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EnerNOC, Inc. (NASDAQ:ENOC)

Q4 2009 Earnings Call

February 11, 2010 5:00 PM EST

Executives

Will Lyons – IR Manager

Tim Healy – Chairman and CEO

David Brewster – President

Tim Weller – CFO

Analysts

Paul Coster – JPMorgan

John Quealy – Canaccord Adams

Steve Milunovich – Merrill Lynch

Jeff Osborne – Thomas Weisel

Paul Clegg – Jefferies

Michael Horwitz – Baird

Pavel Molchanov – Raymond James

Patrick Jobin – Credit Suisse

Vishal Shah – Barclays Capital

Shawn Lockman – Ardour Capital

Ben Schuman – Pacific Crest

Elaine Kwei – Piper Jaffray

Jeremy Hellman – Divine Capital

Operator

Good day, ladies and gentlemen, and welcome to the EnerNOC fourth quarter and year-end 2009 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference, Will Lyons, Investor Relations Manager. You may begin.

Will Lyons

Thanks, Devon. Good afternoon, everyone, and welcome to EnerNOC’s investor conference call for the fourth quarter ended December 31st, 2009. I am Will Lyons, Investor Relations Manager at EnerNOC, and with me today on the call is our Chairman and CEO, Tim Healy; our President, David Brewster; and our Chief Financial Officer, Tim Weller.

Today’s presentation contains estimates and other statements that are forward-looking under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and involve a number of factors that could cause actual results to differ materially from those expressed or implied by such statements.

Additional information concerning these factors is contained in EnerNOC’s filings with the SEC including, including our annual report on Form 10-K and quarterly reports on Form 10-Q, available at www.sec.gov. The forward-looking statements included in this call represent the company’s views on February 11th, 2010, and EnerNOC disclaims any obligation to update these statements to reflect future events or circumstances.

This call also includes discussion of both GAAP and non-GAAP financial measures. Information regarding EnerNOC’s use of these measures as well as a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure is available in our fourth quarter 2009 financial press release which was issued today after the market closed. The release can be found on the Investor section of our corporate website, www.enernoc.com.

I will now turn the call over to Tim Healy.

Tim Healy

Thanks, Will. Good afternoon, everyone. In early 2009, we discussed our major corporate objectives for the year. Those objectives included growing our total revenues by more than 40% to over a $150 million, driving leverage in the model to generate a GAAP per share loss of less than a $1.20, and generating positive cash flow from operations in the second half of 2009. I am pleased to report to you today that we delivered on all of those commitments. In fact, bolstered by great traction of our demand response solutions, we exceeded our 2009 expectations.

We ended the year at a $190.7 million in total revenues, which was above our guidance range, a range that we steadily increased throughout the year. We expanded our gross margin to 45.3% in 2009, up from 38.9% in 2008. We delivered positive cash flow from operations of $18.3 million in the second half of 2009. We increased EnerNOC’s operational leverage as evidenced by the growth in our megawatts under management per full-time employee metric. At year-end, we managed 8.5 megawatts per FTE up from 6.0 megawatts at the end of 2008.

When you account for the fact that we have an increasing percentage of employees that are focused on driving the adoption of our other applications, this metric becomes 10.6. As a result of this increased leverage, we managed to a GAAP loss of just $0.32 per basic and diluted share in 2009, which represents an improvement of more than a $1.50 per share relative to 2008. In positioning us for a strong 2010, we closed out the year with over 3,550 megawatts under management, a 73% increase in our core business. We are very pleased with these results, and later in this call, you will hear Tim Weller provide some additional color on these numbers.

In 2009, we also continued to deliver on our promises to utility and grid operators as evidenced by our strong demand response event performance throughout the year. During 2009, we delivered over a 100% average event performance based on nominated versus delivered capacity in more than a 130 demand response events. We believe that this performance track record is a key competitive differentiator particularly for prospective utility customers that are considering adding demand response resources to their portfolio.

During the fourth quarter, we completed the acquisition of Cogent Energy, a leading energy engineering and building commissioning firm, headquartered in California. We believe that Cogent is a good strategic fit as it provides us with additional energy and mechanical engineering expertise to help develop and supplement our monitoring based commissioning application. It also adds a professional services capability to enhance our ability to strengthen our C&I customer relationships and cross-sell them a broader suite of services. Furthermore, Cogent has strong utility relationships with Pacific Gas & Electric and SoCal Ed, as well as C&I relationships with the University of California, Cal State University, and other important California based institutions.

On past conference calls, we have alluded to the fact that California will be a key region for our monitoring based commissioning services, and we believe that this acquisition will accelerate the traction that we are already experiencing in that market. Our plan is to extend Cogent’s leading service offerings to other targeted geographies, particularly those in which we already have a significant demand response presence.

As EnerNOC management looks ahead in 2010, we are pleased with what we see in our business pipeline. We are currently in a very active Q1 selling period for PJM and other key programs that have late spring or early summer enrollment deadlines. Our utility solutions team is working to extend bilateral contracts and bring a number of new utility deals over the finish line. We are pleased with our current and expanding leadership in the bilateral market as evidenced by a number of key contract announcements in California, Washington, and Canada in the past several months. These developments expand the market for EnerNOC to deliver our demand response applications and strengthen our positioning for new and emerging opportunities such as those potential resulting from Pennsylvania Act 129.

We will also be focused in 2010 on cross-selling the additional value of our differentiated application suites. Over the coming quarters, you should expect to see new product branding announcements that better align our application portfolio with strategic cross-sell opportunities, providing a more integrated experience for our customers. We believe that our core demand response business provides a tremendous competitive advantage here as it creates a sticky relationship between us and our C&I customers.

During a period of contraction across the global economy, we are pleased with early success we have experienced bringing our new products to market, inking a number of MBCx and carbon management accounting deals with financial service companies, university systems, hospital networks, and other large enterprises. As a result, we have tasked our sales force to spend increasingly more of their time in 2010 focusing on cross selling our energy management application suite. Everyone was fully trained on all products at our go-to-market summit in early December and our new sales commission plan includes elements to help us achieve our 2010 cross-selling goals.

We anticipate that our increased emphasis on this application suite will deliver a number of exciting customer wins in 2010, and we intend to provide more metrics around this business line as that customer base reaches critical mass.

