AMRC - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Q1 2019 Ameresco, Inc. Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. Leila Dillon, Vice President of Marketing. begin. may you Ma'am,

Leila Dillon

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

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

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

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

George Sakellaris

revenue all pipeline of of net and as the adjusted EBITDA Revenue, EBITDA development. EPS were our our of start. a were income, percent both year year assets most ago. our is we profitability, The significantly our everyone. expectations. Leila, were higher you, financial to off The Gross adjusted expectations. improved Thank above a margin good and expanded importantly, We morning, than and great ahead results and in

the build pipeline in of our that are assets build pipeline jump the pipeline QX assets indication market quarter. The a in development of to development. our of is the simply nationwide, invest ended to is course capabilities in our all our One in Looking forward, energy and we outstanding. resources, the asset intended We the across The an the putting reason about expanded very of XX% of XXX excited and development early the portfolio. in operate of energy the this of our This wisdom over talent megawatts opportunity. we platform strength regions. was and design, are develop, size built energy the business. of starting By growth excitement the is place to with acceleration our and strategy see

new Our development teams industries new are and now geographies. penetrating

geographies, we our historically, new regions. national were of have example, our in Northeast. penetrate energy across continue The the awards variety For a America. as of business accounts. We more new now industries build we concentrated sizable in even throughout North handful assets units a And established in and states, span momentum asset to especially wins

For of capacity. example, recently announced in Massachusetts new totaling solar alone, over XX awards we megawatts

last assets, have assets placed which Phoenix assets. operate leader Microgrid to the infrastructure. complementing we hired Technology an in Vice In deepen of the also of hiring our energy Storage, commitment to Maximum acquired a year. continue solar Vice in January, power who our capability Energy O&M energy industry And create service XXX was plant, model. specialist foundation business high-margin including that January, solar new of in we And to deepens in we energy We operating our of announced become Solar, the President to QX. underpins to now recurring green revenues into help our the that megawatts gas We President

portfolio, assets over the our sight uncontracted over we development next another operating of high-margin years. revenue combine and XX visibility $X of Our billion If incentives of a million in to line and revenue. $XXX revenue sources, contracted its we have

high-margin performed and model. well. sales O&M recurring also work of $XXX stream, bringing the in The to elements one revenue was only operations The backlog another O&M attractive and O&M recurring added and million maintenance, major many of we our new our total business is other our they up, million. of profits backlog, $X Revenue energy to

built $X our backlog. from energy billion. again is and is development. we core Another which balanced contracted backlog over well, of Growth back start reinvest in again and the solid by with In as both awarded asset project business, project our our Total was performance was the generated into X% the visibility expanding. QX, we gas project grew and quarter

advanced award agreement anticipated new power, by ago, driven of gross and with gas is services an a and is our project we backlog and the higher utility existing on is year Importantly, large percentage complex supply one point in technically than customer. margin million about where projects. a A comprehensive example the great This Canada a $X more water.

and We geothermal. a solar distributed will which generation, includes and develop, operate construct

backup. All the resources on its storage This project load battery campus of microgrid. for be microgrid leveling will A a own. is into fed includes and attractive

proof growth also existing customer portfolio. opportunities that technologies these new it's to bring advanced However, our

a utilize to energy Facility technologies performance The a microgrid, of savings megawatts are of project along the maintenance. XX%. a X Wallops NASA growing projects single-axis award resistance. over includes that the project The hurricane our This Canadian robust and operation solar using a latest with design examples in portfolio million is Virginia. advanced Phase of of increase in projects cybersecurity, Another energy for and tracking system solar generation, for Wallops use to X.X create corrosion by example output technologies is We infrastructures. NASA $XX ongoing the advanced fortified Flight

Of microgrids. course, our growing and portfolio, interest seeing project we controls resiliency are intelligent in in

for The a as well becoming of across infrastructure leveling of range larger energy part and renewable become our technologies resiliency projects. battery as commercial use advanced in which industrial are is and element that these improve customers energy of pay bases, a the help customers model like. and facility types, seeing – to these allowing including upgrades technologies. newer are infrastructure wide performance education, Microgrids our We higher storage the efficiency savings a to critical power savings for pay military

technically conclude is me by Let us. reiterating that a and growing XXXX year strategic for

from O&M core tremendous have an of Perhaps dollars growth and infrastructure business, portfolio market. total have revenue in of asset We visibility our importantly, backlog. more we addressable prospects billions energy expanding

