294 | |
| | | | | | | | |
TOTAL ASSETS | | | 244,299 | | | | 159,147 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
CURRENT LIABILITIES: | | | | | | | | |
Accounts payable | | | 24,095 | | | | 14,150 | |
Accrued and other liabilities | | | 23,783 | | | | 23,887 | |
Accrued restructuring and cost reduction liabilities | | | 265 | | | | 709 | |
Income taxes payable | | | 2,890 | | | | 0 | |
Current unrecognized tax benefit | | | 247 | | | | 242 | |
Current portion of long-term debt | | | 3,731 | | | | 160 | |
Current portion of capital lease obligation | | | 922 | | | | 886 | |
| | | | | | | | |
Total current liabilities | | | 55,933 | | | | 40,034 | |
| | | | | | | | |
LONG-TERM LIABILITIES: | | | | | | | | |
Revolving Line of Credit | | | 0 | | | | 0 | |
Long-term debt, net of current portion | | | 22,496 | | | | 2,080 | |
Capital lease obligation, net of current portion | | | 1,225 | | | | 1,921 | |
Deferred tax liability, net | | | 0 | | | | 955 | |
Unrecognized tax benefit | | | 647 | | | | 640 | |
Other long-term liabilities | | | 2,938 | | | | 2,518 | |
| | | | | | | | |
Total long-term liabilities | | | 27,306 | | | | 8,114 | |
| | | | | | | | |
STOCKHOLDERS’ EQUITY: | | | | | | | | |
Preferred stock—undesignated | | | 0 | | | | 0 | |
Preferred stock—Series C | | | 0 | | | | 0 | |
Common stock | | | 216 | | | | 182 | |
Additional paid-in-capital | | | 157,057 | | | | 112,738 | |
Accumulated other comprehensive earnings (loss) | | | (157 | ) | | | 0 | |
Retained earnings (deficit) | | | 3,944 | | | | (2,361 | ) |
| | | | | | | | |
Total PowerSecure International, Inc. stockholders’ equity | | | 161,060 | | | | 110,559 | |
Noncontrolling Interest | | | 0 | | | | 440 | |
| | | | | | | | |
Total stockholders’ equity | | | 161,060 | | | | 110,999 | |
| | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | | | 244,299 | | | | 159,147 | |
| | | | | | | | |
PowerSecure International, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
($000’s)
| | | | | | | | |
| | | Nine Months Ended | |
| | | Sept 30,
2013 | | | Sept 30,
2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | | | | | | | | |
Net income (loss) | | | 6,124 | | | | 765 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | | | | | | |
Gain on sale of unconsolidated affiliate | | | 0 | | | | (1,439 | ) |
Income from discontinued operations | | | 0 | | | | (78 | ) |
Depreciation and amortization | | | 5,190 | | | | 3,432 | |
Stock compensation expense | | | 438 | | | | 755 | |
Loss on disposal of miscellaneous assets | | | (21 | ) | | | 68 | |
Changes in operating assets and liabilities, net of effect of acquisitions: | | | | | | | | |
Trade receivables, net | | | (16,496 | ) | | | 900 | |
Inventories | | | (4,607 | ) | | | (903 | ) |
Other current assets and liabilities | | | 3,129 | | | | 659 | |
Other noncurrent assets and liabilities | | | (446 | ) | | | (302 | ) |
Accounts payable | | | 8,022 | | | | 2,125 | |
Accrued and other liabilities | | | (9,967 | ) | | | (1,884 | ) |
Accrued restructuring and cost reduction liabilities | | | (444 | ) | | | 1,318 | |
| | | | | | | | |
Net cash provided by (used in) continuing operations | | | (9,078 | ) | | | 5,416 | |
Net cash provided by (used in) discontinued operations | | | 0 | | | | 334 | |
| | | | | | | | |
Net cash provided by (used in) operating activities | | | (9,078 | ) | | | 5,750 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | | | | | | |
Acquisitions, net of cash acquired | | | (9,542 | ) | | | (3,523 | ) |
Purchases of property, plant and equipment | | | (4,744 | ) | | | (4,367 | ) |
Additions to intangible rights and software development | | | (469 | ) | | | (267 | ) |
Proceeds from sale of property, plant and equipment | | | 158 | | | | 15 | |
Proceeds from sale of unconsolidated affiliate | | | 0 | | | | 1,445 | |
| | | | | | | | |
Net cash provided by (used in) investing activities | | | (14,597 | ) | | | (6,697 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | | | | | | |
Net proceeds from stock offering | | | 34,447 | | | | 0 | |
Net borrowings (payments) on revolving line of credit | | | 0 | | | | 0 | |
