Comverge Reports Fiscal Year and Fourth Quarter 2009 Financial Results
Annual Revenue Increases 28%
NORCROSS, Ga., March 8, 2010 (GLOBE NEWSWIRE) -- Comverge, Inc. (Nasdaq:COMV), a leading provider of comprehensive smart grid, demand management, and energy efficiency solutions, today announced fourth quarter and full-year financial and operating results for 2009.
Financial Summary
Fourth quarter revenues for 2009 were $40.8 million compared to $33.0 million in the fourth quarter of 2008, a 24% increase. Historically, fourth quarter revenues are the largest of the year due to the recognition of our residential Virtual Peaking Capacity™ contract revenues, which are deferred throughout the year until the fourth quarter. Full-year revenues were $98.8 million in 2009 compared to $77.2 million in 2008, a 28% increase.
Adjusted EBITDA for the fourth quarter of 2009 was $18.1 million compared to $12.7 million for the fourth quarter of 2008, an increase of 43%. For the full-year 2009, adjusted EBITDA was $1.2 million compared to a loss of $5.1 million for 2008. Adjusted EBITDA is net loss before net interest expense, income tax expense (benefit), depreciation, amortization, stock-based compensation expense and impairment charges (see Schedule 5 – Reconciliation of Non-GAAP Financial Measure to the Most Directly Comparable GAAP Financial Measure).
Net loss for the fourth quarter of 2009 was $3.9 million, or $0.17 per share basic and diluted, compared to net income of $6.1 million, or $0.29 per share basic and $0.28 diluted for the fourth quarter of 2008. Net loss for the fourth quarter of 2009 included one-time expenses of $3.5 million, or $0.15 per share basic and diluted related to the accelerated vesting of stock options, recorded as non-cash stock compensation of $2.7 million, and $0.8 million of interest expense related to the write-off of remaining unamortized loan costs from the early repayment of our GE Capital debt.
Net loss for the full year 2009 was $31.7 million, or $1.45 per share basic and diluted compared to a net loss of $94.1 million, or $4.45 per share basic and diluted in 2008. Net loss for 2009 included one-time expenses of $7.8 million, or $0.36 per share basic and diluted, which included $4.3 million relating to our former CEO's retirement, $2.7 million for accelerated vesting of stock options and $0.8 million related to the write-off of unamortized loan costs from the GE Capital debt. Included in the 2008 net loss was a non-cash impairment charge recorded for goodwill and certain intangible assets related to our acquisition of Enerwise Global Technologies, Inc., of $75.4 million, or $3.52 per share basic and diluted after a $1.0 million tax benefit.
2009 Wrap Up
Our record $98.8 million in revenues reflects great growth in tough economic conditions. General and administrative expenses for 2009 were $37.8 million compared to $34.5 million in 2008. Excluding the $4.3 million one-time expense relating to our former CEO's retirement, general and administrative expenses actually decreased 3% in 2009, while revenue increased 28%. Positive Adjusted EBITDA of $1.2 million for 2009 was a $6.3 million improvement over 2008, and is reflective of our continuing ramp to profitability. Comverge generated $7.8 million in positive cash flow from operations for 2009, a $21.6 million improvement over 2008 and another indicator of our improving financial performance. This was all accomplished while expanding our investment in R&D during 2009 as part of our continuing commitment to innovation. R&D spending of $4.9 million in 2009 was four times greater than 2008, producing our smart grid ready products and Apollo® software.
"2009 resulted in many achievements that have us well positioned for success in 2010," said R. Blake Young, president and chief executive officer of Comverge. "We won our first stimulus-related contract, launched our new enterprise-class demand response management system software, Apollo, and de-leveraged our balance sheet in order to more aggressively participate in PJM capacity auctions this year. By continuing these strategic initiatives, and investing in long-term opportunities that deliver value to customers and shareholders, I believe we will emerge even more prominently positioned by this time next year."
