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8-K - FORM 8-K - POWERSECURE INTERNATIONAL, INC.d579528d8k.htm
EX-99.2 - EX-99.2 - POWERSECURE INTERNATIONAL, INC.d579528dex992.htm

Exhibit 99.1

 

LOGO

POWERSECURE REPORTS SECOND QUARTER 2013 RESULTS

—Record revenues of $70.2 million reflect 85 percent growth y-o-y—

—Record backlog grows to $245 million—

—133 percent y-o-y growth in utility infrastructure revenues—

—87 percent y-o-y growth in energy efficiency revenues—

—46 percent y-o-y growth in distributed generation revenues—

Wake Forest, N.C. – August 7, 2013 – PowerSecure International, Inc. (Nasdaq: POWR) today reported its second quarter 2013 results. Highlights include:

 

   

Revenues increase 85.4 percent y-o-y to $70.2 million

 

   

Operating margin expands 3.3 percentage points y-o-y to 4.9 percent

 

   

GAAP EPS increases by $0.02 y-o-y from $0.09 to $0.11

 

   

Non-GAAP EPS increases by $0.08 y-o-y from $0.04 to $0.12 (see non-GAAP discussion and reconciliation, below)

 

   

EBITDA increases nearly 150 percent to $5.9 million (see non-GAAP discussion and reconciliation, below)

“Our record second quarter results and all time high backlog illustrate the continued momentum we are seeing across our business as we deliver differentiated, best-in-class solutions to our customers. In addition, we are very pleased with the strong performance of our two most recent acquisitions out of the gate, as our new ESCO and Solais businesses delivered second quarter revenues of $12.3 million and $1.6 million, respectively,” said Sidney Hinton, chief executive officer of PowerSecure.

“With increasing revenues and EPS, a strong balance sheet, growing EBITDA from operations, a backlog that has grown even faster than our revenues, and added strength from our recent strategic acquisitions, PowerSecure has never been in a stronger position for long term success,” Hinton added.

Second Quarter 2013:

PowerSecure’s second quarter 2013 (2Q 2013) revenues of $70.2 million, an increase of $32.3 million, or 85.4 percent, from the second quarter of 2012 (2Q 2012), were driven by a 46.1 percent year-over-year (y-o-y) increase in revenues from distributed generation products, a 133.2 percent y-o-y increase in revenues from utility infrastructure products and services, and an 87.1 percent y-o-y increase in revenues from energy efficiency products and services.


                   Variance  
($ in 000’s)    2Q13      2Q12      $      %  

Revenue by Product/Service

           

Distributed Generation

     23,581         16,139         7,442         46.1

Utility Infrastructure

     30,111         12,912         17,199         133.2

Energy Efficiency

     16,495         8,816         7,679         87.1
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Revenue

     70,187         37,867         32,320         85.4

Gross margin as a percentage of revenue was 28.3 percent in 2Q 2013 compared to 32.2 percent in 2Q 2012. The y-o-y gross margin decrease was driven by a higher mix of revenues from solar and ESCO projects, and the increased contribution of our utility infrastructure products and services, which generally carry lower gross margins. Solar and ESCO revenues were $3.9 million and $12.3 million, respectively (solar is included in the distributed generation product category and ESCO is included in the energy efficiency category).

Operating expenses for 2Q 2013 as a percentage of our revenues decreased by 7.2 percentage points compared to 2Q 2012, as the company leveraged operating expenses against a greater level of revenues, quarter-over-quarter.

Operating expenses for 2Q 2013 were $16.4 million, compared to $11.6 million in 2Q 2012. The $4.8 million y-o-y increase in operating expenses consists primarily of $2.7 million of incremental operating expenses in 2Q 2013 related to our recent solar, Solais and ESCO acquisitions. In addition, we incurred $0.5 million in incremental acquisition costs related to our acquisitions in Q2 2013, compared to $0.1 million in incremental acquisition costs in Q2 2012. The remaining y-o-y increase in our operating expenses is primarily due to an increase in selling expenses related to our significantly higher revenue and backlog, depreciation from our investments in company-owned distributed generation systems, utility infrastructure equipment, and increases in personnel and equipment to drive and support our growth. The increases in personnel and equipment include expenses to continue to strengthen the company’s safety resources and programs.