With accelerate the financial to these the capture place I to outlook. in maintain market future our now turn over that, for will comments and performance putting growth. are on opportunities, leading Mark call resources share We and Mark? our

Mark Chiplock

Thank good morning, you, George, everyone. and

keep please all first XXXX that to As and in I I mind quarter figures say all comparisons are otherwise. review unless the changes financials, refer year-over-year for the the

sales recognition Lower had backlog. our a further was steady modestly, solid development O&M outstanding and revenue did Energy grew revenue project grew financially active by energy XX%. job from As impacted sales a assets visibility. George XX%. quarter grew building by projects. progress XX%. in had were Integrated-PV timing project up revenues other and We mentioned, tremendous we and in for growth in

recognized due Our of of entity. $X.X well projects growing O&M strong a upon the better mix million the margin as interest driven a as by to expenses of proportion gain and revenue. gross variable primarily of performance decreased deconsolidation energy a was Operating

Excluding this to operating benefit higher planned expenses gain, to costs headcount one-time and increased salary due growth. related

we market are investment As opportunities. accelerating in George by to capture mentioned, growth investing growing for our strategic resources

expired. the due one-time year Our to was That XXXD. year under tax has higher tax since this benefit rate realized last benefit tax

that a benefit or tax QX per share XXXX. diluted $X.XX $X.X As reminder, in million contributed

Now, sales to outstanding reduced did power. plenty with payables, was healthy as is at days time turn liquidity the is and of up which and let’s borrowing decrease, which normal balance sheet, year. this Cash of we

over rest to the the debt. improve DSO expect for at project and assets. year, We of our of of credit non-recourse cash we some of course Recourse we is payables XX% to The our construction As our debt to only fund normalize modestly total is investment of the energy reduce grew financing. levels corporate position. line regular

Ameresco. always, mind the in liability debt Federal As keep to not is that ESPC

our assets are million, balance are is energy $XXX review Now, in which the let while represent development or investment. operation, me capital quickly XX% in the our sheet Total balance primary which of on assets, energy construction.

per service. on this with of QX, into placed X-megawatt modeling plant not $X EBITDA gave or year annualized our at Because ramping megawatt During operating it an was guidelines contribute million is $X consistent up, prices. once RIN capacity, all full year, basis contribute projects. Phoenix Later for you This it did we it is of expected million gas the green approximately per results. at RNG we our to should our it meaningfully

approximately more these XXX-megawatt is the is doubled CapEx million ago. Expected pipeline development Our months. a equivalents, $XXX which from XX next than over for year to XX assets

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

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

equivalents For the service. to assets still to XX-megawatt between of full place XX we into year, expect

conclude me for the outlook Let with our year.

$XX end lower in our range earnings range. adjusted $X.XX $XXX million the now in EPS raising EBITDA expect and of the of of are We the $X.XX to We range to million.

help year. the but We revenue million. provide shape of remainder of some $XXX we not guidance, range expect in give will million the to to $XXX quarterly color We be do to additional the

QX to due projects our last QX tax in the expect be be that is We rate skewed to to similar it back execution higher in net Keep like XXXX. measures EPS, and should of of our in towards mind was the for our this large QX far year GAAP than half and income results the year. some heavily year.

encourage our a you to on over long-term horizon. always, we performance focus As

the attractive. winter remarks. and lumpy consistent profitability concludes But from quarter-to-quarter, is growth That time, Our especially business in is and over trend in our the months. prepared

Daniel, we’d run the for open questions. over session. Q&A now, our your the will I to back to line coordinator, call the So to like turn

Operator

comes question Thank you. Craig first Capital Our [Operator Partners. with Irwin from Instructions] Roth

is line now open. Your

Craig Irwin

my Hey, for good morning taking and thanks questions.

