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PowerSecure International, Inc (POWR) RSS Feed

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  PowerSecure International, Inc., headquartered in Wake Forest, North Carolina, is a leading provider of Energy and Smart Grid Solutions to electric utilities, their commercial, institutional and industrial customers.

 
Our core business is our Energy and Smart Grid Solutions segment, operated through our largest wholly-owned subsidiary PowerSecure, Inc., which we refer to as "our PowerSecure subsidiary". This segment includes our three core strategic business areas: Interactive Distributed Generation, Utility Infrastructure and Energy Efficiency. These three areas are focused on providing utilities and their commercial, institutional and industrial customers with products and services to help them generate, deliver, and utilize electricity more efficiently and are intended to deliver strong returns on investment. They share common or complementary utility relationships and customer types, common sales and overhead resources, and facilities. However, each business area in this segment possesses distinct technical disciplines and specific capabilities that are designed to provide a competitive advantage in the marketplace for its specific products and services, including personnel, technology, engineering, and intellectual capital. This segment operates primarily out of our Wake Forest, North Carolina headquarters office, and its operations also include several satellite offices and manufacturing facilities, the largest of which are in Raleigh, North Carolina, Randleman, North Carolina, McDonough, Georgia, and Anderson, South Carolina. The locations of our sales organization for this segment are generally in close proximity to the utilities and commercial, industrial, and institutional customers they serve.
Until recently, our Energy Services segment operated through our two other principal operating subsidiaries, Southern Flow Companies, Inc., which we refer to as "Southern Flow", and WaterSecure Holdings, Inc., which we refer to as "WaterSecure". WaterSecure holds a significant noncontrolling minority portion of the equity interests in an unconsolidated business, Marcum Midstream 1995-2 Business Trust, a Delaware statutory trust, which we refer to as "MM 1995-2" or as our "WaterSecure operations". Our WaterSecure operations provided water processing, recycling, and disposal services for oil and natural gas producers in northeastern Colorado utilizing environmentally responsible technologies and processes. In June 2011, substantially all of the assets and business of MM 1995-2 were sold. Accordingly, our WaterSecure subsidiary no longer has any on-going operating activity. See Note 5 for more information regarding the sale of MM 1995-2. Our Southern Flow business, which was sold in January 2011 pursuant to a purchase agreement executed in December 2010, provided oil and natural gas measurement services to customers involved in oil and natural gas production, transportation, and processing, with a focus on the natural gas market. Due to its sale, Southern Flow's operations are now reflected as discontinued operations in the accompanying consolidated financial statements. See Note 4 for more information regarding the sale of Southern Flow. The sales of our WaterSecure and Southern Flow operations were the fulfillment of our strategy to monetize our non-core assets to focus on the businesses in our Energy and Smart Grid Solutions business segment. As a result of these sales, our Energy Services segment ceased business activities in June 2011 and we will no longer report ongoing operations in the Energy Services segment in financial periods after June 30, 2011.


Opinions:http://finance.yahoo.com/q/ae?s=POWR


 

POWR.. $.4.62  PowerSecure Reports Third Quarter Results

 Growth Progression Continues, Revenues Increase 45% to a Record $38 Million, and Backlog Grows to $149 Million

WAKE FOREST, N.C.--(BUSINESS WIRE)--

PowerSecure International, Inc. (Nasdaq: POWR) today reported its third quarter 2011 results, including record revenue of $38.2 million which increased 45% on a year-over-year basis compared to the third quarter of 2010, and increased 27% on a sequential basis compared to the second quarter of 2011. Third quarter 2011 diluted earnings per share ("E.P.S.") were $0.05, which compares on a year-over-year basis to $0.03 in the third quarter of 2010, and on a sequential basis to $0.90 of GAAP E.P.S. and $0.00 of Non-GAAP E.P.S. in the second quarter of 2011. The Company's Non-GAAP E.P.S. for the second quarter of 2011 includes adjustments to GAAP E.P.S. to exclude the gain on the sale of its non-core WaterSecure business and charges related to the exit of its PowerPackages business (see Non-GAAP reconciliation, below). Third quarter 2011 diluted E.P.S. from continuing operations were $0.05, which compares on a year-over-year basis to ($0.01) in the third quarter of 2010, and on a sequential basis to $0.90 of GAAP E.P.S. and $0.00 of Non-GAAP E.P.S. in the second quarter of 2011.

