管理層發言
Thank you for standing by. My name is Luella, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Q3 2024 Ameresco, Inc. earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.
Thank you, Luella, and good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George Sakellaris, Ameresco's Chairman, President, and Chief Executive Officer; Mark Chiplock, Executive Vice President, Chief Financial Officer, and Chief Accounting Officer; as well as two of our executives, Nicole Bulgarino and Lou Maltezos. Before I turn the call over to George, I would like to make a brief statement regarding forward-looking remarks. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the Safe Harbor Language on Slide 2 of our supplemental information, and our SEC filings for discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures and additional information in our supplemental slides that were posted to our website. Please note that all comparisons that will be discussed today are on a year-over-year basis unless otherwise noted. I will now turn the call over to George.
Thank you, Leila, and good afternoon, everyone. Before I begin, I would like to draw everyone's attention to the important announcement we made today regarding further steps we have taken to optimize our corporate structure to drive continued profitable growth. Today, we announced the promotions of four key executives to the role of President, leading their respective groups. Mike Bakas as President of Renewable Fuels; Nicole Bulgarino, as President of Federal and Utility Infrastructure; Lou Maltezos as President of Central and Western USA and Canada; and Peter Christakis, as President of East USA, Greece, and Project Risk. Now, on to our results. Ameresco's diversified business model continued to yield impressive results, with over 40% growth in both revenue and adjusted EBITDA, driven by our continued focus on execution against a strong industry backdrop. We also brought an additional 42 megawatts of energy assets into operation.
This brings our total amount to a record 2,000 megawatts, already above our 200 megawatt guidance for the year. Our total project backlog grew by 22%, expanding our long-term contract visibility to $4.5 billion. We were also very successful with contract execution, as our contracted project backlog grew an impressive 56%, to a record $1.9 billion. Our diversified customer base continued to show very strong demand for our renewables, energy efficiency, and resiliency offerings. We are at the forefront of the energy transition, as our customers value our ability to integrate a comprehensive portfolio of cleantech solutions in order to meet their unique goals, all while offering budget-neutral cost-saving solutions. Before I turn the call over, let me make a few comments about the recent election outcome. Reiterating what we have said many times in the past, we believe we are well-insulated from changes in the administration, as our core efficiency solutions stand on their own without relying on any federal incentives.
The technologies that qualify for incentives, such as battery storage, continue to receive strong bipartisan support. Investors probably remember that Ameresco had some of its best years during the last Trump administration. There was very strong support for our performance contracts especially our resiliency solutions, with both civilian, but more importantly the federal military part of the government, and especially in a budget-constrained environment. Also, we have become much more diversified and resilient over the years. We have purposely grown our recurring energy asset and O&M profit streams, which now account for the majority of our annual adjusted EBITDA. Geographically, we are also much more diversified with operations in every state, Canada, the UK, and our growing continental European footprint. Due to the great value proposition of our business model, we believe we are very well-positioned to thrive under any administration, as we have demonstrated for over 25 years of doing business.
Similar to the last call, I have asked two key members of our executive team, Lou Maltezos, to join us today. Lou will cover the drivers of the strengths we have been seeing in our core markets and discuss some of the internal changes we have made to execute more efficiently in the current operating environment. Nicole will discuss how the increasing demand for resiliency continues to be a key catalyst for our business. And now, I would like to turn the call over to Lou.
Thanks, George, and good afternoon, everyone. I'm pleased to be here today to talk about what we see as the bedrock of our business, the energy efficiency, distributed generation, and cost savings project work. This work is focused on our traditional core customer base, what we call the mush market. That includes state and local governments, colleges and universities, K-12 school systems, and the healthcare sector. While the scale of the projects we execute for these customers tend to be smaller than our federal or utility projects, they represent an important part of Ameresco's business and future growth. These projects address our customers' critical need to upgrade their aging infrastructure and reduce their deferred maintenance. At the same time, they improve the performance and comfort of our customers' buildings in a sustainable, budget-neutral manner. Within these markets, the fundamental drivers are consistent.
Our customers need to fix their buildings but are often budget constrained. A typical Ameresco project will optimize, update, or replace their HVAC, lighting, and building envelope, and provide smart building automation systems. In addition, our projects often go beyond energy efficiency to incorporate customer-driven needs like water efficiency, electric vehicle charging, and solar car parks as part of a complete facility solution. Importantly, these projects can generate operational cost savings from day one with no upfront capital. Ameresco is unique in our ability to integrate a comprehensive set of solutions for our customers as opposed to them having to use a wide range of different products and service providers. A great example of this is a project we recently completed for Columbia County, Oregon. The project involved an extensive renovation of the county's historic John Gumm Building.
