EnerNoc Back in the Red, Sees Return to Profits in 2010

EnerNoc (s enoc) is back to posting losses, but the company says it’s not for long. Although the demand-response company saw its first ever net profit in the third quarter of 2009, it returned to red ink in the final quarter of the year.

The Boston-based company said revenue in the quarter ended December 31, 2009, rose 36 percent from the same quarter a year earlier. The net loss in the period totaled $15.2 million, or 64 cents a share, compared with a 61-cent loss a year earlier. Analysts were looking for a loss of 65 cents, according to Thomson Reuters.

EnerNoc’s stock price has more than tripled over the past year as more companies have turned to demand response systems to better manage their energy usage during a recession, when companies grow more determined to cut costs. Since going public in the spring of 2007, EnerNoc posted loss after loss as the company built out its infrastructure. It finally posted a $27 million net profit in the third quarter of 2009 on record revenue of $103 million.

Some of the loss was attributed to EnerNoc’s purchase of Cogent Energy, a Concord, Calif.,-based company with 30 employees that monitors energy usage. EnerNoc said at the time the acquisition was announced that the deal would help it serve smaller facilities that have less sophisticated control systems.

Adding to the loss, the cost of revenue rose 49 percent to $18 million. So gross margins took a hit in the quarter, as EnerNoc’s gross profit fell to 32.7 percent from 38.6 percent in the year-ago quarter. For the entire year, the company’s gross margin was 45.3 percent. In an earnings statement, EnerNoc didn’t explain the increase in cost of revenues.

In a more encouraging note, EnerNoc’s operating cash flow increased to $8.1 million in the quarter from $3 million in the previous quarter. The company saw negative cash flow of $15.2 million in the year-ago quarter. Operating cash flows are watched as a measure of the money a company is making through its actual operations.

The company said it would return to profitability later this year, forecasting a net profit between 24 cents a share and 34 cents a share for the entire year. However, EnerNoc expects to see a loss between 70 cents a share and 76 cents a share in the first quarter of 2010. Revenue for the year will reach between $255 million an $268 million, versus $190.6 million in 2009.

Despite the bullish outlook, the immediate reaction among investors was disappointment. In after-hours trading, EnerNoc’s stock was down 4.4 percent at $32.20, essentially giving up the gains it saw during offical market hours Thursday.