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8-K - FORM 8-K - POWERSECURE INTERNATIONAL, INC.d497052d8k.htm

Exhibit 99.1

 

LOGO

POWERSECURE REPORTS RECORD FOURTH QUARTER AND

FULL YEAR 2012 RESULTS

—Record $183 million backlog positions company for significant continued growth in 2013—

—Fourth quarter: 27 percent y-o-y growth in distributed generation revenues—

—Fourth quarter: 40 percent y-o-y growth in utility infrastructure revenues—

Wake Forest, N.C. – March 7, 2013 – PowerSecure International, Inc. (Nasdaq: POWR) today reported its fourth quarter and full year 2012 results. Highlights include:

 

   

Fourth quarter 2012 revenues increase 18 percent y-o-y to record $46.8 million

 

   

Fourth quarter 2012 gross margin increases to 33.0 percent

 

   

Fourth quarter 2012 GAAP EPS1 increases 60 percent y-o-y to $0.08, non-GAAP EPS1 increases 160 percent y-o-y to $0.13

 

   

Full year 2012 revenues increase 25 percent y-o-y to record $162.0 million

“Our record results in 2012, punctuated by our terrific fourth quarter, as well as our strong backlog and the robust early demand we are seeing from our distributed generation and utility infrastructure customers in 2013, plus the recent addition of our ESCO business, have PowerSecure in excellent position to achieve our 2015 objectives of $300 million in revenues with mid-double digit operating margins,” said Sidney Hinton, chief executive officer of PowerSecure.

“2012 unfolded as we expected and I am especially pleased that we continue to see growing bottom line leverage resulting from our previous investments in diverse growth and our focus on cost management. As we capitalize on these prior investments and our revenues scale further, we expect this bottom line growth to continue building,” Hinton added.

Fourth Quarter 2012:

PowerSecure’s fourth quarter 2012 (4Q 2012) all-time record revenues of $46.8 million, an increase of $7.1 million, or 18 percent, from the fourth quarter of 2011 (4Q 2011), were driven primarily by a 27 percent year-over-year (y-o-y) increase in revenues from distributed generation products and services and a 40 percent y-o-y increase in revenues from utility infrastructure products and services, as shown below. While showing growth for the full year, 4Q 2012 revenues from energy efficiency products declined 51 percent y-o-y as grocery retailers curtailed investments in LED lighting solutions due to concerns about the macroeconomic environment and uncertainty surrounding the potential impact of the fiscal cliff in late 2012, which followed stronger spending patterns earlier in the year.

 

1 

from continuing operations


                   Variance  
($ in 000’s)    4Q12      4Q11      $     %  

Revenue by Product/Service

          

Distributed Generation

     22,647         17,848         4,799        27

Utility Infrastructure

     20,658         14,744         5,914        40

Energy Efficiency

     3,446         7,097         (3,651     -51
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Revenue

     46,751         39,689         7,062        18

Gross margin as a percentage of revenue increased to 33.0 percent in 4Q 2012 from 31.4 percent in 4Q 2011. The increase in gross margin was driven by improved operational efficiencies across the business, a more favorable mix of projects in the company’s distributed generation and utility infrastructure lines and higher revenues and profits from its company-owned distributed generation recurring revenue projects. Operating margin as a percentage of revenue increased to 4.3 percent in 4Q 2012 from 2.7 percent in 4Q 2011 on a GAAP basis, and was 6.7 percent for 4Q 2012 on a non-GAAP basis. The increase in GAAP operating margin was driven by the expansion in gross margin, and the increase in non-GAAP operating margin was driven by the expansion in gross margin and a reduction in operating expenses as a percentage of revenue.

Diluted earnings per share (EPS) from continuing operations increased to $0.08 in 4Q 2012, compared to $0.05 in 4Q 2011. Non-GAAP EPS from continuing operations increased to $0.13 in 4Q 2012, compared to $0.05 in 4Q 2011.