The core technical work included HVAC, lighting, and envelope efficiency, but the project went beyond those traditional energy conservation measures to address critical building needs including the preservation and repair of historic features, the installation of a new elevator to ensure accessibility, and irrigation and landscaping. Like many of the projects in our core market, the impact goes beyond the immediate benefits of the energy efficiency work and supports our customers' core missions. In this case, we were able to revitalize a historic building so that it can be used to provide expanded services and be a resource to the community. To accelerate our growth further, over the last 12 months, we've taken steps to realign the company to maximize our ability to serve our customers across our various geographies. It is a program we call One Ameresco. This has enabled us to lower our OpEx, improve efficiencies, share our technical strengths, and bolster our ability to serve national accounts.
Together, we're strategically targeting projects in our core markets, squarely within our technical competencies. This organizational realignment is already in place, and it's proving successful. Given the great demand for our services, our unique ability to integrate comprehensive solutions, and the changes we have made internally to best capitalize on these opportunities, I couldn't feel more excited about the future. We're executing well and are focused on the mission. Whether it be a leading-edge transformational energy project or the practical efficiency projects in our core markets, I know we have the right team in place to drive future growth. I'll now turn the call over to Nicole.
Thank you, Lou, and good afternoon. Before I talk about resiliency in particular, I did want to follow up on George's comments about the election. As George mentioned, our federal group has had some of its best years during the last Trump administration with very strong support for our budget-neutral infrastructure solutions. In fact, during the previous Trump administration, the volume of ESPC contracts was approximately three times what we have seen during the Biden administration. We continue to be a leader of ESCO services to the federal government and look to continue to thrive under the new administration, as we did during the last time he was in office. Let me now talk about the growing customer focus on resiliency, which is a very big focus for our federal, civilian, and military customers. Energy resiliency is increasingly vital across the federal, utility, and municipal markets to ensure a continuous and reliable power supply, particularly in the face of rising natural disasters, cyber threats, and aging infrastructure.
For federal markets, energy resiliency is critical for national security, ensuring the uninterrupted operation of vital civilian and military services, and even for supporting our military personnel and their families. While expanding the use of intermittent renewable sources like wind and solar, utility and municipal markets also need firm, robust systems to prevent widespread outages and maintain services during extreme weather events. They require resilient energy solutions to support local communities, emergency services, essential public infrastructure, and grid reliability. By investing in energy resiliency, these sectors can enhance their ability to withstand and quickly recover from disruptions, ensuring the safety and well-being of the populations they serve. Over the years, Ameresco has built a core competency and excellent reputation around many of the important technologies that enable resiliency, including microgrids and battery energy storage systems.
We have successfully won on executing several large resiliency projects this year. By way of example, we are currently in construction of a 50-megawatt battery energy storage asset for Silicon Valley Power in California. This system will efficiently store the surplus renewable electricity on California's grid during the day and discharge it during the afternoon ramp of electricity demand, supporting the renewable assets and providing resiliency during these transitional times. Also in California, we are building a 10-megawatt solar and 50-megawatt hour battery storage project at the Naval Weapons Station Seal Beach, which we expect to come online in the first half of 2025. The project builds on the public-private partnership model successfully deployed at our Kupono Solar Facility in Hawaii. Here, Ameresco is utilizing the Navy's land as the host for a wholesale power project with the utility San Jose Clean Energy and, in conjunction, provides resiliency improvements to the Navy installation.
Another example of a different kind of resiliency solution we have with our military customers is the projects we are developing at Fort Johnson in Louisiana. Here, we are installing geothermal infrastructure and upgrading 3,600 homes for our military families. The project will not only reduce the load from the local utility but, more importantly, provides reliable, sustainable, and highly efficient energy exchange with an underground geothermal system. This is a $33 million resiliency infrastructure investment, and it's one of the projects we are executing in partnership with Corvias, a leader in the Department of Defense's Military Housing Privatization Initiative. In closing, we believe that resilience is a key driver across our markets. Given the depth of our experience, as well as our portfolio of these kinds of projects, we are well-positioned to be a leading solution provider to address this critical infrastructure need. I will now turn the call over to Mark to comment on our financial performance and outlook.
