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Ameresco Reports Third Quarter 2022 Financial Results

01 November 2022
  • Strong Q3 Revenue and Profit with Growth Across All Business Lines 
  • Inflation Reduction Act Provides Excellent Long Term Growth Opportunities 
  • Notable Project and Asset Wins in Europe as Momentum Increases 
  • Re-affirms FY22 Guidance 

Third Quarter 2022 Financial Highlights:

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

  • Revenues of $441.3 million, up 61%
  • Net income attributable to common shareholders of $27.4 million, up 57%
  • GAAP EPS of $0.51, up 55%
  • Non-GAAP EPS of $0.54, up 32%
  • Adjusted EBITDA of $57.9 million, up 44%

Ameresco, Inc. (NYSE:AMRC), a leading cleantech integrator specializing in energy efficiency and renewable energy, today announced financial results for the fiscal quarter ended September 30, 2022. 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.

“Ameresco delivered another quarter of excellent results. We are adapting to the reality of the supply chain environment and continue to execute effectively on our long-term growth strategy. Each of our business lines showed solid year-on-year growth, reflecting the benefits of our diversified business model and our ability to provide customers with innovative end-to-end solutions. The scope and comprehensive nature of our engagements continue to increase, and notable wins in the European market and increasing activity in the commercial and industrial (C&I) sector demonstrated our success in expanding Ameresco’s addressable market.

Ameresco is providing an update on the progress of the Southern California Edison (SCE) battery energy storage systems (BESS) projects. The SCE projects saw continued progress in the quarter, with all battery cells and containers on site and early commissioning steps underway. SCE also recently instructed us to adjust the project schedules into 2023. Under the terms of the contract, Ameresco is entitled to recover costs associated with this schedule adjustment. We are working with SCE to analyze and estimate these costs. We are also continuing discussions regarding the applicability and scope of any force majeure relief based on the force majeure notices we delivered to SCE and the impact the schedule adjustments requested by SCE may have on the overall project schedule and our force majeure claims. Our relationship with SCE continues to be cooperative. Considering the schedule adjustments requested by SCE and the delays disclosed earlier, we anticipate the projects to be in service and achieve substantial completion prior to the summer of 2023.

During the quarter we were honored to become a Great Place to Work-Certified™ company for the first time. The designation is based entirely on employee input making it more meaningful as it reflects the positive experience of our over 1,300 employees. At Ameresco, we believe in doing well by doing good, which underpins our investments in the training and well-being of our employees,” concluded George P. Sakellaris, President and Chief Executive Officer.

Third Quarter Financial Results

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

Total revenue increased 61% with growth across all of the Company's lines of business. Project revenue increased 81% as we continued to execute on the SCE projects. Energy Asset revenue grew 6% despite unplanned maintenance and downtime at two of our RNG facilities. O&M revenue increased 9% as the company continued to add long-term O&M contracts, especially on larger Federal government projects. Other revenue grew 28% with strength in integrated PV sales, especially to the oil & gas industry for remote power applications. Gross margin expanded sequentially to 18.0%, which was in line with our expectations, given a smaller contribution to our overall revenue mix in the quarter from the lower margin SCE design/build projects as they near completion. Revenue performance together with the Company's strong operating leverage led to a 57% increase in net income to $27.4 million, and a 44% increase in Adjusted EBITDA to $57.9 million. The results for the three months ended September 30, 2022 and 2021 reflect a non-cash downward adjustment of $0.3 million and $2.9 million, respectively, related to redeemable non-controlling interest activities. The current quarter results also reflect a non-cash downward adjustment of $1.1 million to recognize additional contingent consideration related to the Company’s Smart Building Solutions business unit which was acquired in 2021. Working capital needs increased slightly from second quarter 2022 levels, in-line with our expectations due to the continued execution of our large SCE design/build projects. The company ended the quarter with approximately $123 million of available cash and generated nearly $87 million in adjusted cash from operations.