Operating margin as a percentage of revenue increased 3.3 percentage points to 4.9 percent in 2Q 2013 from 1.6 percent in 2Q 2012. The increase in operating margin was driven by the reduction in operating expenses as a percentage of revenue. This increase was enhanced by the cost reduction actions the company took during the second half of 2012 to streamline its operations.

The company’s recent acquisitions have provided opportunities to further leverage the profitability of our operations, including significant near and mid-term opportunities to increase the operating margins in our energy efficiency product and service lines. This includes manufacturing and sourcing synergies our Solais acquisition brings to our existing LED lighting operations, and other cost reduction opportunities. The company is executing on these opportunities and initiatives to accelerate the realization of their expected benefits, and we expect these actions to result in a charge of between $2 million and $4 million during the second half of 2013.


Diluted GAAP earnings per share (EPS) from continuing operations increased to $0.11 in 2Q 2013, compared to $0.09 in 2Q 2012. Non-GAAP EPS from continuing operations increased to $0.12 in 2Q 2013, compared to $0.04 in 2Q 2012.

Results from 2Q 2012 included a one-time gain of $1.4 million from the sale of our WaterSecure business, and $0.1 million of acquisition expenses related to our acquisition of PowerSecure Solar. These items are adjusted in our non-GAAP calculation of 2Q 2012 non-GAAP EPS. Results from Q2 2013 include $0.5 million of acquisition costs primarily related to the acquisition of Solais, and are adjusted in the Q2 2013 non-GAAP EPS calculation (see non-GAAP discussion and reconciliation, below).

The company completed the second quarter of 2013 with $26.7 million in cash, zero drawn on its $20 million revolving credit facility and $27.2 million in term debt outstanding.

The company’s capital expenditures during Q2 2013 were $2.5 million, with $1.2 million of this capital invested to deploy systems to support PowerSecure-owned long-term recurring revenue distributed generation projects, and the remaining $1.3 million primarily invested in the purchase of equipment for its growing utility infrastructure business.

The company’s revenue backlog stands at a record $245 million, as of the date of this release. This includes new business from awards announced on June 6, 2013 and July 31, 2013. The company’s revenue backlog represents revenue expected to be recognized after June 30, 2013, for periods including the third quarter of 2013 onward.

This backlog figure compares to the revenue backlog of $206 million announced in the company’s first quarter 2013 earnings release issued on May 8, 2013, which represented revenue expected to be recognized after March 31, 2013, and $166 in revenue backlog announced in the company’s 2Q 2012 earnings release issued on August 6, 2012.

The company’s $245 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 June 30, 2013

 

    Anticipated     Estimated Primary  

Description

  Revenue     Recognition Period  

Project-based Revenue — Near term

  $ 131 Million        3Q13 through 1Q14   

Project-based Revenue — Long term

  $ 45 Million        2Q14 through 2015   

Recurring Revenue

  $ 69 Million        3Q13 through 2020   
 

 

 

   

Revenue Backlog expected to be recognized after June 30, 2013

  $ 245 Million     

Note: Anticipated revenue and estimated primary recognition periods are subject to risks and uncertanities 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 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.

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. The call can also be accessed by dialing 888-713-4211 (or 617-213-4864 if dialing internationally) and providing pass code 53645986. If you are unable to participate during the live webcast, a replay of the conference call will be available approximately two hours after the completion of the call through midnight on August 21, 2013. To listen to the replay, dial 888-286-8010 (or 617-801-6888 if dialing internationally), and enter passcode 84522182. 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, the Solais business, and 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     Six Months Ended  
     June 30,     June 30,     June 30,     June 30,  
     2013     2012     2013     2012  

Revenue

     70,187        37,867        115,144        71,052   

Cost of sales

     50,304        25,663        81,521        49,293   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     19,883        12,204        33,623        21,759   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

        

