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Lime Energy (LIME)
Q1 2013 Earnings Call
August 12, 2013 4:30 pm ET
John E. O'Rourke - Chief Executive Officer, President and Director
Jeffrey R. Mistarz - Chief Financial Officer, Chief Accounting Officer, Executive Vice President, Treasurer and Secretary
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I would now like to turn the conference over to Mr. Glen Akselrod, spokesperson for Lime Energy. Please proceed.
Thank you, Derek. And good afternoon, and thank you, everybody, for taking the time to join Lime Energy's 2013 First Quarter Financial Results Conference Call. With us today is John O'Rourke, CEO; Jeff Mistarz, CFO. I hope all of you had a chance to review the earnings announcement released on Friday after the close and which can be accessed on Lime's website at www.lime-energy.com, or for the 10-Q on the SEC website.
Before I hand the discussion over to John, I want to remind everyone that the call today will include some statements that would be considered forward-looking statements regarding the company's strategy, operations and financial performance. Those statements are subject to many uncertainties in the company's operations and business environment, some of which we'll talk about on the call. I'll also refer you to the complete forward-looking statement disclosure in the earnings release, which is incorporated by reference for purposes of this call. I'd also like to refer you to the disclosures in the company's quarterly and annual filings with the SEC.
Finally, before we get started, I want to mention this call is being broadcast live over the Internet and can be accessed on the Lime Energy website and also on the Thomson/CCBN network. There will be a replay available on both websites until November 8, 2013.
With that, I'll hand the discussion over to John.
John E. O'Rourke
Thank you, Glen. Thank you, and good afternoon, everyone. Today, we are current with our financial reporting. We would like to especially thank all of our employees and, in particular, our finance and accounting team for all of their hard work to get us to this point.
On our call 2 weeks ago, we spoke about the opportunity in our business to leverage a market leadership advantage in the delivery of a cost-effective energy efficiency to our utility clients for their small to medium commercial and industrial customers. We spoke about directing all of our focus as a business there, investing in our technology, capitalizing on our deep experience in energy efficiency and building a sustainable business model in the energy efficiency industry over time.
We also spoke about the challenges the company faced in the wake of the restatement process and discussed key initiatives underway at the company to tackle those challenges head on and get on about the business of creating shareholder value, expanding the business gross margin profile and shoring up balance sheet in anticipation of a much improved operating environment later in the year.
As we continued to execute against our business initiatives, we are realizing improved financial and operational results over last year when adjusted for the $1.3 million of costs related to the restatement and stockholder lawsuits. The focus on technology and operations is beginning to yield measurable and tangible results. We believe that these trends will continue through the remainder of 2013, positioning the company for a stable operating environment in 2014.
The highlights for the quarter are: we completed the sale of the ESCO business on February 28, generating approximately $1.9 million in cash; revenue from our utility programs increased approximately 27% over the prior year first quarter; improving gross margins and strong cash management resulted in a 64% reduction in cash used by operating activities compared to first quarter of 2012; and our major suppliers expanded our credit facilities approximately 200% based on improving volumes and a shared strong outlook for the rest of the year.
As I said 12 days ago on our last call, our goal is to put a string of profitable quarters together, starting in the fourth quarter of 2013. But to meet that goal, we will need to overcome several difficult and important challenges that will require comprehensive and aggressive measures to overcome: improving our margin profile, strengthening our balance sheet, reducing SG&A as a percentage of revenues and enhancing our technology and IT infrastructure.
In lieu of further guidance at this time, we will strive for transparency and better visibility into our operating environment. To that end, we will develop key metrics that offer insight into day-to-day operations of the business. We will set and define these metrics on our next call next week and track improvement, or lack of thereof, for subsequent quarters on future calls.
And with that, I will hand it over to Jeffrey Mistarz.
Jeffrey R. Mistarz
Thanks, everyone, for joining us again today. Since we spoke to you only 12 days ago, I'm going to keep my remarks focused on the first quarter results. Our consolidated revenue increased 4.1%, or $474,000, during the first quarter of 2013 to $12 million when compared to the $11.5 million earned during the first quarter of 2012. Revenue from our utility business increased about 27%, or $2.4 million, but this was largely offset by lower revenue from our FRR contract with the Army Corps of Engineers. The FRR contract varies from period to period depending on the number of project we're working on and the phase of the project.