The Company's record third quarter revenue of $38.2 million continues the consistent growth progression demonstrated throughout 2011, with revenue increases across business lines driven by the expansion of its base of utility partners, a growing customer roster, and the introduction and sales of new products and services:

                            
($ in 000's)    4Q10        1Q11        2Q11        3Q11 
Revenue by Product/Service             
Distributed Generation    10,254    11,202    12,856    19,999 
              
Utility Infrastructure    6,785    7,578    11,510    13,300 
              
Energy Efficiency    3,966        4,933        5,851        4,930 
Total Revenue    21,005    23,713    30,217    38,229 

The Company also announced that an additional $14 million of new business has been added to its revenue backlog from new business received in late-October. This new business is in addition to the $15 million of new awards announced on October 11, 2011. As a result, the Company's revenue backlog stands at $149 million, representing revenue expected to be recognized after September 30, 2011, for periods including the fourth quarter of 2011 onward. This backlog figure compares to $147 million of revenue backlog announced in conjunction with the Company's second quarter earnings release issued on August 4, 2011.

Sidney Hinton, CEO of PowerSecure, said, "2011 is a very gratifying year for the PowerSecure team, as our growth initiatives have accelerated our top-line growth, and we are realizing the positive bottom-line impact of these revenue increases as the year unfolds. We are building a business platform with increasing diversity in areas where we can utilize our core competencies to serve a growing list of utility partners and customers with products and services that have significant long-term potential. We are building a strong foundation to achieve our mid-range goal of $300 million in revenue and double-digit operating margins by 2015. Importantly, we are achieving our near-term results while at the same time succeeding in our long-term strategic objectives of growing our product lines and growing our Distributed Generation recurring revenue business, which posted another record quarter. Our growth strategies are working, and we are pleased with the progress we are making toward unlocking our revenue and profit potential."

The Company's $11.9 million, or 45.3% year-over-year quarterly revenue increase, was driven by an increase in Distributed Generation revenues of $6.3 million, or 46.1%, as well as an increase in Utility Infrastructure revenues of $7.2 million, or 118.1%, partially offset by a decrease in Energy Efficiency revenues of $1.6 million, or 24.5%. On a sequential basis, compared to the second quarter of 2011, the Company's $8.0 million , or 26.5% revenue increase was driven by an increase in Distributed Generation revenues of $7.1 million, or 55.6%, and an increase in Utility Infrastructure revenues of $1.8 million, or 15.6%, partially offset by a decrease in Energy Efficiency revenues of $0.9 million, or 15.7%.

The Company's third quarter gross margin as a percentage of revenue was 30.5% compared to 32.6% in the third quarter of 2010 and 25.4% in the second quarter of 2011. The lower year-over-year gross margins were driven by approximately $0.8 million, or 2.0 percentage points, of additional fuel costs incurred from the extensive operation during the months of July and August of a PowerSecure-owned distributed generation system which serves a Midwest utility, due to record Summer heat causing high demand on the utility system. Excluding this incremental fuel cost, the Company's third quarter gross margin was 32.5%. Additionally, period-to-period gross margins were affected, as they are each quarter, by the specific mix of projects completed in each period, and by the relative mix of higher-margin Distributed Generation revenues compared to lower-margin Utility Infrastructure service revenues in each period.

The Company's strong quarterly revenue and profit results were achieved while at the same time the platform of Company-owned recurring revenue Distributed Generation projects continued to build. The Company invested $3.8 million in capital to deploy systems under high margin long-term recurring revenue contracts, although these projects result in deferred current period revenue and profit recognition. Since the start of 2011, the Company has invested $11.4 million of capital to deploy these projects in support of its long-term growth and profit objectives. These investments have grown its recurring revenue business to record levels, with third quarter recurring revenue reaching $4.1 million, which would have been approximately $3.8 million excluding the incremental operation of the Distributed Generation system discussed above due to the extraordinary Summer heat. This adjusted figure is approximately double compared to the prior year's third quarter.

Operating expenses for the third quarter of 2011 were $11.3 million on a GAAP basis, and $10.8 million on a Non-GAAP basis after adjusting for $0.5 million of operating expenses related to the wind-down of the Company's PowerPackages business, which it is in the process of exiting (see Non-GAAP financial measures, below). This compares to $9.5 million in the third quarter of 2010. The year-over-year increase in operating expenses is due to "step-up investments" the Company has made to expand and grow each of its Interactive Distributed Generation, Utility Infrastructure, and Energy Efficiency businesses. These expenses support new product and customer development, engineering, personnel and equipment, as well as additional sales and marketing activities, and include increases in depreciation from capital expenditures for recurring revenue distributed generation systems.

