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Ameresco Reports Fourth Quarter and Full Year 2021 Financial Results

28 February 2022

Ameresco, Inc. (NYSE:AMRC), a leading cleantech integrator specializing in energy efficiency and renewable energy, today announced financial results for the fiscal quarter ended December 31, 2021. The Company has 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 “Investor Relations” section of the Company’s website at www.ameresco.com. Reconciliations of Non-GAAP measures to the appropriate GAAP measures are included herein.

“Fourth quarter results capped a year of outstanding performance for Ameresco, demonstrating the strength of our diversified business model. Revenue growth was led by our Projects business strengthened by the Southern California Edison (SCE) design/build contract and was complemented by strong performance from our recurring revenue Energy Asset and O&M businesses. We ended the year with 343MWe of operating assets representing 22% year-over-year growth while continuing to expand our assets in development to 414MWe. Ameresco exited 2021 with total project backlog of over $3 billion and more than $2 billion in estimated contracted revenue and incentives from our recurring revenue O&M and Energy Asset businesses. This record multi-year revenue visibility sets the stage for robust long term profit growth. In addition, Ameresco released it’s 2021 ESG report, centering on the theme of Doing Well by Doing Good: Innovation. Action. Integrity. This report highlights Ameresco’s practices pertaining to business and operations, environmental advocacy and impact, employee engagement, giving back, health and safety, and corporate responsibility,” said George P. Sakellaris, President and Chief Executive Officer.

“In 2021 Ameresco was awarded the largest contract in its history providing utility scale battery energy storage systems (BESS) at three sites for SCE. Despite the well-publicized global supply chain challenges, we are pleased to report that the design/build project is proceeding as expected. Importantly this contract is representative of the types of the projects that are emerging as the power industry addresses grid stability and reliability. Our track record of execution on projects of increasing size and complexity puts Ameresco in a distinct competitive advantage to capture similar opportunities in the periods ahead. This project is also an excellent example of our ever expanding addressable market.”

Fourth Quarter Financial Results

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

Total revenue was up 32% with broad based growth across all our business lines. The Company began executing on and recognizing revenue related to the SCE BESS project leading to a 36% increase in Project revenue. The growth in our operating asset base, increased performance of existing assets and strong RIN prices drove a 35% growth in Energy Asset revenue. Gross margin was 17.1%, in line with our expectations given the impact from the lower gross margin profile of the SCE design/build project.

(in millions)

4Q 2021

4Q 2020

 

Revenue

Net Income (1)

Adj. EBITDA

Revenue

Net Income (Loss) (1)

Adj. EBITDA

Projects

$333.0

$11.4

$19.4

$244.8

$13.9

$15.7

Energy Assets

$41.8

$13.9

$24.7

$30.9

$7.6

$16.4

O&M

$20.5

$2.6

$3.9

$19.1

$2.3

$3.2

Other

$20.6

$0.3

$0.5

$19.5

$(0.3)

$0.4

Total (2)

$415.9

$28.2

$48.5

$314.3

$23.5

$35.7

 

 

 

 

 

 

 

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

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

  

($ in millions)

At December 31, 2021

Awarded Project Backlog *

$1,543

Contracted Project Backlog

$1,509

Total Project Backlog

$3,052

 

 

O&M Revenue Backlog

$1,132

Energy Asset Visibility **

$1,050

Operating Energy Assets

343 MWe

Assets in Development

414 MWe

* customer contracts that have not been signed yet

** estimated contracted revenue and incentives on our operating Energy Assets, which may vary with actual production and future values of certain environmental attributes

Project Highlights

In the fourth quarter of 2021:

  • We entered into the largest contract in our history with SCE to design and build three grid scale BESSs for a total of 537.5 MW / 2.15 GWH.
  • Our Federal Solutions Group won a $43 million Energy Savings Performance Contract with the United States Coast Guard at its Petaluma training center, which includes a fully integrated microgrid with solar power generation and a BESS.

