AMRC - Earnings call 3 2023

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Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Ameresco, Inc.

Third Quarter 2023 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the conference over to your host, Mrs. President, Communications. Vice Senior Dillon, Marketing and Leila Ms. Dillon, begin. you may

Leila Dillon

and afternoon, you, appreciate you Thank We joining good call. everyone. Howard, today's us for

me Officer. Executive Sakellaris, Executive Joining Chiplock, Senior Financial George President and Mark are Chief Chief President and Accounting Officer; Ameresco's and Officer; President Vice Chairman, Hole, Vice and Chief Doran here

All our language Please materials make Slide for statement earnings refer major regarding expectations. cause from to forward-looking Before materials, I to forward-looking today's of in statements results over discussion regarding and brief the risk call forward-looking statements, filings George, I statements statements. safe SEC Today's to actual a harbor uncertainties. earnings that contain subject could turn differ our the would forward-looking on our factors the including X to a like risks to are remarks. our and those

several In results. addition, when we financial use presenting our non-GAAP measures

to information. in included measures our the have financial reconciliations supplemental We these

I George. will now turn to George? the call over

George Sakellaris

Leila, our and Ameresco's backlog, visibility in in our backlog of anticipate Thank million gives project project $X.X in total our our with visibility the ended increase sequentially compared revenue $X.X we up of impressive long-term activity billion proposal which to was added year. operation growth. levels. with together profitable billion, supporting XX% new and more that the and last of bringing as This And last grow an over awards total good level. awards will multiyear energy XX% quarter double confidence new given We continue We you, us remained to asset year's quarter year's $XXX versus record $X.X year-to-date last a afternoon, awards in everyone. XX% billion, during the than

quarter We did, results. third which and our face challenges, however, company-specific impacted wide another

disappointed. very are We

with made long-term are We the momentum. in progress we've our business building pleased

and construction. last of the at XXX over increase XX% of This added development from XX megawatts end with almost is in XXX assets year. megawatts of the assets ending development quarter a in also in megawatts We QX the

have we others prospects contracted industry want implementation long-term the the of In like experienced into any we chain on customers supply that are with tightness seeing awarded on project face certain our being industry, of just did to to delayed projects These our delays been are recent labor And note converting sales business, It's our contracts as the a are some awards longer when Projects backlog. never cancellations, have work. well longer the cycle in in I continue challenges. we taking better, to to cycles actual as important comment While some components the to moving of as lengthening not contracts. also market. in proceed

considerably that important weather than industry-wide of our control, as faced Our greater been at assets, our of bottlenecks. all a as well anticipated. energy quarters the well, been as downtime component biogas It's by has than last profitable will delays labor it's factors have built. as some timetables conditions these of keep including always assets administrative both, out delays larger, longer by to of development plants plants structure in interruptions. Driven stretched the have levels of adverse these business just our over complicated as well downtime and for taking assets be as of incurred RNG. and our especially budgeted. such the asset result Where frustrating, more originally construction we utility in have few challenged are several shortages The asset some and Again, mind

at we all are units. and to of our and operational scalability the company more optimizing good structure geographies the across uniformity business As as bring grow, to continues more

Further, more conditions our execution and increase to changing project increased with market drive increased on assumptions more during and our focus quickly around on continued revisiting Doran tremendous impacting the changes these are making generation. have his backlog, efficiency. guidance. will light are execution, our our cash project to numbers flow details industry to we in to of financial the challenges conversion provide We of And corporate and review. some ability times we react

However, to these substantial even future. more is challenges, 'XX with expand in growth highly we beyond. and be and our Ameresco wouldn't we optimistic about profitable, continue

and turn over the to call our outlook. I to performance will on Doran comment now financial Doran?

Spencer Hole

and everyone. good afternoon, Thank George, you,

second $XXX as the project financial Total revenue. slides refer information, the below were asset delays the to closed revenue our release please additional supplemental market was after of and downtime million press and For to site quarter today. that expectations, posted our impacted

as higher lengthening greater-than-expected revenue revenue RIN offset facilities to to was operating our contracted a in our supply benefits backlog year These last by some in number due asset particularly online. to to project issues the as industry-wide cycle X%, awarded converting that as grew impacted downtime assets greater prices. backlog continued well extending new assets the construction lines. Energy of biogas as as as well of helped delays chain compared well at bringing time largely are Our

delivered generated results. driven the at seen overall did meet within years. downtime our expanded our solar change want for EBITDA project I emphasize million quarter. not as as of business. we impacted has off-grid Our of expected not O&M other margin any with our consistent backlog the in I in another least been stable mentioned have end mix project expectations X but our fundamental Gross We X% in to adjusted business $XX.X the line margins quite gross at that to business softness by experienced while slight margin revenue our a just quarter decline our growth, XX%, market and