will What come next ability enhance of online we learned plant. discuss to of plant? Procedurally, that commissioning learned there wanted thing in you that have the First of this couple is the that California? Can plants things projects? and into ask process about some I on commissioning are your things of the future the execute translates to maybe, the ramp Phoenix that you’ve in

George Sakellaris

And the make we Actually, the on the local started a the pipeline. on. them wanted the gas all gas have example, we They we up after location. where criteria we Once we pipeline, bottleneck specifications, then all be and once connected the permitting, plant and we into to the they issues or and us that Michigan. the to interconnection the first natural mirrors it did than got, wanted job But plant of proved some it meets different to quite to it’s up the more better bit started do they with this to install test, gave so a in inspector to the a plant a had we associated capacity, working. month fire with the the did we and local sure bringing originally, that did learned plant station the in at and the up measuring built it for Phoenix and ramping

on good to systems. we especially projects. the So, to we from and bit little the see we permission all it we go it’s communication transportation plant, way they has pipeline with think I the And we all about very a – will And we to issues involved up permitting planning the gas ramped construct. sometimes encouraged was gas keep the the learning. this once improving as assume are fast got it, better and that the and agencies I Phoenix involved, to local do however, how complex That’s have interconnect But the because forward,

Craig Irwin

relationships… Having Great.

George Sakellaris

pipeline Having so to still different more and planned attention guys upfront we in and paid regulation, gas natural the that accordingly. rules

Craig Irwin

Yes. Excellent. Thank you, George.

to you of for include know these I projects sort how permits plants mean, checks are then, about along you’re in what in pipeline. wait Can you us I your describe conservative really are process? far pipeline? and maybe, that a project the what consider So for the the permitting California what you that’s in

George Sakellaris

landfill the careful are [indiscernible], routing they very they Because and you're right, are to say, from with systems order because the complex, And conservative. very, this side two the the Yes. is for to get the go, California, are plants, gas, let's pipeline. permits and the pipeline the in especially and in to the the we transportation very,

announce wouldn't this, You one would hit the of close say Texas the of but of or and progress. couple because minor in two the the And the that put but next projects gas one And other the we be one projects: I in good green project, are we this on we'll nail quarter head. making the course, into of of particular one, quarter I surprised issues. McCarty probably over then But very in slipped so, them we're to quarter, next developed, the that a to it in pipeline Texas; California.

in one system. because of of permitting pipeline further behind is local the little interconnected other issues bit transportation The the California a to some

Craig Irwin

Understood.

I So the to also EBITDA. wanted about of ask stability

full exit recurring this year stream over years. stable roughly bounce this the with lines? quarter, course we as the nice, XXXX of XX% you XX% around of next coming is significantly EBITDA So Do over recurring profitable EBITDA business few more your we of out business from number look the Will from expect stable, XXXX? for to

George Sakellaris

the very very contributor. And and below did the one also XX%. operating this under a assets well. It that No. of very associated with assets to O&M is the would did very, contributors was be was good performance budget. The the pretty slightly – operating much And well we was quarter. the they operating very, direct best them expenditures We actually, have of expect

has You revenue, percentage the represents remember, that margin. have it quarter Craig, to top higher first the a lowest so line

the year, – half of bit contributor why guidance we will higher a at of – that's on second bit So the year. guidance gave around we and that. the little by When end XX% we likely, little most overall, than on the the a of see maybe

We they have contribute year, the be second and will half contracts the to of to executed large that planned revenue. some contribute this – will

will So the revenue pick up.

up, the not assets So of going they keep but will will going – percentage be the to XX%. it's

Craig Irwin

still maybe doing? us through the I now. Is third closeouts. Great. a And for project potentially may. Are the for this at last the then we're guess uncertainty book-and-burn to something us But for how little have you positive How year revenue, I elevated be that early you on up it's year? way know last of in we're could that book-and-burn year update year? the question, XXXX? is if I to can looking right similar in feel shaping we