Lastly, subsequent to the end of the quarter, we announced that we appointed Dr. Susan Tierney to our Board of Directors. Sue has long been a trusted advisor to EnerNOC and we are excited to bring her market and policy expertise onboard to help us fundamentally reshape the way utilities and energy efficiency work together from a regulatory perspective. That effort will be difficult and groundbreaking at times, but we believe there has never been a greater moment in history to capitalize on the enormous market potential of energy efficiency. We are excited that Sue shares our passion and our commitment in this endeavor.

As you can tell from my prepared remarks, EnerNOC continues to deliver on its promises to its customers and to its shareholders. A lot has changed in the macro environment since early 2008, when we first described our path to profitability. However, our business fundamentals haven’t changed. EnerNOC remains a business with visible recurring revenue streams, a stable utility and grid operator customer base, and a strong balance sheet. These attractive attributes have enabled us to stay the course, achieve robust growth, and deliver positive cash flow from operations not just for the back half, but also for the full year of 2009.

Over the past two years, we have emerged as the clear market leader in the multibillion dollar demand response industry, while making important investments in our business aimed at expanding our leadership position and growing our market opportunities. We have accomplished these objectives while maintaining our commitment to deliver positive GAAP earnings per share in 2010 and to continue to reinvest in our business. We are excited about our business prospects in 2010 and are focused on delivering another outstanding year.

I will now turn the call over to David Brewster, who will provide details on some of the regulatory and market forces currently shaping our outlook.

David Brewster

Thanks, Tim. I will touch upon some recent developments in the US market and then update you on our progress in the UK.

As Tim mentioned, we see potential opportunities arising out of Act 129 in Pennsylvania, California [ph] investor owned utilities are in various stages of administered RFPs or developing new programs to meet their statutory peak load reduction requirements. We expect utilities to begin making awards starting in the first half of this year. Moreover, with the rate caps now expired in most of Pennsylvania as of January 1st, 2010, we expect growing opportunities for our energy supply and management application. These developments may further build our Pennsylvania business on top of our base of PJM wholesale market activities.

Regarding FERC, FERC Order 719 as I referred to at our recent Analyst Day, investors should expect to see a series of filings pertaining to ISO and RTO compliance with this order, which is aimed at increasing competition in wholesale markets and breaking down barriers to increase demand side resource participation in those markets. You should also expect to see various state-level proceedings to emerge as a byproduct of Order 719, as state commissions are taking greater interest in a role that demand response and third-party entities can play in their markets.

We believe that these filings will further develop ancillary service opportunities and lower barriers to demand response. You can look for EnerNOC to continue to be named in filings that espouse the demand response industry stance on such matters. As the thought leader in the industry, we believe that it is our responsibility to help shape markets. We also have filed comments indicating that certain grid operators have not gone far enough to remove barriers to demand response. We believe that these proceedings could be positive for EnerNOC and the demand response industry as a whole.

At the Federal level, we are pleased with the increased attention and commitment to establish in the US as a global clean energy leader, specifically we know the Waxman-Markey’s bill peak demand reduction goals which would require each utility with greater than 250 megawatts of load to set peak demand reduction goals and to develop a plan to meet those goals. We believe that these goals could be cost effectively achieved by the utilities by contracting with third-party demand response providers.

We also know that the proposed Federal Renewable Energy Standard will be measured in kilowatt hours and allow energy efficiency to meet up to 25% of the standard which we believe would benefit our monitoring base commissioning activity. This application as you know provides ongoing measurable reductions in energy usage that could be captured by utilities to help meet their targets. While the passage of climate legislation this year is clearly uncertain, there is a possibility that an energy bill minus the climate provisions could pass.

On the international front, we continue to make steady progress in the UK. In Q4, we went live in National Grid’s Short Term Operating Reserve Market and are highly focused at this point on increasing the size of our network and the breadth of our business in the UK, while also pursuing opportunities that we hope will materialize into new international market opportunities for our firm.

In closing, we believe that our leadership position in this exciting global market will result in continued growth, leverage, and differentiation for our company in 2010 and beyond.

I will now turn the call over to Tim Weller, who will provide details on our fourth quarter financial results.

Tim Weller

Thank you, David, and good afternoon, everyone. I would like to provide some additional details on the fourth quarter financial performance, as well as outline our first quarter and full-year 2010 financial guidance.

Consistent with the pattern of previous years, our fourth quarter is sequentially lower than our third quarter on revenue and income, largely due to fewer demand response programs occurring in the off season. For the fourth quarter, we delivered revenue of $26.7 million, which represents an increase of $7.1 million or 36% over the fourth quarter of 2008, and slightly above the high end of our guidance range. We recognized demand response revenues of $24.9 million during the quarter compared to $17.7 million for the quarter ended December 31, 2008, an increase of just over 40%. This was driven by growth in TVA along with megawatt additions and solid capacity pricing in New England and New York.

Revenue in our energy management services products for the quarter ended December 31st, 2009 was $1.8 million, slightly lower than the quarter ended December 31st, 2008. The bulk of these revenues continued to be in our energy supply management, a slow growth area that continues nonetheless to provide great customers for cross-selling opportunities in demand response and other services. We also recorded approximately $250,000 of revenue from our new Cogent acquisition in December. As we outlined at our December Analyst Day, our 2010 operating plan includes dedicating an increasing amount of time and resources to continue to build the energy management services suite.

Total revenues for the full-year 2009 were $190.7 million, up 80% from the $106.1 million that we booked for the full-year 2008. Cost of revenues for the quarter ended December 31st, 2009 totaled $18 million compared to $12.1 million for the quarter ended December 31st, 2008, an increase of approximately $5.9 million or 49%. Our gross profit for the quarter was $8.8 million, compared to the $7.6 million for the quarter ended December 31st, 2008, an increase of approximately $1.2 million or 15%. Gross margin for the fourth quarter was 32.7% compared to 38.6% for the quarter ended December 31st, 2008.

Let me highlight several key items, which contributed to the seasonally light gross margin percentage. First, we experienced impairments and retirements of some production equipment and generators of $800,000 more in 2009 than in 2008. Second, because some indirect cost of revenues are recurring every quarter, while our fast growing PJM revenue is largely concentrated in Q2 and Q3, the gross margin is negatively impact in Q4. Finally, we booked approximately $200,000 of cost of revenues associated with C&I payments in one demand response program in which we deferred the related revenue during the quarter.