Non-GAAP financial measures for 4Q 2012 exclude a $1.1 million pre-tax charge related to a restructuring and cost reduction plan that was initiated during the third quarter and extended into the fourth quarter of 2012, designed to reduce the company’s cost structure by $5 million annually and to position the company for enhanced operating margins in future periods (see non-GAAP discussion and reconciliation, below).

Operating expenses for 4Q 2012 were $13.4 million, compared to $11.4 million in 4Q 2011. The $2.1 million y-o-y increase in operating expenses consists of 1) $0.5 million of incremental operating expenses related to a solar energy company acquired in June 2012, 2) $0.4 million of additional depreciation and amortization expense, primarily driven by additional capital expenditures related to company-owned distributed generation recurring revenue projects, and 3) the $1.1 million pre-tax charge related to the restructuring and cost reduction plan. Excluding the restructuring/cost reduction charge, 4Q 2012 operating expenses were $12.3 million, which represents a 2.3 percentage point reduction as a percentage of revenues on a y-o-y basis.

The company’s capital resources remain strong, with $19.1 million in cash and zero drawn on its revolving credit facility at the end of the Q4 2012. The company’s capital expenditures during Q4 2012 were $6.0 million in total, with $1.3 million of this capital invested to deploy systems to support PowerSecure-owned long-term recurring revenue distributed generation projects, and the remaining $4.7 million primarily invested in the purchase of equipment for its growing utility infrastructure business.

In addition, the company repurchased $2.4 million of its common stock during Q4 2012. As of December 2012, the company repurchased nearly all of its initially authorized $5 million of common stock at an average price of $5.71 per share. On December 19, 2012, the company announced that its board of directors authorized an extension of the company’s stock repurchase program for an additional $5 million of common stock through December 2014.


The company’s revenue backlog stands at a record $183 million, as of the date of this release. This includes new business awards announced on December 19, 2012, and January 28 and February 20, 2013. The company’s revenue backlog represents revenue expected to be recognized after December 31, 2012, for periods including the first quarter of 2013 onward. This backlog figure compares to the revenue backlog of $175 million announced in the company’s third quarter earnings release issued on November 7, 2012, which represented revenue expected to be recognized after September 30, 2012. This revenue backlog does not include any revenues related to $27 million of projects taken over through the company’s recent acquisition of Lime Energy’s ESCO business, as these revenues will be incorporated into the reported backlog as customer transition, permitting and bonding matters are finalized.

The company’s $183 million revenue backlog and the estimated timing of revenue recognition are outlined below, including “project-based revenues” expected to be recognized as projects are completed, and “recurring revenues” expected to be recognized over the life of the underlying contracts:

Revenue Backlog expected to be recognized after December 31, 2012

 

     Anticipated      Estimated Primary

Description

   Revenue     

Recognition Period

Project-based Revenue — Near term

     $100 Million       1Q13 through 3Q13

Project-based Revenue — Long term

     $15 Million       4Q13 through 2014

Recurring Revenue

     $68 Million       1Q13 through 2020
  

 

 

    

Revenue Backlog expected to be recognized after December 31, 2012

     $183 Million      

Note: Anticipated revenue and estimated primary recognition periods are subject to risks and uncertainties as indicated in the Company’s safe harbor statement, below. Consistent with past practice, these figures are not intended to constitute the Company’s total revenue over the indicated time periods, as the Company has additional, regular on-going revenues. Examples of additional, regular recurring revenues include revenues from the engineering fees, and service revenue, among others. Numbers may not add due to rounding.

Orders in the company’s revenue backlog are subject to delay, deferral, acceleration, resizing or cancellation from time to time, and estimates are utilized in the determination of the backlog amounts. Given the irregular sales cycle of customer orders, and especially of large orders, the revenue backlog at any given time is not necessarily an accurate indication of our future revenues.

Full Year 2012:

PowerSecure’s full year 2012 (FY 2012) all-time record revenues of $162.0 million, an increase of $32.0 million, or 25 percent, over full year 2011 (FY 2011), were driven primarily by a 27 percent y-o-y increase in revenues from distributed generation products and services and a 29 percent y-o-y increase in revenues from utility infrastructure products and services, as shown below. FY 2012 revenues from energy efficiency products increased nine percent y-o-y, reflecting strong ordering patterns in the first half of the 2012, partially offset by lower volumes in the second half of the year due to economic uncertainties related to the fiscal cliff which caused grocery retailers to reduce orders.


                   Variance  
($ in 000’s)    FY 2012      FY 2011      $      %  

Revenue by Product/Service

           

Distributed Generation

     76,352         60,073         16,279         27

Utility Infrastructure

     60,735         47,131         13,604         29

Energy Efficiency

     24,952         22,811         2,141         9
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenue

     162,039         130,015         32,024         25

Gross margin as a percentage of revenue increased slightly to 31.5 percent for FY 2012 from 31.3 percent for FY 2011. Operating margin as a percentage of revenue increased to 1.2 percent for FY 2012 from negative 0.8 percent for FY 2011 on a GAAP basis, and was 2.8 percent for 2012 on a non-GAAP basis. The increase in operating margin was driven by both the expansion in gross margin and a reduction in operating expenses as a percentage of revenue.

Diluted EPS from continuing operations was $0.16 for FY 2012, compared to $1.04 for FY 2011. Non-GAAP EPS from continuing operations was $0.21 for FY 2012, compared to a loss of $0.02 for FY 2011.

Non-GAAP financial measures for FY 2012 and FY 2011 exclude 1) $2.7 million in pre-tax charges related to the restructuring and cost reduction plan recorded in 2012, 2) gains on the June 2011 sale of the company’s WaterSecure investment recorded in 2011 of $21.9 million, and 2012 of $1.4 million. The gain recorded in 2012 relates to $1.4 million of contingent sale proceeds that were released from escrow to the company one year after the sale, 3) discontinued operations comprised of the company’s former Southern Flow unit, for which a $5.6 million gain on sale was recorded in 2011, and 4) the company’s discontinued PowerPackages unit, which was exited in 2011 (see non-GAAP discussion and reconciliation, below).

Operating expenses for FY 2012 were $49.2 million compared to $41.7 million in FY 2011. The $7.5 million y-o-y increase in operating expenses consists of 1) $1.4 million of incremental operating expenses related to a solar energy company acquired in June 2012, 2) $1.4 million of additional depreciation and amortization expense, primarily driven by additional capital expenditures related to company-owned distributed generation recurring revenue projects, 3) $2.7 million in pre-tax charges related to the restructuring and cost reduction plan, and 4) $2.0 million of expenses to support the growth of the company’s distributed generation, utility infrastructure, and energy efficiency product lines. Excluding the restructuring/cost reduction charges, FY 2012 operating expenses were $46.5 million, which represents a 3.4 percentage point reduction as a percentage of revenues on a y-o-y basis.

Conference Call Information

The company will host a conference call commencing today at 5:30 p.m. eastern time. The conference call will be webcast live and can be accessed from the Investor Relations section of the company’s website at www.powersecure.com. Participants can also access the call by dialing 888-713-4199 (or 617-213-4861 if dialing internationally), and providing pass code 31734844. If you are unable to participate during the live webcast, a replay of the conference call will be available beginning today at 7:30 p.m. eastern time through midnight on March 21, 2013. To listen to the replay, dial toll-free 888-286-8010 (or 617-801-6888 if dialing internationally), and enter pass code 10242337. In addition, the webcast will be archived on the Company’s website at www.powersecure.com.


