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Ameresco(AMRC) - 2024 Q4 - Annual Report
AMRCAmeresco(AMRC)2025-02-28 20:09
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Revenue and Backlog - As of December 31, 2024, the company had a backlog of approximately 2.5billioninexpectedfuturerevenuesundersignedcustomercontracts,comparedto2.5 billion in expected future revenues under signed customer contracts, compared to 1.3 billion in 2023, indicating a significant increase[93]. - The company reported an O&M backlog of approximately 1.4billionasofDecember31,2024,upfrom1.4 billion as of December 31, 2024, up from 1.2 billion in 2023, reflecting growth in multi-year customer contracts for O&M services[93]. - 67% of the company's revenues for the years ended December 31, 2024, and 72% for 2023 were derived from sales to governmental entities, highlighting the importance of this market sector[98]. - The company anticipates that revenues from the governmental market sector will continue to comprise a significant percentage of its overall revenues for the foreseeable future[98]. - The company had awarded projects with estimated total future revenues of an additional 2.3billionasofDecember31,2024,despitenotyethavingsignedcustomercontracts[93].FinancialPerformance−Revenuesfor2024werereportedat2.3 billion as of December 31, 2024, despite not yet having signed customer contracts[93]. Financial Performance - Revenues for 2024 were reported at 1,769,928 thousand, up from 1,374,633thousandin2023,indicatingayear−over−yearincreaseofabout291,374,633 thousand in 2023, indicating a year-over-year increase of about 29%[315]. - Gross profit for 2024 was 256,091 thousand, compared to 246,429thousandin2023,reflectingagrowthofapproximately4246,429 thousand in 2023, reflecting a growth of approximately 4%[315]. - Net income attributable to common shareholders decreased to 56,757 thousand in 2024 from 62,470thousandin2023,adeclineofabout962,470 thousand in 2023, a decline of about 9%[315]. - The company reported a total current liabilities of 889,008 thousand in 2024, down from 901,471thousandin2023,adecreaseofapproximately1.5901,471 thousand in 2023, a decrease of approximately 1.5%[312]. - Cash and cash equivalents increased to 108,516 thousand in 2024 from 79,271thousandin2023,representingagrowthofabout3779,271 thousand in 2023, representing a growth of about 37%[312]. - The company’s retained earnings rose to 652,561 thousand in 2024, up from 595,911thousandin2023,anincreaseofapproximately9.5595,911 thousand in 2023, an increase of approximately 9.5%[312]. - Selling, general and administrative expenses increased to 173,761 thousand in 2024 from 162,138thousandin2023,ariseofabout7162,138 thousand in 2023, a rise of about 7%[315]. - The company reported a gain on sale of business of 38,007 thousand in 2024, compared to no gain in 2023[315]. Operational Challenges - The company faces a long and variable sales cycle for energy efficiency and renewable energy projects, typically ranging from 18 to 42 months, which can be further extended due to macroeconomic conditions[91]. - The company has experienced disruptions in project development due to supply chain challenges and severe weather, impacting construction timelines and project profitability[96]. - The company relies on third parties for timely and reliable products and services, and any delays or quality issues could adversely affect project completion and customer relationships[106]. - The company faces challenges from global supply chain delays and inflationary pressures, particularly for essential products like lithium-ion battery cells, which could limit growth and profitability[116][117]. - Extreme weather events and natural disasters, exacerbated by climate change, pose risks to project completion and asset development, potentially leading to lost revenue and increased expenses[118]. - The company is dependent on skilled personnel and specialty subcontractors, and any difficulty in attracting or retaining these resources could lead to project delays and increased costs[113]. Regulatory and Compliance Risks - The company may be subject to liquidated damages up to 89millionifitfailstomeetcertainprojectcompletionmilestones,whichcouldadverselyaffectitsreputationandfinancialresults[97].−Thecompany’scontractswithgovernmentalentitiesoftenincludeprovisionsthatallowforterminationormodification,whichcouldadverselyimpactitsbacklogandfuturerevenues[99].−ThecompanymayincurliabilitiesunderEnergySavingsPerformanceContracts(ESPCs)ifprojectsfailtomeetenergyusereductioncommitments,whichcouldmateriallyimpactfinancialresults[108].−Thecompanyissubjecttoexaminationofitsincometaxreturnsbytaxauthorities,whichcouldresultinadverseoutcomesaffectingnetincome[147].−Changesinlawsgoverningpublicprocurementofenergysavingsperformancecontracts(ESPCs)couldmateriallyimpactthecompany′srevenuefromgovernmentcustomers[149].−Compliancewithenvironmentallawsmayadverselyaffectcashflowandprofitabilityduetopotentialsignificantcostsassociatedwithexistingandfutureregulations[159].MarketandCompetitiveLandscape−Thecompanyoperatesinahighlycompetitiveindustry,facingchallengesfromcompetitorswithgreaterresourcesandproprietarytechnologies,whichcouldadverselyaffectitsmarketshareandrevenues[124].−Thecompanyreliesongovernmentsupportforrenewableenergyprojects,andanydeclineinsuchsupportortheimpositionofadditionaltaxescouldharmitsbusiness[139].