Smart Grid Players EnerNoc (ENOC) & Echelon (ELON) Report Earnings

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06:28:03 pm on May 6, 2009

Several days ago Itron (ITRI), the smart grid 800lb gorilla, reported disappointing earnings.  Today, the unprofitable up and comers EnerNoc (ENOC) and Echelon (ELON) reported large losses but losses that were considerably less than the estimates. 

Echelon (ELON) reported a non GAAP loss of .19/share which beat estimates of a loss of .34 by a wide margin.  Revenues also came in better than expected at $18.2 million vs the estimate of $17.8 million.  Despite the better than expected results, ELON is still a company that is far from becoming profitable with the quarterly loss a record for the company.  “As anticipated, we saw both of our products lines affected by the current economic environment,” said Ken Oshman, chairman and CEO of Echelon.  For next quarter the company expects revenues of $21 – 23 million which is a bit lighter than analyst estimates.  I like the smart grid space down the road, but it remains a tough place to invest right now. 

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EnerNoc (ENOC) which has been on a torrid run, up 4 fold since November appears to be much closer to profitability with the company expecting 2010 to be the first profitable year in company history. 

“The first quarter marked another period of high growth for EnerNOC,” said Tim Healy, EnerNOC’s Chairman and CEO. “We experienced the highest quarterly megawatt additions in our company’s history. These record megawatt additions and high-profile utility contract wins are indicative of continued strong demand for EnerNOC’s capital-efficient demand response and energy efficiency applications aimed at helping businesses and institutions manage and reduce energy costs.”

“The advancements we are making in our innovative smart grid applications are enabling us to continue to increase our gross margin and operating leverage,” Healy added. “Our strong start in the first quarter keeps us on track to deliver positive cash flow from operations in the second half of 2009 and positive GAAP earnings per share in 2010.”

Ok, let’s not get carried away Tim!  I wouldn’t exactly call the quarter high growth but you’re making progress.  Here are the facts: The company reported a steep loss of .48/share which is greater than the year ago quarter on revenues of $18.4 million (about in line with the year ago quarter.  Sure, both numbers beat estimates, but I’m not seeing the growth here!  Granted, the company is lining up quite a few customers and the outlook looks good, but given the run up in this stock I’d be staying far far away. 

The stock may run a bit more in the morning based on their increased revenue and EPS outlook for 2009 but I’d be a seller into that move.  The company now expects total revenue of $160 – $172 million vs previous guidance of $155 – $170.  They expect a non GAAP EPS loss of .33 – .44/share vs previous estimates of a loss of .40 – .60/share.

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