Energy, Automobile, EV, Renewable News | Ameresco Reports Third Quarter 2023 Financial Results

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Ameresco Reports Third Quarter 2023 Financial Results

November 7, 2023

by WebSupport@BusinessWire.com

Record Total Project Backlog Increased 14% Sequentially, with $708M in New Awards

Q3 Results Affected by Project Delays and Asset Downtime

Secured Over $500 Million in Financing Commitments

Resetting Guidance to Reflect Continued Industry Headwinds

Third Quarter 2023 Financial Highlights:

Revenues of $335.1 million
Net income attributable to common shareholders of $21.3 million
GAAP EPS of $0.40
Non-GAAP EPS of $0.40
Adjusted EBITDA of $43.3 million

FRAMINGHAM, Mass.–(BUSINESS WIRE)–#carbonreduction–Ameresco, Inc. (NYSE:AMRC), a leading cleantech integrator specializing in energy efficiency and renewable energy, today announced financial results for the fiscal quarter ended September 30, 2023. The Company also furnished supplemental information in conjunction with this press release in a Current Report on Form 8-K. The supplemental information, which includes Non-GAAP financial measures, has been posted to the “Investors” section of the Company’s website at www.ameresco.com. Reconciliations of Non-GAAP measures to the appropriate GAAP measures are included herein.

CEO George Sakellaris commented, “During the quarter we continued to execute effectively on our long term strategic business development activities, driving substantial year-on-year and sequential increases in our project backlog and assets in development, which support our long-term growth objectives. The third quarter was impacted by a variety of factors, including supply chain delays and administrative bottlenecks, caused the push-out of project revenue, resulting in results that were below our expectations. While disappointing, we expect to capture these revenues in future quarters. Also impacting our results was greater than expected downtime at some of our Energy Asset plants.

“Ameresco’s backlog and pipeline metrics underscore the strength of our market positioning and our ability to gain share of an expanding addressable market. The momentum for new projects and asset opportunities remains strong. We are experiencing high levels of project activity with year to date new awards of $1.7 billion, more than double last year’s $800 million. Additionally, we increased our net assets in development by over 50 MW in the third quarter. Even with higher interest rates we are successfully financing our profitable asset business, securing over a half a billion dollars in attractive project financing commitments during the quarter.

Third Quarter Financial Results

(All financial result comparisons made are against the prior year period unless otherwise noted.)

Total revenue of $335.1 million was below the Company’s guidance for the quarter as the Projects business faced supply chain headwinds as well as delays in contract conversions. Energy Asset revenue increased 6.2% driven by continued growth in operating assets and stronger RIN prices partially offsetting unplanned downtime at certain of our RNG plants. O&M revenue increased 4.2% reflecting consistent growth in long-term contracts. Other revenue decreased 3.0% as a result of a decline in our integrated PV business due to weakness in the oil and gas market. Gross margin of 19.0% expanded year-over-year while SG&A increased slightly related to the addition of the Enerqos acquisition earlier in the year. Net income attributable to common shareholders and adjusted EBITDA were $21.3 million and $43.3 million, respectively. The GAAP results for the quarter include a discrete tax benefit of $7.2 million related to the allocation of a prior year Section 179D tax deduction allocated from a customer.

(in millions)	3Q 2023			3Q 2022
	Revenue	Net Income ⁽¹⁾	Adj. EBITDA	Revenue	Net Income⁽¹⁾	Adj. EBITDA
Projects	$242.7	$13.5	$16.4	$351.5	$15.9	$30.2
Energy Assets	$44.3	$5.5	$21.6	$41.7	$8.8	$22.4
O&M	$22.8	$2.4	$3.9	$21.9	$1.7	$3.1
Other	$25.4	$0.0	$1.4	$26.2	$1.0	$2.2
Total⁽²⁾	$335.1	$21.3	$43.3	$441.3	$27.4	$57.9

(1) Net Income represents net income attributable to common shareholders.
(2) Numbers in table may not sum due to rounding.

