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Ameresco Reports Second Quarter 2017 Financial Results
[August 09, 2017]

Ameresco Reports Second Quarter 2017 Financial Results


Ameresco, Inc. (NYSE:AMRC), a leading energy efficiency and renewable energy company, today announced financial results for the fiscal quarter ended June 30, 2017. 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

"We had a solid quarter, with profit growth on track to meet the expectations we set out at the start of the year," said George Sakellaris, Chief Executive Officer. "The results highlight several attractive elements of Ameresco's business model, including visibility, larger more complex projects, geographic penetration and an expanding portfolio of energy-producing assets."

Sakellaris continued, "In particular, our backlog gives us a good view to project revenues out two to four years. Combined with the natural visibility of our recurring revenue streams of energy sales and operations and maintenance, we believe we have an outstanding business model that delivers growth, profit and visibility."

Financial Results

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

Second Quarter 2017

Revenues were $166.7 million, compared to $162.6 million. Operating income was $8.8 million, compared to operating income of $4.7 million.

Net income was $5.8 million compared to $2.0 million, and net income per diluted share was $0.13 compared to $0.04. Non-GAAP EPS was $0.13, compared to $0.08.

Adjusted EBITDA, a non-GAAP financial measure, was $15.4 million, compared to $13.2 million.

Additional Second Quarter 2017 Operating Highlights:

  • Cash flows used in operating activities were $19.6 million, compared to $24.7 million, and adjusted cash from operations, a non-GAAP financial measure, was an inflow of $19.3 million, compared to an outflow of $2.3 million.
  • Total project backlog was $1,644.9 million and consisted of:
  • $631.4 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
  • $1,013.5 million of awarded projects, representing projects in development for which we do not have signed contracts.
  • Assets in development were $202.4 million or 95 MWe.

FY 2017 Guidance

Based on year to date performance and expectations for the remainder of 2017, Ameresco re-affirms its full year 2017 outlook. Ameresco expects to earn total revenue in the range of $665 million to $700 million in 2017. The Company also expects adjusted EBITDA for 2017 to be in the range of $60 million to $65 million and net income per diluted share to be in the range of $0.37 to $0.43 for 2017. This guidance excludes the impact of any non-controlling interest activity and our restructuring activities.

Share Repurchase Program

Through the end of the second quarter, the Company repurchased 1,719,242 shares of its Class A common stock for $8.6 million. The Company has approximately $6.4 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: 53778704)
  • International Participants: Dial 1-224-357-2393 (Access Code: 53778704)

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, 2016, filed with the U.S. Securities and Exchange Commission on March 3, 2017. 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)

 
June 30, December 31,
2017 2016
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 27,131 $ 20,607
Restricted cash 16,565 12,299
Accounts receivable, net 67,679 85,354
Accounts receivable retainage, net 18,295 17,465
Costs and estimated earnings in excess of billings 53,313 56,914
Inventory, net 9,479 12,104
Prepaid expenses and other current assets 10,613 11,732
Income tax receivable 521 406
Project development costs 13,339   9,180  
Total current assets 216,935 226,061
Federal ESPC receivable 221,680 158,209
Property and equipment, net 4,699 5,018
Energy assets, net 348,472 319,758
Goodwill 55,779 57,976
Intangible assets, net 3,113 3,931
Other assets 25,204   26,328  
Total assets $ 875,882   $ 797,281  
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portions of long-term debt and capital lease liabilities $ 22,270 $ 19,292
Accounts payable 102,529 126,583
Accrued expenses and other current liabilities 21,146 22,763
Billings in excess of cost and estimated earnings 21,494 21,189
Income taxes payable 603   775  
Total current liabilities 168,042 190,602
Long-term debt and capital lease liabilities, less current portions and net of deferred financing fees 172,732 140,593
Federal ESPC liabilities 197,729 133,003
Deferred income taxes, net 3,074 9,037
Deferred grant income 7,464 7,739
Other liabilities 16,340 15,154
 
Redeemable non-controlling interests 7,297 6,847
 
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2017 and December 31, 2016 - -
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 29,251,334 shares issued and 27,532,092 shares outstanding at June 30, 2017, 29,005,284 shares issued and 27,706,866 shares outstanding at December 31, 2016 3 3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at June 30, 2017 and December 31, 2016 2 2
Additional paid-in capital 114,653 112,926
Retained earnings 203,540 194,353
Accumulated other comprehensive loss, net (6,338 ) (6,591 )
Less - treasury stock, at cost, 1,719,242 shares at June 30, 2017 and 1,298,418 shares at December 31, 2016 (8,656 ) (6,387 )
Total stockholders' equity 303,204   294,306  
Total liabilities, redeemable non-controlling interests and stockholders' equity $ 875,882   $ 797,281  
 

           

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except share and per share amounts)

 
Three Months Ended June 30, Six Months Ended June 30,
2017       2016 2017       2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues $ 166,665 $ 162,628 $ 301,275 $ 296,404
Cost of revenues 131,257   130,772   239,943   236,872
Gross profit 35,408 31,856 61,332 59,532
Selling, general and administrative expenses 26,650   27,140   53,137   53,028
Operating income 8,758 4,716 8,195 6,504
Other expenses, net 1,738   1,850   3,564   2,693
Income before provision for income taxes 7,020 2,866 4,631 3,811
Income tax provision 1,060   766   415   1,007
Net income 5,960 2,100 4,216 $ 2,804
Net (income) loss attributable to redeemable non-controlling interests (129 ) (106 ) 971   244
Net income attributable to common shareholders $ 5,831   $ 1,994   $ 5,187   $ 3,048
Net income per share attributable to common shareholders:
Basic $ 0.13 $ 0.04 $ 0.11 $ 0.07
Diluted $ 0.13 $ 0.04 $ 0.11 $ 0.07
Weighted average common shares outstanding:
Basic 45,463,403 46,719,122 45,488,498 46,730,805
Diluted 45,674,715 46,793,350 45,601,466 46,730,805
 
