04.11.2010 21:19
PowerSecure Reports Third Quarter Results
Revenue Increases 13% to $31 Million, and Backlog Reaches All-Time High $138 Million
PowerSecure International, Inc. (Nasdaq: 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
Anticipated Estimated Primary
Deion Revenue Recognition Period
Project-based Revenue -- Near term $42 Million 4Q10 through 2Q11
Project-based Revenue -- Long term $35 Million 3Q11 through 2Q13
Recurring Revenue $61 Million 4Q10 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
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