and XXX for GAAP the we'll favorable a us to to customer. to all deduction $X.X continue the customers maximize benefits legislation. of take of results allocated the tax as and benefit our our a Our a tax part include To quarter of other Section related IRA discrete prior year of available advantage million from earnings,

remains revenue as Our strong visibility ever. long-term

we of year last As the by with alone. million this George and billion. an over increase project quarter awards a total new quarter sequential backlog driven versus a $X.X record of during XX% winning ended impressive of $XXX in XX%, This is mentioned, project increase

operating revenue both together a O&M our Our billion future to as well billion, asset representing lifetime $X.X with metrics, visibility revenue. contracted give estimate as visibility R&G Ameresco energy of These is of conservative over $X.X approximately uncontracted revenues. backlog

assets of not Importantly, a from frame these energy has year the recently simple contribution facilities. include assets increasing under XXX Unfortunately, construction. in into be time to such equipment for years small, due this does timing X-plus this RNG assets assets with more of anywhere more megawatts The revenue as and labor development along and operation been can any delays. to from permitting for complex availability, placing

or However, on high placed our sheet our success balance conversion sale into third either through we rate to with of approximately continued assets, a party. service plus a energy XX% our monetized of

We to continue business to will industry, business. of as field to higher us many gives Compared energy flexibility diversity Ameresco, changes relates the the inherent rates model how to our questions environment. to in our asset interest impact it the many adjust business on especially in our

then or risk-adjusted if levered the and project hit sheet operating the profitable party as have sell hurdle our do assets asset on and to We assets not an to to revenue hold IRR third our either energy develop optionality rates. them a balance recognize

part own not assets a asset hit hurdle to return some not strategy with for buyers to assets may well often has is they're of been O&M new and attached an for through such their This profile ready recycling While rates, as model portfolios. many sale come contract. would several our the flow of our business within aggregators our cash asset sales energy years. add Ameresco And

with O&M in us our to in of and technologies asset believe flexible to corporate a high deployment we end, rate business from continue allows project, the interest clean the the even rapid model In that benefit environment. growth lines

finance growth to excellent. remains our ability Our

During we total billion. over quarter, billion commitments over $X to our the $X.X bringing year-to-date in financing secured

clinic our continue Ameresco's we particularly expansion industry portfolio high-quality spreads experienced be has of financing, that credit for at and tightening large to While in asset recent credit spreads, stable. are pleased the

debt, through We of have for attractive number project growth financing recycling of equity sales. the capital including level tax nonrecourse a asset options our and

XXXX recently our XXX expect anticipate year full assets we to plant in megawatts million XXXX XXX EBITDA $X.XX acquired Los all XXXX, service XXXX. energy plant. and to X-megawatt our project completion third of and earlier. early RNG by year revenue, commissioned and the the now RNG our the including billion, detailed between adjusted microgrid to second mechanical Alamitos which at the end at be is items We response and for and expected A EPS adjusting as described We of the midpoints fully in in are We now in to $XXX release. be guidance approximately $X.XX press place of

be full year will detailed providing our and in we guidance early when results, to opportunity target want full XXXX we take this of XXXX. EBITDA quarter XXXX we we $XXX while on to our comment adjusted which million, originally year provided fourth And report

EBITDA want that and framework asset has bolstered results adjusted of Operating XXXX target. growth businesses, to be further clear expect is lengthening compared I been internal represents in it impressive none our energy the the remain approximately sales leverage we long-term top fits in mind opportunity XXXX adjusted being new expected and make our this level of It just million. the and Given EBITDA growth in delayed. And by EBITDA this cycles as construction our OpEx plus on now still diligent adjusted of $XXX the adjusted project XX% optimizations. could we our lost. EBITDA remains to still

call to like George comments. for I'd closing Now over back turn the to

George Sakellaris

Thank Doran. you,

in never to headwinds, call, discussed in redoubling quarters. future and our flow generation. some its this on profitable growth execution we detail while our long-term face success And opportunities The forward we bet. look focus continue in have we have As during cash is to been company detail

continued to thank customers once and closing, for employees, our I their would again support. In like stockholders

Operator, we open questions would now. like call to to the

Operator

of & from Co. comes Instructions] from Our question Oppenheimer or [Operator first Noah Kaye the line comment

Noah Kaye

sense us When the energy to off what essentially you commented bridge if look a of as we I could $XX you the could -- at difference the revised Obviously, components to bridge, between main wondering walk help as if the quantitatively of helpful. I was the really million us were you and get that of start and But get guidance. can? through prior EBITDA. kind both just be would the sense projects assets. you -- Can -- trying in a

Spencer Hole

to XXXX? Sorry, no, clarify, talking you're about

Noah Kaye

Thanks No, for actually. XXXX, clarifying.