Competitive market dynamics affecting margins remained relatively stable in Q4. As we have repeated in the past, we believe that full-year comparisons of gross margins are most meaningful in our business. Gross profit for the full-year 2009 was $86.5 million, up 109.4% from the full-year 2008 number of $41.3 million. Gross margin for the full-year 2009 was 45.3%, compared to full-year 2008 number of 38.9%. Given that our demand response remains our main revenue component on a full-year basis, we expect 2010 overall gross margins to be dominated by our demand response gross margins. We continue to expect our energy management services to provide higher margins over time.

Our solid gross margin for the year reflects successful selling to C&I customers at attractive rates, strong event performance delivering megawatts and avoiding penalties, and effective management of our megawatt portfolio to maximize our gross profit per megawatt, largely through program nomination, open-market auctions, and bilateral contracts. For 2010, with demand response still being the vast majority of our revenue, we see overall gross margins at approximately similar levels to 2009 gross margins.

Operating expenses were $23.3 million for the fourth quarter, compared to $19.7 million in the fourth quarter of 2008, an increase of 18%. Operating expenses for the full-year 2009 were $91.5 million, up 16.6% from the 2008 number of $78.5 million. Employee-related charges including non-cash stock-based compensation represented just over 70% of our operating expenses.

Turning to headcount, we ended the quarter with 418 employees, up sequentially from 370 employees at the end of the third quarter, including 25 new people from our December acquisition of Cogent. As the employee count grows, we’ve continued to track productivity and demand response. We have pointed out to our megawatts under management per full-time employee metric. This has gone from 4.4 at the end of 2007 to 6 at end of 2008 to 8.5 at end of 2009.

Recognizing that many of our employees are not working full-time on energy management services and not demand response, we showed a second version of this metric at our Analyst Day in December, which excludes those employees outside demand response. Megawatt per FTE excluding non-demand response employees was 10.6 at the end of 2009, up from 6.7 at the end of 2008. So we continue to see great operating leverage in demand response with our scale. As an aside, if you were not able to join us in Boston for our Analyst Day, the video webcast is still available on the Investor section of our website.

We generated a GAAP net loss for the fourth quarter ended December 31st, 2009, of $15.2 million or $0.64 per basic and diluted share, compared to a net loss of $12.2 million or $0.61 per basic and diluted share for the same period in 2008. Our GAAP net loss for the full-year 2009 was $6.8 million or $0.32 per basic and diluted share compared to a net loss of $36.7 million or a $1.88 per basic and diluted share in 2008. These results were at the high end of the revised guidance we provided on our Q3 call in November. Please see our earnings release for details on non-GAAP net income and EPS numbers, excluding stock-based compensation and certain amortization, including a full reconciliation to GAAP numbers.

Turning to the balance sheet, we ended the quarter with a $119.7 million in cash and equivalents on December 31st, 2009, up from $60.8 million at year-end 2008. The increase for the year was due primarily to our successful completion of our follow-on equity offering last August, through which we had added $83.4 million of new capital to the balance sheet. Our cash flow from operations was positive $5 million in the Q4. For the second half of 2009, our cash flow from operations was positive $18.3 million, delivering on the promise that we made to the capital markets in early 2008. In fact, cash flow from operations was positive $8.1 million for the entire year of 2009.

We incurred capital expenditures of $3.7 million for the quarter to finish the year with $16.9 million in total, largely for equipment at C&I sites. With CapEx of less than 10% of revenue in 2009, EnerNOC continues to be a low capital expenditure business model. For the quarter, we had approximately 23.7 weighted average basic shares – 23.7 million weighted average basis shares. One December 31st, 2009, we had approximately $26 million diluted shares issued and outstanding.

Now let me turn to guidance for the full-year 2010 and the first quarter. For the full-year, we expect 2010 total revenues of $255 million to $268 million. At our December Analyst Day, I mentioned that we saw 2010 revenues being in excess of $250 million, so this $255 million to $268 million guidance is consistent with that view. We expect full-year 2010 GAAP net income of positive $0.24 to $0.34 per diluted share and non-GAAP net income excluding stock-based comp and certain amortization of positive $0.94 to a $1.04 per share. For EnerNOC, 2010 remains an investment year, and our GAAP positive $0.24 to $0.34 diluted EPS guidance reflects healthy profits in North American demand response offset by startup costs in international demand response and energy management services including monitor based commissioning and carbon management.

We also expect to internally generate free cash flow in 2010, measured as cash flow from operations minus capital expenditures. This is before any cash we might use for acquisition. So with a $119.7 million of cash in the bank at December 31, 2009 and an expectation of positive internal free cash flow for the year, you can see that our balance sheet is in great shape.

Now let’s talk about Q1. Recall that we recognized the majority of our annual revenue in Q2 and Q3, principally due to the fact that our largest region PJM has the vast majority of its revenue concentrated during the summer event season, and thus Q4 and Q1 are lighter revenue quarters for us. This fact will help in reconciling our full-year and Q1 guidance. We expect first quarter 2010 revenues of between $24 million and $26 million. We expect a GAAP net loss of $0.70 to $0.76 per basic and diluted share. Finally, we expect a non-GAAP net loss of $0.50 to $0.56 per basic and diluted shares.

Let me add a couple of other comments that may be helpful in modeling 2010. First, remember that our recent historical quarterly overall revenue pattern has seen Q3 being the highest, Q2 being the next highest and Q1 and Q4 being the lowest within a calendar year, which needs to be taken into account as you forecast gross margins as well. Second, as I mentioned earlier, we see full-year 2010 gross margins at approximately similar levels to 2009 gross margins.

Finally, combining our year-end share count number with the expected stock and options issuance for employees and officers, we expect a full-year diluted weighted average share count of between 26.4 million and 26.7 million before any share issuance that might occur with future acquisitions. For Q1, we estimate a weighted average share count of 24.3 million for both basic and diluted shares due to the expected net loss position.

In closing, we are extremely pleased by our strong financially performance in 2009 and are excited by the prospects of 2010, a year in which we believe we will deliver a GAAP EPS profitability for the full year, a first for our company.

This concludes our prepared remarks. We look forward to seeing many of you in coming months. With that, I would like to open up the call to questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Also, when I open your line, you may ask your question and you have one follow-up. Our first question comes from Paul Coster from JPMorgan

Paul Coster – JPMorgan

Thank you. A question for Tim Weller. The guidance for pro forma EPS for the year is actually ahead of our expectations, whereas the GAAP isn’t, obviously the delta is to do with non-cash charges. Can you just give us a little bit of help on FAS 123 and amortization costs as you see them at this point?

