Ameresco Reports Fourth Quarter and Full Year 2013 Financial Results

Fourth Quarter 2013 Financial Highlights:

  • Revenues of $176.1 million
  • Net income of $1.6 million
  • Net income per diluted share of $0.03

Full Year 2013 Financial Highlights:

  • Revenues of $574.2 million
  • Net income of $2.4 million
  • Net income per diluted share of $0.05

FRAMINGHAM, Mass.--()--Ameresco, Inc. (NYSE:AMRC), a leading energy efficiency and renewable energy company, today announced financial results for the fiscal quarter and year ended December 31, 2013. The Company has also furnished prepared remarks in conjunction with this press release in a Current Report on Form 8-K. The prepared remarks contain supplemental information, including non-GAAP financial metrics, and have been posted to the “Investor Relations” section of the Company’s website at www.ameresco.com.

“2013 revenues were in line with our expectations,” stated George P. Sakellaris, President and Chief Executive Officer of Ameresco. “However, an unfavorable mix of lower margin projects had a negative effect on gross margin and earnings.”

Revenues for the fourth quarter increased 12% from $156.6 million in 2012 to $176.1 million for 2013. Fourth quarter operating income decreased from $6.3 million in 2012 to $3.0 million for 2013. Fourth quarter adjusted EBITDA, a non-GAAP financial measure, decreased from $13.0 million in 2012 to $8.7 million for 2013. Fourth quarter net income decreased from $5.1 million in 2012 to $1.6 million for 2013. Fourth quarter 2013 net income per diluted share was $0.03, compared to $0.11 for 2012.

For the full year ended December 31, 2013, revenues decreased 9% from $631.2 million in 2012 to $574.2 million for 2013. Full year operating income decreased from $28.7 million in 2012 to $6.6 million for 2013. Full year adjusted EBITDA decreased from $52.4 million in 2012 to $29.9 million for 2013. Full year net income decreased from $18.4 million in 2012 to $2.4 million for 2013. Full year 2013 net income per diluted share was $0.05, compared to $0.40 for 2012.

Additional Fourth Quarter and Full Year 2013 Operating Highlights:

  • Project revenues were $388 million for the full year 2013, a decrease of 15% year-over-year.
  • Revenues from other service offerings was $186 million for the full year 2013, an increase of 7% year-over-year.
  • Total construction backlog was $1.35 billion as of December 31, 2013 and consisted of:
    • $361.9 million of fully-contracted backlog of signed customer contracts for installation or construction of projects, which we expect to convert into revenue over the next 12-24 months, on average; and
    • $993.0 million of awarded projects, representing projects in development for which we do not have signed contracts.

FY 2014 Guidance

Ameresco expects to earn total revenue in the range of $560 million to $600 million in 2014. The Company also expects net income for 2014 to be in the range of $7 million to $12 million. Our assumptions for 2014 guidance are as follows: project revenues from contracted backlog of approximately $210 million; project revenues from awarded projects and proposals in the range of $160 million to $185 million; the remainder of revenues from all other service offerings; gross margin in the range of 18-20%; and an effective income tax rate of 19%.

“We expect challenging market conditions to continue in 2014. Revenues are expected to be consistent with 2013, while operating efficiency measures should improve profitability. In addition to delivering 2014 results, we plan to focus on more disciplined execution, continuing to refine our value proposition, diversifying our customer mix and enhancing our market position," continued Sakellaris.

Webcast Reminder

Ameresco will hold its earnings conference call today, March 13th, at 8:30 a.m. Eastern Time with President and Chief Executive Officer, George Sakellaris, and Vice President and Chief Financial Officer, Andrew Spence, to discuss details regarding the Company's fourth quarter and full year 2013 results, business outlook and strategy. Participants may access it by dialing domestically 888.713.4199 or internationally 617.213.4861. The passcode is 18247163. Participants are advised to dial into the call at least ten minutes prior to the call 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. If you are unable to listen to the live call, the webcast will be archived on the Company's website shortly after the call and be available for one year.

