AMRC - Earnings call transcript Q4 2024

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Operator

Thank you for standing by. My name is [ Damian ], and I'll be your conference operator today. At this time, I would like to welcome everyone to the Ameresco, Inc. Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Leila Dillon, Senior Vice President, Marketing and Communications. ahead. go Please

Leila Dillon

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

Financial Officer; Our speakers Ameresco's Chiplock, President Executive Sakellaris, and Utility be will Nicole Infrastructure. Chief of Mark Federal on the Chairman call and today Officer; Bulgarino, and George Chief

during In Bakas available Baribeau answer help will Josh Mike to questions. addition, be and Q&A

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

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

measures in will unless be the I are our that turn noted. that reconciliations comparisons We were over now slides a George. call year-over-year all to on website. the Please additional will to our and to discussed have posted that otherwise supplemental note included these George? basis, information today

George Sakellaris

and good XX% ended XX%, to strong note, respectively. our Thank afternoon, which everyone. you, of XXXX Leila, contributed EBITDA adjusted annual and We on growth a revenue and

in into energy businesses growth, the our and a in We Fourth revenue well with energy assets of delivered record results also from operation. highlight, in and asset XX% strength in level were placed project projects particular total of and EBITDA benefit by a as of record to quarter year-over-year backlog adjusted increasing XX% a XX% as highlighted backlog a XX% billion project $X.X fourth sale was year-over-year contracted a our resulted our the $X.X of billion. This growth backlog noncore record the with record AEG during quarter. conversions business. Growth successful key

additional an our brought we a into quarter, XX During megawatts. the assets operation, bringing to megawatts additions XXX annual energy also of record

at with stand development. now assets energy XXX operating XXX megawatts in another total megawatts Our

accomplishments, the from While our large and team's projects our I'm very full legacy proud did significantly of the year. that X quarter impacted encounter results fourth we during challenges

do to there believe impacts, we us. X those are mitigate applied our which when to overruns. delays we that inflation, and better this experience projects have anticipate and in schedule is tightened review the significant While project best unrecoverable largely of and behind these our Over risk. what we times result time, We impact process have we mitigate learned financial cost

in Importantly, execute a of changing our our in industry. and hundreds deliver team's lies strength dynamically successfully ability projects to on

in like Nicole have would on Nicole? the of the Washington. I to new impact Now comment administration

Nicole Bulgarino

you, and Thank George, afternoon, good everyone.

coming information changes out working all on D.C. diligently the top might of stay are the and impact We of industry. that to

you role our many The includes policies a both our entities, of As business. military. XXXX of of approximately wide representing variety civilian aware, a are federal This federal work in federal revenue. play XX% and significant an is important customer, government

Ameresco the earlier believe has normal manner. cadence federal ESPC the that contract their over recent on for given significantly in costs have cancellation and the are and projects workforce, have allow using project from reduce aligned potential the savings to and Congress. additional work, our appropriations I especially said, a goals improvements a the contract XX in years agencies we been our the facility through been the savings and to changes on in ESPCs approach administration. well-established with direct encountered federal to federal continuing performance agencies federal current is of While contracted budget-neutral anticipating delays. That of And procure in the are and majority schedule. minimal, on impact pause date, energy mechanism the contracts. with other a we X special energy January or cost capital upfront for well operating to vehicle no Federal energy one

reminder, we focused will believe continue and the line shown which upgrading dollar cost current military resiliency are federal housing last on As in in a large critical just demand week. infrastructure, majority projects savings, our administration's the with priorities, to the great is of we be multimillion through and as contract announced

backlog In that signed billion. In in D.C. we to as with monitor closely over long contracts $X contracted current addition, our ESPC O&M projects by closing, will stands the impacts are often continue these proven changes at the of O&M

and back over fundamental strongly remain. turn we projects George? George. I However, drivers the will feel now to benefits federal our of call that the