During the third quarter of 2011 the Company also realized revenue of $1.6 million and gross margin of $0.4 million from the sale of inventory related to the wind-down of its PowerPackages business. These inventory sales, combined with $0.5 million of PowerPackages operating expenses discussed above, generated a pre-tax loss from PowerPackages exit activities of $0.1 million. In addition, the Company recognized a pre-tax gain of just under $0.1 million related to positive adjustments to the purchase price of the sale of its WaterSecure investment, which was completed in the second quarter. In accordance with GAAP, each of these items was recorded as a component of continuing operations during the third quarter. However, because these businesses have been sold or are in the process of being exited by the Company, Non-GAAP Pro-forma results of operations are provided below to adjust for this small WaterSecure gain on sale and PowerPackages wind-down loss (see Non-GAAP financial measures, below). Adjusting for these items, Non-GAAP diluted E.P.S. was $0.05 for the Company's third quarter, essentially the same as GAAP diluted E.P.S of $0.05.

The Company's $149 million revenue backlog and the estimated timing of revenue recognition are outlined below, including "project-based revenues" expected to be recognized as projects are completed, and "recurring revenues" expected to be recognized over the life of the contracts:

Revenue Backlog expected to be recognized after September 30, 2011               
   Anticipated    Estimated Primary 
Description        Revenue        Recognition Period 
        
Project-based Revenue -- Near term    $59 Million    4Q11 through 2Q12 
Project-based Revenue -- Long term    $21 Million    3Q12 through 2013 
Recurring Revenue    $69 Million    4Q11 through 2019 
Revenue Backlog expected to be recognized after September 30, 2011    $149 Million    
        
Note: Anticipated revenue and estimated primary recognition periods are subject to risks and uncertainties
 
as indicated in the Company's safe harbor statement, below. Consistent with past practice, these figures 
are not intended to constitute the Company's total revenue over the indicated time periods, as the Company 
has additional, regular on-going revenues. Examples of additional, regular recurring revenues include 
revenues from the engineering fees, and service revenue, among others. Numbers may not add due to rounding. 

Orders in the Company's revenue backlog are subject to delay, deferral, acceleration, resizing, or cancellation from time to time. Given the irregular sales cycle of customer orders, and especially of large orders, the revenue backlog at any given time is not necessarily an accurate indication of our future revenues.

The Company will host a conference call commencing today at 5:30 p.m. eastern time to discuss its third quarter 2011 results, business operations, strategic initiatives and prospects for the future. The conference call will be webcast live and can be accessed from the Investor Relations section of the Company's website at www.powersecure.com. Participants can also access the call by dialing 888-679-8034 (or 617-213-4847 if dialing internationally), and providing pass code 33260174. If you are unable to participate during the live webcast, a replay of the conference call will be available beginning today at 8:30 p.m. eastern time through midnight on December 1, 2011. To listen to the replay, dial toll-free 888-286-8010 (or 617-801-6888 if dialing internationally), and enter pass code 53518420. In addition, the webcast will be archived on the Company's website at www.powersecure.com.

About PowerSecure

PowerSecure International, Inc. is a leading provider of Energy and Smart Grid Solutions to electric utilities, and their commercial, institutional, and industrial customers. PowerSecure's Energy and Smart Grid Solutions businesses provide products and services in the areas of Energy Efficiency, Interactive Distributed Generation, and Utility Infrastructure. The Company is a pioneer in developing Interactive Distributed Generation® systems with sophisticated, proactive smart grid capabilities, including the ability to 1) forecast electricity demand and electronically deploy the systems to deliver more efficient, and environmentally friendly power at peak power times, 2) provide utilities with dedicated electric power generation capacity to utilize for demand response purposes, and 3) provide customers with the most dependable standby power in the industry. PowerSecure also provides utilities with transmission and distribution infrastructure construction and maintenance services, and engineering and regulatory consulting services. The Company's Energy Efficiency business provides customers with energy efficient lighting technologies that deliver improved quality of light, including its proprietary EfficientLights LED lighting products for grocery, drug, and convenience stores, and its SecureLiteTM and PowerLiteTM street lights for utilities and municipalities which are available through its EnergyLite business unit. Additional information is available at www.powersecure.com.

