Ameresco Reports Third Quarter 2019 Financial Results

– Record Smart Energy Solutions Awards –

– Significant Growth of Ameresco Assets in Development –

– Timing Issues Impact Smart Energy Solutions Revenue –

– Reaffirms Full Year 2019 Guidance

Third Quarter 2019 Financial Highlights:

  • Revenues of $212.0 million
  • Net income attributable to common shareholders of $8.9 million
  • Net income per diluted share of $0.19
  • Adjusted EBITDA of $23.9 million
  • Total project backlog of $2.2 billion
  • Record high project awards of $343 million
  • Ameresco Assets in development added 37 MWe

FRAMINGHAM, Mass.–(BUSINESS WIRE)–#earnings–Ameresco, Inc. (NYSE:AMRC), a leading energy solutions provider today announced financial results for the fiscal quarter ended September 30, 2019. The Company has also furnished supplemental information in conjunction with this press release in a Current Report on Form 8-K. The supplemental information includes non-GAAP financial metrics and has been posted to the “Investor Relations” section of the Company’s website at www.ameresco.com.

“As we stated at the beginning of the year, 2019 was going to be an investment year. We decided to invest in our advanced technology portfolio, bringing in top talent and engineering excellence to accelerate the growth of the distributed energy generation business. This strategy proved effective, as we had a record high quarter for project awards. We also executed effectively on our long-term strategy of growing our recurring revenue with continuing growth of the Ameresco assets business,” said George P. Sakellaris, President and Chief Executive Officer.

“Third quarter results largely reflected timing issues in our Smart Energy Solutions project business as several large contracts were not signed before quarter’s end. These represent contracts that Ameresco has been awarded, but the timing of project commencement can be pushed out according to client schedules.”

“Recent events in California demonstrate the growing need for resiliency, as public and private organizations can no longer count on the existing grid for uninterrupted power. In particular, we expect to see increased demand for our advanced technology portfolio including onsite energy generation, energy storage and microgrids. Ameresco’s investment in these complex technologies places us in a strong competitive position to deliver these solutions to our customers.”

Third Quarter Financial Results

(All financial result comparisons made are against the prior year period unless otherwise noted.)

Revenues were $212.0 million, compared to $205.4 million last year, representing modest growth across our platform. Operating income was $13.5 million, compared to $17.3 million. Net income attributable to common shareholders was $8.9 million, compared to $10.7 million. Non-GAAP net income was $8.5 million, compared to $11.0 million. Net income per diluted share was $0.19, and non-GAAP EPS was $0.18 compared to $0.23 in the year ago quarter. Adjusted EBITDA, a non-GAAP financial measure, was $23.9 million, compared to $25.6 million. Cash flows used in operating activities were $11.5 million, compared to cash from operations of $25.1 million, and adjusted cash from operations, a non-GAAP financial measure, was $21.3 million, compared to adjusted cash from operations of $69.0 million.

Backlog and Awards

New awards during the quarter reached a record high of $343 million up 72% year over year.

Total project backlog at September 30, 2019 was $2.2 billion and was comprised of the following:

  • $787 million in contracted backlog representing signed customer contracts for installation or construction of projects, which we expect to convert into revenue over the next one to three years, on average; and
  • $1.4 billion of awarded projects, representing projects in development for which we do not have signed contracts.

Ameresco assets in development were $572 million or 287 MWe.

Third Quarter Project Update:

  • Ameresco completed the second phase of an energy efficiency project with Lynwood Unified School District, CA
  • Ameresco completed an energy resiliency project at the Middle School in the Town of Wayland, MA
  • Ameresco began phase two of an energy savings project at the Medical University of South Carolina
  • Ameresco was selected to complete a comprehensive building modernization project at the iconic James A. Farley building, a USPS facility in New York City
  • Ameresco completed a switch-flip ceremony at Hamilton Southeastern Schools, IN for two solar arrays comprised of 4,800 panels

Third Quarter Ameresco Assets Update:

  • Ameresco announced construction of a 2.1 MW solar project with Orange Unified School District, CA
  • Ameresco announced it will develop a 27 MW solar farm in the Village of DePue, IL
  • Ameresco completed a ribbon cutting of a 16 MWh battery energy storage project on behalf of Ontario’s Independent Electricity System Operator
  • Ameresco announced completion of the first shared clean energy facility in CT with a 2 MW solar project at Bloomfield, CT

Summary and Outlook

While third quarter results were below the Company’s expectations, Ameresco reaffirms its full year 2019 guidance for net income per diluted share of $0.77 to $0.85, adjusted EBITDA of $95 million to $103 million, and total revenue of $845 million to $885 million.