($ in millions)		At September 30, 2023
Awarded Project Backlog ⁽¹⁾		$2,513
Contracted Project Backlog		$1,188
Total Project Backlog		$3,701
12-month Contracted Backlog ⁽²⁾		$765

O&M Revenue Backlog		$1,238
12-month O&M Backlog		$87
Energy Asset Visibility ⁽³⁾		$2,300
Operating Energy Assets		444 MWe
Ameresco’s Net Assets in Development ⁽⁴⁾		596 MWe

(1) Customer contracts that have not been signed yet
(2) We define our 12-month backlog as the estimated amount of revenues that we expect to recognize in the next twelve months from our fully-contracted backlog
(3) Estimated contracted revenue and incentives during PPA period plus estimated additional revenue from operating RNG assets over a 20-year period, assuming RINs at $1.50/gallon and brown gas at $3.50/MMBtu with $3.00/MMBtu for LCFS on certain projects
(4) Net MWe capacity includes only our share of any jointly owned assets

Project Highlights:

Ameresco was awarded the DOE’s Gen4 EPSC contract which carries a $5 billion contract ceiling over ten years, highlighting its key role in providing energy saving performance contract services to the federal government. On each of the previous generations of this contract, Ameresco developed project solutions totaling more than $2 billion in the aggregate.
Ameresco announced another innovative floating PV installation with Mountain Regional Water at its Signal Hill Water Treatment Plant. The 600 KW design build project will be integrated behind the meter allowing it to provide electricity directly to the treatment plant.

Asset Highlights

In the Third Quarter of 2023:

Ameresco’s Assets in Development ended the quarter at 645 MWe. After subtracting Ameresco’s partners’ minority interests, Ameresco’s owned capacity of Assets in Development at quarter end was 596 MWe.
We increased our net assets in development by 51 MW in the third quarter mostly attributable to the acquisition of the Los Alamitos solar and battery microgrid project as part of our staged acquisition of Bright Canyon Energy.

Summary and Outlook

“While our long-term fundamentals remain as strong as ever, we feel it prudent to adjust our near-term targets reflecting the expectation that recent industry headwinds, including project conversion delays and push-outs in asset permitting along with labor and material shortages, will continue into 2024. We are adjusting our 2023 quarter guidance to reflect the industry issues that continue to impact our business such as project conversion and asset construction pushouts. Full year 2023 guidance is included in the table below. We now expect to place between 120 and 130 MWe of energy assets in service for all of 2023, including the 31.5MW solar + 20MW battery Los Alamitos microgrid project and our second 5MWe RNG plant. A third RNG plant is expected to be at mechanical completion by the end of the year, and fully commissioned in early 2024. We now expect that our 2024 Adjusted EBITDA target will be approximately $250 million. As usual, we will be providing detailed 2024 guidance when we report Q4 early in 2024.

While we continue to face some headwinds, our significant long term growth opportunity has never been better with over $7.2 billion in revenue visibility and almost 600 MW of assets in development and construction. The market demand for renewable and clean tech solutions has never been greater,” Mr. Sakellaris concluded.

FY 2023 Guidance Ranges
Revenue	$1.315 billion	$1.370 billion
Gross Margin	18.5%	19.0%
Adjusted EBITDA	$160 million	$170 million
Interest Expense & Other	$39 million	$40 million
Effective Tax Rate	-30%	-25%
Non-GAAP EPS	$1.15	$1.25

The Company’s Adjusted EBITDA and Non-GAAP EPS guidance excludes the impact of redeemable non-controlling interest activity, one-time charges, asset impairment charges, changes in contingent consideration, restructuring activities, as well as any related tax impact.

