Ameresco, Inc. Highlights Strong Growth Amid Challenges

Ameresco, Inc. ((AMRC)) has held its Q1 earnings call. Read on for the main highlights of the call.

Ameresco, Inc. Reports Strong Financial Performance Amid Challenges

The recent earnings call for Ameresco, Inc. highlighted a robust financial performance, showcasing significant growth in revenue, EBITDA, and backlog. The company noted positive developments such as the recovery of federal contracts and expansion in international markets. However, concerns were raised regarding net income loss, the impact of divestiture, and gross margin pressure.

Strong Financial Performance

Ameresco’s first quarter results exceeded expectations with an 18% increase in revenue and a 32% rise in adjusted EBITDA. The project business revenue grew by 23%, while energy asset revenue saw a 31% increase. This strong financial performance underscores the company’s effective strategic execution and robust market positioning.

Significant Growth in Backlog

The company’s total project backlog surged by 22% to $4.9 billion, with the contracted project backlog experiencing an 80% increase to $2.6 billion. This growth has enhanced Ameresco’s revenue visibility across its businesses, reaching nearly $10 billion, indicating a strong pipeline of future projects.

Federal Contract Recovery

Ameresco successfully navigated challenges with federal contracts, as a previously canceled project was rescoped and two paused contracts resumed. Importantly, there were no new cancellations or delays, which is a positive sign for the company’s federal business segment.

Expansion in International Markets

The company reported strong performance in Europe and Canada, contributing to its diverse customer base and the variety of solutions offered. This expansion into international markets is a key driver of Ameresco’s growth strategy.

Net Income Loss

Despite the strong revenue growth, Ameresco reported a net income loss of $5.5 million, or $0.10 per share. This loss is a point of concern and highlights the challenges the company faces in balancing growth with profitability.

Impact of Divestiture

The divestiture of the AEG business at the end of 2024 led to a decline in revenue in other business lines. This strategic move, while impacting short-term revenue, is part of Ameresco’s long-term strategy to focus on core business areas.

Gross Margin Pressure

Ameresco experienced gross margin pressure, reporting a margin of 14.7%, which was lower than expected. This was attributed to a higher mix of large European EPC contracts that typically have a lower gross margin profile.

Forward-Looking Guidance

Looking ahead, Ameresco maintained its guidance for 2025, projecting total revenue and adjusted EBITDA at $1.9 billion and $235 million, respectively. The company expressed confidence in its strategic approach, emphasizing continued growth across core markets and strong execution, despite industry challenges.

In summary, Ameresco, Inc.’s earnings call reflected a strong financial performance with significant growth in key areas, despite facing some challenges. The company’s strategic focus on expanding its backlog, recovering federal contracts, and growing its international presence are positive indicators for future growth. However, the net income loss and gross margin pressure are areas that require attention as the company moves forward.