This press release contains forward-looking statements within the meaning of and made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are all statements other than statements of historical facts, including but not limited to statements concerning the outlook for the Company's future revenues, earnings, margins, cash resources and cash flow and other financial and operating information and data; the Company's future business operations, strategies and prospects; and all other statements concerning the plans, intentions, expectations, projections, hopes, beliefs, objectives, goals and strategies of management, including statements about other future financial and non-financial items, performance or events and about present and future products, services, technologies and businesses; and statements of assumptions underlying the foregoing. Forward-looking statements are not guarantees of future performance or events and are subject to a number of known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed, projected or implied by such forward-looking statements. Important risks, uncertainties and other factors include, but are not limited to, the on-going downturn, disruption and volatility in the economy, financial markets and business markets and the effects thereof on the Company's markets and customers, the demand for its products and services, and the Company's access to capital; the size, timing and terms of sales and orders, including the Company's revenue backlog discussed in this press release, and the risk of customers delaying, deferring or canceling purchase orders or making smaller purchases than expected; the effects of the sale of Southern Flow business and WaterSecure investment and the Company's strategy of monetizing its non-core businesses on the Company's financial condition and results of operations; the effects of exiting the Company's PowerPackages business, including current and future charges related to the exit plan, and timing of the completion of the exit and wind-down activities; the timely and successful development, production and market acceptance of new and enhanced products, services and technologies of the Company; the ability of the Company to obtain adequate supplies of key components and materials of sufficient reliability and quality for its products and technologies on a timely and cost-effective basis and the effects of related warranty claims and disputes; the ability of the Company to successfully expand its core distributed generation products and services, to successfully develop and achieve market acceptance of its new energy-related businesses, to successfully expand its recurring revenue projects, to manage its growth and to address the effects of any future changes in utility tariff structures and environmental requirements on its business solutions; the effects of competition; changes in customer and industry demand and preferences; the ability of the Company to continue the growth and diversification of its customer base; the ability of the Company to attract, retain, and motivate its executives and key personnel; changes in the energy industry in general and the electricity, oil, and natural gas markets in particular, including price levels; the effects of competition; the ability of the Company to secure and maintain key contracts and relationships; the effects of pending and future litigation, claims and disputes; and other risks, uncertainties and other factors identified from time to time in its reports filed with or furnished to the Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K, as well as subsequently filed reports on Form 10-Q and Form 8-K. Accordingly, there can be no assurance that the results expressed, projected or implied by any forward-looking statements will be achieved, and readers are cautioned not to place undue reliance on any forward-looking statements. The forward-looking statements in this press release speak only as of the date hereof and are based on the current plans, goals, objectives, strategies, intentions, expectations and assumptions of, and the information currently available to, management. The Company assumes no duty or obligation to update or revise any forward-looking statements for any reason, whether as the result of changes in expectations, new information, future events, conditions or circumstances or otherwise.

                   
PowerSecure International, Inc. 
Consolidated Statements of Operations (unaudited) 
($000's except per share data) 
             
 Three Months Ended     Nine Months Ended 
 September 30,   September 30,    September 30,   September 30, 
 2011    2010     2011    2010 
             
Revenue  38,229    26,316     92,159    76,509 
Cost of sales  26,582    17,747     65,183    50,098 
Gross Profit  11,647    8,569     26,976    26,411 
             
Operating expenses            
General and administrative  9,168    7,388     25,596    21,176 
Selling, marketing, and service  1,279    1,383     3,657    3,777 
Depreciation and amortization  858    756     2,499    2,011 
Total operating expenses  11,305    9,527     31,752    26,964 
             
Operating income (loss)  342    (958)     (4,776)    (553) 
             
Other income (expense)            
Gain on sale of unconsolidated affiliate  44    0     21,830    0 
Equity income from unconsolidated affiliate  0    598     1,559    2,435 
Management fees from unconsolidated affiliate  0    136     282    432 
Interest income and other income  31    24     73    77 
Interest expense  (168)    (177)     (454)    (457) 
             
Income (loss) before income taxes  249    (377)     18,514    1,934 
Income tax benefit (provision)  493    (42)     (1,763)    (475) 
             
Net income (loss) from continuing operations  742    (419)     16,751    1,459 
             
Discontinued operations - income from operations (net of tax)  0    777     0    1,587 
Discontinued operations - gain on sale (net of tax)  0    0     5,636    0 
Net income (loss)  742    358     22,387    3,046 
Net income attributable to noncontrolling interest  230    132     573    (15) 
Net income (loss) attributable to PowerSecure International, Inc.  972    490     22,960    3,031 
             
