Ameresco Inc. (NYSE: AMRC), a leader in energy and renewable energy solutions, reported a solid performance for the fourth quarter of CY2024, surpassing Wall Street’s revenue projections. The company posted $532.7 million in sales, marking a 20.7% year-on-year increase, and beating analysts’ estimates of $526.6 million. Additionally, Ameresco’s non-GAAP earnings per share (EPS) came in at $0.88, exceeding the consensus estimate of $0.78 by 12.6%.
Despite the strong quarterly performance, Ameresco’s stock dropped 12.4% following the release of its Q4 results. The company’s revenue and adjusted EPS performance was overshadowed by its full-year guidance, which missed analyst expectations for both revenue and EBITDA. Management has forecasted $1.9 billion in revenue for FY2025, slightly below analysts’ expectations by 1.8%, signaling a deceleration in growth compared to the previous year’s 28.5% increase.
Key Q4 Highlights:
- Revenue: $532.7 million, up 20.7% year-on-year and beating estimates by 1.1%.
- Adjusted EPS: $0.88, a 12.6% beat compared to consensus estimates of $0.78.
- Adjusted EBITDA: $87.19 million, surpassing analyst expectations of $76.57 million by 13.9%, resulting in a 16.4% margin.
- Operating Margin: 8.4%, consistent with the same quarter last year.
Free Cash Flow: Positive at $18.38 million, a major improvement from a negative $123.6 million in Q4 of the previous year.
Contracted Project Backlog: Ameresco’s contracted backlog increased significantly, reaching over $2.5 billion by year-end, nearly double the 2023 levels.
Guidance Misses Analysts’ Expectations
While the Q4 results exceeded expectations, the outlook for FY2025 raised concerns. Ameresco’s guidance for full-year revenue of $1.9 billion and adjusted EPS of $0.80 at the midpoint fell short of analyst predictions by 1.8% and 53.1%, respectively. Additionally, the company’s EBITDA forecast of $235 million for FY2025 also missed analysts’ expectations of $265.5 million. This prompted a sharp decline in Ameresco’s stock price despite the solid Q4 performance.
CEO George Sakellaris’ Comments
CEO George Sakellaris expressed optimism about the company’s growth and future prospects. He noted that the fourth quarter marked a strong finish to an otherwise successful year, with record revenue and project conversions. Ameresco also successfully divested its AEG business unit, focusing more on its core operations and growth potential. Sakellaris emphasized the company’s robust backlog and significant multi-year revenue visibility, which now stands at nearly $10 billion.
Long-Term Growth Outlook
Over the past five years, Ameresco has maintained impressive annualized revenue growth of 15.3%, beating the industrial sector average. However, the company has faced challenges in recent years, with annual revenue growth declining by 1.5% over the past two years. Despite this, analysts project a 10.5% revenue growth for Ameresco over the next 12 months, indicating a potential rebound driven by new products and services.
While Ameresco’s profitability, measured by operating margins, has been relatively stable, its operating margins (8.4%) remain lower than expected for a company of its size and potential. The company’s ability to improve its margin and leverage its revenue growth will be crucial in driving its future profitability.
Conclusion
Ameresco’s Q4 results were impressive in terms of revenue growth and profitability, but its forward-looking guidance left investors cautious. Despite the strong fourth-quarter performance and positive growth outlook, the company’s guidance misses contributed to the stock’s 12.4% drop following the announcement. While there is optimism for the company’s long-term prospects, including a large project backlog and growing energy transition initiatives, the weaker guidance signals potential challenges ahead.
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