Comverge Reports First Quarter 2009 Financial Results
EAST HANOVER, N.J., May 7, 2009 Comverge, Inc. (Nasdaq: COMV), a leading provider of comprehensive smart grid, demand management, and energy efficiency solutions, today announced first quarter financial and operating results for 2009.
"Our first quarter performance was notable with several major turnkey and VPC contract wins, a robust pipeline of opportunities, and our future contracted revenues climbing to over a half billion dollars," said Robert M. Chiste, Chairman, President and CEO of Comverge. "These results, and the addition of 450 megawatts under management in the quarter, underscore the continued confidence placed in Comverge by its utility customers as they increasingly utilize our demand management solutions in their movement toward demand response and energy efficiency as a significant source of clean energy."
Chiste continued, "Our VPC execution was solid as we built out a record 52 megawatts of capacity in our programs while generating positive cash from operations on the cash flow statement during the quarter. In addition, the introduction of our commercially available Apollo software platform in March was a significant milestone and again demonstrates our leadership in developing innovative smart grid technology. We have strong momentum and I am optimistic about the outlook for our performance in the remainder of this year."
Financial Summary First quarter revenues for 2009 were $11.6 million compared to $10.5 million in the first quarter of 2008, an 11% increase. Revenues for both periods exclude revenues from our residential VPC contracts, which are deferred and recognized in the fourth quarter. Deferred revenue on the balance sheet from the VPC contracts was $11.5 million as of March 31, 2009 compared to $4.3 million at year-end 2008, an increase of $7.2 million during the first quarter of 2009. The $7.2 million increase during the first quarter of 2009 is a 38% increase compared to the $5.2 million increase in VPC deferred revenue during the first quarter of 2008.
Adjusted EBITDA for the first quarter of 2009 was negative $6.6 million compared to negative $6.3 million for the first quarter of 2008. Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation expense (see Schedule 5 - Reconciliation of Non-GAAP Financial Measure to the Most Directly Comparable GAAP Financial Measure).
Net loss for the first quarter of 2009 was $9.1 million, or $0.43 per share basic and diluted, compared to a net loss of $8.8 million, or $0.42 per share basic and diluted for the first quarter of 2008.
Business Highlights Comverge first quarter 2009 business highlights include:
Entered into a five year contract with Pepco Holdings, Inc. to provide
full turnkey services, including an AMI-enabled demand response system
totaling over 200 megawatts, as well as installation and marketing
services;
Entered into Virtual Peaking Capacity(R) (VPC) contracts with two Maryland
utilities. Together, the VPC programs will provide the utilities up to
48 megawatts of clean capacity from commercial and industrial customers;
Announced the release of our Apollo(TM) Demand Response Management System
software platform, which has already been purchased by several major
utilities;
Announced the delivery of our five millionth demand management device;
Increased total megawatts under management by 450 megawatts, or 21%
during the first quarter of 2009. As of March 31, 2009, total megawatts
under management were:
Megawatts under long-term contracts, with regulatory approval 754
Megawatts under open market programs 1091
Megawatts to be provided under turnkey programs 320
Megawatts managed for a fee 437
Total megawatts 2602
Recent Developments and Current Outlook Comverge's management and Board of Directors use three metrics to measure the company's operational progress: (i) megawatts owned under long-term contracts, (ii) megawatts managed under open market programs, and (iii) estimated future revenues from long-term contracts. We believe these metrics are the most important to the growth and long-term success of the company.
Our 2009 targets for growth in these metrics and our progress towards these metrics in the first quarter of 2009 are:
Add a net 275 megawatts of capacity under long-term contracts. 53 megawatts of capacity under long-term contracts were added during the first quarter of 2009;
Add a net 225 megawatts in open market programs. 197 megawatts were added in open market programs during the first quarter of 2009; and
Add a net $150 million increase in the amount of estimated future revenues from long-term contracts. $52 million in estimated future revenues were added in the first quarter of 2009.
As of the date of this release, we have 919 megawatts under long-term capacity contracts which will contribute to contracted future revenues of $513 million. Of these amounts, 165 megawatts of capacity under long-term contracts representing an expected $114 million in contracted future revenues, are still awaiting regulatory approval. In the event we receive regulatory approval on these 165 megawatts, our total megawatts managed will be 2767 megawatts.
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 "For Comverge Investors" and in our filings with the Securities and Exchange Commission.
Additional Information Comverge will discuss these first quarter results, as well as its expectations for the future, in a conference call scheduled today at 5:00 p.m. EDT. To participate in the call dial 877-718-5095 or 719-325-4834 for international participants.
An audio replay of the call will be available on the investor relations section of our website beginning May 7, 2009 at 8:00 p.m. and available until May 14, 2009 12:00 a.m. EDT (midnight), by dialing in 888-203-1112 (719-457-0820 for international participants) and using conference code number 6942344.
Additionally, the results will be reported by webcast and available online in the Comverge investor relations section at http://ir.comverge.com. This webcast will be available online and archived on Comverge's website until August 10, 2009 12:00 a.m. EDT.
Additional financial information can be found in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2009, which has been filed today with the Securities and Exchange Commission.
