DevvStream

Ameresco Reports Fourth Quarter and Full Year 2023 Financial Results

28 February 2024
  • Awarded Project Backlog Conversion Drives Significant Q4 Revenue and Profit Growth
  • Record Total Project Backlog of nearly $4B, with $520M in New Awards in Q4
  • 717 MWe of Assets in Development, with 63 MWe Placed into Operation in the Quarter
  • Guiding to 38% Adj. EBITDA Growth at the Midpoint for 2024

Full Year and Fourth Quarter 2023 Financial Highlights:

  • Revenues of $1,374.6 million and $441.4 million
  • Net income attributable to common shareholders of $62.5 million and $33.7 million
  • GAAP EPS of $1.17 and $0.64
  • Non-GAAP EPS of $1.26 and $0.69
  • Adjusted EBITDA of $163.0 million and $54.9 million

FRAMINGHAM, Mass. / Feb 28, 2024 / 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 December 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. All financial result comparisons made are against the prior year period unless otherwise noted.

CEO George Sakellaris commented, “Fourth quarter results represented a strong finish to a challenging year, demonstrating positive momentum that supports Ameresco’s long term growth trajectory. In addition to the considerable revenue and Adjusted EBITDA growth achieved in the quarter, we grew total project backlog nearly 50%, ending 2023 with a record $3.9 billion. We also grew our assets in development 35% to 717 MWe at the end of the year. Both of which provide a pathway for continued growth over the next several years. Despite the industry headwinds, specifically supply chain issues and administrative bottlenecks that caused the push-out of project revenues we noted last quarter, we are pleased to report that we converted and executed on a number of these previously-delayed projects contributing to the 40% increase in our fourth quarter Project revenues. Additionally, we have taken actions to streamline our organization and have considered these industry factors in our future planning and project scheduling. With respect to Energy Assets, we placed 63 MWe into operation in the fourth quarter, bringing our total operating Energy Assets to over 500 MWe.

“We continue to make great strides in growing our UK and European footprint. After a year of strong organic and acquisitive revenue growth of over 150%, this unit now accounts for over 10% of our total revenue. We believe this market remains highly fragmented and very economically attractive to Ameresco.

“Ameresco’s record backlog and asset pipeline metrics underscore the strength of our market positioning and our ability to continue to achieve substantial long-term growth in revenues and profitability. New awards in 2023 were approximately $2.2 billion, double last year’s $1.1 billion, and proposal activity remained at an all-time high. In 2023, our Energy Asset business continued to add high return assets to our development pipeline. During the year, we increased Ameresco-owned Assets in development by 199 MWe to 669 MWe, while also bringing 118 MWe into operation during the year.”

Fourth Quarter Financial Results

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

(in millions)

4Q 2023

4Q 2022

 

Revenue

Net Income (1)

Adj. EBITDA

Revenue

Net Income (1)

Adj. EBITDA

Projects

$346.5

$27.2

$26.3

$247.1

$7.8

$15.5

Energy Assets

$43.9

$1.3

$23.3

$39.1

$7.0

$20.1

O&M

$24.4

$4.1

$3.4

$21.6

$2.0

$3.3

Other

$26.6

$1.1

$1.9

$23.9

$1.1

$2.3

Total (2)

$441.4

$33.7

$54.9

$331.7

$17.9

$41.2

 

 

 

 

 

 

 

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

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

Total revenue was $441.4 million, a 33% increase, with double-digit growth across all four of our lines of business. Our Projects business experienced 40% revenue growth as the Company executed on a number of large contract conversions, some that had slipped from the previous quarter, and benefited from increased overall activity, including revenues related to the addition of the Enerqos acquisition in Italy earlier in the year. We also saw a benefit of approximately $40 million from faster implementation of active contracts. Energy Asset revenue increased 12.3% driven by continued growth in our operating asset portfolio and stronger RIN prices. O&M revenue was up 13.2% reflecting increased growth in our long-term contracts while Other revenue increased 11.4%. Gross margin of 16.8% declined due to an increase in the mix of larger, lower margin contracts. We continued to take advantage of clean energy tax incentives available under the Inflation Reduction Act, resulting in a larger than expected effective tax rate benefit of (67.0%). Net income attributable to common shareholders was $33.7 million. The GAAP results for 2023 reflect a non-cash downward adjustment of $1.6 million related to energy asset impairment charges and a non-cash downward adjustment of $2.2 million related to a goodwill impairment charge. Adjusted EBITDA increased 33% to $54.9 million. GAAP and Non-GAAP EPS were $0.64 and $0.69, respectively, with Non-GAAP EPS increasing 97%.

