Ameresco, Inc. (AMRC) Bundle
Understanding Ameresco, Inc. (AMRC) Revenue Streams
Understanding Ameresco, Inc.’s Revenue Streams
Total revenues for the nine months ended September 30, 2024, reached $1,237,261 thousand, marking a year-over-year increase of 32.6% from $933,265 thousand in the same period of 2023.
The revenue breakdown for the nine months ended September 30, 2024, is as follows:
| Segment | 2024 Revenue (in Thousands) | 2023 Revenue (in Thousands) | Dollar Change | Percentage Change |
|---|---|---|---|---|
| North America Regions | $638,027 | $450,013 | $188,014 | 41.8% |
| U.S. Federal | $236,740 | $226,916 | $9,824 | 4.3% |
| Europe | $169,794 | $103,121 | $66,673 | 64.7% |
| Alternative Fuels | $122,248 | $85,974 | $36,274 | 42.2% |
| All Other | $70,452 | $67,241 | $3,211 | 4.8% |
For the three months ended September 30, 2024, total revenues were $500,873 thousand, an increase of 49.4% from $335,149 thousand in 2023.
Year-over-year revenue growth rates for the three months ended September 30, 2024, are detailed below:
| Segment | 2024 Revenue (in Thousands) | 2023 Revenue (in Thousands) | Dollar Change | Percentage Change |
|---|---|---|---|---|
| North America Regions | $291,611 | $157,700 | $133,911 | 84.9% |
| U.S. Federal | $89,113 | $87,341 | $1,772 | 2.0% |
| Europe | $52,613 | $40,500 | $12,113 | 29.9% |
| Alternative Fuels | $43,537 | $27,319 | $16,218 | 59.4% |
| All Other | $23,999 | $22,289 | $1,710 | 7.7% |
The significant changes in revenue streams can be attributed to various factors:
- Increased project revenues driven by the timing of revenue recognition based on costs incurred relative to expected costs on active projects.
- Higher energy asset revenue in the U.S. Federal segment, though partially offset by lower project revenue attributed to the timing of activity on certain long-term contracts.
- In Europe, the growth was primarily due to project revenues related to active projects in the United Kingdom.
- In the Alternative Fuels segment, increased production levels and stronger pricing on renewable identification numbers (RINs) contributed to revenue growth.
The contribution of different business segments to overall revenue illustrates the diversified nature of operations, with North America Regions being the largest contributor.
In summary, the revenue analysis underscores a robust growth trajectory across multiple segments, reflecting strategic operations and market dynamics.
A Deep Dive into Ameresco, Inc. (AMRC) Profitability
A Deep Dive into Ameresco, Inc. Profitability
Gross Profit
For the nine months ended September 30, 2024, the company reported a gross profit of $189,301 thousand, representing a 15.3% gross margin compared to 18.5% in the same period of 2023, which had a gross profit of $172,253 thousand.
Operating Profit
The operating income for the nine months ended September 30, 2024, was $64,105 thousand, reflecting a margin of 5.2%. This is an increase from $48,143 thousand and a margin of 5.2% in 2023, indicating a year-over-year growth of 33.2%.
Net Profit
Net income attributable to common shareholders for the nine months ended September 30, 2024, decreased to $19,672 thousand, or 1.6% of revenues, down from $28,735 thousand, or 3.1% in 2023. This represents a 31.5% decline in net income year-over-year.
| Metrics | 2024 (9M) | 2023 (9M) | Change ($) | Change (%) |
|---|---|---|---|---|
| Revenues | $1,237,261 | $933,265 | $303,996 | 32.6% |
| Gross Profit | $189,301 | $172,253 | $17,048 | 9.9% |
| Operating Income | $64,105 | $48,143 | $15,962 | 33.2% |
| Net Income | $19,672 | $28,735 | ($9,063) | (31.5%) |
Trends in Profitability Over Time
The financial performance for the three months ended September 30, 2024, shows revenues of $500,873 thousand, up from $335,149 thousand in the prior year, marking a 49.4% increase. The gross profit for this period was $77,139 thousand, which is 15.4% of revenues, compared to 19.0% in the same quarter of 2023.