Ameresco ended the third quarter with a substantial project backlog and large energy asset development pipeline, which support Company expectations for a strong finish to 2019 and accelerated growth entering 2020.

Full year 2019 guidance excludes the impact of the $2.2 million gain during the first quarter from the deconsolidation of a variable interest entity, any non-controlling interest activity, restructuring activities, as well as any related tax impact. Also 2019 guidance does not assume any benefit from IRC Section 179D deductions, which in 2018 provided a benefit of $5.8 million, and have since expired.

Conference Call/Webcast Information

The Company will host a conference call today at 8:30 a.m. ET to discuss results. The conference call will be available via the following dial in numbers:

  • U.S. Participants: Dial 1-877-359-9508 (Access Code: 1390048)
  • International Participants: Dial 1-224-357-2393 (Access Code: 1390048)

Participants are advised to dial into the call at least ten minutes prior to register. A live, listen-only webcast of the conference call will also be available over the Internet. Individuals wishing to listen can access the call through the “Investor Relations” section of the Company’s website at www.ameresco.com. An archived webcast will be available on the Company’s website for one year.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to adjusted EBITDA, Non- GAAP EPS, non-GAAP net income and adjusted cash from operations, which are non-GAAP financial measures. For a description of these non-GAAP financial measures, including the reasons management uses these measures, please see the section following the accompanying tables titled “Exhibit A: Non-GAAP Financial Measures”. For a reconciliation of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Other Non-GAAP Disclosures and Non-GAAP Financial Guidance in the accompanying tables.

About Ameresco, Inc.

Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading independent provider of comprehensive services, energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions for businesses and organizations throughout North America and Europe. Ameresco’s sustainability services include upgrades to a facility’s energy infrastructure and the development, construction and operation of renewable energy plants. Ameresco has successfully completed energy saving, environmentally responsible projects with federal, state and local governments, healthcare and educational institutions, housing authorities, and commercial and industrial customers. With its corporate headquarters in Framingham, MA, Ameresco has more than 1,000 employees providing local expertise in the United States, Canada, and the United Kingdom. For more information, visit www.ameresco.com.

Safe Harbor Statement

Any statements in this press release about future expectations, plans and prospects for Ameresco, Inc., including statements about market conditions, pipeline and backlog, as well as estimated future revenues and net income, and other statements containing the words “projects,” “believes,” “anticipates,” “plans,” “expects,” “will” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward looking statements as a result of various important factors, including the timing of, and ability to, enter into contracts for awarded projects on the terms proposed; the timing of work we do on projects where we recognize revenue on a percentage of completion basis, including the ability to perform under recently signed contracts without unusual delay; demand for our energy efficiency and renewable energy solutions; our ability to arrange financing for our projects; changes in federal, state and local government policies and programs related to energy efficiency and renewable energy; the ability of customers to cancel or defer contracts included in our backlog; the effects of our recent acquisitions and restructuring activities; seasonality in construction and in demand for our products and services; a customer’s decision to delay our work on, or other risks involved with, a particular project; availability and costs of labor and equipment; the addition of new customers or the loss of existing customers; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the U.S. Securities and Exchange Commission on March 8, 2019. In addition, the forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

AMERESCO, INC.

CONDENSED CONSOLIDATED UNAUDITED BALANCE SHEETS

(in thousands, except share amounts)

 

 

September 30,

 

December 31,

 

2019

 

2018

 

(Unaudited)

 

 

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

34,104

 

 

$

61,397

 

Restricted cash

13,498

 

 

16,880

 

Accounts receivable, net

91,755

 

 

85,985

 

Accounts receivable retainage, net

16,652

 

 

13,516

 

Costs and estimated earnings in excess of billings

124,652

 

 

86,842

 

Inventory, net

9,902

 

 

7,765

 

Prepaid expenses and other current assets

22,585

 

 

11,571

 

Income tax receivable

1,629

 

 

5,296

 

Project development costs

26,305

 

 

21,717

 

Total current assets

341,082

 

 

310,969

 

Federal ESPC receivable

182,012

 

 

293,998

 

Property and equipment, net

10,469

 

 

6,985

 

Energy assets, net

507,759

 

 

459,952

 

Goodwill

57,899

 

 

58,332

 

Intangible assets, net

1,810

 

 

2,004

 

Operating lease assets

32,540

 

 

 

Other assets

36,786

 

