AMRC earnings call analysis

NYSE:AMRC Q1 2026 Earnings Call Transcript Generated on 6/6/2026 Jordan | Conference Operator: Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Q1 2026 Amoresco Inc. Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Leila Dillon, Chief Marketing Officer.

Please go ahead. Leila Dillon | Chief Marketing Officer

Thank you, and good afternoon, everyone. We appreciate you joining us for today's call. Our speakers on the call today will be George Sakolaris, Amoresco's Chairman and Chief Executive Officer, Mike Backus, who will become the CEO of Neogenics Fuels, Nicole Bulgarino and Lou Maltesos, newly appointed co-presidents of Amoresco, and Mark Chiplock, Chief Financial Officer. In addition, Josh Barabo, our Chief Investment Officer, will also be available during Q&A to help answer questions. Before I turn the call over to George, I would like to make a brief statement regarding forward-looking remarks. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. In particular, some of the commentary is predicated on the expected closing of the neogenic fuels transaction. Please refer to today's earnings materials, the safe harbor language on slide two of our supplemental information, and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations of these measures and additional information in our supplemental slides that were posted to our website. Please note that all comparisons that we will be discussing today are on a year-over-year basis unless otherwise noted. I will now turn the call over to George.

George Sakolaris | Chairman and Chief Executive Officer

George? Thank you, Lila. And good afternoon, everyone. I am pleased to report that we had a solid start to the year, with the MRESCO team delivering 14% revenue growth, despite experiencing adverse weather conditions affecting several of our RNG facilities. New business also remained quite strong, with 20% growth in awarded backlog. against a backdrop of significant activity, especially with the federal government. We also announced several important corporate actions which we have taken to better position ourselves for substantial future growth opportunities while also maximizing shareholder value. Today, after the market closed, we announced the signing of a transformational agreement with HACI for a $400 million strategic investment in our biofuels business. This agreement will create a newly formed joint venture named Neogenics Fuels. Embaresco has been a leader in the biofuels industry for the last 25 years. When completed, this transaction will enable us to monetize a portion of the $1.8 billion enterprise value that we have created in our biogas business. Of the $400 million commitment from CASI, $300 million will be directly invested in eugenics fuels to drive business growth. And the $100 million will be direct compensation to MRSCO for the existing business, which will be used for strategic opportunities, working capital, and the leveraging throughout the year. I would like to turn the call over to Mike Backus, a member of my management team for nearly 30 years, and who will become Chief Executive Officer of Neogenics Fuels. To comment on this exciting transaction, Mike.

Mike Backus | Chief Executive Officer, Neogenics Fuels

Thank you, George. Good afternoon, everyone. First and foremost, I very much appreciate the confidence and trust that George and Hatsi leadership have bestowed on me to take the helm of what we see as a transformative business. As many of you are aware, I have been leading Amoresco's biogas business since the founding of the company, helping to create one of the country's largest greenfield developers of biogas projects. We are thrilled to be taking the next step in this evolution, along with our long-term partner, Hasi, with the creation of Neogenics Fuels, which will be 70% owned by Amoresco and 30% by Hasi. As part of the transaction, Amoresco will contribute its operating biogas assets along with one of the most robust development pipelines in the industry. The organization will be staffed by Amoresco's seasoned team of biogas veterans. Both Amoresco and HACI recognize the tremendous opportunities to deliver resilient energy and biofuel solutions while building the foundation for renewable molecules, and next-generation drop-in fuels of the future. This transaction represents a combination of Amoresco's proven history and expertise in successful biogas development with HACI's deep sector financial knowledge and scalable capital platform. We see this partnership as positioning Neogenics to become a global industry leader in the next generation of fuels as our addressable market continues to expand. As noted, we have a signed agreement and expect a timely close to the transaction. George, I'll turn the call back to you.

George Sakolaris | Chairman and Chief Executive Officer

Thank you, Mike. We are very excited about this transaction, which I believe not only recognizes the tremendous tangible value of our energy assets, but also positions MRS to better drive long-term profitable growth. Also during the quarter, we strengthened our corporate structure to position us to fully execute on our great growth opportunities. We recently promoted proven leaders, Nicole Bolgarino and Lou Maltazos, to co-presidents of MRSCO, and Pira Gristakis to chief operating officer. Lou and Nicole both came to MRSCO 22 years ago with our successful excellent solutions acquisitions. As co-presidents, Nicole and Lou will work closely with me on MRSCO's continued growth strategy while at the same time maintaining clear and distinct areas of operational focus. The easiest way to understand the operational alignment is to look at our current project business, which is split evenly between energy infrastructure and building efficiency. Nicole is responsible for the energy infrastructure, half of the business, while continuing to guide the company's federal solution business. Lou focuses on the built-in efficiency side, overseeing the core non-federal projects. Now, I will ask each of them to comment on some of the market dynamics in their respective areas. Nicole?

Nicole Bulgarino | Co-President, Energy Infrastructure & Federal Solutions

Thank you, George, and good afternoon, everyone. Amoresco's federal business continues to be a core strength of the company. We see strong demand across our traditional federal programs, including energy efficiency, infrastructure modernization, with long-term ESPC and design-build work. Amoresco's military and civilian federal government customers remain focused on upgrading buildings, improving reliability, reducing lifecycle costs, and hardening critical facilities. And I am pleased to note a nice uptick in federal government proposal activity over the last year. Amoresco's longstanding relationships, technical expertise, and proven execution track record position us well to continue delivering strong results in this important market. In parallel, we are seeing great demand for our energy infrastructure solutions. We have built a strong pipeline of large and complex projects, including transformational data center opportunities. This activity is being driven by growing demand for on-site, reliable power solutions where access to utility power is constrained or delayed. We are approaching this market with discipline, focusing on larger, experienced developers and projects where Ameresco's behind-the-meter capabilities can provide clear value. While still disciplined in what we advance, we are encouraged by the quality and the scope of opportunities we are pursuing and how they are progressing. I will now turn the call over to Lou.

Lou Maltesos | Co-President, Building Efficiency

Thank you, Nicole. It's been a very exciting time for our project business, with our long history and expertise in providing building efficiency solutions. For many of our customers, energy represents one of their single largest operating expenditures. More and more, our customers are experiencing spiking electricity prices. leading to heightened interest in energy efficiency solutions. In addition to these challenges, many customers have older, often outdated buildings with limited capital budgets to pursue new construction. So upgrading their existing facility is not only the best economic option, but it's often their only option. The cost savings generated from our energy efficiency upgrades can then be reinvested in a laundry list of facility improvements, all done by Amoresco. As electricity prices rise, energy efficiency investments drive much faster returns, allowing our customers to tackle more and more improvements. This enables Amoresco to execute larger, more comprehensive projects. As one of the largest energy services companies in North America, Amoresco should be a main beneficiary of increasing energy costs for years to come. I'll now turn the call back over to George for a few brief comments before Mark covers our financials.

George Sakolaris | Chairman and Chief Executive Officer

Thank you, Luke. Before we turn to the financials, I want to step back and connect the themes you have heard over the last few minutes. We see the creation of neogenic fuels with Hathi as a clear validation of the scale and value we have created in our biofuels platform while also bringing in a strong long-term partner and incremental capital to accelerate the next phase of growth. At the same time, The leadership updates we announced reflect the depth of our bench and our focus on continuity and execution as we scale. Positioning Mike to lead Neogenics Fuels and elevating Nicole and Lou as co-presidents to sharpen execution across our energy infrastructure and building efficiency business. Together, we see these actions strengthening our operating model enhancing our ability to deploy capital and talent where returns are most attractive, and keeping the Maresco firmly on the same strategic path, delivering durable growth while creating long-term shareholder value. With that, I will turn it over to Mark to walk through the core financial results and guidance reflecting the Neogenics-Hulz transaction. Mark? Thank you, George.

Mark Chiplock | Chief Financial Officer

we had a solid start to the year with total revenue of $401 million, up 14% year-over-year, reflecting broad-based growth across our core businesses and led by continued strength in projects in O&M. Project revenue increased 16% to $291 million, driven by solid execution across federal and key geographies, as well as continued demand for both building efficiency and energy infrastructure solutions. Importantly, Business development activity remained very strong. Awarded project backlog grew 20% to $2.8 billion, with over half a billion dollars of new awards during the quarter, bringing our total project backlog to $5.3 billion. We continue to see a healthy pipeline of opportunities and strong proposal activity, particularly in the federal market. Energy asset revenue grew 7% to $61 million, supported by the continued expansion of our operating portfolio. We did see some weather-related impacts at certain RNG facilities during the quarter, but the underlying performance of the portfolio remains strong. Our operating energy asset base now stands at 838 megawatts, with 568 megawatts in development and construction, positioning us well for continued long-term growth. As we continue to scale this platform, we're increasingly focused on both the operational performance and the capital efficiency of our asset strategy. In line with that strategy, and as George highlighted, we entered into an agreement to sell a 30% equity interest in our biofuels business. Of the $400 million commitment from HACI, $300 million will be directly invested in Neogenics Fuels to drive business growth, and $100 million will be direct compensation to Amoresco for the existing business, which will be used for strategic opportunities, working capital, and deleveraging throughout the year. This transaction implies a post-money enterprise value of approximately $1.8 billion and recognizes the tremendous value embedded within our energy asset portfolio. In addition, it will allow us to retain control of the platform and bring in a trusted partner to help fund future growth, which will allow us to continue scaling the business in a capital-efficient manner. Turning back to the financials, O&M had another strong quarter with revenue up 22%, driven by the continued additions of new long-term contracts. Our long-term O&M backlog now exceeds $1.5 billion. reinforcing the visibility and durability of this revenue stream. Gross margin of 14.1% reflects project mix along with the impact from adverse weather conditions at certain RNG sites. We continue to make targeted investments in people, product development, and execution capabilities to support future growth. These investments drove operating expenses to $46 million during the quarter. Net interest and other expenses were slightly higher than expected, driven primarily by $1.8 million of non-cash mark-to-market impact and approximately $1 million in foreign exchange losses. Net loss attributable to common shareholders was $18.3 million, with a GAAP EPS loss of $0.35 per diluted share and non-GAAP loss per share of $0.33. Adjusted EBITDA of $40.5 million was in line with the company's expectations. Turning to our balance sheet, we ended the quarter with $104 million of unrestricted cash. Total corporate debt was $417 million, reflecting our investment in working capital to support continued growth across both our project and energy asset businesses. In the quarter, our senior secured lenders reaffirmed their confidence and commitment to Amoresco by increasing our term loan by $45 million. Our corporate leverage was 3.2 times which remains below our 3.5 times covenant. Our cash generation remained solid this quarter with adjusted cash flows from operations of approximately $62 million. On a longer term basis, our eight quarter rolling average adjusted cash from operations was approximately $57 million. Now turning to guidance. Given our solid start to the year and strong visibility, we would have been reaffirming our 2026 guidance. But in anticipation of the closing of the neogenics fuels transaction, we are updating our full-year guidance to reflect the expected impact on our reported results. Given the structure of the transaction, we plan to consolidate neogenics fuels, and therefore our revenue guidance remains unchanged. 30% of adjusted EBITDA and net income from the biofuels business will be attributable to HACI and reflected as non-controlling interest. Consistent with this, our operating assets and assets and development metrics will reflect our 70% ownership in the JV. On the balance sheet, we plan to consolidate 100% of Neogenix Fuel's assets and liabilities, including all related project-level debt. HACI's 30% ownership will be reflected as a non-controlling interest within shareholders' equity, representing their share of the JV's net assets. We continue to anticipate placing approximately 100 to 120 megawatts of total energy assets in service, including two RNG plans. Expected CapEx is $300 million to $350 million, the majority of which is expected to be funded with a combination of energy asset debt, assays investment, tax equity, and tax credit sales. The revenue cadence for the remainder of the year is expected to follow our historical seasonal pattern, with results weighted towards the second half. We expect the second half to contribute approximately 60% of total 2026 revenue, consistent with recent year performance. And finally, for the second quarter, with the expectation that the Neogenics Fuels transaction will close in the quarter, we expect adjusted EBITDA of $58 million to $62 million and non-GAAP EPS of 18 cents to 23 cents. Now I'd like to turn the call back to George for closing comments. Thank you, Mark.

