ENOC

EnerNOC, Inc. (ENOC)

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EnerNOC Inc. (ENOC)

Q3 2008 Earnings Call

November 10, 2008 5:00 pm ET

Executives

Will Lyons - Investor Relations Manager

Tim Healy - Chairman and Chief Executive Officer

David Brewster - President

Neal Isaacson - Chief Financial Officer

Analysts

Mark Siegel - Canaccord Adams

Michael Horwitz - Stanford Group

Jeff Osborne - Thomas Weisel Partners

Michael Carboy - Signal Hill

Richard Baxter - Ardour Capital

[Brian Sterling] - JMP Securities

Jonathan Hoopes - ThinkEquity

Benjamin - Pacific Crest Securities

Presentation

Operator

Good day, everyone and welcome to the EnerNOC Third Quarter 2008 Earnings Conference Call. Today’s conference is being recorded.

At this time, I would like to turn the call over to Mr. Will Lyons, Investor Relations Manager. Please go ahead, sir.

Will Lyons - Investor Relations Manager

Thanks Jamie. Good afternoon and thank you for joining EnerNOC’s third quarter 2008 investor conference call. Speaking today will be Tim Healy, EnerNOC’s Chairman and Chief Executive Officer; David Brewster, EnerNOC’s President; and Neal Isaacson, EnerNOC’s Chief Financial Officer.

I’d like to remind everyone that today’s presentation contains estimates and other statements relating to the future financial performance and the future growth of the company’s demand response and energy management solutions, including statements regarding the company’s ability to continue and capture market share and grow its business in terms of megawatts under management, revenues, and gross margins that may constitute forward-looking statements under the Private Securities Litigation Reform Act of 1995.

These statements are based on current expectations and assumptions that are subject to both risks and uncertainties, and involve a number of factors that may cause actual results to differ materially from those indicated by these forward-looking statements.

Additional information concerning these factors can be found under risk factors in EnerNOC’s Annual Report on Form 10-K for the year ended December 31, 2007 and Quarterly Reports on Form 10-Q as filed with the SEC on May 30, 2008 and August 30, 2008 respectively. As well as other documents that may be filed by EnerNOC from time to time with the SEC. Please refer to our SEC filings, for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website.

Though we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change, and therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today.

And now, I’ll turn over the call to Tim Healy.

Tim Healy - Chairman and Chief Executive Officer

Thank you, Will. Good afternoon everyone, and thank you for joining us. During 2008, we have been building steadily upon our industry leadership position, making targeted, disciplined, strategic investments to capture additional market share and further differentiate our suite of energy cost saving solutions.

In both our core demand and response business and their other value added energy management solutions, we’re continuing to experience healthy, consistent growth geographically across an expanding and increasingly diverse customer network. Of today’s economic environment undoubtedly presents challenges for most businesses. We believe that we have several unique features that will help us continue to grow in the months and years ahead. I’d like to point out three of these distinct features to start this call.

The first feature to keep in mind, about EnerNOC is this, our business involves timely energy cost savings for our commercial, institutional and industrial clients without the need for these clients to make direct expense outlays to achieve those savings. And in the midst of today’s challenging economic times, cost cutting measures across the variety of businesses and organizations are getting significant management attention. Many of these organizations may no longer have the same access to capital resources as they once did, making our solutions particularly attractive. Our demand response solutions reduce energy costs and generate cash flow for the businesses and institutions in our growing network, without them having to incur upfront or ongoing capital expenditures.

The second feature of note; is that the vast majority of our revenues come from utilities and grid operators, which are generally regarded as a strong, stable, credit worthy set of entities. In general, both types of organizations operate under long-term planning cycles more so than most businesses do. In part, due to the relatively long-time horizon required to plan, sight, permit, construct and commission new generation transmission and distribution infrastructure.

So, what does that means for EnerNOC? Let’s think about our grid operated customer. Many of whom who have already carried out the capacity procurement activities for the next several years. We participated in various forward capacity auctions that they conducted. And, we were awarded capacity amounts in excess of the amounts we currently manage in these markets. As a result we now have attractive multi-year opportunities akin to hunting license so to speak in these major markets.

As we fill these allocations, we get paid at fixed, known rates that increase over the next couple of years. Accordingly, we believe that we can expect some of our most attractive growth opportunities to the current regions where we already have important operating and sales experience.

Let’s next consider our utility customer base; most utility projects require large amounts of capital spending and take several years to build making it difficult to slowdown or eliminate planned capital projects without knowing the duration or severity of an economic slowdown or its affect on demand growth. In these situations, we believe that demand response can provide some unique value. In uncertain markets utilities can hedge their bets by turning to demand response to get quick, efficient clean capacity, allowing them to differ some of their capital spending on large infrastructure projects should they elect to do so.

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