Tim Weller

Sure, yes. Hi Paul. I don’t think there is anything unusual going on there. I guess in general, I ask you to wait for the proxy, and you will be able to see the opposite side of ledger there, and we will have more to talk about employee option pools. On top of my head I can’t think of a reason why you would – why you have a big gap there, but that’s the bulk of it. There is some amortization from the Cogent acquisition as well, and I don’t know if we have reported a number on that, but it will certainly be in the K, which will get filed soon. So probably combining that amortization number with some of the shares, I think you will be able to look – you will able to reconcile that gap.

Paul Coster – JPMorgan

Okay. And on a more fundamental basis, the – as you know one of the concerns is that some of the auctions relating to PJM going out to 2011, 2012 indicate a reduced price per megawatt, and it seems to be offset though by other activities in the bilateral market, international market. And so, do you think you can just sort of paint a picture for us of how the megawatt per day or megawatt per – the price per megawatt is going to evolve over the next couple of years and why we shouldn’t be too concerned about the PJM auction?

Tim Weller

Yes, sure. Well, now you are starting to get a little bit into – into your business area, the forecasting of the future. We are out there publicly obviously with what will happen in 2012-2013 season for PJM. We had a release I guess almost a year-ago now. The next data point we will have on that of any meaning will probably in May when the next BRA auction happens. So I don’t think we have any crystal ball beyond what is out there already.

People are obviously starting to look out three years, there is more chatter about the economy being able to recover a little bit and maybe some flat based lines we have seen declines clearly in the last couple of years. And so the – as always, it’s a question of how effective is our asset versus the alternatives of building a power plant, and hence the whole reason we have these three-year out, these three-year out markets.

As you said, the bilaterals are clearly very helpful. We have a very well diversified portfolio, we are starting to diversify it international. We are starting to see better traction even in North American markets like Canada. So I think, overall, we are cautiously optimistic I guess is the proper way to phrase it.

Tim Healy

I mean, I think I would only add that we said it before, but demand response still continues to be in the early innings of what this resource is going to mean to the market. And as we see more and more opportunities to leverage the multiple revenue streams you can achieve from managing that megawatt, whether it’s ancillary services, whether it’s providing demand response resources for economic demand response purposes or starting to do some of the other things that we are seeing, this resource is going to become more important.

The technology clearly needs to advance in the market in order to address the things that grid operators and the utilities are starting to expect and we see that. We see various pricing relative to the demands that are placed on this resource. So we continue to be excited about what we are able to do, and I think that’s why you are seeing us announce today that – and we said it at our Analyst Day, we are going to continue to invest in our technology and in our applications, and that’s both in the demand response piece of the business, so that our demand response resources can continue to garner the highest value per managed megawatt out there in the market.

Operator

Our next question comes from John Quealy from Canaccord Adams.

John Quealy – Canaccord Adams

Hi, good evening, guys. The quick question going back to the gross margins, the detail in terms of seasonality looking forward, can you just explain a little bit more in Q4 with regard to the write-off for the generators, is that a movement more automated as you add more megawatt under management, they are coming more in-house to more automated NOC style or can you just give a little bit more background on what that was?

Tim Weller

Yes, sure, John. Nothing that involved at all. We literally had a couple of generators. You know we look at our assets on a continuous basis. We had a couple down in Connecticut if I remember right that we had to take offline. We are constantly analyzing customers. If you have a customer that that goes bankrupt, for example, you pull the equipment out of there or you strand the equipment and write it off, so nothing too interesting in terms of a trend, just this number – this year’s number when we did at year-end turned out to be bigger than last year’s. And when you are talking about $26 million of revenue, every $260,000 is a 100 basis points of margin, so that largely explains the delta. And as I said, on the competitive side in terms of splits and things, we didn’t see anything unusual in Q4 versus the last Q4. So – and obviously the real action starts in the next quarter too for 2010 competitively.

Tim Healy

And I think it’s – just to put it in historical perspective, the type of activity that Tim was referring to where we are actually working with customers where we have been involved in the purchase of that generator asset or in the expense of capital equipment upgrade such as our clean gen program out in California doesn’t make up a sizeable part of our business at all. We are talking about, dozens of customers, not hundreds, and when you have climbing up on 3,000 customers now, you can kind of put it in perspective. This isn’t a large part of our business, but it’s something that we had opportunities to engage in, and it made sense to do that activity and we have to manage the business accordingly.

John Quealy – Canaccord Adams

All right, it makes sense. And then my last question, Tim, you talked about the new product branding cross-selling opportunities, can you give us an idea of will all your customers be touched with the full platform or at least be introduced to it in 2010. How do you see that process moving forward in ’10 with your sales force?

Tim Healy

Well, we would actually love it if every customer was touched and introduced to the application suite of applications that we have. Without a doubt with the sales force spending more time on that area, we are going to try to touch as many customers as possible. We have to keep in mind that some markets are better than others. The PJM market happens to be one of the prime markets, because you can offer the entire suite of applications, energy – the energy efficiency application is applicable everywhere. The energy procurement services or what we are calling energy management solutions or -- I am sorry, what we are calling an energy procurement, that’s only available in the nation’s deregulated market. So that’s going to touch a more limited subset of the customers.

We should be excited I think the way we look at it is we have been able to incubate these businesses and see some traction in an otherwise very challenging market for selling new solutions. I think we look at the macro-economic environment and we realize that if we have been able to get some great traction with utilities that are paying attention to our energy efficiency solutions and not just our demand response, and then more importantly the commercial and industrial customers that now want to buy from us and just not receive a capacity payment every quarter from us, but they want to turn around and buy solutions from us. In this kind of an economic environment, we feel really good, and we feel excited to see what would happen if we saw an upturn in the overall economic climate as well.

So it’s – 2010 will be an interesting year for us. And again we are pretty excited about what are seeing in terms of the pipeline and the traction that we are getting in those other parts of our business.

Operator

Our next question comes from Steve Milunovich from Merrill Lynch.

Steve Milunovich – Merrill Lynch

Great, thank you. A couple of quick questions. One is on the commission for cross-selling, how does that structure work? Is it everyone has to sell a certain percent kind of cross-selling or is it more if you sell you get upside?