About PowerSecure

PowerSecure International, Inc. is a leading provider of utility and energy technologies to electric utilities, and their industrial, institutional and commercial customers. PowerSecure provides products and services in the areas of Interactive Distributed Generation ® (IDG®), energy efficiency and utility infrastructure. The company is a pioneer in developing IDG® power systems with sophisticated smart grid capabilities, including the ability to 1) forecast electricity demand and electronically deploy the systems to deliver more efficient, and environmentally friendly, power at peak power times, 2) provide utilities with dedicated electric power generation capacity to utilize for demand response purposes and 3) provide customers with the most dependable standby power in the industry. Its proprietary distributed generation system designs utilize a range of technologies to deliver power, including renewables. The company’s energy efficiency business develops energy efficient lighting technologies that improve the quality of light, including its proprietary EfficientLights® LED lighting products for grocery, drug and convenience stores, and its SecureLite area light and PowerLite street lights for utilities and municipalities. PowerSecure also provides electric utilities with transmission and distribution infrastructure maintenance and construction services, and engineering and regulatory consulting services. Additional information is available at www.powersecure.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements other than statements of historical facts, including but not limited to statements concerning the outlook for the company’s future revenues, earnings, margins, cash resources and cash flow and other financial and operating information and data; the company’s future business operations, strategies and prospects; the company’s cost reduction plan; and all other statements concerning the plans, intentions, expectations, projections, hopes, beliefs, objectives, goals and strategies of management, including statements about other future financial and non-financial items, performance or events and about present and future products, services, technologies and businesses; and statements of assumptions underlying the foregoing.

Forward-looking statements are not guarantees of future performance or events and are subject to a number of known and unknown risks, uncertainties and other factors that are difficult to predict and could cause actual results to differ materially from those expressed, projected or implied by such forward-looking statements. Important risks, uncertainties and other factors include, but are not limited to, the on-going downturn, disruption and volatility in the economy, financial markets and business markets and the effects thereof on the company’s markets and customers, the demand for its products and services, and the company’s access to capital; the size, timing and terms of sales and orders, including the company’s revenue backlog discussed in this press release, and the risk of customers delaying, deferring or canceling purchase orders or making smaller purchases than expected; the potential adverse financial and reputational consequences that can result from safety risks and hazards such as accidents inherent in the company’s operations; the impact of the company’s recent acquisitions of the ESCO business and of the commercial and industrial solar business; the company’s ability to reduce and control its costs and expenses; the timely and successful development, production and market acceptance of new and enhanced products, services and technologies of the company; the ability of the company to obtain adequate supplies of key components and materials of sufficient reliability and quality for its products and technologies on a timely and cost-effective basis and the effects of related warranty claims and disputes; the ability of the company to successfully expand its core distributed generation products and services, to successfully develop and achieve market acceptance of its new energy-related businesses, to successfully expand its recurring revenue projects, to manage its growth and to address the effects of any future changes in utility tariff structures and environmental requirements on its business solutions; the effects of competition; changes in customer and industry demand and preferences; the ability of the company to continue the growth and diversification of its customer base; the ability of the company to attract, retain, and motivate its executives and key personnel; changes in the energy industry in general and the electricity, oil, and natural gas markets in particular, including price levels; the effects of competition; the ability of the company to secure and maintain key contracts and relationships; the effects of pending and future litigation, claims and disputes; and other risks, uncertainties and other factors identified from time to time in its reports filed with or furnished to the Securities and Exchange Commission, including the company’s most recent Annual Report on Form 10-K, as well as subsequently filed reports on Form 10-Q and Form 8-K, copies of which may be obtained by visiting the investor relations page of the company’s website at www.powersecure.com or the SEC’s website at www.sec.gov.


Accordingly, there is no assurance that the results expressed, projected or implied by any forward-looking statements will be achieved, and readers are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements in this press release speak only as of the date hereof and are based on the current plans, goals, objectives, strategies, intentions, expectations and assumptions of, and the information currently available to, management. The company assumes no duty or obligation to update or revise any forward-looking statements for any reason, whether as the result of changes in expectations, new information, future events, conditions or circumstances or otherwise.

Contact:

John Bluth

PowerSecure International, Inc.

(919) 453-2103


PowerSecure International, Inc.

