Comverge Reports Third Quarter 2011 Financial Results

 

Norcross, GA., November 9, 2011 – Comverge, Inc. (NASDAQ: COMV), the leading provider of Intelligent Energy Management (IEM) solutions for Residential and Commercial & Industrial (C&I) customers, today announced its third quarter 2011 financial and operating results.

  • Five percent consolidated revenue growth year over year, on a comparable basis
  • Sales momentum continues with new wins in residential and C&I
  • Increased adoption of IntelliSOURCE, with 18 utilities now using Comverge’s enterprise software platform
  • C&I expansion accelerated with a 75 percent year over year growth in facilities under management
  • Strong quarterly financial results, including gross margin expansion to 34 percent, $4.7 million of operating cash flow and continued progress on our expense reduction initiative

“We had another solid quarter, as we expanded gross margins and continued to demonstrate improved operating leverage in our business,” commented R. Blake Young, Comverge’s president and chief executive officer. “We are gaining momentum in the market as evidenced by our recent contract wins, and we continue to grow our pipeline, which we believe provides a good foundation as we head into 2012. With our corporate consolidation initiative behind us, we are seeing greater efficiency in our operations, resulting in improved operating leverage as expenses are controlled and margins improve. Our residential and commercial and industrial businesses both continue to perform well and this revenue diversity is a strength of our business model.”

Financial Summary
Third quarter revenues for 2011 were $48.6 million compared to $51.7 million in the third quarter of 2010, a 6 percent decrease. The decrease in revenue is primarily related to $5.8 million in revenues from PJM capacity programs that were recognized in the second quarter of 2011, whereas all PJM capacity programs revenues were recognized in the third quarter of 2010. If all PJM capacity programs revenues were recognized in the third quarter 2011, revenue growth would have been 5 percent.

Gross margin for the third quarter of 2011 was 34 percent compared to 31 percent in the third quarter of 2010. The gross margin expansion was primarily the result of improved performance in residential turnkey and VPC programs.
Adjusted EBITDA for the third quarter of 2011 was $1.6 million compared to $1.0 million for the third quarter of 2010. Comverge defines adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation expense. 
Net loss for the third quarter of 2011 was $0.9 million, or $0.04 per basic and diluted share, compared to a net loss of $1.4 million, or $0.06 per basic and diluted share for the third quarter of 2010.
Excluding stock-based compensation charges, amortization expense of acquisition-related assets, and change in acquisition-related deferred income taxes, non-GAAP net loss for the third quarter of 2011 was $0.2 million, or $0.01 per basic and diluted share, compared to a non-GAAP net income of $0.2 million, or $0.01 per basic and diluted share, for the same period in 2010. 
Please refer to the financial schedules attached to this press release for reconciliation of GAAP to non-GAAP Adjusted EBITDA, net loss and net loss per share.
Payments from long-term contracts, which represent an estimate of total payments that Comverge expects to receive under long-term agreements with customers were $541 million for the third quarter 2011.
Annual Guidance
The company expects 2011 annual revenues to range from $136 to $141 million.

Business Highlights:
 

Comverge has made significant progress on the expense reduction initiative the company announced back in July and continues to expect that it will deliver more than $4 million in lower expenses on a full year run rate in 2012.

Tampa Electric selected IntelliSOURCE for its enhanced automated residential price response program.

Comverge reduced more than 16 gigawatt hours of electricity demand during the 2011 summer cooling season.

Duquesne Light Company, a leader in the transmission and distribution of electric energy in southwestern Pennsylvania, selected Comverge to help optimize residential and small commercial customers’ summer peak energy usage.

C&I customers under management grew by 75 percent year over year.

Total megawatts (MW) under management as of September 30, 2011 and September 30, 2010 were as follows:

 September 30, 2011 September 30, 2010
Megawatts under long-term contracts, with regulatory approval* 736 910
Megawatts under open market programs 1,868 1,504
Megawatts to be provided under turnkey programs 690 690
Megawatts managed for a fee  437 437
  
Total megawatts 3,731 3,541

*In the third quarter of 2010, Comverge had 155 MW under a long-term contract with NV Energy that is no longer in effect for 2011.
 

Additional Information
Comverge will host a conference call to discuss its third quarter of 2011 financial and operational results at 4:30 p.m. (EST) on Wednesday, November 9, 2011. An earnings release will be issued after market close on the same day. To participate in the call, please dial 877-334–1969 or 760-666-3589 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 November 9, 2011 at 7:30 p.m. and available until November 12, 2011 at 12:00 a.m. ET (midnight) by dialing in 855-859-2056 or 404-537-4306 for international participants and using conference code number 18367680. A replay of the call will be available online until November 8, 2012 at http://ir.comverge.com

Additional financial information can be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, which has been filed today with the Securities and Exchange Commission.

About Comverge
With more than 500 utility and 2,100 commercial customers, as well as five million deployed residential devices, Comverge brings unparalleled industry knowledge and experience to offer the most reliable, easy-to-use, and cost-effective intelligent energy management programs.  We deliver the insight and control that enables energy providers and consumers to optimize their power usage through the industry’s only proven, comprehensive set of technology, services and information management solutions.  For more information, visit www.comverge.com.

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, as amended. The forward-looking statements in this release are not 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 will be generated by long-term contracts or open market programs, expected reductions in annual costs and expenses, corresponding future growth associated with the new initiative, expectations regarding achieving profitability in the future, updated guidance as to our projected financial results, and certain assumptions upon which such forward-looking statements are based. The forward-looking statements in this release 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 Quarterly Report on Form 10-Q filed today. 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 reconciliations 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.