 

29,394

 

Total assets

$

1,170,357

 

 

$

1,161,634

 

 

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Current portions of long-term debt and capital lease liabilities

$

54,958

 

 

$

26,890

 

Accounts payable

133,833

 

 

134,330

 

Accrued expenses and other current liabilities

28,700

 

 

35,947

 

Current portion of operating lease liabilities

5,935

 

 

 

Billings in excess of cost and estimated earnings

23,234

 

 

24,363

 

Income taxes payable

 

 

1,100

 

Total current liabilities

246,660

 

 

222,630

 

Long-term debt and capital lease liabilities, less current portions and net of deferred financing fees

223,766

 

 

219,162

 

Federal ESPC liabilities

196,584

 

 

288,047

 

Deferred income taxes, net

3,242

 

 

4,352

 

Deferred grant income

6,223

 

 

6,637

 

Long-term portions of operating lease liabilities, net of current

28,799

 

 

 

Other liabilities

30,989

 

 

29,212

 

 

 

 

 

Redeemable non-controlling interests

32,108

 

 

14,719

 

 

 

 

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2019 and December 31, 2018

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 31,134,154 shares issued and 29,033,114 shares outstanding at September 30, 2019, 30,366,546 shares issued and 28,275,506 shares outstanding at December 31, 2018

3

 

 

3

 

Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at September 30, 2019 and December 31, 2018

2

 

 

2

 

Additional paid-in capital

131,111

 

 

124,651

 

Retained earnings

292,256

 

 

269,806

 

Accumulated other comprehensive loss, net

(9,609

)

 

(5,949

)

Treasury stock, at cost, 2,101,040 shares at September 30, 2019 and 2,091,040 shares at December 31, 2018

(11,777

)

 

(11,638

)

Total stockholders’ equity

401,986

 

 

376,875

 

Total liabilities, redeemable non-controlling interests and stockholders’ equity

$

1,170,357

 

 

$

1,161,634

 

AMERESCO, INC.

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF INCOME

(in thousands, except per share amounts)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Revenues

$

212,026

 

 

$

205,375

 

 

$

560,321

 

 

$

569,767

 

Cost of revenues

167,333

 

 

159,213

 

 

439,857

 

 

445,356

 

Gross profit

44,693

 

 

46,162

 

 

120,464

 

 

124,411

 

Selling, general and administrative expenses

31,231

 

 

28,866

 

 

87,396

 

 

84,871

 

Operating income

13,462

 

 

17,296

 

 

33,068

 

 

39,540

 

Other expenses, net

4,192

 

 

3,244

 

 

11,359

 

 

10,754

 

Income before provision for income taxes

9,270

 

 

14,052

 

 

21,709

 

 

28,786

 

Income tax provision

939

 

 

3,351

 

 

2,000

 

 

1,879

 

Net income

8,331

 

 

10,701

 

 

19,709

 

 

26,907

 

Net loss (income) attributable to redeemable non-controlling interests

539

 

 

 

 

2,524

 

 

(516

)

Net income attributable to common shareholders

$

8,870

 

 

$

10,701

 

 

$

22,233

 

 

$

26,391

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

0.19

 

 

$

0.23

 

 

$

0.48

 

 

$

0.58

 

Diluted

$

0.19

 

 

$

0.23

 

 

$

0.47

 

 

$

0.57

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

46,555

 

 

45,854

 

 

46,413

 

 

45,599

 

Diluted

47,693

 

 

46,944

 

 

47,675

 

 

46,509

 

 

AMERESCO, INC.

CONDENSED CONSOLIDATED UNAUDITED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Nine Months Ended September 30,

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

Cash flows from operating activities:

 

 

 

Net income

$

19,709

 

 

$

26,907

 

Adjustments to reconcile net income to cash flows from operating activities:

 

 

 

Depreciation of energy assets

26,338

 

 

19,699

 

Depreciation of property and equipment

2,115

 

 

1,573

 

Amortization of debt issuance costs

1,734

 

 

1,587

 

Amortization of intangible assets

681

 

 

771

 

Accretion of ARO and contingent consideration

98

 

 

 

Provision for bad debts

(134

)

 

483

 

Loss on disposal / sale of assets

 

 

300

 

Gain on deconsolidation of VIE

(2,160

)

 

 

Net gain from derivatives

(1,072

)

 

(420

)

Stock-based compensation expense

1,195

 

 

1,137

 

Deferred income taxes

152

 

 

3,914

 

Unrealized foreign exchange loss

149

 