George Sakolaris | Chairman and Chief Executive Officer

As you have heard today, we are not only off to a solid start in 2026, but we are also taking the decisive steps to position the company to thrive long-term and build shareholder value. We look forward to seeing many of you at upcoming meetings and conferences. In closing, I would like to once again thank our employees, customers, and stockholders for their continued support. Operator, We would like to open the call to questions now.

Operator | Conference Moderator

We'll start the question and answer session.

Jordan | Conference Operator

In order to ask a question, press star followed by one on your telephone keypad. Please limit yourself to one question and one follow-up question. Your first question comes from the line of Craig Aaron from Roth Capital Partners.

Your line is live. Craig Aaron | Analyst, Roth Capital Partners

Good evening, George. Congratulations on another really foundational move for the company with the investment in neogenics here. We've advocated for this for years, and it's really just a fantastic thing that I think will generate a lot of value for your company.

So congratulations. George Sakolaris | Chairman and Chief Executive Officer

Thank you. Thank you, Greg.

Craig Aaron | Analyst, Roth Capital Partners

So as we look at the value of neogenics, a lot of people know that Mike has been incredibly loyal to your company having built your asset portfolio, you know, from his early days, I guess, at Duke Solutions, right? And, you know, it seems that the multiple that you're using for the enterprise value might be kind of at the low end of the range versus what some of the other public competitors are trading at. You know, if you... were to use a public mark for the valuation of this business. What are the features of this business that you would point people to that would have you compare this to some of your peers that seem to trade at a better than 15x multiple?

George Sakolaris | Chairman and Chief Executive Officer

Well, we went out and we spent over a year in evaluating the company and looking, getting various proposals and so on. And we think we got a very fair valuation for the company. And the fact that we only sell in only 30% is because with the additional investment that we will make in the company, the $300 million coming into it, we will accelerate development. We have almost 10% projects under development right now, and it will help us accelerate development at the end of the day. We will substantially increase the value and become much more significant. And Josh did lots of the analysis, and I think you might want to add some color to that.

Josh Barabo | Chief Investment Officer

Sure. Yeah. So one of the reasons we did this transaction and, of course, got a board approval and we had a lot of brainpower behind the advisors we used is because this actually we believe this is in line, if not above market multiples. We're at over 20 times post money valuation on the one point eight billion. So, again, I think that's. We believe that's significantly greater than Amoresco was trading prior to this, as well as what a lot of the prior transactions in the market, either public comps or transaction multiples in the past three, four years in the space have been. So we're very comfortable that we created a lot of value here and unlocked a lot of value.

Craig Aaron | Analyst, Roth Capital Partners

No, congratulations on that. The next question is also not really about the quarter. For the last many years, how long it's been, I guess 10, 15 years, investors have had a hard time separating out the debt related with your ESPC receivables financing. You know, there's been constant debate about, you know, do we take it out? Do we leave it in? We've been squarely in the camp that you take it out because it's non-recourse debt. It's debt where the federal government is the agency of recourse there. and you've never had a project not accepted by the federal government. You handled one of the biggest issues today with Neogenics that I think will drive value for the company over the long run. This is another key thing that I know that you've been bringing some creative ideas to over the last many years. Is it possible that we see this other point of sort of structural confusion in the markets You know, is it possible that we see, you know, similar changes that might allow a cleaner valuation on MRSCO versus its peers so people can see, you know, how clearly your company is undervalued?

George Sakolaris | Chairman and Chief Executive Officer

Go back and convince the SEC to change the way we were doing it before, you know. And you got a good point, Greg. No question about it. You know, it's not, it's non-recourse that, you know, It shouldn't show up as people combine it and then they indicate that the company will be over leveraged when indeed it's not.

Mark Chiplock | Chief Financial Officer

So we won't geek out on any accounting or GAAP accounting, but I mean, this, the federal ESPC, I mean, the contract structure, I think that the federal government likes to use, certainly Nicole can speak more to that. So, um, yeah, I think, I think, you know, we're constrained a little bit and I think some of the complexities just really how we need to report this, not only on the balance sheet, but coming through the cash flows. So, um, but yeah, we don't consider this to be debt. Um, and so we don't include it in our, in our reported debt, um, you know, metrics, but, you know, I don't, you know, I guess you'll be able to tell us if, you know, we see that changing of the contract structure.

George Sakolaris | Chairman and Chief Executive Officer

I don't see any. You know, it might not be a bad idea to start think about it and see maybe we can do something. Yeah. Excellent. Excellent. We haven't become large enough, right?

I'm sorry. Craig Aaron | Analyst, Roth Capital Partners

Yeah. Sorry, George. If I could squeeze in one last question. So, um, You are EBITDA, you know, a million ahead of consensus, you know, two million ahead of us in this quarter. You know, you mentioned some weather headwinds that impacted things a little bit in the first quarter. Clearly, the federal business is not facing some of the potential issues from the shutdown. Everything's tracking in line. Were there any particular closeouts or big wins or big pieces of book and burn businesses that maybe contributed to the strength in the quarter, or is this just indicative of a strong start to the year?

George Sakolaris | Chairman and Chief Executive Officer

It was a strong start for the year, and probably I would say $20 to $30 million of next quarter revenue that were pulled into this quarter. But the weather, though, did have a major impact. We had the freeze-up on three of our RNG plans, and that was for at least a couple of weeks, Mike, or more. So we would have an excellent quarter if that hadn't happened. And then, of course, the snow cover. We had more snow this season than we did the last couple of seasons, and that didn't help some of the solar farms that we had. Even on the construction side, some of the solar farms we couldn't get in. We had to demobilize, remobilize. But anyway, not one-time pick-up zone.

Mark Chiplock | Chief Financial Officer

Right. I think it was purely mixed that in a way helped to offset some of the impacts, but nothing unusual or one-time from a closeout perspective.

Craig Aaron | Analyst, Roth Capital Partners

Great. Well, thanks for taking my questions, and congratulations on these big changes.

Thank you. That's great. Jordan | Conference Operator

The next question comes from the line of George Gianarikas from CanCore Genuity.

Your line is live. George Gianarikas | Analyst, Canaccord Genuity

Hi, everyone. Good afternoon, and thank you for taking my questions. Again, maybe to focus on neogenics, what are the plans that you have in place to accelerate growth, and are there any additional plans to maybe go public with this asset as well?

Thank you. George Sakolaris | Chairman and Chief Executive Officer

Yeah. You know, we always look at opportunities to maximize value, and then if Greg is right, we grow it that way. get it to a large enough size, and then we will look at opportunity, no question about it. And as far, the money that we will invest, the $300 million, no question about it, will accelerate the growth. Right now we're building a couple of plants a year. I think it will take us probably a couple of years at least to get to about four plants a year, and maybe we could do a little bit better than that as we go down the road. But as you know, to permit some of these plants, it takes a couple of years. So you're not going to see anything until late 28 and beyond. But the plan is to accelerate the growth, double it up. And then Mike might want to add some more color, some other opportunities that we are looking at that will help us accelerate the growth.

Mike Backus | Chief Executive Officer, Neogenics Fuels

Yeah, and George, thanks for hearing from me again. Look, there's a tremendous amount of... opportunity, I think, in our space to see some consolidation. And so there's a fair bit of, I think, platform smaller that might, through M&A, help us grow the business in addition to our organic growth. As you know, to date, our portfolio has been 100% greenfield. We haven't acquired anything yet. I also think that the market is really starting to transition to more of a global opportunity, and I think the capital will allow us to expand our resources to potentially export some of our product that we produce today.

George Gianarikas | Analyst, Canaccord Genuity

Thank you. Maybe as a follow-up on the cash, so you're expecting $100 million of cash from the transaction internally to Amarisco, and if I may bring this up, at some point you're going to get if our math is correct, about another $100 million from the SEC deal. So you will be, I would argue, at a corporate level at least, relatively under-levered. What are your plans for that, about $200 million of cash infusion?

George Sakolaris | Chairman and Chief Executive Officer

I can start. Look, one, our business plans to have sufficient cash in order to be able to accelerate the growth of this company. You know, we've been growing in the high single digits, and we want to add a few percentage points to that get over the 10 threshold that we have established as a goal internally. And then, as we know, you know, we're adding a substantial amount of resources in expanding our what I call the large energy infrastructure project, like data centers and so on and so forth. And that's why the OPEX, it picked up for the first quarter. And because many of these people, they charge into OPEX now rather than capitalizing the cost. And then, of course, we have Euro. We have quite a few opportunities that we can expand our market and our reach. And then, of course, if there are some strategic acquisitions, we will always be looking at them. And that, of course... Rather than hiring one person at a time, when you buy a particular company, especially if they have the human resources that we will need, it will help us accelerate the business.

Mark Chiplock | Chief Financial Officer

Yeah, I won't add too much. I like that. George said, I think we'll take a balanced approach, George, if we look at this. I mean, this is going to be a great place for us to be when we start talking about that cash and the flexibility that it will give us. So certainly we'll focus on supporting working capital, but we'll selectively de-lever throughout the year. We're going to want to give ourselves plenty of dry powder to stay flexible for opportunities. So, yeah, this is going to be a good place for us to be. We're looking forward to all of this coming in.

Operator | Conference Moderator

Thanks.

Jordan | Conference Operator

Your next question comes from the line of Dushyant Ilani from Jefferies.

Your line is live. Dushyant Ilani | Analyst, Jefferies

Hi, Tim. Thanks for taking my question. Maybe just to follow up on the prior comment there, maybe could you share the timeline that it would take for you guys to cross over that 10% hurdle threshold that you've set for top line and then maybe Specifically, I know you touched on some of the key drivers, but what would be more imminent if you had to, you know, kind of discuss that?

