Attached files
| file | filename |
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| 8-K - FORM 8-K - COMVERGE, INC. | form8k.htm |
Exhibit
99.1
FOR IMMEDIATE
RELEASE
Comverge
Reports Second Quarter 2010 Financial Results
Norcross, GA., July 29, 2010 –
Comverge, Inc. (NASDAQ: COMV), the leading provider of Intelligent Energy
Management (IEM) solutions for Residential and Commercial + Industrial
customers, today announced second quarter 2010 financial and operating
results.
|
·
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Quarterly
revenues of $17 million, a 29% increase over prior
year
|
|
·
|
Secured
$74 million in future contracted revenue in PJM’s 2013-14
auction
|
|
·
|
Awarded
a major Virtual Peaking Capacity contract expansion at NV
Energy
|
|
·
|
Announced
strategic partnership to pursue international
opportunities
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“Our
explosive growth in the commercial and industrial sector in particular,
punctuated by the results of the PJM 2013 auction, where we tripled revenue
compared to the prior auction and increased our market share to more than 10% of
the total awarded Demand Response resources, is proof positive of our position
as the proven provider of comprehensive energy management solutions,” said
Comverge President & CEO, R. Blake Young. “In the second quarter
of 2010 we continued our momentum of high growth, securing valuable partnerships
that will allow us to enter new markets and winning key strategic contracts in
both the residential and commercial and industrial sectors.”
Financial
Summary
Second
quarter revenues for 2010 were $17.0 million compared to $13.3 million in the
second quarter of 2009, a 29% increase. Revenues for both periods
exclude revenues from our residential Virtual Peaking Capacity (VPC) contracts,
which are deferred and recognized in the fourth quarter.
Gross
margin for the second quarter of 2010 was 31.4% compared to 44.0% in the second
quarter of 2009. Gross margin in the second quarter of 2010 was
impacted by 3 percentage points for the one-time limited product recall
disclosed in June and lower gross margins on turnkey contracts. Gross
margins are most meaningful when comparing on a 12 month basis due to the
deferral of VPC contract revenues. Deferred VPC contract revenues at
June 30, 2010 were $14.3 million, with a deferred gross margin of 76% compared
to deferred VPC gross margin of 66% at June 30, 2009.
Adjusted
EBITDA for the second quarter of 2010 was a negative $8.2 million compared to a
negative $6.3 million for the second quarter of 2009. Adjusted EBITDA
is earnings before interest, taxes, depreciation, amortization and non-cash
stock compensation expense (see Schedule 5 – Reconciliation of Non-GAAP
Financial Measure to the Most Directly Comparable GAAP Financial
Measure).
Net loss
for the second quarter of 2010 was $10.3 million, or $0.42 per share basic and
diluted, compared to a net loss of $9.1 million, or $0.43 per share basic and
diluted for the second quarter of 2009. Included in the second quarter of 2010
result was a one-time charge of $0.03 per share related to the limited product
recall.
Business
Highlights
Comverge
second quarter 2010 business highlights include:
|
-
|
secured
more than $74 million in future contracted revenues in the PJM
Interconnection (PJM) market as a result of the 2013/2014 Reliability
Pricing Model Base Residual Auction. The award extends
Comverge's recent growth in the commercial and industrial (C+I) demand
response market, following an increase of more than 275 megawatts (MWs)
under management in the first quarter of
2010,
|
|
-
|
announced
the extension and expansion of our NV Energy residential Virtual Peaking
Capacity contract to manage the 143 MWs built-out by Comverge over the
last three years and to build-out an additional 12 MWs during 2010,
bringing the program total to more than 155 MWs;
and
|
|
-
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announced
a joint venture agreement with Projects International, Inc., an
international business development firm. Under the three-year
agreement, Projects International will pursue opportunities to leverage
Comverge’s IEM solutions in select
countries.