General and administrative

     12,511        9,093        22,343        17,738   

Selling, marketing, and service

     2,105        1,366        3,490        2,424   

Depreciation and amortization

     1,809        1,136        3,265        2,221   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     16,425        11,595        29,098        22,383   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     3,458        609        4,525        (624

Other income (expense)

        

Gain on sale of unconsolidated affiliate

     0        1,439        0        1,439   

Interest income and other income

     19        23        40        45   

Interest expense

     (130     (116     (235     (224
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     3,347        1,955        4,330        636   

Income tax expense (benefit)

     1,305        621        1,679        228   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     2,042        1,334        2,651        408   

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

     0        32        0        67   

Discontinued operations—gain on sale (net of tax)

     0        0        0        0   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     2,042        1,366        2,651        475   

Net loss attributable to noncontrolling interest

     57        277        181        565   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     2,099        1,643        2,832        1,040   
  

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

        

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

     2,099        1,611        2,832        973   

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

     0        32        0        67   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     2,099        1,643        2,832        1,040   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

        

Continuing Operations

        

Basic

     0.11        0.09        0.15        0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.11        0.09        0.15        0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations

        

Basic

     0.00        0.00        0.00        0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.00        0.00        0.00        0.00   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

        

Basic

     0.11        0.09        0.15        0.06   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.11        0.09        0.15        0.05   
  

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

        

Basic

     19,024        18,846        18,635        18,874   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     19,357        18,941        18,941        19,015   
  

 

 

   

 

 

   

 

 

   

 

 

 


PowerSecure International, Inc.

Condensed Consolidated Balance Sheets (unaudited)

($000’s)

 

     June 30,      December 31,  
     2013      2012  

ASSETS

     

CURRENT ASSETS:

     

Cash and cash equivalents

     26,653         19,122   

Trade receivables, net of allowance for doubtful accounts

     74,526         57,147   

Inventories

     28,576         20,327   

Income taxes receivable

     0         592   

Deferred tax asset, net

     803         803   

Prepaid expenses and other current assets

     1,440         1,285   
  

 

 

    

 

 

 

Total current assets

     131,998         99,276   
  

 

 

    

 

 

 

PROPERTY, PLANT, AND EQUIPMENT:

     

Equipment

     52,713         48,447   

Furniture and fixtures

     460         375   

Land, building, and improvements

     5,996         5,907   
  

 

 

    

 

 

 

Total property, plant, and equipment at cost

     59,169         54,729   

Less accumulated depreciation and amortization

     15,008         12,152   
  

 

 

    

 

 

 

Property, plant, and equipment, net

     44,161         42,577   
  

 

 

    

 

 

 

OTHER ASSETS:

     

Goodwill

     28,073         12,884   

Restricted annuity contract

     2,484         2,447   

Intangible rights and capitalized software, net of accum amort

     6,870         1,328   

Other assets

     1,227         635   
  

 

 

    

 

 

 

Total other assets

     38,654         17,294   
  

 

 

    

 

 

 

TOTAL ASSETS

     214,813         159,147   
  

 

 

    

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

     

CURRENT LIABILITIES:

     

Accounts payable

     25,364         14,150   

Accrued and other liabilities

     31,881         23,887   

Accrued restructuring and cost reduction liabilities

     360         709   

Income taxes payable

     983         0   

Current unrecognized tax benefit

     242         242   

Current portion of long-term debt

     3,731         160   

Current portion of capital lease obligation

     910         886   
  

 

 

    

 

 

 

Total current liabilities

     63,471         40,034   
  

 

 

    

 

 

 

LONG-TERM LIABILITIES:

     

Revolving Line of Credit

     0         0   

Long-term debt, net of current portion

     23,429         2,080   

Capital lease obligation, net of current portion

     1,460         1,921   

Deferred tax liability, net

     57         955   

Unrecognized tax benefit

     640         640   

Other long-term liabilities

     2,627         2,518   
  

 

 

    

 

 

 

Total long-term liabilities

     28,213         8,114   
  

 

 

    

 

 

 

STOCKHOLDERS’ EQUITY:

     

Perferred stock—undesignated

     0         0   

Preferred stock—Series C

     0         0   

Common stock

     193         182   

Additional paid-in-capital

     122,465         112,738   

Retained earnings (deficit)

     471         (2,361
  

 

 

    

 

 

 

Total PowerSecure International, Inc. stockholders’ equity

     123,129         110,559   

Noncontrolling Interest

     0         440   
  

 

 

    

 

 

 

Total stockholders’ equity

     123,129         110,999   
  

 

 

    

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

     214,813         159,147   
  

 

 

    

 

 

 


PowerSecure International, Inc.