(in millions)

3Q 2022

3Q 2021

 

Revenue

Net Income (1)

Adj. EBITDA

Revenue

Net Income (1)

Adj. EBITDA

Projects

$351.5

$15.9

$30.2

$194.0

$9.6

$12.6

Energy Assets

$41.7

$8.8

$22.4

$39.2

$5.5

$23.6

O&M

$21.9

$1.7

$3.1

$20.0

$2.6

$3.4

Other

$26.2

$1.0

$2.2

$20.4

$(0.3)

$0.6

Total (1)

$441.3

$27.4

$57.9

$273.7

$17.4

$40.2

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

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

($ in millions)

 

At September 30, 2022

Awarded Project Backlog (1)

 

$1,693

Contracted Project Backlog

 

$933

Total Project Backlog

 

$2,626

 

 

 

O&M Revenue Backlog

 

$1,246

Energy Asset Visibility (2)

 

$1,020

Operating Energy Assets

 

360 MWe

Ameresco's Net Assets in Development (3)

 

452 MWe

(1) Customer contracts that have not been signed yet

(2) Estimated contracted revenue and incentives on our operating Energy Assets, which may vary with actual production and future values of certain environmental attributes

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

Project Highlights

In the Third Quarter of 2022:

  • Ameresco, and partner Sunel, were selected by Cero Generation, as the contractors for “Delfini”, a 100 MWp solar photovoltaic (PV) project in Drama, Greece.
  • Ameresco was awarded a new project to install a microgrid system at White Sands Missile Range to provide resilient power for several of the base’s potable water wells. The microgrid includes a new 700kW solar photovoltaic array, a 500kW natural gas generator and a 500kW battery energy storage system and is designed to provide 14 days of power in the event of an outage.
  • Ameresco was awarded a comprehensive utility savings project in partnership with Southwest Gas at Fort Irwin, CA for $98M.
  • The Company completed a 2.6 MW "brightfield" solar installation on a former General Motors Plant brownfield site in Danville, Illinois.
  • Ameresco announced phase two of a longstanding partnership with Joint Base McGuire-Dix-Lakehurst (JBMDL) to provide mission-critical energy infrastructure updates at the joint base as part of a comprehensive $92 million project designed to add more onsite solar power, energy efficiency measures, and infrastructure upgrades.

Asset Highlights

In the Third Quarter of 2022:

  • Ameresco continued to grow its Assets in Development, bringing the total to 501 MWe. After subtracting Ameresco’s partners’ minority interests, Ameresco’s owned capacity of Assets in Development is 452 MWe.
  • Ameresco, together with Colorado Mountain College and Holy Cross Energy, partnered to install and complete 5MW of solar PV and 15MWH battery energy storage, the largest installation of its kind in the State of Colorado.

Summary and Outlook

“Year-to-date results have put us on track to achieve record results in 2022 and provide the foundation for our continued progress in 2023 and beyond. We see high energy prices, together with customer demand for both resilience and cost savings, and the recently enacted Inflation Reduction Act (IRA) as long-term growth catalysts for Ameresco. These factors strengthen our ability to achieve our 2024 Adjusted EBITDA target of $300 million and continue our growth trajectory in the years ahead.” Mr. Sakellaris noted.

“We are pleased to reiterate our 2022 guidance. During 2022, we anticipate placing between 50 and 70 MWe of energy assets in service, while investing approximately $225 million to $275 million of capital, the majority of which we expect to fund with non-recourse debt.

We look forward to welcoming analysts and institutional investors on November 15, 2022 for a tour of our Phoenix, AZ RNG facility showcasing the largest wastewater treatment biogas-to-renewable natural gas facility in the US. We look forward to hosting the plant tour followed by a presentation to provide a deeper understanding of Ameresco’s RNG business.” 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 redeemable non-controlling interest activity related to tax-equity partnerships, 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 third quarter 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 and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, gross margin, capital investments, other financial guidance, statements about our agreement with SCE including the impact of any delays, the impact of the IRA 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 recently signed contracts without delay; 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 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 and global trade conflicts and 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; 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; 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 Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 3, 2022, and other SEC filings. 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)

     

 

 

September 30,

 

December 31,

 

 

2022

 

2021

 

 

(Unaudited)

 

 

ASSETS

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

122,537

 

 

$

50,450

 

Restricted cash

 

 

24,403

 

 

 

24,267

 

Accounts receivable, net

 

 

219,817

 

 

 

