PowerSecure International, Inc (POWR)

[10 bagger]

POWR.. $8.749.. Earnings..

PowerSecure Reports Third Quarter Results

Revenue Increases 13% to $31 Million, and Backlog Reaches All-Time High $138
Million

WAKE FOREST, N.C., Nov 04, 2010 (BUSINESS WIRE) -- PowerSecure International,
Inc. (POWR) today reported its third quarter fiscal 2010 revenues were $31.4
million, and diluted E.P.S. was $0.03. On a year-to-date basis, the Company's
revenues were $90.4 million, and diluted E.P.S. was $0.16. Additionally, the
Company reported that its revenue backlog stands at an all time high $138 million
as a result of new business awards earned during the last three months.

The Company's third quarter 2010 revenues of $31.4 million increased 13.3%
compared to the third quarter of 2009. This growth was driven by year-over-year
revenue growth in the Company's Interactive Distributed Generation business of
29.4%, Utility Infrastructure business of 37.9%, and Energy Services business of
22.9%, partially offset by lower revenues in its Energy Efficiency business of
23.9%. The Company's revenue growth combined with continued strong gross margin
results, which were 34.8% of revenue, to deliver a 6.6% increase in gross profit,
to $10.9 million. These gains were offset by a year-over-year increase in
operating expenses of $3.1 million, driven by investments the Company is making
in business expansion and new product development in each of its Interactive
Distributed Generation, Utility Infrastructure, and Energy Efficiency growth
areas. As a result, diluted E.P.S. for the third quarter of 2010 was $0.03 per
share compared to $0.09 per share in the third quarter of 2009.

Sidney Hinton, CEO of PowerSecure, said, "We are very pleased with our third
quarter results. Our top line exceeded our expectations, our gross margins remain
very strong, and the investments we are making in each of our businesses position
us for even higher levels of growth and profitability in the future.
Additionally, the new business we were awarded over the last few months provides
us with an all time high backlog of $138 million, which is a full $48 million
greater than our backlog at this time last year. Our backlog includes
significantly more medium and long-term revenue bookings, providing a great
foundation for growth -- including very good progress in building our 2011
revenue base."

Mr. Hinton continued, "The investments we are making in new product development
and technology provide us with a strong set of growth catalysts in each of our
business areas, and the capability to generate even higher levels of
profitability in the future. As we said last quarter, we remain highly attentive
to any changes in the state of the economic recovery in the near-term, while at
the same time we are very positive about the targeted investments we are making
to enhance our capabilities and product offerings to deliver our businesses' full
growth potential."

For the third quarter of 2010, the Company's Energy and Smart Grid Solutions
segment revenues were $26.3 million, increasing $2.7 million, or 11.6%, compared
to the third quarter of 2009. This segment includes the strategic business areas
of Energy Efficiency, Interactive Distributed Generation, and Utility
Infrastructure. These three business areas realized the following revenue
variances in the third quarter of 2010 compared to the third quarter of 2009:

1) Interactive Distributed Generation: Third quarter 2010 Interactive Distributed
Generation (IDG) revenues increased 29% compared to the third quarter of 2009.
This increase was driven by a 19% increase in the Company's project-based
revenues from sales of IDG systems, a 6% increase in recurring revenues from IDG
systems, and a 48% increase in NexGear switchgear revenues. Total recurring
revenues from IDG systems for the third quarter were $1.8 million, slightly
higher on a sequential basis than the second quarter, establishing a new record
for any quarter in the Company's history.

2) Energy Efficiency: Third quarter 2010 Energy Efficiency revenues were 24%
lower than the third quarter of 2009. This was driven by $3.1 million of lower
revenues from the Company's EfficientLights LED lighting products, which totaled
$5.1 million, due to a surge in EfficientLights installations during last year's
third quarter. On a sequential basis, EfficientLights revenues for the third
quarter 2010 were slightly higher than the second quarter of 2010. Additionally,
the Company's recently acquired LED lighting company, IES Lighting, contributed
$1.0 million of revenue to third quarter 2010 results.

3) Utility Infrastructure: Third quarter 2010 Utility Infrastructure revenues
increased 38% compared to the third quarter of 2009. As expected, this was driven
by substantial increases in the Company's Utility Services revenues, including
transmission and distribution system construction and maintenance services.