Mark Chiplock | Chief Financial Officer

Yeah, so maybe just some clarity on the question. So you're talking about the top line 10% growth? Yeah. Yeah. Yeah, I mean, I think that's just going to come down to execution. I mean, we feel really comfortable in the plan we put in place for the year and the visibility we have coming out of our backlog, especially with the projects business. So... Yeah, I mean, I think that's why, you know, we said in our remarks we would have reaffirmed guidance, and revenue doesn't change in any of this with the transactions. So, you know, I think, you know, our plan this year probably puts us right around that 10% growth year. We feel pretty confident about that.

Dushyant Ilani | Analyst, Jefferies

Got it. And then maybe just another question on – I know you guys talked about tax equity earlier in your comments. Have you guys seen any – any slowdown in tax equity in terms of, like, if there have been any FIOG concerns around tax equity that have been impacting your projects. I know that we have heard, you know, some comments around FIOG for tax equity, but I don't know if that's been maybe impacting you guys or not.

Josh Barabo | Chief Investment Officer

The compliance around FEOC, this is Josh, the compliance around FEOC has been more of the concern more so than a pullback in availability. We're probably not large enough to source those mega tax equity funds or syndications that some of the sort of tier one utility scale developers that we've also been hearing or been pulling back. I think you know we use a mix of transferability, which we're tapping into bank markets as well as corporate. And we use kind of smaller regional banks as well as large light coasts. So we have a pretty diversified pool of tax investors or tax equity. And so far, given the strength of our pipeline, our reputation, and probably even the fact that our appetite isn't huge, we have not seen any meaningful pullback because of that.

Got it. Operator | Conference Moderator

Thank you. Your next question comes from the line of Ben Calo from Baird. Your line is live. Ben, your line is live.

Ben Calo | Analyst, Baird

Sorry about that, guys. So a couple quick ones for me. Congrats on the JV. Just first, if pricing is impacted, could you just maybe talk to it just from the amount of natural gas I think that is being demanded to power data centers? Maybe it's a completely different market. We may talk to that, and then I have a follow-up.

Josh Barabo | Chief Investment Officer

Ben, this is Josh. Let me see if I can reiterate the question. You're wondering if the price of natural gas impacts the end market for renewable natural gas based on either data or demand?

Ben Calo | Analyst, Baird

Or if data will demand any RNG or if that changes the market at all?

Mike Backus | Chief Executive Officer, Neogenics Fuels

Yeah, I mean, I will say if you're tracking some of the stats, I think there was – There's a whole host of projects, I think almost 200 data center projects that have been in jeopardy because of community groups. And so a lot of the data centers are looking to green their power supply to get through the concerns of some of the local community groups. So we have seen an uptick in interest in fuel. And I think part of it is it's a baseload security supply. The RNG, it's all local. So that has a lot of...

interest versus intermittent resources. Ben Calo | Analyst, Baird

A follow-on just on data centers. You guys talked about being targeted and selective. Maybe could you just talk more about where you would play in data centers? And then also if you could just mention, you know, any kind of more work you're doing with military bases as well and data centers related to the U.S.

government. Thank you. Nicole Bulgarino | Co-President, Energy Infrastructure & Federal Solutions

Yeah, so this is Nicole. So to answer your second question first, I mean, we're continuing our strategy of working on military land because we feel like it's a great position for data centers to be located on. It has less land permitting requirements that commercial properties do. It's also on secure, usually, you know, away from communities and on secure military bases, which is another plus in the field. And certainly the ultimate tenant there serves nicely for the government IT. So that's top of our strategy. But also we've been working with a lot of commercial developers who need to bring power land solutions to the market. And we're seeing that across lots of states right now because of the constraints from the grid.

Pira Gristakis | Chief Operating Officer

And that's our specialty is doing these behind the meter microgrid eventually to connect to the grid future solutions as well.

Operator | Conference Moderator

Great.

Jordan | Conference Operator

Thank you guys. Next question comes from the line of Eric Stein from Craig column.

Your line is live. Eric Stein | Analyst, Craig Column

Hi everyone. Hey, um, so I know it'd be in a different form, but you know, any thoughts about, uh, you know, something like the joint venture that you're forming for RNG, uh, And doing that in the data center space, I know that your first award, I believe you're counting 10% or so of the megawatts in your backlog with the expectation that you would have a partner in some way. So just curious, I mean, is there a path to having, rather than each project maybe a separate, do you have a defined partnership where you can accelerate that?

George Sakolaris | Chairman and Chief Executive Officer

Yeah, definitely, Eric. We are looking into it, and we are talking to several people, but we don't have anything concrete to announce yet. When we are ready, we will do it. But the data centers, as you know, they require a substantial amount of capital, and even on the development stage. So it will be good to have somebody with deep pockets that will help us accelerate the development of those data centers. And the larger infrastructure projects that we are developing and we are building, like we're doing the hydro plant up in Alaska, the wind farm up there, and so on. That's the infrastructure business. We're getting pretty good traction into it, in addition to the data centers. It's a good question, and we are looking into it.

Eric Stein | Analyst, Craig Column

Okay. I'll definitely stay tuned. I guess maybe my follow-up, you know, just curious, you touched on this a little bit last quarter, but, you know, after the award that you made back in, I believe it was September, you know, I come and get the question, you know, when's the next order? And so I know these projects take time. I know often that these are, you know, Greenfield projects situations where you need to wait for the data center to even be built out before you start your work. So could you maybe just touch on, you know, kind of the typical project you're going after and why maybe that timeline's a little longer than other parts of your business? Yeah, Nicole?

Nicole Bulgarino | Co-President, Energy Infrastructure & Federal Solutions

Yeah, I mean, I think you've already kind of highlighted it very well. I mean, these are complex projects, and it's not just the power side, but it's also the data center side itself. And getting the right specs for the tenants that they're serving, and then matching that with the power, the power that we can put there, matching that with the air permitting that's required, the gas supply, the future interconnection. There's a lot of complexities there. So our pipeline consists of a lot of projects that are in various stages, some very far in development that we've been brought into for the power specifically, others that we're developing together on the land side to bring solution there. So You know, again, when you're talking with a large amount of capital required that George mentioned, I mean, these are complex projects and just require a lot more. I mean, it's like our normal assets require a lot of development in there.

Pira Gristakis | Chief Operating Officer

But, again, having a diverse pipeline will help us hedge against when they start coming online.

spk03

Got it. That is very helpful.

Thank you. Operator | Conference Moderator

Thanks, Eric. Thanks, Eric.

Thank you. Jordan | Conference Operator

Next question comes from the line of Manish Sumaya from Cantor.

Your line is live. Manish Sumaya | Analyst, Cantor Fitzgerald

Thank you. Thank you for taking my question. Mark, you mentioned 60% of the earnings out in the second half. Maybe if you can just talk about the biggest execution milestones embedded in the second half outlook.

Mark Chiplock | Chief Financial Officer

I don't know. I mean, that I went through the biggest, we, you know, we have great visibility coming out of contracted backlog, which, you know, just becomes our ability to execute the conversion of that. And then there's a portion of that coming out of our awarded backlog that, you know, again, will require us to, you know, to convert that to sales, get to a contract and then start executing on that revenue. So again, you know, we, we drive that, that, that forward-looking view based on the best visibility we have coming out of the backlog. We feel pretty confident, not only based on the mix of what's coming out of the backlog, but our ability to execute.

Manish Sumaya | Analyst, Cantor Fitzgerald

Okay. And then the $522 million of new awards that you had in the quarter, maybe you can just talk about where do you see the biggest opportunities going forward?

Nicole Bulgarino | Co-President, Energy Infrastructure & Federal Solutions

Nicole? Certainly a lot of it, and just on the federal side, we have, there's an uptick in activity for infrastructure modernization with GSA, with VA, even with the Department of War. So we're seeing new activity, modifications in the federal government. We also, again, the power infrastructure side of this, you know, providing new projects for electrical distribution, for other generation type projects as well.

Lou Maltesos | Co-President, Building Efficiency

I think this is Lou and the rest of the projects business. We're also seeing a lot of increased demand. I mentioned in the comments that electricity prices are increasing pretty dramatically for some of our customers. That's creating a real motivation for them to get to the table and look at projects that might have been borderline in the past.

Manish Sumaya | Analyst, Cantor Fitzgerald

Super helpful. Thank you so much. Congrats again on the JV.

Thank you. Thanks. Jordan | Conference Operator

As a reminder, if you'd like to ask a question, press star 1 on your telephone to ask a question or rejoin the queue. Next question comes from the line of Ryan Finkst from B Riley Securities.

Your line is live. Ryan Finkst | Analyst, B. Riley Securities

Hey, guys. Thanks for taking my questions. Hey, there. Michael, it would be great to hear your view on the recently finalized RVO and any expectations you might have for D3 pricing?

Mike Backus | Chief Executive Officer, Neogenics Fuels

Yeah, I mean, it's, I think, again, the EPA was focused on trying to get a RVO set that kind of meets market conditions. And that's why I think we've seen the rates have been pretty steady between 240 and currently, I think today was around 251. And I think what you're going to see if you think about with the market expansion, you know, what's going on in the industry, we're starting to see more gas go to Canada. California is going to start seeing more gas go to their program, which is a non-RFS, SB 1440. You're going to start seeing more go to Europe. So you're going to have this, if you would, some of the gas leaving the RFS program, which will just create more demand. to fulfill the RVO.

spk03

So I think we were happy with where it ended up on the volume.

Appreciate that. Ryan Finkst | Analyst, B. Riley Securities

And then turning to the data center opportunity, are there any updates or milestones that we should look for around the Cyrus One project as that one moves forward?

Nicole Bulgarino | Co-President, Energy Infrastructure & Federal Solutions

I mean, I think we're continuing to develop that and work with the timing of when the data center can be built and constructed, because that needs to match up with the energy build as well.

Pira Gristakis | Chief Operating Officer

So we're continuing to refine those dates and when they can be come online together. But in the meantime, we're continuing to work with Cyrus on other opportunities as well.

Operator | Conference Moderator

Great. Thanks, Nicole. I'll turn it back. Your final question comes from the line of Noah K.

from Oppenheimer. Jordan | Conference Operator

Your line is live.

Noah K. | Analyst, Oppenheimer

All right, great. Thanks for taking the questions. And I want to start by congratulating Nicole and Lou and Mike on your new roles and responsibilities. Just great to see how you all and how the company has kind of continued to grow over the years. So I wish you all a lot of success. Let me ask a question or two questions on the JV. I just want to make sure I got this right. I guess the comments imply something like 90 million EBITDA profile for the platform. That's where it's running for 26. First of all, is that right? And then I guess with 74 megawatt equivalent in the development pipeline, Where does that grow to, do you think, over the next three years? Because that pipeline is usually what you expect to bring online in the next three years.

Josh Barabo | Chief Investment Officer

No, this is Josh. I'll start with the valuation. If you just look at what we have to back out for non-controlling interest at 30%, so $22.5 million at the midpoint divided by 0.3, it's more of like a $75 million type of number at the midpoint for this year. Mike, in terms of growth and pipeline?

Mike Backus | Chief Executive Officer, Neogenics Fuels

Yeah, I mean, you're pretty spot on. We have typically visibility on three years out on our pipeline, which is what we have now with the 11 projects in development. And we continue to add to that pipeline. So right now, we have good visibility through 2029. And we're working on some new awards right now that we would expect to build into that 2030 timeframe and beyond.

spk03

Okay, thanks.

