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After nearly a decade of mostly organic growth, EnerNOC Inc. now plans to accelerate its acquisition activity, CEO Tim Healy said in an interview.
Healy said he believes the energy management industry overall is ripe for consolidation, and EnerNOC, which has the largest share of the demand-response market, will be among those looking to acquire.
“We’ve been acquisitive in the past, but modestly acquisitive,” said Healy, who co-founded the Boston-based company in 2001 with David Brewster, the company’s president. “We will probably accelerate that acquisition activity moving forward.”
Healy did not specify what types of companies EnerNOC is interested in pursuing, but said that energy management is starting to take off as an industry for a number of reasons. Among the key factors, he said, is that some of the investments made into companies over the last three to five years are starting to bear fruit.
“There are some good-quality companies, quality technologies, that have been built, and you’re going to see that manifest itself in some consolidation,” Healy said.
Healy also expects that large companies are going to try to buy their way into certain segments of the energy management space, which he termed a “natural consequence of this being a real, sizeable, important industry moving forward.”
A third factor is that there is still a scarcity of executive talent within the cleantech industry overall, and one way for companies to fill their ranks is to acquire companies started by talented entrepreneurs, he said.
EnerNOC earns most of its revenue from its demand-response service, which pays companies to reduce their power during peak hours. The company in turn receives most of its revenue from grid operators, which include the operator of the New England grid, ISO New England.
As of June 30, EnerNOC had more than 4,800 megawatts of demand-response capacity under management, the company said in a filing with the U.S. Securities and Exchange Commission. The company’s closest competitor, Georgia-based Comverge Inc., reported having 3,355 megawatts under management or ownership as of June 30.
EnerNOC has expanded into areas outside of demand response, launching a service that monitors customers’ energy systems and helps them to reduce their energy use, and a service that measures customers’ greenhouse gas emissions.
EnerNOC’s most recent acquisition was SmallFoot LLC, a Colorado-based wireless demand control solutions developer, for an undisclosed price in March. Last December, EnerNOC bought California-based energy monitoring firm Cogent Energy Inc. for $3 million.
The company returned to profitability in the second quarter as year-over-year revenue grew 57 percent. EnerNOC saw revenue of $66.5 million and a profit of $1.1 million in the quarter.
EnerNOC (Nasdaq: ENOC), last profitable in the third quarter of 2009, had seen net losses totaling $29.2 million in the two quarters since then.
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