George Sakellaris

actually, we that the closeouts, actually we projects closed On this quarter, out. have

and been When substantially of better wait by to get customer. once seen will pickup better project complete enough. and it's year, we that it completed as what think budget, At then and if customary, we will it was and the do. quarter, on every gets of XX% the project over think Otherwise, ahead we I project do But neutral schedule budget, accepted a then that's end the closeouts. project us we But to the any with there long though, – the we see the below below each if will we budget and finish. have you've every job. it update associated is we the review is revision that with

a quarter we of We of out go projects negative. me that a those that Actually, surprised way. have we this close the couple some have other seen had

Craig Irwin

in Is coming Yes. book materializes revenue, book-and-burn volume? in that Understood. is material later And and the revenue. any fast the this that year? execute something Or usually through

George Sakellaris

I'm the not question. understand so sure I

Craig Irwin

for to had of elements The whether rest that's same something the and project outlook booked how that that a at been positive revenue understand in that of is wondering been know guidance materializes. because one know an executed that the really lot not contribution I is of the a burned was or uncertainty there scope an in that's contribution or don't quarter, other this actually you revenue, if quarter of I just on a over be if individual much the that's of I update the all XXXX. the you opportunistically time. that's in

George Sakellaris

Yes, here. there's Mark

Mark Chiplock

Yes. Craig, Mark. is this

need large backlog. a expecting need of it's of of last second our we – year. million probably what we're were be have projects and awarded half think, half into because of to we'll but the the where that why revenue remainder year, the I at out to $XXX of as to that's So out And point of better the contributed XXXX. our execute I bit some we still we We're in higher this normal we awarded than be we're out we're backlog of and we to over awarded compared forward – that similar, the think than higher looking have do year stronger back to in of year, convert look terms the deliver rest needs backlog the our

Craig Irwin

strong results. the on congratulations And Great.

George Sakellaris

you, Thank Craig.

Mark Chiplock

you much. very Thank

Operator

from comes question Oppenheimer. next Kaye Our Noah Instructions] [Operator with

is now Your line opened.

Noah Kaye

Good morning Mark. and George

George Sakellaris

Noah. Hi

Noah Kaye

First, guidance. the on question clarification just a

said yes? terms of Or of year. to Is guide, XQ seasonality? in the last similar terms would You revenue that be levels similar similar absolute of in

George Sakellaris

describe year, There than little the the of the a it, we was Mark way – last similar last gave. I and to will maybe what even year said guidance bit because lighter

that will be We a large And sometime be second those the contracts and have half But expect you the of signed months. want add? the to summer to we signed, will year. contribute to lot some they yes, during

Mark Chiplock

I agree.

had last across other the very it we will QX benefit in look still think board additional I an than XXXD. similar – discrete from the year,

them contributed that, a Outside – definitely EPS align to I higher be year. last that closely. so we'd pretty to And of to expect think

Noah Kaye

Okay.

Just In sure. terms of making absolute levels?

Mark Chiplock

Yes.

Noah Kaye

Got it. right. All

megawatts on So in in ago. the development, the significant solar XXX solar months – assets three of in question step-up a had development you

XXX have megawatts. you Now

you How So versus acquisition much organic the what completed? step-up? drove was the of this

George Sakellaris

megawatts. every of this out because we're quarter. good that's new always that United did acquisition though the over established, maintain. performance have it that in The a fact had two and that even year, XXX that's is had. they organic, each across States rest about company and And the was excited of we of and add enter Actually, is Canada speaks the pipeline that question. will we why all operate own, very platform is the potential, they assets last did we performance. in and unit The That what we that and they the only And megawatts great that development tremendous though, about their a

that great are head own. will and we asset deal. Before, investment that expand that very are also biggest To very... it's in which making, capability the already. happy And feel see the that – Northeast platform, paying would about us we it's or will just And And to to our particular good off it federal achievement we across are If manage we a we doing we we very helping. glad, have it, and me, we help was quarter. this

Noah Kaye

– add Did yes. you organically you – add

organically megawatts of You added over solar... XX

George Sakellaris

That is correct.

Noah Kaye

months. three In

George Sakellaris

Yes.