Summary of Amounts Attributable to PowerSecure International, Inc. shareholders    
Income from continuing operations (net of tax)  972    (287)     17,324    1,444 
Income from discontinued operations (net of tax)  0    777     5,636    1,587 
Net income (loss) attributable to PowerSecure

International, Inc.
 972    490     22,960    3,031 
             
EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE TO          
POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:           
Continuing Operations            
Basic  0.05    (0.01)     0.92    0.08 
Diluted  0.05    (0.01)     0.91    0.08 
             
Discontinued Operations            
Basic  0.00    0.04     0.30    0.09 
Diluted  0.00    0.04     0.29    0.08 
             
Net Income            
Basic  0.05    0.03     1.22    0.17 
Diluted  0.05    0.03     1.20    0.16 
             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING           
Basic  18,966    18,640     18,848    17,942 
Diluted  19,163    18,640     19,122    18,447 
  
PowerSecure International, Inc. 
Condensed Consolidated Balance Sheets (unaudited) 
($000's) 
        
 September 30,   December 31, 
ASSETS  2011    2010 
CURRENT ASSETS:     
Cash and cash equivalents  32,692    8,202 
Trade receivables, net of allowance for doubtful accounts  47,322    29,290 
Assets of discontinued operations held for sale  0    12,183 
Inventories  24,441    25,011 
Current deferred income taxes  1,667    1,731 
Prepaid expenses and other current assets  658    933 
Total Current Assets  106,780    77,350 
      
PROPERTY, PLANT, AND EQUIPMENT:     
Equipment  35,660    24,946 
Furniture and fixtures  281    280 
Land, building, and improvements  5,874    5,720 
Total property, plant, and equipment at cost  41,815    30,946 
Less accumulated depreciation and amortization  7,485    5,899 
Property, plant, and equipment, net  34,330    25,047 
      
OTHER ASSETS:     
Goodwill  7,970    7,970 
Deferred income taxes, net of current portion  154    1,244 
Restricted annuity contract  2,358    2,306 
Intangible rights and capitalized software, net of accum amort  1,768    1,942 
Investment in unconsolidated affiliate  195    4,346 
Other assets  273    324 
Total other assets  12,718    18,132 
        
TOTAL ASSETS  153,828    120,529 
      
LIABILITIES AND STOCKHOLDERS' EQUITY     
      
CURRENT LIABILITIES     
Accounts payable  8,549    8,438 
Accrued and other liabilities  16,629    10,986 
Liabilities of discontinued operations held for sale  0    1,411 
Current income taxes payable  395    251 
Current unrecognized tax benefit  287    954 
Current portion of capital lease obligations  828    796 
Total current liabilities
 26,688    22,836 
      
LONG-TERM LIABILITIES     
Revolving Line of Credit  10,000    5,000 
Capital lease obligations, net of current portion  3,022    3,647 
Unrecognized tax benefit  731    749 
Other long-term liabilities  2,236    1,053 
Total long-term liabilities  15,989    10,449 
      
STOCKHOLDERS' EQUITY     
Preferred stock - undesignated
 0    0 
Preferred stock - Series C  0    0 
Common stock  190    187 
Additional paid-in-capital  116,308    114,791 
Accumulated deficit  (6,529)    (29,489) 
Total PowerSecure International, Inc. stockholders' equity  109,969    85,489 
Noncontrolling Interest  1,182    1,755 
Total stockholders' equity  111,151    87,244 
      
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY  153,828    120,529 
  
PowerSecure International, Inc. 
Condensed Consolidated Statement of Cash Flows (unaudited) 
($000's) 
        
 Nine Months Ended 
 September 30,    September 30, 
 2011    2010 
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net income (loss)  22,387    3,046 
Adjustments to reconcile net income (loss) to net cash provided by    
(used in) operating activities:     
Gain on sale of unconsolidated affiliate  (21,830)    0 
Income from discontinued operations  (5,636)    (1,587) 
Depreciation and amortization  2,499    2,011 
Stock compensation expense  1,376    1,270 
Distributions to noncontrolling interest shareholder  0    (877) 
Loss on writedown or disposal of equipment  420    29 
Deferred income taxes  1,154    0 
Equity in income of unconsolidated affiliate  (1,559)    (2,435) 
Distributions from unconsolidated affiliate  1,537    2,225 
Changes in operating assets and liabilities, net of     
effect of acquisitions:
    
