Press Releases

May 7, 2009

World Energy Solutions Reports Record Revenue for Q1 2009

Company adds NASDAQ listing subsequent to quarter end

May 7, 2009, Worcester, MA – World Energy Solutions, Inc. (NASDAQ: XWES; TSX: XWE), an operator of online exchanges for energy and green commodities, today announced its financial results for the first quarter ended March 31, 2009. All figures below are in U.S. dollars and growth percentages compare the results of the three months ended March 31, 2009 with the three months ended March 31, 2008, unless stated otherwise.  All share and per share amounts have been adjusted to reflect the Company’s March 27, 2009 one-for-ten reverse stock split.

Q1 2009 Highlights

• Revenue increased by 28% to $4.0 million
• Annualized backlog* grew 12% to $8.6 million
• Total backlog* increased 55% to $18.0 million
• Continued Realization of Operating Leverage in Quarterly Results
  • Gross margin increases from 60% to 73%
  • Net loss decreases by 69%
• Strong Performance Across Product Lines
  • Key announcements in Green
    • Company supported the Regional Greenhouse Gas Initiatives’ (RGGI) third compliance auction for CO2 allowances
    • Signed strategic partnerships with the Gold Standard and TZ1 Registry
  • Wholesale delivers strong results
    • Record quarterly revenue, increasing 57%
    • Customer base more than doubled to 42
  • Retail shows continued solid growth
    • Revenue increased 20%
    • Channel partners grew by 43% to 66

“World Energy is off to a strong start in 2009, achieving record quarterly revenue based on strong performance across all product lines.  We continue to realize the operating leverage in our business model, with increased gross margins and reduced loss in the quarter as we trend toward cash flow positive this year.  Subsequent to quarter end, we reached an important corporate milestone with our listing on NASDAQ, which will enable us to gain additional exposure to the U.S. investment community,” said Richard Domaleski, Chief Executive Officer, World Energy Solutions. “We are well positioned to capitalize on the growth opportunities presented by the New Energy Economy, particularly global demand for auction-driven cap and trade. This is clearly an exciting time for the Company.” 
 
Financial Review

Revenue for the quarter ended March 31, 2009 rose by 28% over the same period last year to $4.0 million, which reflects increases in all of the Company’s product lines, including Wholesale and strong natural gas bookings in Retail. 
 
The improvements made to the Company’s cost structure in 2008 and resulting efficiencies had a positive impact on operating results for the first quarter of 2009. Cost of revenue decreased $0.1 million and gross profit margin increased to 73% compared to 60% in the same period in the prior year. Total operating expenses decreased 13% to $3.6 million primarily reflecting general salary decreases as well as decreases in travel and compliance costs. Operating expenses as a percentage of revenue decreased more than 40% over the prior year as the Company was able to lower its operating cost structure while delivering the 28% increase in revenue.

Net loss for Q1 2009 was $0.7 million, or $(0.08) per share, compared with a net loss of $2.2 million, or $(0.26) per share, in Q1 2008. This decrease was primarily due to the 28% increase in revenue and an overall decline in cost of revenue and operating expenses.

At March 31, 2009, the Company had no bank debt and cash and cash equivalents of $1.0 million, compared with $1.7 million at December 31, 2008. Net cash used in operations was $0.7 million resulting primarily from an increase in trade accounts receivable and a decrease in current liabilities. Non-cash expense items, including depreciation, amortization and share-based compensation, were greater than the net loss for the period. The Company believes it has the financial resources to execute its growth plans and reach cash flow positive in 2009.

* Backlog relates to contracts in force on a given date representing transactions between buyers and sellers on our platform related to commodity brokerage assuming sellers consume energy at their historical usage levels or deliver credits at expected levels. Total backlog represents the revenue that the Company would derive over the remaining life of those contracts. Annualized backlog represents the revenue that the Company would derive from those contracts within the 12 months following the date on which the backlog is calculated. Total and annualized backlog at March 31, 2009 included commodity backlog of $16.9 million and $7.5 million, respectively. In addition, total and annualized backlog include contracted management fees between World Energy and energy consumers for energy management and auction administration services of $1.1 million that are expected to be received over the following 12 month period. These management fees can be terminated within 30 days per the terms of the contracts.

Conference Call & Webcast

World Energy will hold a conference call today, May 7, 2009, at 10:00 a.m. ET to discuss its Q1 2009 financial results. To access the conference call by telephone, dial 416-644-3424 or 1-800-594-3790. The conference call will be archived for replay until Thursday, May 14, 2009 at midnight. To access the archived conference call, please dial 416-640-1917 or 1-877-289-8525 and enter the reservation code 21303916 (followed by the number sign).

A live audio webcast of the conference call will be available at www.worldenergy.com and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to secure a line and ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 365 days.

About World Energy Solutions, Inc.

World Energy (NASDAQ: XWES; TSX: XWE) operates online exchanges for energy and green commodities. For buyers and sellers of electricity, natural gas, capacity, and green-energy assets who are impacted by today’s volatile markets, World Energy’s proven approach has transformed the normally complex procurement process into a powerful, streamlined vehicle for cost savings. In addition to enabling customers to seek competitive pricing on traditional energy commodities, World Energy is taking a leadership position in the emerging environmental-commodities markets. Its award-winning World Green Exchange® supports the ground-breaking Regional Greenhouse Gas Initiative’s (RGGI) cap and trade program for CO2 emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to: we have a history of losses and cannot provide any assurance we will be profitable in any given period; our revenue is dependent on actual future energy purchases pursuant to completed procurements; the demand for our services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; we depend on a small number of key energy consumers, suppliers and channel partners; there are factors outside our control that affect transaction volume in the electricity market; and there are other factors identified in our Annual Report on Form 10-K and subsequent reports filed with the Securities and Exchange Commission.

 WORLD ENERGY SOLUTIONS, INC.

SUMMARY OF CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

SUMMARY OF CONDENSED CONSOLIDATED BALANCE SHEET

SOURCE: World Energy Solutions, Inc.

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