Thursday, November 12, 2009

Lime Energy shares down after hours on weak results (LIME)

I wrote back in September about Lime Energy(LIME):



The company reported third quarter results this afternoon that were quite disappointing. While revenue came in almost in line with expectations of $21.48million, the loss of 26cents per share was way below the expectation for a loss of 9cents, largely due to much weaker gross margins:


In the release, LIME takes down guidance for the full year, as they're having trouble with their "ability to convert backlog into contracted revenue." In layman's terms, they're finding it tougher to make money. And even when they do win business, their slipping gross margin indicates that the pricing is very very competitive.

"We currently have the largest and most diversified backlog in our history. However, in the immediate term, the current business environment and uncertainty about the stimulus bill are impacting our ability to convert backlog into contracted revenue. ...On the public side, the release of certain contracts has been delayed while public entities wait to see if they can incorporate stimulus funds into their projects. ...We are therefore reducing our annual revenue guidance for 2009 to between $71 million and $73 million with an Adjusted EBITDA* loss of $5 million to $5.5 million. While the delays in being awarded these contracts will impact our 2009 revenue, we believe in combination with our recently awarded contracts from National Grid, NYPA and the Army Corp of Engineers, they will contribute to improved results during the first half of 2010 and are confident of achieving sustained growth during full year 2010."

Actual cash burned of about $700k was much less than the net income loss, and with $24million in cash left over from the capital raise it doesn't look as if they'll run out of money soon. But the reduction in guidance, coupled with no profits in the next year or so, mean this stock will head south. Right now it's off a dollar in late trading.

Copyright 2009 AlphaNinja

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