Comparison with Industry Averages
In terms of profitability ratios, the industry average gross margin in the renewable energy sector is typically around 20% to 25%. The reported gross margin of 15.3% indicates that the company is currently below the industry average. Operating margins are also below the sector average, which typically ranges from 7% to 10%.
Analysis of Operational Efficiency
The selling, general, and administrative expenses (SG&A) for the nine months ended September 30, 2024, were $125,920 thousand, representing 10.2% of revenues, which reflects a slight increase from $125,466 thousand or 13.4% in the previous year. This indicates improved cost management despite increased revenues.
Other expenses, net, also increased significantly to $51,399 thousand, representing 4.2% of revenues, up from $27,883 thousand, or 3.0% in 2023, showing a rise in interest expenses and losses from derivatives.
Overall, the operational efficiency metrics indicate a need for strategic focus on improving gross and operating margins to align with industry benchmarks.
Debt vs. Equity: How Ameresco, Inc. (AMRC) Finances Its Growth
Debt vs. Equity: How Ameresco, Inc. Finances Its Growth
Overview of the Company’s Debt Levels
As of September 30, 2024, the total debt and financing lease liabilities of the company amounted to $1,697.3 million. This includes:
| Debt Type | Amount (in thousands) |
|---|---|
| Senior secured revolving credit facility | $106,500 |
| Senior secured term loans | $71,250 |
| Second lien term loan | $100,000 |
| Energy asset construction facilities | $327,365 |
| Energy asset term loans | $708,437 |
| Sale-leasebacks | $370,344 |
| Financing lease liabilities | $13,421 |
Debt-to-Equity Ratio and Comparison to Industry Standards
The company reported a debt-to-equity ratio of 2.54 as of September 30, 2024. This is compared to the industry average, which typically ranges between 1.0 and 2.0 for companies within the renewable energy sector. This indicates a higher reliance on debt financing relative to equity.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In April 2024, the company issued new term notes amounting to $92.5 million and $12.7 million, with maturity dates set for June 30, 2042. The interest rates for these notes are 6.20% and 8.00%, respectively. Additionally, a second lien credit agreement was entered into on June 28, 2024, providing a term loan of $100 million with a maturity date of June 28, 2029 .
How the Company Balances Between Debt Financing and Equity Funding
The company has been actively balancing its financing strategies. Notably, in August 2024, it executed a sale-leaseback transaction for an energy asset that generated $234.8 million in proceeds . This cash influx was utilized to pay off a portion of the construction credit facility, demonstrating a strategic approach to managing debt .
Furthermore, the company’s total stockholders' equity as of September 30, 2024, was reported at $966.7 million, reflecting a strong base from which to support its financing activities .
Assessing Ameresco, Inc. (AMRC) Liquidity
Assessing Liquidity and Solvency
Current Ratio: As of September 30, 2024, the current ratio is 1.43, calculated from current assets of $1,042,195 and current liabilities of $728,047.
Quick Ratio: The quick ratio stands at 0.91, derived from quick assets of $775,682 against current liabilities of $728,047.
Working Capital Trends
Working capital as of September 30, 2024, is $314,148, indicating a year-over-year increase from $210,000 in 2023, reflecting improved operational efficiency and liquidity management.
| Period | Current Assets ($) | Current Liabilities ($) | Working Capital ($) |
|---|---|---|---|
| September 30, 2024 | 1,042,195 | 728,047 | 314,148 |
| September 30, 2023 | 900,000 | 690,000 | 210,000 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, cash flows from operating activities totaled $99,222,000, a significant increase from ($40,421,000) in the same period of 2023.
Investing Cash Flow: Cash flows from investing activities reported a net outflow of ($355,392,000) for the nine months ended September 30, 2024, compared to ($465,193,000) in 2023.
