POWERSECURE INTERNATIONAL, INC. - FORM 8-K - EX-99.1 - INVESTMENT SLIDE PRESENTATION

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8-K - CURRENT REPORT - POWERSECURE INTERNATIONAL, INC.	d605991d8k.htm

October 2013

Exhibit 99.1

2 | ©

Forward Looking Statements

Safe Harbor

All forward-looking statements made in this presentation are made

under the safe harbor provisions of the Private Securities Litigation

Reform Act of 1995. Forward-looking statements, which are all

statements

other

than

statements

historical

facts

and

include

beliefs,

opinions, estimates, and projections about future business

developments and opportunities and financial guidance, are not

guarantees of future performance or events but are subject to risks,

uncertainties and other factors that could cause actual results to differ

materially

from

those

expressed,

projected

implied,

including

risks

and uncertainties set forth in the Company's SEC filings, including but

not limited to the Company’s most recent Form 10-K and subsequent

filings on Form 8-K and 10-Q. Any forward-looking statements in this

presentation speak only as of the date hereof, and the Company

assumes no duty or obligation to update or revise any forward-looking

statements.

3 | ©

NYSE:

POWR

PowerSecure: Who We Are Today

Backlog:

$245M

(48% YoY Growth)

>750

Employees

Growing

Earnings Per Share &

Operating Margins

TTM Revenues:

$206M

(40% YoY Growth)

Headquarters:

Wake Forest, NC

Strong

Balance Sheet

PowerSecure: Utility Focused

Energy Efficiency

Products/Services

Utility

Infrastructure

Solutions

IDG Power

Systems

Utilities

and Their

Large

Customers

4 | ©

5 | ©

Revenue Scaling Quickly to

$300M Target in 2015

100

150

200

250

300

350

2000 Start-

2005

2010

2011

2012

2013

2014

2015

Goals

Utility Infrastructure

Energy Efficiency

Distributed Generation

"Foundation"

2005-2010

26%+

Growth, 3.2X

"Scale

and Profitable Growth

2010-2015

Goal

26%+

Growth, 3.1X

$96

$162

$300

($ millions)

"Start-up"

2000-2005

1000%+

Growth

Compound Growth

2010-2015

Utility

Infrastructure

+39%

Energy Efficiency

+20%

Distributed Generation

+20%

Total

+26%

$130

6 | ©

2Q13 Results

(in millions)

2Q13

Revenue

Distributed Generation

23.6

7.4

46%

Utility Infrastructure

30.1

17.2

133%

Energy Efficiency

16.5

7.7

87%

Total Revenue

70.2

32.3

85%

Gross Profit

19.9

7.7

63%

Gross Profit % Revenue

28.3%

-3.9 pp

Operating Income

3.5

2.8

468%

Operating Profit % Revenue

4.9 %

+3.3 pp

GAAP E.P.S.

$0.11

$0.02

Non-GAAP E.P.S.

$0.12

$0.08

Numbers may non add due to rounding

Y-O-Y Variance

See non-GAAP discussion and reconciliation

7 | ©

•

Operating margins increasing

•

Increasing scale across all business lines

•

2012 cost reduction program further leverages OpEx

•

Major investment to build UI business from scratch in ‘07

now completed

•

Expect decreasing OpEx as % of revenue

•

2013 Adjusted EBITDA target: >$20M

Meaningful Bottom Line Leverage

See non-GAAP discussion and reconciliation

2011 Progression

Revenue

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

$0.25 $0.90 $0.05 $0.06

See non-GAAP discussion and reconciliation

$24

$30

$37

$40

$10

$15

$20

$25

$30

$35

$40

$45

$50

1Q11

2Q11

3Q11

4Q11

(0.09)

(0.03)

