Our first quarter performance was notable with several major turnkey and VPC contract wins, a robust pipeline of opportunities, and our future contracted revenues climbing to over a half billion dollars, said Robert M. Chiste, chairman, president and chief executive officer of Comverge. These results, and the addition of 450 megawatts under management in the quarter, underscore the continued confidence placed in Comverge by its utility customers as they increasingly utilize our demand management solutions in their movement toward demand response and energy efficiency as a significant source of clean energy.
Chiste continued, Our VPC execution was solid as we built out a record 52 megawatts of capacity in our programs while generating positive cash from operations on the cash flow statement during the quarter. In addition, the introduction of our commercially available Apollo software platform in March was a significant milestone and again demonstrates our leadership in developing innovative smart grid technology. We have strong momentum and I am optimistic about the outlook for our performance in the remainder of this year.
Financial Summary
Revenues for both periods exclude revenues from the company’s residential VPC contracts, which are deferred and recognized in the fourth quarter. Deferred revenue on the balance sheet from the VPC contracts was $11.5 million as of March 31, 2009 compared to $4.3 million at year-end 2008, an increase of $7.2 million during the first quarter of 2009. The $7.2 million increase during the first quarter of 2009 is a 38% increase compared to the $5.2 million increase in VPC deferred revenue during the first quarter of 2008.
Adjusted EBITDA for the first quarter of 2009 was negative $6.6 million compared to negative $6.3 million for the first quarter of 2008. Adjusted EBITDA is earnings before interest, taxes, depreciation, amortization, and non-cash stock compensation expense.
Business Highlights
Comverge first quarter 2009 business highlights include:
Entered into a five year contract with Pepco Holdings, Inc. to provide full turnkey services, including an AMI-enabled demand response system totaling over 200 megawatts, as well as installation and marketing services;
Entered into Virtual Peaking Capacity (VPC) contracts with two Maryland utilities. Together, the VPC programs will provide the utilities up to 48 megawatts of clean capacity from commercial and industrial customers;
Announced the release of the company’s Apollo Demand Response Management System software platform, which has already been purchased by several major utilities;
Announced the delivery of the company’s five millionth demand management device;
Increased total megawatts under management by 450 megawatts, or 21% during the first quarter of 2009. As of March 31, 2009,
Recent Developments and Current Outlook
Comverge’s management and Board of Directors use three metrics to measure the company’s operational progress: (i) megawatts owned under long-term contracts, (ii) megawatts managed under open market programs, and (iii) estimated future revenues from long-term contracts. We believe these metrics are the most important to the growth and long-term success of the company.
Our 2009 targets for growth in these metrics and the company’s progress towards these metrics in the first quarter of 2009 are:
Add a net 275 megawatts of capacity under long-term contracts. 53 megawatts of capacity under long-term contracts were added during the first quarter of 2009;
Add a net 225 megawatts in open market programs. 197 megawatts were added in open market programs during the first quarter of 2009; and
Add a net $150 million increase in the amount of estimated future revenues from long-term contracts. $52 million in estimated future revenues were added in the first quarter of 2009.
As of the date of this release, the company has 919 megawatts under long-term capacity contracts which will contribute to contracted future revenues of $513 million. Of these amounts, 165 megawatts of capacity under long-term contracts representing an expected $114 million in contracted future revenues, are still awaiting regulatory approval. In the event the company receives regulatory approval on these 165 megawatts, the company’s total megawatts managed will be 2767 megawatts.