 

486

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

(4,468

)

 

2,073

 

Accounts receivable retainage

(3,079

)

 

3,008

 

Federal ESPC receivable

(110,374

)

 

(111,982

)

Inventory, net

(2,137

)

 

10

 

Costs and estimated earnings in excess of billings

(23,130

)

 

28,704

 

Prepaid expenses and other current assets

(11,084

)

 

5,241

 

Project development costs

(5,641

)

 

(6,984

)

Other assets

(698

)

 

(1,371

)

Accounts payable, accrued expenses and other current liabilities

(8,931

)

 

(16,532

)

Billings in excess of cost and estimated earnings

(952

)

 

11,166

 

Other liabilities

(1,602

)

 

227

 

Income taxes payable

2,566

 

 

(2,038

)

Cash flows used in operating activities

(120,725

)

 

(32,041

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

(6,188

)

 

(2,961

)

Purchases of energy assets

(72,140

)

 

(103,154

)

Acquisitions, net of cash received

(1,279

)

 

(3,592

)

Contributions to equity investment

(323

)

 

 

Cash flows used in investing activities

(79,930

)

 

(109,707

)

Cash flows from financing activities:

 

 

 

Payments of financing fees

(541

)

 

(3,667

)

Proceeds from exercises of options and ESPP

5,265

 

 

4,327

 

Repurchase of common stock

(139

)

 

(1,772

)

Proceeds (payments) from senior secured credit facility, net

41,343

 

 

(900

)

Proceeds from long-term debt financings

7,614

 

 

78,914

 

Proceeds from Federal ESPC projects

115,556

 

 

113,570

 

Proceeds for energy assets from Federal ESPC

1,639

 

 

2,269

 

Proceeds from sale-leaseback financings

 

 

5,145

 

Contributions from redeemable non-controlling interests, net of distributions

20,173

 

 

3,731

 

Payments on long-term debt

(18,033

)

 

(22,825

)

Cash flows from financing activities

172,877

 

 

178,792

 

Effect of exchange rate changes on cash

249

 

 

(124

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(27,529

)

 

36,920

 

Cash, cash equivalents and restricted cash, beginning of period

97,913

 

 

60,105

 

Cash, cash equivalents and restricted cash, end of period

$

70,384

$

97,025

 

Non-GAAP Financial Measures (in thousands)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Adjusted EBITDA:

 

 

 

 

 

 

 

Net income attributable to common shareholders

$

8,870

 

 

$

10,701

 

 

$

22,233

 

 

$

26,391

 

Impact from redeemable non-controlling interests

(539

)

 

 

 

(2,524

)

 

516

 

Plus: Income tax provision

939

 

 

3,351

 

 

2,000

 

 

1,879

 

Plus: Other expenses, net

4,192

 

 

3,244

 

 

11,359

 

 

10,754

 

Plus: Depreciation and amortization of intangible assets

9,831

 

 

7,523

 

 

29,134

 

 

22,043

 

Plus: Stock-based compensation

413

 

 

390

 

 

1,195

 

 

1,137

 

Plus: Restructuring and other charges

169

 

 

386

 

 

410

 

 

66

 

Less: Gain on deconsolidation of VIE

 

 

 

 

(2,160

)

 

 

Adjusted EBITDA

$

23,875

 

 

$

25,595

 

 

$

61,647

 

 

$

62,786

 

Adjusted EBITDA margin

11.3

%

 

12.5

%

 

11.0

%

 

11.0

%

 

 

 

 

 

 

 

 

Non-GAAP net income and EPS:

 

 

 

 

 

 

 

Net income attributable to common shareholders

$

8,870

 

 

$

10,701

 

 

$

22,233

 

 

$

26,391

 

Impact from redeemable non-controlling interests

(539

)

 

 

 

(2,524

)

 

516

 

Plus: Restructuring and other charges

169

 

 

386

 

 

410

 

 

66

 

Less: Gain on deconsolidation of VIE

 

 

 

 

(2,160

)

 

 

Less: Income tax effect of non-GAAP adjustments

 

 

(101

)

 

 

 

(101

)

Non-GAAP net income

$

8,500

 

 

$

10,986

 

 

$

17,959

 

 

$

26,872

 

 

 

 

 

 

 

 

 

Diluted net income per common share

$

0.19

 

 

$

0.23

 

 

$

0.47

 

 

$

0.57

 

Effect of adjustments to net income

(0.01

)

 

 

 

(0.09

)

 

0.01

 

Non-GAAP EPS

$

0.18

 

