(Source: Business Wire)
PowerSecure International, Inc. (NASDAQ:POWR) today reported another
quarter of strengthening results, posting revenues of $27.7 million and
diluted earnings per share ("E.P.S.") of $0.09 for its third quarter of
2009. On a sequential basis, compared to the second quarter of 2009 the
Company's revenues increased 10.3%, and E.P.S. increased 125%.
Additionally, third quarter gross margin as a percentage of revenue
reached 37.0%, an all-time high for any quarter in the Company's history.
The Company's third quarter 2009 results were lower compared to the
third quarter of 2008 primarily due to the completion of a large number
of projects for Publix Supermarkets in 2008. As reported, third quarter
2009 revenue and E.P.S. was lower than third quarter 2008 revenue and
E.P.S. by 17.4% and 47.1%, respectively. Excluding Publix project
revenues in both years' third quarters, revenues for the third quarter
of 2009 were $24.3 million and revenues for the third quarter of 2008
were $24.6 million (see Non-GAAP financial measure reconciliation below).
Sidney Hinton, CEO of PowerSecure, said, "We are very pleased with the
consistent improvement we are seeing in our results -- including
achieving our highest ever quarterly gross margin percentage. Each
successive quarter in 2009 has shown higher revenue, higher gross
margin, higher operating profit, and higher E.P.S. The consistent
strengthening of our results demonstrates the determination and drive of
the PowerSecure team to execute extraordinarily well and deliver
increasing value to our customers in a difficult environment."
Mr. Hinton continued, "Our growth and diversification strategies are
working, and assuming the economy cooperates, the progress we have made
in a challenging 2009 positions us to have a very good 2010. A major
demonstration of our success is our EfficientLights business, which we
expect to generate $20 million of revenue in 2009, growing 650% over
2008."
Mr. Hinton added that the progression of the Company's Utility Services
business also continues to be very positive, and is a significant growth
driver in PowerSecure's Utility Infrastructure area. This unit is seeing
strong demand from utilities for transmission and distribution services,
and was up 41% sequentially in the third quarter compared to the second
quarter. The progression and development of these new businesses has
offset a more protracted recovery in the Company's Interactive
Distributed Generation business, which has continued to broaden and
diversify its utility and customer base despite pressures from the
economy.
"We are excited about the strategic positions each of our businesses
holds in the marketplace," said Mr. Hinton, "as well as the strong value
they deliver our utility partners and business customers, and their
long-term growth opportunities and promise. That said, we are not
sitting still, and we are actively developing new, complementary
business lines and technologies to bring to market -- examples of which
are our new EfficientLights Street Light and our new SmartStation
substation -- to sustain our growth well into the future."
For the third quarter of 2009, the Company's Energy and Smart Grid
Solutions segment showed strong sequential improvement, as revenues of
$23.6 million, were $2.9 million, or 14.1%, more than the second quarter
of 2009. This third quarter revenue result was $5.1 million less than
the third quarter of 2008 due to $5.5 million of lower Publix revenues.
The Energy and Smart Grid Solutions segment includes the strategic
business areas of Interactive Distributed Generation®, Energy
Efficiency, and Utility Infrastructure. These three business areas
realized the following revenue variances compared to the third quarter
of 2008 ("year-over-year" variances) and the second quarter of 2009
("sequential" variances):
1) Interactive Distributed Generation:
On a sequential basis, Interactive Distributed Generation revenues for
the third quarter were 8% less than the second quarter of 2009. On a
year-over-year basis, Interactive Distributed Generation revenues were
46% lower than the third quarter of 2008, and were 33% lower excluding
Publix projects in both years.
2) Energy Efficiency: The
Company's EfficientLights revenues for the third quarter were a record
$8.3 million, which represented a sequential increase of over 80%, and a
year-over-year increase of over 800%. This growth was partially offset
by revenue decreases in the Company's EnergyLite business, driven by
planned reductions in the Company's focus on EnergyLite to more
aggressively pursue EfficientLights opportunities. In total, Energy
Efficiency revenues were up 74% on a sequential basis, and up 280% on a
year-over-year basis.
3) Utility Infrastructure: Utility
Infrastructure realized a 3% sequential increase in revenues for the
third quarter, driven by new utility services business which offset
lower revenues from large infrastructure projects in the final stages of
completion. On a year-over-year basis, this unit realized a 35% decrease
in revenues, also driven by lower revenues from large infrastructure
projects, and partially offset by the growth in new utility services
business.
For the third quarter of 2009, the Company's Energy Services segment
realized a 15% year-over-year decrease in revenues from its Southern
Flow business. On a sequential basis, Southern Flow revenues were down
7% from the second quarter of 2009. The Company's WaterSecure business
posted pre-tax income of $0.5 million, down 45% on a year-over-year
basis, but up 7% on a sequential basis compared to the second quarter of
2009. These Energy Services segment results were impacted by
year-over-year declines in the price of oil and the adverse impact of
low natural gas prices on industry production and investment.
Gross margin as a percentage of revenue for the third quarter 2009 was
37.0%, the highest quarterly gross margin percentage in the Company's
history. On a year-over-year basis gross margin was up 4.5 percentage
points, and on a sequential basis gross margin was up 4.2 percentage
points.
Third quarter 2009 operating expenses were $8.1 million, down 9.9% on a
year-over-year basis, and up 5.9% on a sequential basis compared to the
second quarter of 2009. The reductions versus prior year were due to
cost reduction measures taken in anticipation of the difficult economic
climate, as well as reductions in selling expense due to lower
year-over-year revenues. The sequential quarterly increase in operating
expenses was driven by additional compensation expense resulting from
the Company's improving financial results, higher selling expense due to
higher revenues, and an increase in depreciation from capital deployed
to support the Company's growing recurring revenue business.
Additionally, the Company's operating expenses reflect continuing
investments in new product development and infrastructure for several
growth initiatives, which include but are not limited to its new
PowerPackages business unit, the EfficientLights Street Light product,
and its SmartStation substation technology.
As of the date of this press release, the Company's revenue backlog
expected to be recognized after September 30, 2009 is $90 million. This
includes revenue related to new business announcements made by the
Company on September 29 and October 14, 2009, and is $2 million more
than the $88 million of revenue backlog reported in the Company's second
quarter earnings release (issued on August 6, 2009). 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, 2009
Anticipated Estimated Primary
Description Revenue Recognition Period
Project-based Revenue -- Near term $35 Million 4Q09 through 2Q10
Project-based Revenue -- Long term $19 Million 3Q10 through 2011
Recurring Revenue $37 Million 4Q09 through 2016
Revenue Backlog to be recognized after September 30, 2009 $90 Million
Note: Revenue and 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 toconstitute 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 theCompany's Southern Flow business, engineering fees, and certain monitoring and maintenance revenue,among others. Numbers may not add due to rounding.