About Comverge Comverge, with over 2760 megawatts of clean energy capacity under management, is a leading provider of clean energy solutions that improve grid reliability and supply electric capacity on a more cost effective basis than conventional alternatives by reducing base load and peak load energy consumption. For more information, visit www.comverge.com.
For Comverge Investors 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 contracted revenues, projected regulatory changes or approvals, the amount of revenue and megawatts that we expect 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, economic and competitive factors, our key strategic relationships, and other risks more fully described in our most recently filed Quarterly Report on Form 10-Q and 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.
For Additional Information
Michael Picchi
Executive Vice President and CFO
Comverge, Inc.
SCHEDULE 1
COMVERGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
Three Months Ended
March 31,
2009 2008
(unaudited) (unaudited)
Revenue
Product $4,836 $3,202
Service 6,744 7,251
Total revenue 11,580 10,453
Cost of revenue
Product 3,104 2,040
Service 4,058 4,005
Total cost of revenue 7,162 6,045
Gross profit 4,418 4,408
Operating expenses
General and administrative expenses 7,889 8,326
Marketing and selling expenses 3,759 4,000
Research and development expenses 1,116 368
Amortization of intangible assets 552 656
Operating loss (8,898) (8,942)
Interest and other (income) expense, net 195 (211)
Loss before income taxes (9,093) (8,731)
Provision for income taxes 42 92
Net loss $(9,135) $(8,823)
Net loss per share
Basic and diluted $(0.43) $(0.42)
Weighted average shares used in
computation 21,366,409 20,873,479
SCHEDULE 2
COMVERGE, INC.
SEGMENT INFORMATION
(In thousands)
Three Months Ended
March 31,
2009 2008
(unaudited) (unaudited)
Revenue:
Utility Products & Services $6,661 $4,157
Residential Business 3,952 3,326
Commercial & Industrial Business 967 2,970
Total Revenue $11,580 $10,453
Cost of Revenue:
Utility Products & Services 3,877 2,411
Residential Business 2,643 1,546
Commercial & Industrial Business 642 2,088
Total Cost of Revenue $7,162 $6,045
Gross Profit:
Utility Products & Services 2,784 1,746
Residential Business 1,309 1,780
Commercial & Industrial Business 325 882
Total Gross Profit $4,418 $4,408
SCHEDULE 3
COMVERGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
Assets 2009 2008
Cash and cash equivalents $28,091 $19,571
Restricted cash 1,072 1,968
Marketable securities 20,352 28,276
Accounts receivable, net 19,507 24,785
Inventory, net 4,810 4,960
Deferred costs 4,098 2,197
Other current assets 1,347 1,273
Total current assets 79,277 83,030
Restricted cash 2,092 2,089
Property and equipment, net 21,900 20,572
Intangible assets, net 9,739 10,251
Goodwill 8,179 8,179
Other assets 976 1,036
Total assets $122,163 $125,157
Liabilities and Shareholders' Equity
Accounts payable 5,345 7,672
Accrued expenses 4,975 8,006
Deferred revenue 13,507 6,694
Current portion of long-term debt 4,082 3,226
Other current liabilities 3,290 2,400
Total current liabilities 31,199 27,998
Deferred revenue 2,425 2,220
Long-term debt 26,348 24,888
Other liabilities 2,284 2,391
Total long-term liabilities 31,057 29,499
Common stock 22 22
Additional paid-in capital 222,083 220,638
Common stock held in treasury (171) (119)
Accumulated deficit (162,065) (152,930)
Accumulated other comprehensive income 38 49
Total shareholders' equity 59,907 67,660
Total liabilities and shareholders'
equity $122,163 $125,157
SCHEDULE 4
COMVERGE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
2009 2008
Cash flows from operating activities
Net loss $(9,135) $(8,823)
Adjustments to reconcile net loss to
net cash used in operating
activities
Depreciation 250 175
Amortization of intangible assets 679 656
Stock-based compensation 1,387 1,853
Other 91 85
Changes in working capital 8,128 (2,196)
Net cash provided
by (used in)
operating
activities 1,400 (8,250)
Cash flows from investing activities
Changes in restricted cash 893 (2,922)
Purchases of marketable securities (4,019) (10,380)
Maturities of marketable securities 11,900 16,780
Purchases of property and equipment (3,941) (2,394)
Net cash provided
by investing
activities 4,833 1,084
Cash flows from financing activities
Borrowings under credit agreement 2,339 1,886
Other (52) 85
Net cash provided
by financing
activities 2,287 1,971
Net change in cash and cash
equivalents 8,520 (5,195)
Cash and cash equivalents at
beginning of period 19,571 39,755
Cash and cash equivalents at end of period $28,091 $34,560
SCHEDULE 5
COMVERGE, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURE TO THE
MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURE
(In thousands)
Three Months Ended
March 31,
2009 2008
(unaudited) (unaudited)
Net loss $(9,135) $(8,823)
Depreciation and amortization 929 831
Interest (income) expense, net 191 (208)
Provision for income taxes 42 92
EBITDA $(7,973) $(8,108)
Non-cash stock compensation expense 1,387 1,853
Adjusted EBITDA $(6,586) $(6,255)
See "Non-GAAP Financial Information" above in this earnings
press release for information on the use of this Non-GAAP
financial measure