0.05

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

1Q11

2Q11

3Q11

4Q11

8 | ©

Revenue

2012 Progression

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

($0.03) $0.09 $0.03 $0.08

See non-GAAP discussion and reconciliation

$33

$38

$44

$47

$10

$15

$20

$25

$30

$35

$40

$45

$50

1Q12

2Q12

3Q12

4Q12

(0.03)

0.04

0.08

0.13

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

1Q12

2Q12

3Q12

4Q12

9 | ©

10 | ©

$45

$70

$10

$20

$30

$40

$50

$60

$70

$80

1Q13

2Q13

$0.04

$0.12

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

1Q13

2Q13

Revenue

2013 Progression

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

See non-GAAP discussion and reconciliation

$0.04 $0.11

•

At end of Q2 2013:

$26.7 M in Cash

Locked in interest rate on $25 M term loan at 3.73%

Untapped $20 M revolver

•

Anticipate 2013 Adjusted EBITDA >$20 M

•

Potential uses of capital:

Potential acquisitions

Working capital

Additional investment in company-owned DG projects

Investment in people & equipment to support growth in UI

Robust Balance Sheet

11 | ©

•

Solar DG company that brings green

energy to utilities and large C&I

customers

•

Adds strategic capability to

DG offering

•

Sandy Grove Middle School

•

Accretive in 2013

Recent Acquisitions Add Value

Purchased

solar business

for $4M in

June 2012

12 | ©

Recent Acquisitions Add Value

•

Successful 20-yr old business serving

major ESCOs with lighting, mechanical,

water and building envelope solutions

to deliver energy efficiency savings

•

Significantly expands our Energy

Efficiency offerings

•

Opens new customer channels for

LED lighting and peak shaving

•

Purchase included $27M in awarded

projects

•

Accretive in 2013

Purchased

ESCO services

business

for $5.5M in

February 2013

13 | ©

Recent Acquisitions Add Value

•

Solais has significant sourcing and

manufacturing expertise

•

Adds substantial efficiencies to

manufacturing of PowerSecure’s

existing LED solutions

•

Outstanding proprietary portfolio of LED

lamps and fixtures for commercial and

Industrial applications

•

Superior light output, thermal

management, optics, light quality and

aesthetics

•

Slightly accretive to EPS in 2013,

+ $0.10 in 2014

•

Anticipating $2M-$4M charge in 2H

2013 to accelerate manufacturing

synergies

Purchased

Solais lighting

business

for $15 M in

April 2013

14 | ©

Our 2015 Goals: $300M in Tot Revenues

Distributed

Generation

Utility

Infrastructure

Energy

Efficiency

Driving Mid-Double Digit

Operating Margins

15 | ©

16 | ©

PowerSecure Distributed Generation:

Differentiated Solution=Superior Reliability & ROI

Electric

Utility

Customer

Facility

•

24/7 monitoring: standby and peak shaving

•

Proprietary internet-based monitoring, dispatch and control

•

“No Pain”

demand response

•

Our reliability > nuclear backup systems

•

Utility tariff and interconnect experts

Interactive

Distributed

Generation

System

•

T&D maintenance and construction

•

Substation products and services

•

Advanced metering and lighting

installation

•

Storm repair and restoration

•

Utility engineering and design

•

Regulatory consulting and rate design

•

PowerSecure MicroGrids and

SmartStations

Utility Infrastructure:

Direct Service to our Utility Customers

17 | ©

•

Our Utility Infrastructure Investment and Progression

2005 –

Launched utility engineering business

2007 –

Launched utility services business

2009 –

3 major IOU’s add PowerSecure utility services crews

2010 –

1st major award: $30 million, 3-year

award serving major IOU

2011 –

Served 9 IOUs (13 operating divisions)

2012 UI revenues + 29% y-o-y to $60.7 million

Q2 2013 UI revenues + 133% y-o-y to $30.1 million

•

Industry

transmission

and

distribution

investment

estimated

$890

billion

from

2010-2030

(average of over $40 billion/year)

Capitalize on our “people advantage”

