AMRC - Earnings call transcript Q4 2018

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Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter and Full Year 2018 Ameresco, Incorporated 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 call is being recorded. I would now like to introduce your host for today's conference, Leila Dillon, Vice President of Marketing.

begin. may You

Leila Dillon

good for and We your appreciate Thank call. morning, us today’s joining you, everyone.

Joining George Chief here Officer; me are and Chief President, Mark Executive and Chiplock, Interim Financial Sakellaris, Officer. Ameresco's Chairman,

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

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

George Sakellaris

Cuts faster expended margin benefit When exclude another points strong XXX grew XX%. and outstanding service to performance by Tax and assets in due XX Leila, and solar good one-time QX to added We A you, morning, adjusted XX%. Jobs megawatts our Act, over profitable development. our year. income again objective revenue. quarter. outstanding by placed We by XXXX the of net the megawatts was We gross growing XX We achieved grew than to Thank XX%. profits in concluded you EBITDA basis another projects everyone. in of

full project adjusted the X% from EBITDA million growth Important cash generated and by one-time $X the including income net QX adjusted ESPC of Federal billion to by XX%. revenue XX%, to year, by For we tax development to XX% energy by benefit, XX%, we and note, profit to XX%. $XXX income was megawatts. in than gross excluding grew XXXX from closer more And increased the assets over backlog operations liabilities. XXX Furthermore, proceeds by we net doubled

back I we look on accomplishments shareholders. key think investment wanted elements Ameresco for a attractive to you, that the our remarkable of business XXXX, we an and As share make

of quality a grids, in resiliency, is but in the element first context business model. context rarely the The micro discuss we of our

year resiliency is why this performance Our highlights so important.

revenue million of XXXX, that of in The and represented $X.XX range in range increase we streams. those projects business, in start any high goes notably margins backlog underpinned At wrong. the range $X.XX of an $XX million. absorb usually midpoint a to anticipated the the of have by stable to As recurring diversified large general, can EPS challenges unexpected $XX now adjusted because we million adjusted of of In $XX EBITDA. EBITDA we and something in

a from our Michigan expected of in gas to EBITDA plants Arizona. that come incremental majority renewable We vast and

encountered business, disruptions. of in In six-megawatt the plant our turned some contributing And XX-megawatt quarter As just second started to meaningfully normal Arizona the XXXX. the half year. started also we the first generating revenue the it only plant project out, Michigan in earnings of

had for instance, the XXXX. half second project center For conventional of we a large from budgeted revenue

year. award to this of the not we However, convert by end did contract the

be to first contract half of this signed year. expect this in the We

Another shortages slowed to recognition parts. half down large in due the the Streetlight is second revenue ongoing Chicago of and Implementation Project. contract

City addition, winter had In heat Authority that disruption York to during make New that no sure season. the requested in was Housing the our their residents focus

were services other result, types are schedule. you further out business, project a in These originally pushed use. As schedules in dealt implementation of are These that absorb in shortfall. especially have can of the opportunities years. broad they types measures other set and a that normal delays challenges, the have when buildings counteract retrofitting our To for of are we the with challenges we with now regularly projects, revenue these activities

large converting Palm as federal Base our and very During group outstanding year, Island Joint demonstrated Communities such the projects Antonio. execution, San

XXXX, in gain Texas a included large ever in the time This region. and that activity. first a actively streetlight with – bringing like on multiple $XXX penetrated Southwest also driving of The revenue the across projects the strategy in for revenues. business new Southwest repeat of expansion region. geographic is Notably country is topped System XXX parts prints Our region focus the million University

So execution $XX the despite enabled of of million. to and EBITDA deliver income I net setbacks solid us $XX project adjusted mentioned, million

element visibility. important The of business is second our

level visibility dollars. in and critical dimensions is our across and visibility investment. an or is of is years visibility recognized in years recurring pipeline leading of in Ameresco is in and Our filled all our differentiating measured improved three with we've most XXXX important revenue. revenue two as The in billion uncommon of is from now. We as edge This

portfolio long-term revenue years, we on of focused streams. building recurring a For have

mass us reached a and gives portfolio, for foundation critical that We stability high have now which outstanding margins. an in

contracted the agreements will note, this years. merchant revenue of on of and million Our years. this now revenue development of of million portfolio and of $XXX include revenue does sources our by likely revenue XXX to least line of contributions also complemented include Important operations over revenue has If construction. where have next and assets does energy figure visibility not portfolio XX from is contracted visibility pipeline we revenue. megawatts. in at over include, XX $X we solid $XXX extensive assets energy not of we of operating and sight any incentive maintenance, Based those stands billion The power-purchase realize at

of energy are accelerating asset we the Importantly, portfolio. build-out

We in Michigan is RNG are have additional in outstanding and should plants our in service The green-gas an to portfolio. a Arizona incremental natural Texas did activity an opportunities. we into about metric well which RNG Renewable plant the our entering strong also now and pipeline new energy throughout distributed gas. historical as asset talked service RNG important XX We is to solar XX in the over the months. known place with green one extensive landfill are months opportunity and QX. is gas exiting of assets-in-development development U.S. next our year This in gas or pipeline,

to We to of this firmly in are the we XXX two megawatts additional metric added have happy in now plants QX. green-gas assets development approximately Of report XX% projects. that, are

to opportunities still we pursuing. are six we five additional actively that, have green gas Beyond

projects these XX megawatts approximately XX of All are to each.

creative identifying are new energy We sales. to approaches

will capacity the consist during This at For demand of instance, storing will It in each. two Canada, selling low hours facilities we is back energy asset it to and are help in Ontario. implementing with demand. of a peak two storage based balance grid a asset grid, megawatts that battery the

not total included backlog the limited of is year recurring $X billion, almost project We of to with backlog Of $XXX course, revenue contracted visibility streams. ended million.

seeing are business. often we larger more have and and are getting -- As we more repeat we sizes been project mention

strategic phase for the New good have authority the with to signed country additional Authority and For in contracts instance, them NYCHA relationship work biggest is York we we and produced the now. for two position over are Housing years pursue our has revenue of City two there. housing in

Ameresco makes large attractive that quality an market opportunity. is our and growing third The investment

are First reflect we of Efficiency the energy sophisticated measures is new comprehensive. is transforming that part finally larger more getting but and the all, work, since Market simple infrastructure conservation core upgrades smart energy business shifting our always are of to demand savings plant model. from economy. projects

our few customers, Palm and market traditional Navigant upgrades, an Antonio have Base storage, controls According portfolio. we distributed $XX leveraged between size energy, per technologies without efficiency HVAC billion have advance as technologies battery per approximately are from been adding in micro-grid to acclaimed half today the these years to for billion expand the more. billion upgrades additional controls addressable our Research, total or to year resiliency, and $X now generation our building Island to $X have are resiliency, year. San distributed micro-grids, infrastructure A might Joint they ago, billion project advanced or as $XX example, the So

also we Our in growing opportunity is new penetrate territories. as

underserved now Southeast structure team performance the -- to have we're been we in us Canada, target which see XXXX. positive Southwest beginning historically. continue and place the new to team from In by the in and put the We

market opportunities, have meaningful To our getting also take advantage U.K. up full of growing in we Finally, the the are investments. stepping traction we

expertise. and energy that people our more development. project technical expanding with team, the XXXX with years more are Also adding we people We and in-depth are in deep are we beyond. expertise have optimistic conclude, about To asset

before, plan growing high EBITDA high we double-digits. and and As single-digits we revenue growing a three-year on stated basis see in

and we to XXXX, strong Mark? exit in coming strategic our financial the well-positioned now and made, assets we on the that, resource for online, As the call for with are turn XXXX the performance have XXXX. over PV and that Texas growth we investments plant will comments I Mark With additional RNG outlook.

Mark Chiplock

good and George you, Thank morning everyone.

and fourth performance. achieved the We As goal of quarter faster revenue revenue. growing George year mentioned, our than outstanding concluded grew double-digits profit with we financial

QX Our full predictability will referred comparisons about some the continue I our business XXXX growing recurring say the for visibility bring unless turn all project year to XXXX otherwise. are results brief results. changes model. and and our increased year-over-year to long-term start All QX, backlog then figures with our revenues to to I comments and

to of sales. projects. was delays, margin project conversion than sales total by supported and NYCHA's offset X%, energy to exists energy revenue help As these expected. George from in by continued gross natural revenues Despite increased Strong business. mix came business a lines high the however, projects that our parse the revenues convention with these variability The awarded better a and out O&M request margin up work, performance our driven was and recurring mentioned project large in of delayed center of lower

XXX in only operating points. amounts the We income while reported by year, grew expenses Operating $X.X year. profit net continued basis and operating resulted Full million gross This margin million. to our last from last EPS demonstrate inherent $X.X by the expanding below were in business. grew our leverage

of or that and $X.XX due per benefit However, million XXXX keep a we in Cuts Act. Tax share to the had $XX mind in QX Jobs

Excluding grew XX%. EPS benefit, non-GAAP grew this XX% non-GAAP and net one-time income

a comparisons let's grew Revenue favorable otherwise. mix XXX at by look full and to refer basis and These figures expanded higher-margin the to all recurring all and are I our with XX% XXXX year Now projects. margin state revenues of unless results. XX.X%, full to the year points XXXX due gross

XXXX, reasons. more revert to XX% expect the range gross the XX% to in we For margin to normal following levels for

LFG so, in contribution. we in portion million First, RNG. plant to million of take to will existing us significant we this for Texas In costing the $X a doing asset are year off-line $X the converting

proportion Second, points. we Operating certain operating margin expect leverage demonstrated operating control. tight a We projects. XXX basis lower-margin to under expanded solid greater come of revenue expenses from keeping over by

Looking are George capture we our accelerating market that opportunities. in at resources the growing investment strategic XXXX noted to

above are expenses. to planning the $X incremental million million $X such, we operating normal in invest growth to As an

remains sheet strong. balance Our

million Our corporate and hand million liquidity $XX our is available cash revolver. on excellent over on $XX of with

for rest of debt This We of not corporate year ESPC to also cash-flow project performance. have in important the Shifting over Ameresco. billion only reiterate marked The Federal our that $XX Ameresco. debt and an to debt is $X milestone is liability It's to non-recourse million. important financing. assets

operations $XX operations. the While GAAP million in million, projects, over we back Federal from adjusted was of you cash cash proceeds generated used add ESPC $XXX when from

our energy Let operations, are primary in the million are assets, assets on sheet in balance construction. Total of quickly review the our me represent balance which XX% while which over investment. $XXX energy assets capital are

service XX During into megawatts XXXX, the during year. placed we

XXX-megawatt year which is doubled than equivalent, pipeline development a from more Our ago.

but development, assets counted we formal development even of metric. also in had course, yet assets in earlier are not Of those in stages our

in confident this finance fully ability our are We pipeline. to

As how energy results. growth, assets of our thought becoming to assets it driver our shape we will would are contribute be to help an those important important

at structures Keep your current We from the comment In at EBITDA approximately in general, can provide and specific plants guidelines but $X asset. approximate will contract mind for and asset incentives of annually. modeling. can on not capacity megawatt vary to prices mix generate full can plans, million of per rim RNG

annually. megawatt EBITDA at Our approximately solar plants generate capacity per full $XXX,XXX can of

of megawatts into XX assets For place expect XXXX, and we between to XX service.

XXXX. in Texas additional And projects half awarded second come online online in California Our project is to expected RNG two come are recently expected in XXXX. to the the of

As permitting are subject the these projects lines time are to stage, still in the change.

likely our changes let explain rate. tax Finally, in me

Our $X.X not million diluted included the share. extension energy effective tax clear benefit and the since efficiency rate benefit XXXD. The of a for under XXXX was approximately if available was be deductions XX.X%. tax extended. is or tax This That will $X.XX it per has it benefit from expired

we rate in a in XX% such range tax As XXXX, are assuming XX%. higher of to the

expect another solid year growth. of We and profit revenue

to in XXXX expect $XXX be the million We million. revenue of to range $XXX

Our akin than normal to in we expect what to higher normal, return in was more levels gross XXXX we margin so reported XXXX. to

$XX I to we was not of and $X.XX EBITDA due QX of unusually We to QX to expect due benefits you $X.XX. project like Like the revenue in of year, earnings. expect last more grow revenue should to likely variability to the again XXXX offering range million. look to quarterly timing. guidance both $XXX are Adjusted Therefore, QX of that we the XXXX will of EPS strong XXXX. in million remind range

the of expect follow we That concludes prepared our full each sequential quarter. the growth remarks. normal However, year pattern to

to we to to the over session. call will the the coordinator now, to our like would Heather lines So to open run questions. your I back Heather? turn Q&A

Operator

with from [Operator Thank your you. question And Riley Carter Instructions] will FBR. first come Driscoll B.

open. line is Your

Carter Driscoll

the Mark Texas could strong puts Good talk half. very of takes morning, George first and on conversion gentlemen. Maybe Congratulations plant. the about XXXX and you

converting sure Just understand of like the over contribution I green that kind gas. from of the and timing it incremental to make

George Sakellaris

know, are us why one contribution. there we will sometimes the of of all like contemplated in it half cover the what that's Well, we I something year. then the next based happen. say be timing will The right But now appropriate Okay. happens what we process cover come it will the cover now, to on and of permitting getting we Right permits the the online it. is and depends schedule. half. And second Mark the timing looks second to will in in could

on Phoenix -- this plant project year, right? issues, fully local though As didn't was the completed this last the the permitting fourth quarter you probably year of it recall operate even the of first of until quarter because

Mark Chiplock

we going reiterate offline that And going Carter, then Yes. mentioned. XXXX take right, to we're just in to and as

in $X So, But back to be mentioned million of we prepared again an $X have remarks, about as megawatt at annually. online XX plant EBITDA in -- per and lost rate probably this going of that $X to about megawatts that's and anticipate we contribution would run XX-megawatts the about impact million full will then to million year. comes when that we're XX

So--.

Carter Driscoll

in it from apples-to-apples about one to that be Is Just another, on EBITDA? guess roughly would fair? XX% an a increase feedstock I in contribution

Mark Chiplock

X%. about Yes

Carter Driscoll

X%?

Mark Chiplock

sorry. I'm times Five

Carter Driscoll

Yes.

Okay, all right.

George Sakellaris

year question once much and we $XX And million operational. EBITDA If and to EBITDA a this $XX $X I is million EBITDA that to of talk the little ask full $XX it's be want losing we numbers those million will million fully $XX -- everyone million the million question to operating to the current $X when the I capacity. at mean correctly in million we're contribution it prices rain $X plants bit pretty

quarter-to-quarter you we variability. Sometimes some from see it have might

Carter Driscoll

Yes.

the of sense magnitude of in to investment trying a get change Just offline. taken the

some of newer the Maybe just Okay. about talk geographies.

more more looked Can success come territory an Southwest just You the you half mentioned for of back in mix Southeast it's incrementally like underserviced XXXX? it's online. region? second the you're whether types projects having has of by do thoughts after going you as Canada the you then or your you impact give kind real And of mentioned. territory, incremental XXXX see in been of -- of

George Sakellaris

million backlog reached about not for have are why And over Yes. group we're well. we we for we California have we they the the Texas. said the year. we mean -- in in made Southwest that's to much that's the $XXX good that for I outstanding great talking past and because an as Southeast. backlog Southwest mentioned But them in have addition getting performance especially established I have strides very in but And California, underserved -- in and good the it And

California. plants XX have We operating LFG in

grass visibility as in connection pipelines or as gas be solar Now, -- it with there gas are the several in local ones, year two green well they California until did developing addition saw to the new as that there clear contracts. you And the projects we and them to have put visibility that provided our will plants, the of plants utility as the in in to we're the backlog assets for so. their in not a we

So, more the and projects in we're think strides. making Georgia, good we potential. even though done some Southeast have like Southeast we Florida The is there

So, we part -- in resources put people there, those in groups. additional make of the investment more put in particular we in

Carter Driscoll

am the assuming is for not plants California BG&E territory. connection I the And

George Sakellaris

Yes.

Carter Driscoll

in back offline. the take guys. the I'll queue. get I'll Thanks Okay. rest

George Sakellaris

you. thank Yes,

Operator

you. Thank

Your next Partners. Capital question with comes from ROTH Craig Irvin

Your line is open.

Craig Irwin

thanks my morning questions. taking and for Good

George Sakellaris

Good morning.

Craig Irwin

of as EBITDA, higher midpoint to million year originally than for $XX million $XX we look actual the $XX this the year at gave back guidance the of guidance result you could was when time of George issued So, a year. the you in your million to the ago beginning

expected than over XX outperformed into XXXX? some you is went guidance the that these unnecessary? in projects You've already XXXX. outlook for touched XXXX? maybe to about Are And contingencies expecting went in had the were you a that the our you conservative same wrong of the better way things months? couple maybe maybe the for talk this of But can how factored that the on obviously that us And projects last

George Sakellaris

hand be are on to our business try in projects be Okay. because things we many Look and other we tried realistic project the these to we and in the But guidance. conservative happen. we implemented

That that executive into three updated year So, the we year. actually beginning million our that last started actually -- of they to get When coming planning otherwise the yet, we was during two we the they as awarded year, projects visibility. over signed projects we the better year had were for $XXX had move to we out from not at that times guidance category. got the were

So that's one.

were the more reluctant top and gave upgraded the EBITDA, a we the $XX asset on revenues in line though line And million Woodland beginning But pay attention The pointed issues for $XX other guidance throughout came And to Mark mentioned one, have the year one we the million. at million that. one most likely moved plate they up. on guidance broader was projects $XX in bundle last guidance. you give EBITDA. lost, million we bottom to you more – And remember as as all was some together, would those the but and had that we if will and the step out. with got them And we if information, I and million we that, lower-margin that up about and was revenues the the our they're And EBITDA. $XX to been projects I the is I contribution $X the to

right Arizona – explains again, very running that plant and So up for to This cautious, last now. example the we because tried year. that's year, is be

do at modifications. we some facility, of taken Today, in takes were ramping out it some Part we capacity. the full up For example this course to it yesterday, time. have

more anything and execution comes revenues you awarded In year, our we they plant implement this to to converted to last order go in year that have want in of as to add to ahead that, have Mark, to that? again, have else we them. like be contracts from projects slightly amount addition

Mark Chiplock

No.

I come closeouts. hit from plan just think don't great on you a points. closeouts. I pickups to for back question project lot Craig your If the the we I XXXX regarding mean,

year-to-year. is history with know, And size a has we've guarantee. our and from that vary going shown to quarter-to-quarter and had aspects I the our project recent business it's timing of some, mean, you but all and As not

XXXX, Difficulty] in [Technical plan don't So pickups for from we

Craig Irwin

And in a $XXX share Can beginning something side here, last last executed awarded did year you in whether and at a Or not year? Excellent. you or XXXX? the just you've the executed like Okay. mentioned you similar included follow-up factored was XXXX. have of conservative assumption question million business for maybe you that on both

Mark Chiplock

our last sizable as Yeah. as fairly George amount as awarded I we certain but on numbers coming not converted to mean, in again still – awarded. are a amount mentioned, we're we rely from from to assuming into have a going are year, probably contracted large

visibility to good year. have the contracted we're contributing awards this rely from But, yeah, We our going converting still into backlog revenue. on project

Craig Irwin

Okay. the you a in and the G&G be profit expect online the quarter. for new you a a ramp this to And my Will for modest in Can the headwind plant thing getting through up. quarter? for about see it next plant brought was maybe contribution Congratulations Would that quarter? Phoenix us clarify as starts to question's it that this March maybe shakedown? EBITDA headwind about that the plant go in the first you quarter

George Sakellaris

full Like But we some of of got to a I take it's ago days then at minor operation it will down, color take of year. quarter. see balance quarter, three to much said, took will it up a the operated the so first not all do modifications course more we you few if even for were – a think far to it days going up I we days, we second because the might You the so couple ramping two, and week. start in impact gives it

will you up second third it very be So so on. quarter, and the contribution my quarter and picking the this then a it will see – small but

Craig Irwin

And Great. then…

George Sakellaris

over-performed even By might the And year. time the an up getting over running. the and we I things, of Michigan plant quarter of had point would expected. One quarter. last we the particular of the a say plant performance the I was last I'm last there's on other quarter that the excellent it year talking this hard thing out last way, fourth that there the the what performed about quarter,

Craig Irwin

focused Those I've is on are for so why them amazing XX last been the plants months. which

just So to…

George Sakellaris

come They to And exact, have their though and the for it significant they a we because exactly that's for EBITDA help why might are But that's or are we that have. called timing understand, becoming up the wouldn't and out, why they online. And they else called them the be we fully catalyst be such they able Even the not we contribution operational. they are to were for year they quarters great. them so contribution show out year. predict potential to much everyone when in how order

like In color going a to what's to going forward. three over it's the give look that, addition years better to two next to

Craig Irwin

you in your come into backlog to What how to the is so this point we growth which portfolio? for Great. mentioned that plants should But I two of a for total your backlog into the potential potentially with out right, the you XX for And in look And you megawatts. The last moved little plants the may. then as backlog question, you G&G pipeline, look if headcount maybe California five what or into what bit plans were Can us changed? booked engineering actually this formulated you were permits these gives seems those issued, we last specific right? Were confidence you there, approved, now? design of changed remaining or preliminary or the there of other months? over there bookings that should couple build have and discuss what to

George Sakellaris

specific. very be I'll

the example, to that the execute Keller addition significant plants client. the Solar that quarter a service awarded that made I in with we had For a the the impact. service and backlog gas the in with We two mean in put to this our agreements contracts utility last

the client the we on they Once contracts, Now the we're of looking probably owners. now. are those execute is awarded category. right ones you course see gas landfill the there And them

at complete In some developers addition them to able were the so them major you that's we stage on of we acquired from PV, executed not and that they then quarter did and saw to projects the last developments early that impact. we the a why acquire and

but we make again getting will careful is add the than awarded large, going want when it, pipeline category. running past. and put of sure up use might -- to guidelines better are Mark XX%. the we in used and Going that we them we than much color We're is The the to forward, the but more them to some probability in same

Mark Chiplock

Yes. I No, agree.

I only thing project. I XX% into asset and think the it's a add, will get high than we I'd metric, once development that go to pretty better mean, a those the generally probability, them

one feel pretty metric. we So get they that good the about if into

Craig Irwin

Great, thank you my again for taking questions.

Operator

Thank you.

Your comes next with Kaye Oppenheimer. from Noah question

Your open. line is

Noah Kaye

megawatt morning portfolio. question Mark. Phoenix? Good equivalents Maybe RNG-asset and George we're megawatts the Thanks. lot the talking a clarifying What total about or in are just since RNG assets including operation today in

Mark Chiplock

in equivalents me with we've today. -- got just service XX-megawatt Bear

Noah Kaye

And and XXXX? plants come what that two the conversion does the to at the grow online, Texas of Phoenix. assuming including Right, California end

Mark Chiplock

Yes.

So megawatts each top so on another XX-plus those, to another XX for the of XX three that. of

Noah Kaye

the understand of to -- was I -- puts year here, you're a full as a it's that said did Michigan a correct that Okay. about guidance, the And of takes mean that's and which right? we're you getting XX-megawatt the plant, it now I just thinking hear

Mark Chiplock

Yes.

Noah Kaye

And six, Arizona right? is

Mark Chiplock

Yes.

Noah Kaye

Okay.

puts or Michigan. just That's million megawatts puts let's say takes conservative be of getting from already that are benefit getting eight you of that -- kind say -- or sorry But alone we're So lot $X let's -- so bridge the year-over-year guidance of go we're in -- is your there ahead. of other vacuum. a midpoint to I'm a and and yes the

George Sakellaris

brown Texas gas take from the that to have $X million plant of We green off converting because gas. to

people its we whether that order to able that assets of be take had on, them, brought storage, we micro-grids primarily have for -- The additional and addition able to with business we more so of to on. our order million the RNG investments to increase a on. execute we development to people development the make in and well assets same as In in construction even be had --we another on engineers example couple $X as need in battery to managers we with so same more

got started it they're and So last take this you probably will have and -- a we say I -- year year. so to we to million $X from

Mark Chiplock

would I And say... Yes.

Noah Kaye

ahead I'm Yes. sorry. Mark. Go

Mark Chiplock

ramping to is year. in was looking then estimate We're and I QX in the plant early fully was a I Michigan up running $X probably Michigan remember It incremental. high. think between of running around add, at going million the was Because Yes. and probably the part two that QX. No little through the total just QX

estimate So I something around is two we're looking of that incrementally. think and little at the between high that it's probably $X million on particular those plant probably -- a one

Noah Kaye

perfect. about That's growth? That's million of we're getting and million the Sub then the where $X EBITDA $X business. really incremental. of out with million we're the Is called I it. of think another gas you to projects that growth benefit going the on $X from Yes. remaining the about part the that basically That way right was getting

Mark Chiplock

lower mean less. going mix That's at of to a be as little we than are proportion higher mentioned probably again -- to project it, the expect average. bit margin that I our we is a that

on the mix. closer probably it's to again given the just million project So $X side

Noah Kaye

All Okay. right.

just yes let sorry So George. ahead ask you me go --

George Sakellaris

we margin XX% XX%. -- profit -- it this margin be would year we gross over we the year to The closer last to up ended estimated XX% and

that's a we're well there over point So and substantial. losing

Noah Kaye

Understood. yes. Yes,

Okay.