For Additional Information:
Comverge fourth quarter 2009 business highlights include:
strengthened the board of directors with the appointment of A. Laurence Jones, Joseph M. O'Donnell and Scott B. Ungerer to its Board of Directors effective October 26, 2009;
raised an additional $27.0 million net equity in a common stock offering;
retired our GE Capital debt of $23.0 million;
entered into our first stimulus-related contract with Oklahoma Gas & Electric to be a key partner in the Oklahoma City-based utility's Positive Energy® Smart Grid demand response program; and
released Apollo Version 1.2, a more extensive and feature-rich demand response platform for utilities and their customers, empowering them to better understand their energy usage, control costs and promote grid reliability.
Increased total megawatts under management by 35% or 747 megawatts during 2009. As of December 31, 2009 total megawatts under management were:
Megawatts under long-term contracts, with regulatory approval (898)
Megawatts under open market programs (1194)
Megawatts to be provided under turnkey programs (370)
Megawatts managed for a fee (437)
Total megawatts (2899)
Recent Developments
announced the appointment of R. Blake Young as CEO and President and the appointment of Michael D. Picchi, EVP – Chief Financial Officer, to our Board of Directors;
significantly enhanced our ability to fund future business growth by increasing our Silicon Valley Bank revolving credit line by $20 million, to a total of $30 million, with a new 3-year term that will be available for general working capital needs and issuances of letters of credit;
announced our second stimulus-related contract, an expanded 5-year agreement with Pepco Holdings, Inc. for 40,000 additional homes providing energy management devices, marketing, installation and call center services managed by our Apollo Demand Response Management System software. This program is one of the largest deployments of next generation smart grid residential demand response technology in the industry.
Current Outlook
We currently expect full year 2010 revenues to be in the range of $125 to $137 million. We also expect to grow total megawatts under management by 800 megawatts.
As of the date of this release, we have 1015 megawatts under long-term capacity contracts which we expect to contribute to approximately $498 million of total contracted future revenues. Of these amounts, 117 megawatts of capacity under long-term contracts, representing an expected $32 million in contracted future revenues, are still awaiting regulatory approval. Furthermore, we have been awarded 683 megawatts of capacity in the 2012 – 2013 PJM Economic Load Response Program, or ELRP. In the event we receive regulatory approval on these 117 megawatts and we secure adequate load capacity to meet our obligations under the 2012-2013 PJM ELRP, we will have 3369 in total megawatts managed.
The above statements are based on current expectations. These statements are forward-looking and actual results may differ materially. The Company assumes no obligation to publicly update or revise its outlook. Investors are reminded that actual results may differ from these estimates for the reasons described below under the caption "Caution Regarding Forward-Looking Statements" and in our filings with the Securities and Exchange Commission.
Additional Information
Comverge will discuss these results for the fourth quarter and full-year 2009 as well as its expectations for the future in a conference call scheduled today at 10:00 a.m. EST. To participate in the call, dial 800-289-0479 or 913-312-0658 for international participants.
Additionally, the results will be reported in the Investor Relations section on Comverge's website at http://ir.comverge.com. An audio replay of the call will be available beginning March 8, 2010 at 1:00 p.m. and available until March 15, 2010 at 12:00 a.m. EDT (midnight) by dialing in 888-203-1112 (719-457-0820 for international participants) and using conference code number 7401577.
Additional financial information can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2009, which has been filed today with the Securities and Exchange Commission.
About Comverge
With over 3,300 megawatts of clean energy capacity under management, Comverge is a leading provider of comprehensive smart grid, demand management, and energy efficiency solutions that improve grid reliability and supply electric capacity by reducing base load and peak load energy consumption. For more information, visit www.comverge.com. Virtual Peaking Capacity is a trademark of Comverge, Inc. Apollo is a registered trademark of Comverge, Inc.