Spencer Hole

contracts ramp So the it solid of just I awards QX. we to. conversions execution XXXX the relied in materialize and in expected foremost, point the to way really -- that is That think first happening on and some didn't

as you a you've this And expect. guidance result so push as before. And to kind right as might do we've adjusted us of of the seen to things probably that,

through of relatively as contracted half But then and we're had backlog. we executing was just kind in the that know revenue I want with delayed high performance. contracted of of awarded there our large think I higher-than-expected we detail push second resulted QX, 'XX conversions And amount the that? guidance So projects, things on backlog you into out. I that a more saw think one don't being any to several the the go beyond that in also

George Sakellaris

Well, of contributed assets as to the that well. operation the

Spencer Hole

operation. at That's

George Sakellaris

Yes.

Noah Kaye

right. right, Right,

So not detail. be and half and possible that going whether half say it that to not you're able provide to assets to sort was of to going projects

that's Understood. firm, okay. a Understood. think I

and flexible the a is in leverage levels? You about And and about you benefits model about just how financing? earlier, recycling quarter. your thinking But the of mentioned this to for here thinking good securing ability capital to capital capital might soon bit of capital. plans talk be that a one amount occur? you're wanted how You the little understand recycling mentioned how you're already around of Can

Spencer Hole

this as that look, I we part model business the that of is really assets. will that look designed think So was sell a to reminder

these bit IRR through I assets challenge levered take way with make that's targets the of And about I their we a to some think in rates, know, sort while in the interest and quarter, something to as that you development talked see higher of as little of metric operation. have. into last a asset we're starting

assets What ours. lower that we on around we that So kind for and we experienced the hurdles than work of sales rate. preconstruction. is some agreements market still assets return the pressure entering those interest those found will And into are as regularly turning exists with on

going So to it's looking would that's more that kind converts development, as it's while you say say into as dynamic go on good business we forward. for us if such as I line. it be in for they're to fair project at opposed of still business of effectively it a it consistently to distinct kind obviously a

Noah Kaye

question. one last Maybe Sure.

George. Sorry, go ahead,

George Sakellaris

we No, in projects have that's development. and -- still development, many so assets

quest. so refocus development. so on the an down gives the to backlog rather more it's of monetize least And at big, we growth still this opportunity at The And it to ones per looking internal recycle rate opportunity generate And projects project a the than hold. we our -- is cash. So as XX% why the will interest think growing the assets my hold cash we generate in in year that's maintain to to outside. that the about good go target to large, a ones -- build out the road business from of environment, some I we

Spencer Hole

assets And customers. hold expecting developing us a We're if aren't the still want keep. to market, our for time, amount customers, the same good our target. staying to to we're at stay that least in in find it IRR growth a there, right? we're -- basis the of non-recourse returns continuing and right rate mean the the financing on front to assets. on of mid-teens I We're our we of Yes. that we're staying at maintain front in we And allows

George Sakellaris

don't And our sheet. way we overstress that's the balance

Noah Kaye

lot I I offline. -- know of a take questions, but have I'll you other them

You get to. lot got of to a analysts

Operator

the comment Stifel. Our Stephen next question or line Gengaro of comes from from

Stephen Gengaro

you've the seen handle makes we guess of to you've quarter you I look into those of big gives start and out this traction on you When gave challenges issues realistic? we is, confidence picture your preliminary laid you 'XX, kind kind targets So the my about get the what XXXX. about obviously, additional think when and kind that to momentum which and question think of

George Sakellaris

all to that basically, for foreseeable And Well, we that's we future. this operate, took made. will happened we And we into what us that conditions between quarter. consideration the had us, particular not mistakes the for these assume continue of

many, of a the We the get we got in timely couldn't quite by of we X were our used we of And lot the many stuck in contemplated. start just And fashion. said had few but a applications. to as them, permitting. overperforming bad labor the the the in quarters, don't let think get then implementation it's projects -- see. thing of us schedules. ones a a weeks. nobody executing because to than a X, across is I couple the guard not it the the then of surprised first, take projects, that couple believe little realizing can awards we we And not couldn't other some I couple became extension the that that and the right shows that review contracts a of down administrative even materials. up face, moving we some we though first more It On when months X takes a you to the challenges because It

are about talk give the we to when color we have a into marketplace. and the what's now, 'XX good why a we feel detail that's will So the end taken -- especially right details customer in we on this that's because that give project in we I very afford and we and feel that more it. pretty time. the account on -- that our and we level at year, we project of that it's But we the and And -- point now after the XXXX why think bit the execute more feel getting can business going it's numbers happening backlog where point and to good little

