Ameresco, Inc. 2021 Q1 SEC Filing Summary
Business Context and Reporting Period
Ameresco is a clean-technology integrator providing energy-efficiency, renewable-energy, distributed-generation, integrated photovoltaic, operations and maintenance, consulting, and energy-management services. The unaudited Form 10-Q covers the three months ended March 31, 2021, with comparisons to the three months ended March 31, 2020. Results are seasonal, with first-quarter revenue and operating income typically lower than later quarters.
Financial Performance and Key Metrics
| Metric | Q1 2021 | Q1 2020 | Change |
|---|---|---|---|
| Revenue | $252.2 million | $212.4 million | 18.7% increase |
| Gross profit | $46.9 million | $38.4 million | 22.0% increase |
| Gross margin | 18.6% | 18.1% | 50 basis-point increase |
| Operating income | $18.3 million | $9.5 million | 92.3% increase |
| Operating margin | 7.3% | 4.5% | 280 basis-point increase |
| Net income | $12.4 million | $6.6 million | 87.3% increase |
| Net income attributable to common shareholders | $11.2 million | $6.2 million | 80.2% increase |
| Diluted EPS | $0.22 | $0.13 | $0.09 increase |
| Operating cash flow | $(38.7) million | $(51.6) million | $12.9 million improvement |
| Capital expenditures for energy assets | $55.8 million | $28.5 million | Increase of $27.3 million |
Revenue growth was driven primarily by a $36.3 million increase in project revenue and a $5.1 million increase in energy-asset revenue. Higher-margin energy-asset revenue improved the gross margin. SG&A declined 1.1%, partly due to lower travel and information-technology costs. Other expense declined 31.9%, primarily because of lower interest expense following repayment of the revolving credit facility.
At March 31, 2021, cash and cash equivalents were $81.0 million and total cash, cash equivalents, and restricted cash were $116.3 million. Total debt and financing lease liabilities were $350.6 million, compared with $391.8 million at December 31, 2020. The company had $101.2 million available under its senior secured revolving credit facility and $70.1 million available under its construction revolver.
Total assets were $1.85 billion and stockholders’ equity was $628.9 million at March 31, 2021. The company reported current assets of $485.8 million and current liabilities of $351.6 million.
Material Changes Versus the Prior Comparable Period
- U.S. Federal revenue increased 48.7% to $102.2 million, while Non-Solar Distributed Generation revenue increased 33.6% to $30.4 million.
- U.S. Regions revenue declined 0.7% to $85.3 million, and All Other revenue declined 4.3% to $22.7 million.
- Non-Solar Distributed Generation income before taxes and unallocated corporate activity increased to $8.6 million from $1.7 million, primarily due to higher production, favorable renewable identification number pricing, lower project development costs, and derivative gains.
- The company completed a public offering of 2.875 million Class A shares for net proceeds of $120.2 million. It used $80.0 million to repay the outstanding U.S. dollar balance on its senior secured revolving credit facility.
- Operating cash flow remained negative, although it improved year over year. The principal cash use was a $66.0 million increase in Federal ESPC receivables, reflecting the timing of project activity and related financing.
- Energy-asset purchases nearly doubled year over year, reflecting increased investment in renewable-energy projects.
- Unrecognized stock-based compensation increased to $26.1 million from $12.1 million at December 31, 2020 following grants of approximately 693,500 options.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
- Management planned approximately $165 million to $215 million of additional capital expenditures during the remainder of 2021, principally for renewable-energy plant construction or acquisitions, with most expected to be funded through project finance debt.
- Management planned approximately $120 million to $170 million of additional project financings during the remainder of 2021.
- Management stated that cash, working capital, revolving-credit availability, and access to credit markets should be sufficient to fund operations through at least May 2022. This assessment remains subject to business and market conditions.
- Project backlog was $2.309 billion at March 31, 2021, including $787.8 million of fully contracted backlog and $1.521 billion of awarded projects not yet signed. O&M backlog was $1.127 billion, and reported remaining performance obligations were $1.915 billion, of which approximately 35% was expected to be recognized within twelve months.
- COVID-19 had no material effect on Q1 2021 results, but management identified potential future effects from delayed receivable collections, delayed contract execution, supply-chain disruptions, and uncertain demand.
- The Energy Act of 2020 extended the 26% solar investment tax credit for qualifying projects beginning construction through 2022 and made the Section 179D commercial-building energy-efficiency deduction permanent. These provisions supported the company’s market outlook.
- The company received approximately $4.0 million of federal income-tax refunds under CARES Act carryback provisions and Alternative Minimum Tax credit utilization.
- The company had accrued a reasonable estimate for a probable loss in a customer legal proceeding and a corresponding insurance recovery; the filing does not provide the accrued amounts. Management stated that other pending matters were not expected to have a material adverse effect.
- Management disclosed forward-looking risks related to seasonality, project-award and contract-conversion timing, financing availability, construction execution, renewable-energy incentives, COVID-19 effects, and the potential outcome of an SEC investigation referenced in the filing. The filing states that no material changes occurred to the risk factors in the 2020 Form 10-K.
Important Facts for Investors to Verify
- Whether the substantial awarded-but-not-signed backlog converts to fully contracted projects and the timing of that conversion.
- Whether planned 2021 capital expenditures and project financings can be completed without increasing liquidity or leverage pressure.
- The timing of collection of Federal ESPC receivables and the effect on operating cash flow.
- The sustainability of improved margins, particularly the contribution from energy-asset revenue, renewable identification number pricing, and project mix.
- The impact of the March equity offering on future per-share results and potential dilution.
- The ultimate outcome and financial exposure of the disclosed legal proceeding, SEC investigation reference, derivative positions, and other contingencies.
- The extent to which COVID-19, supply-chain constraints, customer delays, and seasonal construction patterns affect future results.