Noah K. | Analyst, Oppenheimer

And then I guess the follow-up is as the platform kind of continues to grow in size, just how should we think about the ability to further recycle capital or monetize? Is this going to stay a 70-30 split? Is there any kind of an option to adjust ownership percentages going forward? Just curious about the mechanics.

Josh Barabo | Chief Investment Officer

This is Josh. I'll start again. So I think what's important to note is that Amoresco does not have to put another dollar into this business until Hazy's $300 million commitment is exhausted. We think that'll last us a few years unless something kind of really material and exciting comes along from an acquisition standpoint. But pure CapEx, this is multiple years worth of cash that Amoresco does not have to put in. And just to be absolutely clear, Those dollars will not dilute us further. We're at 70-30 for this $400 million commitment. But the natural, I guess, the natural other side of that is that all the dollars we would have normally had to put into that business ourselves are now back at Amoresco Inc., where we can invest in Lou's business, Nicole's business, and just the rest of what we're doing at a corporate level, including potential acquisitions, if they're accretive. So I wanted to just make sure that's clear for everyone listening. as well as yourself. I think that's our key message. After that 300 is exhausted, then the partnership, if there's further capital calls, it could be pro rata or depending on how the partners choose to fund, that's kind of when you'll get maybe a change in ownership. But as of right now, we don't have to put a dollar into this business for the foreseeable future.

Noah K. | Analyst, Oppenheimer

So you marry up the pipeline visibility with now kind of the funding visibility. Just great to hear.

Congratulations to all. Josh Barabo | Chief Investment Officer

Thanks. And actually, sorry, I'll add a comment just to be also clear. This doesn't change any of the strategy around non-recourse debt or tax equity. And that's how we're able to stretch these dollars so far. We'll still be levering the assets probably somewhere between 60 to 70% if we can get it on a loan to value on a non-recourse basis and monetize the majority of the tax credits themselves through partnerships or tax transfer. So that's why we're able to stretch this 300 very far and really pull in the Operator | Conference Moderator: pulling the build and potential acquisitions. There are no further questions in the question and answer session. That concludes today's meeting. You may now disconnect. jsPDF 3.0.3 D:20260606085933-00'00'

NYSE:AMRC Q4 2025 Earnings Call Transcript Generated on 6/6/2026 Kelvin | Conference Operator: Good afternoon, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to MRESCO Inc.' 's Q4 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. Thank you. I would now like to turn the call over to Leila Dhillon, Chief Marketing Officer.

Please go ahead. Leila Dhillon | Chief Marketing Officer

Thank you, Kelvin, and good afternoon, everyone. We appreciate you joining us for today's call. Our speakers on the call today will be George Sakalaris, MRSCO's Chairman and Chief Executive Officer, and Mark Chiplock, Chief Financial Officer. In addition, Josh Barabow, our Chief Investment Officer, will be available during Q&A to help answer questions. Before I turn the call over to George, I would like to make a brief statement regarding forward-looking remarks. Today's earnings materials contain forward-looking statements. including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the Safe Harbor language on slide two of our supplemental information, and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations of these measures and additional information in our supplemental slides that were posted to our website. Please note that all comparisons that we will be discussing today are on a year-over-year basis unless otherwise noted. I will now turn the call over to George. George?

George Sakalaris | Chairman and Chief Executive Officer

Thank you, Lila, and good afternoon, everyone. I am pleased to report that our fourth quarter results represented a great finish to a year of strong performance, with annual results reaching the mid to high end of our revenue and profit guidance. Excellent execution by the MRESCO team, together with the recurring revenue contributions from our energy asset and O&M businesses, were key drivers to our success. And this success was achieved even amid concerns surrounding potential Department of Government efficiency actions early in the year and the six-week federal government shutdown in the fourth quarter. Importantly, our results were broad-based, with growth across all three of our core business lines, including strong growth from our European operations. And while our team continues to be laser-focused On contract execution, converting a record $1.5 billion of project backlog into revenue this year, we also saw excellent new business activity, including meaningful project scope increases in our federal backlog. This helped to drive our total awarded backlog to over $2.5 billion, up 13% from last year. Also, Europe. was a strong contributor this year and represents a real success story. We first entered Europe over 10 years ago with a small acquisition of a UK-based energy consulting firm. But more recently, we have focused on expanding our business in continental Europe. In doing business in Europe, requires a localized presence. Our European growth strategy has been driven by opportunistic acquisitions, such as Italy-based Anarchos, and partnerships in various target countries. We focus on smaller opportunities and then use the power of MRS Group, our technology and process know-how, and financial resources to accelerate and drive growth. Geographically, which are focused on southern and eastern Europe, areas which are experiencing higher rates of growth with fewer large domestic and transit competitors. Our 51%-owned joint venture with a Greek-based Renault Group is an excellent example of this approach. The joint venture was created on April of 2023 to pursue utility-scale PV and battery energy storage opportunities. After great success in Greece, the joint venture has since expanded its business, including a few recent large wins in Romania. We expect to continue to grow Europe organically and through opportunistic acquisitions and partnerships. Europe not only represents an excellent growth market, but it also provides important diversification, as demand drivers in Europe are not subject to the same U.S. political and policy variables. We look forward to providing additional updates on this important aspect of our company's future growth. Before I hand the call over to Mark to cover our results and outlook, I would like to briefly highlight a number of key industry growth drivers and how we believe MRS Corp can benefit from them for years to come. The first key driver is the rapidly growing demand for electricity. This has been driven by the electrification of buildings and transportation, the power needs for many high-technology industries, and the growth in industrial manufacturing. Overall, electricity demand is expected to increase by 78% by 2050, needing 80 gigawatts of capacity added every year for the next 20 years. Meeting this demand will be a significant challenge to our aging system of centralized generation and the associated transmission infrastructure. As a result, many of our customers are choosing to install on-site behind the mirror generation and storage solutions. Amaresco has been providing a portfolio of these solutions since the founding of the company, including not only solar, but also battery energy storage systems, natural gas engines, gas turbines, fuel cells, and microgrids. We are also exploring the next generation of energy infrastructure technologies, like micro and small modular nuclear reactors. These power and storage solutions will be a key element to supporting ongoing global energy demand needs. Second, increasing energy costs is another key industry driver for which and Maresco is well-positioned to benefit from, particularly through our built-in efficiency solutions. As electricity prices rise, energy efficiency investments made by our customers deliver faster payback and stronger returns. Energy efficiency is often the most economical solution for existing buildings. According to Frost and Sullivan, Maresco is the nation's largest largest provider of energy efficiency services, which represent nearly half of our current project backlog. Third, the increasing stress on the country's aging energy infrastructure from high demand and the critical natural oil uninterruptible power is quickly driving a growing demand for resilient energy solutions. High-nines power is not only a must-have for critical high technology industries, such as data centers, but also for industrial customers, where even limited downtime can have significant cost of production consequences. Advancements in lithium battery technologies, as well as rapidly declining costs, have driven tremendous growth in the use of battery energy storage solutions over the last five years. Maresco has a very long track record of providing resilient solutions at military bases across the country, keeping their mission-critical functions running in case of grid power interruptions, and thus making us a go-to provider across all end markets. As you can see, we believe that Maresco is very well positioned to benefit from these long-term trends that should help drive profitable growth for many more years to come. Now, I would like to turn the call over to Mark to provide financial commentary on this quarter's excellent results, as well as provide our outlook for 2026. Mark? Thank you, George.

Mark Chiplock | Chief Financial Officer

This was another strong quarter for Amoresco in a year defined by consistent execution. Despite the Q4 government shutdown, we delivered record quarterly revenue of $581 million, up 9% year over year, with growth across all of our core business lines. These results underscore the durability of our diversified business model and the disciplined execution of our team. Projects revenue grew 11%, driven by strong backlog conversion and continued solid performance from our European joint venture with CINAHL. While we converted a significant amount of backlog in the quarter, we still maintain our total project backlog above $5 billion. reflecting sustained demand for our comprehensive energy infrastructure solutions. Energy asset revenue increased 5%, driven by the growth of our operating asset portfolio. We placed 87 megawatts into operation during the quarter, including our ninth RNG facility, a large military solar plus storage installation, and the new core BEST system. For the year, we exceeded our guidance, placing 121 megawatts of energy assets into operations, bringing our total operating assets to 838 megawatts. We also added 30 megawatts to our energy assets in development, continuing to balance backfilling our energy asset pipeline with our disciplined financial approach to new asset opportunities. Our recurring O&M revenue increased 11%. reflecting continued attachment of long-term service agreements to our completed project work. Our long-term O&M revenue backlog now stands at approximately $1.5 billion. When you combine our project backlog and the future revenue streams from our recurring O&M business and portfolio of operating energy assets, we have over $10 billion in long-term revenue visibility. We believe that level of visibility is a real strength in this challenging environment. And finally, our other line of business, excluding the sale of our AEG business at the end of 2024, delivered solid year-over-year results. Gross margin was 16.2%, up both sequentially and year-over-year. This reflects continued improvement in project mix, higher quality backlog, and disciplined cost management. Operating expenses in the fourth quarter were $50.9 million, compared to $47.8 million last year. The increase reflects targeted investments in people, project development, and execution support as we manage revenue growth, more complex infrastructure projects, and continue replenishing backlog. Importantly, operating expenses are growing materially slower than gross profit, so we're still preserving operating leverage in the business. As we move into 2026, we expect to continue investing prudently to support demand and drive growth, which is reflected in our guidance. Net income attributable to common shareholders was $18.4 million, with gap EPS of $0.34 and non-gap EPS at $0.39. Adjusted EBITDA was $70 million, resulting in a margin of 12%. As a reminder, last year's fourth quarter, adjusted EBITDA results included the $38 million gain on the sale of AEG. Turning to our balance sheet, we ended the quarter with approximately $72 million in cash and corporate debt of approximately $300 million. Leverage under our senior secured facility was 2.7 times, comfortably below the covenant level of 3.5 times. During the quarter, we secured approximately $175 million in new project financing commitments. Adjusted cash flow from operations was approximately $36 million, including proceeds from ITC sales. On a longer-term basis, our eight-quarter rolling average adjusted cash from operations was approximately $54 million. Now let me move on to our 2026 guidance. We enter the year with strong business momentum and visibility, supported by continued strength across our end markets, increased industry demand, combined with the recurring revenue from our growing energy asset and O&M businesses, provides clear visibility into another year of strong growth. As detailed in our press release, for 2026, we are guiding to approximately $2.1 billion of revenue and $283 million of adjusted EBITDA at the midpoints of our ranges, representing growth of 9% and 19%, respectively. We expect to place approximately 100 to 120 megawatts of energy assets into service, including two RNG plants. For some quarterly shaping, the cadence of the year should follow our historical seasonal pattern, with the heavier weighting towards the second half. We expect revenues in the second half of the year to represent approximately 60% of our total revenue for 2026. This is consistent with our performance from the past couple of years. As we look to the first quarter, which is seasonally our lowest revenue quarter, we expect revenue and adjusted EBITDA to be generally consistent with Q1 of last year. The quarter reflects normal project timing and the recent severe weather that has impacted execution across several regions. As noted in the earnings release, Q1 EPS is expected to be lower year over year, primarily reflecting higher interest and depreciation expenses from our growing energy asset portfolio, as well as continued investment as we scale the business. Before closing on guidance, I want to briefly clarify how certain structural items impact both adjusted EBITDA and EPS. As George mentioned, we operate certain parts of our business through joint venture structures, including Arsenal JB in Europe. Where we have control, we consolidate 100% of revenue and expenses. However, a portion of both adjusted EBITDA and net income is attributable to our JB partners and reflected as non-controlling interest. As a result, the adjusted EBITDA and EPS we report reflect only Amoresco's ownership share of those consolidated entities. Given these factors have a significant impact on our results, we've provided estimated ranges for income attributable to non-controlling interest in our 2026 guidance as detailed in our press release. In summary, 2025 demonstrated the durability of our model. We delivered consistent growth, expanded backlog, improved margins, and maintained financial discipline. 2026 is shaping up to be another year of sustained profitable growth for the company, as we believe we can continue to benefit from the many positive secular trends driving demand for our energy solutions. Now I'd like to turn the call back to George for closing comments.