Stephen Gengaro

but like you can't those into kind versus think things way And of a sounds though what -- control that expectations are it can you accounting so for like feel this, it? control that year. to Is next of going reasonable about kind you

George Sakellaris

very, panels is in time, this future of And very this done we I the comment, to by everything just, electric, that -- be bottlenecks now. been going very But we in on we're had obviously then to we with happening, pack. we that's one They're trend is a longer thought the -- you bit yes. little have And only lost. where said and taking our bit the on business all projects transformers I a with various It's about thought as the on. what a supply what it I in beauty, the not moving good. little issue chain on metrics so the of get built manufacturers electrical especially why we the be equipment we think, business. and the been That the that control we've execute my And at or pace. of is of slower feel are stuck and to be correct, good will and long honest capability that guys, It and side, just there,

Spencer Hole

have margin. lengthening to the focusing prior OpEx with OpEx of we of been the still had It's come generate executing this generation, still our vendors these backlog to just we're with a that kind on control with in And the is continue suppliers Steve, our we're adjustments customer because importance toward going cycle. the We're few and a controlling earnings generate. that contract of derisk to frankly, that. expect here working to contracts execute we've working to the the of our of for to EBITDA And projects you're and some bit that

Operator

Stine from comment the of Eric from line Craig Our Hallum. next question or comes

Eric Stine

number in things on mean was headwinds? projects, I just I larger the those I it mean, is pretty something that just So try to it's little know understand that more, this a are supply intensify? greater bit in a dig it impact you is Or just the here a challenge. back want issues where you chain been the to labor, had you I consistent half to of of contributing to where saw year counting from a just

George Sakellaris

at Especially of going you the whether of scheduled or and contract happened, She workers projects. say the Great at all the already this or site exactly some the especially so up do question. sudden the key. that a and qualified bio larger site. what it's They to XYZ, were is get show that's work there contract, could this to now

them of we'll vendors XX X one sometimes them X And we out go some qualified. and to that And will of get or to responses. used RF with out an XX even to is you not find

So original a it's concern. labor huge become has

Eric Stine

negative Got it. your area And interest mentioned you having that, the thing. had But sort -- you where the can project then, interest of is I great permitting that say, simply higher tangible -- rate business. mean impact, in mean mean, is and impact? business you've growth this I a that of I rates

Spencer Hole

Not really. No, no.

on really haven't We business. seen the that project

Eric Stine

Okay. And then...

Spencer Hole

think go yes, ahead. I --

Eric Stine

you're at of areas. confirm, right? that improvement you're through these just lot I in just for $XXX not out expecting going to say, stand in XXXX, things the expecting areas, the than about to so XXXX You're early No, anticipating status improvement kind necessarily there's that from was million look these really playing a of talking rather where that now, quo

George Sakellaris

there's due diligence That's a And what we on that. did. great Mark,

very You think we comment. and try exactly we represented make and do But can accurately. what a to have -- that's we

Operator

the or Blair of comment from question from line Mulrooney & next Company. Tim Our comes William

Timothy Mulrooney

acceleration? revenue your of more the XX% you third the in midpoint ramp things? still primary I at guide. your a at up factors or think, it of other Can quarter than is I from to suggesting, on talk midpoint. collection unbilled contributing is sequentially, quarter Is guide up revenue, SCE The the XXXX My question fourth nice about that think,

Mark Chiplock

projects we're contracted revenue deliver like in mostly it's we currently are It Yes. the backlog. seeing. contracted. number assuming look QX. Tim, with that little the revenue. good mean assumes that Mark. It's a this the But active into on take we very we is and that, working on to it's awarded consideration we is on, -- we took that slippage a execution feel can I at have contracted our And

Timothy Mulrooney

just follow-up, what being in just expect or it's My a carry administrative Okay. issue fourth bottlenecks talk you a ask that I were more into wanted broader little they or about detail you that a results. quarter Can those about the quarter X as you specific will if were? listed third factor If X to to beyond? and projects the impacting

George Sakellaris

gas it's connected a Well, got I connect are we renewable. that there not of or they that the were to We solar out before plants was the somebody didn't a were months because project of whether know plants the that the built delayed they review applications. the we when assets couple utility. delayed goof some I The to think in, X were get because

that about So that months. delayed for X particular project

Mark Chiplock

impact administrative we that And that to to towards the see delays of the with some of We contract. timing felt convert. in the end the I are started awards really QX converting that impacting QX. think It's bit really really we awards expected something little to a

to to so that and through do all pushing just the are question, yes, as right. really your expect QX to of kind And out these continue we

-- So in taken our guidance. revised we've account into that but

George Sakellaris

it many of our back what impact has I think implementation turned fact and in does that Say the other the everybody work, is to happened, it work, people.

