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Ameresco Reports First Quarter 2018 Financial Results

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First Quarter 2018 Financial Highlights (year over year):

  • Revenues of $167.4 million, compared to $134.6 million, up 24%
  • Net income attributable to common shareholders of $7.0 million,
    compared to $(0.6) million
  • Net income per diluted share of $0.15, compared to $(0.01)
  • Adjusted EBITDA of $15.8 million, compared to $6.0 million, up 164%
  • Non-GAAP EPS of $0.16, compared to a loss of $(0.04)
  • Record high project backlog of $1.9 billion, up 15%

Ameresco, Inc. (NYSE:AMRC), a leading energy efficiency and renewable
energy company, today announced financial results for the fiscal quarter
ended March 31, 2018. 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.

Management Commentary
"First quarter results were
outstanding, demonstrating the momentum in our business," said George P.
Sakellaris, President and Chief Executive Officer of Ameresco. "All of
our lines of business grew revenue meaningfully while expanding
profitability. Our recurring revenue streams grew over 20% and
contributed the majority of our profit, a direct result of our strategic
focus. Efficiency project revenue was up over 30% with broad strength
across the country complementing the continued momentum with the Federal
government. Looking ahead, we are expecting the momentum to continue,
which could help drive growth for years to come. Based on the strong
first quarter results, we are reiterating the annual guidance we offered
a few weeks ago, which reflects our confidence in the outlook for
another year of accelerating growth."

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

First Quarter 2018

Revenues were $167.4 million, compared to $134.6 million. Operating
income was $8.3 million, compared to operating loss of $0.6 million.

Net income attributable to common shareholders was $7.0 million compared
to a loss of $0.6 million, and net income per diluted share was $0.15
compared to a loss of $0.01. Non-GAAP EPS was $0.16, compared to a loss
of $0.04.

Adjusted EBITDA, a non-GAAP financial measure, was $15.8 million,
compared to $6.0 million.

Additional First Quarter 2018 Operating Highlights:

  • Cash flows used in operating activities were $37.1 million, compared
    to $32.0 million, and adjusted cash from operations, a non-GAAP
    financial measure, was $(0.5) million, compared to $3.2 million.
  • Total project backlog was $1.9 billion and consisted of:
  • $595.6 million of fully-contracted backlog, representing signed
    customer contracts for installation or construction of projects, which
    we expect to convert into revenue over the next two to four years, on
    average; and
  • $1.3 billion of awarded projects, representing projects in development
    for which we do not have signed contracts.
  • Assets in development were $221.4 million or 90 MWe.

FY 2018 Guidance

Based on year to date performance and expectations for the remainder of
2018, Ameresco is revising its 2018 outlook. Ameresco expects net income
per diluted share to be in the range of $0.60 to $0.70 for 2018.
Ameresco reaffirms total revenue to be in the range of $765 million to
$800 million and adjusted EBITDA to be in the range of $75 million to
$85 million in 2018. This guidance excludes the impact of any
non-controlling interest activity and our restructuring activities, as
well as any related tax impact.

Share Repurchase Program

Through the end of the first quarter, the Company repurchased 2,085,397
shares of its Class A common stock for $11.5 million. The Company has
approximately $3.5 million of remaining authorization under the share
repurchase program it announced in May 2016.

Webcast Reminder
The Company will host a conference call
today at 8:30 a.m. ET today 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: 4396436)
  • International Participants: Dial 1-224-357-2393 (Access Code: 4396436)

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; market price of the Company's stock prevailing from time to
time; the nature of other investment opportunities presented to the
Company from time to time; the Company's cash flows from operations; and
other factors discussed in our Annual Report on Form 10-K for the year
ended December 31, 2017, filed with the U.S. Securities and Exchange
Commission on March 7, 2018. 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.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

 

March 31, December 31,
2018 2017
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 34,125 $ 24,262
Restricted cash 16,894 15,751
Accounts receivable, net 93,622 85,121
Accounts receivable retainage, net 19,869 17,484
Costs and estimated earnings in excess of billings 64,064 104,852
Inventory, net 8,683 8,139
Prepaid expenses and other current assets 23,258 14,037
Income tax receivable 4,246 6,053
Project development costs 14,652   11,379  
Total current assets 279,413 287,078
Federal ESPC receivable 254,349 248,917
Property and equipment, net 5,817 5,303
Energy assets, net 381,724 356,443
Deferred income tax 3,570
Goodwill 56,294 56,135
Intangible assets, net 2,231 2,440
Other assets 28,377   27,635  
Total assets $ 1,011,775   $ 983,951  
 
