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Ameresco Reports First Quarter 2023 Financial Results

01 May 2023

First Quarter Revenue Ahead and Profits in Line with Guidance
Total Backlog Increased 13% Sequentially, with $472M in New Awards
Placed 34 MWe of Energy Assets into Operation
Reaffirms 2023 Guidance
First Quarter 2023 Financial Highlights:

  • Revenues of $271.0 million
  • Net income attributable to common shareholders of $1.1 million
  • GAAP EPS of $0.02
  • Non-GAAP EPS of $0.03
  • Adjusted EBITDA of $27.4 million

FRAMINGHAM, Mass. / May 01, 2023 / Business Wire / Ameresco, Inc. (NYSE:AMRC), a leading cleantech integrator specializing in energy efficiency and renewable energy, today announced financial results for the fiscal quarter ended March 31, 2023. The Company also furnished supplemental information in conjunction with this press release in a Current Report on Form 8-K. The supplemental information, which includes Non-GAAP financial measures, has been posted to the “Investors” section of the Company’s website at www.ameresco.com. Reconciliations of Non-GAAP measures to the appropriate GAAP measures are included herein.

CEO George Sakellaris commented, “In the first quarter we continued to build our excellent multi-year visibility, while making significant progress across our businesses that support both our 2023 guidance and our longer-term financial targets. Our total project backlog increased by 13% sequentially, driven by the addition of $472 million in new awards. We also placed 34 MWe of solar assets into operation and continued to add long-term O&M contracts. We are seeing an increase in engagement as customers assess and prioritize their projects to optimize the potential benefits of the Inflation Reduction Act (IRA). In addition, we are encouraged by the substantial increase in the dollar value of year-to-date proposal activity compared to 2022 levels.

“We are pleased to be welcoming analysts and institutional investors on May 11th to our London Investor Day, which spotlights the growing interest in Ameresco from investors across Europe. European markets are becoming increasingly important to our future global growth strategy, and we expect to continue to expand internationally through a combination of organic growth, acquisitions, and partnerships.

During the quarter our expertise with LED street lighting projects was once again recognized as our Chicago Smart Light Program was awarded the Inspiring Efficiency Impact Award by the Midwest Energy Efficiency Alliance, a collaborative network advancing energy efficiency in the Midwest for sustainable economic development and environmental stewardship. We continue to see significant opportunities to execute similar smart street lighting projects. We also recently were honored to be awarded the 2023 North American Energy Services Company of the Year by market research firm Frost & Sullivan. Ameresco was selected due to its demonstrated excellence in the energy services space, particularly as it relates to customer impact and visionary transformation and performance.

SCE agreed to accelerate $125 million of future milestone payments on the projects, which we received during the quarter. This was in conjunction with our agreement with SCE related to the costs associated with SCE’s request to adjust the project schedule into 2023. Construction of the SCE projects progressed further in the quarter. We anticipate two of the projects to be in service and to achieve substantial completion in the summer of 2023. One of the projects was impacted by the record rainfall earlier in 2023 and experienced further delays. We are working with SCE to determine the duration of this delay and are continuing discussions regarding the applicability and scope of any force majeure relief. Our relationship with SCE continues to be cooperative.”

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

Total revenue was $271.0 million, about $40 million above our first quarter guidance, as we experienced faster execution on certain projects as well as some early contract conversions. Energy Asset revenue grew 6% as growth in operating assets and increased solar production from existing assets more than offset lower RIN prices. O&M revenue increased 10% reflecting continued growth in long-term contracts. Other revenue increased 13% primarily due to strength in our utility SaaS and consulting business. Gross margin of 18.4% reflected significant expansion from 14.4% in the previous year due to the reduced contribution from the lower margin SCE projects. SG&A increased slightly during the quarter to support our increased proposal activity in the United States and Europe. Net income attributable to common shareholders and adjusted EBITDA were $1.1 million and $27.4 million, respectively.

The Company generated cash flow from operations of $58.8 million and adjusted cash flow from operations of approximately $101.1 million, ending the quarter with approximately $178.9 million of unrestricted cash. We significantly reduced our receivables and unbilled revenue during the quarter through payments from our SCE projects. We also had a very strong quarter with respect to project financings. During the quarter, the Company secured cash financing of $58.2 million and opened additional unfunded facilities that can further support Ameresco’s Energy Asset growth.

