POWERSECURE INTERNATIONAL, INC. - FORM 8-K - EX-99.2 - INVESTMENT SLIDE PRESENTATION

Attached files

file	filename
8-K - CURRENT REPORT - POWERSECURE INTERNATIONAL, INC.	d625063d8k.htm
EX-99.1 - PRESS RELEASE - POWERSECURE INTERNATIONAL, INC.	d625063dex991.htm

Stephens

2013 Fall Investment Conference

November 12, 2013

Sidney Hinton, Chief Executive Officer

Exhibit 99.2

2 | ©

Forward Looking Statements

Safe Harbor

All forward-looking statements made in this presentation are made

under the safe harbor provisions of the Private Securities Litigation

Reform Act of 1995. Forward-looking statements, which are all

statements other than statements of historical facts and include beliefs,

opinions, estimates, and projections about future business

developments and opportunities and financial guidance, are not

guarantees of future performance or events but are subject to risks,

uncertainties and other factors that could cause actual results to differ

materially from those expressed, projected or implied, including risks

and uncertainties set forth in the Company's SEC filings, including but

not limited to the Company’s most recent Form 10-K and subsequent

filings on Form 8-K and 10-Q. Any forward-looking statements in this

presentation speak only as of the date hereof, and the Company

assumes no duty or obligation to update or revise any forward-looking

statements.

3 | ©

NYSE:

POWR

PowerSecure: Who We Are Today

Backlog:

$240M

(37% YoY Growth)

>750

Employees

Growing

Earnings Per Share &

Operating Margins

Strong

Balance Sheet

TTM Revenues:

$243M

(57% YoY Growth)

Headquarters:

Wake Forest, NC

PowerSecure: Utility Focused

Energy Efficiency

Products/Services

Utility

Infrastructure

Solutions

IDG Power

Systems

4 | ©

Utilities

And Their

Large

Customers

Revenue Scaling Quickly to

$300M Target

100

150

200

250

300

350

2000 Start-

2005

2010

2011

2012

2013

2014

2015

Goals

Utility Infrastructure

Energy Efficiency

Distributed Generation

"Foundation"

2005-2010

26%+

Growth, 3.2X

"Scale

and Profitable Growth

2010-2015

Goal

26%+

Growth, 3.1X

$96

$162

$300

($ millions)

"Start-up"

2000-2005

1000%+

Growth

Compound Growth

2010-2015

Utility

Infrastructure

+39%

Energy Efficiency

+20%

Distributed Generation

+20%

Total

+26%

$130

5 | ©

6 | ©

3Q13 Results

(in millions)

Numbers may non add due to rounding

Y-O-Y Variance

See non-GAAP discussion and reconciliation

3Q13

3Q12

Revenue

Distributed Generation

40.6

25.1

62%

Utility Infrastructure

24.2

14.0

72%

Energy Efficiency

16.7

5.1

225%

Total Revenue

81.5

44.2

84%

Gross Profit

21.5

13.9

55%

Gross Profit % Revenue

26.3%

31.4%

-5.1

Operating Income

5.9

0.5

1112%

Operating Profit % Revenue

7.3 %

1.1%

+6.2

GAAP E.P.S.

$0.17

$0.03

+ $0.14

Non-GAAP E.P.S.

$0.17

$0.08

+ $0.09

7 | ©

•

Operating margins increasing

•

Increasing scale across all business lines

•

2012 cost reduction program enhances OpEx leverage

•

Major investment to build UI business from scratch in ‘07

now completed

•

Decreasing OpEx as % of revenue

•

2013 Adjusted EBITDA target: >$20M

Meaningful Bottom Line Leverage

See non-GAAP discussion and reconciliation

8 | ©

2011 Progression

Revenue

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

$0.25 $0.90 $0.05 $0.06

See non-GAAP discussion and reconciliation

$24

$30

$37

$40

$10

$15

$20

$25

$30

$35

$40

$45

$50

1Q11

2Q11

3Q11

4Q11

(0.09)

(0.03)