Pre-Registration for the call is also available at: https://www.theconferencingservice.com/prereg/key.process?key=PDJYUV7MV. Pre-registrants will be issued a pin number to use when dialing into the live call which will provide faster access to the conference by bypassing the operator upon connection.

Use of Non-GAAP Financial Measures

This press release and the accompanying tables include references to adjusted EBITDA and adjusted free cash flow, 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 Other Non-GAAP Disclosures in the accompanying tables.

Prior Period Financial Results

Certain prior period cash flow information included in the accompanying tables has been revised from amounts previously reported to reflect a change in the manner that we present the amounts to be paid by various U.S. federal government agencies for work performed and earned by us under specific energy savings performance contracts on the consolidated statements of cash flows. We previously classified the advances from the investors in these projects as operating cash flows; however, we concluded during the fourth quarter of 2013 that these advances would be better classified as financing cash flows. The use of the cash received under these arrangements to pay project costs continues to be classified as operating cash flows. For more information, see the prepared remarks posted to the “Investor Relations” section of the Company’s website and furnished with the Company’s Current Report on Form 8-K dated March 13, 2014.

About Ameresco, Inc.

Founded in 2000, Ameresco, Inc. (NYSE:AMRC) is a leading independent provider of comprehensive services, energy efficiency, infrastructure upgrades, asset sustainability and renewable energy solutions for facilities throughout North America. Ameresco’s services include upgrades to a facility’s energy infrastructure and the development, construction and operation of renewable energy plants. 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 provides local expertise through its 70 offices in 33 states, five Canadian provinces and the United Kingdom. Ameresco has more than 900 employees. 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 and net income, 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; 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 unusual delay; demand for our energy efficiency and renewable energy solutions; our ability to arrange financing for our projects; 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 effects of our recent acquisitions; 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; the addition of new customers or the loss of existing customers; and other factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2012, filed with the U.S. Securities and Exchange Commission on March 18, 2013. In addition, 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

 
    December 31,
2013   2012
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 17,170,736 $ 63,347,645
Restricted cash 15,496,829 26,358,908
Accounts receivable, net 86,008,308 84,124,627
Accounts receivable retainage 21,018,816 23,197,784
Costs and estimated earnings in excess of billings 71,204,421 62,096,284
Inventory, net 10,256,415 9,502,289
Prepaid expenses and other current assets 10,176,880 9,600,619
Income tax receivable 3,970,726 5,385,242
Deferred income taxes 4,842,635 5,190,718
Project development costs 9,686,354   9,038,725  
Total current assets 249,832,120 297,842,841
Federal ESPC receivable 44,297,275 91,854,808
Property and equipment, net 8,699,048 9,387,218
Project assets, net 210,744,176 207,274,982
Deferred financing fees, net 5,319,642 5,746,177
Goodwill 53,074,362 48,968,390
Intangible assets, net 10,253,181 9,742,878
Other assets 22,439,759   4,654,709  
Total assets $ 604,659,563   $ 675,472,003  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 12,973,591 $ 12,452,678
Accounts payable 88,733,043 101,007,455
Accrued expenses and other current liabilities 11,947,022 13,157,024
Billings in excess of cost and estimated earnings 16,932,639 22,271,655
Income taxes payable 615,063    
Total current liabilities 131,201,358 148,888,812
Long-term debt, less current portion 103,221,845 109,079,009
Federal ESPC liabilities 44,297,304 92,843,163
Deferred income taxes 11,318,406 24,888,229
Deferred grant income 8,163,368 7,590,730
Other liabilities 29,652,488 30,362,869
Stockholders' equity:

Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and

outstanding at December 31, 2013 and 2012

Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 27,869,317

shares issued and outstanding at December 31, 2013, 32,019,982 shares issued and

27,186,698 outstanding at December 31, 2012

2,787 3,202

Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000

shares issued and outstanding at December 31, 2013 and 2012

1,800 1,800
Additional paid-in capital 102,586,666 93,141,432
Retained earnings 171,093,577 177,169,717
Accumulated other comprehensive income, net 3,112,442 713,194
Non-controlling interest 7,522

(27,583

)

Less — treasury stock, at cost, no shares at December 31, 2013 and 4,833,284
shares at December 31, 2012

(9,182,571

)

 

 

 

 

 

Total stockholders’ equity 276,804,794   261,819,191  
Total liabilities and stockholders’ equity $ 604,659,563   $ 675,472,003  
 
 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF INCOME

 
      Three Months Ended December 31,
2013   2012
(Unaudited) (Unaudited)
Revenues $ 176,134,219 $ 156,591,086
Cost of revenues 147,774,957   123,627,776  
Gross profit 28,359,262 32,963,310
Selling, general and administrative expenses 25,318,197 25,682,732
Goodwill impairment   1,016,325  
Operating income 3,041,065   6,264,253  
Other expenses, net 1,370,238   216,355  
Income before provision for income taxes 1,670,827 6,047,898
Income tax provision 96,934   954,300  
Net income $ 1,573,893   $ 5,093,598  
Net income per share attributable to common shareholders:
Basic $ 0.03 $ 0.11
Diluted $ 0.03 $ 0.11
Weighted average common shares outstanding:
Basic 45,819,906 45,116,164
Diluted 46,649,171 46,508,767
OTHER NON-GAAP DISCLOSURES

Adjusted Earnings before interest, taxes, depreciation, amortization and
impairment (Adjusted EBITDA):

Operating income $ 3,041,065 $ 6,264,253
Depreciation, amortization of intangible assets and impairment 4,969,719 5,909,648
Stock-based compensation 674,127   823,216  
Adjusted EBITDA $ 8,684,911   $ 12,997,117  
Adjusted EBITDA margin 4.9 % 8.3 %
Adjusted free cash flow:
Net cash (used in) provided by operating activities $ (15,305,591 ) $ 29,813,115
Less: purchases of property and equipment (963,771 )
Plus: proceeds from federal ESPC projects 18,627,286   3,334,757  
Adjusted free cash flow $ 3,321,695   $ 32,184,101  
Construction backlog:
Awarded $ 993,016,577 $ 1,114,749,220
Fully-contracted 361,885,599   367,400,839  
Total construction backlog $ 1,354,902,176   $ 1,482,150,059  
 

Note: Awarded represents estimated future revenues from projects that have been awarded, though the contracts have not yet been signed.

 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF INCOME

 
    Year Ended December 31,
2013   2012
(Unaudited)
Revenues $ 574,171,249 $ 631,170,565
Cost of revenues 470,846,710   503,023,288  
Gross profit 103,324,539 128,147,277
Selling, general and administrative expenses 96,693,028 98,473,950
Goodwill impairment   1,016,325  
Operating income 6,631,511   28,657,002  
Other expenses, net 3,872,643   4,050,116  
Income before provision for income taxes 2,758,868 24,606,886
Income tax provision 344,681   6,246,753  
Net income $ 2,414,187   $ 18,360,133  
Net income per share attributable to common shareholders:
Basic $ 0.05 $ 0.41
Diluted $ 0.05 $ 0.40
Weighted average common shares outstanding:
Basic 45,560,078 44,649,275
Diluted 46,419,199 45,995,463
OTHER NON-GAAP DISCLOSURES

Adjusted Earnings before interest, taxes, depreciation, amortization and
impairment (Adjusted EBITDA):

Operating income $ 6,631,511 $ 28,657,002
Depreciation, amortization of intangible assets and impairment 20,474,513 20,356,415
Stock-based compensation 2,799,403   3,351,142  