Balance Sheet and Cash Flow Metrics

($ in millions)

December 31, 2023

Total Corporate Debt (1)

$279.9

Corporate Debt Leverage Ratio (2)

3.3x

 

 

Total Energy Asset Debt (3)

$1,213.3

Energy Asset Book Value (4)

$1,689.4

Energy Debt Advance Rate (5)

72%

 

 

Q4 Cash Flows from Operating Activities

$(29.6)

Plus: Q4 Proceeds from Federal ESPC Projects

$47.0

Equals: Q4 Adjusted Cash from Operations

$17.5

 

 

8-quarter rolling average Cash Flows from Operating Activities

$(51.0)

Plus: 8-quarter rolling average Proceeds from Federal ESPC Projects

$49.1

Equals: 8-quarter rolling average Adjusted Cash from Operations

$(1.9)

 

 

(1) Term loans and drawn amounts on the revolving line of credit on our Sr. Secured Credit Facility

 

(2) Debt to EBITDA, as calculated under our Sr. Secured Credit Facility

 

(3) Term loans, sale-leasebacks and construction loan project financings for our Energy Assets in operations and in-construction and development

 

(4) Book Value of our Energy Assets in operations and in-construction and development

 

(5) Total Energy Asset Debt divided by Energy Asset Book Value

 

The Company ended the quarter with $79.3 million in cash. Our total corporate debt including our term loans and drawn amounts on our revolving line of credit continued to decline to $279.9 million, with a corporate leverage ratio as calculated under our Sr. Secured Credit Facility of 3.3x, below our 3.75x bank covenant level. Our Energy Asset Debt was $1.2 billion with an Energy Debt Advance rate of 72% on the Energy Asset Book Value. Our Adjusted Cash from Operations in Q4 was $17.5 million and $84.3 million for 2023. Given the volatility of quarterly Adjusted Cash from Operations we are also providing investors with a quarterly average over a trailing 8-quarter period in our supplemental materials, representing our average implementation cycle.

After the end of the year, we announced that we had engaged an investment bank to raise subordinated debt as required by the December 2023 amendment to our Sr. Secured Credit Facility. The debt raise, if successful, would be used to repay outstanding amounts on the Sr. Secured Credit Facility.

Project and Asset Highlights

($ in millions)

 

At December 31, 2023

Awarded Project Backlog (1)

 

$2,555

Contracted Project Backlog

 

$1,324

Total Project Backlog (2)

 

$3,879

12-month Contracted Backlog (3)

 

$719

 

 

 

O&M Revenue Backlog

 

$1,222

12-month O&M Backlog

 

$89

Energy Asset Visibility (4)

 

$2,300

Operating Energy Assets

 

508 MWe

Ameresco's Net Assets in Development (2)

 

669 MWe

 

 

 

(1) Customer contracts that have not been signed yet

(2) Project backlog and Net MWe capacity after minority interests

(3) 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

(4) 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

  • Ameresco’s Assets in Development ended the quarter at 717 MWe. After subtracting Ameresco’s partners’ minority interests, Ameresco’s owned capacity of Assets in Development at quarter end was 669 MWe.
  • Increased net assets in development by 63 MW in the fourth quarter driven by increased solar and BESS activity.
  • Ameresco continued to grow its innovative BESS energy assets under development with the upcoming installation of a 50 MW / 200 MWh system with Silicon Valley Power.
  • Ameresco, along with its partner Sunel Group, continued its international business momentum and has begun construction of 300 MW of design-build solar parks across the UK for Sonnedix, a global renewable energy producer.
  • The military market continued to show significant interest in installations that provide resiliency to military installations around the world. Ameresco, along with a partner, will install a 6.25 MW solar generation plant funded by the Department of Defense’s Energy Resilience and Conservation Investment Program (ERCIP), which funds projects that improve energy resilience, contribute to mission assurance, save energy and reduce DoD’s energy costs.