Sorry, go George. ahead,

second business. the government longest and history. in just a talk federal for through We gears switch went the just down shut about me Let project

forward? revenue quarter business and performance. strong in there a the and had How of the impact does You it the business the going terms

George Sakellaris

business. is a our about This good thing

whatever funded America might know you Federal Bank and be, the contracts are case a so all on. third-party these of Hannon As Armstrong ESPC through

then them out, an build So money goes the as draw account we that escrow and lines. into we it we from

occupied able for was not impact and it basis-in-basis, had interruptions do not shutdown. the GSA no in wouldn't the that's the we example, doing we of construction. sure for were we all there was our a it helped So the then build-in be no projects to government were that. were though during contraction time, that I'm And It the other project. thing what doing is there did we them impact fact If on

side any that we ready at be to impact signed implementation there impact on executing nobody on and was saw an there to see contract all sign. a we was the So where didn't was

didn't a So that local quarter some last we any the impact. elections. from a We quarter. this into saw year. than on Switching that Other government and in a shifted moved to got this got government contract impact state see particular

projects because that third-party the bottom business to the So funded with money, have commission. the our don't line come helps up that during model get financing then through is

Noah Kaye

that I something to because Yes. but and yes, mean, nicely. by is ago. all we because contracts fair down very think new fully contracted awards a the than understand Year-over-year, year I did wanted were amount backlog and the up sequentially that's step a obviously lighter

expect question an should the to and amount really timing? maybe really of XQ we due is above-average in last So the year kind contracts' conversion relative of bookings to

George Sakellaris

bit us. little Southwest that what It's model No. assets the business impacting due part built-in timing the is for is more projects And example, more the transforming we There's backlog good region, assets. for the awards built-in from unit that but fact others for we're and lumpiness for a a for to assets to shifted, lumpiness. the the it's

the get our them balance assets of assets awards we we in them to shift in some development. So we pointing why show awards. a business the look as shifted model show will don't tried anymore, and the into development, That's in the impacts is as them the at in projects started because now project development that And own as why that's for I assets total. retain out our I there that sheet,

Mark Chiplock

year-over-year some awards. only had The awarded mean large small, XXXX with is but thing optics growth on the Yes. there I the the

still tough continue I C&I. we're year-over-year, in some song we it's to to $XXX federal million projects, but So continuing awards back a new comp think activity we and in quoting the year, over and of had see

we'll I goals our we think continue revenue grow backlog order the feel in pretty So confident going to to forward. meet

Noah Kaye

question the taking Perfect. so much for Thanks

George Sakellaris

Thank you.

Mark Chiplock

it. got You

Operator

Thank you.

question Chip Moore comes with from Your Canaccord. next

line Your is open.

Chip Moore

the them? for morning or have there? you question. do them solar-asset acquired we the quarter, they four a more did You've so, taking Hey, have what about Maybe had in Thanks things bring? bit firm trending are you California seen months since what for pipeline. How could folks. You buy the during talk a

George Sakellaris

part that of increasing pipeline engineers. with we good pretty XXX the a development It's have capability And resources so. They are or of the megawatts group of two individuals. only the associated

central projects far located I they're call And will so service year. moved primarily in but yet, what think any we contemplated I haven't some focused they're though in to they to-be-awarded And California. even will in category that they the put this

the Southwest we're environment as that all that's about investments the of center. I when transforming group do in able as for in in the the that focus in company And with part talked to that the to primary is Southeast. it group why has new particular resources, to well be addition and compete the making Our

Mark Chiplock

And the East.

Chip Moore

Yes. absolutely. Understood. guys. No, Thanks

George Sakellaris

Thank you.

Mark Chiplock

Thank you.

Operator

And to for CEO you. George our remarks. question-and-answer this to concludes turn over I'd session. like call Thank back closing the Sakellaris

George Sakellaris

conclude are we the Thank you, about Heather. optimistic years ahead. To

is pipeline strong. Our

growth Our solid. opportunity is

our Our engaged. technical expertise And highly team is is proven.

is to We forward to of for Heather. success is you report Thank the strategy you morning, quarters back Our in your record sound will this turn I and more operator the ahead. excellent. execution and attention to our track the call now look

Operator

program And does and in conclude participating and for you. you ladies This day. conference. wonderful today's you Thank have Everyone may thank the disconnect. all a gentlemen

Ameresco (AMRC) 6 Mar 192018 Q4 Earnings call transcript