Operator

from Our Guggenheim. or of comes Osha the line next question from Joseph comment

Joseph Osha

and it's a X.X might million little the XXXX. bit XXXX. is beginning of of shift your cash that debt-to-EBITDA. quarter Xx new any I in deck we're figure where business The guide, if generated for hasn't it's you XXXX generated And the at business on about in flow since even your wrapping here. $XX free debt-to-EBITDA we hasn't lot a I about current since nonrecourse. likely generated at standing annualize point out When QX, stand But we look you then gears and now

does how So that XXXX? into thinking energy what can in cash? about the about as this I'm generate we business I begin the asking, go we growth just to are point guess And at assets business you talk But here.

Spencer Hole

effectively right? out the we we've first the thing work adjusted of was cadence cash is As if necessary to is have determining we that with out advance the pointed point nonrecourse positive, Understand under not debt. metric cash our Joe, leverage operations that's talking higher on as numbers to a catch yourself, about, up investment EBITDA rates that you're the Okay. about, need that when from you operating discretion talked I'd that the flow. used asset multiples

I all think of on therefore, point. those can agree will think that normal you looking end we higher would what about kind from And than up figures corporate credit facility.

As that, flow I discussed is far something, and cash as concerned, think this. that we've is

to is talk start We the are going cash assets. looking how we what being history much like company's at invested versus looks into be can how to generating about that and of

of debt speaking, other kind a getting remain broadly the would our to quite does about own wrapping on bit corporate overall down operating used I of projects so-called actually cash that those However, bit only a is We've and of in. basis inflated that -- the the leverage say cash delayed the the the flow thing it up, pay debt.

I And bit At much in address can terms more a facility. there I this kind will show know the of coming it, so of your to of got kind so project, question. corporate see call QX-ish that to help of turnaround, say delevering how the of out unbilled that the SCE we've cash you'll don't us stage, quite

Joseph Osha

the like are and solar of cash generation. guess, that this and a companies residential these And kind flow lot been of question on second of follow-on, you businesses. of of some debate I the same kind And just some look, is the question. a Sure. comparable going -- has to part the how It growth you balance it's

about point George $X just you or I'm the versus maybe we're and when of making view cash whatever trying just whoever, of you or return shareholders. you're capital guess is how underpins ultimately or say, the company $X a billion philosophy take maybe as growth here generating I a company get to ask to flow going to sense decision. different slightly that think a a billion So there we or how it's a I'll to okay,

George Sakellaris

assets focus higher part philosophy, issuing the interest addition which then good the the the guideline internally new more the why assets in that own, O&M, will to cash generates monetizes that's of business, retain I than and rather all environment. and a good company. projects Well, why not to cash we and this stock, from especially want flow all of That's asset it generated develop some flow. we in think even very flow and finance And basically potential comes we going will that using invest that it delever assets be of to forward that we generated will from in we that, cash to we all existing that -- project

Operator

of comes line Our of Bank next from question Julien from or comment Dumoulin-Smith America. the

Julien Dumoulin-Smith

following Just on a here. things up couple of

by roughly an mean, And and on categorically, thinking track? that of XX% on look bringing want higher 'XX? back and then time payments maybe more this -- we down rolling in 'XX that 'XX? think then view about there you are Do First across the Or a of 'XX the here you also cash. off, track?" to into needs the to get [ -- on to forward the line little up kind how here capping do when is we're "back that do get I here last kind 'XX? forward of a you ball ]. you as think line play the about the batteries time is catch-up and payments on for bit there Or these here, clarify things element on about SG&A? just clean to up is that back get there other OpEx to projects Obviously, there on where risk any on And --

Spencer Hole

talk in OpEx million when to answer, grow will are with view this everyone don't for necessarily cycles, sales as the to under periods the grow far remain don't to continue the we into awards X I grow. going control. look the The beyond, We've shortage and First we're $XXX in time quarter, is catch-up Macroeconomically, the We the market. in in door observing company. -- to year. the watch you had what issues obviously, our a right? those. lines We ] labor at about OpEx new understands no that in order to is future. respect [ the come But OpEx. on the this need construction don't stretching got to XXXX detail that business the The or cycle are

the lines necessarily of However, still really trying what grow and amount compress that's doesn't potentially our awards to. to get overall at to continue to mean growth through, is business the XX% EBITDA, the It IRA of kind we're of those that year there. per time need coming the to we

So that's the response.