0.05

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

1Q11

2Q11

3Q11

4Q11

See non-GAAP discussion and reconciliation

9 | ©

2012 Progression

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

($0.03) $0.09 $0.03 $0.08

1Q12

2Q12

3Q12

4Q12

$10

$15

$20

$25

$30

$35

$40

$45

$50

$33

$38

$44

$47

($0.10)

($0.05)

$0.00

$0.05

$0.10

$0.15

(0.03)

2Q12

3Q12

4Q12

0.04

0.08

0.13

See non-GAAP discussion and reconciliation

9 | ©

Revenue

Revenue

2013 Progression

E.P.S. --

Non-GAAP

Continuing Ops

E.P.S. --

GAAP

$0.04 $0.11 $0.17

See non-GAAP discussion and reconciliation

$45

$70

$82

$10

$20

$30

$40

$50

$60

$70

$80

$90

1Q13

2Q13

3Q13

$0.04

$0.12

0.17

$0.00

$0.05

$0.10

$0.15

$0.20

1Q13

2Q13

3Q13

10 | ©

•

At end of Q3 2013:

$54.1 M in Cash

Locked in interest rate on $25 M term loan at 3.73%

Untapped $20 M revolver

•

Anticipate 2013 Adjusted EBITDA >$20 M

•

Potential uses of capital:

Additional investment in company-owned DG projects

Potential acquisitions

Working capital

Equipment to support growth in UI

Robust Balance Sheet

11 | ©

•

Provides cybersecurity and NERC-CIP

compliance consulting services to

utility industry

•

Opportunity for PowerSecure to expand

UI service offerings to world-class Encari

customer base

•

PowerSecure can bring Encari’s

expertise to existing UI customers

•

Accretive to UI gross margin

Recent Acquisitions Add Value

12 | ©

Purchased

Encari for $4.8M

October 2013

Recent Acquisitions Add Value

•

Successful 20-yr old business serving

major ESCOs with lighting, mechanical,

water and building envelope solutions

to deliver energy efficiency savings

•

Significantly expands our Energy

Efficiency offerings

•

Opens new customer channels for

LED lighting and peak shaving

•

Purchase included $27M in awarded

projects

•

Accretive in 2013

Purchased

ESCO services

business

for $5.5M

February 2013

13 | ©

Recent Acquisitions Add Value

•

Solais has significant sourcing and

manufacturing expertise

•

Adds substantial efficiencies to

manufacturing of PowerSecure’s

existing LED solutions

•

Outstanding proprietary portfolio of LED

lamps and fixtures for commercial and

Industrial applications

•

Superior light output, thermal

management, optics, light quality and

aesthetics

•

Anticipating $4M-$6M charge in Q4

2013/Q1 2014 to accelerate

manufacturing synergies

Purchased

Solais lighting

business

for $15 M

April 2013

14 | ©

Our 2015 Goals: $300M in Tot Revenues

Distributed

Generation

Utility

Infrastructure

Energy

Efficiency

Driving Mid-Double Digit

Operating Margins

15 | ©

PowerSecure Distributed Generation:

Differentiated Solution=Superior Reliability & ROI

Electric

Utility

Customer

Facility

•

24/7 monitoring: standby and peak shaving

•

Proprietary internet-based monitoring, dispatch and control

•

“No Pain”

demand response

•

Our reliability > nuclear backup systems

•

Utility tariff and interconnect experts

Interactive

Distributed

Generation

System

16 | ©

17 | ©

•

T&D maintenance and construction

•

Substation products and services

•

Advanced metering and lighting

installation

•

Storm repair and restoration

•

Utility engineering and design

•

Regulatory consulting and rate design

•

PowerSecure MicroGrids and

SmartStations

Utility Infrastructure:

Direct Service to our Utility Customers

18 | ©

•

Our Utility Infrastructure Investment and Progression

2005 –

Launched utility engineering business

2007 –

Launched utility services business

2009 –

3 major IOU’s add PowerSecure utility services crews

2010 –

1st major award: $30 million, 3-year

award serving major IOU

2011 –

Served 9 IOUs (13 operating divisions)

