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Author: thompsonpsu Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 114  
Subject: EnerNOC 2012 Q1/Jump on May 21st Date: 5/10/2012 11:02 AM
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Thursday, May 4th was the release of Q1 2012 results...
As anticipated, release was not a blowout, but better than expected... They reported a loss of ($.86) earnings per share. This beat the average analyst estimate of ($1.04) by $.18, or 17%. They did not announce any statement in which I predicted would be the catalyst that would catapult the stock (I didn't expect them to this quarter), but that doesn't mean they won't in the future. Overall, I think the conference call and outlook are very good despite their financial report, and am still optimistic for the long-term.

The overall status of their income statement/balance sheet is not very good when compared to previous quarters, but this is mainly due to the market fundamentals in which they are subject to, and not the operations of the company (ie the weather was warmer than expected... auction clearing prices were lower... etc... stuff that is not in their control). They reported lower earnings and profit when compared to last year's quarter... but again, the EPS number is the key number. Their forward-looking financial statement guidance was not overly positive, but their conference call had a lot of positive guidance.

The feel of the conference call was really optimistic and positive. The key takeaway I got from the call, which was reiterated many times by Executives and frequently asked by analysts whom cover the stock, was that their future operations are "more clear". Translation: all the negativity that has happened in the past year and a half (the PJM/FERC ruling on their double-counting issues and other various rule changes), has caused the stock to plummet because investors are wary about the future of the company, and demand response in general… but that chapter is now complete, and they can focus better going forward. Analysts were pessimistic about the uncertainty of the industry, and they punished the stock as a result. EnerNOC has adapted their strategies, and there is no longer any uncertainty in the markets. Essentially it has given investors the confidence that the demand response market has now matured enough to become a well-established mechanism in the wholesale electricity market, and has reaffirmed confidence for their future. This will reassure investors going forward, and hopefully bring money back into the company.

Other positive things to note:
•	Regarding the upcoming 2015/2016 PJM BRA Capacity Auction, which is released on Friday, May 18th (after hours)... they are "cautiously optimistic"... Translation: "prices are going to be really high, but we are trying to save our words and not over-estimate." They stated they have $50 million dollars worth of cash and credit in which they are using to procure capacity in the auction. This translates to about 1,400 MW of additional capacity, or 35% more, from the 4,000 MW already owned in PJM. This 1,400 MW will be worth about $153 million if prices clear at $300/MWh. The first day of trading after this release will be on Monday, May 21st, and I would advise selling at any high on that day. Last year the stock jumped 20% during the day after the 2014/2015 auction prices were released, and those auction prices were only around $135/MWh. I am expecting around $200 - $220/MWh this year, so their stock should pop. 
•	The first chart below is a chart of the 2011 stock price around the BRA auction clearing price release date. Friday, May 13th is when PJM released the 2014/2015 auction prices (after hours), which were around $135. On Monday, the stock jumped to about 20% at it's high of $22.40, before selling off and ending at $20.46, up from $16.96 of the low on the previous Friday. As mentioned, 2015/2016 prices may clear around $200, which should boost the stock on Monday, May 21st. Any high you may see that day I would sell.
•	The second chart is the last four years, April through June, of EnerNOC’s stock price, and the auction clearing posting dates overlaid (vertical line represents the first available trading day after the auction posting, and the horizontal lines are the stock price). You'll see that 2011 (orange line) produced the best jump in stock price relative to auction clearing price posting, but most years have produced a run up.
 
 
•	During the call, Executives also really pushed their growing "pipeline and sales" across the world. Their growth is very substantial since 2008, and increasingly impressive this quarter, as 900 MW in demand response contracts, expansion into other foreign countries, namely Alberta (their largest Commercial & Industrial contract to date) and New Zealand, and their new contract with National Grid to run Natural Gas operations, is a key indicator that significant revenue is in the future.
•	They are the first demand response company to complete a FERC (Federal Energy Regulatory Committee) Audit. This proves the significance of demand response companies in wholesale energy markets, and exhibits that EnerNOC is the leading provider of demand response services.
•	Revenue in California and Texas markets may be significant in 2012 as the result of supply tightening (less power plants available to generate capacity), and therefore the need of demand response.
•	Executives expect higher gross margins going forward.
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