George Sakellaris

Nicole. you, Thank

will As we that might demand impact from discuss our through to manage in work built we expect have and business given we And our and guidance, policy comments. need see difficult continue XXXX reliable we that But incorporated long-term we for on mentioned as can for customers our the and have agency short-term always, believe and environments. remain secure, changes to potential his Mark we disruptions delays through have a in power. which diversified federal while resilient resilient into focused the challenges, the model past, business

grown business of strong our multiyear These asset long-term for adjusted contracts, energy volatility account have our O&M providing generally in now short-term annuity-like growing to mitigate visibility, businesses, lines majority annual also the EBITDA. project the Beyond of project visibility helping business. backlog, us recurring the we which revenue our and have and purposely

with over for in deliberately to million outlook. turn expanding to Mark will also and now call the this our marked from operations expanded footprint XXXX performance now Europe. XXXX generated financial over on of state, growing Canada, comment Ameresco have business. We $XXX I European significant our in Continental U.K. has and the revenue region geographically. every Mark? a milestone

Mark Chiplock

good George, our growing lines business X total a led in our $XXX revenues the you, to experiencing to to million solid and of each finish year over Thank revenue and the business across everyone. record execution Strong afternoon, with quarter XX% growth.

conversion year. We into consistent and Energy added revenue XXX our record adds execution assets full grew bringing the to XX%, backlog. asset quarter, another last Our to year XX greater operating XX%, of largely a of business of projects operations our megawatts assets grew number compared driven our by revenue megawatts. focus this on reflecting

Our O&M as XXX than our XX% revenue stands grew base at win grew of consulting operating PV from continued megawatts. Gross of revenue and margin long-term other the our X% assets XX.X% performances while significantly quarter from to we of expected. off-grid was now business, business for more with lower businesses. strong O&M line

profit negatively As George mentioned, projects X by $XX XXX million on cost gross unanticipated or impacted approximately basis overruns points.

of of which was the AEG sites the by approximately of from county. million, in unit, related of points. We basis recognized projects primarily financial $XX us. projects closing to or was these impact one that quarter impairment XXX of This by the an completed increase our these gain $XX.X X X revenue is sale a $XX $XX partially profit announced offset was of million XX%, the to the year, full million by resulted Operating the growth our For of believe in the increase behind gas bolstered approximately of gross and largely million. business our income noncash impact asset charges landfill

expenses growth portfolio. Net operating depreciation shareholders million, of of also $XX.X to common asset attributable saw XX%. income higher our $X increasing was directly to We related million the by

to tax clean of in of an million over $XX.X XX% in project benefit very $XXX million activity, development our The awards compared quarter healthy the by tax remains Fourth rate benefit adjusted with XX%. EBITDA resulted outstanding, increased advantage of fueled incentives, of to We continue be energy XXXX growth for XX% take effective in quarter. project of of a which XXXX. to continued backlog business our which new

Importantly, continued new focus strong billion. These to Total revenue. demand on XXXX demonstrate our our awards backlog we at increased execution project and added XX% metrics for projects. our Xx $X.X project the

with in to balance cash We Turning approximately ended solid quarter the cash. cash $XXX and in flows. our a million position sheet

total to million proceeds million outstanding portion our to were down $XXX a sale term from as our loan. Our large debt pay of AEG declined the used cash from of corporate $XXX

in our we asset business. approximately help During the million fourth commitments fund quarter, $XXX financing successfully project executed to

quarter during full total million, operations from bringing $XX cash adjusted $XXX to was Our the million. year our

was Our X-quarter operations cash from adjusted $XX rolling million. average

recent on the RNG to to turning I our Before business. of guidance, touch our wanted XXXX impacting events some