(in millions)

1Q 2023

1Q 2022

 

Revenue

Net Income (Loss)  (1)

Adj. EBITDA

Revenue

Net Income (1)

Adj. EBITDA

Projects

$183.2

($1.3)

$4.0

$393.4

$10.2

$18.5

Energy Assets

$40.8

$1.1

$19.9

$38.4

$3.9

$21.2

O&M

$22.3

$0.5

$1.5

$20.3

$2.6

$3.6

Other

$24.8

$0.7

$1.9

$21.9

$0.7

$1.8

Total (2)

$271.0

$1.1

$27.4

$474.0

$17.4

$45.1

 

 

 

 

 

 

 

(1) Net Income (Loss) represents net income (loss) attributable to common shareholders.

(2) Numbers in table may not sum due to rounding.

 

($ in millions)

 

At March 31, 2023

 

Awarded Project Backlog (1)

 

$1,964

 

Contracted Project Backlog

 

$1,008

 

Total Project Backlog

 

$2,972

 

12-month Contracted Backlog (2)

 

$639

 

 

 

 

 

O&M Revenue Backlog

 

$1,215

 

12-month O&M Backlog

 

$86

 

Energy Asset Visibility (3)

 

$2,300

 

Operating Energy Assets

 

423 MWe

 

Ameresco's Net Assets in Development (4)

 

432 MWe

 

 

 

 

 

(1) Customer contracts that have not been signed yet

(2) We define our 12-month backlog as the estimated amount of revenues that we expect to recognize in the next twelve months from our fully-contracted backlog

(3) Estimated contracted revenue and incentives during PPA period plus estimated additional revenue from operating RNG assets over a 20-year period, assuming RINs at $1.50/gallon and brown gas at $3.50/MMBtu with $3.00/MMBtu for LCFS on certain projects.

(4) Net MWe capacity includes only our share of any jointly owned assets

Project Highlights
In the First Quarter of 2023:

  • Ameresco continued its strong presence in the higher education market with the announcement of its partnership with Alaska Pacific University (APU) to design and upgrade existing infrastructure at the institution’s Thomas Training Center. Ameresco will work to install a new boiler, baseboard heaters, convection heaters, water heaters and retrofit the facilities’ existing 750-gallon water tank with a new 500-gallon water tank.
  • Customer demand for PV projects remained strong with news wins including a 5 MWe solar array for the City of Alton, Illinois. The solar installation will be developed on a local closed municipal landfill site in the city.
  • This quarter, we continued to build on our partnership with GSA by executing a contract modification to our GSA National Deep Energy Retrofit 6 task order (signed in December). Our GSA Texas and Louisiana ESPC project received over $9.6 million in IRA funding to support integration of Grid-Interactive Efficient (GEB) and Green Proving Ground technologies such as BAS Improvements, Motors & VFDs, Window Inserts and high-efficiency chillers.
  • Ameresco completed another phase of work at Fall River Public Schools in MA. Building on the other phases at Fall River, this was a complete HVAC system upgrade to the Lord and Talbot Middle Schools, including high efficient heat pumps, VRF Heating and Cooling Systems, new Electronic Building Controls, and a complete upgrade of the window systems.

Asset Highlights
In the First Quarter of 2023:

  • Ameresco’s Assets in Development ended the quarter at 491 MWe. After subtracting Ameresco’s partners’ minority interests, Ameresco’s owned capacity of Assets in Development at quarter end was 432 MWe.
  • The Company added 13 MWe of new energy asset awards and placed 34 MWe into service.

Summary and Outlook
“The Ameresco team delivered first quarter results in line with our expectations, while continuing to grow our project backlog and operating asset portfolio. We expect to convert a substantial dollar amount of awarded backlog to contracted backlog during the second quarter, and to place additional assets in operation. Together these metrics support our confidence in our 2023 guidance. Our longer-term opportunities remain very compelling as the number and complexity of projects continue to increase, and the incentives associated with the IRA are expected to drive significant new customer investment over the coming years. Secular growth drivers, together with the breadth of our technological expertise and our international expansion plans underpin our 2024 Adjusted EBITDA target of $300 million,” Mr. Sakellaris concluded.