Summary and Outlook

“Ameresco’s robust backlog and growing assets in development are strong indicators of how well aligned our capabilities are with market demand. Our broad and deep technical expertise has enabled us to execute on complex projects, positioning us as a leading provider of cost-effective, resilient energy solutions for public and private clients. With over $7 billion in multi-year revenue visibility from our project backlog and asset development pipeline, we have a roadmap to achieving our long-term growth targets.

Ameresco’s full year 2024 guidance is included in the table below and reflects an expected revenue and Adjusted EBITDA growth of 20% and 38%, respectively, at the midpoints. We plan to continue to take advantage of clean energy tax incentives resulting in a likely net tax benefit. The Company expects to place approximately 200 MWe of energy assets in service for all of 2024. Our expected capex for 2024 is $350 million to $400 million, the majority of which we expect to fund with project financing. For the first quarter of fiscal 2024, we expect revenues of $225 million to $275 million and adjusted EBITDA of $20 million to $30 million, with negative non-GAAP EPS. We expect the remainder of the year to follow a more normal quarterly seasonal cadence.

FY 2024 Guidance Ranges

Revenue

$1.60 billion

$1.70 billion

Gross Margin

17.5%

18.5%

Adjusted EBITDA

$210 million

$240 million

Interest Expense & Other

$60 million

$65 million

Non-GAAP EPS

$1.30

$1.50

The Company’s Adjusted EBITDA and Non-GAAP EPS guidance excludes the impact of redeemable non-controlling interest activity, one-time charges, asset impairment charges, changes in contingent consideration, restructuring activities, as well as any related tax impact.

We are working closely with Southern California Edison Company on the final steps toward substantial completion for two of the three projects. Construction activities and preparation for commissioning have begun for the third project, which was significantly impacted by the heavy rainfall in California in 2023. This last site is expected to reach substantial completion in the summer of 2024.

Conference Call/Webcast Information

The Company will host a conference call today at 4:30 p.m. ET to discuss fourth 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, effective tax rate, capital investments, other financial guidance and longer term outlook, statements about our financing plans including the status of discussion related to raising subordinated debt and our ability to finalize such a debt financing, the impact the IRA, supply chain disruptions, shortage and cost of materials and labor, and other macroeconomic and geopolitical challenges; our expectations related to our agreement with SCE including the impact of delays and any requirement to pay liquidated damages, 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: demand for our energy efficiency and renewable energy solutions; 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; the ability to perform under signed contracts without delay and in accordance with their terms and related liquidated and other damages we may be subject to; the fiscal health of the government and the risk of government shutdowns; our ability to complete and operate our projects on a profitable basis and as committed to our customers; our cash flows from operations and our ability to arrange financing to fund our operations and projects our customers’ ability to finance their projects and credit risk from our customers; our ability to comply with covenants in our existing debt agreements including the requirement to raise additional subordinated debt; the impact of macroeconomic challenges, weather related events and climate change on our business; our reliance on third parties for our construction and installation work; availability and cost of labor and equipment particularly given global supply chain challenges and global trade conflicts; global supply chain challenges, component shortages and inflationary pressures; changes in federal, state and local government policies and programs related to energy efficiency and renewable energy; the ability of customers to cancel or defer contracts included in our backlog; the output and performance of our energy plants and energy projects; cybersecurity incidents and breaches; regulatory and other risks inherent to constructing and operating energy assets 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; the addition of new customers or the loss of existing customers; market price of our Class A Common stock prevailing from time to time; the nature of other investment opportunities presented to our Company from time to time; risks related to our international operation and international growth strategy; and other factors discussed in our most recent Annual Report on Form 10-K. 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,

 

2023

 

2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

79,271

 

 

$

115,534

 

Restricted cash

 

62,311

 

 

 

20,782

 

Accounts receivable, net

 

153,362

 

 

 

174,009

 

Accounts receivable retainage

 

33,826

 

 

 

38,057

 

Costs and estimated earnings in excess of billings

 

636,163

 

 

 

576,363

 

Inventory, net

 

13,637

 

 

 

14,218

 

Prepaid expenses and other current assets

 

123,391

 