Condensed Consolidated Statement of Cash Flows (unaudited)

($000’s)

 

     Six Months Ended  
     June 30,     June 30,  
     2013     2012  

CASH FLOWS FROM OPERATING ACTIVITIES:

    

Net income (loss)

     2,651        475   

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

    

Gain on sale of unconsolidated affiliate

     0        (1,439

Income from discontinued operations

     0        (67

Depreciation and amortization

     3,265        2,221   

Stock compensation expense

     289        576   

Loss on disposal of miscellaneous assets

     14        45   

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

    

Trade receivables, net

     (11,025     4,360   

Inventories

     (7,353     861   

Other current assets and liabilities

     1,480        416   

Other noncurrent assets and liabilities

     (520     (335

Accounts payable

     9,291        (378

Accrued and other liabilities

     (1,869     (3,067

Accrued restructuring and cost reduction liabilities

     (349     0   
  

 

 

   

 

 

 

Net cash provided by (used in) continuing operations

     (4,126     3,668   

Net cash provided by (used in) discontinued operations

     0        132   
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (4,126     3,800   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

    

Acquisitions, net of cash acquired

     (9,542     (3,523

Purchases of property, plant and equipment

     (3,856     (3,330

Additions to intangible rights and software development

     (319     (215

Proceeds from sale of property, plant and equipment

     0        14   

Proceeds from sale of unconsolidated affiliate

     0        1,445   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (13,717     (5,609
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

    

Net borrowings (payments) on revolving line of credit

     0        0   

Proceeds from long-term borrowings

     25,000        2,400   

Principal payments on long-term debt

     (80     (80

Principal payments on capital lease obligations

     (437     (414

Repurchases of common stock

     (9     (1,010

Proceeds from stock option exercises

     900        14   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     25,374        910   
  

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

     7,531        (899

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR

     19,122        24,606   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS AT END OF PERIOD

     26,653        23,707   
  

 

 

   

 

 

 


Non-GAAP Pro forma Financial Measures Discussion:

Our references to our second quarter 2012 and 2013 “Non-GAAP Pro forma” financial measures of 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. discussed and shown in this report constitute non-GAAP financial measures. They refer to our GAAP results, adjusted to show the results 1) without the 2Q 2012 gain on the sale of our WaterSecure investment (identified in our financial statements as our unconsolidated affiliate), 2) without the Q2 2012 results of our discontinued PowerPackages business, 3) without the Q2 2012 acquisition expenses related to PowerSecure Solar and 4) without the Q2 2013 acquisition expenses primarily related to Solais (and to a lesser extent our ESCO, PowerLine, IES, and PowerSecure Solar transactions).

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 with the same consistent financial context. These non-GAAP pro forma measures also correspond with the way we expect Wall Street analysts to 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, our other measures of financial information prepared in accordance with GAAP, such as GAAP revenue, operating income, 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.

References to our second quarter and year-to-date 2012 and 2013 EBITDA, which we define as our earnings before interest, taxes, depreciation and amortization, as discussed and shown in this release, constitutes a non-GAAP “pro forma” financial measure.

We believe that EBITDA, as a non-GAAP pro forma financial measure, provides meaningful information to investors in terms of enhancing their understanding of our operating performance and results, as it allows investors to more easily compare our financial performance on a consistent basis compared to the prior year periods. This non-GAAP financial measure also corresponds with the way we expect investment analysts to evaluate and compare our results. Any non-GAAP pro forma financial 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 net income attributable to PowerSecure International, Inc.

