The Bounce Back of Blue Earth Energy Management (BBLU, LII, IR)

Blue Earth Inc (OTC:BBLU) has managed in the last month to rally shareholders and post a bounce-back as energy management companies like Lennox International Inc. (NYSE:LII), currently trading in the $37.31 range, and Ingersoll-Rand PLC (NYSE:IR) currently trading in the $31.20 range, bring “Green Energy” and “Green Efficiency” back into investors thinking; a nice diversion from Euro-finance.

But a Financial Advisor or Money Manager or an individual for that matter doesn’t have to spend northwards of $30 a share, BBLU was trading at $1.20 on Nov 11 and is currently trading in the $1.74 range; a gain of 45% in ten days on a strong bounce-back; and still under $2 for ‘Entry Level’ buyers. 

Blue Earth Inc (OTC:BBLU) is one of those energy-tech companies that is focused on consumers being able to reduce their energy consumption, lower their generating and maintenance costs, and realize environmental benefits. The Company achieves this through lighting, heating, ventilation, and air conditioning products and services.

BBLU has geared up and is in essence at this time, an acquisitions company, buying up smaller entities that have “green” technologies which fit the Blue Earth core businesses, and bringing those products and systems to market. The “Grass Roots” build-up of a customer base is hinged on this; through energy management service companies and manufacturers representatives which have an established base of customers at the local, state, regional, and national levels, the Company can make its acquired products and services available. Smart.

For example; a small commercial business in a specific geographic territory that needs to retrofit its lighting, heating, and/or cooling to save money every month, can look to Blue Earth and its product/system manufacturers for ‘efficiency’ solutions. The Company to date has targeted acquisition candidates based on that expansion philosophy.

That’s how national distribution, installation, and service networks are built in the multi-billion dollar energy efficiency sector of the clean-tech industry.

This from the Company’s web site… “From a business viewpoint, we share the idea that “blue is the new green,” and that taking care of our planet for ourselves and future generations, while making a profit, is an essential component of thinking blue.”

Optimizing energy use, reducing harmful environmental emissions and substantially reducing energy costs to customers is the BBLU mantra and there’s a Big Market to support its endeavors.

According to a September 2010 Lawrence Berkeley National Laboratory study, the energy efficiency services sector (“EESS”) is poised to become an increasingly important part of the U.S. economy. 

In 2008, the EESS spending was just over $18 billion in the U.S. EESS spending is forecast to increase more than four-fold, to over $80 billion in 2020.

One of the key drivers for EESS growth includes the large infusion of funding from the American Recovery and Reinvestment Act (“ARRA”) to support state and local government energy efficiency programs, increased spending in ratepayer funded energy efficiency programs, and increased customer interest in strategies that mitigate higher utility bills and/or address environmental emissions.

Energy management is considered an important priority among commercial decision-makers. While motivations differ from region to region, cost savings is consistently the most important factor driving investments. After cost savings, lowering greenhouse gas emissions is the second most important motivator for energy efficiency in all regions except North America, where boosting public image and taking advantage of government/utility incentives rank higher in importance.

According to the study, globally, 63% of respondents plan to make capital investments in energy efficiency, and 70% plan operating budget expenditures in efficiency programs over the next 12 months. 85% plan to make efficiency a priority in their new construction and retrofit projects.

Some of the cost-saving market drivers that are fueling such a high level of interest include: Utility Rebate Programs with Ratepayer-funded programs that are offered by utilities to encourage load reductions by customers. In 2009, ratepayer-funded energy efficiency program budgets totaled $4.4 billion. 

From 2004 through 2009, ratepayer-funded energy efficiency spending increased from $1.7 billion to $4.4 billion, representing a CAGR of 21.3%. Ratepayer-funded energy efficiency spending is estimated to increase at a CAGR of 16.1% from 2010 to 2015.

The Blue Earth Acquisition Strategy…

The Company has been looking, and buying, companies with a defined profile. The parameters include commercially-proven technologies which increase energy efficiency/water and wastewater for the small commercial business segment and residential segment; energy management service companies which have an established customer base seeking growth capital to expand their capabilities and product offerings, and substantially increase their revenues and operating profits; and refrigeration, lighting, and air conditioning companies that are installing energy efficient retrofits that present an opportunity to cross-sell bundled retrofits to the other acquired companies' customer base. Another important criteria is an acquisition candidate’s existing relationship with utilities.

ACQUISITIONS

BBLU has grown rapidly in 2011, executing a roll-up strategy. Blue Earth acquisitions include:

Castrovilla (CI)
CI has served over 6,000 small businesses and several utilities in Northern California. Castrovilla, Inc., (“CI”) a subsidiary of Blue Earth, Inc., is expanding its energy efficiency retrofit model into Southern California, Oregon, Washington, Nevada, Arizona, Utah, and Idaho.

Rapid Dewatering System (RDS)
Blue Earth has an agreement with Genesis Fluid Solutions, Ltd (“GFS”) to receive a 6% royalty on all gross revenues derived from dewatering operations and the sale, lease, or licensing arrangements of the Rapid Dewatering System (“RDS”) and/or any of the dewatering boxes of its affiliates.

Lighting Controls Technology
Blue Earth acquired the exclusive private label and manufacturing rights to an innovative and patented lighting controls technology based on a microprocessor to control the “Switch” inside fluorescent ballast. The lighting controls market is projected to reach $3.8 billion by 2015.

Xnergy
Xnergy has been rated the #1 Alternative Energy Provider by the San Diego Business Journal. Xnergy provides comprehensive maintenance and service programs, including every aspect of heating, ventilation and air-conditioning with an emphasis on servicing hospitals.

And when Blue Earth isn’t acquiring another company, it’s looking for Joint Ventures it can benefit from like the deal it struck with Gexpro and eCORE in Oct to provide financing to more than 2,000 independently owned retail petroleum/convenience store sites operating in select North American markets who are seeking to reduce their total energy consumption.

The projected $60 million energy efficiency program focuses on energy conservation measures for retail petroleum locations with an average $30,000 cost per facility for the energy efficiency upgrades.

BBLU intends to acquire innovative technologies and established, reputable energy management and energy management service companies using restricted common stock, cash, and debt in combinations appropriate for each potential acquisition.

Blue Earth Inc (OTC:BBLU) Shares and Money…

The Company is part of the Services Sector; Diversified Services Industry; SIC 8700 and has Shares Outstanding of 18,482,414 and a Public Float of 5,927,616 shares.

According to its 11/16 10-Q the Company has $1,588,831 in cash. For the period ending 09/30/11, Blue Earth had revenues of $1,129,491, produced a Gross Profit of $537,584, and (due to its acquisitions and payments) posted a net loss of -$0.12 per share or -$1,737,033. 

In September 2011, BBLU completed a private placement of preferred Stock and warrants of $1,000,000 and an additional $690,000 in October 2011 which it believes will fund its operations at least through September 2012.

For more detailed information about Blue Earth please visit www.blueearthinc.com where there is an extensive Investors page and lots of contact numbers for curious institutional and individual stock buyers.

I haven’t, don’t, and do not intend on holding any of the companies mentioned in this article.