Consolidated Statements of Income (unaudited)

($000’s except per share data)

 

     Three Months Ended     Twelve Months Ended  
     December 31,     December 31,     December 31,     December 31,  
     2012     2011     2012     2011  

Revenue

     46,751        39,689        162,039        130,015   

Cost of sales

     31,300        27,243        110,953        89,321   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     15,451        12,446        51,086        40,694   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

General and administrative

     9,451        9,305        36,201        33,652   

Selling, marketing, and service

     1,521        1,086        5,560        4,651   

Depreciation and amortization

     1,348        991        4,780        3,423   

Restructuring and cost reduction charges

     1,127        0        2,675        0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     13,447        11,382        49,216        41,726   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,004        1,064        1,870        (1,032

Other income (expense)

        

Gain on sale of unconsolidated affiliate

     0        43        1,439        21,873   

Equity income—unconsolidated affiliate

     0        0        0        1,559   

Management fees—unconsolidated affiliate

     0        0        0        282   

Interest income and other income

     21        25        88        98   

Interest expense

     (111     (121     (449     (575
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     1,914        1,011        2,948        22,205   

Income tax expense (benefit)

     503        357        850        3,134   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     1,411        654        2,098        19,071   

Discontinued operations—income (loss) from operations (net of tax)

     0        165        78        (1,501

Discontinued operations—gain on sale (net of tax)

     0        (2     0        5,634   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     1,411        817        2,176        23,204   

Net loss attributable to noncontrolling interest

     145        273        902        846   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     1,556        1,090        3,078        24,050   
  

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

        

Income (loss) from continuing operations (net of tax)

     1,556        927        3,000        19,917   

Income (loss) from discontinued operations (net of tax)

     0        163        78        4,133   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     1,556        1,090        3,078        24,050   
  

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE AMOUNTS (“E.P.S”) ATTRIBUTABLE TO POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:

        

Continuing Operations

        

Basic

     0.08        0.05        0.16        1.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.08        0.05        0.16        1.04   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations

        

Basic

     0.00        0.01        0.00        0.22   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.00        0.01        0.00        0.22   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

        

Basic

     0.08        0.06        0.16        1.27   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.08        0.06        0.16        1.26   
  

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

        

Basic

     18,306        18,963        18,681        18,877   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     18,487        19,216        18,818        19,139   
  

 

 

   

 

 

   

 

 

   

 

 

 


PowerSecure International, Inc.

Condensed Consolidated Balance Sheets (unaudited)

($000’s)

 

     December 31,
2012
    December 31,
2011
 

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

     19,122        24,606   

Trade receivables, net of allowance for doubtful accounts

     57,147        46,163   

Assets of discontinued operations held for sale

     0        380   

Inventories

     20,327        20,290   

Income taxes receivable

     592        439   

Deferred tax asset, net

     803        650   

Prepaid expenses and other current assets

     1,285        1,128   
  

 

 

   

 

 

 

Total Current Assets

     99,276        93,656   
  

 

 

   

 

 

 

PROPERTY, PLANT, AND EQUIPMENT:

    

Equipment

     48,447        38,441   

Furniture and fixtures

     375        283   

Land, building, and improvements

     5,907        5,885   
  

 

 

   

 

 

 

Total property, plant, and equipment at cost

     54,729        44,609   

Less accumulated depreciation and amortization

     12,152        8,281   
  

 

 

   

 

 

 

Property, plant, and equipment, net

     42,577        36,328   
  

 

 

   

 

 

 

OTHER ASSETS:

    

Goodwill

     12,884        7,970   

Non-current deferred tax asset

     0        266   

Restricted annuity contract

     2,447        2,376   

Intangible rights and capitalized software, net of accum amort

     1,328        1,642   

Investment in unconsolidated affiliate

     0        6   

Other assets

     635        331   
  

 

 

   

 

 

 

Total other assets

     17,294        12,591   
  

 

 

   

 

 

 

TOTAL ASSETS

     159,147        142,575   
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES

    