Thank you, Nicole, and good afternoon. As George mentioned, we had another strong quarter of revenue and profit growth. Our total revenue grew 49% to over $0.5 billion as each of our four business lines experienced double-digit growth. Revenues from our projects business grew nearly 60%, reflecting our consistent focus on execution and conversion of our backlog. Projects business development activity remained robust, with our total backlog increasing 22% to $4.5 billion, and importantly, our contracted backlog increased 56% on the strength of nearly $600 million of awards converted into contracts. Energy asset revenue grew 33%, largely due to the greater number of operating assets compared to last year. We brought 42 megawatts of assets into operations this quarter, bringing our year-to-date adds to a record 209 megawatts. This already exceeds our full-year guidance, again, a result of strong execution.
Our large and growing base of operating energy assets now stands at 715 megawatts. Our O&M business also had a very strong quarter, with revenue growing 25% as we continue to win more long-term O&M business. The O&M backlog now stands at over $1.4 billion, an increase of 15%, or $180 million, compared to a year ago. Gross margin of 15.4% was lower and reflects a larger contribution from lower-margin projects, along with additional costs associated with the SCE projects as described during the previous quarter. Adjusted EBITDA grew 44% to a record $62.2 million, driven by our revenue growth, along with cost savings and operating leverage. Non-GAAP EPS was $0.32, as the additional contribution from our revenue growth was largely offset by higher interest and depreciation expenses. Those interest costs also included a non-cash negative adjustment of $3.7 million to mark to market unhedged derivatives, compared to a $3 million favorable adjustment last year.
As a reminder, the results for the third quarter last year also included a discrete tax benefit of $7.2 million related to a prior year Section 179D tax deduction. Turning to our balance sheet and cash flows, we ended the quarter with approximately $114 million in cash and corporate debt of approximately $273 million. Our debt-to-EBITDA leverage ratio under our Senior Secure Credit Facility of 2.8 times continued to decline and remains below the covenant level of 3.5 times. Our energy asset debt advance rate remained at a conservative 74%. Importantly, we continue to believe our access to energy asset capital is excellent with many financing options available, as demonstrated by us having secured approximately $237 million in new project financing commitments in the quarters and received net proceeds of $57 million. Our cash flow continued to be positive, with adjusted cash flow from operations of approximately $34 million.
Our 8-quarter rolling average adjusted cash from operations, which we believe best represents the cash conversion over our full implementation cycle, was $39 million. During the quarter, we reached an agreement with SCE on the substantial completion of two of the three battery energy storage system projects. We received approximately $110 million in milestone payments, net of a holdback of $52 million for potential liquidated damages, which are still in dispute. A portion of these proceeds was used to catch up on outstanding vendor payments, as well as to pay down a portion of our corporate revolver. Final acceptance milestone payments on these two projects of approximately $36 million will follow upon completion. The third project, which is expected to reach substantial completion in Q4, has two remaining milestone payments, totaling $55 million net of potential liquidated damages. Finally, let me spend a minute on our 2024 guidance.
We are pleased to be reaffirming our full-year guidance, reflecting revenue and adjusted EBITDA growth of 27% and 35%, respectively, at the midpoints, representing what we believe will be a very strong finish to a solid year of performance. While we expect higher interest and other expenses in the range of $70 million to $75 million, we are also maintaining our non-GAAP EPS guidance, largely driven by our estimated annual tax benefit rate. Now I'd like to turn the call back over to George for closing comments.
Thank you, Mark. Ameresco has excellent momentum as we head into the final quarter of 2024. We believe the strong results will carry into the new year, given the growth in our contracted backlog, our energy assets, and O&M contracts. The broad range of impactful solutions we provide has never been in greater demand by governments, institutions, utilities, and corporations around the world. In closing, I would like to once again thank our employees, customers, and stockholders for their continued support. Operator, we would like to open the call to questions now.
分析師問答
Your first question comes from the line of George Gianarikas with Canaccord Genuity. Please go ahead.
Hi, good afternoon everyone. Thank you for taking my questions. Maybe to just ask about the changes in Washington, specifically around the potential impact on your RNG business. Can you just help us think through the pluses and minuses to biofuel mandates? And also, last quarter, you announced a supply agreement with a California-based natural gas utility. Anything else you can point us to that helps insulate any volatility in RIN prices? Thank you.
