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

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8-K - CURRENT REPORT - POWERSECURE INTERNATIONAL, INC.	d703427d8k.htm

April 2014

Exhibit 99.1

2 | ©

Forward Looking Statements

Safe Harbor

All

forward-looking

statements

made

this

presentation

are

made

under

the

safe

harbor

provisions

the

Private

Securities

Litigation

Reform

Act

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

future

performance

events

but

are

subject

risks,

uncertainties

and

other

factors

that

could

cause

actual

results

differ

materially

from

those

expressed,

projected

implied,

including

risks

and

uncertainties

set

forth

the

Company's

SEC

filings,

including

but

not

limited

the

Company’s

most

recent

Form

10-K

and

subsequent

filings

Form

8-K

and

10-Q.

Any

forward-looking

statements

this

presentation

speak

only

the

date

hereof,

and

the

Company

assumes

duty

obligation

update

revise

any

forward-looking

statements.

3 | ©

NYSE:

POWR

PowerSecure: Who We Are Today

Backlog:

$248M

(36% YoY Growth)

>750

Employees

Growing

Operating

Margins,

E.P.S.,

Adjusted EBITDA

Strong

Balance Sheet

TTM Revenues:

$270M

(67% YoY Growth)

Headquarters:

Wake Forest, NC

PowerSecure: Utility Focused

4 | ©

Distributed

Generation

Systems

Utility

Infrastructure

Solutions

Energy Efficiency

Products/Services

Utilities

and Their

Large

Customers

FY13

FY12

Revenue

Distributed Generation

111.5

76.4

46%

Utility Infrastructure

111.7

60.7

84%

Energy Efficiency

47.0

25.0

89%

Total Revenue

270.2

162.0

67%

GAAP Gross Profit

71.6

51.1

40%

GAAP Gross Profit % Revenue

26.5%

31.5%

-5.0 pp

non-GAAP Gross Profit

75.3

51.1

47%

non-GAAP Gross Profit % Revenue

27.8%

31.5%

-3.7 pp

GAAP Operating Income

8.6

1.9

362%

GAAP Operating Profit % Revenue

3.2%

1.2%

2.0 pp

non-GAAP Operating Income

14.5

4.7

211%

non-GAAP Operating Profit % Revenue

5.4%

2.9%

2.5 pp

GAAP E.P.S.

$0.22

$0.16

38%

Non-GAAP E.P.S.

$0.38

$0.22

73%

Adjusted EBITDA

22.1

11.2

97%

See non-GAAP discussion and reconciliation

5 | ©

FY 2013 Results

(in millions)

Y-O-Y Variance

4Q 2013 Results

(in millions)

4Q13

4Q12

Revenue

Distributed Generation

26.4

22.6

16%

Utility Infrastructure

37.5

20.7

82%

Energy Efficiency

9.7

3.4

182%

Total Revenue

73.6

46.8

57%

GAAP Gross Profit

16.5

15.5

GAAP Gross Profit % Revenue

22.4%

33.0%

-10.6 pp

non-GAAP Gross Profit

20.2

15.5

31%

non-GAAP Gross Profit % Revenue

27.4%

33.0%

-5.6 pp

GAAP Operating Income

-1.8

2.0

N/M

GAAP Operating Profit % Revenue

-2.5 %

4.3%

-6.8 pp

non-GAAP Operating Income

3.5

3.1

12%

non-GAAP Operating Profit % Revenue

4.8%

6.7%

-1.9 pp

GAAP E.P.S.

-$0.09

$0.08

N/M

Non-GAAP E.P.S.

$0.13

Y-O-Y Variance

See non-GAAP discussion and reconciliation

6 | ©

7 | ©

•

2013 GAAP EPS of $0.22 (+37.5% y-o-y)

•

2013 non-GAAP EPS of $0.38 (+72.7% y-o-y)

•

2013 operating margins increase

o

+ 2.0 pp on a GAAP basis

o

+ 2.5 pp on a non-GAAP basis

•

2013 Adjusted EBITDA increases 97% to $22.1M

•

Decreasing OpEx as percentage of revenue

•

Increasing scale across all business lines

Meaningful Bottom Line Leverage

See non-GAAP discussion and reconciliation

8 | ©

Revenue Scaling and Diversifying:

Driving OpEx Leverage

See non-GAAP discussion and reconciliation

9 | ©

2011 Progression

Revenue

E.P.S. --

Non-GAAP

E.P.S. --

GAAP

$0.25 $0.90 $0.05 $0.06

See non-GAAP discussion and reconciliation

See non-GAAP discussion and reconciliation

10 | ©

Revenue

2013 Progression

E.P.S. --

Non-GAAP

E.P.S. --

GAAP

See non-GAAP discussion and reconciliation

$0.04 $0.11 $0.17 ($0.09)

11 | ©

•

At end of Q4 2013:

$50.9 M in Cash

$27 M term debt (majority hedged at 3.73%)

Untapped $20 M revolver

•

Potential uses of capital:

Additional investment in company-owned DG projects

Potential acquisitions

Working capital

Equipment to support growth in UI

Robust Balance Sheet

12 | ©

•

Provides cyber security and NERC-CIP

compliance consulting services to

utility industry

•

Opportunity for PowerSecure to expand

UI service offerings to world-class Encari

customer base

•

PowerSecure can bring Encari’s

expertise to existing UI customers

•

Accretive to UI gross margin

Recent Acquisitions Add Value

Purchased

Encari for $4.8M

October 2013

13 | ©

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

•

Delivered $2.3M in profit in 2013

Purchased

ESCO services

business

for $5.5M

February 2013

14 | ©

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

Purchased

Solais lighting

business

for $15 M

April 2013

15 | ©

16 | ©

2014 Goal: >$300M in Revenues

16 | ©

Distributed

Generation

Utility

Infrastructure

Energy

Efficiency

DG: Hospital & Data Center Growth Drivers

•

Hospital revenues +144% in 2013

•

Data center revenues +86% in 2013

•

Average DG project size up 28%

from 2012 to 2013

•

Focused hospital and data center

sales teams

•

Proprietary PowerBlock solution

drivers higher ROI for customers

•

70% bi-fuel capability delivers

environmental & economic benefits

•

18-24 month sales cycle

2013

PowerSecure.

All

rights

reserved.

PowerSecure Distributed Generation:

Differentiated Solution=Superior Reliability & ROI

•

24/7 monitoring: standby and peak shaving

•

Proprietary internet-based monitoring, dispatch and control

•

“No Pain”

demand response

•

98.2% reliability

•

Utility tariff and interconnect experts

•

Solar DG capability

Interactive

Distributed

Generation

System

Electric

Utility

Customer

Facility

2014

PowerSecure.

All

rights

reserved.

•

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

Utility Infrastructure:

Direct Service to our Utility Customers

2014

PowerSecure.

All

rights

reserved.

•

Department store/high-end retail lighting

Solais product line adds new customers

•

Utility lighting

•

Grocery, drug, and convenience stores

Best-in-class lights for freezer/refrigerated cases

•

Commercial & industrial lighting

New targeted/niche product recently launched

Energy Efficiency: LED Solutions

Utilities and municipalities

Energy and maintenance savings drive payback

Opportunity: millions of lights across U.S.

2014

PowerSecure.

All

rights

reserved.

PowerSecure: Utility Focused

Energy Efficiency

Products/Services

Utility

Infrastructure

Solutions

Distributed

Generation

Systems

Utilities

And Their

Large

Customers

2014

PowerSecure.

All

rights

reserved.

Thank you

Non-GAAP Financial Measures

23 | ©

Our references to our fourth quarter and full year 2013, and fourth quarter and full year 2012 “non-

GAAP pro forma” financial measures of cost of sales, gross margins, gross margins as a percentage

of 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,

and diluted E.P.S. discussed and shown in this report constitute non-GAAP financial measures. For

the fourth quarter of 2013, our non-GAAP financial measures refer to our GAAP results, excluding a

$4.9 million charge primarily related to the restructuring of the Company’s Energy Efficiency LED

lighting operations to position its product lines for enhanced future growth and profitability. The

restructuring was implemented to realize the manufacturing and sourcing synergies contemplated by

the Company in its 2013 acquisition of Solais Lighting. The actions taken included eliminating

certain duplicative facilities, resourcing from new lower cost suppliers, reducing the number of

product offerings, and reducing personnel and overhead. $3.7 million of this charge relates to

inventory and was recorded in cost of sales, and $1.2 million relates to severance, facilities and

equipment expenses which was recorded as “restructuring charge” in operating expense. The

Company expects to record an additional charge related to these actions in the first quarter of 2014

in an amount of $0.3-1.0 million. Fourth quarter 2013 non-GAAP financial measures also exclude a

one-time expense of $0.5 million to upgrade an annuity that underpins the post-retirement

compensation of its chief executive officer to fully guarantee future payments.

24 | ©

Non-GAAP Financial Measures

For the fourth quarter of 2012, our non-GAAP financial measures refer to our GAAP results,

excluding a $1.1 million pre-tax charge related to a restructuring and cost reduction plan that was

initiated during the third quarter of 2012, and extended into the fourth quarter of 2012, to position the

company to lower its operating expenses as a percentage of revenue in future periods. For the full

year 2013, our non-GAAP financial measures refer to our GAAP results, excluding a $4.9 million

charge primarily related to the restructuring of the Company’s Energy Efficiency LED lighting

operations to position its product lines for enhanced future growth and profitability. $3.7 million of

this charge relates to inventory and was recorded in cost of sales, and $1.2 million relates to

severance, facilities, and equipment expenses which was recorded as “restructuring charge” in

operating expense. Our full year 2013 non-GAAP financial measures also exclude a one-time

expense of $0.5 million to upgrade an annuity that underpins the post-retirement compensation of its

chief executive officer to fully guarantee future payments, and acquisition expenses of $0.6 million

related to the Solais, ESCO, and PowerLine transactions.

For the full year 2012, our non-GAAP financial measures refer to our GAAP results, excluding: 1)

$2.7 million in charges related to restructuring and cost reduction actions taken in 2012, 2)

acquisition expenses of $0.1 million related to the PowerSecure Solar transaction, and 3) gain on the

sale of the company’s WaterSecure investment of $1.4 million. 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 2012, 2013, 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.

25 | ©

Non-GAAP Financial Measures

References to our fourth quarter and full year 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) restructuring charges, 5) acquisition expenses, 6) income

tax expense (or minus an income tax benefit), 7) interest expense, 8) depreciation and amortization

and 9) 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.

26 | ©

27 | ©

28 | ©

29 | ©

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.

30 | ©

Non-GAAP Financial Measures

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 - SLIDE PRESENTATION - April 4, 2014

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