George Sakalaris | Chairman and Chief Executive Officer

Thank you, Mark. As Mark mentioned, during 2026, we will be built in on our excellent momentum from 2025. to deliver another year of strong profitable growth. Our highly differentiated portfolio of energy infrastructure and built-in efficiency solutions are well aligned with customer demand. Over our 26-year history, Maresco has proven to be one of the most consistent providers of these solutions. We are making targeted investments this year as we focus on technical innovation and drive long-term growth. As we have here today, we are very excited about our growth prospects for 2026 and beyond. We look forward to seeing many of you at upcoming meetings and conferences. In closing, I would like to once again thank our employees, customers, and stockholders for our great success in 2025 and for their continued support in 2026. Operator, we would like to open the call to questions.

Kelvin | Conference Operator

Ladies and gentlemen, we will now begin the question and answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again.

spk13

One moment, please, for your first question. Your first question comes from the line of Noah Kay of Oppenheimer.

Kelvin | Conference Operator

Please go ahead.

Noah Kay | Analyst, Oppenheimer & Co.

There was a lot of anticipation there. Thanks for taking the questions.

Noah Kay | Analyst, Oppenheimer & Co.

I know you don't formally guide to the segments in the outlook. But maybe just some sort of shaping on energy assets as contemplated in the guide. You know, the 121 megawatts placement service did exceed. So how do we think about the revenue trajectory there and kind of the margin profile? It seems like it should be a nice step up.

Josh Barabow | Chief Investment Officer

Hey, Noah. So I think as in previous years, the majority of the assets placed in service will kind of be towards the middle to the back half of the year. That's just kind of how things work with interconnection queues and development cycle, heavy construction in the summer months, et cetera. And so that will generally look like this year. This year was very heavily Q4 weighted, I think 80 plus megawatts placed in service. So it may not look quite like that, but certainly more back half and middle loaded than linear. In terms of the margin contributions, really no reason to believe that the margins are any different per segment, battery, gas, or solar, as they are historically. And the mix is about the same. We've kind of given you the rough mix of what we expect to place this year. And as you know, most of the assets we placed in service in any given year don't meaningfully contribute that year. It takes sort of a little while to ramp up to get commissioned, and then the real contribution is the following year. So this year has a lot of the impacts of the assets we placed in service in 2025, especially because it was back half loaded. Much like the 2020, six assets placed in service will have more of a meaningful impact on our 27 numbers, which we haven't provided yet.

Noah Kay | Analyst, Oppenheimer & Co.

Yep, yep, very clear.

Noah Kay | Analyst, Oppenheimer & Co.

And then I think you mentioned the prepared remarks, Mark, around, you know, it's kind of the first quarter shaping. You mentioned weather had an impact. Obviously, we all... experienced firsthand, at least most of us, that weather. So not a huge surprise, but can you maybe comment on what that meant for, you know, just some of the project work and how you think about, you know, the sort of sequencing of, you know, getting rid of some of the associated labor inefficiencies and the like so that that flows a little bit better into Q in the back half?

Mark Chiplock | Chief Financial Officer

Yeah, I mean, the weather, again, as you can imagine, impacted our ability to access certain sites. It impacted our assets. But, you know, so it's really just impacting the timing, you know, the cadence of conversion. You know, we expect to see, certainly on the project side, that revenue to come in, you know, in Q2 as we get kind of on the other side of it. But, yeah, I mean, it was, you know, we always try to look at Q1 with the best visibility we have coming out of backlogs. you know, this was unusual just given how severe the weather was. But, again, we feel pretty good that that is just timing, and, you know, we'll see that revenue come back in as we get out, you know, outside of Q1 later into the year.

George Sakalaris | Chairman and Chief Executive Officer

If I may add a little bit there, Noah, we had a freeze-up on three of our assets, you know, the renewable gas assets, and that's not really recoverable. That's gone. But we have taken all that into account for our – Noah Kay | Analyst, Oppenheimer & Co.: items for the year and the numbers for the first part. Super helpful, George and Mark. I'll turn it over. Thank you.

spk13

Thanks, Noah.

Thank you. Kelvin | Conference Operator

Your next question comes from the line of George Gianarikas of CannaCurgenuity.

Please go ahead. George Gianarikas | Analyst, CannaCurgenuity

Hi, everyone. Thank you for taking the questions.

Noah Kay | Analyst, Oppenheimer & Co.

Hey, George.

George Gianarikas | Analyst, CannaCurgenuity

Hi, George.

George Gianarikas | Analyst, CannaCurgenuity

Hi there. I'd like to focus a little bit on Europe and the momentum you're seeing now. In order to scale further, do you expect to do it organically, or are you looking at maybe adding acquisitions to bolster your scale?

George Sakalaris | Chairman and Chief Executive Officer

Thank you. Like I said in my commentary, we are looking for a creative acquisition, strategically located, and we'd be very opportunistic in that regard, and partnerships and expanding acquisitions. the partnership that we have with Sonel, and as pointed out, we had great, great success up in Romania, and we are looking at a couple of other countries working with them, and that the some RFPs that come out, and we're planning to go ahead and go after that particular business with that entity. But as I said, though, the growth in Europe, especially on solar, and the next one, wave that's coming, the battery storage, because those countries, they have so much solar and wind installations. And we are well positioned to take good advantage of that. So we're looking at very good growth opportunities in Europe. And of course, we don't have to put up with the U.S. political things that are going on over here. It's a great diversity for us.

Noah Kay | Analyst, Oppenheimer & Co.

Diversification.

George Gianarikas | Analyst, CannaCurgenuity

Thank you. And maybe as a follow-up, just to ask a little bit about George Gianarikas | Analyst, CannaCurgenuity: Recent momentum in data centers, you specifically mentioned momentum in behind the meter. Any update on what you're seeing in the data center market?

Thank you. George Sakalaris | Chairman and Chief Executive Officer

Look, we're getting more requests than we can handle. Once we announce a little more data centers, and of course, we have, I would say, a little bit of strategic advantage from the other competitors. A, because we can put the package together and provide high-nines power within data centers. Otherwise, they might have gas turbines or it might be better in storage. And the microgrid, we as a company, we have been doing that for a long time. And we have a great, great pipeline. That's all I can say. But as you know, we're a little bit conservative when we announce a particular project. But we think it's going to be a great, great contributor for us down the road. A little bit this year and much more down the next couple of years.

Mark Chiplock | Chief Financial Officer

Yeah, maybe what I'll just add to that, you know, when we think about the timing of when those opportunities can start to come into backlog, you know, we're going to really maintain some strong discipline and risk management as we look at those projects. You know, there's a number of gating items that we need to make sure de-risk, like engineering, permitting, equipment sourcing, financing, you know, commercial structuring. So a lot goes into making sure that those opportunities are real, and I think that's the approach we've been taking. um in bringing these assets or bringing these projects into uh into the backlog so as george said pipeline is strong uh but conversion timing is going to reflect you know how well we can de-risk some of these gating items thank you your next question comes from the line of ben kayla of baird please go ahead hey good evening guys um congrats on the results Ben Kayla | Analyst, Baird: Just maybe following on, I know that you put in a very high, if not record, number of assets in the service in Q4. Just on timing of adding new products to backlog, following on George's last question with data center, when should we expect to get some of this stuff into backlog? And then my second question is just around, you know, any kind of tightness in labor, equipment, or other that you'd like to call out that are impacting kind of your speed, you know, to market here. Thank you, guys.

Mark Chiplock | Chief Financial Officer

Yeah. Yeah. I'll take the first one. Yeah, I think, as George mentioned, you know, the pipeline is really strong for, you know, these behind-the-meter data center load opportunities. We're really trying to maintain some strong discipline as how we manage these projects from a risk management perspective. There's a lot of gating items that you need to go through from engineering or permitting, how we source the equipment. We obviously need to work out commercial terms. You know, it's going to take time, and we want to make sure that these opportunities are grounded in something real before we start to bring them into the backlog. So, you know, as we work through de-risking those gating items, you'll start to see more of those opportunities come out of the pipeline and into our reported backlog.

George Sakalaris | Chairman and Chief Executive Officer

And as far as the supply, you know, we still have some challenges, but it has gotten better than what it used to be, you know, during COVID-19. but we are not 100% there where we should be. We have challenges. We manage the flow, but it has been a little bit better. And some of the things that they trip us up, besides the tariffs, like, for example, what's happening with the lithium prices and so on. And so far, we learned to live with them, and we have incorporated it into our forecast and our guidance as much as possible.

spk13

Thank you. Okay, thank you. Thanks, Pat. Your next question comes from the line of Stephen Gingaro of Spiegel.

Kelvin | Conference Operator

Please go ahead.

Stephen Gingaro | Analyst, Spiegel

Thanks. Good afternoon, everybody.

Kelvin | Conference Operator

Hey, Stephen.

Stephen Gingaro | Analyst, Spiegel

So two things for me. The first, just based on your guide, you have kind of a bit of upward momentum on the margin side. Can you just talk about what's driving that? Is it a specific segment? Is it just execution on certain areas? What's the big driver we should be thinking about for margins in 26?

Mark Chiplock | Chief Financial Officer

Yeah, I think it's a great question. I think it's discipline and it's execution. We've been talking about this for the last couple of years, but we've really tightened our discipline in terms of how we select projects, how we price them. how we manage the cost. And so, you know, we're starting to see that coming through in some of the margin improvements. I think, you know, as we continue to take that approach to bringing new projects through the backlog and converting them, you know, as well as bringing more assets online and just growing out those recurring streams, I think that's where we're starting to get confidence in more of the quality of earnings and what we're seeing in this gradual movement in margins.

Stephen Gingaro | Analyst, Spiegel

Great. Thanks. And the follow-up to that is, And I'd have to go back and look historically to get the snapshot exactly. But when you look at your total project backlog that you show in the presentation, are there any sub-segments of that pie chart that tend to have higher margins or on the project size at all fairly similar?

