管理層發言
Thank you for standing by. My name is Dustin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ameresco, Inc. First Quarter 2025 Earnings Conference Call. I would now like to turn the conference over to Leila Dillon, Senior Vice President of Marketing and Communications. Please go ahead.
Thank you, Dustin. And good afternoon, everyone. We appreciate you joining us for today's call. Our speakers on the call today will be George Sakellaris, Ameresco's Chairman and Chief Executive Officer; and Mark Chiplock, Chief Financial Officer. In addition, our Chief Investment Officer, Josh Baribeau, will be available during Q&A to help answer questions. 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 a 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. First, I would like to thank the entire Ameresco team as we celebrate the company's 25th anniversary. It's been an amazing journey, establishing Ameresco as a leader in our industry and delivering over $16 billion in customer solutions dedicated to reducing energy consumption, enhancing energy infrastructure and resiliency, and developing proven pathways to decarbonization. While the current environment remains challenging, the drivers of our business remain strong. Global power demand grows, electricity costs continue to rise, and grid reliability is deteriorating as we saw in Europe a few days ago. All of this will increase the demand for distributed, diversified, resilient energy solutions. The team's outstanding execution led to a strong start to the year with results exceeding our expectations. First quarter revenue and adjusted EBITDA grew 18% and 32%, respectively.
These results also highlighted the strength of our diversified business model as we experienced material growth in both our projects and energy asset business, including strong performance in Europe and Canada. We also increased our total project backlog to almost $5 billion, bringing our total revenue visibility across our businesses to almost $10 billion. This was another quarter of significant contract execution conversion success, resulting in a contracted project backlog of $2.6 billion, representing a growth rate of almost 80% year-over-year. And these positive business trends have continued into the second quarter. I also wanted to comment on some of the well-known challenges facing our industry and provide some insights into how the Ameresco team is working to overcome them. First, let me cover our work with the federal government. This business accounts for approximately 30% of our current total project backlog, with military-related customers accounting for approximately two-thirds and GSA or civilian agency related project work of approximately one-third.
We have provided a breakdown of our backlog by end market in our supplemental slides. Because these federal contracts have multiyear execution cycles, they are expected to account for less than 20% of our 2025 project revenue. We noted in our last conference call that we had encountered one cancellation on a project contracted earlier in January and a pause on two other contracts. We are pleased to report that the project that had been canceled has now been rescoped, and the other two contracts have now been unpaused. Also, we have not encountered any additional cancellations or delays in our federal contracts. So while it is too early to say that there will be no additional future disruptions, we are cautiously optimistic. And as the current administration's priorities come into focus, we believe our broad and deep technical expertise and our agnostic and budget-neutral approach will help us promote our offerings.
Interestingly, we are now seeing a significant number of recently issued federal RFPs focused on our core competencies of resiliency and increasing the power supply through new energy infrastructure. The government's recent release of a quest for information about the possible use of DOE land to support growing demand for data centers. Following that, the DOE has identified 16 potential sites uniquely positioned for rapid data center construction, including in-place energy infrastructure with the ability to fast track permitting for new energy generation. For example, we are seeing more opportunities to leverage federal lands for critical energy infrastructure projects. The Kūpono 44 megawatt solar and 44 megawatt battery project is a perfect example of how this can work. We leveraged an enhanced use lease with the Navy at Pearl Harbor to build this critical energy infrastructure that supports not only the base but also the Hawaiian Electric grid.
We are also developing a 99 megawatt firm power plant, an advanced microgrid project on the same base. We are utilizing similar structures, including enhanced use leases, to develop data center energy infrastructure projects with the Department of Defense. As we captured on another new slide on our supplemental deck detailing our project backlog by technology, Ameresco is very well diversified in our expertise with efficiency, resiliency, and power production solutions. Approximately 50% of our total project backlog includes energy infrastructure projects using generation technologies, such as gas turbines, engines, solar, hydroelectric, and rigidity technologies such as large-scale battery storage and microgrids. We believe our solutions are a good match for the evolving energy landscape, which is demanding ever-increasing amounts of electricity and higher levels of resiliency. We are very excited about the opportunities ahead for our work with not only the federal government but with all of our customers across our core markets, including utilities, data centers, cooperatives, and large commercial and industrial clients.