|
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-
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Increased
total megawatts under management by 456 megawatts or 16%, during the first
half of 2010. Total megawatts under management as of June 30,
2010 and December 31, 2009 were:
|
|
6/30/2010
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12/31/09
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||
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Megawatts
under long-term contracts, with regulatory approval
|
910
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898
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|
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Megawatts
under open market programs
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1453
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1194
|
|
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Megawatts
to be provided under turnkey programs
|
555
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370
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|
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Megawatts
managed for a fee
|
437
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437
|
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Total
megawatts
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3355
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2899
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Recent
Developments
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-
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announced
we were selected by Public Service Company of Oklahoma (PSO) to deliver a
comprehensive energy management pilot program to eligible residential and
commercial customers. The demand response pilot program will be
built on Comverge’s Apollo Demand Response Management System (DRMS)
software, the industry’s leading energy management software
platform. Under the three-year agreement, Comverge will provide
full turnkey services including hardware, enrollment, installation and
call center services to both PSO’s residential and commercial + industrial
customers.
|
Current
Outlook
We are
reaffirming our revenue outlook for full year 2010 and expect revenues to be in
the range of $125 to $137 million. We also expect to grow total
megawatts under management by 800 megawatts.
As of the
date of this release, we have 910 megawatts under long-term capacity contracts,
which represents approximately $614 million in total contracted future
revenues. Furthermore, we have been awarded 997 megawatts of capacity
in the 2013 – 2014 PJM Reliability Pricing Model Base Residual Auction, or
BRA. In the event we secure adequate load capacity to meet our
obligations under the 2013-2014 PJM BRA, we will have 3,975 in total megawatts
managed.
The above
statements are based on current expectations. These statements are
forward-looking and actual results may differ materially. The Company
assumes no obligation to publicly update or revise its
outlook. Investors are reminded that actual results may differ from
these estimates for the reasons described below under the caption “Caution
Regarding Forward Looking Statements” and in our filings with the Securities and
Exchange Commission.
Additional
Information
Comverge
will discuss these results for the second quarter 2010 as well as its
expectations for the future in a conference call scheduled today at 5:00 p.m.
EDT. To participate in the call, dial 877-334-1969 or 760-666-3589
for international participants.
Additionally,
the results will be reported in the Investor Relations section on Comverge's
website at http://ir.comverge.com.
An audio replay of the call will be available beginning July 29, 2010 at 8:00
p.m. and available until August 5, 2010 at 12:00 a.m. EDT (midnight) by dialing
in 800-642-1687 (706- 645-9291 for international participants) and using
conference code number 83321791.
Additional
financial information can be found in the Company’s Quarterly Report on Form
10-Q for the quarter ended June 30, 2010, which has been filed today with the
Securities and Exchange Commission.
About
Comverge
With more
than 500 utility and 2,100 commercial customers, as well as five million
deployed residential devices, Comverge brings unparalleled industry knowledge
and experience to offer the most reliable, easy-to-use, and cost-effective
intelligent energy management programs. We deliver the insight and control
that enables energy providers and consumers to optimize their power usage
through the industry’s only proven, comprehensive set of technology, services
and information management solutions. For more information, visit www.comverge.com.
Caution Regarding Forward Looking
Statements
This
release contains forward-looking statements that are made pursuant to the safe
harbor provisions of Section 21E of the Securities Exchange Act of 1934. The
forward-looking statements in this release are not and do not constitute
historical facts, do not constitute guarantees of future performance and are
based on numerous assumptions which, while believed to be reasonable, may not
prove to be accurate. These forward looking statements include projected revenue
guidance, projected contracted revenues, projected regulatory changes or
approvals, the amount of revenue and megawatts that will be generated by
long-term contracts or open market programs and certain assumptions upon which
such forward-looking statements are based. The forward-looking statements in
this release do not constitute guarantees of future performance and involve a
number of factors that could cause actual results to differ materially,
including risks associated with Comverge's business involving our products, the
development and distribution of our products and related services, regulatory
changes or grid operator rule changes, regulatory approval of our contracts,
economic and competitive factors, our key strategic relationships, and other
risks more fully described in our most recently filed Annual Report on Form 10-K
and Quarterly Report on Form 10-Q filed today. Comverge assumes no obligation to
update any forward-looking information contained in this press release or with
respect to the announcements described herein.