For the third quarter of 2010, the Company's Energy Services segment realized a
22.9% year-over-year increase in revenues from its Southern Flow business, due to
the improved conditions in the natural gas markets and new growth initiatives.
The Company's WaterSecure business contributed third quarter income of $0.7
million, up 37% on a year-over-year basis. The Company's WaterSecure results were
also positively impacted by improved conditions in the natural gas markets, as
well as year-over-year increases in oil prices.

Third quarter 2010 operating expenses were $11.1 million compared to $8.1 million
in the third quarter of 2009. The year-over-year increase was primarily due to
investments to support new and future business growth in the Company's
Interactive Distributed Generation, Energy Efficiency, and Utility Infrastructure
businesses, including new product development, engineering, personnel, and
equipment. Additionally, the Company realized increases in selling expense due to
higher revenue, and increases in depreciation from capital expenditures for IDG
systems owned under the Company's growing recurring revenue business. On a
sequential basis, the Company's third quarter 2010 operating expenses were
essentially even with the second quarter 2010.

As of the date of this press release, the Company's revenue backlog expected to
be recognized after September 30, 2010 is $138 million. This includes revenue
included in the new business announcement made on October 20, 2010, and compares
to $127 million of revenue backlog reported with the Company's second quarter
earnings release (issued on August 5, 2010). The Company's revenue backlog and
the estimated timing of revenue recognition is 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 to be recognized after September 30, 2010
AnticipatedEstimated Primary
DescriptionRevenueRecognition Period
----------------------------------------------------------------------------------------
Project-based Revenue -- Near term$42 Million4Q10 through 2Q11
Project-based Revenue -- Long term$35 Million3Q11 through 2Q13
Recurring Revenue$61 Million4Q10 through 2019
-------------
Revenue Backlog to be recognized after September 30, 2010$138 Million
Note: Anticipated revenue and estimated primary recognition
periods are subject to risks and uncertanities
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 Company's Southern Flow business, engineering fees, and
service revenue, among others.
Numbers may not add due
to rounding.


The Company will host a conference call commencing today at 5:30 p.m. eastern
time to discuss its third quarter 2010 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 http://www.powersecure.com. Participants can also access the call by
dialing 888-713-4209 (or 617-213-4863 if dialing internationally), and providing
pass code 72264542. 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 2, 2010. To listen to the replay, dial
toll-free 888-286-8010 (or 617-801-6888 if dialing internationally), and enter
pass code 132837375. In addition, the webcast will be archived on the Company's
website at http://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, as well as Energy Services to the oil and natural gas
industry. 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's Energy Efficiency business
provides customers with energy efficient lighting technologies that deliver
improved quality of light, including its proprietary EfficientLights LED lighting
product that saves grocery, drug, and convenience stores 70% off the cost to
operate traditional fluorescent lighting in their refrigerated cases. The Company
is a pioneer in developing Interactive Distributed Generation(R) 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 provides Energy
Services to the oil and natural gas industry through its Southern Flow and
WaterSecure business units. Additional information is available at
http://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 recent 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 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 EndedNine Months Ended
----------------------------- ----------------------
September 30,September 30,September 30,September 30,
2010200920102009
------------------------------------------------
Revenue31,40627,72190,39472,576
Cost of sales20,48017,46958,04048,195
--------------------------
Gross Profit10,92610,25232,35424,381
--------------------------
Operating expenses
General and administrative8,7686,39925,10118,511
Selling, marketing, and service1,5039973,9432,797
Depreciation and amortization8326572,2321,762
--------------------------
Total operating expenses11,1038,05331,27623,070
--------------------------
Operating income (loss)(177)2,1991,0781,311
Other income (expense)
Equity income5984292,4351,307
Management fees136106432309
Interest income and other income303686127
Interest expense(177)(144)(457)(463)
------- ------------ ----------- ------------
Income (loss) before income taxes4102,6263,5742,591
Income tax benefit (provision)(52)(423)(528)(473)
------- ------------ ----------- ------------
Net income (loss)3582,2033,0462,118
Less: Net income attributable to noncontrolling interest132(549)(15)(914)
-------------- ----------- ------------
Net income (loss) attributable to PowerSecure International, Inc.4901,6543,0311,204
==========================
EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE TO
POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:
Basic0.030.100.170.07
==========================
Diluted0.030.090.160.07
==========================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic18,64017,21817,94217,158
==========================
Diluted19,02817,46718,44717,174
==========================

