Ameresco, Inc. Q4 FY2024 earnings call

Key Points

• Ended 2024 with 29% annual revenue growth and 38% adjusted EBITDA growth; record project backlog ($4.8B, +24% YoY) and energy assets added (241 MW, with 31 MW in Q4).
• Fourth quarter: 21% revenue growth, 59% adjusted EBITDA growth; benefit from sale of non-core AEG business.
• Challenges: Two legacy projects caused schedule delays and cost overruns, but financial impact is largely behind us.
• Nicole Bulgarino: Federal business affected by new admin; one project canceled, two paused, but majority of federal projects continuing; ESPCs aligned with admin goals.
• Mark Chiplock: Q4 gross margin 12.5% lower due to cost overruns; operating income up 31% due to revenue growth and AEG sale, offset by impairment and depreciation; full year gross profit impacted by $38M from two projects.

Projects business: Q4 revenue grew 21%, full year revenue grew 29%. Energy asset: Q4 revenue grew 31%, full year revenue grew 29%; operating assets at 731 MW with 637 MW in development. O&M: Q4 revenue grew 9%, full year revenue grew 29%. Other business: Q4 revenue grew 14%, full year revenue grew 29%.

2025 Guidance

• Revenue midpoint $1.9B, adjusted EBITDA midpoint $235M.
• Anticipate placing 100-120 MW energy assets (including 1-2 RNG plants).
• CapEx $350M-$400M, funded by energy asset debt, tax equity, or tax credit sales.
• Seasonality: Q1 expected similar to Q1 2024, second half of year ~60% of total revenue.

• Challenges from two legacy projects with schedule delays and inflation leading to cost overruns.
• Uncertainty in federal policies: one project canceled, two paused, potential for additional delays in federal projects.
• RIN price volatility impacting earnings, with less than 30% of 2025 RIN generation merchant.

Q: Talk about customer conversations since January vs the back half of 2024 and the impact of admin uncertainty.

A: Activity still good, with RFPs out; DoD active, but civilian slow in some areas like TSA.

Q: Pause in GSA projects, what's driving it and when might business revert to normal?

A: Pause due to GSA evaluating building sales; expect re-scoping of projects, with administration still favoring ESPCs.

Q: Breakdown of EBITDA growth by business lines?

A: Project backlog contributes, energy assets ramp up, and O&M has linear growth.

Q: Shift in guidance and delta if no DC changes?

A: Backlog is excellent, but projects pushed ~6 months due to new admin, with overall market still good.

Q: Is the federal business pause one-off or widespread?

A: Cancellation is one-off, pauses accounted for in guidance, with a conservative approach to policy changes.

Q: Gap between contracted backlog and revenue guidance?

A: Implementation period of projects is over 12-36 months, with 12-month contracted providing line of sight to revenue.

Q: Timing of RNG plants and regulatory approvals?

A: Confident in EPA certification moving along, with pro biofuels stance from administration