     

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
Six Months Ended June 30,
2017       2016
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 4,216 $ 2,804
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation of energy assets 10,220 9,179
Depreciation of property and equipment 1,336 1,552
Amortization of deferred financing fees 786 635
Amortization of intangible assets 716 1,211
Provision for bad debts 15 2,932
Gain on sale of assets (104 ) -
Unrealized gain on ineffectiveness of interest rate swaps (178 ) (153 )
Stock-based compensation expense 650 758
Deferred income taxes (1,867 ) (1,365 )
Unrealized foreign exchange gain (712 ) (791 )
Changes in operating assets and liabilities:
Restricted cash 215 (3,361 )
Accounts receivable 18,561 (8,701 )
Accounts receivable retainage (779 ) (484 )
Federal ESPC receivable (72,781 ) (50,167 )
Inventory, net 2,626 (1,183 )
Costs and estimated earnings in excess of billings 4,101 22,646
Prepaid expenses and other current assets 906 (562 )
Project development costs (4,066 ) (1,360 )
Other assets 240 459
Accounts payable, accrued expenses and other current liabilities (15,720 ) (8,254 )
Billings in excess of cost and estimated earnings 212 (6,041 )
Other liabilities (60 ) (1,908 )
Income taxes payable 97   2,432  
Cash flows from operating activities (51,370 ) (39,722 )
Cash flows from investing activities:
Purchases of property and equipment (1,231 ) (2,212 )
Purchases of energy assets (51,393 ) (20,813 )
Proceeds from sale of assets of a business 2,777 -
Acquisitions, net of cash received (2,409 ) -  
Cash flows from investing activities (52,256 ) (23,025 )
Cash flows from financing activities:
Payments of financing fees (1,614 ) (749 )
Proceeds from exercises of options 1,077 470
Repurchase of common stock (2,269 ) (1,949 )
Proceeds from senior secured credit facility, net 13,200 2,900
Proceeds from long-term debt financing 41,565 3,013
Proceeds from Federal ESPC projects 74,036 38,759
Proceeds from sale-leaseback financing 21,454 11,008
Proceeds from investment by redeemable non-controlling interests, net 1,421 6,519
Restricted cash (2,458 ) 3,369
Payments on long-term debt (35,987 ) (6,129 )
Cash flows from financing activities 110,425 57,211
Effect of exchange rate changes on cash (275 ) (832 )
Net increase (decrease) in cash and cash equivalents 6,524 (6,368 )
Cash and cash equivalents, beginning of period 20,607   21,645  
Cash and cash equivalents, end of period $ 27,131   $ 15,277  
 
           

Non-GAAP Financial Measures (in thousands)

 
Three Months Ended June 30, Six Months Ended June 30,
2017       2016 2017       2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Adjusted EBITDA:
Net income attributable to common shareholders $ 5,831 $ 1,994 $ 5,187 $ 3,048
Impact from redeemable non-controlling interests 129 106 (971 ) (244 )
Plus: Income tax provision 1,060 766 415 1,007
Plus: Other expenses, net 1,738 1,850 3,564 2,693
Plus: Depreciation and amortization of intangible assets 6,090 6,023 12,272 11,942
Plus: Stock-based compensation 307 391 650 758
Plus: Restructuring and other charges 244   2,060   244   3,429  
Adjusted EBITDA $ 15,399   $ 13,190   $ 21,361   $ 22,633  
Adjusted EBITDA margin 9.2 % 8.1 % 7.1 % 7.6 %
 
Non-GAAP net income and EPS:
Net income attributable to common shareholders $ 5,831 $ 1,994 $ 5,187 $ 3,048
Impact from redeemable non-controlling interests 129 106 (971 ) (244 )
Plus: Restructuring and other charges 244 2,060 244 3,429
Plus: Income Tax effect of non-GAAP adjustments (44 ) (282 ) (44 ) (562 )
Non-GAAP net income $ 6,160   $ 3,878   $ 4,416   $ 5,671  
 
Diluted net income per common share $ 0.13 $ 0.04 $ 0.11 $ 0.07
Effect of adjustments to net income -   0.04   (0.01 ) 0.05  
Non-GAAP EPS $ 0.13   $ 0.08   $ 0.10   $ 0.12  
 
Adjusted cash from operations:
Cash flows from operating activities $ (19,585 ) $ (24,653 ) $ (51,370 ) $ (39,722 )
Plus: proceeds from Federal ESPC projects 38,869   22,374   74,036   38,759  
Adjusted cash from operations $ 19,284   $ (2,279 ) $ 22,666   $ (963 )
 
June 30,
2017 2016
(Unaudited) (Unaudited)
Construction backlog:
Awarded(1) $ 1,013,500 $ 1,116,000
Fully-contracted 631,400   435,100  
Total construction backlog $ 1,644,900   $ 1,551,100  
Energy assets in development(2) $ 202,400 $ 157,000
 
           
Three Months Ended June 30 Six Months Ended June 30
2017       2016 2017       2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
New contracts and awards:
New contracts $ 238,400 $ 187,800 $ 293,500 $ 243,000
New awards(1) $ 113,700 $ 270,100 $ 349,400 $ 403,100

(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, 2017
        Low       High
Operating income       $ 33,000         $ 37,000
Depreciation and amortization of intangible assets       26,000         26,000
Stock-based compensation       1,000         2,000
Restructuring and other charges       -         -
Adjusted EBITDA       $ 60,000         $ 65,000
           

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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