EnerNOC, Inc. Earnings Remain Challenged

By Markets Fool.com

Image source: Flickr user Sarah Altendorf.

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Despite scoring a huge win in a Supreme Court case during the quarter, EnerNOC's financial results continue to remain under pressure while it shifts its focus to energy intelligence software (EIS). Even with the pressure of that transition, though, the company's fourth-quarter financial results were right within its own guidance range. That said, the transition continues to take time, with EnerNOC expecting another year of declining revenue and weaker earnings.

EnerNOC results: The raw numbers

Metric

Q4 2015 Actuals

Q4 2014 Actuals

Growth (YOY)

Revenue

$59.2 million

$46.0 million

28.8%

Net Income (Non-GAAP)

($29.2 million)

($16.3 million)

N/M

Net Income Per Share (Non-GAAP)

($1.02)

($0.60)

N/M

Data source: EnerNOC.

What happened with EnerNOC this quarter?
EnerNOC's results continue to be weighed down by its move toward EIS:

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  • Year-over-year revenue growth was strong, led by a 64.4% surge in enterprise revenue to $25.8 million. Further, both grid operator and utility revenue grew over last year's fourth-quarter, up 13.3% and 5.8%, respectively. That pushed revenue up toward the high-end of EnerNOC's guidance range of $50 million to $60 million.
  • The company grew its enterprise annual recurring revenue by $3 million over last quarter to $61 million.
  • Non-GAAP net income slumped primarily due to a loss on the early extinguishment of debt and a related tax impact.
  • EnerNOC was free cash flow positive by $16.7 million for the quarter. However, for the full-year it was free cash flow negative by $16 million.

What management had to say
CEO Tim Healy,commenting on the company's results, said:

We continued to build momentum and enhance our leadership position in the EIS market during 2015... And following our recent landmark victory at the Supreme Court, we begin 2016 with the clarity and focus needed to drive significant growth in our software business and maximize the cash flow generation of our demand response business.

EnerNOC noted that the Supreme Court's decision to uphold FERC's jurisdiction over the participation of demand response in the U.S. wholesale electricity markets was a major win for it and other distributed energy resource providers. That's because it upheld a rule that pays large users to conserve power during peak periods, which is key for EnerNOC's demand response business.

Looking forward
In spite of the positives of that ruling and the momentum growing within its EIS business, EnerNOC sees revenue and earnings continuing to decline in 2016. It is guiding for revenue to be in a range of $365 million to $395 million, which is down from the slightly less than $400 million in revenue it pulled in during 2015. Total adjusted EBITDA, likewise, is expected to head south, with the company guiding for a loss of $45 million to $35 million, which is a wider loss than the $21.1 million it turned in during 2015. That said, it sees solid growth in its software business, with revenue projected to be in the range of $80 million to $85 million, or up 7% from last year at the midpoint.

The article EnerNOC, Inc. Earnings Remain Challenged originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends EnerNOC. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.