Accounts payable

     14,150        6,894   

Accrued and other liabilities

     23,887        16,129   

Accrued restructuring and cost reduction liabilities

     709        0   

Liabilities of discontinued operations held for sale

     0        125   

Current income taxes payable

     0        0   

Current unrecognized tax benefit

     242        287   

Current portion of term loan

     160        0   

Current portion of capital lease obligations

     886        840   
  

 

 

   

 

 

 

Total current liabilities

     40,034        24,275   
  

 

 

   

 

 

 

LONG-TERM LIABILITIES

    

Revolving Line of Credit

     0        0   

Term loan, net of current portion

     2,080        0   

Capital lease obligations, net of current portion

     1,921        2,807   

Deferred tax liability, net

     955        0   

Unrecognized tax benefit

     640        731   

Other long-term liabilities

     2,518        2,300   
  

 

 

   

 

 

 

Total long-term liabilities

     8,114        5,838   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Preferred stock—undesignated

     0        0   

Preferred stock—Series C

     0        0   

Common stock

     182        189   

Additional paid-in-capital

     112,738        116,803   

Accumulated deficit

     (2,361     (5,439
  

 

 

   

 

 

 

Total PowerSecure International, Inc. stockholders’ equity

     110,559        111,553   

Noncontrolling Interest

     440        909   
  

 

 

   

 

 

 

Total stockholders’ equity

     110,999        112,462   
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

     159,147        142,575   
  

 

 

   

 

 

 


PowerSecure International, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

($000’s)

 

     Twelve Months Ended  
     December 31,
2012
    December 31,
2011
 

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income (loss)

     2,176        23,204   

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

    

Gain on sale of unconsolidated affiliate

     (1,439     (21,873

Income from discontinued operations

     (78     (4,133

Depreciation and amortization

     4,780        3,423   

Stock compensation expense

     885        2,151   

Loss on disposal of miscellaneous assets

     78        37   

Equity in income of unconsolidated affiliate

     0        (1,559

Distributions from unconsolidated affiliate

     0        1,576   

Changes in operating assets and liabilities, net of effect of acquisitions:

    

Trade receivables, net

     (9,664     (16,873

Inventories

     68        4,721   

Deferred income taxes

     1,068        2,059   

Other current assets and liabilities

     (354     (1,551

Other noncurrent assets and liabilities

     (249     1,152   

Accounts payable

     6,579        (1,544

Accrued and other liabilities

     5,959        5,035   

Accrued restructuring and cost reduction liabilities

     709        0   
  

 

 

   

 

 

 

Net cash provided by (used in) continuing operations

     10,518        (4,175

Net cash provided by (used in) discontinued operations

     334        (1,306
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     10,852        (5,481
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisition

     (3,523     0   

Additions to property, plant and equipment

     (10,385     (16,545

Additions to intangible rights and software development

     (331     (426

Proceeds from sale of property, plant and equipment

     15        13   

Proceeds from sale of unconsolidated affiliate

     1,445        26,167   

Proceeds from sale of discontinued operations

     0        16,515   

Discontinued operations investing activities

     0        (3
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (12,779     25,721   
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Net borrowings (payments) on revolving line of credit

     0        (5,000

Proceeds from term loan borrowings

     2,400        0   

Proceeds from sale leaseback transactions

     0        2,097   

Payments on term loan

     (160     0   

Payments on capital lease obligations

     (840     (796

Repurchases of common stock

     (5,268     (447

Proceeds from stock option exercises

     311        310   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (3,557     (3,836
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     (5,484     16,404   

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

     24,606        8,202   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

     19,122        24,606   
  

 

 

   

 

 

 


Non-GAAP Pro forma Financial Measures:

Our references to our fourth quarter and full year 2012, and fourth quarter and full year 2011 “Non-GAAP Pro forma” financial measures of operating expenses, operating expenses as a percentage of revenue, operating income, operating income as a percentage of revenue, net income from continuing operations, net income, net income attributable to PowerSecure International, Inc., diluted E.P.S. from continuing operations, and diluted E.P.S. discussed and shown in this report constitute non-GAAP financial measures. For the fourth quarter and full year 2012, they refer to our GAAP results, adjusted to show them 1) for the fourth quarter of 2012 excluding charges related to our restructuring and cost reduction initiative, and 2) for the full year 2012 excluding charges related to our restructuring and cost reduction initiative, gains related to the 2011 sale of our WaterSecure operations, and results of our discontinued PowerPackages business exited in 2011. For the fourth quarter and full year 2011, they refer to our GAAP results, adjusted to show them 1) for the fourth quarter of 2011 excluding our WaterSecure operations, and the results of our discontinued PowerPackages business, and 2) for the full year 2011 excluding gains and income related to our WaterSecure operations, the results of our discontinued PowerPackages business, and gains and income related to our discontinued Southern Flow business sold in 2011.

We believe providing non-GAAP measures which show our pro forma results with these items adjusted is valuable and useful as it allows our management and our board of directors to measure, monitor and evaluate our operating performance in 2011, 2012, and in future periods with the same consistent financial context as the business was managed in those periods. Additionally, because these items were non-recurring, our non-GAAP pro forma measures are more comparable to our prior period and future period results.

We believe these Non-GAAP Pro forma measures also provide meaningful information to investors in terms of enhancing their understanding of our fourth quarter and full year 2012, and fourth quarter and full year 2011 operating performance and results, as they allow investors to more easily compare our financial performance on a consistent basis compared to the prior year periods. These Non-GAAP Pro forma measures also correspond with the way we expect investment analysts to evaluate and compare our results. Our Non-GAAP Pro forma measures should be considered only as supplements to, and not as substitutes for or in isolation from, or superior to, our other measures of financial information prepared in accordance with GAAP, such as GAAP revenue, operating expenses, operating expenses as a percentage of revenue, operating income, operating income as a percentage of revenue, net income from continuing operations, net income, net income attributable to PowerSecure International, Inc., diluted E.P.S. from continuing operations, diluted E.P.S. from discontinued operations, and diluted E.P.S.

The following table provides a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.


PowerSecure International, Inc.

Non-GAAP Pro forma Measures

($000’s except per share data, some rounding throughout)

 

     Three Months Ended December 31, 2012     Three Months Ended December 31, 2011  
     As Reported
4Q12
    Restructuring and
cost reduction
charges
    Pro forma
4Q12
    As Reported
4Q11
    WaterSecure and
PowerPackages
    Pro forma
4Q11
 

Revenue

     46,751          46,751        39,689          39,689   

Cost of sales

     31,300          31,300        27,243          27,243   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     15,451        0        15,451        12,446        0        12,446   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

            

General and administrative

     9,451          9,451        9,305          9,305   

Selling, marketing, and service

     1,521          1,521        1,086          1,086   

Depreciation and amortization

     1,348          1,348        991          991   

Restructuring and cost reduction charges

     1,127        (1,127     0        0          0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     13,447        (1,127     12,320        11,382        0        11,382   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     2,004        1,127        3,131        1,064        0        1,064   

Other income (expense)

            

Gain on sale of unconsolidated affiliate

     0          0        43        (43     0   

Equity income—unconsolidated affiliate

     0          0        0        0        0   

Management fees—unconsolidated affiliate

     0          0        0        0        0   

Interest income and other income

     21          21        25          25   

Interest expense

     (111       (111     (121       (121
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     1,914        1,127        3,041        1,011        (43     968   

Income tax expense (benefit)

     503        296        799        357        (6     351   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     1,411        831        2,242        654        (37     617   

Discontinued operations—income (loss) from operations (net of tax)

     0          0        165        (165     0   

Discontinued operations—gain on sale (net of tax)

     0          0        (2     2        0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     1,411        831        2,242        817        (200     617   

Net income (loss) attributable to noncontrolling interest

     145          145        273          273   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     1,556        831        2,387        1,090        (200     890   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

            

