EnerNOC, Inc. (ENOC)

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EnerNOC, Inc. (ENOC)

Q4 2008 Earnings Call Transcript

February 20, 2009 5:00 pm ET


Will Lyons – IR

Tim Healy – CEO, Chairman, and Co-Founder

David Brewster – President and Co-Founder

Neal Isaacson – SVP and CFO


Mark Siegel – Canaccord Adams

Nick Allen – Morgan Stanley

Ben Kallo – Stanford Group

Michael Carboy – Signal Hill

Jeff Osborne – Thomas Weisel Partners

Elaine Kwei – Piper Jaffray

Paul Clegg – Jefferies

Adam Baumgarten [ph] – Oppenheimer

Jonathan Hoopes – ThinkEquity

Richard Baxter – Ardour Capital

Pavel Molchanov – Raymond James



Good day, everyone, and welcome to the EnerNOC fourth quarter 2008 earnings conference call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Will Lyons, Please go ahead, sir.

Will Lyons

Thanks, Elan. Thank you. Good afternoon and thank you for joining EnerNOC’s fourth quarter and year-end 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.

Today’s presentation contains estimates and other statements that are considered forward-looking under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements.

Additional information concerning these factors is contained in EnerNOC’s filings with the SEC, including our Annual Report on Form 10-K and quarterly reports on Form 10-Q available at www.sec.gov. The forward-looking statements included in this call represent the company’s view on February 18, 2009. EnerNOC disclaims any obligation to update these statements to reflect future events or circumstances.

This call also includes discussion of both GAAP and non-GAAP financial measures. Information regarding EnerNOC’s use of these measures as well as a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure is available in our fourth quarter 2008 financial press release, which was issued today after the market close. This release can be found on the Investors section of our corporate website, www.enernoc.com.

Now let me turn the call over to Tim.

Tim Healy

Thanks, Will. Good afternoon, everyone, and thank you for joining us. Earlier this afternoon we released our fourth quarter and year-end financial results, which punctuated an outstanding year for our company. On this call, I’ll briefly discuss those results and describe some of our plans for the year ahead before turning the call over to my colleagues. So let’s start with a look-back at 2008.

In early 2008 we disclosed our major corporate objectives for the year. Those objectives included exceeding $100 million in total revenues, increasing our gross margin to above 36%, keeping our operating expenses between $74 million and $79 million, and exceeding 2,000 megawatts of dispatchable demand response capacity under management.

We are very pleased with our performance in 2008, as we achieved or exceeded each of those objectives. We ended the year at $106.1 million in revenues, the high end of that guidance range, a range that we increased about two-thirds of the way through the year. We expanded our gross margin to 38.9% in 2008, which is up from 36% in 2007. We did this by selling our increasingly differentiated solutions on product suite and total value, not on price alone.

We kept our operating expenses in range at $78.5 million and drove increased operational efficiencies. And positioning us for continued growth in 2009, we closed out 2008 with over 2,050 megawatts under management, a number which as of today has already exceeded 2,500 megawatts. Equally it’s important to us when our demand response network was dispatched by our grid operator and utility customer base, it performed reliably once again.

During 2008 our network delivered over 100% performance on average based on nominated versus delivered capacity in more than 100 demand response events. We are very pleased with these results. As the external environment has become more challenging, other companies have had to tamper expectations. We trenched and even changed strategies midcourse. We are pleased that we have been able to remain focus and meet or exceed all of the corporate objectives that we provided for 2008.

We believe that our performance is due primarily to a nature of our clean energy management applications that deliver cost savings and payments to commercial, institutional and industrial customers in our network usually without direct expense to them, our compelling value proposition any time, but especially now.

Our attractive applications in combination with our stable grid operator and utility customer base and our own financial strength and visibility give us confidence in the following 2009 corporate objectives. Number one, we expect our revenues to grow approximately 55% over 2008 to a range of $155 to $170 million. Number two, we expect to continue to increase our operating leverage and reduce our GAAP net loss per basic and diluted share from $1.88 in 2008 to a range of $1.00 to $1.20 in 2009.

Number three, we currently expect to reduce non-GAAP net loss per basic and diluted share, which excludes stock-based compensation charges and amortization of intangibles from $1.29 in 2008 to a range of $0.40 to $0.60 in 2009. Perhaps most importantly is number four. We remain confident in our expectation to generate positive cash flow from operations in the second half of ’09 and to delivery positive GAAP earnings per basic and diluted share for the year ending December 31, 2010.

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