Proceeds from long-term borrowings | | | 25,000 | | | | 2,400 | |
Principal payments on long-term debt | | | (1,013 | ) | | | (120 | ) |
Principal payments on capital lease obligations | | | (660 | ) | | | (626 | ) |
Repurchases of common stock | | | (88 | ) | | | (2,786 | ) |
Proceeds from stock option exercises | | | 999 | | | | 23 | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | 58,685 | | | | (1,109 | ) |
| | | | | | | | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | | | 35,010 | | | | (2,056 | ) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | | | 19,122 | | | | 24,606 | |
| | | | | | | | |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | | | 54,132 | | | | 22,550 | |
| | | | | | | | |
Non-GAAP Pro forma Financial Measures Discussion:
Our references to our third quarter 2012 “Non-GAAP Pro forma” financial measures of net income from continuing operations, net income, net income attributable to PowerSecure International, Inc., diluted EPS from continuing operations, diluted EPS from discontinued operations and diluted EPS discussed and shown in this report constitute non-GAAP financial measures. They refer to our GAAP results, adjusted to show the results without the restructuring and cost reduction charge of $1.5 million recorded in the third quarter of 2012.
We believe providing non-GAAP measures which show our pro forma results with these items adjusted is valuable and useful as it allows our management and our board of directors to measure, monitor and evaluate our operating performance with the same consistent financial context. These non-GAAP pro forma measures also correspond with the way we expect Wall Street analysts to compare our results. Our non-GAAP pro forma measures should be considered only as supplements to, and not as substitutes for or in isolation from, our other measures of financial information prepared in accordance with GAAP, such as GAAP revenue, operating income, net income from continuing operations, net income, net income attributable to PowerSecure International, Inc., diluted EPS from continuing operations, diluted EPS from discontinued operations, and diluted EPS.
References to our third quarter and year-to-date 2012 and 2013 Adjusted EBITDA, which we define as our earnings before interest, taxes, depreciation and amortization, as discussed and shown in this release, constitutes a non-GAAP “pro forma” financial measure.
We believe that Adjusted EBITDA, as a non-GAAP pro forma financial measure, provides meaningful information to investors in terms of enhancing their understanding of our operating performance and results, as it allows investors to more easily compare our financial performance on a consistent basis compared to the prior year periods. This non-GAAP financial measure also corresponds with the way we expect investment analysts to evaluate and compare our results. Any non-GAAP pro forma financial measures should be considered only as supplements to, and not as substitutes for or in isolation from, or superior to, our other measures of financial information prepared in accordance with GAAP, such as net income attributable to PowerSecure International, Inc.
We define and calculate Adjusted EBITDA as net income attributable to PowerSecure International, Inc., minus: 1) the gain on the sale of our unconsolidated affiliate, 2) discontinued operations and 3) interest income and other income, plus: 4) restructuring charges, 5) acquisition expenses, 6) income tax expense (or minus an income tax benefit), 7) interest expense, 8) depreciation and amortization and 9) stock compensation expense. We disclose Adjusted EBITDA because we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to Adjusted EBITDA are broadly used by analysts, rating agencies, investors and financial institutions in assessing our performance. Accordingly, we believe that the presentation of Adjusted EBITDA provides useful information to investors. The table below provides a reconciliation of Adjusted EBITDA to net income attributable to PowerSecure International, Inc., the most directly comparable GAAP financial measure.