Regulation
G Disclosure - Non-GAAP Financial Information
Non-GAAP
financial measures are based upon our unaudited consolidated statements of
operations for the periods shown, giving effect to the adjustments shown in the
reconciliations set forth below. This presentation is not in accordance with, or
an alternative for, U.S. generally accepted accounting principles (GAAP). The
non-GAAP financial information presented herein should be considered
supplemental to, and not as a substitute for, or superior to, financial measures
calculated in accordance with GAAP. However, Comverge believes that non-GAAP
reporting, giving effect to the adjustments shown in the reconciliation below,
provides meaningful information and therefore uses it to supplement its GAAP
reporting and internally in evaluating operations, managing and benchmarking
performance. The Company has chosen to provide this supplemental information to
investors, analysts and other interested parties to enable them to perform
additional analyses of operating results, to illustrate the results of
operations giving effect to the non-GAAP adjustments shown in the
reconciliations below, and to provide an additional measure of
performance.
Contact:
Investor
Relations Media
Relations
Dan
Pfeffer Marie
Bahl
VP,
Treasurer-Investor
Relations Senior
Director of Corporate Marketing
678-802-8302,
invest@comverge.com
678-802-8371,
pr@comverge.com
SCHEDULE
1
COMVERGE,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands,
except share and per share data)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
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June
30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
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|||||||||||||
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(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
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Revenue
|
||||||||||||||||
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Product
|
$ | 5,294 | $ | 5,077 | $ | 10,755 | $ | 9,913 | ||||||||
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Service
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11,753 | 8,188 | 19,673 | 14,932 | ||||||||||||
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Total
revenue
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17,047 | 13,265 | 30,428 | 24,845 | ||||||||||||
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Cost
of revenue
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||||||||||||||||
|
Product
|
4,382 | 2,982 | 8,006 | 6,086 | ||||||||||||
|
Service
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7,308 | 4,445 | 12,350 | 8,503 | ||||||||||||
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Total
cost of revenue
|
11,690 | 7,427 | 20,356 | 14,589 | ||||||||||||
|
Gross
profit
|
5,357 | 5,838 | 10,072 | 10,256 | ||||||||||||
|
Operating
expenses
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||||||||||||||||
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General
and administrative expenses
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9,214 | 8,101 | 17,312 | 15,990 | ||||||||||||
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Marketing
and selling expenses
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4,066 | 4,683 | 8,844 | 8,442 | ||||||||||||
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Research
and development expenses
|
1,543 | 1,209 | 2,908 | 2,325 | ||||||||||||
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Amortization
of intangible assets
|
536 | 552 | 1,072 | 1,104 | ||||||||||||
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Operating
loss
|
(10,002 | ) | (8,707 | ) | (20,064 | ) | (17,605 | ) | ||||||||
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Interest
and other expense, net
|
291 | 369 | 353 | 564 | ||||||||||||
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Loss
before income taxes
|
(10,293 | ) | (9,076 | ) | (20,417 | ) | (18,169 | ) | ||||||||
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Provision
for income taxes
|
55 | 65 | 115 | 107 | ||||||||||||
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Net
loss
|
$ | (10,348 | ) | $ | (9,141 | ) | $ | (20,532 | ) | $ | (18,276 | ) | ||||
|
|
||||||||||||||||
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Net
loss per share (basic and diluted)
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$ | (0.42 | ) | $ | (0.43 | ) | $ | (0.83 | ) | $ | (0.85 | ) | ||||
|
Weighted
average shares used in computation
|
24,618,730 | 21,403,508 | 24,598,205 | 21,385,061 | ||||||||||||
SCHEDULE
2
COMVERGE,
INC.