Q3 2013 UI revenues + 72% y-o-y to $24.2 million

TTM UI revenues + 73% y-o-y to $94.8 million

•

Industry transmission and distribution investment

is estimated to be $890 billion from 2010-2030

(average of over $40 billion/year)

Capitalize on our “people advantage”

Shale gas/oil exploration are an additional growth driver

Utility Infrastructure:

Business Progression and Growth

The

Brattle

Group,

November

2008

–

“Transforming

America’s

Power

Industry

–

The

Investment

Challenge

2010-2030”

19 | ©

•

Department store/high-end retail lighting

Solais product line adds new customers

•

Utility lighting

Utilities and municipalities

Energy and maintenance savings drive payback

Opportunity: millions of lights across U.S.

•

Grocery, drug, and convenience stores

Best-in-class lights for freezer/refrigerated cases

•

Commercial & industrial lighting

New targeted/niche product recently launched

Energy Efficiency: LED Solutions

20 | ©

Revenue Scaling Quickly to

$300M Target

100

150

200

250

300

350

2000 Start-

2005

2010

2011

2012

2013

2014

2015

Goals

Utility Infrastructure

Energy Efficiency

Distributed Generation

$96

$162

$300

$130

Compound Growth

2010-2015

Utility Infrastructure

+39%

Energy Efficiency

+20%

Distributed Generation

+20%

Total

+26%

"Foundation"

2005-2010

26%+ Growth, 3.2X

"Scale and Profitable Growth"

2010-2015 Goal

26%+ Growth, 3.1X

($ millions)

"Start-up"

2000-2005

1000%+ Growth

Thank you

22 | ©

Non-GAAP Financial Measures

Our references to our third quarter 2012 “Non-GAAP Pro forma” financial measures of net income from

continuing operations, net income, net income attributable to PowerSecure International, Inc., diluted

EPS from continuing operations, diluted EPS from discontinued operations and diluted EPS discussed

and shown in this report constitute non-GAAP financial measures. They refer to our GAAP results,

adjusted to show the results without the restructuring and cost reduction charge of $1.5 million recorded

in the third quarter of 2012.

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 operating performance with the same consistent financial context. These non-GAAP pro

forma measures also correspond with the way we expect Wall Street analysts to compare our results.

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 EPS from continuing

operations, diluted EPS from discontinued operations, and diluted EPS.

23 | ©

Non-GAAP Financial Measures

References to our third quarter and year-to-date 2012 and 2013 Adjusted EBITDA, which we define as

our earnings before interest, taxes, depreciation and amortization, as discussed and shown in this

release, constitutes a non-GAAP “pro forma” financial measure.

We believe that Adjusted EBITDA, as a non-GAAP pro forma financial measure, provides meaningful

information to investors in terms of enhancing their understanding of our operating performance and

results, as it allows investors to more easily compare our financial performance on a consistent basis

compared to the prior year periods. This non-GAAP financial measure also corresponds with the way

we expect investment analysts to evaluate and compare our results. Any non-GAAP pro forma financial

measures should be considered only as supplements to, and not as substitutes for or in isolation from,

or superior to, our other measures of financial information prepared in accordance with GAAP, such as

net income attributable to PowerSecure International, Inc.

We define and calculate Adjusted EBITDA as net income attributable to PowerSecure International, Inc.,

minus: 1) the gain on the sale of our unconsolidated affiliate, 2) discontinued operations and 3) interest

income and other income, plus: 4) restructuring charges, 5) acquisition expenses, 6) income tax

expense (or minus an income tax benefit), 7) interest expense, 8) depreciation and amortization and 9)

stock compensation expense. We disclose Adjusted EBITDA because we believe it is a useful metric by

which to compare the performance of our business from period to period. We understand that measures

similar to Adjusted EBITDA are broadly used by analysts, rating agencies, investors and financial

institutions in assessing our performance. Accordingly, we believe that the presentation of Adjusted

EBITDA provides useful information to investors. The table below provides a reconciliation of Adjusted

EBITDA to net income attributable to PowerSecure International, Inc., the most directly comparable

GAAP financial measure.