 

 

38,617

 

Income tax receivable

 

5,775

 

 

 

7,746

 

Project development costs, net

 

20,735

 

 

 

16,025

 

Total current assets

 

1,128,471

 

 

 

1,001,351

 

Federal ESPC receivable

 

609,265

 

 

 

509,507

 

Property and equipment, net

 

17,395

 

 

 

15,707

 

Energy assets, net

 

1,689,424

 

 

 

1,181,525

 

Goodwill, net

 

75,587

 

 

 

70,633

 

Intangible assets, net

 

6,808

 

 

 

4,693

 

Operating lease assets

 

58,586

 

 

 

38,224

 

Restricted cash, non-current portion

 

12,094

 

 

 

13,572

 

Deferred income tax assets, net

 

26,411

 

 

 

3,045

 

Other assets

 

89,735

 

 

 

38,564

 

Total assets

$

3,713,776

 

 

$

2,876,821

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Current portions of long-term debt and financing lease liabilities, net

 

322,247

 

 

 

331,479

 

Accounts payable

 

402,752

 

 

 

349,126

 

Accrued expenses and other current liabilities

 

108,831

 

 

 

89,166

 

Current portions of operating lease liabilities

 

13,569

 

 

 

5,829

 

Billings in excess of cost and estimated earnings

 

52,903

 

 

 

34,796

 

Income taxes payable

 

1,169

 

 

 

1,672

 

Total current liabilities

 

901,471

 

 

 

812,068

 

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

 

1,170,075

 

 

 

568,635

 

Federal ESPC liabilities

 

533,054

 

 

 

478,497

 

Deferred income tax liabilities, net

 

4,479

 

 

 

9,181

 

Deferred grant income

 

6,974

 

 

 

7,590

 

Long-term operating lease liabilities, net of current portion

 

42,258

 

 

 

31,703

 

Other liabilities

 

82,714

 

 

 

49,493

 

Commitments and contingencies

 

 

 

Redeemable non-controlling interests, net

$

46,865

 

 

$

46,623

 

Stockholders’ equity:

 

 

 

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

 

 

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,378,990 shares issued and 34,277,195 shares outstanding at December 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 December 31, 2023 and 2022

 

2

 

 

 

2

 

Additional paid-in capital

 

320,892

 

 

 

306,314

 

Retained earnings

 

595,911

 

 

 

533,549

 

Accumulated other comprehensive loss, net

 

(3,045

)

 

 

(4,051

)

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

 

(11,788

)

 

 

(11,788

)

Stockholders’ equity before non-controlling interest

 

901,975

 

 

 

824,029

 

Non-controlling interests

 

23,911

 

 

 

49,002

 

Total stockholders’ equity

 

925,886

 

 

 

873,031

 

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

$

3,713,776

 

 

$

2,876,821

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

    

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2023

 

2022

 

2023

 

2022

 

(Unaudited)

 

(Unaudited)

 

 

 

 

Revenues

$

441,368

 

 

$

331,727

 

 

$

1,374,633

 

 

$

1,824,422

 

Cost of revenues

 

367,192

 

 

 

270,131

 

 

 

1,128,204

 

 

 

1,533,589

 

Gross profit

 

74,176

 

 

 

61,596

 

 

 

246,429

 

 

 

290,833

 

Earnings from unconsolidated entities

 

402

 

 

 

170

 

 

 

1,758

 

 

 

1,647

 

Selling, general and administrative expenses

 

36,672

 

 

 

39,452

 

 

 

162,138

 

 

 

159,488

 

Asset impairments

 

3,831

 

 

 

 

 

 

3,831

 

 

 

 

Operating income

 

34,075

 

 

 

22,314

 

 

 

82,218

 

 

 

132,992

 

Other expenses, net

 

16,066

 

 

 

7,397

 

 

 

43,949

 

 

 

27,273

 

Income before income taxes

 

18,009

 

 

 

14,917

 

 

 

38,269

 

 

 

105,719

 

Income tax (benefit) provision

 

(15,083

)

 

 

(3,726

)

 

 

(25,635

)

 

 

7,170

 

Net income

 

33,092

 

 

 

18,643

 

 

 

63,904

 

 

 

98,549

 

Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests

 