I also wanted to discuss the dynamic tariff landscape that we, like every other company in our industry, are facing. First, I would like to point out that much of the equipment for current ongoing projects and energy assets in development has already been purchased and is in the country or already on the worksites, which we believe shields us from near-term price increases. Longer term, we will work to mitigate price increases during contract negotiations and reprice where possible. It's important to note that the majority of our solar and battery projects are international and therefore not subject to U.S. tariffs. As many of our shareholders know, this is not the first time Ameresco has faced tariffs or inflation, and we have experienced overcoming similar difficult pricing dynamics. We have strong relationships with domestic and global vendors and a healthy backlog of projects, giving us a position of strength with our various partners. I will now turn the call over to Mark to comment on our financial performance and 2025 outlook.
Thank you, George. And good afternoon, everyone. We delivered strong first quarter results with total revenue growing 18% and adjusted EBITDA growing 32%. Our projects business revenue grew 23%, reflecting outstanding execution and our laser focus on the conversion of our backlog. Also, as George mentioned, we did not encounter any additional delays or cancellations with the federal government with those contracts that we highlighted during our fourth quarter call, which have now been unpaused or rescoped. Beyond our federal project work, we also had a strong quarter in Europe, Canada, and several U.S. regions. This performance speaks to the diversity of our customers, geographies, and types of solutions that is a hallmark of the Ameresco business model. Energy asset revenue grew 31%, driven largely by the growth of assets in operation compared to last year with our base of operating assets now standing at 740 megawatts.
We have also taken steps to mitigate lower RIN prices for the year through our dynamic hedging strategy with our remaining 2025 anticipated RIN exposure at only 20%. The revenue decline in our other line of business is attributed directly to the divestiture of our AEG business at the end of 2024. Gross margin of 14.7% was largely in line with our expectations, reflecting a greater mix of revenue from large European EPC contracts. As a reminder, while these design-build projects have a lower gross margin profile, they help to diversify our business as well as create strong operating leverage as they require very little incremental operating expense for the gross profit dollars they contribute. Net income attributable to common shareholders was a loss of $5.5 million or $0.10 per share. Adjusted EBITDA of $40.6 million increased 32%, reflecting our strong revenue growth, tight cost controls, and the power of our lean, scalable business model.
We continue to see substantial growth in our total project backlog, which grew 22% to $4.9 billion. Importantly, we converted $330 million of awards to contracts during the quarter, driving our contracted project backlog up 80% to $2.6 billion. Our project teams continue to deliver on contract conversion and execution to increase revenue and cash flow generation. We also added $367 million of new project awards to our awarded backlog during the quarter. Turning to our balance sheet and cash flows. We ended the quarter in a solid cash position with approximately $72 million in cash and total corporate debt of $270 million. During the first quarter, we successfully executed approximately $334 million in financing commitments, which included extending and upsizing our senior secured credit facility to help fund our growth. With our strong first quarter results and forward visibility, we are pleased to reaffirm our guidance ranges for 2025 revenue and adjusted EBITDA of $1.9 million and $235 million at the midpoints.
Our team's outstanding execution drove faster implementation during the first quarter of approximately $30 million of project revenue. To assist with shaping for the remainder of the year, we are maintaining our expectation for the cadence of revenue in the second half of 2025 to represent approximately 60% of our total revenue. Accounting for our strong Q1 results, we anticipate Q2 revenue will be in the range of approximately $400 million to $425 million. Now I'd like to turn the call back to George for closing comments.
