AMRC - Earnings call transcript Q1 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Ameresco, Inc. Q1 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call may be recorded. introduce for to conference, like would your today's host Mr. I Chief Financial Granara, Officer. John

You may begin.

John Granara

and everyone. conference good joining Glenda, you, Thank morning Ameresco's quarter us We first XXXX earnings call. for you appreciate

George Sakellaris, will a in financials mind questions. George operating of Joining me quarter the information. with today Ameresco's President supplemental then Executive review review and I before have Keep and that deck Chairman, financial highlights, the we Officer. Chief the take is we'll

the Investor from section You of can deck download website. Relations our that

the I business. expectations statements press from would of forward performance and Before predictions to forward-looking are revise statements you beliefs. This filings. regarding to could like assume events to risks in to call We management's refer important financial factors such may results Actual contains turn over forward-looking the as based on George, company. materially results make to and differ looking call cause or and statement future projections materially company's the to morning future contained We statements. no this that made I actual company's any information our to the We on our regarding call. documents a today's current of a caution brief the obligation that issued discuss remarks. result differ pertain that those forward-looking These uncertainties or SEC release you

in I'll Appendix release, measures the Sakellaris. as is to over Accepted now prepared measures reconciliation to of non-GAAP A non-GAAP this the behind well explanation prepared remarks, Principles. financial in available to In These financial referring accordance With an are financial during in Accounting addition, will our non-GAAP Generally use we turn be George? GAAP George call as not slides. of measures press call. the with and non-GAAP the

George Sakellaris

solid to we in business last March, we had first spoke everyone. the you, good an noted early going to had Thank We in outstanding you to and XXXX. morning momentum John we quarter. When

XX%, strategies profitability up strong team. pursue, we results reinforce Our our the correct from class and was to performance execution is substantially A function grew Revenue was outstanding was of world a continue to total up with combined backlog our confidence. XX%.

can of key is we to over the business. last of our One focus visibility of the on strategies years couple the

We are succeeding visibility due a our our revenue, in large with to in backlog turn in this projects. on emphasis pursuit of combined recurring

sales faster continue are margin Our XX%. streams energy than from recurring earnings grew maintenance high revenue are to we very grow revenues. which we so streams, This operational owned and assets revenue

revenue adjusted quarter. Our XX% over total recurring contributed of EBITDA the in

We contribution expect robust natural a starting we profit gas growth in from get our since continue to plant Michigan. just are large renewable to

mentioned, in few have rev we next the online and Michigan the normal now with plan As capacity to is months.

come expected plant half new to second in the Our ramp during is QX. late online of year. in It capacity should Arizona to the

we is to total, of portfolio. we projects an decade XX plants a next course alone pipeline. expect now Of housing operating large popularity placed customers; Community and estimated to Canadian are for not in assets energy to equivalent. us a few growing energy these revenue agreements XX.X public XX megawatts the our two the only purchase nurturing to megawatts over of or bringing over our so. activity in Furthermore, on shortly. Massachusetts, our In development we energy equivalent in grew of megawatt $XXX in service, in megawatts XXX These similar million assets solar construction portfolio to by equivalent. gives assets assets visibility close acquisition deals In the solar executed are

approaching $X core year-over-year We and have and X% sequentially, project is outstanding our business grew backlog XX% project visibility now in Total (inaudible). billion.

and billion development, contracted our awarded which Our $X.X is our We which backlog in growing $XXX disparities. of large one backlog at million. last and year. this XX% because investment Backlog is invested project part is is in development stands project quarter of in now nearly more

keep past our expect delivered that results We more $X had to it’s driving million market ramping contracted growth, projects compared larger is investments average increasing these how the spoken backlog $XX in project The about by in backlog. the to be manufacturing. are complex size since We to continues million and and the in case. awarded

since example comprehensive will largest them in second a The project million harboring our the with XX one very lighting large in trends located new This is and HVAC, contract Our hospitals is with Veteran awarded backlog market at project controls, the more. project An be a Affairs, contract of reflects the their December. of current place. Department of Bronx.