643

 

 

 

(708

)

 

 

(1,434

)

 

 

(3,623

)

Net income attributable to common shareholders

$

33,735

 

 

$

17,935

 

 

$

62,470

 

 

$

94,926

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

Basic

$

0.65

 

 

$

0.34

 

 

$

1.20

 

 

$

1.83

 

Diluted

$

0.64

 

 

$

0.34

 

 

$

1.17

 

 

$

1.78

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

52,247

 

 

 

51,925

 

 

 

52,140

 

 

 

51,841

 

Diluted

 

53,063

 

 

 

53,332

 

 

 

53,228

 

 

 

53,278

 

AMERESCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

  
 

Year Ended December 31,

 

2023

 

2022

Cash flows from operating activities:

 

 

 

Net income

$

63,904

 

 

$

98,549

 

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

 

 

 

Depreciation of energy assets, net

 

59,390

 

 

 

49,755

 

Depreciation of property and equipment

 

4,155

 

 

 

2,665

 

Amortization of debt discount and debt issuance costs

 

4,201

 

 

 

4,211

 

Amortization of intangible assets

 

2,366

 

 

 

1,858

 

Net increase in fair value of contingent consideration

 

347

 

 

 

1,614

 

Accretion of ARO liabilities

 

258

 

 

 

146

 

Impairment of goodwill

 

2,222

 

 

 

 

Provision (recoveries of) for bad debts

 

356

 

 

 

(382

)

Impairment of long-lived assets / loss on write-off

 

1,710

 

 

 

937

 

In-kind lease expenses, net

 

(3,164

)

 

 

 

Earnings from unconsolidated entities

 

(1,758

)

 

 

(1,647

)

Net gain from derivatives

 

(1,108

)

 

 

(212

)

Stock-based compensation expense

 

10,318

 

 

 

15,046

 

Deferred income taxes, net

 

(27,602

)

 

 

3,918

 

Unrealized foreign exchange gain

 

(368

)

 

 

(123

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

52,647

 

 

 

3,477

 

Accounts receivable retainage

 

4,337

 

 

 

4,716

 

Federal ESPC receivable

 

(260,378

)

 

 

(259,499

)

Inventory, net

 

581

 

 

 

(5,411

)

Costs and estimated earnings in excess of billings

 

(13,211

)

 

 

(272,629

)

Prepaid expenses and other current assets

 

(41,125

)

 

 

(3,182

)

Project development costs

 

(5,486

)

 

 

(685

)

Other assets

 

(6,896

)

 

 

(11,327

)

Accounts payable, accrued expenses, and other current liabilities

 

53,238

 

 

 

36,155

 

Billings in excess of cost and estimated earnings

 

26,202

 

 

 

449

 

Other liabilities

 

3,559

 

 

 

(5,074

)

Income taxes receivable (payable), net

 

1,314

 

 

 

(1,613

)

Cash flows from operating activities

 

(69,991

)

 

 

(338,288

)

Cash flows from investing activities:

 

 

 

Purchases of property and equipment

 

(5,713

)

 

 

(5,296

)

Capital investment in energy assets

 

(538,418

)

 

 

(304,596

)

Capital investment in major maintenance of energy assets

 

(7,636

)

 

 

(18,007

)

Acquisitions, net of cash received

 

(9,182

)

 

 

 

Contributions to equity and other investments

 

(5,429

)

 

 

 

Loans to joint venture investments

 

(565

)

 

 

(459

)

Cash flows from investing activities

$

(566,943

)

 

$

(328,358

)

Cash flows from financing activities:

 

 

 

Payments of debt discount and debt issuance costs

 

(9,315

)

 

 

(3,695

)

Proceeds from exercises of options and ESPP

 

4,455

 

 

 

5,963

 

Payment of contingent consideration

 

(1,866

)

 

 

 

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

 

(43,000

)

 

 

137,900

 

Proceeds from long-term debt financings

 

843,498

 

 

 

468,476

 

Proceeds from Federal ESPC projects

 

154,338

 

 

 

238,360

 

Net proceeds from energy asset receivable financing arrangements

 

14,512

 

 

 

14,341

 

Investment fund call option exercise

 

 

 

 

(839

)

Contributions from non-controlling interest

 