Thank you, Mark. As you have heard, we had a very solid start to the year, and we have seen this momentum continue into the second quarter. For over 25 years, we have built an organization with unmatched expertise in developing, structuring, and delivering energy projects. Our business model is resilient, with a majority of our adjusted EBITDA coming from our long-term recurring revenue businesses, as well as from the strong multiyear visibility inherent in our project backlog. Furthermore, we believe our project business will continue to grow as we expect to capture more of the emerging infrastructure and resiliency build-out. We are also a global business, diversified by end customer, technology, and geography, which will allow us to continually support change in policy in any geography that will maximize our growth and earnings. In closing, I would like to once again thank our employees, customers, and stockholders for their continued support. We would like to open the call to questions.
分析師問答
And with our first question, this comes from Noah Kaye from Oppenheimer.
So clearly from 4Q to now, a nice turn of events around the federal business. I wonder if you could take us a little bit into some of the transpirings that went on during the quarter to maybe kind of get the visibility and some of the contract situations into a better place. I think we start from the premise that these are energy-saving and net positive for any assets that the projects are going into. But maybe talk a little bit about how it played out and maybe the nature of some of these new RFPs you're seeing?
I'll address the first part regarding the federal contracts. We were fortunate that the one canceled contract has been rescoped, and we believe it will return under a future modification. This should result in little to no change from its original state, which we view as a positive development. As for the two contracts that were paused but are now active again, they will also be rescoped. We anticipate a minor reduction from this, but it's certainly better than the worst-case scenario of them being canceled. Overall, we consider this a favorable outcome for the three contracts we initially discussed.
And the bottom line is the fact that these contracts are primarily energy efficiencies; they are budget neutral, and all administrations like these particular projects. And I think the fact that they would have signed in January probably had something to do with it. And that's why they probably resumed, and once they realized it's good for the government, they plan to move ahead. And the one with the GSA, the contract that was canceled, some of the buildings will be sold. So they took that amount of work and put it in other buildings. So that's why we feel very good about where we are with this administration. And I think we can work with them because they like the budget approach and they like resiliency and more power generation in federal facilities to have the required resilience. The other thing, and that's why I tried to cover in my notes, is how they maximize the use and get more return from some of the land that's in the federal base if it’s unused, that's what happened in Pearl Harbor and so on.
Mark, I think last quarter, you gave us some direction on how to think about the shape not only of revenue but maybe even around sort of margins. Obviously, things can move around a fair bit with project timing. But any color on sort of the shaping of margins either for Q2 or the balance of the year?
I mean, we feel really good about our full year guidance, especially on the gross margin range, which was 15.5% to 16%. Again, I think Q1 was a little bit lower than our expectation. But as I mentioned, we did see a heavier mix of European EPC contracts that do have a little bit lower margin profile. But I feel pretty good about the margin range for the rest of the year.
Maybe the last one to sneak in. It's always hard to resist the temptation to ask about recent events. And I think in this case, it's quite appropriate, the blackouts in Southern Europe. I guess, we're still figuring out what caused them, but it does go to a question around building infrastructure reliability on the grid. And I'm curious to think about how you see Ameresco's opportunity set when you look at events like that and kind of the type of project flow and opportunity you're seeing in Europe broadly?
It happened not only in Spain; a few days earlier, it partially occurred in Greece. The reality is that many countries are generating significant amounts of solar renewable power, which is intermittent. This trend is likely to increase in the United States, similar to the freeze events seen in Texas. As we integrate more renewables into the system, we will need battery storage or consistent power solutions to address these intermittent issues. I foresee that distributed generation will play a much larger role compared to large-scale power plants and transmission lines, as building the necessary transmission lines to enhance grid resiliency is quite challenging. I recall working with a utility on a transmission line from Massachusetts to Rhode Island, which took us a decade to secure the right of way. Furthermore, once we construct these transmission lines, we often lose one or two, leaving us without the necessary reserve to handle potential failures, leading to outages. In my previous utility roles focused on long-term planning, we maintained a spending reserve of 5% to 10%, a practice that seems to have diminished now.