Trade receivables, net  (18,032)    (5,927) 
Inventories  570    (2,249) 
Other current assets and liabilities  (248)    402 
Other noncurrent assets and liabilities  1,163    429 
Accounts payable  111    169 
Restructuring charges  0    (325) 
Accrued and other liabilities  5,537    (2,938) 
Net cash provided by (used in) continuing operations  (10,551)    (6,757) 
Net cash provided by (used in) discontinued operations  0    1,808 
Net cash provided by (used in) operating activities  (10,551)    (4,949) 
      
CASH FLOWS FROM INVESTING ACTIVITIES:     
Additions to property, plant and equipment  (13,743)    (3,695) 
Additions to intangible rights and software development  (365)    (518) 
Acquisitions  0    (4,413) 
Proceeds from sale of property, plant and equipment  12    21 
Proceeds from sale of unconsolidated affiliate  25,974    0 
Proceeds from sale of discontinued operations  16,515    0 
Discontinued operations investing activities  0    (147) 
Net cash provided by (used in) investing activities  28,393    (8,752) 
      
CASH FLOWS FROM FINANCING ACTIVITIES:     
Net borrowings (payments) on revolving line of credit  5,000    7,500 
Proceeds from sale-leaseback transactions  2,097    0 
Payments on capital lease obligations  (593)    (563) 
Proceeds from stock option and warrant exercises, net of shares tendered  144    1,263 
Net cash provided by (used in) financing activities  6,648    8,200 
NET INCREASE (DECREASE) IN CASH     
AND CASH EQUIVALENTS  24,490    (5,501) 
      
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR  8,202    20,169 
      
CASH AND CASH EQUIVALENTS AT END OF PERIOD  32,692    14,668 
  
 
 
PowerSecure International, Inc. 
Non-GAAP Pro-forma Financial Measures - 3Q11 
Results of Operations Excluding PowerPackages Business Exit and WaterSecure Gain 
                           
    Adjustments for PowerPackages Exit Activities    
    and WaterSecure Gain on Sale    
 
 As Reported

3Q11
   WaterSecure

Gain on Sale
  PowerPackages

Exit Activities
   Pro-forma

3Q11
 
               
Revenue  38,229        (1,645)      36,584 
Cost of sales  26,582          (1,210)      25,372 
Gross Profit  11,647    0     (435)      11,212 
Gross Profit % Revenue  30.5%             30.6% 
Operating expenses              
General and administrative  9,168        (376)      8,792 
Selling, marketing, and service  1,279        (161)      1,118 
Depreciation and amortization  858                 858 
Total operating expenses  11,305    0     (537)      10,768 
               
Operating income (loss)  342    0     102      444 
               
Other income (expense)              
Gain on sale of unconsolidated affiliate  44    (44)          0 
Equity income from unconsolidated affiliate  0             0 
Management fees from unconsolidated affiliate  0             0 
Interest income and other income  31             31 
Interest expense  (168)                 (168) 
               
Income (loss) before income taxes  249    (44)     102      307 
Income tax benefit (provision)  493    17     (38)      471 
               
Net income (loss) from continuing operations  742    (28)     64      778 
               
Discontinued operations - income from operations (net of tax)  0    0     0      0 
Discontinued operations - gain on sale (net of tax)  0    0     0      0 
Net income (loss)  742    (28)     64      778 
Net income attributable to noncontrolling interest  230                 230 
Net income (loss) attributable to PowerSecure International, Inc.  972    (28)     64      1,008 
               
Summary of Amounts Attributable to PowerSecure International, Inc. shareholders        
Income from continuing operations (net of tax)  972    (28)     64      1,008 
Income from discontinued operations (net of tax)  0    0     0      0 
Net income (loss) attributable to PowerSecure International, Inc.  972    (28)     64      1,008 
               
EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE TO             
POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:             
Continuing Operations              
Basic  0.05    0.00     0.00      0.05 
Diluted  0.05    0.00     0.00      0.05 
               
Discontinued Operations              
Basic  0.00    0.00     0.00      0.00 
Diluted  0.00    0.00     0.00      0.00 
               
Net Income              
Basic  0.05    0.00     0.00      0.05 
Diluted  0.05    0.00     0.00      0.05 
               
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING             
Basic  18,966    18,966     18,966      18,966 
Diluted  19,163    19,163     19,163      19,163 
  
