Q3 2012 Earnings Call
November 05, 2012 5:00 pm ET
Timothy G. Healy - Co-Founder, Executive Chairman and Chief Executive Officer
David B. Brewster - Co-Founder, President and Director
Kevin J. Bligh - Chief Accounting Officer
Patrick Jobin - Crédit Suisse AG, Research Division
Benjamin Schuman - Pacific Crest Securities, Inc., Research Division
John Quealy - Canaccord Genuity, Research Division
Andrew Weisel - Macquarie Research
Ahmar M. Zaman - Piper Jaffray Companies, Research Division
Previous Statements by ENOC
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Thank you, Latoya. Thank you, and good afternoon, everyone, and welcome to EnerNOC's Investor conference call for the third quarter ended September 30, 2012. We appreciate you joining us today. I'm Jen Varley, Senior Manager of Investor Relations at EnerNOC; and with me on the call today is our Chairman and CEO, Tim Healy; our President, David Brewster; and our Chief Accounting Officer, Kevin Bligh.
Today's presentation contains estimates and other statements that are forward-looking under the Private Securities Litigation Reform Act of 1995 and other federal securities laws, including, but not limited to, management's future expectations, beliefs, intentions, goals, strategies, plans or prospects. These forward-looking statements include, without limitations, statements relating to EnerNOC's future financial performance; the global market opportunity for EnerNOC's energy management applications, services and products; and the future growth and success of EnerNOC's energy management applications, services and products in general. 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 views on November 5, 2012. EnerNOC disclaims any obligation to update these statements to reflect future events or circumstances.
During this call, we will refer to non-GAAP financial measures, including non-GAAP net income, free cash flow and adjusted EBITDA. These financial measures are non-GAAP financial measures that are not prepared in accordance with generally accepted accounting principles. The definitions of and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures is available in the press release announcing our third quarter financial results. This press release is available on the Investors section of our website at www.enernoc.com.
And with that, I'll turn the call over now to Tim Healy.
Timothy G. Healy
Thanks, Jen, and thank you to everyone for joining us this afternoon on our third quarter earnings conference call. On today's call, my prepared remarks will cover our third quarter results and put them in the context of our strategic plan. I'll briefly update some key metrics regarding our growth and operating leverage, and provide an overview of our third quarter sales and operational performance, as well as highlight some relevant data about the continued effective management of our portfolio of demand response resources.
David Brewster will then provide color on some important regulatory developments and provide an overview of our current and emerging market opportunities. Finally, Kevin Bligh will discuss our Q3 financial results and provide some key business metrics along with our updated financial outlook. In sum, you'll hear that we remain on track to achieve our 2012 and 2013 objectives, and are excited by the execution and strong momentum we continue to drive throughout the organization.
So let's begin by reviewing some key third quarter developments and overall performance year-to-date. On our second quarter call, in August, we described that market expansion was a key theme of our year-to-date performance. As of the end of Q3, we had roughly 8,500 megawatts under management, with the additional capacity primarily driven by new customer additions outside of the PJM market, including international markets. Through the first 9 months of 2012, we've added approximately 900 customers to our global demand response network, representing well over 1 gigawatt of new capacity to manage. We're now operational in 46 different demand response markets covering 38 states, as well as 6 countries and 4 continents.
While expansion continues to be a key theme for EnerNOC, operational excellence, key to EnerNOC's third quarter performance. 2012 has been an exceptionally busy year for demand response. In fact, year-to-date, EnerNOC successfully responded to nearly 300 demand response dispatches, in line with the number of demand response dispatches during the same period in 2011. But the volume of demand response we have dispatched grew substantially, with EnerNOC delivering approximately 85 gigawatt hours of demand reduction across multiple demand response markets and products, including economic demand response. Economic DR represents resources that we dispatched for customers in our network who proactively respond to high prices in the wholesale markets, a growing trend for our customers.
Overall, this year's dispatches have been widespread throughout our network, including several new initiatives implemented in 2012, such as the Pennsylvania Act 129 programs and our LSSi auto demand response program in Alberta. In particular, we enjoyed significant success fulfilling our Act 129 commitments, including the expansion of our agreements with 2 Pennsylvania utilities as those programs were in full swing. We perceive that this achievement is a testament to our ability to execute and another strong statement that demand response from the industry leader is a reliable and cost-effective way to meet even the most aggressive demand-side targets.