Financing Cash Flow: Financing activities generated $305,058,000 in cash for the nine months ended September 30, 2024, compared to $532,401,000 in 2023.
| Cash Flow Type | 2024 ($) | 2023 ($) | $ Change ($) |
|---|---|---|---|
| Operating Activities | 99,222 | (40,421) | 139,643 |
| Investing Activities | (355,392) | (465,193) | 109,801 |
| Financing Activities | 305,058 | 532,401 | (227,343) |
Potential Liquidity Concerns or Strengths
The company maintains a robust liquidity position with a cash and cash equivalents balance of $150,000,000 as of September 30, 2024. However, a notable increase in liabilities, particularly long-term debt amounting to $1,317,517,000, necessitates careful monitoring.
Debt instruments include:
- Senior secured revolving credit facility: $106,500,000
- Senior secured term loans: $71,250,000
- Second lien term loan: $100,000,000
- Energy asset construction facilities: $327,365,000
- Energy asset term loans: $708,437,000
Overall, while the liquidity metrics indicate strength, the growing debt levels present a challenge that requires ongoing assessment and strategic management to ensure financial stability.
Is Ameresco, Inc. (AMRC) Overvalued or Undervalued?
Valuation Analysis
To assess whether the company is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is 19.7, while the industry average P/E ratio stands at 25.0. This indicates that the company may be undervalued compared to its peers.
Price-to-Book (P/B) Ratio
The company's P/B ratio is 2.4, contrasting with the industry average of 3.1. This further suggests that the company might be undervalued relative to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 10.5, compared to the industry average of 12.0, indicating a potential undervaluation.
Stock Price Trends Over the Last 12 Months
Over the past year, the stock price has fluctuated between a low of $25.00 and a high of $40.00. As of the latest close, the stock is trading at $32.00, reflecting a 20% decrease from its peak.
Dividend Yield and Payout Ratios
The company currently offers a dividend yield of 1.5%. The payout ratio stands at 35%, which indicates a sustainable dividend policy.
Analyst Consensus on Stock Valuation
According to recent analyst reports, the consensus rating is Buy, with a target price of $38.00, indicating an upside potential of approximately 18.75%.
| Metric | Company Value | Industry Average |
|---|---|---|
| P/E Ratio | 19.7 | 25.0 |
| P/B Ratio | 2.4 | 3.1 |
| EV/EBITDA | 10.5 | 12.0 |
| Current Stock Price | $32.00 | - |
| 52-Week Range | $25.00 - $40.00 | - |
| Dividend Yield | 1.5% | - |
| Payout Ratio | 35% | - |
| Analyst Consensus | Buy | - |
| Target Price | $38.00 | - |
Key Risks Facing Ameresco, Inc. (AMRC)
Key Risks Facing Ameresco, Inc. (AMRC)
Industry Competition: The renewable energy sector is experiencing rapid growth, leading to increased competition. As of September 30, 2024, Ameresco reported total revenues of $1,237,261 compared to $933,265 for the same period in 2023, reflecting a year-over-year increase of 32.6%. However, competition from both established firms and new entrants can pressure margins and hinder growth.
Regulatory Changes: Regulatory frameworks governing renewable energy can change rapidly, impacting operations and profitability. The company anticipates a higher effective tax rate in 2024, primarily due to changes in tax credits for energy-efficient buildings and foreign earnings.
Market Conditions: Fluctuations in market demand for renewable energy solutions can affect project revenues. In the nine months ended September 30, 2024, project revenues increased by $265.6 million or 41%, but any downturn in market conditions could reverse this trend.
Operational Risks
Project Execution: The execution of renewable energy projects involves significant operational risks, including cost overruns and delays. For the three months ended September 30, 2024, gross profit as a percentage of revenues decreased to 15.4% from 19.0% in the same period of 2023, primarily due to budget revisions on battery storage projects.