161,970

 

Accounts receivable retainage, net

 

 

42,456

 

 

 

43,067

 

Costs and estimated earnings in excess of billings

 

 

628,529

 

 

 

306,172

 

Inventory, net

 

 

13,095

 

 

 

8,807

 

Prepaid expenses and other current assets

 

 

21,980

 

 

 

25,377

 

Income tax receivable

 

 

4,116

 

 

 

5,261

 

Project development costs, net

 

 

16,062

 

 

 

13,214

 

Total current assets

 

 

1,092,995

 

 

 

638,585

 

Federal ESPC receivable

 

 

726,679

 

 

 

557,669

 

Property and equipment, net

 

 

14,772

 

 

 

13,117

 

Energy assets, net

 

 

1,032,809

 

 

 

856,531

 

Deferred income tax assets, net

 

 

3,357

 

 

 

3,703

 

Goodwill, net

 

 

70,118

 

 

 

71,157

 

Intangible assets, net

 

 

5,089

 

 

 

6,961

 

Operating lease assets

 

 

37,952

 

 

 

41,982

 

Restricted cash, non-current portion

 

 

16,618

 

 

 

12,337

 

Other assets

 

 

37,654

 

 

 

22,779

 

Total assets

 

$

3,038,043

 

 

$

2,224,821

 

 

 

 

 

 

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY

Current liabilities:

 

 

 

 

Current portions of long-term debt and financing lease liabilities

 

$

301,247

 

 

$

78,934

 

Accounts payable

 

 

411,371

 

 

 

308,963

 

Accrued expenses and other current liabilities

 

 

95,268

 

 

 

43,311

 

Current portions of operating lease liabilities

 

 

6,129

 

 

 

6,276

 

Billings in excess of cost and estimated earnings

 

 

43,173

 

 

 

35,918

 

Income taxes payable

 

 

3,072

 

 

 

822

 

Total current liabilities

 

 

860,260

 

 

 

474,224

 

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

 

 

511,621

 

 

 

377,184

 

Federal ESPC liabilities

 

 

706,933

 

 

 

532,287

 

Deferred income tax liabilities, net

 

 

10,542

 

 

 

3,871

 

Deferred grant income

 

 

7,716

 

 

 

8,498

 

Long-term operating lease liabilities, net of current portion

 

 

31,142

 

 

 

35,135

 

Other liabilities

 

 

47,212

 

 

 

43,176

 

Commitments and contingencies

 

 

 

 

Redeemable non-controlling interests, net

 

$

48,077

 

 

$

46,182

 

Stockholders' equity:

 

 

 

 

Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021

 

 

 

 

 

 

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,015,988 shares issued and 33,914,193 shares outstanding at September 30, 2022, 35,818,104 shares issued and 33,716,309 shares outstanding at December 31, 2021

 

 

3

 

 

 

3

 

Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at September 30, 2022 and December 31, 2021

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

299,487

 

 

 

283,982

 

Retained earnings

 

 

515,642

 

 

 

438,732

 

Accumulated other comprehensive loss, net

 

 

(5,650

)

 

 

(6,667

)

Treasury stock, at cost, 2,101,795 shares at September 30, 2022 and December 31, 2021

 

 

(11,788

)

 

 

(11,788

)

Stockholders' equity before non-controlling interest

 

 

797,696

 

 

 

704,264

 

Non-controlling interest

 

 

16,844

 

 

 

 

Total stockholders’ equity

 

 

814,540

 

 

 

704,264

 

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

 

$

3,038,043

 

 

$

2,224,821

 

         

AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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

     

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenues

 

$

441,296

 

 

$

273,682

 

 

$

1,492,695

 

 

$

799,804

 

Cost of revenues

 

 

361,740

 

 

 

214,869

 

 

 

1,263,458

 

 

 

640,760

 

Gross profit

 

 

79,556

 

 

 

58,813

 

 

 

229,237

 

 

 

159,044

 

Selling, general and administrative expenses

 

 

40,618

 

 

 

35,168

 

 

 

118,559

 

 

 

95,651

 

Operating income

 

 

38,938

 

 

 

23,645

 

 

 

110,678

 

 

 

63,393

 