First, we got basically, people hit that's we've can respect see completion contract the terms public, SoCal, that's to with substantial when in payment that. XX-day

So can there. first of Julia. about of while half a deep being the we're not X talking completed and in flows, about the in the We're projects year QX that assume from kind then project into cash those of third in forward you one detail going

Julien Dumoulin-Smith

relatively a time mean quarter-over-quarter confident guys are it project here. have of real like for the when the you mean seems line-wise that this And has Right. new sense are I materialized lines recently. just we time I here, push?

more of how depth these specifically the be? if the RNG mean, of lumpy considering it, like how I larger you here, curious, and can Just bit little you speak can do a delays they projects to know some

George Sakellaris

we RNG so X projects, like And would have to X- a to other the just schedule. X construction, pretty have I much. then in projects months we on delay the what say to we far X-year say mean construction that from I seen

not construction, were $XXX air we're X happened. because and work somehow, in looks that our forecast. that on the plane, deliver with Projects but put and some But the the million-plus projects. of sell revenue is X-year years that it our why to stuff stuff in target And we there, and this things particular is But in the lost. on that's comfortable that X.X Wall incorporate delay wasn't North I on of as we that. business it I much is they loaded then didn't like feel We'll think try the to million XX% we And felt into and get particular and the to EBITDA of growth, something be into more it we project. Now it all almost right, lost equipment base. happen than think to have to on a mean I doing way, a the will very construction left that done. X-month the that's part

Operator

Our the from next Gianarikas comes George of Canaccord comment line question Genuity. from

George Gianarikas

points. hit wanted I same just on So to the

don't the And think You call? heard call talked I on about heard think to that you that interest that of what Is in mentioned those during Is are rate the delays changes the you any contract conversions. I that delays we in related the regime. correct?

George Sakellaris

correct. is That

Spencer Hole

accurate. That's

George Sakellaris

correct. is That

George Gianarikas

So can explain... then you

George Sakellaris

nightmare implementing just administrative. of bureaucratic Some hand, on up then in is show of some of X/X other getting tougher the the million, or It's tougher. is do them, and them we're The the getting of $XXX that federal more -- even don't them Boards or contracts. they're next But people meet the moving fetal contracts. award that them is getting stage but

George Gianarikas

that funnel where just up? function administrative converting as backlog contracted. this project have and delays showing of administrative this the when project issues stretched delays somehow then billion, conversion strictly to to awarded So it's that the you now impacting It's well? are are is from a of just $X.X top Is the that just

Spencer Hole

of that's schedules time lines material certainly, it, administrative labor George based was No, of the are availability. construction project bit time contract, and the adulation just and execution mentioning out the really on the side the delays the a lines, are stretching what post

George Gianarikas

And track, months and more it's XX to have of contract, is now that XX to like slides said months your XX this you one the you -- right? I is on XX think so

George Sakellaris

the will I question than... Mark better answer let

Mark Chiplock

administrative I mean what large but contracting delays we're we range, in still But awards dragging them seeing the have been talking of one mature every of are in about it's that process, is not and award. that -- of our out. but these more kind stages are several we've impacting

get we taking that active to is So workforce a into had it's several to projects bit delays. where time. the overall, materials and worksite. to have that seen on but And to that the made average, we're is to all get convert little other once need get next large starting mobilize, they the expected really that period contracted stage we That to implementation to within we've points longer still we've get construction take the range been then of

really kind it's all then causing the push. is ramp-up So and of a the of stretching the implementation, between conversion in the lot which

George Gianarikas

Okay. just a maybe And question. final

our RIN R&G prices some offsetting unplanned downtime at mentioned You of are facilities. the the stronger that

what's ramp some missed plan X those? can monetize you Have monetize an downtime? as your opportunity to anything those outlook, how you in the surge share recent the any based here and on RINs wins your to you on Now back, of you

George Sakellaris

that next well I today other used And about was advantage the month out, month, what time would prices, this for did last our but for point months. the of old I started taking the say. got prices of We the now, been guidance we with it's pretty the older. And merchant. production what had Well, and right in to We year. the for couple this -- year we're and we estimate, year as RIN the market and the pretty about left of think is optimistic always we have calls good I been reflected I now. as XX% probably thing were much monetizing it are last one mention RIN right We've to of what prices 'XX. year And want