Our 2023 guidance, included in the table below, anticipates adjusted EBITDA growth of 5% at the midpoint. We expect to place between 80 and 100 MWe of energy assets in service in 2023 including three RNG plants. Several additional RNG assets are in the late stages of development, and we expect that 4 or 5 of these will come online during 2024. Our planned capex for 2023 is $325 million to $375 million, the majority of which is expected to be funded with non-recourse debt.

Given the $40 million in revenue pull forward into the first quarter mentioned above, we estimate second quarter revenue, adjusted EBITDA and Adjusted EPS to be in the range of $280 million to $300 million, $30 million to $40 million and $0.10 to $0.20, respectively.

FY 2023 Guidance Ranges

Revenue

$1.45 billion

$1.55 billion

Gross Margin

19.5%

20.0%

Adjusted EBITDA

$210 million

$220 million

Interest Expense & Other

$30 million

$35 million

Effective Tax Rate

10%

5%

Adjusted EPS

$1.80

$1.90

The Company’s guidance excludes the impact of any redeemable non-controlling interest activity related to tax-equity partnerships, one-time charges, asset impairment charges, changes in contingent consideration, restructuring activities, as well as any related tax impact.

Conference Call/Webcast Information
The Company will host a conference call today at 4:30 p.m. ET to discuss first quarter 2023 financial results, business and financial outlook and other business highlights. Participants may access the earnings conference call by pre-registering here at least fifteen minutes in advance. 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 “Investors” section of the Company’s website at www.ameresco.com. If you are unable to listen to the live call, 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 Non-GAAP Financial Measures and Non-GAAP Financial Guidance in the accompanying tables.

About Ameresco, Inc.
Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading cleantech integrator and renewable energy asset developer, owner and operator. Our comprehensive portfolio includes energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions delivered to clients throughout North America and Europe. Ameresco’s sustainability services in support of clients’ pursuit of Net-Zero include upgrades to a facility’s energy infrastructure and the development, construction, and operation of distributed energy resources. 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 1,200 employees providing local expertise in the United States, Canada, and Europe. 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, visibility, and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, gross margin, capital investments, other financial guidance and longer term outlook, statements about our agreement with SCE including the impact of any delays, and the impact of the IRA and macroeconomic conditions on our business, longer term outlook, 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 or at all; the timing of work we do on projects where we recognize revenue on a percentage of completion basis, including the ability to perform under signed contracts without delay and in accordance with their terms; demand for our energy efficiency and renewable energy solutions; our ability to complete and operate our projects on a profitable basis and as committed to our customers; our ability to arrange financing to fund our operations and projects and to comply with covenants in our existing debt agreements; changes in federal, state and local government policies and programs related to energy efficiency and renewable energy and the fiscal health of the government; the ability of customers to cancel or defer contracts included in our backlog; the output and performance of our energy plants and energy projects; the effects of our acquisitions and joint ventures; 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 cost of labor and equipment particularly given global supply chain challenges and global trade conflicts; our reliance on third parties for our construction and installation work; the addition of new customers or the loss of existing customers; the impact of macroeconomic challenges, weather related events and climate change on our business; global supply chain challenges, component shortages and inflationary pressures; 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; cybersecurity incidents and breaches; regulatory and other risks inherent to constructing and operating energy assets; risks related to our international operation and international growth strategy; and other factors discussed in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. 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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

March 31,

 

December 31,

 

2023

 

2022

 

(Unaudited)

 

 

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

178,939

 

 

$

115,534

 

Restricted cash

 

21,232

 

 

 

20,782

 

Accounts receivable, net

 

130,940

 

 

 

174,009

 

Accounts receivable retainage, net

 

35,625

 

 

 

38,057

 

Costs and estimated earnings in excess of billings

 

497,762

 

 

 

576,363

 

Inventory, net

 

13,609

 

 

 

14,218

 

Prepaid expenses and other current assets

 

56,311

 

 

 

38,617

 

Income tax receivable

 

7,626

 

 

 

7,746

 

Project development costs, net

 

15,930

 

 

 

16,025

 

Total current assets

 

957,974

 

 

 

1,001,351

 

Federal ESPC receivable

 

539,820

 

 

 

509,507

 

Property and equipment, net

 

16,865

 

 

 

15,707

 

Energy assets, net

 

1,270,230

 

 

 

1,181,525

 