Two of the three Southern California Edison projects are currently in commissioning and are expected to achieve substantial completion by the end of 2023. The third project, which was significantly impacted by the heavy rainfall in California, is expected to reach substantial completion in the first half of 2024. Based on this we have requested an additional extension to the maturity date for the remaining principal amount of the delayed draw term loan A under our senior secured credit facility, which is scheduled to mature on December 15, 2023. The remaining principal balance is $90 million down from the original balance of $220 million.

Conference Call/Webcast Information

The Company will host a conference call today at 4:30 p.m. ET to discuss third quarter 2023 financial results, business and financial outlook and other business highlights. Participants may access the earnings conference call by pre-registering here at least fifteen minutes in advance. A live, listen-only webcast of the conference call will also be available over the Internet. Individuals wishing to listen can access the call through the “Investors” section of the Company’s website at www.ameresco.com. If you are unable to listen to the live call, an archived webcast will be available on the Company’s website for one year.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to adjusted EBITDA, Non- GAAP EPS, Non-GAAP net income and adjusted cash from operations, which are Non-GAAP financial measures. For a description of these Non-GAAP financial measures, including the reasons management uses these measures, please see the section following the accompanying tables titled “Exhibit A: Non-GAAP Financial Measures”. For a reconciliation of these Non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Non-GAAP Financial Measures and Non-GAAP Financial Guidance in the accompanying tables.

About Ameresco, Inc.

Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading cleantech integrator and renewable energy asset developer, owner and operator. Our comprehensive portfolio includes energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions delivered to clients throughout North America and Europe. Ameresco’s sustainability services in support of clients’ pursuit of Net-Zero include upgrades to a facility’s energy infrastructure and the development, construction, and operation of distributed energy resources. Ameresco has successfully completed energy saving, environmentally responsible projects with Federal, state, and local governments, healthcare and educational institutions, housing authorities, and commercial and industrial customers. With its corporate headquarters in Framingham, MA, Ameresco has more than 1,200 employees providing local expertise in the United States, Canada, and Europe. For more information, visit www.ameresco.com.

Safe Harbor Statement

Any statements in this press release about future expectations, plans and prospects for Ameresco, Inc., including statements about market conditions, pipeline, visibility, and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, gross margin, capital investments, other financial guidance and longer term outlook, statements about our financing plans including possible asset sales, the requested extension to the maturity date of our Delayed Draw Term Loan A, the impact of any reorganizations, the impact the IRA, supply chain disruptions, shortage and cost of materials and labor, and other macroeconomic and geopolitical challenges; our expectations related to our agreement with SCE including the impact of any delays, the impact of a possible U.S. federal government shutdown and the U.S. Department of Commerce’s solar panel import investigation and other statements containing the words “projects,” “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward looking statements as a result of various important factors, including the timing of, and ability to, enter into contracts for awarded projects on the terms proposed or at all; the timing of work we do on projects where we recognize revenue on a percentage of completion basis, including the ability to perform under signed contracts without delay and in accordance with their terms; demand for our energy efficiency and renewable energy solutions; our ability to complete and operate our projects on a profitable basis and as committed to our customers; our ability to arrange financing to fund our operations and projects and to comply with covenants in our existing debt agreements; changes in federal, state and local government policies and programs related to energy efficiency and renewable energy and the fiscal health of the government; the ability of customers to cancel or defer contracts included in our backlog; the output and performance of our energy plants and energy projects; the effects of our acquisitions and joint ventures; seasonality in construction and in demand for our products and services; a customer’s decision to delay our work on, or other risks involved with, a particular project; availability and cost of labor and equipment particularly given global supply chain challenges and global trade conflicts; our reliance on third parties for our construction and installation work; the addition of new customers or the loss of existing customers; the impact of macroeconomic challenges, weather related events and climate change on our business; global supply chain challenges, component shortages and inflationary pressures; market price of the Company’s stock prevailing from time to time; the nature of other investment opportunities presented to the Company from time to time; the Company’s cash flows from operations; cybersecurity incidents and breaches; regulatory and other risks inherent to constructing and operating energy assets; risks related to our international operation and international growth strategy; and other factors discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.


AMERESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)

	September 30,			December 31,
		2023			2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	107,776		$	115,534
Restricted cash		56,909			20,782
Accounts receivable, net		133,070			174,009
Accounts receivable retainage, net		33,459			38,057
Costs and estimated earnings in excess of billings		591,378			576,363
Inventory, net		13,648			14,218
Prepaid expenses and other current assets		67,864			38,617
Income tax receivable		7,219			7,746
Project development costs, net		18,800			16,025
Total current assets		1,030,123			1,001,351
Federal ESPC receivable		529,382			509,507
Property and equipment, net		17,551			15,707
Energy assets, net		1,656,585			1,181,525
Deferred income tax assets, net		9,439			3,045
Goodwill, net		77,343			70,633
Intangible assets, net		7,347			4,693
Operating lease assets		52,857			38,224
Restricted cash, non-current portion		11,010			13,572
Other assets		69,356			38,564
Total assets	$	3,460,993		$	2,876,821

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities, net	$	409,906		$	331,479
Accounts payable		328,155			349,126
Accrued expenses and other current liabilities		93,584			89,166
Current portions of operating lease liabilities		12,703			5,829
Billings in excess of cost and estimated earnings		36,880			34,796
Income taxes payable		1,114			1,672
Total current liabilities		882,342			812,068
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs		1,022,256			568,635
Federal ESPC liabilities		486,019			478,497
Deferred income tax liabilities, net		4,134			9,181
Deferred grant income		7,070			7,590
Long-term operating lease liabilities, net of current portion		38,806			31,703
Other liabilities		73,965			49,493
Redeemable non-controlling interests, net	$	47,275		$	46,623
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022		—			—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,336,341 shares issued and 34,234,546 shares outstanding at September 30, 2023, 36,050,157 shares issued and 33,948,362 shares outstanding at December 31, 2022		3			3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at September 30, 2023 and December 31, 2022		2			2
Additional paid-in capital		321,821			306,314
Retained earnings		562,203			533,549
Accumulated other comprehensive loss, net		(3,735	)		(4,051	)
Treasury stock, at cost, 2,101,795 shares at September 30, 2023 and December 31, 2022		(11,788	)		(11,788	)
Stockholders’ equity before non-controlling interest		868,506			824,029
Non-controlling interests		30,620			49,002
Total stockholders’ equity		899,126			873,031
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	3,460,993		$	2,876,821


AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts) (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
		2023			2022			2023			2022
Revenues	$	335,149		$	441,296		$	933,265		$	1,492,695
Cost of revenues		271,493			361,740			761,012			1,263,458
Gross profit		63,656			79,556			172,253			229,237
Earnings from unconsolidated entities		526			488			1,356			1,477
Selling, general and administrative expenses		42,752			41,106			125,466			120,036
Operating income		21,430			38,938			48,143			110,678
Other expenses, net		10,642			7,546			27,883			19,876
Income before income taxes		10,788			31,392			20,260			90,802
Income tax (benefit) provision		(10,054	)		3,657			(10,552	)		10,896
Net income		20,842			27,735			30,812			79,906
Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests		423			(344	)		(2,077	)		(2,915	)
Net income attributable to common shareholders	$	21,265		$	27,391		$	28,735		$	76,991
Net income per share attributable to common shareholders:
Basic	$	0.41		$	0.53		$	0.55		$	1.48
Diluted	$	0.40		$	0.51		$	0.54		$	1.44
Weighted average common shares outstanding:
Basic		52,209			51,869			52,104			51,810
Diluted		53,300			53,297			53,259			53,252


AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

	Nine Months Ended September 30,
		2023			2022
Cash flows from operating activities:
Net income	$	30,812		$	79,906
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation of energy assets, net		42,847			36,911
Depreciation of property and equipment		2,849			2,057
Increase in contingent consideration		705			814
Accretion of ARO liabilities		194			108
Amortization of debt discount and debt issuance costs		3,407			2,869
Amortization of intangible assets		1,681			1,462
Provision for bad debts		637			363
Loss on write-off of long-lived assets		18			888
Earnings from unconsolidated entities		(1,356	)		(1,477	)
Net gain from derivatives		(3,306	)		(225	)
Stock-based compensation expense		12,318			10,837
Deferred income taxes, net		(13,089	)		4,927
Unrealized foreign exchange loss		1,148			466
Changes in operating assets and liabilities:
Accounts receivable		58,135			(47,257	)
Accounts receivable retainage		4,589			225
Federal ESPC receivable		(143,647	)		(180,249	)
Inventory, net		570			(4,287	)
Costs and estimated earnings in excess of billings		5,260			(325,057	)
Prepaid expenses and other current assets		(10,925	)		864
Project development costs		(4,638	)		(823	)
Other assets		(2,080	)		(10,254	)
Accounts payable, accrued expenses and other current liabilities		(38,444	)		143,026
Billings in excess of cost and estimated earnings		10,104			7,802
Other liabilities		1,200			(436	)
Income taxes receivable, net		590			3,371
Cash flows from operating activities		(40,421	)		(273,169	)
Cash flows from investing activities:
Purchases of property and equipment		(4,597	)		(3,981	)
Capital investment in energy assets		(445,540	)		(182,119	)
Capital investment in major maintenance of energy assets		(8,024	)		(16,106	)
Asset acquisition, net of cash acquired		6,206			—
Contributions to equity investments		(3,489	)		—
Acquisitions, net of cash received		(9,183	)		—
Loans to joint venture investments		(566	)		(458	)
Cash flows from investing activities		(465,193	)		(202,664	)
Cash flows from financing activities:
Payments of debt discount and debt issuance costs		(8,635	)		(2,885	)
Proceeds from exercises of options and ESPP		3,384			4,430
(Payments on) proceeds from senior secured revolving credit facility, net		(115,000	)		139,000
Proceeds from long-term debt financings		728,600			331,086
Proceeds from Federal ESPC projects		107,303			173,865
Net proceeds from energy asset receivable financing arrangements		12,514			7,675
Contributions from non-controlling interests		499			13,148
Distributions to non-controlling interest		(20,521	)		—
Distributions to redeemable non-controlling interests, net		(494	)		(784	)
Payment on seller’s promissory note		(12,500	)		—
Payments on long-term debt and financing leases		(162,749	)		(111,341	)
Cash flows from financing activities		532,401			554,194

Effect of exchange rate changes on cash		(980	)		(1,857	)
Net increase in cash, cash equivalents, and restricted cash		25,807			76,504
Cash, cash equivalents, and restricted cash, beginning of period		149,888			87,054
Cash, cash equivalents, and restricted cash, end of period	$	175,695		$	163,558

Non-GAAP Financial Measures (Unaudited, in thousands)

	Three Months Ended September 30, 2023
Adjusted EBITDA:	Projects			Energy Assets			O&M			Other			Consolidated
Net income (loss) attributable to common shareholders	$	13,465		$	5,454		$	2,393		$	(47	)	$	21,265
Impact from redeemable non-controlling interests		—			(587	)		—			—			(587	)
Plus (less): Income tax provision (benefit)		(6,953	)		(3,766	)		717			(52	)		(10,054	)
Plus: Other expenses, net		5,042			4,970			227			403			10,642
Plus: Depreciation and amortization		1,134			14,902			311			707			17,054
Plus: Stock-based compensation		3,128			570			293			328			4,319
Plus: Contingent consideration, restructuring and other charges		595			14			4			52			665
Adjusted EBITDA	$	16,411		$	21,557		$	3,945		$	1,391		$	43,304
Adjusted EBITDA margin		6.8	%		48.7	%		17.3	%		5.5	%		12.9	%