Yes, that's a great question, George. Mike is here to provide some valuable insights regarding it. We believe that the business is strong and will continue to perform well.
To address the last question about the utility, we are currently awaiting PTC approval. The staff is in the process of making recommendations for the commissioners. We are also seeing significant growth in the voluntary sector, with many utilities issuing RFPs for similar requests with longer terms, keeping that market quite active. Regarding the change in administration, it’s important to note that much has evolved in the past four years within our industry. Major oil companies have invested billions, and there are various tax incentives that will benefit red states, which we believe will remain in effect. The Farm Bill is essentially a Farm Bill, and it has been influential for President-elect Trump and Vance, who has strong support from the Farm Bureau. Additionally, Elon Musk's substantial investment in Trump's campaign positions him favorably if opportunities arise. Another aspect to consider is the cellulosic waiver credit; we didn't have it this year, but it could be reinstated next year, which is inversely linked to fuel costs.
Thus, if gasoline prices decrease, the waiver credit could increase, providing a stronger safety net for us. Trump has been vocal about driving down gas prices below $2 per gallon, which would further benefit our market. Overall, considering the incentives and developments related to hydrogen as well, I believe the market remains solid, as evidenced by recent trading steady around $3 to $3.05 per run.
Thank you.
Yeah. Thanks for taking the question. Follow-up on the election comments. If you go back to Trump's first term, were there any differences in the federal contracting landscape in terms of demand patterns or the contract structures compared to the last four years? Or has it basically been status quo?
Yes, I will let Nicole add more detail to that. During the first years of the Trump administration, our performance in the contract business was exceptionally strong. I recall discussing this with Speaker Boehner while we were advocating for something else, and he mentioned that the business's performance contracts were favored by key individuals, although there were some concerns about other aspects of the project. In fact, we executed three times as many contracts during the Trump administration compared to under Biden. One reason for this, which Nicole will elaborate on, is that during the Obama and Biden administrations, customers often delayed signing contracts to determine the extent of the incentives available, which slowed down the overall process. Nicole?
No, just to add to that, I think what we observed during Trump's administration was a strong alignment with the military. We accomplished significant work for the Department of Defense through performance contracting to improve infrastructure, which they utilized as a strategy for many improvements. The Biden administration continues to do some of this but not nearly at the same volume. There has also been considerable emphasis on farm power cogeneration facilities that were part of those Trump contracts.
Let me follow-up on the kind of international side of things. I saw several announcements recently about projects in Greece. Is it safe to say that Greece is now on par with the UK, as basically your main operating areas in Europe?
Yes. I mean, in Greece, because we have a good partnership with Sunel, and people know us. We're doing an excellent job, not just for the Greek government or the local utility, but for many of the funds that invest in solar farms in Greece. We have the reputation of executing and they trust us. We've teamed up with them and we're getting great traction in that particular part of the world. That's why I appointed Peter Christakis, who's been with us for a long time, as President of Greece in order to monitor the performance of those projects. But don't forget Italy. We are doing very well and we are expanding in that particular market as well. And that's why I brought her up. The fact that we have the Trump administration and things might change in the United States is a good diversification. Nothing's going to happen to the Europeans. There's more and more demand.
Good afternoon everybody. Can you help us understand the transition from the third quarter to the fourth quarter? It seems you're suggesting around $81 million to $82 million of EBITDA, which would indicate a strong quarter. Can you clarify the different factors involved?
Sure, this is Mark. We are definitely anticipating a strong revenue quarter in Q4. We have good visibility on the sources of our revenue, with a significant portion coming from contracted revenue. Additionally, we expect this revenue mix to result in an improved gross margin profile. Therefore, we should see a better EBITDA margin in Q4. The EBITDA bridge and the EPS bridge are largely influenced by the tax benefits we are expecting at the end of the year.
And is that margin comment applicable to projects and assets?
Yes, I mean, I think we've seen some pretty steady margins on the assets. It's really more focused on the projects because we've seen, certainly in the last couple of quarters, project margins be a bit lower based on a combination. We've talked about the SEC costs but also just some larger, more design-build type projects that carry a lower margin profile. Yes, I think, again, the mix of the project stuff will also help that improve margin.
Hello, this is Luke on for Eric. We've got a couple of questions here for you. First, looking at the mix between utility and transportation in the RNG business, what's your outlook for growth with utility customers going forward? And where do you see that mix trending long-term?