Caution Regarding Forward-Looking Statements
This release contains forward-looking statements that are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release are not and do not constitute historical facts, do not constitute guarantees of future performance and are based on numerous assumptions which, while believed to be reasonable, may not prove to be accurate. These forward looking statements include projected revenue guidance, projected contracted revenues, projected regulatory changes or approvals, the amount of revenue and megawatts that will be generated by long-term contracts or open market programs and certain assumptions upon which such forward-looking statements are based. The forward-looking statements in this release do not constitute guarantees of future performance and involve a number of factors that could cause actual results to differ materially, including risks associated with Comverge's business involving our products, the development and distribution of our products and related services, regulatory changes or grid operator rule changes, regulatory approval of our contracts, economic and competitive factors, our key strategic relationships, and other risks more fully described in our most recently filed Annual Report on Form 10-K. Comverge assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
Regulation G Disclosure - Non-GAAP Financial Information
Non-GAAP financial measures are based upon our unaudited consolidated statements of operations for the periods shown, giving effect to the adjustments shown in the reconciliations set forth below. This presentation is not in accordance with, or an alternative for, U.S. generally accepted accounting principles (GAAP). The non-GAAP financial information presented herein should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. However, Comverge believes that non-GAAP reporting, giving effect to the adjustments shown in the reconciliation below, provides meaningful information and therefore uses it to supplement its GAAP reporting and internally in evaluating operations, managing and benchmarking performance. The Company has chosen to provide this supplemental information to investors, analysts and other interested parties to enable them to perform additional analyses of operating results, to illustrate the results of operations giving effect to the non-GAAP adjustments shown in the reconciliations below, and to provide an additional measure of performance.
SCHEDULE 1
COMVERGE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2009
2008
2009
2008
(unaudited)
(unaudited)
Revenue
Product
$ 4,556
$ 5,643
$ 20,732
$ 17,890
Service
36,248
27,336
78,112
59,348
Total revenue
40,804
32,979
98,844
77,238
Cost of revenue
Product
3,033
3,415
12,912
11,087
Service
24,285
11,146
52,736
32,248
Total cost of revenue
27,318
14,561
65,648
43,335
Gross profit
13,486
18,418
33,196
33,903
Operating expenses
General and administrative expenses
9,372
8,015
37,781
34,463
Marketing and selling expenses
4,955
3,568
17,737
15,738
Research and development expenses
1,395
461
4,878
1,137
Amortization of intangible assets
552
517
2,209
2,439
Impairment charges
--
--
--
75,432
Operating income (loss)
(2,788)
5,857
(29,409)
(95,306)
Interest and other expense (income), net
1,098
(313)
2,038
(299)
Income (loss) before income taxes
(3,886)
6,170
(31,447)
(95,007)
Provision (benefit) for income taxes
60
69
219
(901)
Net income (loss)
$ (3,946)
$ 6,101
$ (31,666)
$ (94,106)
Net income (loss) per share
Basic
$ (0.17)
$ 0.29
$ (1.45)
$ (4.45)
Diluted
$ (0.17)
$ 0.28
$ (1.45)
$ (4.45)
SCHEDULE 2
COMVERGE, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2009
2008
2009
2008
(unaudited)
(unaudited)
Revenue:
Utility Products & Services
$ 7,630
$ 6,951
$ 31,415
$ 22,458
Residential Business
30,329
23,972
39,585
34,652
Commercial & Industrial Business
2,845
2,056
27,844
20,128
Total
$ 40,804
$ 32,979
$ 98,844
$ 77,238
Cost of Revenue:
Utility Products & Services
$ 5,283
$ 4,020
$ 19,028
$ 12,897
Residential Business
20,057
9,130
25,662
14,914
Commercial & Industrial Business
1,978
1,411
20,958
15,524
Total
$ 27,318
$ 14,561
$ 65,648