First, before or the construction Section that tax would investment XX These XXXX ITC rules new that credit. of projects later. finalized Treasury the clarified were the began December, in RNG end rules placed XXXX governing apply in service and to our in

transferability Importantly, we can investors credits choose to sell or the either rules. to the tax credits the under use third-party internally

remainder XXXX for RNG recognized we which a $XXX with placed cash between ITCs tax in XXXX, be million, XXXX. part service expected approximately benefit of in to and XXXX Our assets of as sold in the generated

with XXXX credits. $XXX an have XXXX expected we to of projects addition, between safe additional In COD and go RNG million harbored potential estimated

effect the its tax the Second, Section sold year, production credit. XXZ Clean which production on XXXX. in released Fuels January, the through takes provides from credit tax this fuels of for transportation Treasury XXXX a guidance initial XXZ,

landfill option $XX. lower to the third million use be to we $X the or the ourselves benefit our cash. to our to our for either credit parties believe of approximately for have from guidance is rate qualify RNG XXZ credit. All we this finalized, Once And ITC, plants sell to annual or like the total tax could them

due waive by the cellulosic forecasted a to the end year, shortfall to production. Finally, at requirement fueled RIN weakened rule prices the DX of volume last partially proposed XXXX in biofuel EPA's

market RINs. has While reflects not the yet been our guidance the for waiver finalized, current

our strategy deploy price to impact on volatility to manage with earnings. and dynamic associated risks hedging its continue RIN We our the

expected As of overall is XXXX merchant. than of generation today, our RIN XX% less

Now political our turning believe environment. and to reflects XXXX current regulatory guidance. the We unpredictable guidance

and XXX RNG our to midpoint $XXX guiding of we we in of mix that but as of than year benefit will cash. the anticipate megawatts optimize an revenue net the plants. for tax ranges. benefit, billion We We our at likely keep approximately placing we Included to is be guidance lower X credits energy assets last estimated of are adjusted in versus service, sell that million X XXX EBITDA including of the credits anticipation $X.X EPS the of

is CapEx million, to of expected sales. debt, $XXX additional asset or to tax credit expect majority energy $XXX with the tax which Our fund we million equity

noncontrolling interest. thought to more provide interest that expenses color on For be I depreciation, EPS helpful EPS, and would on certain on guidance, impact have an additional it our factors clarity

increase asset anticipate corresponding our portfolio a expenses. As grows, our depreciation energy in we

higher expenses our debt of Additionally, footprint, strategic global leverage joint and as local partners' expertise which expand growth use we to use continue will lead our this we finance allow our will arrangements, resources. strategic to to and nonrecourse us to interest venture

we arrangements, these revenue we a under have Sunel report Europe example have expenses. Ameresco control of a and in majority joint partnership. When such an is XXX% Energy venture's Our of stake and the JV

the by joint partner, interest reduced our are ownership venture. stake of our their noncontrolling in JV However, and the EBITDA adjusted net income reflecting

these currently related in is potential change implemented, significant guidance Given in interest have to our impact our sale-leaseback provided of lower being on change not call of estimated as I other them factors accounting result the does include million that a an press assessed. our that impact to in XXXX XXXX detailed impact out annual our If results, a estimated want and ranges XXXX. for guidance release. Also, expenses in arrangements we've principle could $XX with in this EPS

performance depreciation the and some to shaping our expenses, respect first past linear of second provide revenue is the for last seasonally adjusted year couple to years. QX anticipate half interest cadence XXXX. lowest of We revenues EPS. With quarter revenue This we consistent because that quarter of negative of represent to the is will I similar we total and to expect EBITDA from nature in be on expect the XX% revenue, our to will year quarter and our revenue approximately first the Finally, the and due with of XXXX. have

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

George Sakellaris

you, Thank Mark.

operation. have and heard, a year energy backlog the and footing project ended assets record O&M we solid a you record in As very on of backlog with number

to transition of XXXX, we government. As are the federal navigating we the cautiously look

a is confident in However, cost and would for we employees, thank assets generation and in in There on remain savings, now. with budget-neutral backlog significant Operator, flow. In dynamic cash execute much support. I I our ability to and demand customers call again customers We continued project tremendous would of open this solutions the for infrastructure like focused strong to to improvements. provide that once execution needed am the of our environment. the resiliency and closing, to questions stockholders like our development their our profitable

Operator

question And line Instructions] from of [Operator with first your Stephen comes the Gengaro Stifel.