Operator

BNP the from Our comes next Sutton Paribas. question line Moses of comment from

Unknown Analyst

what the to months there's It's in margins growth first return at do X think EBITDA for real year-to-date. Perfin in about table. I project business? not you I noted growth should when how adjusted you do cash worth, question, X% it's for guess order first, the think the And slow like

side closer XX% on mismatches How to due on I we delay? that this of inflation? certain think Is of think do it EBITDA? typically. due the this Is to project to

George Sakellaris

but so are mix, And are of typically a the right? it's bit a function XX% be projects function at mean margins. that that to of it's mix high, the that of point think going active the little impacting that I I sounds Yes. a when you're year-over-year, comparing

to closer been think X% probably historically. I we've

our and have some recently off that So profile, have of I margin been expanding. not though mix margins we're lower more again, a little seen far we've think overall bit -- even

of far kind of So margins our where been. I not think we're historical have off

Unknown Analyst

a it. or so RIN certain XX% Got talk helpful. peaks, it. hedges price in delay to actually on R&D [ that spot year projects the That's like I that the RINs at about And you sit would you the the the future know Is topic, Got a contracted. prior. more roll XXX than the Is expect projects the of in typically on then already offering next the XX% have basis B as I -- spot spot you exposure higher contracted guess as XXXX contract RINs you embedded near online DX back ]...

George Sakellaris

point. very, talking a couple It's good very of now. we to right fires Actually, are a

couple not We prices with couple we for That's on, higher the have that and of so into year long-term had, a offers about a contracts No, more table. to question as on X feel of than the it. might will we we soon say, are forecasting why we And what prices with prices, much ring next entered a bit couple them. let's little we the at execute looking no, it. years And no comfortable as we back. contracts enter

Unknown Analyst

what's in years? And of considered long now helpful. in terms very term terms That's tenor of --

George Sakellaris

to XX up have years. We

Operator

of comes Grippin from comment William UBS. line or question next Our the from

William Grippin

your maybe more you structure sharing financing hoping and there to that able with you Is costs is something is a First that flexible that, recently might elaborate on? question, understanding be that financing? the a color could that to My to around return little component announced actual give you're RNG just

Joshua Baribeau

Baribeau here. Josh is this Folks,

interest fixed amortized. achieve out. cash initial of it gets loan their that, and after So until the a internal until it's not bit variable. How an it is cash on then IRR, of works rate And rate sweep component is there's they a return a investment

William Grippin

for to on able that effective disclose the for what you? financing? -- the you rate Are upfront rate is guess, The actual is I you

Joshua Baribeau

and at Yes, rate. that's accruing in that the IRR X-K, we're

Operator

B. next comment from comes Souther of Our the line from Riley. Christopher question

Christopher Souther

visibility cycle with implementation, this I for to the have. With and contracting being back-end the loaded year, extended going awards more much you're we're think

think is So when on . just and of the that like of visibility be I'm just of backlog visibility more Or we you kind visibility thinking year? the that as full going about we kind there's get [ contracted on you're how my for curious should awarded maybe today XXX ] kind wishful kind the of consider lot expectation guidance of XXXX, the a about kind you on do that to enter hand how thinking

George Sakellaris

relying going have year than end quarters, year be the I impact more and to we're else pretty and think going of anything this are. where contracted and big we to and invest rely we what more contracted visibility, and at the especially the We're good couple the gives attack on we that not we're we much. of last have as for not the did where

Christopher Souther

that maybe be will Okay. Like Is specific you're particular all sector you'd there? solar, it at it you in RNG? batteries, development potential of any what the the then the of areas project is looking kind sales? on seeing And project, sales. Is for Or above? be there focused potential on kind

Spencer Hole

really I RNG. think not

I and battery, mostly then certainly of the I that and multiple fact the on think some I of solar battery it -- markets, past to in solar, put about those us markets. said, continue given to some think stand-alone like hybrid we develop we're wouldn't the

merchants might markets those than of Some have we like. more

we'll And work of so that. projects NTP on like sale therefore, an

So I the along think more those it's RNG. versus lines

George Sakellaris

And or longer returns. projects, time. to they simpler But have they better with better return. they the a And then process. in a savings. no bit we have then the at sell even just is the ones a receivable little energy and get option financing the assets, money time, It have everybody them. I we that question RNG remit with it's rate this assets, and want point guarantee takes returns complicated, the we end get battery we It's different day, than the at about assets no whether and probably and monetizing contract. it. of of the understand generally, are This the and more sale becomes the to developing then the keep solar then Basically,

Operator

Raymond James. Our next comment Pavel question line from of the or comes from Molchanov

Pavel Molchanov

of about X core ask A I'll questions business. commentary lot domestic about the Europe.

any First other issues permitting are the side your supply complications the work of affecting Atlantic? chain all, the on of of any and of