Asset Highlights

In the fourth quarter of 2021:

  • Ameresco brought 26MWe into operation while adding 33MWe (gross) to our Assets in Development, bringing our total to 414MWe.
  • Entered into a 15-year Energy as a Service agreement with Kauai Beach Resort.
  • Reached commercial operations for a comprehensive microgrid and facility renewal project at the London District Catholic School Board’s John Paul II Catholic Secondary School.

Summary and Outlook

“We are pleased to provide guidance for what we expect to be another year of strong growth in 2022. Specifically, we expect revenues in the range of $1.83 billion to $1.87 billion, Adjusted EBITDA of $200 million to $210 million and Non-GAAP EPS to range from $1.85 to $1.95, representing year-over-year growth of 52%, 34% and 26% at the midpoints. During 2022, we anticipate placing between 60 and 80 MWe of energy assets in service, while investing approximately $225 million to $275 million in capital in 2022, the majority of which we expect to fund with non-recourse debt.

“2022 quarterly cadence will be meaningfully impacted by the timing of the SCE BESS contract. We anticipate first quarter revenue will be sequentially flat with our strong 2021 fourth quarter with total gross margin at approximately 14.5%. Revenue from the SCE BESS project is expected to peak during the second quarter, driving an approximately 40% sequential total revenue increase, with total gross margin for the quarter expected to be closer to 14.0%. Third quarter total revenue is expected to look similar to the first quarter, but total gross margin is expected to be approximately 17.5% due to project mix.”

“We expect that 2022 will be another record year for Ameresco. Our addressable markets continue to expand, driven by strong long term industry growth trends. These trends, together with the breadth of our technological expertise and proven track record position Ameresco to benefit from the growing number of opportunities in front of us. I have never been more excited about the prospects for Ameresco,” Mr. Sakellaris concluded.

FY 2022 Guidance Ranges

Revenue

$1.83 billion

$1.87 billion

Gross Margin

15.5%

16.5%

Adjusted EBITDA

$200 million

$210 million

Interest Expense & Other

$25 million

$27 million

Effective Tax Rate

13%

17%

Non-GAAP EPS

$1.85

$1.95

The Company’s guidance excludes the impact of any non-controlling interest activity, one-time charges, asset impairment charges, 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 results. The conference call will be available via the following dial in numbers:

  • U.S. Participants: Dial +1 (877) 359-9508 (Access Code: 7944909)
  • International Participants: Dial +1 (224) 357-2393 (Access Code: 7944909)

Participants are advised to dial into the call at least ten minutes prior to register. A live, listen-only webcast of the conference call will also be available over the Internet. Individuals wishing to listen can access the call through the “Investor Relations” section of the Company’s website at www.ameresco.com. An archived webcast will be available on the Company’s website for one year.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to adjusted EBITDA, Non- GAAP EPS, Non-GAAP net income and adjusted cash from operations, which are Non-GAAP financial measures. For a description of these Non-GAAP financial measures, including the reasons management uses these measures, please see the section following the accompanying tables titled “Exhibit A: Non-GAAP Financial Measures”. For a reconciliation of these Non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see 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 the United Kingdom. For more information, visit www.ameresco.com.

Safe Harbor Statement

Any statements in this press release about future expectations, plans and prospects for Ameresco, Inc., including statements about market conditions, pipeline and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, capital investments, other financial guidance, statements about our agreement with SCE, 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 recently signed contracts without delay; demand for our energy efficiency and renewable energy solutions; 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 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 costs of labor and equipment particularly given global supply chain challenges; our reliance on third parties for our construction and installation work; the addition of new customers or the loss of existing customers including our reliance on the agreement with SCE for a significant portion of our revenues in 2022; the impact from Covid-19 on our business; 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; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (SEC) on March 1, 2022. The forward-looking statements included in this press release represent our views as of the date of this press release. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

AMERESCO, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

 

 

December 31,

 

 

2021

 

 

 

2020

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

50,450

 

 

$

66,422

 

Restricted cash

 

24,267

 

 

 

22,063

 

Accounts receivable, net

 

161,970

 

 

 

125,010

 

Accounts receivable retainage

 

43,067

 

 

 

30,189

 