Our next question comes from the line of George Gianarikas from Canaccord Genuity.
Could you provide an update on any projects that might be affected by changes in the Inflation Reduction Act? Are those projects still progressing, or are there some delays as things settle down? I’d appreciate any insights you can share.
I mean, I think for the projects that are coming online this year, especially on the RNG, we safe-harbored the ITC related to those projects. We feel pretty good about that. Even beyond that, for about three quarters of the projects in our asset development pipeline, we safe-harbored the ITC on that as well. I think we mentioned that last quarter around $200 million of additional ITC. So the teams have done a great job to take the necessary steps to try and safe-harbor that. I think for assets outside of the RNG, again, I think we've done a pretty good job of safe-harboring most of that. So I don't expect any short-term impact if there were something to happen with the IRA.
Maybe as a follow-up, the changing dynamics and the landscape impacted your decision tree around projects versus willingness to own assets. I mean, how's your philosophy changed there over the last, call it, three to six months?
The interest environment is slightly higher than we would prefer. This has contributed to the growth in the project business, which we are emphasizing more. These projects generate strong cash flow, and we have carved out a solid niche in the market. As we evolve with increased resiliency and power generation, we aim to capture a significant share of that opportunity, as it aligns with our expertise. Additionally, we have over 600 megawatts of assets in development that will support us for the next two to three years. We are maintaining our momentum in this area and are quite optimistic about the project business, where we are achieving considerable success and are intensifying our focus.
Our next question comes from the line of Kashy Harrison from Piper Sandler.
Thanks for taking the questions, and congrats on 25 years. So nice to hear that the projects that have paused have now resumed. I was just wondering, have you seen any negative impacts from the reduced federal workforce on your business or is the approval process, and just the day-to-day work of the federal government ongoing without any interruptions from fewer workers?
To be honest, we haven't seen anything yet. But we certainly could see a situation where the personnel reductions could have an impact on the timing of how awards can convert to contracts or just administrative challenges that could impact the timing of the progression of our projects. I think we've tried to build in some amount of conservatism into our guidance and to the numbers through the year. But kind of near term, we haven't seen anything as of yet.
On the long term though, because of the budget neutrality associated with our projects, if you recall, the previous Trump administration, we actually did more performance contracts under them than we did under the Biden administration because they like this concept. So even though we might see a delay in the movements from awards to contracted backlog, the number of contracts and proposals most likely will go up.
Maybe just two more quick ones from me. George, I think you discussed that you're in a good spot on storage, and the exposure is not even that great or is not that high anyways to the U.S.; it's more international. And then you said demand, it sounds like demand hasn't really been impacted by tariffs. But I'm just curious, are there any other implications to your business from tariffs that we need to be thinking about in any of the individual segments that maybe weren't covered in the prepared remarks?
Regarding the batteries, the projects we are working on this year and next year were all ordered before the tariffs were implemented. For next year, I anticipate that half of them will be reordered. For the remaining half, we have arranged with some customers that whatever the tariff is, it will be passed through in the purchase agreements. We'll recalculate, and the rate will reflect that. The same approach applies to some of the panels as well. We have also been trying to source as much domestically as possible. However, with tariffs, domestic prices could increase too. Fortunately, we are managing the situation quite effectively so far.
And then maybe just one final one for me. I was just curious whether you've observed any dislocations in valuations between private transactions or what your pieces of your portfolio may be able to get in the private market versus what you're seeing in the public markets and whether there's any appetite to show the public markets the value of your assets via transactions?
So I think the answer is yes. We do believe that there are still robust private valuations for the types of projects and assets that we are implementing, nothing we can really share now. But I think that the public valuations in our whole sector have definitely been, we'll call it, disproportionately impacted by maybe rational and irrational fears about changes in the government and news cycle, et cetera. But the fundamentals of our energy efficiency offerings, our RNG assets, our pipeline, our portfolio, and our platform remain incredibly strong. People that have the ability to look at these things from a project financing perspective or some of our develop-and-sell, those equity investors, those private equity investors, still like what they see, and we're still able to monetize the value that we're creating.