Mark Chiplock | Chief Financial Officer

Yeah, I mean, I think as we see some of these larger, more complex infrastructure projects come in, I think the margin profile will be somewhat higher. Not, you know, I don't think it would be a, you know, a spike in margins. But I think that, you know, with those mix of projects coming more into the backlog, they do bring a bit higher of a margin profile.

Stephen Gingaro | Analyst, Spiegel

Okay, great. Thanks. That's all for me.

spk13

Your next question comes from the line of Manish Somai of Cancer Fitzgerald. Please go ahead. Manish, your line might be on mute. Your next question comes from the line of Ryan Fink of B.

Riley Securities. Kelvin | Conference Operator

Please go ahead.

Noah Kay | Analyst, Oppenheimer & Co.

Hey, guys. Thanks for taking my questions.

Noah Kay | Analyst, Oppenheimer & Co.

I'm just curious if you can give a broader update on the RNG market in terms of new project opportunities going forward and if you're considering any larger M&A as part of the strategy there.

George Sakalaris | Chairman and Chief Executive Officer

I would say yes to both of them. Our backlog, I think Mark mentioned it, we have at least 10 R&G facilities that they are in the back row right now that will be built over the next few years. In addition to that, there's no shortage of new projects out there. But it takes a considerable amount of money in order to develop those projects. And we try to be disciplined as to how many we take on at any given time. As far as emergency acquisitions, we are open to it and we are looking at some stuff. but nothing that is mature enough to talk about it.

spk04

Yeah.

George Sakalaris | Chairman and Chief Executive Officer

But look, we have done 26 acquisitions for this company. We grew it that way as well as organically. And we always look for good opportunities as long as they are creative and they add value at the end of the day to the company.

spk00

Yeah.

Mark Chiplock | Chief Financial Officer

I mean, you know, we're still very excited about the opportunities that we're seeing. You know, I think the compliance, the demand from the compliance market is still pretty durable and, But the voluntary markets are starting to see some growth as well. So, you know, the opportunities are there. And I think, you know, we're going to continue to be disciplined in how we bring more of those RNG assets into development and into operations to meet the demand that we're seeing.

Noah Kay | Analyst, Oppenheimer & Co.

I appreciate that. And then for my second one, firm generation ticked higher in terms of energy assets in development. I'm curious if that's going to continue to be the case just based on the type of demand that you guys are seeing going forward.

Thanks. Mark Chiplock | Chief Financial Officer

Yeah, I think we're going to see the firm generation that comes to some of these behind-the-meter opportunities will absolutely be there. You know, I think from, you know, where we will either decide to bring these into our assets and development or turn them into EPC opportunities, I mean, that's still, you know, a decision that we need to have. You know, the larger these projects are, it's more likely that we'll want to go an EPC path. But, yeah, I think that, you know, that firm generation will be a large driver of those opportunities and, you know, projects coming through our backlog.

spk13

Appreciate it, guys. Yep. Your next question comes from the line of Julian Dumoulin-Smith of Jefferies.

Kelvin | Conference Operator

Please go ahead.

Hannah Velazquez | Analyst, Jefferies

Hey, good afternoon. This is Hannah Velazquez on for Julian. Thank you for the update and congrats on the strong quarter. I just wanted to ask around the tariff landscape. You know, we've seen some fluctuations in tariff policy following the Supreme Court order and then some commentary from the White House suggesting that there could be different levers to pull across different statutes like Section 301, Section 332, etc. Can you just go ahead and maybe outline the general risk in that area, maybe how you are managing that if it's reflected in PPAs you're negotiating today. Yeah, to the extent you see that as risk.

Thank you. Josh Barabow | Chief Investment Officer

Yeah, I think, and George and probably Mark's prepared remarks, we all talked about the challenging environment of 2025, largely driven by policy and things like that. So we're not... I would say overexposed or underexposed than our peers to these sort of global things. And obviously whatever the president may or may not do and what the Supreme Court may or may not do in response to that, yada, yada, yada, is not really where we're prepared to comment. But we have said previously that some of our newer contracts have protections for tariffs. We're building that into the contract where if there are tariffs, there are potential price adjustment mechanisms that and other than that, we're sort of, we're just playing it by ear. We're building contingency into our deals. We're doing some pricing, like I said, some price adjustment potential in contracts, and we're sort of crossing our fingers and just hoping things stabilize, but we're managing through it just as our peers are.

George Sakalaris | Chairman and Chief Executive Officer

Well, if I might add there one thing, though, about the State of the Union message for the President that he said that the high, hyperscalers, they should be doing their own power plants in order to provide their capacity. We thought that was a good opening and it will help us in the long term. Because as many of you know, I've been writing some articles saying that if we wait for the hyperscalers, they wait for the utilities in order to interconnect their power plants, we will lose the AI race. The only way that it can happen if they develop their own power plants at the end of the day. Of course, they will get better reliability, and ultimately it will be less expensive than doing it the other way. Because to get transmission lines, even though you have a large central power plant, it's going to cost you as much to bring that power to the load as it does to build the generation. So ultimately, everybody's going to bear off. So I think it's a great, great sales pitch for our business Hannah Velazquez | Analyst, Jefferies: Okay, that makes sense. And this is a follow-up, just going off of that point. On the hyperscaler front, can you give us a sense of what the general, you know, if there is a generic mix between resources that some of the conversations you're having with hyperscalers look like? Is it more so biased towards firm power? Are you seeing any surprises, perhaps more of a weighting towards renewable solar plus storage? But generally, what does the resource mix look like that they're interested in?

George Sakalaris | Chairman and Chief Executive Officer

I mean, across the board, you know, the energy infrastructure, it's across the board. And right now, everybody's concerned. Many of the industrialists and commercialists that we're talking about, resiliency. And the other thing that they're concerned a lot, speed to power. And that's why I say, you know, if they go, they wait for the utilities and the central power plants to happen and get the right of way to the transmission lines, which might take five to ten years, you will lose the AI race. So speed to power, it might be, and many of them, not only they want gas turbines, but they want some renewable. So you will see that they have gas turbines, that we have some solar, some battery storage. At the end of the day, high and nice power supply. And that's where we come in into, MRS will come into the picture because we've been doing it for military bases. Take the San Antonio, Postman Naval Shipyard, and I keep going on and on, Ferris Island, all of them, and some of us started, it's in the previous Trump administration because they wanted to have resiliency in every, what I would say, critical base, military base, whether it's the naval or army, or the Marines in and so on.

spk13

Thank you.

Kelvin | Conference Operator

Your next question comes from the line of Manish Sumayya of Cancer Fitzgerald. Please go ahead.

spk04

Hi there. Can you hear me? We can. Okay, fantastic. Thank you. I don't know what happened earlier. Two questions. One is if you could just help us understand on the operating cash flow. Just give us a sense as to, I guess, how we should think about working capital in particular as we think about 26?

Sure. Mark Chiplock | Chief Financial Officer

Yeah. I mean, look, if you look at kind of Q4, right, from a cash flow, and I've said this a lot, quarterly cash flow can be lumpy, right? In Q4 cash flow, that really reflected kind of normal project timing and working capital movements. Obviously, that was a very heavy construction period. I think the right way to look at it, the right way to evaluate our cash generation is on a rolling multi-quarter basis. And I think that's why we like to provide that metric. It's a more realistic reflection of our implementation cycle. Like I said, quarterly cash can kind of move around due to construction timing and milestone billings. I think working capital we've been a bit tighter on working capital because we've got some larger projects that are coming through on build that are tied to milestones. And as we continue to progress those projects and achieve those milestones, we'll start to see unbilled convert through AR and cash. And you'll start to see that come through our, our cash from operations. So timing can vary kind of quarter to quarter, but you know, we would expect our working capital to normalize across the year. and we expect us to see kind of the normal, if not growing, level of cash generation.

spk04

Okay, that's super helpful. And then on the guidance, what gets you to the top end of the guidance? What are some of the milestones that we should be kind of looking for?

Mark Chiplock | Chief Financial Officer

Yeah, I mean, I think that's going to really come down to just execution, right? I think that the backlog is there, the opportunities are there, When we try to put our guidance together, we need to take a bit of a prudent look at how we think things can progress through the backlog and into the P&L. So I think if we can execute on these projects, we don't have other delays like some of the weather stuff we're seeing early in the year. I think it always just comes down to our ability to execute and kind of stay disciplined on how we manage costs. And I think that could represent an opportunity. But, you know, we feel really good about the midpoints just based on how anchored it is to our visibility coming out of backlog, assets we're bringing on, et cetera.

spk04

And then maybe last one for George, you know, high level, obviously look at the backlog. It's pretty impressive. A lot of opportunities ahead. You talked about growth in Europe. So as I think about the business the next couple of years out, I mean, I How does MRSCO evolve?

Noah Kay | Analyst, Oppenheimer & Co.

Go ahead. Sorry, George.

George Sakalaris | Chairman and Chief Executive Officer

I think you will see us doing more and more infrastructure projects and a good chunk of business in Europe. The potential is there. And that's why we made the investment. The last couple of quarters and this quarter, we added a considerable amount for people with the engineering, development people, as well as financial and execution, construction managers, especially senior level management, construction management people to execute on these larger projects. Because I think that you will see us doing more data centers, more storage or resiliency plans for the industrial customers especially, because You know, the industrial sector for a long time tried to move energy efficiency projects that were very difficult. But now, because they are concerned about resiliency and the higher cost of electricity, we're getting some good traction. So I think you will see us doing less of some of that mush. The business is there. We'll be doing much work, but the company will become much larger and driven by these larger opportunities, I would say, in the energy infrastructure sector.

spk04

Okay, that's super helpful. Thank you so much.

spk13

You got it. Again, ladies and gentlemen, if you have a question, please press star 1 on your telephone keypad. There are no appearing questions at this time.

Kelvin | Conference Operator

And with that, ladies and gentlemen, concludes today's conference call. We thank you for participating. You may now disconnect your lines. jsPDF 3.0.3 D:20260606085935-00'00'

NYSE:AMRC Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Operator: Thank you for standing by. At this time, I would like to welcome everyone to a Maresco Inc. 3rd Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any backward noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you. I would now like to turn the conference over to Lila Dilan, Chief Marketing Officer.

Please go ahead. Lila Dilan | Chief Marketing Officer

Thank you, Demi, and good afternoon, everyone. We appreciate you joining us for today's call. Our speakers on the call today will be George Sakolaris, Ameresco's Chairman and Chief Executive Officer, Mark Chiplock, Chief Financial Officer, and Nicole Bulgarino. President of Federal and Utility Infrastructure. In addition, Josh Barabow, our Chief Investment Officer, will be available during the Q&A to help answer any questions. Before I turn the call over to George, I would like to make a brief statement regarding forward-looking remarks. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the Safe Harbor language on slide two of our supplemental information, and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations of these measures and additional information in our supplemental slides that were posted to our website. Please note that all comparisons that we will be discussing today are on a year-over-year basis, unless otherwise noted. I will now turn the call over to George. George?

George Sakolaris | Chairman & Chief Executive Officer

Thank you, Leila, and good afternoon, everyone. We are very pleased to report that this was another core of excellent execution for MResco. We deliver strong financial results with growth across our key metrics. We also further strengthen our tremendous visibility with significant business development achievements in all our business lines. This is a very exciting time for our industry. A combination of factors, including increasing demand for electricity due to the move to electrification and terra center demand, rising utility rates, and growing grid instability, are driving robust demand for our energy infrastructure solution. And this demand is not only coming from our traditional federal, municipal, utility, school, and hospital customers. We are also seeing considerable opportunities in new and markets with demand coming from electric co-ops, industrials such as steel manufacturing and cutting edge industries such as data centers, all of which are looking for quick deploy large to quickly deploy large amounts of highly resilient megawatts. Well, the customized solutions we are providing have evolved over time. We see MResco's domain knowledge and ability to deliver these large and complex solutions as a core capability. We also believe our business model gives us the ability to tailor financial solutions to the needs of our customers and is a meaningful differentiator for MResco, setting us apart from engineering and construction and ESCO companies. Our mix of project, O&M, and energy asset business enables us to design and build a project and also operate and maintain it, or we can use our balance sheet and own the solution as an MRESCO energy asset, providing our customer with a long-term off-take agreement. This flexibility we offer to our customers is core to Emorescu's DNA, and we believe it provides us with another important long-term competitive advantage. While we are the early units of growth in many of these areas, the impact on our business is already apparent. If you look at our breakdown of total project backlog on our slides, you can see that energy infrastructure related projects are almost half of our total project backlog. We're also seeing the impact with the energy asset side of our business. You will note the recently added category of assets called firm generation energy assets in construction and development slide. Firm generation assets such as natural gas generators already account for 22% of our total assets in development. Also note that batteries now account for 41% of our assets in development compared to only 22% of battery operating assets, showing how we are able to pivot to where large and profitable opportunities present themselves. Now, I would like to turn the call over to Nicole to provide additional commentary on a few of our recent energy infrastructure wins and give an update to our business with the federal government. Nicole?

Nicole Bulgarino | President of Federal and Utility Infrastructure

Thank you, George, and good afternoon, everyone. Amoresco has delivered energy infrastructure solutions since its founding, but recent industry dynamics, like those that George mentioned, are driving a surge in large-scale opportunities. While data center wins often make headlines, the demand for resilient, firm power spans a wide range of customers, including utilities, government agencies, industrial firms, and tech companies. Among these markets, data center customers also present a compelling growth area for Amoresco, and our opportunities in this space extend well beyond federal-sided projects. But the common driver across our customer segments is clear. We are seeing a critical need for an increasing supply of resilient firm power. An example of this need is the 40 megawatt firm power plant we are building for Hawaiian Electric on Maui. This project, which includes multiple dual fuel engines, is designed to bring resilient firm energy, enhance power grid reliability, and provide a highly flexible capacity resource. In addition, it will enable the island to reduce its dependence on foreign sources of fuel. Another great example is the recently announced 50 megawatt battery energy storage system with Nucor, North America's largest steel producer. As Nucor continues to expand production at its Arizona facility, driving increased electricity demand, a behind-the-meter battery energy storage solution was a natural choice for the company and its utility. The project was completed in just under one year and will supply rapidly deployable on-demand power as well as provide significant resilience to that facility. We will also be adding solar to the facility, providing additional on-site generation as the plant continues to scale its production. As I have just highlighted, we are seeing tremendous interest from a variety of customer segments. including industrials, looking for rapidly deployable and highly resilient solutions. And with the recent push to scale onshore industry in the U.S., these opportunities are expected to grow. And of course, I'm excited to share more about our Lemoore Data Center initiative with Cyrus One, for which we are finalizing the agreement. This solution will be designed to deliver cutting-edge energy infrastructure tailored for AI-driven, high-density computing environment serving hyperscalers. Cirrus One will build and operate the data center while Amoresco would provide the energy infrastructure through a long off-turret agreement to meet its 24-7 power demands. Our solution will combine firm energy via fuel cells, solar and battery storage that will complement local utility power. As the facility scales, we would install up to 350 megawatts, making this one of our largest deployments to date. We expect to own a portion of the asset, and the balance would be owned by a financial partner. And this is just the beginning. We have a strong pipeline of future opportunities with data center developers, gas providers, real estate partners, and direct tenants. Notably, these projects are not just sited on federal land, but also on customer-owned properties. Before I turn the call over to Mark, I want to briefly address the current federal government shutdowns. Since this was anticipated, we were able to proactively coordinate with our agency partners to implement contingency plans, which has enabled us to maintain operations with minimal disruption. Amoresco has successfully navigated previous shutdowns in the past, and our team is well prepared. Although a prolonged shutdown could delay some project award conversions and shift some revenue timing, we do not anticipate a material impact on our Q4 results. Now I will turn over the call to Mark to provide financial commentary on this quarter's results and our outlook for the remainder of the year.

Mark. Mark Chiplock | Chief Financial Officer

Thank you, Nicole. I'd first like to reiterate that this was another quarter of strong execution with growth achieved across all of our key metrics. Amoresco delivered solid results in a challenging operating environment, demonstrating the strength and flexibility of our diversified business model. Revenue grew 5% year over year, reflecting robust execution across our project portfolio, sustained momentum in our energy asset segment, and reliable recurring income from our O&M business. Adjusted EBITDA increased 13% from the prior year, driven by higher project margins, expanding contributions from Europe and our energy asset portfolio, as well as disciplined operating cost management. Projects revenue grew 6%, supported by strong results from our European joint venture with Sunel, This partnership continues to be a key part of our strategy to diversify revenue streams and expand our international footprint. And as Nicole mentioned, we have not experienced a notable slowdown in our work, even with the current federal government shutdown. The project's team continued its focus on converting awards into contracts and contracts into revenue. We saw strong demand for our comprehensive energy infrastructure solutions that combine efficiency, generation, and resiliency which drove substantial growth in our total project backlog to $5.1 billion. Importantly, we secured another $450 million in new project awards this quarter and converted $467 million of awards into signed contracts, driving our contracted project backlog up 33% to $2.5 billion. Energy asset revenue also grew 6%, driven largely by the growth of our operating assets portfolio. We placed an additional 16 megawatts into operation during the quarter, including the facility, bringing our total operating assets to 765 megawatts. We also added 32 megawatts during the quarter, bringing our net energy assets in development to 626 megawatts. We remain on track to reach our annual target of placing 100 to 120 megawatts of additional assets into operation. Our recurring O&M revenue increased by 8% this quarter, as we continue to win more long-term O&M business associated with our completed project work. These wins helped to add over $158 million to our long-term O&M backlog, which now stands at approximately $1.5 billion. Combined, our project backlog, together with our recurring O&M and operating energy asset portfolios, gives us long-term revenue visibility of over $10 billion. And finally, while revenues from the remaining businesses within our other revenue segment continue to experience growth, our other line of business was lower year over year due to the divestiture of our AEG business at the end of 2024. Gross margin improved to 16%, up both sequentially and compared to last year, highlighting our continued focus on higher margin projects and assets and disciplined cost management. Net income attributable to common shareholders was $18.5 million, with both GAAP and non-GAAP EPS at 35 cents. And as I mentioned, adjusted EBITDA grew 13% to $70.4 million, resulting in an adjusted EBITDA margin of 13.4%. Turning to our balance sheet and cash flows, we closed the quarter with approximately $95 million in cash and $340 million in total corporate debt. Our debt to EBITDA leverage ratio under our senior secured facility was 3.2 times and remains below the covenant level of 3.5 times. We continue to fund our growth primarily through non-recourse project debt and partner capital at the energy asset level, preserving capacity at the corporate level for working capital and strategic investments. During the quarter, the company secured approximately $180 million in new project financing commitments. Our cash generation remained solid this quarter, with adjusted cash flows from operations of approximately $64 million, an improvement both sequentially and year-over-year. The performance reflects our disciplined approach to working capital management, ensuring that vendor payments are more closely aligned with project milestones and progress. While some of this increase is attributable to timing, it highlights our ongoing commitment to rigorous liquidity management in a dynamic operating environment. On a longer-term basis, our eight-quarter rolling average adjusted cash from operations was approximately $52 million, underscoring the consistency of our cash generation and the effectiveness of our financial controls. Now, let me spend a minute on our 2025 guidance. Q3 once again highlighted Amoresco's ability to execute in a complex environment while expanding our strategic positioning. Our strong year-to-date performance, robust demand, expanding presence in data center and resiliency infrastructure, and growing energy asset portfolio provide us with solid momentum and clear visibility as we approach year-end. While a prolonged government shutdown could delay the conversion of some project awards, shifting the timing of some revenue We do not expect this to materially affect our Q4 results. Accordingly, we are reaffirming our guidance ranges for 2025. Now I'd like to turn the call back over to George for closing comments.

George Sakolaris | Chairman & Chief Executive Officer

Thank you, Mark. As the MRSCO team continues to deliver excellent results, we are also building our strong foundation for future growth by expanding our backlogs and building our energy asset business. Our strong visibility, along with what we expect to be very favorable industry dynamics for our energy infrastructure solutions, supports our confidence in delivering our long-term target growth targets of 10% and 20% revenue and adjusted EBITDA, respectively. In closing, I would like to once again thank our employees, customers, and stockholders for their continued support. Operator, we would like to open the call to questions.

Operator

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. We will pause for just a moment to compile the Q&A roster. And your first question comes from the line of Noah K. with Oppenheimer and Company. Your line is open.

spk03

Hey, good afternoon. Thanks for taking the questions. Maybe if we can start with data center. Nicole, you talked a little bit in the prepared remarks about a strong pipeline kind of extending beyond federal government to other customers. And I wondered if you could maybe frame out for us the opportunity set a little bit. Should we think of the scope of these projects being, you know, similar to LOMOR where you're providing the energy apparatus, the energy infrastructure? Are there additional possibilities in scope? And how should we think about maybe kind of a timing on seeing some of those start to materialize in the orders?

Nicole Bulgarino | President of Federal and Utility Infrastructure

Yes, you're correct. They're similar to what we're doing. Our focus is on the energy infrastructure for data centers. So on the commercial side, we're looking to do similar things, providing power solutions to the data center customers and speed to power for them.

spk03

Okay, and I think you mentioned it as well, and Mark can also touch on this, but just it sounds like you're finalizing the details for the first project, but thinking about a combination of Amoresco and partner capital. Again, can you sort of broadly help us think about, you know, the size of the commitment there and when you might expect to have some of those details finalized for the market?

Josh Barabow | Chief Investment Officer

Hey, no, it's Josh. I might jump in here. So, in the supplemental slides, we have the updated assets and development footnote that it's in there at about 10% of its value. A little bit for conservatism, a little bit because, as George and Mark mentioned, that we're probably going to bring in an equity partner for this one just because it is so large. So, the increase was about 35 megawatts, so the total opportunity could be as large as 350 just for L'Amour. And we're not quite ready to disclose capex figures, but it's in line with what we've talked about between battery and solar cost per megawatt. So it's a pretty large project.

spk03

All right. Well, looking forward to the details. And congratulations on the broader awards momentum.

spk04

I'll turn it over. Thank you. Thanks, Noah.

