10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

PowerSecure International Inc. Reports Operating Results (10-Q)

November 03, 2011 | About:
10qk

10qk

18 followers
PowerSecure International Inc. (POWR) filed Quarterly Report for the period ended 2011-09-30.

Powersecure International Inc. has a market cap of $84.2 million; its shares were traded at around $4.44 with and P/S ratio of 0.8.

Highlight of Business Operations:

Our gross profit margin as a percentage of revenue was 29.3% during the nine month period 2011, a decrease of 5.2 percentage points compared to the nine month period 2010. The decline in gross profit margin was driven by a $1.7 million inventory charge we recognized during the second quarter 2011 in cost of sales related to our planned exit from the PowerPackages business, $0.8 million of additional fuel costs incurred to operate a PowerSecure-owned distributed generation system which serves a Midwest utility, due to record heat and high demand on the utility system during the months of July and August, as well as changes in the mix of projects and products completed in the nine month period 2011 compared to the nine month period 2010. Our operating expenses increased in the nine month period 2011 compared to the nine month period of 2010 due to investments we made in our Energy and Smart Grid Solutions Segment to drive and support our future growth, including expenses relating to new product development, engineering, facilities, personnel, selling expense, compensation expense in each of our Distributed Generation, Energy Efficiency, and Utility Infrastructure business areas, as well as additional depreciation expense resulting from capital deployed to support our growing recurring revenue business. As a result, our total operating expenses during the nine month period 2011 increased by $4.8 million, or 17.8%, compared to our operating expenses during the nine month period 2010.

Our Energy and Smart Grid Solutions segment distributed generation revenues are very heavily affected by the number, size and timing of our Interactive Distributed Generation projects as well as the percentage of completion of in-process projects, and the percentage of customer-owned as opposed to recurring revenue projects. Our Interactive Distributed Generation sales have fluctuated significantly in the past and are expected to continue to fluctuate significantly in the future. Our Energy and Smart Grid Solutions segment revenues increased by $11.9 million, or 45.3%, during the third quarter 2011 compared to the third quarter 2010. The increase in those revenues in the third quarter 2011 over the third quarter 2010 was primarily attributable to a $7.2 million, or 118.1%, increase in revenues from our Utility Infrastructure products and services and a $6.3 million, or 46.1%, increase in revenues from our Interactive Distributed Generation products and services, partially offset by a $1.6 million, or 24.5%, decrease in revenues from our Energy Efficiency products and services. The increase in our Interactive Distributed Generation product sales and services reflects an increase in both our PowerSecure-owned recurring revenue projects and customer-owned system sales from period-to-period. During the third quarter 2011, 20.3% of our distributed generation revenues were derived from recurring revenue sales, a substantial increase over the third quarter 2010 when 13.0% of our distributed generation revenues were derived from recurring revenue sales. The increase in our Utility Infrastructure product sales and services was due to an increase in the number of utilities that we service, and an increase in those customers spending levels on transmission and distribution system maintenance and construction. The decrease in our Energy Efficiency sales and services in the third quarter 2011 compared the third quarter 2010 reflects a decrease in revenues from both our EfficientLights and IES LED lighting business operations.

Our Energy and Smart Grid Solutions segment distributed generation revenues are very heavily affected by the number, size and timing of our Interactive Distributed Generation projects as well as the percentage of completion of in-process projects, and the percentage of customer-owned as opposed to recurring revenue projects. Our Interactive Distributed Generation sales have fluctuated significantly in the past and are expected to continue to fluctuate significantly in the future. Our Energy and Smart Grid Solutions segment revenues increased by $15.7 million, or 20.5%, during the nine month period 2011 compared to the nine month period 2010. The increase in those revenues in the nine month period 2011 over the nine month period 2010 was primarily attributable to a $14.9 million, or 85.2%, increase in revenues from our Utility Infrastructure products and services and a $2.2 million, or 5.2%, increase in revenues from our Interactive Distributed Generation products and services, partially offset by a $1.4 million, or 8.3%, decrease in revenues from our Energy Efficiency products and services. The increase in our Interactive Distributed Generation product sales and services reflects an 88.9% increase in our PowerSecure-owned recurring revenue projects during the nine month period 2011 compared to the nine month period 2010. During the nine month period 2011, 19.1% of our distributed generation revenues were derived from recurring revenue sales, a substantial increase over the nine month period 2010 when 12.2% of our distributed generation revenues were derived from recurring revenue sales. The increase in our Utility Infrastructure product sales and services was due to an increase in the number of utilities that we service, and an increase in those customers spending levels on transmission and distribution system maintenance and construction. The decrease in our Energy Efficiency sales and services in the nine month period 2011 compared the nine month period 2010 reflects a decrease in sales from our EfficientLights subsidiary, partially offset by the inclusion of revenues from our IES LED lighting business operations for the full nine month period in 2011 versus just six months during 2010, due to its acquisition on April 1, 2010.

Cash provided by investing activities was $28.4 million in the nine month period 2011 and cash used by investing activities was $8.8 million in the nine month period 2010. Historically, our principal cash investments have related to the purchase of equipment used in our production facilities, the acquisitions of certain contract rights, the acquisition and installation of equipment related to our recurring revenue sales, and the acquisition of businesses or technologies. During the nine month period 2011, we received $26.0 million from the sale of our WaterSecure operations, we received $16.5 million from the sale of our Southern Flow business, we used $11.4 million to purchase and install equipment at our recurring revenue distributed generation sites, and we used $2.7 million at our PowerSecure subsidiary principally to acquire operational assets. During the nine month period 2010, we used $4.4 million to acquire a 67% ownership interest in IES, $1.7 million to purchase and install equipment at our recurring revenue distributed generation sites and $2.5 million at our PowerSecure subsidiary principally to acquire operational assets.

Our capital expenditures during the nine month period 2011 were approximately $14.1 million, of which we used $11.4 million to purchase and install equipment at our recurring revenue distributed generation sites, and $2.7 million to purchase equipment and other capital items at our PowerSecure subsidiary. Our capital expenditures from our continuing operations during the nine month period 2010 were approximately $4.2 million, of which we used $1.7 million to purchase and install equipment at our recurring revenue distributed generation sites, and $2.5 million to purchase equipment and other capital items at our PowerSecure subsidiary.

Read the The complete Report

About the author:

10qk
GuruFocus - Stock Picks and Market Insight of Gurus

Rating: 2.0/5 (1 vote)

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK