Ameresco, Inc. ((AMRC)) has held its Q4 earnings call. Read on for the main highlights of the call.
Ameresco, Inc. Reports Mixed Sentiment in Latest Earnings Call
Ameresco, Inc. recently conducted its earnings call, revealing a mixed sentiment. The company celebrated strong revenue and adjusted EBITDA growth, alongside a record project backlog and successful expansion into Europe. However, challenges with legacy projects and federal contracting delays posed significant hurdles, impacting gross margins and causing financial strain. Despite these setbacks, Ameresco expressed optimism about its diversified and resilient business model.
Strong Revenue and Adjusted EBITDA Growth
Ameresco concluded 2024 with impressive financial results, boasting a 29% increase in annual revenue and a 38% rise in adjusted EBITDA. The fourth quarter was particularly strong, with revenue growing by 21% and adjusted EBITDA surging by 59%. These figures underscore the company’s robust performance in its core operations.
Record Project Backlog and Energy Assets
The company’s project backlog reached new heights, with a 92% year-over-year increase in contracted backlog, amounting to $1.1 billion in conversions. The total project backlog expanded by 24% to $4.8 billion. Additionally, Ameresco successfully brought 31 megawatts of energy assets into operation, totaling 241 megawatts for the year.
Successful Sale of Non-core AEG Business
Ameresco’s strategic decision to sell its non-core AEG business paid off, contributing significantly to the quarter’s results. The sale resulted in a gain of approximately $38 million, bolstering the company’s financial standing.
European Expansion Success
Ameresco’s expansion into the European market proved fruitful, with revenue from this region exceeding $250 million in 2024. This success highlights the company’s ability to diversify and grow its international presence.
Positive Financial Performance Metrics
The company reported a 31% increase in operating income and a 15% growth in net income attributable to common shareholders. These metrics reflect Ameresco’s solid financial health and effective management strategies.
Challenges with Legacy Projects
Ameresco faced significant challenges with two large legacy projects, which encountered schedule delays and inflationary pressures. These issues led to unrecoverable cost overruns, impacting gross profit by approximately $20 million in the quarter and $38 million for the full year.
Federal Contracting Delays
The company experienced setbacks in its federal projects, with one project cancellation and two others paused due to changes in the federal workforce. These delays have been factored into the company’s 2025 guidance, reflecting anticipated challenges in this area.
Gross Margin Impact
The cost overruns on the two legacy projects significantly affected Ameresco’s gross margin, which fell to 12.5% for the quarter, much lower than expected. This highlights the financial strain caused by these projects.
D3 RIN Price Weakness
At the end of 2024, D3 RIN prices weakened following the EPA’s proposed rule to partially waive the 2024 cellulosic biofuel volume requirement. This development added to the challenges faced by Ameresco in maintaining its financial performance.
Forward-looking Guidance
Looking ahead, Ameresco provided guidance for 2025, anticipating revenue of $1.9 billion and adjusted EBITDA of $235 million. The company expects to place 100 to 120 megawatts of energy assets and continue to see demand from federal agency customers, despite policy changes. This forward-looking guidance underscores Ameresco’s strategic focus on execution, backlog growth, and geographical expansion.
In conclusion, Ameresco’s latest earnings call presented a mixed picture. While the company celebrated significant growth in revenue and adjusted EBITDA, alongside successful European expansion, it also faced notable challenges with legacy projects and federal contracting delays. Despite these hurdles, Ameresco remains optimistic about its future, supported by a strong project backlog and strategic focus on growth and diversification.