SEGMENT
INFORMATION
(In
thousands)
|
Three
Months Ended
|
Six
Months Ended
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|||||||||||||||
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June
30,
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June
30,
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|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
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(unaudited)
|
|||||||||||||
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Revenue:
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||||||||||||||||
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Utility
Products & Services
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$ | 11,106 | $ | 7,939 | $ | 20,186 | $ | 14,600 | ||||||||
|
Residential
Business
|
2,269 | 3,019 | 4,368 | 6,971 | ||||||||||||
|
Commercial
& Industrial Business
|
3,672 | 2,307 | 5,874 | 3,274 | ||||||||||||
|
Total
Revenue
|
$ | 17,047 | $ | 13,265 | $ | 30,428 | $ | 24,845 | ||||||||
|
Cost
of Revenue:
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||||||||||||||||
|
Utility
Products & Services
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$ | 8,116 | $ | 4,362 | $ | 14,108 | $ | 8,239 | ||||||||
|
Residential
Business
|
1,265 | 1,690 | 2,604 | 4,333 | ||||||||||||
|
Commercial
& Industrial Business
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2,309 | 1,375 | 3,644 | 2,017 | ||||||||||||
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Total
Cost of Revenue
|
$ | 11,690 | $ | 7,427 | $ | 20,356 | $ | 14,589 | ||||||||
|
Gross
Profit:
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||||||||||||||||
|
Utility
Products & Services
|
$ | 2,990 | $ | 3,577 | $ | 6,078 | $ | 6,361 | ||||||||
|
Residential
Business
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1,004 | 1,329 | 1,764 | 2,638 | ||||||||||||
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Commercial
& Industrial Business
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1,363 | 932 | 2,230 | 1,257 | ||||||||||||
|
Total
Gross Profit
|
$ | 5,357 | $ | 5,838 | $ | 10,072 | $ | 10,256 | ||||||||
SCHEDULE
3
COMVERGE,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands)
|
June
30,
|
December
31,
|
|||||||
|
2010
|
2009
|
|||||||
|
(Unaudited)
|
||||||||
|
Assets
|
||||||||
|
Cash
and cash equivalents
|
$ | 10,432 | $ | 16,069 | ||||
|
Restricted
cash
|
1,584 | 3,000 | ||||||
|
Marketable
securities
|
24,953 | 34,409 | ||||||
|
Billed
accounts receivable, net
|
13,544 | 8,119 | ||||||
|
Unbilled
accounts receivable
|
7,064 | 11,873 | ||||||
|
Inventory,
net
|
8,167 | 6,605 | ||||||
|
Deferred
costs
|
6,102 | 1,715 | ||||||
|
Other
current assets
|
1,484 | 938 | ||||||
|
Total
current assets
|
73,330 | 82,728 | ||||||
|
Restricted
cash
|
2,838 | 2,636 | ||||||
|
Property
and equipment, net
|
19,575 | 18,340 | ||||||
|
Intangible
assets, net
|
7,352 | 8,779 | ||||||
|
Goodwill
|
8,179 | 8,179 | ||||||
|
Other
assets
|
270 | 235 | ||||||
|
Total
assets
|
$ | 111,544 | $ | 120,897 | ||||
|
Liabilities
and Shareholders' Equity
|
||||||||
|
Accounts
payable
|
$ | 8,392 | $ | 6,874 | ||||
|
Accrued
expenses
|
6,159 | 11,574 | ||||||
|
Deferred
revenue
|
19,785 | 5,890 | ||||||
|
Current
portion of long-term debt
|
3,000 | 3,000 | ||||||
|
Other
current liabilities
|
6,579 | 5,648 | ||||||
|
Total
current liabilities
|
43,915 | 32,986 | ||||||
|
Deferred