Costs and estimated earnings in excess of billings

 

306,172

 

 

 

185,960

 

Inventory, net

 

8,807

 

 

 

8,575

 

Prepaid expenses and other current assets

 

25,377

 

 

 

26,854

 

Income tax receivable

 

5,261

 

 

 

9,803

 

Project development costs, net

 

13,214

 

 

 

15,839

 

Total current assets

 

638,585

 

 

 

490,715

 

Federal ESPC receivable

 

557,669

 

 

 

396,725

 

Property and equipment, net

 

13,117

 

 

 

8,982

 

Energy assets, net

 

856,531

 

 

 

729,378

 

Goodwill, net

 

71,157

 

 

 

58,714

 

Intangible assets, net

 

6,961

 

 

 

927

 

Operating lease assets

 

41,982

 

 

 

39,151

 

Restricted cash, non-current portion

 

12,337

 

 

 

10,352

 

Deferred income tax assets, net

 

3,703

 

 

 

3,864

 

Other assets

 

22,779

 

 

 

15,307

 

Total assets

$

2,224,821

 

 

$

1,754,115

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

Current portions of long-term debt and financing lease liabilities

$

78,934

 

 

$

69,362

 

Accounts payable

 

308,963

 

 

 

230,916

 

Accrued expenses and other current liabilities

 

43,311

 

 

 

41,748

 

Current portion of operating lease liabilities

 

6,276

 

 

 

6,106

 

Billings in excess of cost and estimated earnings

 

35,918

 

 

 

33,984

 

Income taxes payable

 

822

 

 

 

981

 

Total current liabilities

 

474,224

 

 

 

383,097

 

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

 

377,184

 

 

 

311,674

 

Federal ESPC liabilities

 

532,287

 

 

 

440,223

 

Deferred income tax liabilities, net

 

3,871

 

 

 

6,227

 

Deferred grant income

 

8,498

 

 

 

8,271

 

Long-term operating lease liabilities, net of current portion

 

35,135

 

 

 

35,300

 

Other liabilities

 

43,176

 

 

 

37,660

 

Commitments and contingencies

 

 

 

Redeemable non-controlling interests

$

46,182

 

 

$

38,850

 

Stockholders’ equity:

 

 

 

Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at December 31, 2021 and 2020

 

 

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 35,818,104 shares issued and 33,716,309 shares outstanding at December 31, 2021, 32,326,449 shares issued and 30,224,654 shares outstanding at December 31, 2020

 

3

 

 

 

3

 

Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at December 31, 2021 and 2020

 

2

 

 

 

2

 

Additional paid-in capital

 

283,982

 

 

 

145,496

 

Retained earnings

 

438,732

 

 

 

368,390

 

Accumulated other comprehensive loss, net

 

(6,667

)

 

 

(9,290

)

Treasury stock, at cost, 2,101,795 shares at December 31, 2021 and 2020

 

(11,788

)

 

 

(11,788

)

Total stockholder’s equity

 

704,264

 

 

 

492,813

 

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

$

2,224,821

 

 

$

1,754,115

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

    

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Revenues

$

415,893

 

 

$

314,319

 

 

$

1,215,697

 

 

$

1,032,275

 

Cost of revenues

 

344,580

 

 

 

256,098

 

 

 

985,340

 

 

 

844,726

 

Gross profit

 

71,313

 

 

 

58,221

 

 

 

230,357

 

 

 

187,549

 

Selling, general and administrative expenses

 

39,272

 

 

 

33,647

 

 

 

134,923

 

 

 

116,050

 

Operating income

 

32,041

 

 

 

24,574

 

 

 

95,434

 

 

 

71,499

 

Other expenses, net

 

3,611

 

 

 

1,904

 

 

 

17,290

 

 

 

15,071

 

Income before income taxes

 

28,430

 

 

 

22,670

 

 

 

78,144

 

 

 

56,428

 

Income tax benefit

 

(1,164

)

 

 

(1,091

)

 

 

(2,047

)

 

 

(494

)

Net income

 

29,594

 

 

 

23,761

 

 