Deferred income tax assets, net

 

3,049

 

 

 

3,045

 

Goodwill, net

 

77,810

 

 

 

70,633

 

Intangible assets, net

 

8,666

 

 

 

4,693

 

Operating lease assets

 

38,189

 

 

 

38,224

 

Restricted cash, non-current portion

 

13,406

 

 

 

13,572

 

Other assets

 

41,339

 

 

 

38,564

 

Total assets

$

2,967,348

 

 

$

2,876,821

 

 

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

Current portions of long-term debt and financing lease liabilities

$

313,459

 

 

$

331,479

 

Accounts payable

 

285,465

 

 

 

349,126

 

Accrued expenses and other current liabilities

 

115,044

 

 

 

89,166

 

Current portions of operating lease liabilities

 

5,868

 

 

 

5,829

 

Billings in excess of cost and estimated earnings

 

39,326

 

 

 

34,796

 

Income taxes payable

 

7,950

 

 

 

1,672

 

Total current liabilities

 

767,112

 

 

 

812,068

 

Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs

 

631,676

 

 

 

568,635

 

Federal ESPC liabilities

 

520,816

 

 

 

478,497

 

Deferred income tax liabilities, net

 

2,869

 

 

 

9,181

 

Deferred grant income

 

7,424

 

 

 

7,590

 

Long-term operating lease liabilities, net of current portion

 

31,779

 

 

 

31,703

 

Other liabilities

 

64,200

 

 

 

49,493

 

Redeemable non-controlling interests, net

$

46,700

 

 

$

46,623

 

Stockholders' equity:

 

 

 

Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022

 

 

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,132,157 shares issued and 34,030,362 shares outstanding at March 31, 2023, 36,050,157 shares issued and 33,948,362 shares outstanding at December 31, 2022

 

3

 

 

 

3

 

Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at March 31, 2023 and December 31, 2022

 

2

 

 

 

2

 

Additional paid-in capital

 

310,726

 

 

 

306,314

 

Retained earnings

 

534,624

 

 

 

533,549

 

Accumulated other comprehensive loss, net

 

(4,645

)

 

 

(4,051

)

Treasury stock, at cost, 2,101,795 shares at March 31, 2023 and December 31, 2022

 

(11,788

)

 

 

(11,788

)

Stockholders' equity before non-controlling interest

 

828,922

 

 

 

824,029

 

Non-controlling interests

 

65,850

 

 

 

49,002

 

Total stockholders’ equity

 

894,772

 

 

 

873,031

 

Total liabilities, redeemable non-controlling interests and stockholders' equity

$

2,967,348

 

 

$

2,876,821

 

 

AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts) (Unaudited)

 

Three Months Ended March 31,

 

2023

 

2022

Revenues

$

271,042

 

 

$

474,002

 

Cost of revenues

 

221,094

 

 

 

405,624

 

Gross profit

 

49,948

 

 

 

68,378

 

Earnings from unconsolidated entities

 

450

 

 

 

637

 

Selling, general and administrative expenses

 

41,301

 

 

 

40,329

 

Operating income

 

9,097

 

 

 

28,686

 

Other expenses, net

 

8,043

 

 

 

7,081

 

Income before income taxes

 

1,054

 

 

 

21,605

 

Income tax (benefit) provision

 

(503

)

 

 

2,307

 

Net income

 

1,557

 

 

 

19,298

 

Net income attributable to non-controlling interests and redeemable non-controlling interests

 

(455

)

 

 

(1,914

)

Net income attributable to common shareholders

$

1,102

 

 

$

17,384

 

Net income per share attributable to common shareholders:

 

 

 

Basic

$

0.02

 

 

$

0.34

 

Diluted

$

0.02

 

 

$

0.32

 

Weighted average common shares outstanding:

 

 

 

Basic

 

51,963

 

 

 

51,744

 

Diluted

 

53,261

 

 

 

53,636

 

 

AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)

 

Three Months Ended March 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

1,557

 

 

$

19,298

 

Adjustments to reconcile net income to net cash flows from operating activities:

 

 

 

Depreciation of energy assets, net

 

13,341

 

 

 

11,806

 

Depreciation of property and equipment

 

644

 

 

 

734

 

Increase (decrease) in contingent consideration

 

121

 

 

 

(320

)

Accretion of ARO liabilities

 

66

 

 

 

36

 

Amortization of debt discount and debt issuance costs

 

790

 

 

 

852

 

Amortization of intangible assets

 

302

 

 

 

578

 

Provision for bad debts

 

93

 

 

 

237

 

Loss on write-off of long-lived assets

 

18

 

 

 

 

Earnings from unconsolidated entities

 

(450

)

 

 

(637

)

Net loss from derivatives

 

163

 

 

 

1,622

 

Stock-based compensation expense

 

4,037

 

 

 

3,531

 

Deferred income taxes, net

 

(7,142

)

 

 

1,284

 

Unrealized foreign exchange (gain) loss

 

(29

)

 

 

132

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

58,954

 

 

 

(40,859

)

Accounts receivable retainage

 

2,439

 

 

 

2,582

 

Federal ESPC receivable

 

(33,736

)

 

 

(46,300

)

Inventory, net

 

608

 

 

 

(914

)

Costs and estimated earnings in excess of billings

 

85,748

 

 

 

(154,325

)

Prepaid expenses and other current assets

 

929

 

 

 

2,813

 

Project development costs

 

(1,812

)

 

 

1,260

 

Other assets

 

(1,903

)

 

 

105

 

Accounts payable, accrued expenses and other current liabilities

 

(82,266

)

 

 

(77,163

)

Billings in excess of cost and estimated earnings

 

9,398

 

 

 

(4,309

)

Other liabilities

 

522

 

 

 

(33

)

Income taxes receivable, net

 

6,380

 

 

 

1,868

 

Cash flows from operating activities

 

58,772

 

 

 

(276,122

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(1,657

)

 

 

(889

)

Capital investment in energy assets

 

(89,787

)

 

 

(55,489

)

Capital investment in major maintenance of energy assets

 

(589

)

 

 

(1,355

)

Acquisitions, net of cash received

 

(9,182

)

 

 

 

Loans to joint venture investments

 

(38

)

 

 

 

Cash flows from investing activities

 

(101,253

)

 

 

(57,733

)

Cash flows from financing activities:

 

 

 

Payments of debt discount and debt issuance costs

 

(366

)

 

 

(2,570

)

Proceeds from exercises of options and ESPP

 

571

 

 

 

1,708

 

Proceeds from senior secured revolving credit facility, net

 

 

 

 

76,000

 

Proceeds from long-term debt financings

 

58,188

 

 

 

286,744

 

Proceeds from Federal ESPC projects

 

42,309

 

 

 

64,788

 

Net proceeds from energy asset receivable financing arrangements

 

4,438

 

 

 

1,925

 

Contributions from non-controlling interests

 

16,308

 

 

 

4,594

 

Distributions to redeemable non-controlling interests, net

 

(161

)

 

 

(357

)

Payments on long-term debt and financing leases

 

(15,159

)

 

 

(77,432

)

Cash flows from financing activities

 

106,128

 

 

 

355,400

 

Effect of exchange rate changes on cash

 

42

 

 

 

(196

)

Net increase in cash, cash equivalents, and restricted cash

 

63,689

 

 

 

21,349

 

Cash, cash equivalents, and restricted cash, beginning of period

 

149,888

 

 

 

87,054

 

Cash, cash equivalents, and restricted cash, end of period

$

213,577

 

 

$

108,403

 

 

Non-GAAP Financial Measures (Unaudited, in thousands)

 

Three Months Ended March 31, 2023

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net (loss) income attributable to common shareholders

$

(1,300

)

$

1,149

 

$

532

 

$

721

 

$

1,102

 

Impact from redeemable non-controlling interests

 

 

 

32

 

 

 

 

 

 

32

 

(Less) plus: Income tax provision (benefit)

 

(884

)

 

72

 

 

127

 

 

182

 

 

(503

)

Plus: Other expenses, net

 

2,490

 

 

4,905

 

 

236

 

 

412

 

 

8,043

 

Plus: Depreciation and amortization

 

660

 

 

13,122

 

 

304

 

 

201

 

 

14,287

 

Plus: Stock-based compensation

 

2,729

 

 

607

 

 

332

 

 

369

 

 

4,037

 

Plus: Contingent consideration, restructuring and other charges

 

337

 

 

20

 

 

7

 

 

7

 

 

371

 