Stephen Gengaro

cetera. -- But and at what the seeing by kind of you the reacting about sort all of little opposed the over customers you your you with is, sort customers backlog talked conversations the obviously of how or talk conversations whether administration you 'XX about bit -- half little can Can basically and back since how you talk uncertainty are bit of a are in paralyzed about to January kind are et where as going to of think they're around that? those a

George Sakellaris

I and months can to add bit of is or especially Nicole think good. little or last RFPs last even still -- color is X X.X just so, on today. very the it the especially the sector, federal couple activity out a months, the Actually, there the a

Nicole Bulgarino

Yes.

on certainly in -- active of in stated, been I there's like slowness and out an on -- of when Defense I think certainly some coming microgrids surety like civilian RFPs, the that point, work. been seeing business, example. at TSA for type Department I the our I think it's related side, -- even there they're looking mean, as our mean, several as and you're need RFPs has side, this still because George the energy. of with of we're active utility At and

Stephen Gengaro

assets to Okay. appreciate about think of 'XX? cadence of But is energy gave I for the you some ask when revenue of business sort question quarterly sort or any should of throughout the deployment on anything kind be in is -- assets the of we there guidance deployment lumpiness I on other And aware energy 'XX. the And of you this wanted year. quickly the

George Sakellaris

good like transformers only No. that of say is the I sometimes the especially of thing larger on gas, energy size the interconnection natural pipelines and interconnection, equipment, assets renewable the the would transformers, getting the supply the do development The of right in utility assets then good. ways interconnections. generally, very and of the we is we the very, last were markets, quarter. can what financial see, very demonstrated very, they're the But to for as as backlog you And our still able

-- new but of very the on good. assets. as the because you even overall administration is market I will hiccups of environment think So them the the some as and here find projects there, But still well

Operator

Oppenheimer. Noah with from question line Next the of comes Kaye

Noah Kaye

seeing one see of what on the decisions? conversations of I driving No you're guess as have call we to first a is guess might And counterparts time-tested Nicole how The well. business is I What might decades-long usual? the of upfront company let's should relevant that and question be now the mean, around? the always I with as better we a been way money surprise. a reversion are save question what's kind having kind to, bipartisan. these some of it, ESPCs quickly that given make government pause

Nicole Bulgarino

looking has is the And -- they're at selling that related mentioned their GSA. in assets. and So lot mean, minutes a specifically pause ago to just a if we few you everyone the I of headlines seen

which they evaluating paused they're those as may buildings projects, are particular, And so in sell.

kind specific expect and administration to the expect a same be case that to we STCs [ by -- appreciated don't the value GSA -- this this we be is on to So still ]. of

Noah Kaye

George. thoughts. No, Go appreciate I please. your ahead,

George Sakellaris

What let's X happen some of a that. of might projects, to GSA or Yes. want project They X say, hit sell might might buildings. X, or decide this X is to or they X XX have

ahead the go the with the buildings. and So have to rescope we projects rest of

likely, most will that's So happening. you what see

Noah Kaye

that buildings retrofit. scope of lots opportunities there's energy in an mine have IDIQ of the you deep to because of terms But remaining, covers still are whatever extensibly

Nicole Bulgarino

That is correct.

George Sakellaris

this And administration this projects. That of kind is likes correct.

Noah Kaye

of about least a business, from seasonality on thank said, guideposts relative good A for guess some contribution parts different as a question Good. we assets. I in Mark, of in of put at the when revenues amount And you the XQ. think you you the the around guide. providing amount, really energy record

RIN your pretty you got mentioned. as You've handled, exposure well

a bit and then the certain a from of variable. about how and being the give more you is [ way project least just kind EBITDA on O&M of could of about there ] the So to of us think projects at little business thinking to bridge. the color swing growth sort Maybe the

Mark Chiplock

the I lot a revenue. coming project coming -- revenue that we I into have our Yes. So we backlog, our backlog coming from and right? think year, mean we're the a lot talked about project contracted of

see incremental we'll contribution of we that's last a operations, amount given to came throughout will of XXXX, to of additional new there. decent the completely a of But we expect see that not So course, then there. contribution be board going megawatts obviously, some just with in all of to that placed XXXX. And year, on that lot assets

put Just still to remember they take up. some assets some we when do of these ramp online, that time

contribution O&M, expect bit expect pretty some We there. would that And of amount always of little We incremental linear. a there. growth then remains

we've So from -- streams. contribution some but steady got again, those recurring

mean, I I in -- of EBITDA how how of So those the contribute lines the growth. color those will business give to I best guess that's terms about X you can

Operator

question from Capital. with of Craig comes the Next line ROTH Irwin

Craig Irwin

I was on a us more George, of in shift could guidance you you So sort color little give hoping bit put the your the together. way maybe

these doing footprint, the anticipating what's conservatism but so line owners, for years? that federal So going financials of what are what or like to have Nobody us some the for far backlog better D.C. do, would you'd important these the adjustment conservatism happen around buildings you today, I would knows can in change maybe you managing down out appreciate we you're profile, next looks couple over estimate as very contribution been in that your as than the that the been would building if changes work executed of delta if that that buildings. expect maybe have been have the what around of a the changes nothing guys the except the scope for Can be to could have ready straight a it's in taken you with right? -- kind

George Sakellaris

right be the stabilizes had during this backlog don't but right if to I I people Well, happened, until everything for their important have performance could next a out, mean we number that new the the months not in most impact is it we better And -- the I government the than the give probably X nothing is will -- a bottleneck the year is think and considerably excellent want now. get now. positions. get federal

to have project out we're projects, to do more take months, to the to projects, going say, about some ones execution a we would it least that's have buildings, if those So have -- you estimate that I you canceled, little people, the it's all you in time. if financing stage. But and and and were and remaining this rough push again bit to particular where And that pushed in so a we do particular projects at then a out project, they're of And rescope the the try months particular negotiating other going a couple X it. do for -- I scope takes have new are we actually, the know one was to now few on. over but that

hospitals, a even college the from bit have get thing other that of because some will more neutral, now, love school of you're say, business. And money money, them the haircut but be from picking a this or of contracts program. to X the government system some that out in they other -- budget a the I part let's a or the performance that to this do we right So they guarantee IRA point savings you little business the federal up year administration though, they are energy years want because I

buy performance the they So savings energy contracts. down

seen on particular the timing of haven't have project, lost a we a slowdown bit. So little project that been but shifted we any bit has But either. little

Craig Irwin

Excellent. Excellent.

quarter. on I will question, this something second I I called then guess past So ask the privately you

construction be and success program contracting ESPC versus hearing into not Obviously, name projects that's you the of It typical is very the ESPC-like So administration that it, the of of IDIQ. federal from similar be actually portfolio to billions. last done years roads at outperformance of because that the we've federal looking in many, moving billion libraries the to hundreds would many over been most -- been the a in an it would vehicle. $XX the

similar industry structure Given stock, allowed entire budget-neutral involved your be set such conversations investment those to developing the leadership this contracting been sort and an of up important building the helping in all? the that's to contribution at you a in projects Does similar And performance have a much it for for scope nonenergy-related if a the of make type we projects contracting brought saw sense some mechanism growth to across opportunity to wider country? this would have structure? contracting be you maybe of

George Sakellaris

of some bombers the Yes. I do ships, Force Air on. would love to their of and some so

apply I think concept you other areas. tremendous there's that many to potential this

are about the yet, centers. that. of we it talking we I road, haven't talking down then One areas down about to the not something data we we hear the road and it it. -- talked concrete start we think something about but probably that about could because And have will And wanted -- will that's we be is the

Operator

Eric Next of Stine from question the comes with Craig-Hallum. line

Eric Stine

So big today. federal obviously, just sticking the the business, with focus

think in is, that other think and scope, a business, is are what on mean, it I there's than change simply which doing that, and GSA you touched here saying may it you curious, to you large, that say by Just is the fair pause.

