Ameresco(AMRC) - 2020 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION Condensed Consolidated Financial Statements Presents unaudited condensed consolidated financial statements, with total assets at $1.46 billion and six-month revenues of $435.4 million Condensed Consolidated Balance Sheets Total assets increased to $1.46 billion from $1.37 billion, with liabilities reaching $1.0 billion and equity at $439.7 million Key Balance Sheet Items (in thousands) | Balance Sheet Item | June 30, 2020 (Unaudited) | December 31, 2019 | | :--- | :--- | :--- | | Total current assets | $422,426 | $425,192 | | Energy assets, net | $637,618 | $579,461 | | Total assets | $1,459,532 | $1,374,013 | | Total current liabilities | $272,978 | $336,647 | | Long-term debt and financing lease liabilities | $295,048 | $266,181 | | Total liabilities | $983,556 | $912,541 | | Total stockholders' equity | $439,673 | $428,856 | Condensed Consolidated Statements of Income Q2 revenues rose to $223.0 million, but net income attributable to common shareholders decreased to $4.4 million Statements of Income Highlights (in thousands, except per share data) | Metric | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $223,036 | $198,183 | $435,449 | $348,295 | | Gross Profit | $39,508 | $43,139 | $77,954 | $75,771 | | Operating Income | $12,888 | $13,057 | $22,410 | $19,606 | | Net Income | $8,836 | $8,507 | $15,472 | $11,378 | | Net Income Attributable to Common Shareholders | $4,365 | $9,216 | $10,566 | $13,363 | | Diluted EPS | $0.09 | $0.19 | $0.22 | $0.28 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $73.6 million, while financing activities provided $142.4 million for the six-month period Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | Net cash from operating activities | $(73,594) | $(109,254) | | Net cash from investing activities | $(78,700) | $(50,746) | | Net cash from financing activities | $142,406 | $135,663 | | Net decrease in cash | $(10,345) | $(24,237) | Notes to Condensed Consolidated Financial Statements (Unaudited) Provides detailed disclosures on accounting policies, revenue recognition, and debt, noting no material COVID-19 impact and CARES Act benefits - The company's backlog of remaining performance obligations was approximately $2.15 billion as of June 30, 2020, with about 27% expected to be recognized as revenue in the next twelve months[37] - The company adopted new accounting standards for credit losses (ASU 2016-13) and fair value measurement (ASU 2018-13) as of January 1, 2020, with no material impact on its financial statements[23][25] - The CARES Act, enacted in March 2020, allows the company to delay approximately $5.0 million of employer payroll taxes and is estimated to provide a discrete tax benefit of about $2.0 million from net operating loss carryback provisions[19] Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses Q2 and H1 2020 financial results, highlighting a 25% revenue increase to $435.4 million and strong backlog Results of Operations Six-month revenues increased 25.0% to $435.4 million, while gross margin declined to 17.9% due to project mix Six Months Ended June 30, 2020 vs 2019 (in millions) | Metric | H1 2020 | H1 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $435.4 | $348.3 | $87.1 | 25.0% | | Gross Profit | $78.0 | $75.8 | $2.2 | 2.9% | | Gross Margin | 17.9% | 21.8% | - | -3.9 p.p. | | SG&A Expenses | $55.5 | $56.2 | $(0.7) | (1.1)% | | Operating Income | $22.4 | $19.6 | $2.8 | 14.3% | - The decrease in gross margin for both the three and six-month periods was primarily attributed to an increased level of design-build work and other lower-margin projects within the revenue mix[126] - The company recorded a tax benefit of $2.5 million for H1 2020, compared to a $1.1 million provision in H1 2019, mainly due to investment tax credits and benefits from the CARES Act's net operating loss carryback provisions[131] Backlog and Awarded Projects Fully-contracted backlog increased to $1.02 billion, with awarded projects at $1.20 billion, indicating a robust pipeline Backlog and Pipeline Comparison (in millions) | Metric | June 30, 2020 | June 30, 2019 | | :--- | :--- | :--- | | Fully-Contracted Backlog | $1,017.7 | $788.7 | | Awarded Projects | $1,201.9 | $1,236.5 | | O&M Backlog | $1,133.5 | $906.5 | | Assets in Development | $752.5 | $518.4 | Business Segment Analysis U.S. Federal segment revenue grew 56.2% to $153.2 million, leading overall segment growth, while 'All Other' declined - The U.S. Federal segment revenue grew by 56.2% to $153.2 million for the six months ended June 30, 2020, due to the timing and phase of active projects[138][139] - The U.S. Regions segment revenue increased by 20.6% to $173.4 million for the first half of 2020, also driven by the timing of project revenue recognition[136] - The 'All Other' segment's revenue decreased by 9.3% in H1 2020, primarily due to a decline in integrated PV revenues[145] Liquidity and Capital Resources Liquidity is funded by operations and debt, with $73.6 million used in operations and $142.4 million provided by financing - The company plans to invest approximately $110.0 million to $160.0 million in additional capital expenditures for the remainder of 2020, principally for the construction or acquisition of new renewable energy plants[150][151] - The CARES Act is expected to improve liquidity by allowing the delay of approximately $5.0 million in 2020 employer payroll taxes and providing tax refunds of approximately $5.3 million related to net operating loss carrybacks and Alternative Minimum Tax credits[150] - In June 2020, the company entered into a new $100 million revolving credit agreement to finance construction costs of its owned projects[108] Quantitative and Qualitative Disclosures About Market Risk No significant changes in market risk exposures were reported as of June 30, 2020, compared to prior disclosures - There were no significant changes in market risk exposures as of June 30, 2020, compared to those disclosed in the company's 2019 Annual Report[153] Controls and Procedures Management concluded disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[154][155] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[155] PART II - OTHER INFORMATION Legal Proceedings The company does not anticipate any material adverse effects from current legal proceedings on its financial condition - The company states that it does not expect any currently pending legal proceedings to have a material adverse effect on its business, results of operations, or financial condition[157] Risk Factors No material changes to the company's previously disclosed risk factors were reported as of June 30, 2020 - No material changes to the company's risk factors were reported as of June 30, 2020[158] Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the stock repurchase program in Q2 2020, with $5.9 million remaining available Stock Repurchase Program Activity (Q2 2020) | Period | Total Shares Purchased | Average Price Paid | Approx. Dollar Value Remaining ($) | | :--- | :--- | :--- | :--- | | Q2 2020 | 0 | $0 | $5,897,229 | Exhibits Lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and XBRL financial data