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Current portions of long-term debt and capital lease liabilities $ 26,253 $ 22,375
Accounts payable 100,085 135,881
Accrued expenses and other current liabilities 23,818 23,260
Billings in excess of cost and estimated earnings 22,462 19,871
Income taxes payable 564   755  
Total current liabilities 173,182 202,142
Long-term debt and capital lease liabilities, less current portions
and net of deferred financing fees
218,398 173,237
Federal ESPC liabilities 244,341 235,088
Deferred income taxes, net 584
Deferred grant income 7,050 7,188
Other liabilities 17,784 18,754
 
Redeemable non-controlling interests 10,751 10,338
 
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no
shares issued and outstanding at March 31, 2018 and December 31, 2017
Class A common stock, $0.0001 par value, 500,000,000 shares
authorized, 29,552,750 shares issued and 27,467,353 shares
outstanding at March 31, 2018, 29,406,315 shares issued and
27,533,049 shares outstanding at December 31, 2017
3 3
Class B common stock, $0.0001 par value, 144,000,000 shares
authorized, 18,000,000 shares issued and outstanding at March 31,
2018 and December 31, 2017
2 2
Additional paid-in capital 117,242 116,196
Retained earnings 238,378 235,844
Accumulated other comprehensive loss, net (3,786 ) (5,626 )
Less - treasury stock, at cost, 2,085,397 shares at March 31, 2018
and 1,873,266 shares at December 31, 2017
(11,570 ) (9,799 )
Total stockholders' equity 340,269   336,620  
Total liabilities, redeemable non-controlling interests and
stockholders' equity
$ 1,011,775   $ 983,951  
           

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

 
Three Months Ended March 31,
2018 2017
(Unaudited) (Unaudited)
Revenues $ 167,410 $ 134,610
Cost of revenues 131,937   108,686  
Gross profit 35,473 25,924
Selling, general and administrative expenses 27,204   26,487  
Operating income (loss) 8,269 (563 )
Other expenses, net 3,544   1,826  
Income (loss) before benefit for income taxes 4,725 (2,389 )
Income tax benefit (2,779 ) (645 )
Net income (loss) 7,504 (1,744 )
Net (income) loss attributable to redeemable non-controlling
interests
(516 ) 1,100  
Net income (loss) attributable to common shareholders $ 6,988   $ (644 )
Net income (loss) per share attributable to common shareholders:
Basic $ 0.15 $ (0.01 )
Diluted $ 0.15 $ (0.01 )
Weighted average common shares outstanding:
Basic 45,373,000 45,514,000
Diluted 45,994,000 45,514,000
           

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
Three Months Ended March 31,
2018 2017
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income (loss) $ 7,504 $ (1,744 )
Adjustments to reconcile net income (loss) to cash flows from
operating activities:
Depreciation of energy assets 6,312 5,109
Depreciation of property and equipment 542 693
Amortization of deferred financing fees 419 397
Amortization of intangible assets 253 380
Provision for bad debts 64
Gain on sale of assets (104 )
Unrealized gain on ineffectiveness of interest rate swaps (102 ) (123 )
Stock-based compensation expense 355 343
Deferred income taxes (2,920 ) (859 )
Unrealized foreign exchange gain (loss) 492 (185 )
Changes in operating assets and liabilities:
Accounts receivable (1,837 ) 30,478
Accounts receivable retainage (2,453 ) (1,333 )
Federal ESPC receivable (37,967 ) (34,418 )
Inventory, net (544 ) 1,154
Costs and estimated earnings in excess of billings 30,906 7,193
Prepaid expenses and other current assets (4,578 ) (2,686 )
Project development costs (2,325 ) (1,155 )
Other assets (281 ) (23 )
Accounts payable, accrued expenses and other current liabilities (33,227 ) (31,939 )
Billings in excess of cost and estimated earnings 565 (3,053 )
Other liabilities 135 65
Income taxes payable 1,617   (201 )
Cash flows from operating activities (37,070 ) (32,011 )
Cash flows from investing activities:
Purchases of property and equipment (1,015 ) (387 )
Purchases of energy assets (12,818 ) (29,121 )
Proceeds from sale of assets of a business 2,777
Acquisitions, net of cash received (21,343 ) (2,409 )
Cash flows from investing activities (35,176 ) (29,140 )
Cash flows from financing activities:
Payments of financing fees (575 ) (338 )
Proceeds from exercises of options 691 240
Repurchase of common stock (1,771 ) (2,049 )
Proceeds from senior secured credit facility, net 17,404 18,000
Proceeds from long-term debt financings 33,501 12,878
Proceeds from Federal ESPC projects 36,581 35,167
Proceeds from Federal ESPC energy assets 717
Proceeds from sale-leaseback financings 8,783
Distributions from investment by redeemable non-controlling
interests, net
(103 ) (62 )
Payments on long-term debt (2,322 ) (8,010 )
Cash flows from financing activities 84,123 64,609
Effect of exchange rate changes on cash (185 ) 51  
Net increase in cash, cash equivalents and restricted cash 11,692 3,509
Cash, cash equivalents and restricted cash, beginning of period 60,105   52,826  
Cash, cash equivalents and restricted cash, end of period $ 71,797   $ 56,335  
     