 

80,191

 

 

 

56,922

 

Net income attributable to redeemable non-controlling interest

 

(1,388

)

 

 

(276

)

 

 

(9,733

)

 

 

(2,870

)

Net income attributable to common shareholders

$

28,206

 

 

$

23,485

 

 

$

70,458

 

 

$

54,052

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

0.55

 

 

$

0.49

 

 

$

1.38

 

 

$

1.13

 

Diluted

$

0.53

 

 

$

0.47

 

 

$

1.35

 

 

$

1.10

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

51,644

 

 

 

48,015

 

 

 

50,855

 

 

 

47,702

 

Diluted

 

53,018

 

 

 

49,440

 

 

 

52,268

 

 

 

49,006

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

Year Ended December 31,

 

 

2021

 

 

 

2020

 

Cash flows from operating activities:

 

 

 

Net income

$

80,191

 

 

$

56,922

 

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

 

 

 

Depreciation of energy assets

 

43,113

 

 

 

38,039

 

Depreciation of property and equipment

 

3,143

 

 

 

3,317

 

Amortization of debt discount and debt issuance costs

 

2,849

 

 

 

2,686

 

Amortization of intangible assets

 

321

 

 

 

685

 

Accretion of ARO and contingent consideration

 

123

 

 

 

93

 

Provision for bad debts

 

187

 

 

 

282

 

Impairment of long-lived assets / loss on disposal

 

1,901

 

 

 

2,696

 

Gain on sale of equity investments

 

(575

)

 

 

 

Net loss (gain) from derivatives

 

240

 

 

 

(705

)

Stock-based compensation expense

 

8,716

 

 

 

1,933

 

Deferred income taxes, net

 

(4,760

)

 

 

3,401

 

Unrealized foreign exchange loss (gain), net

 

142

 

 

 

(306

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(15,953

)

 

 

(24,178

)

Accounts receivable retainage

 

(12,882

)

 

 

(13,113

)

Federal ESPC receivable

 

(249,728

)

 

 

(227,078

)

Inventory, net

 

(232

)

 

 

660

 

Costs and estimated earnings in excess of billings

 

(113,192

)

 

 

19,474

 

Prepaid expenses and other current assets

 

1,770

 

 

 

517

 

Project development costs

 

1,949

 

 

 

(3,085

)

Other assets

 

(1,752

)

 

 

536

 

Accounts payable, accrued expenses and other current liabilities

 

83,473

 

 

 

29,047

 

Billings in excess of cost and estimated earnings

 

(693

)

 

 

8,042

 

Other liabilities

 

(5,036

)

 

 

1,844

 

Income taxes payable, net

 

4,389

 

 

 

(4,292

)

Cash flows from operating activities

 

(172,296

)

 

 

(102,583

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(4,896

)

 

 

(2,211

)

Capital investment in energy assets

 

(178,879

)

 

 

(180,546

)

Grant award proceeds for energy assets

 

774

 

 

 

1,874

 

Proceeds from sale of equity investment

 

1,672

 

 

 

 

Acquisitions, net of cash received

 

(14,928

)

 

 

 

Contributions to equity investment

 

(9,000

)

 

 

(132

)

Cash flows from investing activities

$

(205,257

)

 

$

(181,015

)

 

 

 

 

 

Year Ended December 31,

 

 

2021

 

 

 

2020

 

Cash flows from financing activities:

 

 

 

Proceeds from equity offering, net of offering costs

$

120,084

 

 

$

 

Payments of debt discount and debt issuance costs

 

(2,919

)

 

 

(5,234

)

Proceeds from exercises of options and ESPP

 

6,927

 

 

 

9,875

 

Repurchase of common stock

 

 

 

 

(6

)

(Payments on) proceeds from senior secured credit facility, net

 

(8,073

)

 

 

3,000

 

Proceeds from long-term debt financings

 

185,994

 

 

 

116,067

 

Proceeds from Federal ESPC projects

 

159,216

 

 

 

248,917

 

Proceeds for energy assets from Federal ESPC

 

2,033

 

 

 