 

$

0.23

 

 

$

0.38

 

 

$

0.58

 

 

 

 

 

 

 

 

 

Adjusted cash from operations:

 

 

 

 

 

 

 

Cash flows from operating activities

$

(11,471

)

 

$

25,096

 

 

$

(120,725

)

 

$

(32,041

)

Plus: proceeds from Federal ESPC projects

32,769

 

 

43,906

 

 

115,556

 

 

113,570

 

Adjusted cash from operations

$

21,298

 

 

$

69,002

 

 

$

(5,169

)

 

$

81,529

 

 

 

 

 

 

 

 

 

 

As of September 30,

 

 

 

2019

 

2018

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Construction backlog:

 

 

 

 

 

 

 

Awarded(1)

$

1,434,900

 

 

$

1,215,400

 

 

 

 

 

Fully-contracted

787,200

 

 

819,400

 

 

 

 

 

Total construction backlog

$

2,222,100

 

 

$

2,034,800

 

 

 

 

 

 

 

 

 

 

 

 

 

Energy assets in development(2)

$

572,000

 

 

$

319,800

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2019

 

2018

 

2019

 

2018

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

New contracts and awards:

 

 

 

 

 

 

 

New contracts

$

144,000

 

 

$

282,000

 

 

$

425,000

 

 

$

638,500

 

New awards(1)

$

343,000

 

 

$

198,900

 

 

$

619,000

 

 

$

654,900

 

(1) Represents estimated future revenues from projects that have been awarded, though the contracts have not yet been signed

(2) Estimated total construction value of all energy assets in construction and development

Non-GAAP Financial Guidance

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA):

(in thousands)

Year Ended December 31, 2019

 

Low

High

Operating income

$

61,000

 

$

67,000

 

Depreciation and amortization of intangible assets

35,000

 

36,000

 

Stock-based compensation

1,000

 

2,000

 

Restructuring and other charges

(2,000

)

(2,000

)

Adjusted EBITDA

$

95,000

 

$

103,000

 

Exhibit A: Non-GAAP Financial Measures

We use the non-GAAP financial measures defined and discussed below to provide investors and others with useful supplemental information to our financial results prepared in accordance with GAAP. These non-GAAP financial measures should not be considered as an alternative to any measure of financial performance calculated and presented in accordance with GAAP. For a reconciliation of these non-GAAP measures to the most directly comparable financial measures prepared in accordance with GAAP, please see Other Non-GAAP Disclosure and Non-GAAP Financial Guidance in the tables above.

We understand that, although measures similar to these non-GAAP financial measures are frequently used by investors and securities analysts in their evaluation of companies, they have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for the most directly comparable GAAP financial measures or an analysis of our results of operations as reported under GAAP. To properly and prudently evaluate our business, we encourage investors to review our GAAP financial statements included above, and not to rely on any single financial measure to evaluate our business.

Adjusted EBITDA and Adjusted EBITDA Margin

We define adjusted EBITDA as operating income before depreciation, amortization of intangible assets, accretion of asset retirement obligations, contingent consideration expense, stock-based compensation expense, restructuring charges, and gain upon deconsolidation of a variable interest entity (“VIE”). We believe adjusted EBITDA is useful to investors in evaluating our operating performance for the following reasons: adjusted EBITDA and similar non-GAAP measures are widely used by investors to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired; securities analysts often use adjusted EBITDA and similar non-GAAP measures as supplemental measures to evaluate the overall operating performance of companies; and by comparing our adjusted EBITDA in different historical periods, investors can evaluate our operating results without the additional variations of depreciation and amortization expense, accretion of asset retirement obligations, contingent consideration expense, stock-based compensation expense, restructuring charges, and gain upon deconsolidation of a VIE. We define adjusted EBITDA margin as adjusted EBITDA stated as a percentage of revenue.

Our management uses adjusted EBITDA and adjusted EBITDA margin as measures of operating performance, because they do not include the impact of items that we do not consider indicative of our core operating performance; for planning purposes, including the preparation of our annual operating budget; to allocate resources to enhance the financial performance of the business; to evaluate the effectiveness of our business strategies; and in communications with the board of directors and investors concerning our financial performance.

Contacts

Media Relations

Leila Dillon, 508.661.2264, news@ameresco.com

Investor Relations

Eric Prouty, AdvisIRy Partners, 212.750.5800, eric.prouty@advisiry.com
Lynn Morgen, AdvisIRy Partners, 212.750.5800, lynn.morgen@advisiry.com

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