• Revenue Growth: Increased by 49% to over half a billion dollars.
• Adjusted EBITDA: Grew 44% to a record $62.2 million.
• Gross Margin: 15.4%, reflecting a larger contribution from lower margin projects.
• Net Income: Non-GAAP EPS was $0.32.
• Project Backlog: Increased 22% to $4.5 billion; contracted backlog grew 56% to $1.9 billion.
• Energy Asset Revenue: Grew 33% with 42 megawatts of assets brought into operation this quarter.
• O&M Revenue: Grew 25%, with backlog increasing 15% to over $1.4 billion.
• Cash and Debt: Ended the quarter with $114 million in cash and corporate debt of $273 million.
• Debt to EBITDA Ratio: 2.8 times, below the covenant level of 3.5 times.
• Cash Flow from Operations: Adjusted cash flow of approximately $34 million.
• Energy Assets: Operating energy assets now total 715 megawatts.
• Guidance: Reaffirmed full-year guidance with expected revenue and adjusted EBITDA growth of 27% and 35%, respectively.

• Warning! GuruFocus has detected 7 Warning Signs with AMRC.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ameresco Inc (NYSE:AMRC) reported over 40% growth in both revenue and adjusted EBIT, driven by strong execution and a favorable industry backdrop.
• The company brought an additional 42 megawatts of energy assets into operation, exceeding their full-year guidance.
• Ameresco Inc (NYSE:AMRC)'s total project backlog grew by 22%, expanding long-term contract visibility to $4.5 billion.
• The contracted project backlog increased by 56% to a record $1.9 billion, indicating strong demand and successful contract execution.
• The company is well-positioned in the energy transition, offering comprehensive clean tech solutions that are budget-neutral or cost-saving for customers.

Negative Points

• Gross margin decreased to 15.4% due to a larger contribution from lower-margin projects and additional costs.
• Higher interest and depreciation expenses offset the additional contribution from revenue growth, impacting non-GAAP EPS.
• The company faces challenges with supply chain constraints, particularly in acquiring transformers for battery storage projects.
• There is uncertainty regarding potential changes in federal policies and incentives, which could impact future projects.
• The European project margins are currently lower, which could affect overall profitability as the company expands in this region.

Q & A Highlights

Q: How might changes in Washington impact Ameresco's Renewable Natural Gas (RNG) business, and what measures are in place to mitigate volatility in Renewable Identification Numbers (RIN) prices? A: George Sakellaris, CEO, noted that the RNG business remains strong. Michael Bakas, EVP of Distributed Energy Systems, added that the voluntary market is active, with many utilities issuing requests for proposals. He highlighted that significant investments have been made in the industry, and various incentives are expected to remain, benefiting the business. The potential return of the COPS waiver of credit could also positively impact the market.

Q: Were there any differences in federal contracting during Trump's first term compared to the last four years? A: George Sakellaris, CEO, explained that performance contracting was strong during Trump's first term, with three times as many contracts as under Biden. Nicole Bulgarino, EVP of Federal Solutions, added that there was alignment with the military, leading to significant infrastructure improvements under performance contracts.

Q: What is the outlook for growth with utility customers in the RNG business, and how do you see the mix trending long-term? A: Michael Bakas, EVP of Distributed Energy Systems, stated that the voluntary market is picking up significantly and is expected to surpass transportation sector demand in the long term. The exit of some gas companies from the country is freeing up capacity in the RFS program.

Q: How will the recent leadership structure changes impact the business going forward? A: George Sakellaris, CEO, explained that the changes will enhance project execution and investment decisions, consolidate procurement, and give leaders more responsibility and visibility. The senior management team works well together, sharing resources and standardizing processes across the organization.

Q: How is Ameresco managing capital allocation, particularly regarding energy asset development? A: George Sakellaris, CEO, stated that the company aims to grow its asset base by about 20% annually without overstressing the balance sheet. They monetize projects with lower returns than their cost of capital, generating good cash flow and allowing them to develop more projects than they can hold on their balance sheet.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.