1,378

 

Investment fund call option exercise

 

(1,000

)

 

 

 

Proceeds from investments by redeemable non-controlling interests, net

 

1,399

 

 

 

4,805

 

Payments on long-term debt and financing leases

 

(98,200

)

 

 

(73,633

)

Cash flows from financing activities

 

365,461

 

 

 

305,169

 

Effect of exchange rate changes on cash

 

309

 

 

 

2

 

Net (decrease) increase in cash, cash equivalents, and restricted cash

 

(11,783

)

 

 

21,573

 

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

 

98,837

 

 

 

77,264

 

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

$

87,054

 

 

$

98,837

 

        
Non-GAAP Financial Measures (Unaudited, in thousands)
 

 

Three Months Ended December 31, 2021

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

11,434

 

$

13,911

 

$

2,593

 

$

268

 

$

28,206

 

Impact from redeemable non-controlling interests

 

 

 

1,388

 

 

 

 

 

 

1,388

 

Plus (less): Income tax provision (benefit)

 

3,431

 

 

(5,429

)

 

663

 

 

171

 

 

(1,164

)

Plus: Other expenses, net

 

264

 

 

3,260

 

 

(3

)

 

90

 

 

3,611

 

Plus: Depreciation and amortization

 

634

 

 

11,144

 

 

405

 

 

307

 

 

12,490

 

Plus: Stock-based compensation

 

3,551

 

 

446

 

 

219

 

 

219

 

 

4,435

 

Plus: Restructuring and other charges

 

81

 

 

6

 

 

1

 

 

1

 

 

89

 

Less: Gain on sale of equity investment

 

 

 

 

 

 

 

(571

)

 

(571

)

Adjusted EBITDA

$

19,395

 

$

24,726

 

$

3,878

 

$

485

 

$

48,484

 

Adjusted EBITDA margin

 

5.8

%

 

59.2

%

 

18.9

%

 

2.4

%

 

11.7

%

  

 

Three Months Ended December 31, 2020

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net income (loss) attributable to common shareholders

$

13,911

 

$

7,636

 

$

2,251

 

$

(313

)

$

23,485

 

Impact from redeemable non-controlling interests

 

 

 

276

 

 

 

 

 

 

276

 

Plus (less): Income tax provision (benefit)

 

898

 

 

(2,145

)

 

64

 

 

92

 

 

(1,091

)

(Less) plus: Other (income) expenses, net

 

(414

)

 

2,110

 

 

138

 

 

70

 

 

1,904

 

Plus: Depreciation and amortization

 

857

 

 

8,490

 

 

709

 

 

469

 

 

10,525

 

Plus: Stock-based compensation

 

431

 

 

54

 

 

34

 

 

34

 

 

553

 

Plus: Restructuring and other charges

 

34

 

 

9

 

 

20

 

 

3

 

 

66

 

Adjusted EBITDA

$

15,717

 

$

16,430

 

$

3,216

 

$

355

 

$

35,718

 

Adjusted EBITDA margin

 

6.4

%

 

53.1

%

 

16.9

%

 

1.8

%

 

11.4

%

  

 

Year Ended December 31, 2021

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

35,515

 

$

26,197

 

$

8,353

 

$

393

 

$

70,458

 

Impact from redeemable non-controlling interests

 

 

 

9,733

 

 

 

 

 

 

9,733

 

Plus (less): Income tax provision (benefit)

 

3,482

 

 

(7,774

)

 

1,547

 

 

698

 

 

(2,047

)

Plus: Other expenses, net

 

2,117

 

 

14,794

 

 

41

 

 

338

 

 

17,290

 

Plus: Depreciation and amortization

 

2,414

 

 

41,122

 

 

1,710

 

 

1,331

 

 

46,577

 

Plus: Stock-based compensation

 

6,607

 

 

1,031

 

 

530

 

 

548

 

 

8,716

 

Plus: Energy asset impairment

 

 

 

1,901

 

 

 

 

 

 

1,901

 

Plus: Restructuring and other charges

 

260

 

 

43

 

 

37

 

 

318

 