Adjusted EBITDA

$

4,032

 

$

19,907

 

$

1,538

 

$

1,892

 

$

27,369

 

Adjusted EBITDA margin

 

2.2

%

 

48.8

%

 

6.9

%

 

7.6

%

 

10.1

%

 

Three Months Ended March 31, 2022

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

10,160

 

$

3,870

 

$

2,630

 

$

724

 

$

17,384

 

Impact from redeemable non-controlling interests

 

 

 

1,914

 

 

 

 

 

 

1,914

 

Plus (less): Income tax provision (benefit)

 

3,299

 

 

(1,784

)

 

392

 

 

400

 

 

2,307

 

Plus: Other expenses, net

 

1,424

 

 

5,460

 

 

115

 

 

82

 

 

7,081

 

Plus: Depreciation and amortization

 

851

 

 

11,485

 

 

335

 

 

447

 

 

13,118

 

Plus: Stock-based compensation

 

2,934

 

 

286

 

 

153

 

 

158

 

 

3,531

 

Plus: Energy asset impairment

 

 

 

 

 

 

 

 

 

 

(Less) plus: (Contingent consideration) and restructuring and other charges

 

(155

)

 

(26

)

 

(14

)

 

(14

)

 

(209

)

Adjusted EBITDA

$

18,513

 

$

21,205

 

$

3,611

 

$

1,797

 

$

45,126

 

Adjusted EBITDA margin

 

4.7

%

 

55.2

%

 

17.8

%

 

8.2

%

 

9.5

%

 

 

 

 

 

 

 

Three Months Ended March 31,

 

2023

2022

Non-GAAP net income and EPS:

 

 

Net income attributable to common shareholders

$

1,102

 

$

17,384

 

Adjustment for accretion of tax equity financing fees

 

(27

)

 

(28

)

Impact from redeemable non-controlling interests

 

32

 

 

1,914

 

Plus: Contingent consideration, restructuring and other charges

 

371

 

 

(209

)

(Less) Plus: Income tax effect of Non-GAAP adjustments

 

(96

)

 

54

 

Non-GAAP net income

 

1,382

 

 

19,115

 

 

 

 

Diluted net income per common share

$

0.02

 

$

0.32

 

Effect of adjustments to net income

 

0.01

 

 

0.04

 

Non-GAAP EPS

$

0.03

 

$

0.36

 

 

 

 

Adjusted cash from operations:

 

 

Cash flows from operating activities

$

58,772

 

$

(276,122

)

Plus: proceeds from Federal ESPC projects

 

42,309

 

 

64,788

 

Adjusted cash from operations

$

101,081

 

$

(211,334

)

 

Other Financial Measures (Unaudited, in thousands)

 

Three Months Ended March 31,

 

2023

2022

New contracts and awards:

 

 

New contracts

$

146,960

$

226,700

New awards (1)

$

472,100

$

438,000

(1) Represents estimated future revenues from projects that have been awarded, though the contracts have not yet been signed

Non-GAAP Financial Guidance

Adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA):

Year Ended December 31, 2023

 

Low

High

Operating income(1)

$132 million

$140 million

Depreciation and amortization

$59 million

$60 million

Stock-based compensation

$19 million

$20 million

Adjusted EBITDA

$210 million

$220 million

(1) Although net income is the most directly comparable GAAP measure, this table reconciles adjusted EBITDA to operating income because we are not able to calculate forward-looking net income without unreasonable efforts due to significant uncertainties with respect to the impact of accounting for our redeemable non-controlling interests and taxes.

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 Non-GAAP Financial Measures 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 net income attributable to common shareholders, including impact from redeemable non-controlling interests, before income tax (benefit) provision, other expenses net, depreciation, amortization of intangible assets, accretion of asset retirement obligations, contingent consideration expense, stock-based compensation expense, energy asset impairment, restructuring and other charges, gain or loss on sale of equity investment, and gain or loss upon deconsolidation of a variable interest entity. 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, accretion of asset retirement obligations, contingent consideration expense, stock-based compensation expense, impact from redeemable non-controlling interests, restructuring and asset impairment charges. 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.

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 energy asset impairment, restructuring and other charges, impact from redeemable non-controlling interest, gain or loss on sale of equity investment, and gain or loss upon deconsolidation of a variable interest entity. 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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