Other expenses, net

 

 

7,546

 

 

 

4,557

 

 

 

19,876

 

 

 

13,679

 

Income before income taxes

 

 

31,392

 

 

 

19,088

 

 

 

90,802

 

 

 

49,714

 

Income tax provision (benefit)

 

 

3,657

 

 

 

(1,192

)

 

 

10,896

 

 

 

(883

)

Net income

 

 

27,735

 

 

 

20,280

 

 

 

79,906

 

 

 

50,597

 

Net income attributable to redeemable non-controlling interests

 

 

(344

)

 

 

(2,857

)

 

 

(2,915

)

 

 

(8,345

)

Net income attributable to common shareholders

 

$

27,391

 

 

$

17,423

 

 

$

76,991

 

 

$

42,252

 

Net income per share attributable to common shareholders:

 

 

 

 

 

 

 

 

Basic

 

$

0.53

 

 

$

0.34

 

 

$

1.48

 

 

$

0.83

 

Diluted

 

$

0.51

 

 

$

0.33

 

 

$

1.44

 

 

$

0.81

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

51,869

 

 

 

51,464

 

 

 

51,810

 

 

 

50,599

 

Diluted

 

 

53,297

 

 

 

52,839

 

 

 

53,252

 

 

 

52,013

 

                 

AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

   

 

 

Nine Months Ended September 30,

 

 

2022

 

2021

Cash flows from operating activities:

 

 

 

 

Net income

 

$

79,906

 

 

$

50,597

 

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

 

 

 

 

Depreciation of energy assets, net

 

 

36,911

 

 

 

31,449

 

Depreciation of property and equipment

 

 

2,057

 

 

 

2,397

 

Net increase in fair value of contingent consideration

 

 

814

 

 

 

 

Accretion of ARO liabilities

 

 

108

 

 

 

90

 

Amortization of debt discount and debt issuance costs

 

 

2,869

 

 

 

2,085

 

Amortization of intangible assets

 

 

1,462

 

 

 

241

 

Provision for bad debts

 

 

363

 

 

 

29

 

Loss on disposal / impairment of long-lived assets

 

 

888

 

 

 

1,901

 

Equity in earnings of unconsolidated entity

 

 

(1,477

)

 

 

(128

)

Net (gain) loss from derivatives

 

 

(225

)

 

 

1,892

 

Stock-based compensation expense

 

 

10,837

 

 

 

4,280

 

Deferred income taxes, net

 

 

4,927

 

 

 

(1,834

)

Unrealized foreign exchange loss

 

 

466

 

 

 

124

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

 

(47,257

)

 

 

27,721

 

Accounts receivable retainage

 

 

225

 

 

 

(9,214

)

Federal ESPC receivable

 

 

(180,249

)

 

 

(187,984

)

Inventory, net

 

 

(4,287

)

 

 

246

 

Costs and estimated earnings in excess of billings

 

 

(325,057

)

 

 

(22,166

)

Prepaid expenses and other current assets

 

 

864

 

 

 

3,771

 

Project development costs

 

 

(823

)

 

 

15

 

Other assets

 

 

(10,254

)

 

 

(3,467

)

Accounts payable, accrued expenses and other current liabilities

 

 

143,026

 

 

 

(17,677

)

Billings in excess of cost and estimated earnings

 

 

7,802

 

 

 

(5,856

)

Other liabilities

 

 

(436

)

 

 

(155

)

Income taxes receivable, net

 

 

3,371

 

 

 

5,299

 

Cash flows from operating activities

 

 

(273,169

)

 

 

(116,344

)

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

 

(3,981

)

 

 

(2,133

)

Capital investment in new energy assets

 

 

(182,119

)

 

 

(141,253

)

Capital investment in major maintenance of energy assets

 

 

(16,106

)

 

 

(6,714

)

Loans to joint venture investments

 

 

(458

)

 

 

 

Cash flows from investing activities

 

 

(202,664

)

 

 

(150,100

)

Cash flows from financing activities:

 

 

 

 

Proceeds from equity offering, net of offering costs

 

 

 

 

 

120,084

 

Payments of debt discount and debt issuance costs

 

 

(2,885

)

 

 

(2,650

)

