Ameresco Reports Fourth Quarter and Full Year 2023 Financial Results

CEO George Sakellaris commented, “Fourth quarter results represented a strong finish to a challenging year, demonstrating positive momentum that supports Ameresco’s long term growth trajectory. In addition to the considerable revenue and Adjusted EBITDA growth achieved in the quarter, we grew total project backlog nearly 50%, ending 2023 with a record $3.9 billion. We also grew our assets in development 35% to 717 MWe at the end of the year. Both of which provide a pathway for continued growth over the next several years. Despite the industry headwinds, specifically supply chain issues and administrative bottlenecks that caused the push-out of project revenues we noted last quarter, we are pleased to report that we converted and executed on a number of these previously-delayed projects contributing to the 40% increase in our fourth quarter Project revenues. Additionally, we have taken actions to streamline our organization and have considered these industry factors in our future planning and project scheduling. With respect to Energy Assets, we placed 63 MWe into operation in the fourth quarter, bringing our total operating Energy Assets to over 500 MWe.

“We continue to make great strides in growing our UK and European footprint. After a year of strong organic and acquisitive revenue growth of over 150%, this unit now accounts for over 10% of our total revenue. We believe this market remains highly fragmented and very economically attractive to Ameresco.

“Ameresco’s record backlog and asset pipeline metrics underscore the strength of our market positioning and our ability to continue to achieve substantial long-term growth in revenues and profitability. New awards in 2023 were approximately $2.2 billion, double last year’s $1.1 billion, and proposal activity remained at an all-time high. In 2023, our Energy Asset business continued to add high return assets to our development pipeline. During the year, we increased Ameresco-owned Assets in development by 199 MWe to 669 MWe, while also bringing 118 MWe into operation during the year.”

Fourth Quarter Financial Results

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

Total revenue was $441.4 million, a 33% increase, with double-digit growth across all four of our lines of business. Our Projects business experienced 40% revenue growth as the Company executed on a number of large contract conversions, some that had slipped from the previous quarter, and benefited from increased overall activity, including revenues related to the addition of the Enerqos acquisition in Italy earlier in the year. We also saw a benefit of approximately $40 million from faster implementation of active contracts. Energy Asset revenue increased 12.3% driven by continued growth in our operating asset portfolio and stronger RIN prices. O&M revenue was up 13.2% reflecting increased growth in our long-term contracts while Other revenue increased 11.4%. Gross margin of 16.8% declined due to an increase in the mix of larger, lower margin contracts. We continued to take advantage of clean energy tax incentives available under the Inflation Reduction Act, resulting in a larger than expected effective tax rate benefit of (67.0%). Net income attributable to common shareholders was $33.7 million. The GAAP results for 2023 reflect a non-cash downward adjustment of $1.6 million related to energy asset impairment charges and a non-cash downward adjustment of $2.2 million related to a goodwill impairment charge. Adjusted EBITDA increased 33% to $54.9 million. GAAP and Non-GAAP EPS were $0.64 and $0.69, respectively, with Non-GAAP EPS increasing 97%.

Balance Sheet and Cash Flow Metrics

The Company ended the quarter with $79.3 million in cash. Our total corporate debt including our term loans and drawn amounts on our revolving line of credit continued to decline to $279.9 million, with a corporate leverage ratio as calculated under our Sr. Secured Credit Facility of 3.3x, below our 3.75x bank covenant level. Our Energy Asset Debt was $1.2 billion with an Energy Debt Advance rate of 72% on the Energy Asset Book Value. Our Adjusted Cash from Operations in Q4 was $17.5 million and $84.3 million for 2023. Given the volatility of quarterly Adjusted Cash from Operations we are also providing investors with a quarterly average over a trailing 8-quarter period in our supplemental materials, representing our average implementation cycle.

After the end of the year, we announced that we had engaged an investment bank to raise subordinated debt as required by the December 2023 amendment to our Sr. Secured Credit Facility. The debt raise, if successful, would be used to repay outstanding amounts on the Sr. Secured Credit Facility.

Project and Asset Highlights

• Ameresco’s Assets in Development ended the quarter at 717 MWe. After subtracting Ameresco’s partners’ minority interests, Ameresco’s owned capacity of Assets in Development at quarter end was 669 MWe.
• Increased net assets in development by 63 MW in the fourth quarter driven by increased solar and BESS activity.
• Ameresco continued to grow its innovative BESS energy assets under development with the upcoming installation of a 50 MW / 200 MWh system with Silicon Valley Power.
• Ameresco, along with its partner Sunel Group, continued its international business momentum and has begun construction of 300 MW of design-build solar parks across the UK for Sonnedix, a global renewable energy producer.
• The military market continued to show significant interest in installations that provide resiliency to military installations around the world. Ameresco, along with a partner, will install a 6.25 MW solar generation plant funded by the Department of Defense’s Energy Resilience and Conservation Investment Program (ERCIP), which funds projects that improve energy resilience, contribute to mission assurance, save energy and reduce DoD’s energy costs.

Summary and Outlook

“Ameresco’s robust backlog and growing assets in development are strong indicators of how well aligned our capabilities are with market demand. Our broad and deep technical expertise has enabled us to execute on complex projects, positioning us as a leading provider of cost-effective, resilient energy solutions for public and private clients. With over $7 billion in multi-year revenue visibility from our project backlog and asset development pipeline, we have a roadmap to achieving our long-term growth targets.

Ameresco’s full year 2024 guidance is included in the table below and reflects an expected revenue and Adjusted EBITDA growth of 20% and 38%, respectively, at the midpoints. We plan to continue to take advantage of clean energy tax incentives resulting in a likely net tax benefit. The Company expects to place approximately 200 MWe of energy assets in service for all of 2024. Our expected capex for 2024 is $350 million to $400 million, the majority of which we expect to fund with project financing. For the first quarter of fiscal 2024, we expect revenues of $225 million to $275 million and adjusted EBITDA of $20 million to $30 million, with negative non-GAAP EPS. We expect the remainder of the year to follow a more normal quarterly seasonal cadence.

We are working closely with Southern California Edison Company on the final steps toward substantial completion for two of the three projects. Construction activities and preparation for commissioning have begun for the third project, which was significantly impacted by the heavy rainfall in California in 2023. This last site is expected to reach substantial completion in the summer of 2024.

Conference Call/Webcast Information

The Company will host a conference call today at 4:30 p.m. ET to discuss fourth quarter 2023 financial results, business and financial outlook and other business highlights. Participants may access the earnings conference call by pre-registering here at least fifteen minutes in advance. 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 “Investors” section of the Company’s website at www.ameresco.com. If you are unable to listen to the live call, 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 Non-GAAP Financial Measures and Non-GAAP Financial Guidance in the accompanying tables.

About Ameresco, Inc.

Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading cleantech integrator and renewable energy asset developer, owner and operator. Our comprehensive portfolio includes energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions delivered to clients throughout North America and Europe. Ameresco’s sustainability services in support of clients’ pursuit of Net-Zero include upgrades to a facility’s energy infrastructure and the development, construction, and operation of distributed energy resources. 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 1,200 employees providing local expertise in the United States, Canada, and Europe. 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, visibility, and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, gross margin, effective tax rate, capital investments, other financial guidance and longer term outlook, statements about our financing plans including the status of discussion related to raising subordinated debt and our ability to finalize such a debt financing, the impact the IRA, supply chain disruptions, shortage and cost of materials and labor, and other macroeconomic and geopolitical challenges; our expectations related to our agreement with SCE including the impact of delays and any requirement to pay liquidated damages, 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: demand for our energy efficiency and renewable energy solutions; the timing of, and ability to, enter into contracts for awarded projects on the terms proposed or at all; the timing of work we do on projects where we recognize revenue on a percentage of completion basis; the ability to perform under signed contracts without delay and in accordance with their terms and related liquidated and other damages we may be subject to; the fiscal health of the government and the risk of government shutdowns; our ability to complete and operate our projects on a profitable basis and as committed to our customers; our cash flows from operations and our ability to arrange financing to fund our operations and projects our customers’ ability to finance their projects and credit risk from our customers; our ability to comply with covenants in our existing debt agreements including the requirement to raise additional subordinated debt; the impact of macroeconomic challenges, weather related events and climate change on our business; our reliance on third parties for our construction and installation work; availability and cost of labor and equipment particularly given global supply chain challenges and global trade conflicts; global supply chain challenges, component shortages and inflationary pressures; 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 output and performance of our energy plants and energy projects; cybersecurity incidents and breaches; regulatory and other risks inherent to constructing and operating energy assets the effects of our acquisitions and joint ventures; 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; the addition of new customers or the loss of existing customers; market price of our Class A Common stock prevailing from time to time; the nature of other investment opportunities presented to our Company from time to time; risks related to our international operation and international growth strategy; and other factors discussed in our most recent Annual Report on Form 10-K. 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.