  
PowerSecure International, Inc. 
Non-GAAP Pro-forma Financial Measures -- 2Q11 
Results of Operations Excluding WaterSecure Gain on Sale and PowerPackages Exit Plan Charges 
                     
     

Adjustments for WaterSecure Gain on Sale,
   
    and PowerPackages Exit Plan Charges    
 As Reported

2Q11
   WaterSecure

Gain on Sale
  PowerPackages

Charges
   Pro-forma

2Q11
 
             
Revenue  30,217           30,217 
Cost of sales  22,547         (1,692)     20,855 
Gross Profit  7,670    0    1,692     9,362 
Gross Profit % Revenue  25.4%           31.0% 
Operating expenses            
General and administrative  8,509       (383)     8,126 
Selling, marketing, and service  1,220           1,220 
Depreciation and amortization  835               835 
Total operating expenses  10,564    0    (383)     10,181 
             
Operating income (loss)  (2,894)    0    2,075     (819) 
             
Other income (expense)            
Gain on sale of unconsolidated affiliate  21,786    (21,786)        0 
Equity income from unconsolidated affiliate  548           548 
Management fees from unconsolidated affiliate  114           114 
Interest income and other income  22           22 
Interest expense  (144)               (144) 
             
Income (loss) before income taxes  19,432    (21,786)    2,075     (279) 
Income tax benefit (provision)  (2,339)    2,622    (250)     34 
             
Net income (loss) from continuing operations  17,093    (19,164)    1,825     (245) 
             
Discontinued operations - income from operations (net of tax)  0    0    0     0 
Discontinued operations - gain on sale (net of tax)  0    0    0     0 
Net income (loss)  17,093    (19,164)    1,825     (245) 
Net income attributable to noncontrolling interest  159               159 
Net income (loss) attributable to PowerSecure International, Inc.  17,252    (19,164)    1,825     (86) 
             
Summary of Amounts Attributable to PowerSecure International, Inc. shareholders      
Income from continuing operations (net of tax)  17,252    (19,164)    1,825     (86) 
Income from discontinued operations (net of tax)  0    0    0     0 
Net income (loss) attributable to PowerSecure International, Inc.  17,252    (19,164)    1,825     (86) 
             
EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE

TO
          
POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:           
Continuing Operations            
Basic  0.91    (1.02)    0.10     0.00 
Diluted  0.90    (1.00)    0.10     0.00 
             
Discontinued Operations            
Basic  0.00    0.00    0.00     0.00 
Diluted  0.00    0.00    0.00     0.00 
             
Net Income            
Basic  0.91    (1.02)    0.10     0.00 
Diluted  0.90    (1.00)    0.10     0.00 
             
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING           
Basic  18,857    18,857    18,857     18,857 
Diluted  19,146    19,146    19,146     19,146 

Non-GAAP Pro-forma Financial Measures:

Our references to our third quarter 2011 "Non-GAAP Pro-forma" financial measures of revenue, gross profit, gross margin as a percentage of revenue, operating expenses, 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. discussed and shown above constitute non-GAAP financial measures. They refer to our GAAP results, adjusted to show the results 1) without the gain on the sale of our WaterSecure investment (identified in our financial statements as our unconsolidated affiliate), with the third quarter 2011 amount representing a small positive adjustment from the gain on the sale which was announced and recorded in the Company's second quarter of 2011, and 2) without the wind-down activity and charges related to the plan to exit our PowerPackages business, which was announced and initiated in the Company's second quarter of 2011. For each of these two items we are utilizing a 37.5% effective tax rate to calculate their impact on net income.

Our references to our second quarter 2011 "Non-GAAP Pro-forma" financial measures of revenue, gross profit, gross margin as a percentage of revenue, operating expenses, 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. discussed and shown above constitute non-GAAP financial measures. They refer to our GAAP results, adjusted to show our results 1) without the gain on the sale of the WaterSecure investment (identified in our financial statements as our unconsolidated affiliate), 2) without the charges related to the write-down of assets in conjunction with our plan to exit our PowerPackages business, and 3) after allocating the tax expense incurred in our second quarter to each of the elements of our Non-GAAP Pro-forma reconciliation utilizing the second quarter of 2011's effective tax rate, reflecting that virtually all of our tax net operating loss carry forwards ("NOL's") will be utilized as a result of the gain on the sale of our WaterSecure business.