We define and calculate EBITDA as net income attributable to PowerSecure International, Inc., minus: 1) the gain on the sale of our unconsolidated affiliate, 2) discontinued operations and 3) interest income and other income, plus: 4) acquisition expenses, 5) income tax expense (or minus an income tax benefit), 6) interest expense, 7) depreciation and amortization and 8) stock compensation expense. We disclose EBITDA because we believe it is a useful metric by which to compare the performance of our business from period to period. We understand that measures similar to EBITDA are broadly used by analysts, rating agencies, investors and financial institutions in assessing our performance. Accordingly, we believe that the presentation of EBITDA provides useful information to investors. The table below provides a reconciliation of EBITDA to net income attributable to PowerSecure International, Inc., the most directly comparable GAAP financial measure.


PowerSecure International, Inc.

Non-GAAP Pro forma Measures

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

 

     Three Months Ended June 30, 2013     Three Months Ended June 30, 2012  
     As Reported
2Q13
    Acquisition
Expenses for Solais,
ESCO, PowerLine,
IES, and
PowerSecure Solar
Transactions
    Pro forma
2Q13
    As Reported
2Q12
    WaterSecure,
PowerPackages,
and Acquisition
Expenses for

PowerSecure Solar
    Pro forma
2Q12
 

Revenue

     70,187          70,187        37,867          37,867   

Cost of sales

     50,304          50,304        25,663          25,663   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit

     19,883        0        19,883        12,204        0        12,204   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

            

General and administrative

     12,511        (452     12,059        9,093        (74     9,019   

Selling, marketing, and service

     2,105          2,105        1,366          1,366   

Depreciation and amortization

     1,809          1,809        1,136          1,136   

Restructuring and cost reduction charges

     0        0        0        0          0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     16,425        (452     15,973        11,595        (74     11,521   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     3,458        452        3,910        609        74        683   

Other income (expense)

            

Gain on sale of unconsolidated affiliate

     0          0        1,439        (1,439     0   

Interest income and other income

     19          19        23          23   

Interest expense

     (130       (130     (116       (116
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income taxes

     3,347        452        3,799        1,955        (1,365     590   

Income tax expense (benefit)

     1,305        176        1,481        621        (433     188   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) from continuing operations

     2,042        276        2,318        1,334        (932     402   

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

     0          0        32        (32     0   

Discontinued operations - gain on sale (net of tax)

     0          0        0        0        0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

     2,042        276        2,318        1,366        (964     402   

Net loss attributable to noncontrolling interest

     57          57        277          277   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     2,099        276        2,375        1,643        (964     679   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

   

         

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

     2,099        276        2,375        1,611        (932     679   

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

     0        0        0        32        (32     0   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

     2,099        276        2,375        1,643        (964     679   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

            

Continuing Operations

            

Basic

     0.11        0.01        0.12        0.09        (0.05     0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.11        0.01        0.12        0.09        (0.05     0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued Operations

            

Basic

     0.00        0.00        0.00        0.00        0.00        0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.00        0.00        0.00        0.00        0.00        0.00   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income

            

Basic

     0.11        0.01        0.12        0.09        (0.05     0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     0.11        0.01        0.12        0.09        (0.05     0.04   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

            

Basic

     19,024        19,024        19,024        18,846        18,846        18,846   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     19,357        19,357        19,357        18,941        18,941        18,941   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


PowerSecure International, Inc.

Non-GAAP Pro forma Measures

EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization)—Calculations and Reconciliation

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

 

     Three Months Ended     Six Months Ended  
     June 30,     June 30,     June 30,     June 30,  
     2013     2012     2013     2012  

EBITDA Calculation/Reconciliation

        

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

     2,099        1,643        2,832        1,040   

Items to Subtract from Net Income

        

Gain on sale of unconsolidated affiliate

     0        (1,439     0        (1,439

Discontinued operations—income

     0        (32     0        (67

Interest income and other income

     (19     (23     (40     (45

Items to Add to Net Income

        

Acquisition Expenses

     452        74        531        74   

Income tax expense (benefit)

     1,305        621        1,679        228   

Interest expense

     130        116        235        224   

Depreciation and Amortization

     1,809        1,136        3,265        2,221   

Stock compensation expense

     148        281        289        576   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     5,924        2,377        8,791        2,812