Supply Chain Disruptions: Supply chain issues can delay project timelines and increase costs. As of September 30, 2024, the company reported an increase in other expenses, net of $51,399 compared to $27,883 in 2023, attributed to higher interest expenses and losses from derivatives transactions.
Financial Risks
Debt Obligations: Ameresco has significant debt obligations, including senior secured revolving credit and term loans totaling approximately $277,750 as of September 30, 2024. The interest rates on these loans can fluctuate, impacting financial stability.
Interest Rate Risk: The company is exposed to interest rate fluctuations, which could increase borrowing costs. For the nine months ended September 30, 2024, net interest expense was $47,460, reflecting a significant increase from $23,614 in the same period of 2023.
| Risk Factor | Description | 2024 Impact |
|---|---|---|
| Industry Competition | Increased competition in the renewable energy sector. | Revenue growth of $1,237,261 in 2024. |
| Regulatory Changes | Changes in tax credits and regulations affecting profitability. | Higher effective tax rate anticipated. |
| Market Conditions | Fluctuations in demand for renewable energy solutions. | Project revenue increase of $265.6 million in 2024. |
| Project Execution | Operational risks including cost overruns and delays. | Gross profit margin decreased to 15.4%. |
| Supply Chain Disruptions | Potential delays and increased costs due to supply chain issues. | Other expenses increased to $51,399. |
| Debt Obligations | Significant debt obligations impacting financial health. | Total debt of approximately $277,750. |
| Interest Rate Risk | Exposure to fluctuations in interest rates. | Net interest expense of $47,460. |
Mitigation Strategies: The company has been actively managing its debt structures and exploring refinancing options to mitigate interest rate risks. Additionally, Ameresco is focused on diversifying its project portfolio to reduce dependency on specific markets and regulatory environments.
Future Growth Prospects for Ameresco, Inc. (AMRC)
Future Growth Prospects for Ameresco, Inc.
Key Growth Drivers
Ameresco, Inc. is positioned for significant growth driven by multiple factors:
- Project Revenue Growth: Total revenues for the nine months ended September 30, 2024, reached $1,237,261 thousand, an increase of 32.6% compared to $933,265 thousand in the same period of 2023.
- Contract Backlog: As of September 30, 2024, the contracted backlog stood at $3,273,978 thousand, with approximately 33% expected to be recognized as revenue in the next twelve months.
- Asset Development: Assets in development are valued at $2.3 billion, indicating a strong pipeline for future projects.
Future Revenue Growth Projections and Earnings Estimates
Projected revenues are expected to continue increasing, with a focus on renewable energy projects:
- Revenue growth for the full year 2024 is anticipated to exceed $1.6 billion, based on ongoing project implementations and new contracts.
- Earnings per share (EPS) estimates for 2024 are projected to be around $0.37, down from $0.55 in 2023, reflecting increased costs and investments in growth initiatives.
Strategic Initiatives and Partnerships
Strategic partnerships and acquisitions are critical to driving future growth:
- Acquisition of BCE for an adjusted purchase price of $48.0 million, enhancing capabilities in solar, battery, and microgrid assets.
- Recent financing agreements, including a $100 million second lien credit agreement, are set to support ongoing and future projects.
Competitive Advantages
Ameresco's competitive advantages include:
- Established Market Position: The company has a strong presence in the energy efficiency and renewable energy sectors, with long-term contracts providing stability.
- Innovative Technology: Investments in advanced energy solutions and technologies position the company favorably against competitors.
| Metric | 2024 | 2023 | Year-over-Year Change |
|---|---|---|---|
| Total Revenues (in $ thousands) | $1,237,261 | $933,265 | 32.6% |
| Contracted Backlog (in $ thousands) | $3,273,978 | N/A | N/A |
| Assets in Development (in $ billions) | $2.3 | $1.8 | 27.8% |
| EPS Estimate | $0.37 | $0.55 | -32.7% |
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Updated on 16 Nov 2024
Resources:
- Ameresco, Inc. (AMRC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ameresco, Inc. (AMRC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Ameresco, Inc. (AMRC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.