A Little More Respect for Lime Energy

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by Debra Fiakas CFA

Last week Lime Energy (LIME:  Nasdaq) reported exceptional sales growth in the quarter ending June 2015.  Revenue from the company’s energy efficiency solutions was $32 million, increasing and impressive 135% compared to a year ago.  Sales were boosted beginning by the March 2015 acquisition of EnerPath, a provider of software solutions for utility energy efficiency.  However, several of the company’s utility programs were expanded and that drove organic sales as well.

Is it time to give Lime some new respect?

In the renewable energy sector, efficiency programs are often overlooked as a contributor to climate and energy relief.  Lime Energy made its bones in the efficiency sector with programs for small- and medium-sized businesses to save on the cost of lighting, space heating and cooling, equipment operation and water heating.  The acquisition of EnerPath gives the company a bigger stake in utility-based programs.  
Sales in the twelve months ending March 2015, were $64.8 million, resulting in a net loss of $5.3 million or $1.01 per share.  On its own Lime Energy had yet to achieve profitability.  What is more, operations still required cash resources.  The quarter ending June 2015, was the first quarter that EnerPath contributed for the full period.  Thus it appears the company’s new annual revenue run-rate is around $124 million.  In the June quarter the combined companies reported a small operating profit and earnings adjusted for non-cash expenses was a respectable 5.3% of sales.  It appears that EnerPath brings a more effective operating structure to Lime. 

Lime Energy is a small company with a market cap of $35.5 million and trading volume in its stock is only about 10,000 share per day.  It has been overlooked as a investment in the modern energy industry.  LIME trades at 0.6 times sales, which could be a bargain for a company that just doubled in size.  It is also very interesting for an operation that is approaching profitability.

Debra Fiakas is the Managing Director of
Crystal Equity Research, an alternative research resource on small capitalization companies in selected industries.

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.


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