24 | ©

PowerSecure International, Inc.

Non-GAAP Pro forma Measures

($000's except per share data, some rounding throughout)

Three Months Ended September 30, 2012

As Reported

3Q12

Restructuring

Charges

Pro forma

3Q12

Operating expenses

General and administrative

9,012

Selling, marketing, and service

1,615

Depreciation and amortization

1,211

Restructuring and cost reduction charges

1,548

(1,548)

Total operating expenses

13,386

(1,548)

11,838

Total operating expenses % revenue

30.3%

26.8%

Operating income

490

1,548

2,038

Operating income % revenue

1.1%

4.6%

Income (loss) before income taxes

398

1,548

1,946

Income tax expense (benefit)

119

463

582

Net income (loss) from continuing operations

279

1,085

1,364

EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE TO

POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:

Continuing Operations

Diluted

0.03

0.06

0.08

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Diluted

18,793

25 | ©

PowerSecure International, Inc.

Non-GAAP Pro forma Measures

Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization, and Charges)

Calculations and Reconciliation

($000's except per share data, some rounding throughout)

Sept 30,

2013

2012

2013

2012

Adjusted EBITDA Calculation/Reconciliation

Net income (loss) attributable to

PowerSecure International, Inc.

3,473

482

6,305

1,522

Items to Subtract from Net Income

Gain on sale of unconsolidated affiliate

(1,439)

Discontinued operations - income

(11)

(78)

Interest income and other income

(21)

(22)

(61)

(67)

Items to Add to Net Income

Restructuring Charges

1,548

Acquisition Expenses

560

128

Income tax expense (benefit)

2,227

119

3,906

347

Interest expense

262

114

497

338

Depreciation and Amortization

1,925

1,211

5,190

3,432

Stock compensation expense

149

179

438

755

Adjusted EBITDA

8,045

3,620

16,835

6,486

Three Months Ended

Nine Months Ended

26 | ©

Non-GAAP Financial Measures

Our references to our second quarter 2012 and 2013 “Non-GAAP Pro forma” financial measures of 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 in this report constitute non-GAAP financial measures. They refer to our

GAAP results, adjusted to show the results 1) without the 2Q 2012 gain on the sale of our WaterSecure

investment (identified in our financial statements as our unconsolidated affiliate), 2) without the Q2 2012

results of our discontinued PowerPackages business, 3) without the Q2 2012 acquisition expenses

related to PowerSecure Solar and 4) without the Q2 2013 acquisition expenses primarily related to

Solais (and to a lesser extent our ESCO, PowerLine, IES, and PowerSecure Solar transactions).

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 operating performance with the same consistent financial context. These non-GAAP pro

forma measures also correspond with the way we expect Wall Street analysts to compare our results.

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.

27 | ©

PowerSecure International, Inc.

Non-GAAP Pro forma Measures

($000's except per share data, some rounding throughout)

Three Months Ended June 30, 2013

Three Months Ended June 30, 2012

As Reported

2Q13

Acquisition

Expenses for

Solais, ESCO,

PowerLine, IES,

and PowerSecure

Solar Transactions

Pro forma

2Q13

As Reported

2Q12

WaterSecure,

PowerPackages,

and Acquisition

Expenses for

PowerSecure

Solar

Pro forma

2Q12

Revenue

70,187

37,867

Cost of sales

50,304

25,663

Gross Profit

19,883

12,204

Operating expenses

General and administrative

12,511

9,093

Selling, marketing, and service

2,105

1,366

Depreciation and amortization

1,809

1,136

Restructuring and cost reduction charges

Total operating expenses

16,425

11,595

Operating income (loss)

3,458

452

3,910

609

683

Other income (expense)

Gain on sale of unconsolidated affiliate

1,439

Interest income and other income

Interest expense

(130)

(116)

Income (loss) before income taxes

3,347

452

3,799

1,955

(1,365)

590

Income tax expense (benefit)

1,305

176

1,481

621

(433)

188

Net income (loss) from continuing operations

2,042

276

2,318

1,334

(932)

402

Discontinued operations -

income (loss) from

operations (net of tax)

Discontinued operations -

gain on sale (net of

tax)

Net income (loss)

2,042

1,366

Net loss attributable to noncontrolling

interest

277

Net income (loss) attributable to

PowerSecure International, Inc.