revenue
|
1,911 | 1,203 | ||||||
|
Long-term
debt
|
8,250 | 9,750 | ||||||
|
Other
liabilities
|
2,613 | 2,914 | ||||||
|
Total
long-term liabilities
|
12,774 | 13,867 | ||||||
|
Shareholders'
equity
|
||||||||
|
Common
stock
|
25 | 25 | ||||||
|
Additional
paid-in capital
|
260,153 | 258,660 | ||||||
|
Treasury
stock
|
(203 | ) | (63 | ) | ||||
|
Accumulated
deficit
|
(205,128 | ) | (184,596 | ) | ||||
|
Accumulated
other comprehensive income
|
8 | 18 | ||||||
|
Total
shareholders' equity
|
54,855 | 74,044 | ||||||
|
Total
liabilities and shareholders' equity
|
$ | 111,544 | $ | 120,897 | ||||
SCHEDULE
4
COMVERGE,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
|||||||||||||
|
Cash
flows from operating activities
|
||||||||||||||||
|
Net
loss
|
$ | (10,348 | ) | $ | (9,141 | ) | $ | (20,532 | ) | $ | (18,276 | ) | ||||
|
Adjustments
to net loss to net cash from operating activities
|
||||||||||||||||
|
Depreciation
|
294 | 261 | 576 | 512 | ||||||||||||
|
Amortization
of intangible assets
|
708 | 686 | 1,412 | 1,365 | ||||||||||||
|
Stock-based
compensation
|
843 | 1,429 | 1,325 | 2,817 | ||||||||||||
|
Other
|
271 | 555 | 501 | 644 | ||||||||||||
|
Changes
in operating assets and liabilities
|
6,413 | 14,220 | 6,474 | 22,348 | ||||||||||||
|
Net
cash provided by (used in) operating activities
|
(1,819 | ) | 8,010 | (10,244 | ) | 9,410 | ||||||||||
|
Cash
flows from investing activities
|
||||||||||||||||
|
Changes
in restricted cash
|
(320 | ) | (4 | ) | 1,214 | 889 | ||||||||||
|
Maturities
(purchases) of marketable securities, net
|
9,815 | (1,112 | ) | 9,055 | 6,769 | |||||||||||
|
Purchases
of property and equipment
|
(2,151 | ) | (4,645 | ) | (3,916 | ) | (8,586 | ) | ||||||||
|
Net
cash provided by (used in) investing activities
|
7,344 | (5,761 | ) | 6,353 | (928 | ) | ||||||||||
|
Cash
flows from financing activities
|
||||||||||||||||
|
Borrowings
(payments) under debt facilities, net
|
(750 | ) | 3,410 | (1,500 | ) | 5,749 | ||||||||||
|
Other
|
45 | 55 | (246 | ) | 3 | |||||||||||
|
Net
cash provided by (used in) financing activities
|
(705 | ) | 3,465 | (1,746 | ) | 5,752 | ||||||||||
|
Net
change in cash and cash equivalents
|
4,820 | 5,714 | (5,637 | ) | 14,234 | |||||||||||
|
Cash
and cash equivalents at beginning of period
|
5,612 | 28,091 | 16,069 | 19,571 | ||||||||||||
|
Cash
and cash equivalents at end of period
|
$ | 10,432 | $ | 33,805 | $ | 10,432 | $ | 33,805 | ||||||||
SCHEDULE
5
COMVERGE,
INC.
RECONCILIATION
OF NON-GAAP FINANCIAL MEASURE TO THE
MOST DIRECTLY
COMPARABLE GAAP FINANCIAL MEASURE
(In
thousands)
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
|
June
30,
|
June
30,
|
|||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
|||||||||||||
|
Net
loss
|
$ | (10,348 | ) | $ | (9,141 | ) | $ | (20,532 | ) | $ | (18,276 | ) | ||||
|
Depreciation
and amortization
|
1,002 | 947 | 1,988 | 1,877 | ||||||||||||
|
Interest
expense, net
|
292 | 358 | 357 | 548 | ||||||||||||
|
Provision
for income taxes
|
55 | 65 | 115 | 107 | ||||||||||||
|
EBITDA
|
(8,999 | ) | (7,771 | ) | (18,072 | ) | (15,744 | ) | ||||||||
|
Non-cash
stock compensation expense
|
843 | 1,429 | 1,325 | 2,817 | ||||||||||||
|
Adjusted
EBITDA
|
$ | (8,156 | ) | $ | (6,342 | ) | $ | (16,747 | ) | $ | (12,927 | ) | ||||
See "Non-GAAP Financial Information" above in this earnings press release for information on the use of this Non-GAAP financial measure.