−LimitedBatteryEnergyStorageSystemsupplycapacityoutsideofChinaandimportrestrictionsmayincreasecostsandoperationalchallenges,affectingcompetitivepricing[140].AssetManagementandFinancialStrategy−Thecompanyhasa89 million if it fails to meet certain project completion milestones, which could adversely affect its reputation and financial results[97]. - The company’s contracts with governmental entities often include provisions that allow for termination or modification, which could adversely impact its backlog and future revenues[99]. - The company may incur liabilities under Energy Savings Performance Contracts (ESPCs) if projects fail to meet energy use reduction commitments, which could materially impact financial results[108]. - The company is subject to examination of its income tax returns by tax authorities, which could result in adverse outcomes affecting net income[147]. - Changes in laws governing public procurement of energy savings performance contracts (ESPCs) could materially impact the company's revenue from government customers[149]. - Compliance with environmental laws may adversely affect cash flow and profitability due to potential significant costs associated with existing and future regulations[159]. Market and Competitive Landscape - The company operates in a highly competitive industry, facing challenges from competitors with greater resources and proprietary technologies, which could adversely affect its market share and revenues[124]. - The company relies on government support for renewable energy projects, and any decline in such support or the imposition of additional taxes could harm its business[139]. - Limited Battery Energy Storage System supply capacity outside of China and import restrictions may increase costs and operational challenges, affecting competitive pricing[140]. Asset Management and Financial Strategy - The company has a 200 million revolving senior secured credit facility and a 100milliontermloan,withabalanceof100 million term loan, with a balance of 148 million as of December 31, 2024[164]. - The company’s financial covenants include a maximum ratio of total funded debt to EBITDA, which may limit business activities and access to credit[164]. - The company has entered into interest rate swaps to hedge exposure to adverse changes in short-term market rates related to its renewable energy project term loans[283]. - The company may incur substantial costs to comply with privacy and consumer protection laws, with potential fines for non-compliance due to regulations like GDPR[162]. International Operations and Expansion - International expansion is a key growth strategy, with operations outside the U.S. expected to increase, but this exposes the company to various risks not faced domestically[135]. - The company has not repatriated earnings from foreign subsidiaries but has chosen to invest in new business opportunities in those regions[288]. Goodwill and Asset Valuation - The goodwill balance as of December 31, 2024, was 66.3million,withannualimpairmentassessmentsconductedatthereportingunitlevel[301].−Significantestimatesandassumptionsareusedinthegoodwillimpairmentassessments,particularlyregardingrevenueandexpensegrowthrates[302].−Thecompanyevaluateslong−livedassetsforimpairment,recognizinglosseswhenthecarryingvalueexceedsthefairvaluebasedonfuturecashflowestimates[361].CashFlowandInvestment−Cashflowsfromoperatingactivitiesincreasedsignificantlyto66.3 million, with annual impairment assessments conducted at the reporting unit level[301]. - Significant estimates and assumptions are used in the goodwill impairment assessments, particularly regarding revenue and expense growth rates[302]. - The company evaluates long-lived assets for impairment, recognizing losses when the carrying value exceeds the fair value based on future cash flow estimates[361]. Cash Flow and Investment - Cash flows from operating activities increased significantly to 117,598,000 in 2024, compared to a negative cash flow of (69,991,000)in2023[323].−Totalcapitalinvestmentinenergyassetswas(69,991,000) in 2023[323]. - Total capital investment in energy assets was 416,992,000 in 2024, down from 538,418,000in2023,indicatingareductionincapitalexpenditures[325].−Proceedsfromlong−termenergyassetdebtfinancingsamountedto538,418,000 in 2023, indicating a reduction in capital expenditures[325]. - Proceeds from long-term energy asset debt financings amounted to 643,529,000 in 2024, compared to 843,498,000in2023,reflectingadecreaseinfinancingactivities[325].−Paymentsonlong−termcorporatedebtfinancingswere843,498,000 in 2023, reflecting a decrease in financing activities[325]. - Payments on long-term corporate debt financings were 127,000,000 in 2024, down from 155,000,000in2023,indicatingareductionindebtservicing[325].InventoryandReceivables−ThetotalinventoryprimarilyconsistsofPVsolarpanels,batteries,andrelatedaccessories,withprovisionsmadetoreducecarryingvaluetonetrealizablevalue[344].−Otherreceivablesdecreasedsignificantlyfrom155,000,000 in 2023, indicating a reduction in debt servicing[325]. Inventory and Receivables - The total inventory primarily consists of PV solar panels, batteries, and related accessories, with provisions made to reduce carrying value to net realizable value[344]. - Other receivables decreased significantly from 74,454 thousand in 2023 to 16,336thousandin2024,indicatingasubstantialreductioninoutstandingamounts[345].−Thecompanysoldreceivableswithoutrecoursetotaling16,336 thousand in 2024, indicating a substantial reduction in outstanding amounts[345]. - The company sold receivables without recourse totaling 3,994 thousand in 2024, down from $39,923 thousand in 2023, indicating a decrease in financing through receivables sales[346]. Lease and Asset Management - The company applies the acquisition method of accounting for business combinations, recording assets and liabilities at fair value, with any excess consideration recognized as goodwill[368]. - Sale-leaseback arrangements for solar PV energy assets allow the company to recognize revenue through the sale of electricity and solar renewable energy credits generated by these assets[388]. - The company retains control of underlying assets in sale-leaseback transactions, which are accounted for as financing liabilities[390].