PowerSecure International, Inc.
Condensed Consolidated Balance Sheets (unaudited)
($000's)
September 30, December 31,
ASSETS20102009
--------------
CURRENT ASSETS:
Cash and cash equivalents14,66820,169
Trade receivables, net of allowance for doubtful accounts34,60728,332
Inventories24,16321,632
Deferred income taxes2,7132,713
Prepaid expenses and other current assets9031,300
--------------
Total Current Assets77,05474,146
--------------
PROPERTY, PLANT, AND EQUIPMENT:
Equipment26,22222,252
Furniture and fixtures683671
Land, building, and improvements4,9044,802
--------------
Total property, plant, and equipment at cost31,80927,725
Less accumulated depreciation and amortization7,0195,413
--------------
Property, plant, and equipment, net24,79022,312
--------------
OTHER ASSETS:
Goodwill13,2017,256
Restricted annuity contract2,2872,220
Intangible rights and capitalized software, net of accum amort1,9981,320
Investment in unconsolidated affiliate4,1293,974
Other assets166249
--------------
Total other assets21,78115,019
TOTAL ASSETS123,625111,477
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable5,2624,116
Accrued and other liabilities17,47620,379
Restructuring charges payable0325
Current income taxes payable50
Current unrecognized tax benefit954327
Current portion of capital lease obligations787756
--------------
24,48425,903
Total current liabilities
--------------
LONG-TERM LIABILITIES
Revolving Line of Credit7,5000
Capital lease obligations, net of current portion3,8514,445
Unrecognized tax benefit6921,169
Deferred Compensation970721
--------------
Total long-term liabilites13,0136,335
--------------
STOCKHOLDERS' EQUITY
00
Preferred stock - undesignated
Preferred stock - Series C00
Common stock187172
Additional paid-in-capital113,939110,911
Accumulated deficit(29,920)(32,951)
------- -------- ----
Total PowerSecure International, Inc. stockholders' equity84,20678,132
Noncontrolling Interest1,9221,107
--------------
Total stockholders' equity86,12879,239
--------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY123,625111,477
==============

PowerSecure International, Inc.
Condensed Consolidated Statement of Cash Flows (unaudited)
($000's)
Nine Months Ended
----------------------------------------
September 30,September 30,
20102009
-------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)3,0462,118
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization2,2321,762
Stock compensation expense1,2701,202
Distributions to noncontrolling interest shareholder(877)0
(Gain) loss on disposal of miscellaneous assets3732
Equity in income of unconsolidated affiliate(2,435)(1,307)
Distributions from unconsolidated affiliate2,2251,618
Changes in operating assets and liabilities, net of
effect of aquisitions:
Trade receivables, net(5,927)(4,842)
Inventories(2,249)(5,234)
Other current assets and liabilities402631
Other noncurrent assets9753
Accounts payable169(539)
Restructuring charges(325)(1,096)
Accrued and other liabilities(2,938)(3,526)
Unrecognized tax benefits150188
Deferred compensation obligation249249
Restricted annuity contract(67)(65)
---------------------- ---------- ---
Net cash provided by (used in) operating activities(4,941)(8,756)
---------------------- ---------- ---
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment(3,850)(2,202)
Additions to intangible rights and software development(518)(442)
Acquisitions(4,413)(800)
Proceeds from sale of property, plant and equipment2112
-------------------------------
Net cash provided by (used in) investing activities(8,760)(3,432)
---------------------- ---------- ---
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) on revolving line of credit7,5000
Proceeds from sale-leaseback transactions00
Payments on capital lease obligations(563)(534)
Proceeds from stock option and warrant exercises, net of shares1,263298
tendered
-------------------------------
Net cash provided by (used in) financing activities8,200(236)
------------------------------- ---
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS(5,501)(12,424)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR20,16924,316
-------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD14,66811,892
===============================


SOURCE: PowerSecure International, Inc.

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


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