PowerSecure International, Inc.
Non-GAAP Pro forma Measures
($000’s except per share data, some rounding throughout)
| | | | | | | | | | | | |
| | | Three Months Ended September 30, 2012 | |
| | | As Reported
3Q12 | | | Restructuring
Charges | | | Pro forma
3Q12 | |
Operating expenses | | | | | | | | | | | | |
General and administrative | | | 9,012 | | | | | | | | 9,012 | |
Selling, marketing, and service | | | 1,615 | | | | | | | | 1,615 | |
Depreciation and amortization | | | 1,211 | | | | | | | | 1,211 | |
Restructuring and cost reduction charges | | | 1,548 | | | | (1,548 | ) | | | 0 | |
| | | | | | | | | | | | |
Total operating expenses | | | 13,386 | | | | (1,548 | ) | | | 11,838 | |
Total operating expenses % revenue | | | 30.3 | % | | | | | | | 26.8 | % |
| | | |
Operating income | | | 490 | | | | 1,548 | | | | 2,038 | |
Operating income % revenue | | | 1.1 | % | | | | | | | 4.6 | % |
| | | |
Income (loss) before income taxes | | | 398 | | | | 1,548 | | | | 1,946 | |
Income tax expense (benefit) | | | 119 | | | | 463 | | | | 582 | |
| | | | | | | | | | | | |
Net income (loss) from continuing operations | | | 279 | | | | 1,085 | | | | 1,364 | |
| | | |
EARNINGS PER SHARE AMOUNTS (“E.P.S”) ATTRIBUTABLE TOPOWERSECURE INTERNATIONAL, INC. SHAREHOLDERS: | | | | | | | | | | | | |
Continuing Operations | | | | | | | | | | | | |
Diluted | | | 0.03 | | | | 0.06 | | | | 0.08 | |
| | | |
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | | | | | | | | | | | | |
Diluted | | | 18,793 | | | | 18,793 | | | | 18,793 | |
PowerSecure International, Inc.
Non-GAAP Pro forma Measures
Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, and Charges)
Calculations and Reconciliation
($000’s except per share data, some rounding throughout)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Nine Months Ended | |
| | | Sept 30, | | | Sept 30, | | | Sept 30, | | | Sept 30, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
Adjusted EBITDA Calculation/Reconciliation | | | | | | | | | | | | | | | | |
Net income (loss) attributable to PowerSecure International, Inc. | | | 3,473 | | | | 482 | | | | 6,305 | | | | 1,522 | |
| | | | |
Items to Subtract from Net Income | | | | | | | | | | | | | | | | |
Gain on sale of unconsolidated affiliate | | | 0 | | | | 0 | | | | 0 | | | | (1,439 | ) |
Discontinued operations—income | | | 0 | | | | (11 | ) | | | 0 | | | | (78 | ) |
Interest income and other income | | | (21 | ) | | | (22 | ) | | | (61 | ) | | | (67 | ) |
| | | | |
Items to Add to Net Income | | | | | | | | | | | | | | | | |
Restructuring Charges | | | 0 | | | | 1,548 | | | | 0 | | | | 1,548 | |
Acquisition Expenses | | | 30 | | | | 0 | | | | 560 | | | | 128 | |
Income tax expense (benefit) | | | 2,227 | | | | 119 | | | | 3,906 | | | | 347 | |
Interest expense | | | 262 | | | | 114 | | | | 497 | | | | 338 | |
Depreciation and Amortization | | | 1,925 | | | | 1,211 | | | | 5,190 | | | | 3,432 | |
Stock compensation expense | | | 149 | | | | 179 | | | | 438 | | | | 755 | |
| | | | | | | | | | | | | | | | |
| | | | |
Adjusted EBITDA | | | 8,045 | | | | 3,620 | | | | 16,835 | | | | 6,486 | |