Tim Weller

Hi Steve, Tim Weller. It’s basically built into the ‘010 plan as a sweetener, so you get your payments for a demand response both ongoing as well as for new bookings. And then if you are able to hit your targets in cross-selling you get a percentage bonus on top of demand response. So if you only cross-sell then you collect normal margins on the cross-sell products, but you don’t make anything on DR. And so we really encourage the people to do both. And then there is a little bit of a natural seasonality here. Obviously the first 90 days of the year is very intense on the demand response side, you go in, you start the early conservation on the cross-sell types of products.

And then as demand response starts to taper off or go down to a lower rate in 2Q and certainly 3Q, then you are deeper into your enterprise sale on the carbon and MBCx. And obviously we have solution specialist backing you up as a front-line business development manager, you get technical engineering solution specialist kind of folks coming in behind that. So it’s a blended plan for this year to – which absolutely motivates, you can’t have your top gear if you are not cross-selling. On the other hand, it doesn’t – and the gate selling and demand response in anyway which is the balancing act we went through.

Steve Milunovich – Merrill Lynch

I got you. And then now that you have been at the company even bit a longer than at the Analyst Meeting, have you found any additional cost savings as you continue to turnover rocks?

Tim Healy

I think so, it’s singles and doubles. But as we get scale and we have consolidated a number of companies over the past year-and-a-half or two, we do indeed continue to find ongoing cost savings and I have confidence that there is plenty more in 2010.

Operator

Our next question comes from Jeff Osborne from Thomas Weisel.

Jeff Osborne – Thomas Weisel

Great. I just had two quick questions. I was wondering if you could just give a forecast for what you thought the energy management services would be as a percentage of revenue for 2010. I know you commented that the main response will be the bulk of revenue, but should we expect that percentage to increase?

Tim Healy

Yes, we aren’t going out with the revenue forecast on that. And I think I spoke a little bit about that at the Analyst Day too for a couple of a reasons, one is it’s obviously very early; two, we have got several different selling models out in the market and we are less focused on which ones book GAAP revenue sooner than we are -- how the customer wants to buy and how things are going to be structured. So you are talking about such a large revenue base on the demand response side that it’s a little bit hazardous I think to start pitching a percentage. But we certainly will be reporting on this as the year goes on in terms of leading indicators and then eventually the financial numbers and backlog.

So hang in there with us, and we will tell it all, but it’s so early, it’s proving to be challenging for us to forecast that. I think the only other thing on that is just is your sales cycle. In the demand response we have a relatively tight sales cycle, which we understand. And here we think it could be anywhere from a couple of months to nine months or 10 months, and we are just trying to – and trying to get our arms around that. And clearly the bigger the deal, you might expect the longer the sales cycle might be.

Jeff Osborne – Thomas Weisel

Understand. And then just a last follow-up question. Any sense Tim on the kind of rhythm of the numbers of OpEx through the year? Historically, 1Q and 2Q have been a bit higher for the company. How should we think about the pace of hiring in this year that you characterize as an investment year?

Tim Weller

Yes. We did as you can see for the numbers, both externally through Cogent as well as internally, hire a fair amount in the fourth quarter. I think it is probably a little bit front end loaded, but pretty steady. Obviously on the sale side, for a region like PJM, anybody that you don’t have onboard now, you are not going to bring onboard. But all the other programs, we will be hiring steadily on the front end and sales side. And I think most of the rest of the hires are other than onesies and twosies in the back-office, and I think mostly rest of them are success driven.

So you should be able to kind of check in each quarter with the numbers and with the employee count, and I think you will see those pretty well tied together. There is clearly for the metrics I gave great operating leveraging on the employee side in demand response. And we can start through a quarter little more on those folks that are going into some of the newer businesses. But clearly at the moment a lot of people are still wearing two hats and splitting their time.

Operator

Our next question comes from Paul Clegg from Jefferies.

Paul Clegg – Jefferies

Hi guys, thanks for taking my questions. Coming back to Jeff Osborne’s question there, it sounds like you have a little bit of uncertainty still on how much ancillary services could be for the year if I am not misinterpreting your comments. Should we think of it as kind of being an upside option on guidance in 2010, is it a fair way of looking at it?

Tim Healy

Paul, just to be clear, ancillary services has a certain meaning in the industry. It relates more to the demand response piece of the business. If you are referring to the energy management piece of the business, which is the non-demand response piece, I think it just goes back to what Tim says. We have some internal projections, we are still studying the data and figuring out what type of a sales cycle we are involved in, we have made some hires in that part of the business, we have increased the sales force in that part of the business, because I think Tim mentioned that there are some sales specialist that supplement our overall sales force, and we want to see their results. And before we go out and start projecting what that will be, because the numbers are smaller, a few deals one way or the other can make significant difference in what you project, I think we are just going to keep it a little bit under our own watch here and continue to invest in that part of the business, continue to be excited about it.

I mean the other thing to think about with this part of the business is there is a lot of customers that when they are going to make their decision about what demand response provider they are going to engage with. And again our contracts are often four years in length, one of the things that they are doing if they are teeing themselves up to say I want to work with EnerNOC, I might not do these energy management things for the first year, maybe the first couple of years, but at some point in time, I am going to get it into my budget cycle, I am going to be able to show that I am getting this recurring revenue stream from EnerNOC quarter after quarter, and I can start to turn some of that money around and put it back into your energy management services business.

So there is just a lot of dynamics in play and until we get some more data that we can share that make sense and then we can feel confident about, we want to just continue to be optimistic. And if we see some trends that we don’t like, if we see some trends that say, this isn’t getting the kind of traction we would expect, we are not seeing the efficacy of what we are offering to the markets, I think you would see our tone change. But right now our tone continues to be incredibly optimistic about what we are seeing out there in the marketplace.

Paul Clegg – Jefferies

Okay. If I could, a follow-up just kind of a high level, I mean your response rate numbers look pretty good this quarter, they have for a long time. When you talk to utilities what do they tell you they need to see to get more comfortable with your ability to deliver with December liability as a peaker, is it just kind of more data or more megawatts or more time or –

Tim Healy

In all fairness, I don’t think it often comes down to that. I think that – I think the utilities, their eyes open up when we show them the performance figures. They like that and that’s something that gets us the conversation and gets them thinking about this from a different perspective. But then what it really boils down to is why does an utility – what is going to be the driver for them to engage in long-term demand response contracts with EnerNOC. And it will have a lot to do with what the regulatory construct is in that particular state, it will have a lot to do with what the strategy of that utility is, what they need in terms of their overall portfolio, how the public utility commission views a demand response asset in terms of maybe having some requirements or some overall objectives that it’s trying to meet. And then we have cost effectiveness tests, how to value that demand response resource relative to a peaker.