Our next question comes from the line of Eric Stine from Craig Hallum.
Sticking with the tariffs, there is good news regarding how things are organized for 2025 and part of next year. However, if this period of uncertainty extends beyond that, I would like to explore the structure of the contracts. Is it common to include pass-through language? Essentially, I want to know whether this requires a detailed renegotiation for each contract or if it's standard in the contracts and generally accepted by your customers.
Well, pretty much like I've told our people that new contracts, we have the language that we are protected against tariffs. And sometimes, if we have too much equipment coming from abroad, foreign exchange variations as well, that's just become right now the standard. But it goes from customer to customer. For example, this particular customer, it's a large contract; it's a battery storage project, and they had a certain deadline that they wanted to have the project up and running. We had to put money down for the transformer in order to save up property ITC and so on, and we said that's fine. But if the tariffs come and the prices go up, you have to be on the hook for it as well for the transformer and so on. And they stepped up to the plate. We've seen more and more of some of the largest industrial customers looking for resiliency, better storage, and so on. At the end of the day, they're willing to do what is necessary to protect their operations.
Look, I think beyond even the contracts, we continue to diversify the supply chain, right? I think we are taking quite a few learnings that we came out of COVID. We have been focusing on bringing materials in faster on our projects, diversifying the supply chain, and looking at domestic sources. So I think the combination of building those protections into the contracts, as well as maintaining that diversification, is going to help us to mitigate most of the exposure to tariffs moving forward.
I wanted to revisit the topic of federal government work to clarify something that was just asked. Regarding the reduced workforce, it seems you're viewing this as more of a delay rather than outright cancellations. So far, you've had one that will be rescoped, and two others have come back. Is the issue more about the approval process and the time it takes to navigate everything needed to proceed, rather than a significant risk that having fewer buildings with a smaller workforce will alter the overall scope?
I mean, I wouldn't say that we have potential delays. I mean, it would be immaterial because that's what I'm trying to point out. The power of the value proposition of our offerings is so strong, and the administration wants it so badly; they need this kind of work. Because at the end of the day, they get the infrastructure upgrade, and they don’t have to use their budget to do it; they don't require the capital. There will be more push to save money. So even if they have fewer people, at the end of the day, I would expect that we will see more contracts signed with them.
Generally speaking, if there is any risk, it seems to be more about administrative issues that could slow down the processes related to award conversions or contracting. As of now, we haven't observed anything significant.
Our next question comes from Craig Irwin from Roth Capital Partners.
So George, Mark, everyone, thank you for the data point on your RIN hedging position. I'm sure you're well aware of some of the controversial forecasts that have been out there from different analysts about RINs possibly being cut in half, not something that you would expect one of the big oil desks to say. But can you just remind us what the process is as you go through to evaluate the potential profitability on your assets before you go and deploy capital, how you structure these agreements as far as sharing of the RINs and other incentives? And how you sort of stress test these projects before you ever spend any money, breaking ground to build, to ensure profitability across the cycle?
So we have a pretty thorough process of vetting the RNG projects throughout their development, including multiple steps with our investment committee. We have well-established financing partners as well. We run a lot of the projects through them early on to make sure that their expectations for the RIN curve match ours or match something that's reasonable in the market. We layer in the financing assumptions in terms of the amount of debt, the cost of debt, the tenor, et cetera, in conjunction with what our models are showing us and what the development team is producing. In a base case scenario and in a stress case scenario, if they meet our hurdle rates, which we’ve talked about as sort of a leveraged teens IRR on a risk-adjusted basis, then we proceed throughout those next steps, those gates throughout development. So there's a lot in there, but we definitely aren't taking historical RIN rates or even current RIN rates; it really is a downward sloping curve based on forecasts that we have from all sorts of market parties as well as our own proprietary analysis of supply and demand from the RVO, et cetera.