Noah Kaye

to And quickly remind your we that so us in pipeline, to times be solar a service? before, place Craig's just for you can similar just what need understand to online, PPA can XX-megawatt you this close coming convert to project can how checkmarks question you to there add how

George Sakellaris

And you later you likelihood probably project RFPs will go of important is we a with another that PPA the disclose is make York put or the intent most those over And know, even that – there so we on going to I that to the particular we is though associated a even it as particular I difficulties the know once to be not that executed, back that, couple Craig's of agreement the that has know out business who in into come put New why rights with the been we particular here's likelihood name. federal is it. sure land. might don't plants PPA will unless is that a have executed, terms though – utility. one the there And won. are well, the XX% a of cannot but customer and them of the interconnection letter into of backlog. as we The green with RFP. development. reality. And feel too, I on, this comfortable, over far the PPA, didn't Anyway, might a get the that's customer many is we excellent And going then a is question, XX%. there, that we want a put ahead the gas that But one a to couple utility

Noah Kaye

Okay. a I guess related question.

capital the XX% energy pipeline, this up leverage, $XXX few trailing requirements Look, consolidated totally to fund flagged debt next to now over You X.X understand expected million of asset XX-month And comfortable times. presumably, a the years so debt be non-recourse. non-recourse. are to what fund have assets going is to new consolidated benchmark, prominently in level just leverage? we of But should terms you can the energy of

Mark Chiplock

mean, the us. think, happy these we as Yes. I I before, said mean, as will leverage – high non-recourse. we're think We're continue I up no, banks to assets I to as allow

their I perspective, they're checks to our from of as But from by have as happy high manage in we them place to think, we're can. up obviously, balances risk and standpoint, going the lever own kind there. to a non-recourse

George Sakellaris

the assets, And what ITC some the Yes. we thing that the the equity you the that we remember, Noah, amount amount. some might landfill in have And asset of up, own dry come particular to we of we that now. I very for power, equity, depreciation assets this the so the on assets, financing solar a put call, is small monetize accelerate do on the with and other this as that have sometime

portfolio. on been debt need I and And some of we them will some debt and off, we be to them. on has have our to, them Some And if debt growth the dry continue put projects our of and road, down able accelerating power otherwise the zero we them. paid asset call and the refinance might finance

Noah Kaye

color. ESPC very the And last then just business. That's on helpful Okay.

down a in that revenues can the the basically the year? your course getting over year project-level or year. bit were for is you to around of in you're us before think terms versus And XXXX? needs remind just an out But up of what assumptions little full revenue I the happen what guidance

George Sakellaris

million have that of then, think $XXX we from we large rest executed projects the $XXX development like those amount that's you and I to expense. third about – said, associated get they to that they in And And revenues. because soon contracts million projects, assume be to revenue coming will sometimes, a the quarter. about the a million have substantial project. come as in the that they the awarded as capitalized And they into will have year, are particular then then, addition we we to with executed, in awards. that becomes but of will think of that, part convert time We million of have from that $XX pipeline, projects $XX the short period We

that And come. some will of

the remember, think become If energy might awarded. $XX three might or we you backlog a $XX project. and we And the showing have two we have have the that's do project it with conservative negotiate scope the at audit customer, million after a we that in as million And category. detailed projects

scope know So customer within project particular we the will it's pipeline. has it. the negotiated the It's a once We even with the do awarded, customer. not say we in it's that that of convert though been

Noah Kaye

very helpful. so you That’s much. Thank

George Sakellaris

Thank you.

Operator

showing further further George remarks. like at for I call Instructions] Sakellaris back turn time. And this am not questions I over to [Operator would to the any now any

George Sakellaris

the Thank and growth strategically year you, company this in is about conclude, Daniel. To higher investing coming years. the all for positioning

of all enable to advantage growing investing are the regions to develop of expertise our take markets. to We

operator. Thank the in call to QX. attention turn I the Daniel? this now back already We seen are from we initiatives for highly your you encouraged will these as morning. have results

Operator

have Ladies today's you and gentleman, program, you. you conference. wonderful today's your Everyone, and This in concludes Thank a disconnect. thank may all for participation day.

Ameresco (AMRC) 1 May 192019 Q1 Earnings call transcript