So the conversation very quickly goes from, we get it, it sounds like you guys have achieved the type of performance that we need, because first and foremost, we are a utility that has to meet our reliability objectives, so you win on that, get in the door, now let’s start talking about what our drivers are going to be economically to make this make sense. And I think that’s where you are going to see with the addition of someone like Sue Tierney to our Board, with David Brewster who has always spent a considerable amount of his time continuing to be a sought after resource with public utility commissions that want to understand this, I think we are as well positioned as anyone to try to make the regulatory construct what we wanted to be in 2010 and beyond.

Operator

Our next question comes from Michael Horwitz from Baird.

Michael Horwitz – Baird

Hi, I think a lot of this was answered. But – so you had a very strong addition of megawatts in the quarter, can you give me any idea on what the split might be that went into the PJM?

Tim Healy

Meaning the customer split in PJM?

Michael Horwitz – Baird

Yes, how many, on the additional megawatts in the quarter?

Tim Healy

You mean what percentage of PJM megawatts in the fourth quarter or PJM versus the percentage that weren’t?

Michael Horwitz – Baird

Yes.

Tim Healy

That’s not something that we are providing at this point and time. But –

Michael Horwitz – Baird

Since the megawatts that you added in the fourth quarter were more than the megawatts you added in the fourth quarter in the previous year, would you say that PJM is holding up similarly that it did last year?

Tim Healy

Well, the one thing you’ve got to keep in mind is we have got a lot of other programs. We have been very successful in Ontario, we have been successful in the other regions that were operational. And Texas continues to be a place where we are continuing to do great work there, and we have got great new set of leaders down there that have been doing some phenomenal things for us as well. So I think what’s appealing to us is that we continue to be diversified in what we are doing.

PJM still, Michael, as you know is – it’s our nation’s largest market. But we are seeing big opportunities in big markets like TVA and OPA, and we are just going to continue, I think we continue to be well positioned. And it’s now up to us to find some other regions as well so that the story isn’t always about PJM, but is about some of the big opportunities that we see moving forward. And I think you heard in this call, we are pretty optimistic that there will be some outcomes and some things that we are negotiating right now that give us a lot of optimism for our growth in 2010 and beyond.

Tim Weller

And Michael, our 10-K, as you recall, our 10-K does breakdown megawatts by programs. You will see it in the 10-K broken down.

Operator

Our next question comes from Pavel Molchanov from Raymond James.

Pavel Molchanov – Raymond James

Hi guys. Two quick points, one on the international front, outside the UK, are there any other European markets where you currently are looking to enter or have entered? And if so, what do you think the opportunity might be in 2010?

Tim Healy

There absolutely are – thanks for the question. There is certainly markets in Continental Europe, we have talked about this in the past, tend to be driven more by the balancing services, more than sort of peak demand response that we have seen as a reliability resource in the US. So with the – their wind penetration, you can map that with where there is a real need for flexible resources. But absolutely we are – we are investing now and sort of opening up those new markets for late 2010, early 2011 and beyond hopefully for the company.

Pavel Molchanov – Raymond James

Any particular countries you want to highlight or not yet?

Tim Healy

No, not yet, we are in those conservations. And for strategic reasons, I am sure you can understand, we are not going to talk about specific countries.

Operator

Our next question comes from Patrick Jobin from Credit Suisse.

Patrick Jobin – Credit Suisse

Hi, congratulations on a very solid quarter guys, and thanks for taking my question. If I may, I want to dig in not getting into the specifics of which country or what’s in your forecast for 2010. But just more strategically when you look at balancing a profitable growth at the core DR business with some of these other initiatives like MBCx and carbon track and internationally, how should we look at kind of what your internal benchmark is for when you decide to really push on those businesses, and when you kind of pullback?

Tim Healy

I think it has a lot to do with what the market will bear and it probably has a little bit to do with the roots of this company. The roots of this company are that there were two founders who during difficult macroeconomic environment in 2001 and 2002 identified an opportunity that was just beginning mainly here in the Northeast. And it took a couple of years to get some traction, but then that business started to take off. And I think there is a lot of lessons that the founding team learned about how to make the right investments, how to invest in the sales force that can go out and make sure that you are bringing in clearly identified economic opportunities, so that you are not investing ahead of where the market is.

I don’t think it’s been our history to overbuild technology solutions before we know exactly what our customers want, and I think that’s going to be a key factor in how we look at investing in the future. We listen to our customers, our customers or asking us for more in the energy efficiency in carbon front. I think the other piece that we really like is and we have announced a little bit of it and we hope to announce more is that we are seeing our utilities helping us or helping seed the markets so to speak by putting out RFPs and selecting EnerNOC in many cases to help us, help our customers invest in our monitoring based commissioning and energy efficiency solutions.

These are things the utilities need in order to meet certain energy efficiency objectives or other type of mandates or goals that their public utility commissions have for them to make sure that they are achieving certain kilowatt hour reductions in their territories. And so we have been having utilities sign deals with us or MoUs with us that say we would like to support the first year of the technology investment of your customers so that you can get those customers seeded and into the market. So ours is I think – we are a company that likes aggressive growth, but I think that we have been very capital efficient, very disciplined in making sure that we are balancing that to deliver what shareholders want, but to make sure we are positioned for the future as well.

Patrick Jobin – Credit Suisse

Great, thanks. And just one quick follow-up if I may, the megawatts per full-time employee I think it’s a figure of 10.6 for the employees just involved with DR is very successful. How much further can you take that metric?

Tim Weller

Yes, this is Tim Weller, Patrick. You heard us say I think at the Analyst Day and then I think you took the NOC tour that there is give or take 30 people down in there last summer and there was 30 a year before when the megawatt portfolio was almost double. When you start thinking about the operational search of folks on DR, there is probably almost no limit to where you could take it on all those fixed cost. You clearly need sales people and you clearly need installation folks. But the rest of it, to be honest with you as corporates, when we gave that metric at the Analyst Day, it’s actually a little bit conservative, because all we have done is gone out and exclude people that are obviously full-time on non-demand response.