also, mentioned the we cancellation. Just think about that factoring that should cancellation think you XXXX way Or that then that, is something more you widespread? do curious, for that becomes Is is in you kind one-off? are a And it? that, of one the

Nicole Bulgarino

the X pauses, we've And that And related one-off, The it guidance, the the is delay accounted and those cancellation it GSA. other well. in our are in for was accounted as already a to in for numbers. we've and

Mark Chiplock

Yes.

funding and cancellations, our of by of project to think that try maybe consideration more consideration exposed, cutbacks. We smartly federal all right, a we be be gave right, guidance policies, into build changes, broadly, lot policy to ranges. Eric, it to potential anything to pauses, clear, gave tariff could I other that

So we that definitely took approach.

Eric Stine

Okay.

to there as sitting now. like very the the in I something But year year, And you depending on approach play have so the but change not this possibility, attempted is where we're mean, be how maybe and best here early that's the progresses right is that at things conservative that, out. it sounds given could

Mark Chiplock

Certainly. Yes.

Operator

Next question William line comes from the of UBS. Grippin with

William Grippin

my contracted over projects I back come guidance segment backlog If put wanted point maybe last on the as of first year, back a X years following correlated I to project Just the one, end consistently to last look in for the that's to revenue here, the right, it. to of perfectly finer at basis X the year, X:X your the reported your years.

billion here backlog. here, that at the in contracted conversation So I seems at something. relative that based any that $X.X you're billion not actually the federal your missing the to probably call guidance the But imply feel assuming I midpoint, guide. on to revenue take look the XXXX If on just me $X.X like to I I'm projects revenue

explains given? could you substantial you're a that guide pretty between what elaborate actual and maybe So out? then your you've there more what assuming the is actually overall revenue versus contracted gap backlog And on little in that bit

Mark Chiplock

we're certainly federal assuming yes, the guide. revenue No, Yes. XXXX in some

the that XX period implementation can billion around XX-month XXXX this probably into of contracted at have over of you very is contracted XX to what months. sight think have us $X.X backlog. of good Remember, line I to out be we of the gives contracted look

we off line. guide, that of assuming our contracted the into -- it revenue the in directly we're that XX-month -- execute and and our is basing run our will we directly -- should best see again, So what information

next of implementation on these the over year X, So be yes, execute in expect could get period as contracted to projects that larger, wouldn't the we because years. very XXX% X

Nicole Bulgarino

Yes, especially the federal in end.

Mark Chiplock

Especially in the federal.

William Grippin

Right.

it, there just as side reports couple then the recognizing staff. here, to in to ability on has cutting just I But your budget cut. potentially about media It also EPA facility up of that some those. proposing actually XX% RNG EPA days, can RINs generate the maybe before start the the have approve been reported last of RNG understand at to was a was an to And Okay. you the referring

-- are in necessary RNG the And from X you what are in year approvals? terms I this of So for timing? plants potential the guide delays assuming contemplate the any does guess, you sort regulatory contribution in it of

Michael Bakas

Roxana would we familiar say is X and no the before the because to longer store in is on probably And EPA plant through Keller this went the for mind, gas like, sell rules just and keep megawatt with -- something Yes. This market. example, plants, facilities, and could certification. I What our We you're XX our to think voluntary XX, equivalent. change, how the Mike our year we plant, large Bakas. is I it about

first were we're it for facilities. were I Before considering a month like got we get certification. we those gate, able while rate or think, healthy environmental certified, was within the actually it And selling off the waiting for attributes X at certification, a to pretty

I along a So that at move clip. certification will comfortable we're think still pretty fairly good

have be at so pro yet the that to coming seems hiccups the look from things you if far any been very seen it EPA. out haven't administration, And at of We some biofuels. the

Operator

questions this time. [Operator at There gentlemen, conference all call. no today's are Ladies Instructions] Thank and this further for concludes you joining.

now may disconnect. You

Ameresco (AMRC) 27 Feb 252024 Q4 Earnings call transcript