Mike, go ahead.
Utility customer. Are you talking about utility customers in terms of the voluntary market? Okay. Well, look, what I would tell you is that the voluntary market is picking up in a big way. I think that's really the long-term growth of the addressable market. We are seeing some gas starting to leave the country as well, which is freeing up some capacity in the RFS program. I think long-term you'll see at some point the voluntary segment will surpass the demand in the transportation sector.
Thanks for taking our questions here. Hi sir. I guess to start relating to the election and your projects business. Do you ever see federal contracts that are already funded get delayed or the bidding process kind of pause due to changes in the administration? I guess I'm wondering if it can be common for a slowdown in several projects that the GSA or other agencies to occur, at least for a short time, given the noise associated with the presidential transition.
Yes, Sam. The first part of that would be that there actually will be a push to get projects done in this quarter to be able to accomplish the goals of this administration. I wouldn't normally expect there to be a slowdown into the next administration. I mean, there'll be time to adjust messaging and looking at the projects that they put out. But there's an active pipeline now and a lot of projects that we have in construction and in the awarded that we should convert this year and continue to be able to convert in the 2025 year.
It has stabilized a little bit, but we still find bottlenecks here and there in certain parts of the country, whether it's labor. But one of the biggest constraints that we have right now is finding transformers for some of our battery storage projects and solar plants. It's hard sometimes to estimate how many megawatts we'll put online interconnecting the utilities. But it's better than it was before.
Good evening. Thanks for taking my question. Just kind of following up on that last point, George, you made about interconnection taking longer. As we look into next year, how comfortable are you guys with that 150 megawatts or thereabouts of assets coming online?
No, no. Yes, the 150 megawatts is the average. We're going to put this year by the time we get done. We have one more energy plant coming online. That's about 16 megawatts and probably another 5 to 10 to 15 megawatts of solar. Depending on making sure that the utility connects them. Next year we are looking for around 100 megawatts. I think it's a better estimate. Maybe we'll go up to 120 megawatts based on where we are. But we have almost 600 megawatts in development. We'll see how many we end up putting on service. But for the time being, since we did so much this year, I would say next year it will be in the 100 megawatts, 120 megawatts range.
Thank you. And then just back to kind of the uncertainty in IRA, you answered this on the government side a little bit, but does it impact any of your customer orders or projects? For your own assets, is there any kind of slowdown in a particular asset class as you await for changes, or is it just kind of all speed ahead? Thank you.
I mean, look at our business. We have the project business. I don't see any issue associated with any incentives associated with the federal government as we are waiting for. On the assets, on the ITC, the key issue. But I don't think that's going to go away because there's great bipartisan support. And don't forget, IRA will take a loyal act of Congress right now. It's going to be very hard to reverse it. It might be some slight modifications. One of the things that President-elect has pointed out is some of the subsidies for electric vehicles. Other than that, I don't see any issues. Mike, do you want to add any more?
No, and I would suggest that some of the benefits go again to the red states that have big support there. So I don't see much material. We're not counting a lot of that stuff to get going from the beginning anyways.
Thank you very much. I wanted to revisit the ITC topic briefly. We've heard that some larger developers focused on utility-scale projects are considering safe harboring equipment as a precaution. I understand your perspective on the ITC and tend to agree. It seems likely to remain in place, having been a stable policy across different administrations. Is this something you might consider doing for prudence in 2025?
I believe that we will safe harbor some equipment or a few of the RNG plants. We will definitely do that. For some of the smaller solar plants, we may safe harbor a couple, but not too many. I don't anticipate any changes to the ITC for solar in the near future. Additionally, it's important to note that the President-elect has expressed opposition to offshore wind farms. Given the previous administration's plans for 30,000 megawatts of offshore wind, if those developments do not proceed, it will benefit our market, as we are concentrating more on 5 to 50-megawatt solar plants. These are well distributed across different states, require less transmission, and therefore are more resilient and advantageous. When we pair this with battery storage, it significantly lowers our risk profile and enhances resiliency. A year from now, we may find ourselves busier than we are today. Yes. We have started looking into that because we have great potential. Mike put some numbers together, and we are discussing various possibilities. We are looking into it, and we'll see where it goes.
Seeing as we do not have any more questions at this time, we have come to the end of the question-and-answer session. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.