And what we haven’t done is gone through and cost accounted for the 20% and 40%, 30% -- for example, I spend part of my time on demand response, part of my time on non-demand response. So there is already even some hidden leverage from what we have been able to pull out of there. I don’t – I think you can add an extra zero to our megawatt portfolio and we certainly have a few more people in ops and a few more people in regulatories and regions and that wouldn’t be hundreds more to support that. So the leverage is pretty great there.

Operator

Our next question comes from Vishal Shah from Barclays Capital.

Vishal Shah – Barclays Capital

Thanks for taking for my question. I wanted to ask you – you mentioned that you would use some of the cash in 2010 for acquisitions. Can you talk about what kind of acquisitions you are looking at? And secondly, with respect to your guidance, does that include some of the contracts that you maybe negotiating currently, but with some of the Pennsylvania utilities?

Tim Healy

So I will tackle the first one and then we will come back to the second one, which is a little different – entirely different question. As it relates to acquisitions, I think what we are seeing is a bigger and bigger universe of opportunities than ever before. And that’s due in part to a significant amounts of venture capital investments, the investment in – investments in the smart grid, investments in various technology applications, it might make sense to us has increased. I don’t think that we are going to stray outside of what we have identified though.

We have identified that we need things that our current customer seem to be asking us for and it fit with our overall strategic roadmap which currently is the monitoring base commissioning, the data driven, energy information driven, analytic platform that we have for identifying continuous energy savings through energy efficiency activity. That’s a business where there will probably be adjacencies where right now we have very targeted solutions for certain verticals, the particular verticals who we have mentioned like hospitals and universities, and commercial office buildings. But there are obviously any number of other verticals in our portfolio where if we can find some point solutions that fit within our platform, we would want to be able to bring those to some of our industrial customers or some of our specialty verticals within our portfolio, data centers, for instance.

So we are going to continue to look in that arena. We are going to continue to be watchful of a very busy carbon management accounting market, waiting for firms to break out that it might make sense to us; it’s another place that we will be taking a look. I think we are going to continue to look at just our core demand response business here in the US and in international markets. We continue to be the clear market leader. But I think there will be other companies that invest in point solutions or creative opportunities, so we will look at that as well. So it’s nothing that’s new or if it’s going to stray any further from course than we strayed in the past but it’s just an execution of a very clear strategic roadmap and there might be some others out there that break out of the pack in one area or another and we want to be poised to add them to our mix. You had a second question.

Tim Weller

Yes, I can just answer that question. The answer to that question is no, there isn’t any sort of financial impacts of the Act 129 included in our financial guidance for 2010. The market is still on RFP stage, so there hasn’t been any awards. And also Act 129 is sort of in just a ramp stage in 2010, it’s really in the later years where revenue from Act 129 will kick in.

Operator

Our next question comes from Walter Nasdeo from Ardour Capital.

Shawn Lockman – Ardour Capital

Hi, good evening, gentlemen. This is Shawn Lockman for Walter. I wanted to just maybe take a quick look at 1Q10 guidance and we obviously have a revenue top line of 24 to 26, but the GAAP EPS loss is 70 to 76. Just sort of back of the envelope kind of calculation points to something going on with the gross margins or the operating expense that might be a little higher than say last year. And can you guys give us some color there in terms of what we might expect maybe on the gross margin line?

Time Weller

Sure, yes, I don’t think anything too unusual as I said in terms of pattern this year on gross margin line. And off the top of my head, I would tell you it’s probably a little bit more in the OpEx line in terms of some one-time things at the end of the year and related to bonuses and a couple of other things, we had a new Board member you know as well, and had a charge associated with that. So you will see all of that as a flow through. I think you will – we will take it as an action item to try to strip out of couple of those items. But nothing unusual on the gross margin side that we are looking for and nothing in terms of big headcount buildup or anything else going on there.

Shawn Lockman – Ardour Capital

Got you. So I guess I was just looking at last year’s 1Q gross margins, they were around 43% in that quarter. I mean are they going to stay at that level in 1Q10 or should we look for something lower?

Time Weller

Yes, I would say they would be probably lower than that, but I will stop short of giving a range in guidance. But again, it’s as I said, for Q4 of ’09 in my commentary, it’s the $200,000 items one way or the other that can swing that sort of a number on a lower revenue base.

Operator

Our next question comes from Ben Schuman from Pacific Crest.

Ben Schuman – Pacific Crest

Hi guys, I apologize if you have mentioned this earlier, but can you address maybe the impact of the ATSI integration in PJM potentially in your business in 2011 and 2012?

Tim Healy

You are talking about Allegheny?.

Ben Schuman – Pacific Crest

Integration with PJM.

Tim Healy

Sorry, you cut out. Could you say it again?

Ben Schuman – Pacific Crest

Sorry, the American Transmission Systems Integration in PJM, and the supplemental capacity that they are bringing on line there?

Tim Healy

I don’t know if you are talking about First Energy, you are talking about other things, but that’s not something that’s hitting our radar screen at this point in time.

Ben Schuman – Pacific Crest

Okay. And then maybe a quick update on any regulatory proceedings in California as it relates to job participation in the wholesale markets there?

David Brewster

Yes, I mean we have been very actively involved in a number of fronts. I mean there is a lot going on with California right now in terms of statewide Cali administered [ph] capacity markets. I think that one of the most exciting things going on right now is ancillary services development in California, so we have been very active in those proceedings and I think we will continue to see some outcomes and decisions coming out of there.

But it’s Cali, as you know California has been -- the demand response market has been mostly administered at the utility levels and Cali has also sort of been behind the scenes in terms of that. And so it’s good to Cali stepping up in front of more statewide integration and demand response into their ancillary services markets some with economic demand response and also as I mentioned the statewide capacity market. So we are excited about that. We have the immediate opportunity with the bi-laterals we have with each of the three IOUs in the states as well has continued to go up.

Tim Healy

Yes, I think also just to point to California, we look at the success that we have had in California in the last 18 months or so as being some of the best success we have had on regulatory front anywhere. And it goes back – those that have followed the company for a long time that we are first becoming familiar with how the regulatory backdrop could affect investor sentiment from time-to-time.