3,738

 

 

 

32,706

 

Distributions to non-controlling interest

 

(21,842

)

 

 

 

Distributions to redeemable non-controlling interests, net

 

(658

)

 

 

(1,128

)

Payments on long-term debt and financing leases

 

(303,057

)

 

 

(161,857

)

Cash flows from financing activities

 

640,803

 

 

 

730,227

 

Effect of exchange rate changes on cash

 

(81

)

 

 

(747

)

Net increase in cash, cash equivalents, and restricted cash

 

3,788

 

 

 

62,834

 

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

 

149,888

 

 

 

87,054

 

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

$

153,676

 

 

$

149,888

 

Non-GAAP Financial Measures (Unaudited, in thousands)

  

 

Three Months Ended December 31, 2023

Adjusted EBITDA:

Projects

Energy
Assets

O&M

Other

Consolidated

Net income (loss) attributable to common shareholders

$

27,149

 

$

1,333

 

$

4,145

 

$

1,108

 

$

33,735

 

Impact from redeemable non-controlling interests

 

 

 

(299

)

 

 

 

 

 

(299

)

Less: Income tax benefit

 

(7,312

)

 

(6,722

)

 

(991

)

 

(58

)

 

(15,083

)

Plus: Other expenses, net

 

4,130

 

 

11,551

 

 

110

 

 

275

 

 

16,066

 

Plus: Depreciation and amortization

 

1,202

 

 

16,304

 

 

295

 

 

733

 

 

18,534

 

Plus: Stock-based compensation

 

(1,113

)

 

(440

)

 

(210

)

 

(237

)

 

(2,000

)

Plus: Asset impairment charges

 

2,222

 

 

1,609

 

 

 

 

 

 

3,831

 

Plus: Restructuring and other charges

 

76

 

 

21

 

 

2

 

 

56

 

 

155

 

Adjusted EBITDA

$

26,354

 

$

23,357

 

$

3,351

 

$

1,877

 

$

54,939

 

Adjusted EBITDA margin

 

7.6

%

 

53.3

%

 

13.7

%

 

7.1

%

 

12.4

%

 

Three Months Ended December 31, 2022

Adjusted EBITDA:

Projects

Energy
Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

7,791

 

$

6,972

 

$

2,040

 

$

1,132

 

$

17,935

 

Impact from redeemable non-controlling interests

 

90

 

 

618

 

 

 

 

 

 

708

 

Plus (less): Income tax provision (benefit)

 

538

 

 

(5,131

)

 

573

 

 

294

 

 

(3,726

)

Plus: Other expenses, net

 

2,402

 

 

4,563

 

 

173

 

 

259

 

 

7,397

 

Plus: Depreciation and amortization

 

710

 

 

12,568

 

 

247

 

 

323

 

 

13,848

 

Plus: Stock-based compensation

 

3,137

 

 

496

 

 

274

 

 

302

 

 

4,209

 

Plus: Restructuring and other charges

 

859

 

 

26

 

 

2

 

 

13

 

 

900

 

Adjusted EBITDA

$

15,527

 

$

20,112

 

$

3,309

 

$

2,323

 

$

41,271

 

Adjusted EBITDA margin

 

6.3

%

 

51.5

%

 

15.3

%

 

9.7

%

 

12.4

%

 

 

 

 

 

 

 

Year Ended December 31, 2023

Adjusted EBITDA:

Projects

Energy
Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

39,263

 

$

12,992

 

$

7,965

 

$

2,250

 

$

62,470

 

Impact from redeemable non-controlling interests

 

 

 

570

 

 

 

 

 

 

570

 

(Less) plus: Income tax (benefit) provision

 

(15,717

)

 

(10,642

)

 

345

 

 

379

 

 

(25,635

)

Plus: Other expenses, net

 

14,257

 

 

27,701

 

 

669

 

 

1,322

 

 

43,949

 

Plus: Depreciation and amortization

 

4,103

 

 

58,455

 

 

1,218

 

 

2,135

 

 

65,911

 

Plus: Stock-based compensation

 

7,516

 

 

1,343

 

 

694

 

 

765

 

 

10,318

 

Plus: Asset impairment charges

 

2,222

 

 

1,609

 

 