Proceeds from exercises of options and ESPP

 

 

4,430

 

 

 

4,883

 

Proceeds from (payments on) senior secured revolving credit facility, net

 

 

139,000

 

 

 

(38,073

)

Proceeds from long-term debt financings

 

 

331,086

 

 

 

118,160

 

Proceeds from Federal ESPC projects

 

 

173,865

 

 

 

114,185

 

Proceeds for (payments on) energy assets from Federal ESPC

 

 

7,675

 

 

 

(174

)

Investment fund call option exercise

 

 

 

 

 

(1,000

)

Contributions from non-controlling interest

 

 

13,148

 

 

 

 

(Distributions to) proceeds from redeemable non-controlling interests, net

 

 

(784

)

 

 

1,468

 

Payments on long-term debt and financing leases

 

 

(111,341

)

 

 

(55,616

)

Cash flows from financing activities

 

 

554,194

 

 

 

261,267

 

Effect of exchange rate changes on cash

 

 

(1,857

)

 

 

118

 

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

 

 

76,504

 

 

 

(5,059

)

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

 

 

87,054

 

 

 

98,837

 

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

 

$

163,558

 

 

$

93,778

 

         

Non-GAAP Financial Measures (In thousands) (Unaudited)

  

 

Three Months Ended September 30, 2022

Adjusted EBITDA:

Projects

Energy

Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

15,909

 

$

8,827

 

$

1,667

 

$

988

 

$

27,391

 

Impact from redeemable non-controlling interests

 

 

 

344

 

 

 

 

 

 

344

 

Plus (less): Income tax provision (benefit)

 

6,336

 

 

(3,952

)

 

777

 

 

496

 

 

3,657

 

Plus: Other expenses, net

 

3,047

 

 

4,199

 

 

136

 

 

164

 

 

7,546

 

Plus: Depreciation and amortization

 

745

 

 

12,649

 

 

292

 

 

342

 

 

14,028

 

Plus: Stock-based compensation

 

2,892

 

 

343

 

 

180

 

 

216

 

 

3,631

 

Plus: Contingent consideration, restructuring and other charges

 

1,255

 

 

5

 

 

2

 

 

2

 

 

1,264

 

Adjusted EBITDA

$

30,184

 

$

22,415

 

$

3,054

 

$

2,208

 

$

57,861

 

Adjusted EBITDA margin

 

8.6

%

 

53.8

%

 

14.0

%

 

8.4

%

 

13.1

%

  

 

Three Months Ended September 30, 2021

Adjusted EBITDA:

Projects

Energy

Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

9,617

 

$

5,548

 

$

2,550

 

$

(292

)

$

17,423

 

Impact from redeemable non-controlling interests

 

 

 

2,857

 

 

 

 

 

 

2,857

 

Plus (less): Income tax provision (benefit)

 

398

 

 

(1,942

)

 

298

 

 

54

 

 

(1,192

)

Plus: Other expenses, net

 

475

 

 

4,013

 

 

14

 

 

55

 

 

4,557

 

Plus: Depreciation and amortization

 

581

 

 

10,861

 

 

383

 

 

328

 

 

12,153

 

Plus: Stock-based compensation

 

1,535

 

 

310

 

 

158

 

 

162

 

 

2,165

 

Plus: Energy asset impairment

 

 

 

1,901

 

 

 

 

 

 

1,901

 

Plus: Restructuring and other charges

 

25

 

 

7

 

 

2

 

 

253

 

 

287

 

Adjusted EBITDA

$

12,631

 

$

23,555

 

$

3,405

 

$

560

 

$

40,151

 

Adjusted EBITDA margin

 

6.5

%

 

60.0

%

 

17.0

%

 

2.7

%

 

14.7

%

 

 

 

 

 

 

 

Nine Months Ended September 30, 2022

Adjusted EBITDA:

Projects

Energy

Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

41,855

 

$

25,583

 

$

6,725

 

$

2,828

 

$

76,991

 

Impact from redeemable non-controlling interests

 

 

 

2,915

 

 

 

 

 

 

2,915

 

Plus (less): Income tax provision (benefit)

 

15,315

 

 

(8,036

)

 

2,225

 

 

1,392

 