One of the things we mentioned about 18 months ago or two years ago and continue to remind folks is that this is consistently going to be something where you are going to see a couple of steps forward and a step back, a few steps forward and a step back. And I would say that California has primarily been just step forward over and over again for us, and we continue to be pretty happy about what’s going on and our continued success in that market when it can traditionally be one of the more challenging regulatory and policy environments for companies in the energy space. We continue to be excited about what we have been able to achieve there.

Operator

Our next question comes from Elaine Kwei from Piper Jaffray.

Elaine Kwei – Piper Jaffray

Hi everyone, congratulations on a nice year. Could you talk a little more about the 130 demand response events during the year, specifically what the geographic distribution look like, and also what portion occurred under bilateral contracts versus the wholesale markets?

David Brewster

Sure. We haven’t really broken out in the level of where demand response events are occurring in the past. And we eluded the fact and we are doing, we are excited about programs like in the UK and the Sync Reserves Program in PJM. These are ancillary service type markets that are for balancing services. And so those as well as some of the bilateral contracts where we have utility dispatch mechanisms that are more at their discretion where they can dispatch it for either economic or reliability purposes.

So those are higher dispatch programs as you might imagine than a pure capacity based emergency program. But we – as we have alluded to, we continue to diversify the mix of bilateral of the markets that we are participating, and so we are seeing more and more programs, Idaho, California, ISO New England, New York. It’s been funded. It’s becoming, with a 130 events, it’s become much more of a daily routine down in the NOC than once a summer, few times a year type thing.

Tim Healy

Great example is we had one of our regions in southern most part of the US that was being dispatched today as a matter of fact. So demand response is becoming a resource that’s used more and more in these events. I don’t want to say that they are routine, because it is certainly something that we got to go through the process that we need to go through in our NOC.

But as David said, when you have that many events occurring and you do as well as we have, it leads us to have continued optimism about the way our technology is scaled, the way our business process is scaled, the way our operations team, the team led by our Chief Operating Officer, Darren Brady, the way he has been able to really scale that team, this is his two-year anniversary with us now, and I think he has made just tremendous gains and strides in that part of our organization, and we are pretty proud of what we have been able to achieve there.

Elaine Kwei – Piper Jaffray

All right. And in PJM, the load management megawatts committed for the next several period has averaged about 7,500, and do you see this thing roughly the same or trending up, and is there a strategy for EnerNOC to potentially gain in share future auctions? Is it function of just offering more megawatts at a lower price or are there some other factors that come into play?

Tim Healy

You are talking about auctions like PJM ELRP? I am not sure we got the gist of that question, but I think it goes – if I understood the heart of it, I think it goes to the fact that what we are seeing in the market is that that scale matters as it relates to bidding. And your financial strength matters an awful lot, your balance sheet, your ability to post financial assurance, your ability to actually go in and prove your dispatch plan to these – to the grid operators and the utilities. And we look and we believe that we have one of the – if not the strongest balance sheet in the industry, we continue to have good access to the capital resources that we need and the financial partners that we need in order to position ourselves extremely well. And then we also have a voice at the table that’s been an important aspect of it.

We invested early on in places that not everybody else out there that was thinking about the demand response opportunities was necessarily investing in and that’s in our regulatory affairs, in our participation in the stakeholder meetings, in the working group meetings, and all those activities that really shape these markets moving forward. And I think our access to the right decision makers, our access to the market markers, and those that are structuring those markets, and our ability to be an important stakeholder in those instances because of our scale, and because of the number of commercial, industrial and institutional customers and the size of the load we represent means I think we have really positioned ourselves extremely well both on shaping those markets, and shaping those market opportunities, and then being in a position to take the best advantage of them because of our scale and our performance track record.

David Brewster

And I think we are seeing a general shift in the industry where with these ancillary services and higher dispatch programs and the four capacity markets, there is sort of a more technical focus. I think the technical rules are becoming harder and systems and scale really are becoming more and more important. And so I think we are seeing a shift from sort of the early mom and pop days to real better price applications.

Tim Healy

Yes.

Operator

Our next question comes from Jeremy Hellman from Divine Capital.

Jeremy Hellman – Divine Capital

Good afternoon, everybody. Tim, I wanted to kind of go back to the model a little bit if I could in particular what assumptions you are making on the tax line both for Q1 and the year? If you can get into that, that might be helpful?

Tim Weller

We don’t use it to provide guidance on there, but I think you can see from our balance sheet in the filings, we have got a pretty meaningful NOL built-up. There is going to be a couple of points of something in there every year. It always surprises me how these tax rules work and I am not the greatest expert here. But we have – we have no major tax impact in there for 2010, but again there is always some jurisdiction that’s asking for something and it’s a small line-item that we forecast.

Jeremy Hellman – Divine Capital

Okay. And the follow-up for me, just on the megawatt portfolio, can you disclose anything about where it was as of either today or January 31?

Tim Healy

It’s still early for us in the quarter. Relatively speaking, we feel good about the traction. Obviously we think that the thing to point to that you saw was the pickup in the fourth quarter relative to the third quarter. And that’s a trend that that we like, we are really excited about what’s going on in that part of our business and of course we will announce our numbers again in 90 days, and we have got some very aggressive goals for us in open markets, and we have got important goals for us to hit with some of the bilateral contracts where we have certain obligations that we need to hit in certain markets.

So we feel really good about where we are positioned. We had a great sales summit this year. Our team is larger than ever, commented that this was by far our best training activity. And we think we have seen that in the response of that sales team. And we just chose this time to keep the – keep the numbers to ourselves for strategic reasons, because I think – again we have shown that this business is something that we have a great visibility over what’s going on and a great ability to project what the 2010 numbers should be.

Operator

And sir, I am showing no further questions in the queue.

Tim Healy

Well, thank you very much everyone. I just want to thank the EnerNOC team in particular for a phenomenal 2009. We are able to welcome some new folks to that team that we are excited to add to the team in the Cogent acquisition, and I want to welcome them and thank them for the work that they are doing because they are off to a great start in 2010 as well. I thank everyone, I thank our long-term shareholders in particular who have continued to pay great attention to us and be incredibly supportive. And we look forward to talking to everyone in – at the end of the first quarter. Thanks very much. Bye all.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes the program. You may all disconnect. Everyone have a great evening.

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Source: EnerNOC, Inc. Q4 2009 Earnings Call Transcript
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