Adjusted EBITDA

$ 29,905,427   $ 52,364,559  
Adjusted EBITDA margin 5.2 % 8.3 %
Adjusted free cash flow:
Net cash (used in) provided by operating activities $ (60,609,206 ) $ 42,209,403
Less: purchases of property and equipment (2,331,004 ) (5,060,751 )
Plus: proceeds from federal ESPC projects 40,010,145   30,202,956  
Adjusted free cash flow $ (22,930,065 ) $ 67,351,608  
 
 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 
    Three Months Ended December 31,
2013   2012
(Revised)
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $ 1,573,893 $ 5,093,598
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation of project assets 2,812,725 2,869,472
Depreciation of property and equipment 611,921 825,736
Amortization of deferred financing fees 240,636 89,160
Amortization of intangible assets 1,545,073 1,198,115
Impairment of goodwill 1,016,325
Provision for bad debts (6,468 ) 65,006
Gain on contingent liability (1,075,112 )
Unrealized gain on interest rate swaps (81,019 ) (80,787 )
Stock-based compensation expense 674,127 823,216
Deferred income taxes (11,707,434 ) (2,391,193 )
Excess tax benefits from stock-based compensation arrangements (4,846,821 ) 2,115,333
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (353,246 ) (10,770,929 )
Accounts receivable (7,358,393 ) 18,688,145
Accounts receivable retainage 3,718,927 (2,174,793 )
Federal ESPC receivable (16,680,594 ) (305,255 )
Inventory (848,369 ) (2,401,317 )
Costs and estimated earnings in excess of billings (7,319,036 ) 978,575
Prepaid expenses and other current assets 965,732 (1,332,082 )
Project development costs 2,190,911 (775,772 )
Other assets (4,264,863 ) (161,563 )
Increase (decrease) in:
Accounts payable, accrued expenses and other current liabilities 12,073,038 22,381,716
Billings in excess of cost and estimated earnings 2,393,833 (5,900,266 )
Other liabilities 2,992,841 (376,243 )
Income taxes payable 7,442,107   338,918  
Net cash (used in) provided by operating activities (15,305,591 ) 29,813,115  
Cash flows from investing activities:
Purchases of property and equipment (963,771 )
Purchases of project assets (15,932,071 ) (15,886,990 )
Sales of project assets 27,146,579
Grant awards and rebates received on project assets 1,682,244 3,076,994
Acquisitions, net of cash received 107,236   (335,066 )
Net cash provided by (used in) investing activities 13,003,988   (14,108,833 )
Cash flows from financing activities:
Excess tax benefits from stock-based compensation arrangements 4,846,821 (2,115,333 )
Payments of financing fees (6,053 ) (3,022,712 )
Proceeds from exercises of options 397,181 446,423
Payments of senior secured credit facility (18,000,000 ) (13,446,000 )
Proceeds from long-term debt financing 37,713,158
Proceeds from federal ESPC projects 18,627,286 3,334,757
Non-controlling interest 4,517 (98,897 )
Restricted cash 292,452 183,240
Payments on long-term debt (6,284,655 ) (2,206,774 )
Net cash (used in) provided by financing activities (122,451 ) 20,787,862  
Effect of exchange rate changes on cash 804,557   678,701  
Net (decrease) increase in cash and cash equivalents (1,619,497 ) 37,170,845
Cash and cash equivalents, beginning of period 18,790,233   26,176,800  
Cash and cash equivalents, end of year $ 17,170,736   $ 63,347,645  
 
 

AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

 
    Year Ended December 31,
2013   2012
(Unaudited) (Revised)
Cash flows from operating activities:
Net income $ 2,414,187 $ 18,360,133
Adjustments to reconcile net income to cash (used in) provided by operating activities:
Depreciation of project assets 12,594,590 11,229,380
Depreciation of property and equipment 3,077,902 2,828,540
Amortization of deferred financing fees 1,091,349 456,305
Amortization of intangible assets 4,802,021 5,282,170
Impairment of goodwill 1,016,325
Provision for bad debts 502,067 148,773
Gain on contingent liability (1,075,112 )
Gain on sale of assets (631,917 ) (800,000 )
Unrealized (gain) loss on interest rate swaps (1,459,058 ) 98,026
Stock-based compensation expense 2,799,403 3,351,142
Deferred income taxes (15,261,027 ) (3,849,798 )
Excess tax benefits from stock-based compensation arrangements (5,264,433 ) (259,890 )
Changes in operating assets and liabilities:
(Increase) decrease in:
Restricted cash (1,525,937 ) (11,089,100 )
Accounts receivable (2,608,985 ) 25,624,181
Accounts receivable retainage 2,108,487 3,055,300
Federal ESPC receivable (40,998,471 ) (28,650,513 )
Inventory (94,076 ) (858,895 )
Costs and estimated earnings in excess of billings (8,739,855 ) 7,225,107
Prepaid expenses and other current assets 371,082 (446,600 )
Project development costs (652,234 ) (3,009,937 )
Other assets (6,862,822 ) (790,597 )
Increase (decrease) in:
Accounts payable, accrued expenses and other current liabilities (13,281,139 ) 10,678,911
Billings in excess of cost and estimated earnings (4,309,877 ) (4,943,161 )
Other liabilities 5,369,736 2,975,301
Income taxes payable 7,024,913   4,578,300  
Net cash (used in) provided by operating activities (60,609,206 ) 42,209,403  
Cash flows from investing activities:
Purchases of property and equipment (2,331,004 ) (5,060,751 )
Purchases of project assets (51,687,454 ) (47,190,597 )
Sales of project assets 27,146,579
Grant awards and rebates received on project assets 3,262,463 7,310,767
Proceeds from sales of assets 3,510,500
Acquisitions, net of cash received (9,837,740 ) (4,012,459 )
Net cash used in investing activities (29,936,656 ) (48,953,040 )
Cash flows from financing activities:
Excess tax benefits from stock-based compensation arrangements 5,264,433 259,890
Book overdraft (7,297,122 )
Payments of financing fees (511,038 ) (3,207,790 )
Proceeds from exercises of options 2,073,227 3,462,679
Payments of senior secured credit facility (9,285,713 )
Proceeds from long-term debt financing 9,434,434 37,713,158
Proceeds from federal ESPC projects 40,010,145 30,202,956
Non-controlling interest 35,105 (91,197 )
Restricted cash 1,553,115 (2,683,559 )
Payments on long-term debt (14,669,171 ) (5,587,186 )
Net cash provided by financing activities 43,190,250   43,486,116  
Effect of exchange rate changes on cash 1,178,703   327,800  
Net (decrease) increase in cash and cash equivalents (46,176,909 ) 37,070,279
Cash and cash equivalents, beginning of year 63,347,645   26,277,366  
Cash and cash equivalents, end of year $ 17,170,736   $ 63,347,645  
 

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 Other Non-GAAP Disclosure 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

We define adjusted EBITDA as operating income before depreciation, amortization of intangible assets, impairment of goodwill and share-based compensation expense. 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, and share-based compensation expense.

Our management uses adjusted EBITDA: as a measure of operating performance, because it does 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.

Adjusted Free Cash Flow

We define adjusted free cash flow as net cash (used in) provided by operating activities, less purchases of property and equipment, 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 free cash flow as a measure of operating performance because it captures all sources of cash associated with our revenue generated by operations.

Contacts

Ameresco, Inc.
Media Relations
CarolAnn Hibbard, 508-661-2264
news@ameresco.com
or
Investor Relations
Suzanne Messere, 508-598-3044
ir@ameresco.com

Release Summary

Ameresco Announces Q4 and Full Year 2013 Financial Results

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Contacts

Ameresco, Inc.
Media Relations
CarolAnn Hibbard, 508-661-2264
news@ameresco.com
or
Investor Relations
Suzanne Messere, 508-598-3044
ir@ameresco.com