Ameresco Reports Fourth Quarter and Full Year 2013 Financial Results
Fourth Quarter 2013 Financial Highlights:
• Revenues of $176.1 million
• Net income of $1.6 million
• Net income per diluted share of $0.03
Full Year 2013 Financial Highlights:
• Revenues of $574.2 million
• Net income of $2.4 million
• Net income per diluted share of $0.05
FRAMINGHAM, MA – March 13, 2014 – Ameresco, Inc. (NYSE:AMRC), a leading energy efficiency and renewable energy company, today announced financial results for the fiscal quarter and year ended December 31, 2013. The Company has also furnished prepared remarks in conjunction with this press release in a Current Report on Form 8-K. The prepared remarks contain supplemental information, including non-GAAP financial metrics, and have been posted to the “Investor Relations” section of the Company’s website at www.ameresco.com.
“2013 revenues were in line with our expectations,” stated George P. Sakellaris, President and Chief Executive Officer of Ameresco. “However, an unfavorable mix of lower margin projects had a negative effect on gross margin and earnings.”
Revenues for the fourth quarter increased 12% from $156.6 million in 2012 to $176.1 million for 2013. Fourth quarter operating income decreased from $6.3 million in 2012 to $3.0 million for 2013. Fourth quarter adjusted EBITDA, a non-GAAP financial measure, decreased from $13.0 million in 2012 to $8.7 million for 2013. Fourth quarter net income decreased from $5.1 million in 2012 to $1.6 million for 2013. Fourth quarter 2013 net income per diluted share was $0.03, compared to $0.11 for 2012.
For the full year ended December 31, 2013, revenues decreased 9% from $631.2 million in 2012 to $574.2 million for 2013. Full year operating income decreased from $28.7 million in 2012 to $6.6 million for 2013. Full year adjusted EBITDA decreased from $52.4 million in 2012 to $29.9 million for 2013. Full year net income decreased from $18.4 million in 2012 to $2.4 million for 2013. Full year 2013 net income per diluted share was $0.05, compared to $0.40 for 2012.
Additional Fourth Quarter and Full Year 2013 Operating Highlights:
• Project revenues were $388 million for the full year 2013, a decrease of 15% year-over-year.
• Revenues from other service offerings was $186 million for the full year 2013, an increase of 7% year-over-year.
• Total construction backlog was $1.35 billion as of December 31, 2013 and consisted of:
• $361.9 million of fully-contracted backlog of signed customer contracts for installation or construction of projects, which we expect to convert into revenue over the next 12-24 months, on average; and
• $993.0 million of awarded projects, representing projects in development for which we do not have signed contracts.
FY 2014 Guidance
Ameresco expects to earn total revenue in the range of $560 million to $600 million in 2014. The Company also expects net income for 2014 to be in the range of $7 million to $12 million. Our assumptions for 2014 guidance are as follows: project revenues from contracted backlog of approximately $210 million; project revenues from awarded projects and proposals in the range of $160 million to $185 million; the remainder of revenues from all other service offerings; gross margin in the range of 18-20%; and an effective income tax rate of 19%.
“We expect challenging market conditions to continue in 2014. Revenues are expected to be consistent with 2013, while operating efficiency measures should improve profitability. In addition to delivering 2014 results, we plan to focus on more disciplined execution, continuing to refine our value proposition, diversifying our customer mix and enhancing our market position,” continued Sakellaris.
Use of Non-GAAP Financial Measures
This press release and the accompanying tables include references to adjusted EBITDA and adjusted free cash flow, 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 in the accompanying tables.
Prior Period Financial Results
Certain prior period cash flow information included in the accompanying tables has been revised from amounts previously reported to reflect a change in the manner that we present the amounts to be paid by various U.S. federal government agencies for work performed and earned by us under specific energy savings performance contracts on the consolidated statements of cash flows. We previously classified the advances from the investors in these projects as operating cash flows; however, we concluded during the fourth quarter of 2013 that these advances would be better classified as financing cash flows. The use of the cash received under these arrangements to pay project costs continues to be classified as operating cash flows. For more information, see the prepared remarks posted to the “Investor Relations” section of the Company’s website and furnished with the Company’s Current Report on Form 8-K dated March 13, 2014.
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 facilities throughout North America. Ameresco’s 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 provides local expertise through its 70 offices in 33 states, five Canadian provinces and the United Kingdom. Ameresco has more than 900 employees. 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; 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, 2012, filed with the U.S. Securities and Exchange Commission on March 18, 2013. 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.
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 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.
We define adjusted EBITDA as operating income before depreciation, amortization of intangible assets, impairment of goodwill and share-based compensation expense. 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, and share-based compensation expense.
Our management uses adjusted EBITDA: as a measure of operating performance, because it does 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.
Adjusted Free Cash Flow
We define adjusted free cash flow as net cash (used in) provided by operating activities, less purchases of property and equipment, plus proceeds from Federal ESPC projects. Cash received in payment of Federal ESPC projects is treated as a financing cash flow under GAAP due to the unusual financing structure for these projects. These cash flows, however, correspond to the revenue generated by these projects. Thus we believe that adjusting operating cash flow to include the cash generated by our Federal ESPC projects provides investors with a useful measure for evaluating the cash generating ability of our core operating business. Our management uses adjusted free cash flow as a measure of operating performance because it captures all sources of cash associated with our revenue generated by operations.