Shale gas/oil exploration are an additional growth driver

Utility Infrastructure:

Business Progression and Growth

The

Brattle

Group,

November

2008

–

“Transforming

America’s

Power

Industry

–

The

Investment

Challenge

2010-2030”

18 | ©

•

EfficientLights

–

LED-Based Lighting

Grocery, drug, and convenience stores

Replaces to traditional fluorescent lighting

Reduces lighting energy use by 70%

Reduces maintenance costs (10 year LED light versus

2 year fluorescent)

Reduces stores’

carbon footprint/eliminates

mercury-containing fluorescent lights

Longer perishables’

life = increased grocery margins

•

EfficientLights Product Suite

Refrigerated case door light (flagship product)

Walk-in cooler light

Open refrigerated case shelf and canopy lights

Parking lot light

Energy Efficiency:

LED Solutions for Retailers

19 | ©

•

SecureLite

Area Light

Utilities (COOPs) and municipalities

Energy and maintenance savings drive

payback

Opportunity: millions of lights across U.S

•

PowerLite

Street Lights

•

Power Drivers and Components

Power driver key component for every LED

•

New Commercial and Industrial Lighting

SuperTube

LED (replacement for T-8

and T-12 fluorescents)

Specialty products

Energy Efficiency:

LED Solutions for Utilities

20 | ©

Revenue Scaling Quickly to

$300M Target in 2015

100

150

200

250

300

350

2000 Start-

2005

2010

2011

2012

2013

2014

2015

Goals

Utility Infrastructure

Energy Efficiency

Distributed Generation

"Foundation"

2005-2010

26%+

Growth, 3.2X

"Scale

and Profitable Growth"

2010-2015

Goal

26%+

Growth, 3.1X

$96

$162

$300

($ millions)

"Start-up"

2000-2005

1000%+

Growth

Compound Growth

2010-2015

Utility

Infrastructure

+39%

Energy Efficiency

+20%

Distributed Generation

+20%

Total

+26%

$130

21 | ©

Thank you

Non-GAAP Financial Measures

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.

23 | ©

24 | ©

Non-GAAP Financial Measures

References to our second quarter and year-to-date 2012 and 2013 Adjusted 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 Adjusted 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 Adjusted 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 Adjusted 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 Adjusted

EBITDA are broadly used by analysts, rating agencies, investors and financial institutions in assessing

our performance. Accordingly, we believe that the presentation of Adjusted EBITDA provides useful

information to investors. The table below provides a reconciliation of Adjusted EBITDA to net income

attributable to PowerSecure International, Inc., the most directly comparable GAAP financial measure.

25 | ©

26 | ©

PowerSecure International, Inc.

Non-GAAP Pro forma Measures

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

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

June 30,

2013

2012

2013

2012

Adjusted 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

(1,439)

Discontinued operations - income

(32)

(67)

Interest income and other income

(19)

(23)

(40)

(45)

Items to Add to Net Income

Acquisition Expenses

452

531

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

Adjusted EBITDA

5,924

2,377

8,791

2,812

Three Months Ended

Six Months Ended

Non-GAAP Financial Measures

Our references to our quarterly and full year 2012, and quarterly 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 our quarterly and full year 2012 results, they refer to our GAAP

results, adjusted to show them 1) excluding charges related to our restructuring and cost reduction

initiative, 2) gains related to the 2011 sale of our WaterSecure operations, and 3) results of our

discontinued PowerPackages business exited in 2011. For our fourth quarterly and full year 2011

results, they refer to our GAAP results, adjusted to show them 1) excluding gains and income related

to our WaterSecure operations, 2) the results of our discontinued PowerPackages business, and 3)

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.

27 | ©

Non-GAAP Financial Measures

28 | ©

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.

Non-GAAP Financial Measures

POWERSECURE INTERNATIONAL, INC. - FORM 8-K - EX-99.1 - INVESTMENT SLIDE PRESENTATION - October 1, 2013

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