Spencer Hole

first and was there sites, one here large I bit The -- you to in respect sites. but States the availability little we've week of of materials. seen one So will labor visiting last coat not I a to because tell the the United been that that with the tune there's

top. in only I we Delphine on -- think XXX-megawatt had of variations still kind is slight that that especially the time Greece, got associated there. with project we've along we've line on And that cruising that

I and awarded materials the some on where we're think that -- strong of new them. those on availability EPC Expectations in for Europe projecting the on wins category, side. of many So there what the still and which in jurisdictions we're of in labors was winning remain projects

George Sakellaris

the not City has good and contract council that even to it we didn't than particular we is U.K. goes projects in approved thought. that numbers everybody there, projects, those the we projects, city us. because but longer margin wish considerably And exception through was we getting have. only Bristol the the by And have approve take and lesson -- else this for the that a The

are will approved going have by we're to what much year. next are and we build year of going Now them be have the the incorporated to identify projects what them pretty end emit monthly and this maintenance the doing word

was one, Again, thought else, as that far and as administrative, don't because or what it So anything boat they happened. do we actually want we to missed but... the possible not what it's

Spencer Hole

cycle Yes. and awards. of conversion the Administrative about just of that's

of we push not anything that not in It's guess awards a the to change activity construction I any scope the and give... the is So a furthermore, of actual right. about

Pavel Molchanov

prospective issues, have Okay. opportunities come -- macro you bulk there context, for that you this Clear. on In business on down. Staying theme, I M&A via more the European to to imagine your are of with seeing multiples M&A? have that the up some year,

Spencer Hole

so to we're agree knitting yes, have would are forth. increased. we're on still We're for today, what sticking that anything about to we of look of seeing in and And and specific talk has -- interesting with comment. valuation looking don't fit, again, We we opportunities so very But our management but the your Yes. number opportunistic. financial terms

Operator

next comment from comes Davis Baird. question from Our Sunderland line of the

Unknown Analyst

deals and SoCal been follow-up component to have the about already wanted I and visibility expenses been some stage the is projects have to my Most Similar just asked. questions possibility with lack or there other contracts is, any ask, that recovery you drawn these of labor these now in going of you've given associated that in variables forward? in how of done the out? of contracted And past? my shortages, thinking are the

Spencer Hole

Sure. Yes.

So sorry, got the fuzzy, David, I a question. but little your bit is I line think

So force we contractual the on that's or don't necessarily slowdown that. when general the and for can yes, first have costs numbers though. availability claim delays, you point for situation. course, a back force of majeure Yes, particular a certain or anecdotes -- is always I But is of labor, in mature, for something actually not contracts looking generally any created general, by

next ] looking effectively forward. is of taken considering With number and XXX through -- respect year about the happening we've remainder talking what thinking [ year, about into to in account cadence the going of construction in the

the As of awarded typically at or lose backlog, backlog we the talked out don't we backlog. not contracted business about, certainly contracted

the to out push of kind just things slowdowns, are there if However, right.

you respect with and So we've we've to adjusted to numbers presented basis today. all on cadence, that expectations

Operator

of Wasikowski question next from line from Greg or comes Research comment Webber the Advisory. Our

Gregory Wasikowski

trading energy stay for to if the prospect you might But low to great. allow it. off It one L&M high and assets like seems margin would just of projects selling assets development customers business I of because grasping for about I like projects a I be that one. or business more is within like EBITDA maybe little it Just in that not O&M, some which ask me. in a feel front trading and just I misheard bit in wanted for a maintain isn't business, you're business

for it I be of of fair much there? off at a it kind a would to Is in margin of much base sense, be out the looking Or way it So that more as as pushing continuity. erosion wouldn't like the as am right it? sake

Spencer Hole

Yes.

to, generate O&M those into additional and that you I'll from net the when served EBITDA we're a these way tight to there. couple our unlevered We actually generation pricing others is flow we turn look to income. to some that probably evaluating look a it, IRR the is And the might just contract and then from we kind assets, cash costs. important assets the overall cash as something from A assets it away and where flow So funding term. go metrics turns IRR the and flow versus look out, better on us EPC well, have an long these guide cash for of going might of to recycle when that's equity for better the merchant relatively perspective, the anything at about or generation net generation when the cash modification of tail that attention over only market think income we us perspective and grab I of at throw of some levered were That's kind we're things. perform

Operator

participation. and for Ladies this call. this session. the today's conference you. gentlemen, you Q&A your Thank concludes And concludes Thank

have day. disconnect. now may You Everyone, wonderful a

Ameresco (AMRC) 6 Nov 232023 Q3 Earnings call transcript