 

 

 

 

3,831

 

Plus: Restructuring and other charges

 

1,223

 

 

69

 

 

17

 

 

267

 

 

1,576

 

Adjusted EBITDA

$

52,867

 

$

92,097

 

$

10,908

 

$

7,118

 

$

162,990

 

Adjusted EBITDA margin

 

5.3

%

 

51.5

%

 

11.8

%

 

7.0

%

 

11.9

%

 

Year Ended December 31, 2022

Adjusted EBITDA:

Projects

Energy
Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

49,646

 

$

32,555

 

$

8,765

 

$

3,960

 

$

94,926

 

Impact from redeemable non-controlling interests

 

90

 

 

3,533

 

 

 

 

 

 

3,623

 

Plus (less): Income tax provision (benefit)

 

15,853

 

 

(13,168

)

 

2,798

 

 

1,687

 

 

7,170

 

Plus: Other expenses, net

 

10,592

 

 

15,499

 

 

528

 

 

654

 

 

27,273

 

Plus: Depreciation and amortization

 

3,029

 

 

48,589

 

 

1,160

 

 

1,500

 

 

54,278

 

Plus: Stock-based compensation

 

12,073

 

 

1,398

 

 

740

 

 

835

 

 

15,046

 

Plus: Restructuring and other charges

 

2,102

 

 

5

 

 

16

 

 

73

 

 

2,196

 

Adjusted EBITDA

$

93,385

 

$

88,411

 

$

14,007

 

$

8,709

 

$

204,512

 

Adjusted EBITDA margin

 

6.3

%

 

54.5

%

 

16.5

%

 

9.1

%

 

11.2

%

 

Three Months Ended December 31,

Year Ended December 31,

 

2023

2022

2023

2022

Non-GAAP net income and EPS:

 

 

 

 

Net income attributable to common shareholders

$

33,735

 

$

17,935

 

$

62,470

 

$

94,926

 

Adjustment for accretion of tax equity financing fees

 

(27

)

 

(27

)

 

(108

)

 

(116

)

Impact from redeemable non-controlling interests

 

(299

)

 

708

 

 

570

 

 

3,623

 

Plus: Goodwill impairment

 

2,222

 

 

 

 

2,222

 

 

 

Plus: Energy asset impairment

 

1,609

 

 

 

 

1,609

 

 

 

Plus: Contingent consideration, restructuring and other charges

 

155

 

 

900

 

 

1,576

 

 

2,196

 

Income tax effect of Non-GAAP adjustments

 

(649

)

 

(645

)

 

(1,018

)

 

(983

)

Non-GAAP net income

$

36,746

 

$

18,871

 

$

67,321

 

$

99,646

 

 

 

 

 

 

Diluted net income per common share

$

0.64

 

$

0.34

 

$

1.17

 

$

1.78

 

Effect of adjustments to net income

 

0.05

 

 

0.01

 

 

0.09

 

 

0.09

 

Non-GAAP EPS

$

0.69

 

$

0.35

 

$

1.26

 

$

1.87

 

 

 

 

 

 

Adjusted cash from operations:

 

 

 

 

Cash flows from operating activities

$

(29,570

)

$

(55,952

)

$

(69,991

)

$

(338,288

)

Plus: proceeds from Federal ESPC projects

 

47,035

 

 

45,031

 

 

154,338

 

 

238,360

 

Adjusted cash from operations

$

17,465

 

$

(10,921

)

$

84,347

 

$

(99,928

)

Other Financial Measures (In thousands) (Unaudited)

     

 

Three Months Ended December 31,

Year Ended December 31,

 

2023

2022

2023

2022

New contracts and awards:

 

 

 

 

 

 

 

 

New contracts

$

477,280

 

$

315,250

 

$

1,276,660

 

$

973,050

 

New awards (1)

$

519,600

 

$

260,400

 

$

2,193,225

 

$

1,068,940

 

 

 

(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, 2024

 

Low

High

Operating income (1)

$113 million

$141 million

Depreciation and amortization

$85 million

$86 million

Stock-based compensation

$14 million

$15 million

Restructuring and other charges

$(2) million

$(2) million

Adjusted EBITDA

$210 million

$240 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, goodwill 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, goodwill 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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