$ 43,335
Gross Profit:
Utility Products & Services
$ 2,347
$ 2,931
$ 12,387
$ 9,561
Residential Business
10,272
14,842
13,923
19,738
Commercial & Industrial Business
867
645
6,886
4,604
Total
$ 13,486
$ 18,418
$ 33,196
$ 33,903
SCHEDULE 3
COMVERGE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
Assets
December 31,
2009
December 31,
2008
Cash and cash equivalents
$ 16,069
$ 19,571
Restricted cash
3,000
1,968
Marketable securities
34,409
28,276
Billed accounts receivable, net
8,119
18,877
Unbilled accounts receivable
11,873
5,908
Inventory, net
6,605
4,960
Deferred costs
1,715
2,197
Other current assets
938
1,273
Total current assets
82,728
83,030
Restricted cash
2,636
2,089
Property and equipment, net
18,340
20,572
Intangible assets, net
8,779
10,251
Goodwill
8,179
8,179
Other assets
235
1,036
Total assets
$ 120,897
$ 125,157
Liabilities and Shareholders' Equity
Accounts payable
6,874
7,672
Accrued expenses
11,574
8,006
Deferred revenue
5,890
6,694
Current portion of long-term debt
3,000
3,226
Other current liabilities
5,648
2,400
Total current liabilities
32,986
27,998
Deferred revenue
1,203
2,220
Long-term debt
9,750
24,888
Other liabilities
2,914
2,391
Total long-term liabilities
13,867
29,499
Common stock
25
22
Additional paid-in capital
258,660
220,638
Treasury stock
(63)
(119)
Accumulated deficit
(184,596)
(152,930)
Accumulated other comprehensive income
18
49
Total shareholders' equity
74,044
67,660
Total liabilities and shareholders' equity
$ 120,897
$ 125,157
SCHEDULE 4
COMVERGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2009
2008
2009
2008
(unaudited)
(unaudited)
Cash flows from operating activities
Net income (loss)
$ (3,946)
$ 6,101
$ (31,666)
$ (94,106)
Adjustments to reconcile net income (loss) to net cash from operating activities
Depreciation
16,879
4,340
17,689
5,004
Amortization of intangible assets
721
683
2,810
2,605
Stock-based compensation
3,235
1,460
10,038
6,876
Impairment charges
--
--
--
75,432
Other
1,430
223
2,210
(470)
Changes in working capital
(17,162)
(16,021)
6,698
(9,174)
Net cash provided by (used in) operating activities
1,157
(3,214)
7,779
(13,833)
Cash flows from investing activities
Change in restricted cash
(1,540)
(970)
(1,579)
(1,692)
Cash paid for acquisitions, net of cash acquired
--
--
--
(48)
Maturities (purchases) of marketable securities, net
(7,389)
907
(6,416)
5,091
Purchases of property and equipment
(3,216)
(2,422)
(14,901)
(11,615)
Purchases of technology licenses
(12)
(1,700)
(1,338)
(1,700)
Net cash used in investing activities
(12,157)
(4,185)
(24,234)
(9,964)
Cash flows from financing activities
Proceeds from exercises of stock options
863
5
1,067
359
Borrowings (repayments) of debt
(23,916)
(1,371)
(15,364)
4,227
Proceeds (payments) from issuance of common stock, net of offering costs
27,371
--
27,371
(614)
Other
(48)
(319)
(121)
(359)
Net cash provided by (used in) financing activities
4,270
(1,685)
12,953
3,613
Net change in cash and cash equivalents
(6,730)
(9,084)
(3,502)
(20,184)
Cash and cash equivalents at beginning of period
22,799
28,655
19,571
39,755
Cash and cash equivalents at end of period
$ 16,069
$ 19,571
$ 16,069
$ 19,571
SCHEDULE 5
COMVERGE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO THE
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURE
(In thousands)
Three Months Ended
December 31,
Year Ended
December 31,
2009
2008
2009
2008
Net income (loss)
$ (3,946)
$ 6,101
$ (31,666)
$ (94,106)
Depreciation and amortization
17,600
5,023
20,499
7,609
Interest expense, net
1,107
52
2,114
22
Provision (benefit) for income taxes
60
69
219
(901)
EBITDA
$ 14,821
$ 11,245
$ (8,834)
$ (87,376)
Non-cash stock compensation expense
3,235
1,460
10,038
6,876
Non-cash impairment charge
--
--
--
75,432
Adjusted EBITDA
$ 18,056
$ 12,705
$ 1,204
$ (5,068)
See "Non-GAAP Financial Information" earlier in this earnings press release for information on the use of this
Non-GAAP financial measure
For Additional Information:
Media Relation
Kristin Mastrandrea
Communications Manager
Comverge, Inc.
973-434-7157
Investor relations
Dan Pfeffer
VP, Treasurer-Investor Relations
Comverge, Inc.
678-802-8302