 

10,896

 

Plus: Other expenses, net

 

8,190

 

 

10,936

 

 

355

 

 

395

 

 

19,876

 

Plus: Depreciation and amortization

 

2,319

 

 

36,021

 

 

913

 

 

1,177

 

 

40,430

 

Plus: Stock-based compensation

 

8,936

 

 

902

 

 

466

 

 

533

 

 

10,837

 

Plus: Contingent consideration, restructuring and other charges

 

1,243

 

 

(21

)

 

14

 

 

60

 

 

1,296

 

Adjusted EBITDA

$

77,858

 

$

68,300

 

$

10,698

 

$

6,385

 

$

163,241

 

Adjusted EBITDA margin

 

6.3

%

 

55.5

%

 

16.9

%

 

8.8

%

 

10.9

%

  

 

Nine Months Ended September 30, 2021

Adjusted EBITDA:

Projects

Energy

Assets

O&M

Other

Consolidated

Net income attributable to common shareholders

$

24,087

 

$

12,286

 

$

5,759

 

$

120

 

$

42,252

 

Impact from redeemable non-controlling interests

 

 

 

8,345

 

 

 

 

 

 

8,345

 

Plus (less): Income tax provision (benefit)

 

264

 

 

(2,028

)

 

437

 

 

444

 

 

(883

)

Plus: Other expenses, net

 

1,853

 

 

11,534

 

 

44

 

 

248

 

 

13,679

 

Plus: Depreciation and amortization

 

1,781

 

 

29,978

 

 

1,305

 

 

1,023

 

 

34,087

 

Plus: Stock-based compensation

 

3,056

 

 

586

 

 

311

 

 

327

 

 

4,280

 

Plus: Energy asset impairment

 

 

 

1,901

 

 

 

 

 

 

1,901

 

Plus: Restructuring and other charges

 

178

 

 

37

 

 

36

 

 

318

 

 

569

 

Adjusted EBITDA

$

31,219

 

$

62,639

 

$

7,892

 

$

2,480

 

$

104,230

 

Adjusted EBITDA margin

 

5.5

%

 

57.2

%

 

13.6

%

 

4.0

%

 

13.0

%

      

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2022

2021

2022

2021

Non-GAAP net income and EPS:

 

 

 

 

Net income attributable to common shareholders

$

27,391

 

$

17,423

 

$

76,991

 

$

42,252

 

Adjustment for accretion of tax equity financing fees

 

(27

)

 

(27

)

 

(81

)

 

(89

)

Impact from redeemable non-controlling interests

 

344

 

 

2,857

 

 

2,915

 

 

8,345

 

Plus: Energy asset impairment

 

 

 

1,901

 

 

 

 

1,901

 

Plus: Contingent consideration, restructuring and other charges

 

1,264

 

 

287

 

 

1,296

 

 

569

 

Less: Income tax effect of Non-GAAP adjustments

 

(329

)

 

(569

)

 

(338

)

 

(642

)

Non-GAAP net income

 

28,643

 

 

21,872

 

 

80,783

 

 

52,336

 

 

 

 

 

 

Diluted net income per common share

$

0.51

 

$

0.33

 

$

1.44

 

$

0.81

 

Effect of adjustments to net income

 

0.03

 

 

0.08

 

 

0.08

 

 

0.20

 

Non-GAAP EPS

$

0.54

 

$

0.41

 

$

1.52

 

$

1.01

 

 

 

 

 

 

Adjusted cash from operations:

 

 

 

 

Cash flows from operating activities

$

34,674

 

$

(19,861

)

$

(273,169

)

$

(116,344

)

Plus: proceeds from Federal ESPC projects

 

52,134

 

 

44,026

 

 

173,865

 

 

114,185

 

Adjusted cash from operations

$

86,808

 

$

24,165

 

$

(99,304

)

$

(2,159

)

             

Other Financial Measures (In thousands) (Unaudited)

   

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2022

2021

2022

2021

New contracts and awards:

 

 

 

 

New contracts

$

282,500

$

190,500

$

657,800

$

451,500

New awards (1)

$

147,440

$

346,200

$

808,540

$

718,200

(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, contingent consideration expense, 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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