Income (loss) from continuing operations (net of tax)

     1,556        831        2,387        927        (37     890   

Income (loss) from discontinued operations (net of tax)

     0        0        0        163        (163     0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     1,556        831        2,387        1,090        (200     890   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE AMOUNTS (“E.P.S”) ATTRIBUTABLE TO POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:

            

Continuing Operations

            

Basic

     0.08        0.05        0.13        0.05        0.00        0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.08        0.04        0.13        0.05        0.00        0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations

            

Basic

     0.00        0.00        0.00        0.01        (0.01     0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.00        0.00        0.00        0.01        (0.01     0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

            

Basic

     0.08        0.05        0.13        0.06        (0.01     0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.08        0.04        0.13        0.06        (0.01     0.05   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

            

Basic

     18,306        18,306        18,306        18,963        18,963        18,963   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     18,487        18,487        18,487        19,216        19,216        19,216   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


PowerSecure International, Inc.

Non-GAAP Pro forma Measures

($000’s except per share data, some rounding throughout)

 

     Twelve Months Ended December 31, 2012     Twelve Months Ended December 31, 2011  
     As Reported
2012
    Restructuring and
cost reduction
charges,
WaterSecure, and
PowerPackages
    Pro forma
2012
    As Reported
2011
    WaterSecure,
Southern Flow
and
PowerPackages
    Pro forma
2011
 

Revenue

     162,039          162,039        130,015          130,015   

Cost of sales

     110,953          110,953        89,321          89,321   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     51,086        0        51,086        40,694        0        40,694   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

            

General and administrative

     36,201          36,201        33,652          33,652   

Selling, marketing, and service

     5,560          5,560        4,651          4,651   

Depreciation and amortization

     4,780          4,780        3,423          3,423   

Restructuring and cost reduction charges

     2,675        (2,675     0        0          0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     49,216        (2,675     46,541        41,726        0        41,726   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     1,870        2,675        4,545        (1,032     0        (1,032

Other income (expense)

            

Gain on sale of unconsolidated affiliate

     1,439        (1,439     0        21,873        (21,873     0   

Equity income—unconsolidated affiliate

     0          0        1,559        (1,559     0   

Management fees—unconsolidated affiliate

     0          0        282        (282     0   

Interest income and other income

     88          88        98          98   

Interest expense

     (449       (449     (575       (575
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     2,948        1,236        4,184        22,205        (23,714     (1,509

Income tax expense (benefit)

     850        302        1,152        3,134        (3,347     (213
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     2,098        934        3,032        19,071        (20,367     (1,296

Discontinued operations—income (loss) from operations (net of tax)

     78        (78     0        (1,501     1,501        0   

Discontinued operations—gain on sale (net of tax)

     0        0        0        5,634        (5,634     0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     2,176        856        3,032        23,204        (24,500     (1,296

Net income (loss) attributable to noncontrolling interest

     902          902        846          846   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     3,078        856        3,934        24,050        (24,500     (450
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

            

Income (loss) from continuing operations (net of tax)

     3,000        934        3,934        19,917        (20,367     (450

Income (loss) from discontinued operations (net of tax)

     78        (78     0        4,133        (4,133     0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to PowerSecure International, Inc.

     3,078        856        3,934        24,050        (24,500     (450
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EARNINGS PER SHARE AMOUNTS (“E.P.S”) ATTRIBUTABLE TO POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:

            

Continuing Operations

            

Basic

     0.16        0.05        0.21        1.05        (1.07     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.16        0.05        0.21        1.04        (1.06     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations

            

Basic

     0.00        0.00        0.00        0.22        (0.22     0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.00        0.00        0.00        0.22        (0.22     0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

            

Basic

     0.16        0.05        0.21        1.27        (1.29     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.16        0.05        0.21        1.26        (1.28     (0.02
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

            

Basic

     18,681        18,681        18,681        18,877        18,877        18,877   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     18,818        18,818        18,818        19,139        19,139        19,139