As time more able be details large awards. other will goes on, to on we provide

in large For similarly in convention have instance, secured we higher awards recently centers. one housing and we a education military and

effectiveness higher the Of illustrates our on this are these and awards frequency course, sharply of not projects. large large more our complex the all large, focus of but awards

financial Our the pipeline year’s to come. is optimistic ahead for are now I that call With results years John. makes this turn we to what us John that more the with and will see we and on strong performance. over about comments encouraged importantly our for

John Granara

Thank you, George.

focus influence numbers, QX and figures I’m all going the supplemental comparisons said, Our the performance not the you are I in all that to are are the slides of and results. so quarter Like George figures this year-over-year. Keep contain we say all going was instead referring factors that otherwise unless and to mind on to analysis comparisons press repeat outstanding. need, the release we

continues growth adjusted and gain increase double-digit expansion, higher model the is transformation revenue business as is and greater gross momentum traction. accelerating to a our including margin delivered EBITDA. XXX% We of strong profits Our in

X.X share. in tax or budget that We approximately note resulting another in million was February. also increased per recorded with in The benefit growing diluted recurring that QX I from backlog revenue. record we visibility benefit $X.XX should the passed

were effects board. Excluding some which across major result of an our lines All The the modestly. and the double revenue excellent strength share were impact gains and were all tax except interest, per earnings exceptionally was the an is benefit Topline grew quarter. O&M first for $X.XX, time the of non-controlling the of especially stable best the one-time growth business nature, showed By stream. O&M its digit up. in

incremental our still sales We projects assets. are that we been have million gas and the completed. to once over of XXX construction renewable XX Also contract will O&M due larger million the work year. in have to to both increased O&M this backlog begin we across electricity recognize of Energy expecting in portfolio and

especially our US segment. was robust Our region growth in project revenue

got additional up renewable happy revenue build started somewhat than expected. growth a boost operating XXXX. regions I rate demonstrating was operating XX in are and lower expenses US gross million and well the plants. Operating mention see street our margin lighting project below stable. we picked in rebound an leverage of second had to Chicago of the gross cost Project the Gross half We that gas also margin earned that both on in profit, revenue of as grew slightly business. of inherent from revenue the that earlier should we

development, an of in came from we investment to increase make. the All expenses project happy are operating

the growth of a XXXX. regions Adjusted quarter the than was doubled due margin higher to start our early EBITDA had target slow this of approaching is X%; especially annual in margin with Adjusted US more EBITDA Our XX%.

line Turning to and Payables significant sheet, due credit receivables decrease additional cash on increased balance and to to in of the draws revenue. down while down, projects. is funding were debt good the unbilled complete a to were due

a were As backlog where George ago. is mentioned, total our XX% we year project versus up

We continue a healthy balance US to and proportion the Federal both across the same from business US coming regions. maintain with

$X.XX, from to EPS $X.XX to raising our Turning to we to up $X.XX $X.XX guidance, are XXXX range previously.

the and for We EBITDA. adjusted range reiterating are revenue

this from is report quite seem While the on some case it can backlog still we this In year, have contracts. point and in we comfortable that results to year be our the are reminder quarterly happy converting as we and earlier dependent quarterly results are still Chicago, in to our accelerated guidance. revenue on may did track the updated we that strong in of awarded to Also always lumpy. a the conservative, general, are at is the

questions. the for like our turn we’d coordinator open session. run lines Now over the Q&A to Glenda back to I’ll call your the to

Operator

ROTH And our Instructions] [Operator Partners. line from of Capital question first Irwin Craig comes from the

line is open. now Your

Craig Irwin

on Congratulations is start to strong XXXX, an this a really impressive result.

out doing about been bigger and that goals plans see the The that year the a for company growth first asset new growth delivered to projects bigger what on a of there you’ve what or side, you little do maybe over next then you’ve have can bit faster observers to similar you what green or you wanted months could see you online a opportunity over said you the next see is exactly picture thing accomplishing maybe I do can for us frame as you and People ask been us of of following right. been question, externally closely we would have years, watchers some the looking the potential the the XX or potential talk a of far number last for. as for on project side, as gas But what few than you the the particularly not for about and been year couple if in brought natural or gas a years. whether credibly arena an see look

George Sakellaris

green the try First tackle gas. project then and I to will the

project we start particularly John US growing. are business, it to the regions, mentioned the On that they think I see and happy,

something and the we so second growth up project solar, market that the it place year level they that this statement double-digit see term. storage, activity nobody pipeline picked and good, it in recall, year looks growth that why quarter, compared I grew we XX%. for this if this particular as our year, to I why was we flattish quarter, there US, about at last even across in made that’s to again, good struggle that’s you for of the on are project in federal micro-grids time. double-digit federal would States, they to are last pipeline are on the last especially last by the pretty But year offering it up – that and looks activity than balance evolved, low unless a backlog quarter it well, about but and as this incorporates is getting was knows The course activity In the across pretty over of some going year unit But market but the larger year. drastic various optimistic the projects quarter you we we this in United XXXX have so incorporates it this though them the on of forecasting going the the better think the happens for still in forward The end point of the to good. level the segment saw in sector, pretty and see long for half and extent see the looks for anticipate Canada, picking some and

the we’re So about across optimistic project the again board. business

far we construction Now could do have we potentially development we are the have as gas, assets, and the other Phoenix now right the plant been and like we as said, we in green of on more.

good develop last the will is it. projects. careful in in present winning fair there part And though, (inaudible) time market segment but other measured that the However, we have potential going that on our The the some think opportunities company. particular good place. I about of level I But to of uncertainty take not We of hand track very our that we said share the that how we very we to are advantage the because feel record in are themselves, and do of market we’re we business a a on in and way.

Craig Irwin

I is ask the from then stable coming next So bit question businesses. want about the EBITDA a to

the of assume significantly exceeding little over couple quarters, the now know you’re bit, So in you XX% be this range? or XX% but plus don’t this in the will that quarter. around it XX%-XX% of I increased will quite bounce fair exit it given the we first somewhere contribution have has from range last yet first minus, quarter. this in to a Arizona Would somewhat XXXX that number is the in

George Sakellaris

lower lower but this, not will that to it higher be it but no, somewhat rate, at and XX% will feeling much the will that that. not I let stability, more is John than give color be my

John Granara

generating revenue Craig couple seeing a think of quarter lowest that you’re things is I is projects. for QX

to target so and the the project the I that revenue did still really around. Phoenix debt close achievable is I just as earnings of to a at year, run But those revenues to and expect that well. business say rate us we to as that the unreasonable that scale to And But we approach exiting you an that down would would expect come So see need as little to a bit. at year is scales it’s see We from overtime that today. would number expect throughout could the XX% plant bounce not see increase, project the or amount.

Craig Irwin

take question And you In the talked Can you jump you’ve million queue. Great, project execute if to these executing backlog average on similar projects? larger do there describe that profitability I before some been prepared you projects not that’s what see in of and versus are back contracted project, good a million SG&A it hear. in sort expect hours a other in remarks, I these man efficiencies awarded efficiencies, last about some larger about project size, or whether to get might backlog. does now executing XX on to you your as smaller versus capture X this leverage help an may you

John Granara

leverage done we’re had XX%. as our look overall P&L was seeing company OpEx, of our question, that. year-over-year analysis. get we and X% if operating some topline and have increase at (inaudible) our great we larger you the a only so just projects increase do In Great

longer demonstrating and to a say well. larger of do have is I leverage develop do a bit time take So is little large there projects take the those. will I larger our as effort, we does that The that resources think amount it model operating thing

convert on So we’re a some particular alluded bit quarter about leverage portfolio. we to QX able take in that’s larger long average pipeline now, $XXX be down million convert as across even the was have the this of the so should couple in XX do right convert, and which but entire of XX new which for well, taking are a that The strong, conversion get average did contracts projects is we as and time to side. quite this as months But can year large from little to George well. of to that’s hoping project we weighted projects upwards the months

larger we projects. So get to are able the leverage from

Operator

[Operator comes Noah the Instructions] question from Kaye of Oppenheimer. next And our from line

Your line now open. is

Noah Kaye

acquisitions spent for? could you cash with million quarter, XX If in were looks the you start about flow what item, one those on like

John Granara

acquire two during the made had George particular of a developer. solar from them the Yeah, reference. in We did quarter assets, actually

expecting And are next or so those early to in construction year and those go online later this year.

Noah Kaye

and sense But can those? CapEx that’s from magnitude the a separate actually you give of the of us

John Granara

So it’s we XX that during of that. part of megawatt the it about part equivalents XX it megawatt quarter, was the was equivalent, so added

XX, now this XX during I the to range. or to think we did XX service we in we so probably say the last beginning about place at call XX expected megawatts in year. the with that closer are to acquisition expecting

Noah Kaye

needed and XX about megawatts larger development bring equity amount you a to remaining look looks of think the it thus the kind construction And because of do debt-to-equity to the operations. in How like in of certainly in funding portion we is funding the far? funding total if assets then mix at of

John Granara

That’s observation. a good

we haven’t the So projects we those expect equity; yet thus completed. to million another But to used have far, all assets. have financing would is we equity million about so the XX get of financed XXX

another for So those, the we $XXX bring in on construction. debt million to projects for are about expecting worth of

Noah Kaye

that the question. to leads Great and next in

up full calling should finance you fully get understanding to do is I consolidated project to is non-recourse these and rate that. understand out assets the out going appreciate that which everyone to leverage run once think them? all and you shake that you So, almost Where

John Granara

in million We’re that going to depending look hit holistically. range to the be $XXX at $XXX when you million on timing,

upon to at so really be dependent and now the going where XXX, And are on it’s line its line. dependent much corporate our and just drawn look I we’ve to add think you upon if variabilities, the at the how going we be

actually XX down. we’re number expect drop I right about or that so XX, the do And would will financing at we but when

project we an other any see make decrease as areas potential to going equal, in our offset increase a offset, facility you’re in corporate well. else all So in absent by non-recourse investments that being other

Noah Kaye

if financing think operating? could way are right with, That’s would another and to assets question there of leveraged that about kind on a ask I consolidated a comfortable helpful, target basis? your – What is be of once all a are fully you your

John Granara

assets And some paid new fully say XX%. projects we doing just lets’ running that have projects. on XXX% X, some we’re off, are the we’re in a an so equity for So have average we

would So is I in the XX% consolidated expect debt that total basis to range. amount XX% on a of

Noah Kaye

other all, types comment of the projects energy grid include assets and on developing at there? bucket if energy you’re then And you storage that can the so, does

John Granara

So about the is planning project storage Toronto, batter past place spoken sometime that in doing that a we’re year. and system for the we’ve specifically to in project we’re so the IESO that that’s the service in the energy this storage,

Noah Kaye

on you improvement both touched regions then profitability. And but obviously on and clean in it the US revenue before,

color think why as as seem assessment and the you’re to maybe the rates It I in it, But challenge on a about specifically current project there’s helpful backlog not seeing certainly in doesn’t we’ve projects, to we a size little Is the if understand. that there project and that like a as maybe of is size. well. not? not so, fair bit interest rising, thought leverage

George Sakellaris

small but there executed significantly. after to We in maybe scope reduce project rise the impact. not slightly of is we very but interest that rates is it see a couple it, And a

John Granara

savings the result to the improvements an and have implement, more more the facility. then from can as the do you more you standpoint, of at more look project, the Let’s you measures a say economic you savings having if larger

So from we But both it exist standpoint. wouldn’t works as in and said, fund money projects we’ve didn’t actually save that often themselves. ways customer’s if our we

true that interest think speaks any still in I So rate environment.

Operator

line our And from Craig question comes of Capital Irwin the Partners. from next ROTH

now is line open. Your

Craig Irwin

’XX? Chicago you you the was Just said light one early recognized here, of does out early the something recognition that the spread revenue, of it’s is so out that factors directly contributed second, there? And sort the on quarter fourth quarters the street and of this or to follow-up Can $XX million describe come sort quick maybe more maybe the side. that of third the second through this

John Granara

Sure.

are we originally winter. more was we able they But have install the lights mild it I lights think did. and expect, we prevent had of bad didn’t it the than a the we planned many of of to sure as the than I complain Chicago am weather installing that people will more as Specifically, from City although from

something So would we basis. say, would the in to is million to played the is factor. a weather I the we certainly quarterly expect $XX a on not incremental point in that wanted make $XX

was pulled the from assuming than million it we make of the that XX quarters. point million year. the get wanted to could but so end the we originally largely year beginning And in planned not of high $XX QX, to of expecting – they zero at to be and schedule, But each I the stay we’re in the four is, important on there

not we’re to than City million planned. So Chicago we be originally of XX expecting project higher

question answer be to directly. think going your to spread more out So I it’s

Craig Irwin

something perfectly, is execution is could on And just of ahead of the just so schedule negative this of the really is ahead at a end XQ, and not this you where understand actually year? schedule I delta

John Granara

that be XX%. QX is don’t as that year-over-year rest a the rate of to on saw I able to year-over-year That’s year correct. make the point sustain to a expect basis. progress The strong growth I very we we would

– the in of whole. the We’re is still increase it indicative the we’re in topline lumpiness a rate just of revenues to the holding that, it some to is holding appalling, and still a but business to be the faster but EBITDA of at increase in as overall project XX% the than

Operator

for concludes that over to remarks. session turn I’d question-and-answer closing And back like to George today. our Sakellaris call for the

George Sakellaris

XXXX you, in are and outlook confident off to for To a Glenda. the start we to conclude, are strong Thank get year. happy our

solid are effective Our strategies that performance demonstrates that our can and execute. we

business. from and growing of great, is a substantial with in amount visibility revenue Our coming a backlog project the profit recurring large and with

momentum call attention morning. to have this continue the We turn and I good now our operator. the will business Thank accelerate. can you your believe now to Thank you. for

Operator

Everyone thank you day. participation have gentlemen, and you concludes program may and the Ladies in for great disconnect. This conference. today’s a now

Ameresco (AMRC) 1 May 182018 Q1 Earnings call transcript