2,099

1,643

Summary of Amounts Attributable to PowerSecure International, Inc. shareholders

Income (loss) from continuing operations (net

of tax)

2,099

276

2,375

1,611

(932)

679

Income (loss) from discontinued operations

(net of tax)

(32)

Net income (loss) attributable to

PowerSecure International, Inc.

2,099

276

2,375

1,643

(964)

679

EARNINGS PER SHARE AMOUNTS ("E.P.S") ATTRIBUTABLE TO

POWERSECURE INTERNATIONAL, INC. SHAREHOLDERS:

Continuing Operations

Basic

0.11

0.09

Diluted

0.11

0.09

Discontinued Operations

Basic

0.00

Diluted

0.00

Net Income

Basic

0.11

0.01

0.12

0.09

(0.05)

0.04

Diluted

0.11

0.01

0.12

0.09

(0.05)

0.04

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING

Basic

19,024

Diluted

19,357

28 | ©

Non-GAAP Financial Measures

Our references to our quarterly and full year 2012, and quarterly and full year 2011 “Non-GAAP Pro

forma” financial measures of operating expenses, operating expenses as a percentage of revenue,

operating income, operating income as a percentage of revenue, net income from continuing operations,

net income, net income attributable to PowerSecure International, Inc., diluted E.P.S. from continuing

operations, and diluted E.P.S. discussed and shown in this report constitute non-GAAP financial

measures. For our quarterly and full year 2012 results, they refer to our GAAP results, adjusted to show

them 1) excluding charges related to our restructuring and cost reduction initiative, 2) gains related to

the 2011 sale of our WaterSecure operations, and 3) results of our discontinued PowerPackages

business exited in 2011. For our fourth quarterly and full year 2011 results, they refer to our GAAP

results, adjusted to show them 1) excluding gains and income related to our WaterSecure operations, 2)

the results of our discontinued PowerPackages business, and 3) gains and income related to our

discontinued Southern Flow business sold in 2011.

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 operating performance in 2011, 2012, and in future periods with the same consistent

financial context as the business was managed in those periods. Additionally, because these items

were non-recurring, our non-GAAP pro forma measures are more comparable to our prior period and

future period results.

29 | ©

Non-GAAP Financial Measures

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 operating performance in 2011, 2012, and in future periods with the same consistent

financial context as the business was managed in those periods. Additionally, because these items

were non-recurring, our non-GAAP pro forma measures are more comparable to our prior period and

future period results.

We believe these Non-GAAP Pro forma measures also provide meaningful information to investors in

terms of enhancing their understanding of our fourth quarter and full year 2012, and fourth quarter and

full year 2011 operating performance and results, as they allow investors to more easily compare our

financial performance on a consistent basis compared to the prior year periods. These Non-GAAP Pro

forma measures also correspond with the way we expect investment analysts to evaluate and compare

our results. Our Non-GAAP Pro forma measures should be considered only as supplements to, and not

as substitutes for or in isolation from, or superior to, our other measures of financial information prepared

in accordance with GAAP, such as GAAP revenue, operating expenses, operating expenses as a

percentage of revenue, operating income, operating income as a percentage of revenue, 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.

The following table provides a reconciliation of these non-GAAP financial measures to the most directly

comparable GAAP financial measures.

Non-GAAP Financial Measures

POWERSECURE INTERNATIONAL, INC. - FORM 8-K - EX-99.2 - INVESTMENT SLIDE PRESENTATION - November 12, 2013

Attached files

POWERSECURE INTERNATIONAL, INC. Reports