 

658

 

Less: Gain on sale of equity investment

 

 

 

 

 

 

 

(571

)

 

(571

)

Adjusted EBITDA

$

50,395

 

$

87,047

 

$

12,218

 

$

3,055

 

$

152,715

 

Adjusted EBITDA margin

 

5.6

%

 

57.6

%

 

15.5

%

 

3.7

%

 

12.6

%

  

 

Year Ended December 31, 2020

Adjusted EBITDA:

Projects

Energy Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

28,971

 

$

19,084

 

$

5,513

 

$

484

 

$

54,052

 

Impact from redeemable non-controlling interests

 

 

 

2,870

 

 

 

 

 

 

2,870

 

Plus (less): Income tax provision (benefit)

 

2,195

 

 

(4,806

)

 

1,145

 

 

972

 

 

(494

)

Plus: Other expenses, net

 

2,868

 

 

11,025

 

 

987

 

 

191

 

 

15,071

 

Plus: Depreciation and amortization

 

3,412

 

 

33,922

 

 

2,864

 

 

1,843

 

 

42,041

 

Plus: Stock-based compensation

 

1,430

 

 

222

 

 

136

 

 

145

 

 

1,933

 

Plus: Energy asset impairment

 

 

 

1,028

 

 

 

 

 

 

1,028

 

Plus: Restructuring and other charges

 

929

 

 

176

 

 

85

 

 

186

 

 

1,376

 

Adjusted EBITDA

$

39,805

 

$

63,521

 

$

10,730

 

$

3,821

 

$

117,877

 

Adjusted EBITDA margin

 

5.2

%

 

53.7

%

 

14.8

%

 

5.0

%

 

11.4

%

 

Three Months Ended December 31,

Year Ended December 31,

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Non-GAAP net income and EPS:

 

 

 

 

Net income attributable to common shareholders

$

28,206

 

$

23,485

 

$

70,458

 

$

54,052

 

Adjustment for accretion of tax equity financing fees

 

(27

)

 

(30

)

 

(116

)

 

(121

)

Impact from redeemable non-controlling interests

 

1,388

 

 

276

 

 

9,733

 

 

2,870

 

Plus: Energy asset impairment

 

 

 

 

 

1,901

 

 

1,028

 

Plus: Restructuring and other charges

 

89

 

 

66

 

 

658

 

 

1,376

 

Less: Gain on sale of equity investment

 

(571

)

 

 

 

(571

)

 

 

Income tax effect of Non-GAAP adjustments

 

(2,421

)

 

(769

)

 

(3,063

)

 

(1,377

)

Non-GAAP net income

$

26,664

 

$

23,028

 

$

79,000

 

$

57,828

 

 

 

 

 

 

Diluted net income per common share

$

0.53

 

$

0.47

 

$

1.35

 

$

1.10

 

Effect of adjustments to net income

 

(0.03

)

 

 

 

0.16

 

 

0.08

 

Non-GAAP EPS

$

0.50

 

$

0.47

 

$

1.51

 

$

1.18

 

 

 

 

 

 

Adjusted cash from operations:

 

 

 

 

Cash flows from operating activities

$

(55,952

)

$

(18,794

)

$

(172,296

)

$

(102,583

)

Plus: proceeds from Federal ESPC projects

 

45,031

 

 

54,331

 

 

159,216

 

 

248,917

 

Adjusted cash from operations

$

(10,921

)

$

35,537

 

$

(13,080

)

$

146,334

 

Other Financial Measures (In thousands) (Unaudited)

 

Three Months Ended December 31,

Year Ended December 31,

 

2021

2020

2021

2020

New contracts and awards:

 

 

 

 

New contracts

$

1,064,000

$

104,000

$

1,515,000

$

543,000

New awards (1)

$

1,080,000

$

211,000

$

1,798,000

$

702,000

 

(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, 2022

 

Low

High

Operating income (1)

$137 million

$145 million

Depreciation and amortization

$52 million

$53 million

Stock-based compensation

$11 million

$12 million

Adjusted EBITDA

$200 million

$210 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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