 

Non-GAAP Financial Measures (in thousands)

       
Three Months Ended March 31,
2018       2017
(Unaudited) (Unaudited)
Adjusted EBITDA:
Net income (loss) attributable to common shareholders $ 6,988 $ (644 )
Impact from redeemable non-controlling interests 516 (1,100 )
Plus: Income tax benefit (2,779 ) (645 )
Plus: Other expenses, net 3,544 1,826
Plus: Depreciation and amortization of intangible assets 7,107 6,182
Plus: Stock-based compensation 355 343
Plus: Restructuring and other charges 32    
Adjusted EBITDA $ 15,763   $ 5,962  
Adjusted EBITDA margin 9.4 % 4.4 %
 
Non-GAAP net income (loss) and EPS:
Net income (loss) attributable to common shareholders $ 6,988 $ (644 )
Impact from redeemable non-controlling interests 516 (1,100 )
Plus: Restructuring and other charges 32
Plus: Income Tax effect of non-GAAP adjustments (27 )  
Non-GAAP net income (loss) $ 7,509   $ (1,744 )
 
Diluted net income (loss) per common share $ 0.15 $ (0.01 )
Effect of adjustments to net income (loss) 0.01   (0.03 )
Non-GAAP EPS $ 0.16   $ (0.04 )
 
Adjusted cash from operations:
Cash flows from operating activities $ (37,070 ) $ (32,011 )
Plus: proceeds from Federal ESPC projects 36,581   35,167  
Adjusted cash from operations $ (489 ) $ 3,156  
 
Three Months Ended March 31,
2018 2017
(Unaudited) (Unaudited)
Construction backlog:
Awarded(1) $ 1,293,000 $ 1,138,200
Fully-contracted 595,600   505,000  
Total construction backlog $ 1,888,600   $ 1,643,200  
Energy assets in development(2) $ 221,400 $ 206,600
 
Three Months Ended March 31
2018 2017
(Unaudited) (Unaudited)
New contracts and awards:
New contracts $ 135,000 $ 55,000
New awards(1) $ 229,000 $ 236,000

(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, 2018
          Low       High
Operating income         $ 44,000         $ 52,000
Depreciation and amortization of intangible assets         30,000         31,000
Stock-based compensation         1,000         2,000
Restructuring and other charges                
Adjusted EBITDA         $ 75,000         $ 85,000

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, stock-based compensation expense, restructuring
charges, loss related to a significant non-core project in Canada and
charges related to a significant customer bankruptcy. 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, stock-based compensation expense,
restructuring charges and loss related to a significant non-core project
in Canada. 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.

During the first quarter of 2016, we changed our calculation and
presentation of adjusted EBITDA to exclude restructuring charges and
losses related to a significant non-core project in Canada and during
the third quarter of 2016, we changed our calculation and presentation
of adjusted EBITDA in order to exclude charges related to a significant
customer bankruptcy. We do not consider these items indicative of our
core operating performance. Adjusted EBITDA and adjusted EBITDA margin
for the prior periods have been recalculated to be presented on a
comparable basis.

Non-GAAP Net Income and EPS
We define non-GAAP net income
and earnings per share ("EPS") to exclude certain discrete items that
management does not consider representative of our ongoing operations,
including restructuring charges, loss related to a significant non-core
project in Canada, impact from redeemable non-controlling interest and
charges related to a significant customer bankruptcy. We consider
non-GAAP net income and non-GAAP EPS to be important indicators of our
operational strength and performance of our business because they
eliminate the effects of events that are not part of the Company's core
operations.

Adjusted Cash from Operations
We define adjusted cash from
operations as cash flows from operating activities 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 cash from operations as a measure of
liquidity because it captures all sources of cash associated with our
revenue generated by operations.

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