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 second and third quarter 2011 operating performance with the same consistent financial context as the business was managed and evaluated throughout the 2011 fiscal year. Additionally, because our WaterSecure business was sold in June, 2011, and our PowerPackages exit plan was also initiated in June, 2011, these Non-GAAP Pro-forma measures are not indicative of our current or future results.

We believe these Non-GAAP Pro-forma measures also provide meaningful information to investors in terms of enhancing their understanding of our second and third quarter 2011 operating performance and results, as they allow investors to more easily compare our financial performance on a consistent basis with the way it was reported and evaluated throughout 2011. These Non-GAAP Pro-forma measures also correspond with the way the majority of analysts' current financial estimates are calculated. 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.

 


PowerSecure International, Inc.
Chris Hutter, 919-453-1760
Chief Financial Officer


Source: PowerSecure International, Inc.

 

POWERSECURE INTERNATIONAL, INC. AND SUBSIDIARIES

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CONSOLIDATED BALANCE SHEETS{C}{C}(unaudited)
(in thousands, except share data)
{C}{C}{C}{C}{C}{C}{C}{C}{C}{C}{C} {C}{C}{C}{C}{C}{C}{C}{C}{C}{C}{C}
                 
    June 30,     December 31,  
    2011     2010  
Assets
               
Current Assets:
               
Cash and cash equivalents
  $ 36,148     $ 8,202  
Trade receivables, net of allowance for doubtful accounts of $302 and $415, respectively
    41,869       29,290  
Assets of discontinued operations held for sale
    -       12,183  
Inventories
    26,028       25,011  
Current deferred income taxes
    1,667       1,731  
Prepaid expenses and other current assets
    776       933  
 
           
 
               
Total current assets
    106,488       77,350  
 
           
 
               
Property, plant and equipment:
               
Equipment
    31,257       24,946  
Furniture and fixtures
    280       280  
Land, building and improvements
    5,627       5,720  
 
           
Total property, plant and equipment, at cost
    37,164       30,946  
 
             
Less accumulated depreciation and amortization
    6,857       5,899  
 
           
 
               
Property, plant and equipment, net
    30,307       25,047  
 
           
 
               
Other assets:
               
Goodwill
    7,970       7,970  
Deferred income taxes, net of current portion
    154       1,244  
Restricted annuity contract
    2,341       2,306  
Intangible rights and capitalized software costs, net of accumulated amortization of $2,816 and $2,463, respectively
    1,853       1,942  
Investment in unconsolidated affiliate
    1,445       4,346  
Other assets
    287       324  
 
           
 
               
Total other assets
    14,050       18,132  
 
           
 
               
Total Assets
  $ 150,845     $ 120,529  
 
           
See accompanying notes to consolidated financial statements.

 

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Table of Contents

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POWERSECURE INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data)
{C}{C}{C}{C}{C}{C} {C}{C}{C}{C}{C} {C}{C}{C}{C}{C}
                 
    June 30,     December 31,  
    2011     2010  
Liabilities and Stockholders' Equity
               
Current liabilities:
               
Accounts payable
  $ 7,339     $ 8,438  
Accrued and other liabilities
    14,618       10,986  
Liabilities of discontinued operations held for sale
    -       1,411  
Current income taxes payable
    989       251  
Current unrecognized tax benefit
    954       954  
Current portion of capital lease obligations
    818       796  
 
           
 
               
Total current liabilities
    24,718       22,836  
 
           
 
               
Long-term liabilites:
               
Revolving line of credit
    10,000       5,000  
Capital lease obligations, net of current portion
    3,233       3,647  
Unrecognized tax benefit
    749       749  
Other long-term liabilities
    2,182       1,053  
 
           
 
               
Total long-term liabilities
    16,164       10,449  
 
           
 
               
Commitments and contingencies (Notes 8 and 10)
    -       -  
 
               
Stockholders' Equity:
               
PowerSecure International stockholders' equity:
               
Preferred stock - undesignated, $.01 par value; 2,000,000 shares authorized; none issued and outstanding
    -       -  
Preferred stock - Series C, $.01 par value; 500,000 shares authorized; none issued and outstanding
    -       -  
Common stock, $.01 par value; 25,000,000 shares authorized; 18,966,529 and 18,701,614 shares issued and outstanding, respectively
    190       187  
Additional paid-in-capital
    115,862       114,791  
Accumulated deficit
    (7,501 )     (29,489 )
 
           
Total PowerSecure International, Inc. stockholders' equity
    108,551       85,489  
Noncontrolling interest
    1,412       1,755