EnerNOC's Shares Slide on Larger Than Expected Loss

Shares of EnerNOC (ENOC) are down 27.22 percent as of noon Wednesday after the company announced a $9 million earnings loss for the 4Q 2007. EnerNOC disappointed analysts, whose consensus $0.29 EPS loss was taken to town by the ‘NOCs $0.48 EPS loss in the last quarter. The company posted $19.7 million in revenue for the fourth quarter, up 234 percent year over year. Revenues across 2007 were $60.8 million, up 133 percent from 2006.

Despite a tough day on the street, EnerNOC had a relatively big year of organic growth. The company added 703 MW to it’s energy management program, bringing its total up 1,113 MW. EnerNOC, a demand response firm, contracts with corporations to manage their energy consumption, bring power usage down during peak periods. All tolled the ‘NOC controls the equivalent of two coal fired power plants, retrieving “negawatts” and spinning them into gold - well, maybe not last quarter.

Anyway, I hear there might be some growth opportunities in Florida.

Comments

[US MicroGrid:]

Salesforce.com (CRM) déjà vu?

Enernoc stock finished off its recent slide with a thump, driven by a conviction to invest for the opportunity.

The sound byte was an earnings miss, which eclipsed a deeper story of fantastic growth and a ballooning backlog.

Lag times from sales expense to revenue recognition are greatest in growth regions such as PJM which has some of the juiciest pricng for capacity and enegy.

What do ENOC and CRM have in common? From an inside view, they can calculate the Net Present Value of a newly acquired customer, and they can track renewal rates.

The risks are different, but the calculus is quite similar and probably explain the go for growth stategy.

The company was on sale at a discount to their IPO price today. Reminds me of Salesforce.com a couple of months after their IPO...

2008 Feb 27 08:38 PM

[caveat emptor:]

EnerNOC’s shareholder’s recent woes ought to send us back to Corporate Finance 101 ... what underpins a company's beta? Sure, hitting the books again will tell us that beta is a variable taken from regression analysis but, were we to dig further, we'd learn it’s a reflection of how much market risk is intrinsic to a firm's revenue generating operations. When Jefferies managed EnerNOC's IPO, we can be sure that their bottom's up analysis was as generous as they come, in order to woo wary investors on their roadshow. This is not an uncommon phenomenon. But for as savvy as Jeff Lipton's CleanTech group may be, they repeated the mistakes made by bulge-bracket investment banks in the recent sub-prime mortgage flap. Just as the likes of Citi, Bear Stearns or Merrilly Lynch lacked the innate curiosity to understand the nature of the future cash flows home mortgages promise, Jefferies probably didn't care to look very closely into how EnerNOC's operating leverage affects their income. EnerNOC claims costs have outpaced the sharp revenue growth anticipated by new demand response contracts, a subtle way of implying that they still need to make expensive capital investments in order to put their clients’ loads under control and also maintain a staff to manage those many megawatts once under remote control from EnerNOC’s swank Federal Street offices. High capital costs and high, ongoing variable costs will beleaguer EnerNOC’ bottom line until they install a network linking them to their customer’s cogeneration plants and manage to automate their systems, an additional capital investment requiring expensive and sophisticated software. We may blame EnerNOC for issuing disingenuous forecasts, but we ought to hold Jefferies to a higher standard still for not asking the hard questions when conducting their due diligence in IPOlast spring and valuing the company using a beta likely blended from other technology and energy firms.

2008 Mar 07 12:04 PM