So my next question is about the operating expenses. You had more than $50 million in revenue growth, but you were down over the last couple of years in the first quarter for your operating expenses. Are you allocating personnel maybe to project execution from development activities? Is there anything sort of going on as far as one-time expenses or re-budgeting on the operating expense line? And if there was maybe the move of personnel to execution, could you maybe quantify for us what that might have been on a margin basis?
I believe we are seeing slightly improved utilization in our allocation. When you look at operating expenses, it's important to remember that last year we had additional operating expenses from our AEG business, which has since been divested. This means we are experiencing a direct reduction in those costs that are no longer reflected in our profit and loss statement. Overall, our cost controls regarding operating expenses are effectively keeping them stable or even decreasing them, as we manage the timing for bringing in new employees and only hire as necessary. Additionally, we still have strong operating leverage from many of the larger projects we are taking on.
Our next question comes from the line of Joseph Osha from Guggenheim.
I have two questions. First, George, you mentioned the non-U.S. exposure in your solar and energy storage backlog. Can you provide some rough numbers about that? You noted that 63% of your energy asset backlog is in those two sectors. It’s harder to determine the figure for the project backlog, but could you help us understand how it might be distributed between U.S. and non-U.S. business? Then I have another question.
Most of the European and Canada work, so that's probably 1.5 gigawatts, but primarily though, EPC. I think it's only a very small portion that we will hold and that's up in Canada. In Europe, all the projects that we have, but with the exception of a small one, maybe 10 megawatts, are EPC contracts.
I guess I'm not understanding. You've got 618 megawatts of energy assets in construction, 63% of which are solar or battery. I'm trying to understand what portion of those is U.S. versus non-U.S.?
It's almost all exclusively U.S. Joe, I was responding to a question about the project backlog. I didn't realize you were referencing the outlook.
That's quite helpful. So the project backlog is more geographically diverse, but the energy asset backlog is more U.S.?
That's correct.
And next question, I heard some comments about diversifying procurement, which is great and you got a few options on the solar module side. There's not a lot of LFP production in the United States right now, and most of it is spoken for. When you look at your storage business, are there options for buying in the U.S.? Are you going to buy nickel-based cells or have you found a factory nobody knows about? I'm curious what your procurement strategy is for sales? And I assume you're using mostly LFP.
We're volleying back and forth over who gets this one. The short answer is it is mostly traditional lithium-ion. Unfortunately, we don't have any brand-new factories that nobody knows about to announce on the call tonight. We are sourcing from the same kind of major global players that a lot of people are, especially as it pertains to bankability and performance because as I think you know, and we've tried different solutions, it hasn't been quite as successful. That being said, I think the key here is that the stuff we have at assets in development have for this year, as George mentioned, have been safe-harbored and/or already delivered on-site for the most part. We have one big project that will be kind of mid-year COD, which makes up the bulk of the assets and operations that we guided to last time. New projects are less about procurement and more about contract structure. The new projects, we're inserting change-in-law provisions, as George mentioned, kind of a dollar-for-dollar adjustment to tariff or IRA type of changes. So it's less about procurement and more about working with our customers to get a fair deal in this uncertain environment.
And just as a last follow on to that, other people in this business have alluded to those pass-throughs but also indicated that there are brackets around that limiting exposure. So let us suppose that we are paying 130% LFP tariffs a year from now. Is it your intention and your belief that you can pass all of that along to customers, or will you bear some of it?
We'll try to pass it on to our customers. Unless the project margin is such that we could absorb some, then we will look at economics very, very hard before we take on that kind of risk or cost. At the end of the day, the economics are the price you will see.
Thank you. There are no further questions. This now concludes the question-and-answer session. This also concludes the conference call. Thank you all for joining. You may now disconnect.