Operator

Thank you. Next question comes from the line of Eric Stein with Greg Hallam. Your line is open.

spk13

Hi, everyone. Thanks for taking the questions. Hey, so hello. So maybe for Nicole, I'm just sticking with the data center with that theme. Can you just talk about this first project? I mean, it seems to me that given the timing of the announcement, this would have been underway for quite some time, even though it does fit pretty much perfectly with the executive orders and what the government is looking to do on leased land. So maybe just talk about that and, you know, once you've announced this, what that's kind of meant in terms of pipeline as you see it.

Nicole Bulgarino | President of Federal and Utility Infrastructure

Yeah, I mean, the announcement's been a great opportunity for us to provide a good anchor project of what we're trying to do and accomplish being able to provide behind-meter energy solutions for data center customers. We have been working on it with the permitting and the other things that go into these large projects. projects and the development side of it. So it's been good, and I think we expect to be able to kind of build and leverage future opportunities using a very similar model.

spk13

I mean, it's almost as if you kind of patterned this after exactly what the government was looking to do. So I guess anyways, we'll stay tuned on that, but a great development.

Nicole Bulgarino | President of Federal and Utility Infrastructure

Yeah, I mean, using federal land, I mean, like we've been providing energy solutions for federal customers for years. And so being able to apply this model and similar like we did in Hawaii for a large project that we did solar and battery using federal land to be able to have a third party offtake kind of set them up, be initiated this model. And there's opportunities with excess land that are that align nicely for data center customers.

George Sakolaris | Chairman & Chief Executive Officer

Yeah. And as you know, we have several bases that we actually have done work in addition to that when they go out with the RFPs for what we call, what they call the enhanced use lease. They have land like whether it was Pearl Harbor or this particular one on the Limor. It's wasted land and they want to develop it in great value. And we announced both of these particular sites when we were far along. You know, we've been working for at least a couple of years. And we have several other ones that we are working on. And when we are ready, we are far along, then we will announce more. But the important point of this data center is what we wanted to point out. But the need for resilient power, resilient power in some of the industrial customers, like what we did for Nucor, is we see great, great need out there. Because of the great demand for electricity, many of these people are concerned they don't have the backup. And that's why we put the 50 megawatts on Nucor. That's why last year we put the 100 megawatts on United Power, the battery storage there is. And we are working with several other ones that are large industrial customers that are concerned about resiliency. And you will see substantial amounts of battery storage in the future. And then once, like Nucor, once they put in the battery storage, then they realize they need more capacity, and now we'll build in a 25-barrel solar farm for them. So it's another business line that it wasn't there a year ago.

spk13

Yep. Yep. No, that's great, Kohler. Thank you. Maybe last one for me. Just on the guide, can you just talk a little bit about the puts and takes? I know that coming into this year, there were a lot of questions about the federal business. And I know that, you know, that kind of ended up being much ado about nothing. But government shut down. And even though you think that that has a minimal impact of fourth quarter, if I, you know, do the math, fourth quarter, it would imply a down sequential quarter in the last couple of years. You've been up sequentially from an EBITDA perspective. So maybe just kind of talk about that dynamic or the assumptions going into that.

George Sakolaris | Chairman & Chief Executive Officer

The thing that you have to remember that we have been able to diversify our business so much in the federal government right now, it only represents 20%. And even though it might be some contracts going from the award to the executed, it might be some slippage on the revenue, but it's not that much that has a material impact. And that's why we were able to say that even the cadence for next year, the 10% on top line growth and 20% EBITDA growth, we feel very good about it.

Mark Chiplock | Chief Financial Officer

Yeah, I think, you know, and we've been talking a lot about this throughout the year with respect to 2025 and how we've been managing the guidance, right? I mean, we really had to maintain some discipline throughout the year. And that's no different really for Q4, even though visibility remains pretty strong. you know, it's still a heavy execution quarter for us. A lot of project milestones that we need to achieve. So right now, you know, we feel like the guidance that we're maintaining is realistic.

spk04

Okay.

Thank you. Operator

Thank you. Next question comes from the line of Ben Kalo with Beard. Your line is open.

spk01

Hey, thank you, guys, and congrats on everything and the opportunities. Two quick ones. Just as you do more of this work with data centers, could you explain if there's any differences that we should think about just from an engineering construction point of view of doing what you've done separately but now tied to a data center? Like if there's more risk, or there's more know-how and people that you need as you work on this new end market. And then my second question is because storage is coming up with such a big portion of your energy backlog, could you just talk about procuring batteries and how that's changed and how we should think about that as you look into next year and the following year, just as tariffs or foreign entity of concern language Anything like that?

Thank you. Nicole Bulgarino | President of Federal and Utility Infrastructure

So on the first answer, I mean, I'd say this is very similar to the work that we've been doing for the federal government with the requirements and the 24-hour, seven reliability resiliency requirements that we have for mission-critical operations on a military basis. So similar there. I mean, maybe the difference is just the scale. There are larger opportunities, a little bit quicker need to go faster. So that can be a positive, but not anything necessarily different than what we would be doing in developing the projects than our other, yeah, than our other customers that we've been doing it for, for utilities and customers. I mean, our utility and federal customers.

spk09

And then on the second one, on battery, go ahead.

spk01

No, just, yeah, I was just going to remind you because my first one was so long.

Mark Chiplock | Chief Financial Officer

I mean, I think maybe the answer on that on the second one, you know, with respect to batteries and what we're trying to do there from a supply standpoint is, you know, like everybody, I think we're trying to see how we can diversify the supply chain. You know, I think, you know, we've done quite a bit, at least on the safe harboring side, to try our best to avoid some of these FEOC restrictions that are still a little unclear, but that are upcoming. So we've done some decent work to try and safe harbor some projects from a physical construction aspect as best we can. And I think as we move forward, I think we're hoping we'll be a natural hedge even with some of the impact of potential tariffs or the ITC impact that the cost of batteries are coming down. So that might create just a natural hedge for us as we move forward with some of these projects.

spk10

Thank you, Gus.

Operator

Next question comes from the line of Dushant Ailani with Jefferies. Your line is open.

spk12

Hey, good afternoon. It's Julian here. Can you guys hear me okay? Hey, Julian. Yeah, great. Hey, excellent. Thanks for the time, guys. Appreciate it. Nicely done. Look, a couple things. First, I just wanted to come back to guidance at a high level. Obviously, you guys were commenting about 25 here, but given the meaningful contribution from the data center and the kicking up in 27 here, How do you think about sort of getting back on track with kind of a high teens or 20% EBITDA CAGR? I mean, you guys have historically lived by that. Obviously, a very late, a little bit more muted, but it really seems like there's a little bit more lumpy profile in your business, whether it's tied to this or, frankly, the battery opportunity, which seems to be tied to a supply chain that wants to be used in the relatively near term as well.

Josh Barabow | Chief Investment Officer

Go ahead. Hey, Julian, Josh. So you're absolutely right. The data center opportunity will definitely help us maintain that 10 and 20 type of number that we have. We've been a little bit light on that last year or two, but we've never said that was going to be guaranteed annual guidance. That's sort of a guideline over the three to five year business cycle. So all of that, all of those tailwinds that I think all four of our speakers talked about so far today, will certainly give us, as well as the visibility we have just from work we've already contracted and awards we've already received, give us plenty of confidence we'll be able to hit those targets again in the long term. If there is ever a potential for upside or something else that we'll need to present to investors, we'll certainly do that when we update our formal guidance, which we're not prepared to do right now. But for sure, it helps us keep that target.

spk12

Yeah, nicely done, Josh and team, I got to say. Can you guys talk a little bit more about the ability to replicate this model here? I know someone asked you kind of a similar question earlier, but as it pertains to taking the data center model and running with it, obviously, time to power is front and center. I mean, what's the ability to take this, and what kind of pipeline or sense do you have from other potential customers who want to leverage this model or approach here, if you will? How would you set expectations on other lumpy announcements like this?

Nicole Bulgarino | President of Federal and Utility Infrastructure

Yeah, so this is Nicole. So I think the important thing is with the AI market and the growth that we're seeing, it's also just transitioning energy supply. And with the amount of capacity that keeps increasing, there's limited utility power. So this sets the opportunity for us to be able to do these bridge solutions and behind meter power solutions very much like the L'Amour project. So this is what's pushing and driving the pipeline even more is because the hyperscalers are in need for this immediate power solution, and that's going to be accomplished behind meter versus their utility theaters, the traditional way that they were getting power in the past.

spk10

All right, guys. Any sense on margin on that one, on the data center front?

spk04

Margin.

Josh Barabow | Chief Investment Officer

Yeah, Julian, there's no reason to believe it's going to be any different than our regular corporate margins. It's a little bit of a mix between asset and project, as we talked about, but no reason to believe it's not within the corporate average.

spk09

Right, and with the long-term operations maintenance.

spk04

Yeah, absolutely. Thank you guys for all the questions.

All the best. Congrats again. Operator

Thanks. Next question comes from the line of Ryan Sinks. Could be, Riley. Your line is open.

spk03

Hey, guys. Thanks for taking my questions. I'll just... Hey, guys. I'll follow up on the last question on the Cyrus One deal and kind of the subsequent ones that are potentially coming. Just curious how well-positioned Amoresco is right now operationally to support multiple projects like that, just given the size.

George Sakolaris | Chairman & Chief Executive Officer

yes and what we have done in we started this process actually last year when we established the unit uh utility scale projects and nicole has taken it over and we have organized this particular unit that's additional stuff that we've been adding and so on and uh we're increasing the stuff from the federal uh the federal side as well as this particular site and nicole can add some more color to it but We realize that this is a great opportunity for us, and we have the expertise. And Nicole, of course, is one of the top candidates, and she took over the particular task. And we have made great progress on it, both on the human resource as well as on development, a good pipeline.

Nicole Bulgarino | President of Federal and Utility Infrastructure

Yeah, I know that we, like George said, and we've shifted resources over that were already working our federal team to be able to focus strictly on this as well as some of the resources that we acquired in the Bright Canyon acquisition a couple of years ago. So we were able to have immediate support in our side of this and continue to grow that and expand our construction team, procurement team, engineers, and other front-end partners like the nuclear expert that we brought on earlier this year as well as these power solutions continue to evolve.

spk04

Got to appreciate that detail.

spk03

And then my second question, you guys announced a second nuclear partner a few weeks ago with Terra Innovatum that they're really excited about. Is that... Is that starting to feel like more of a real opportunity on the nuclear side that could turn into orders or, you know, real work for Amoresco here in maybe 26 or 27 or still feels farther away?

Nicole Bulgarino | President of Federal and Utility Infrastructure

It certainly seems more real. I wouldn't say 26 or 27. That's a little early, even for a traditional power plant. But we're really excited about this other partnership because it's a different type of nuclear technology than the one that we did with Terrestrial and that it's a microreactor instead of a small modular reactor. So different types of technology and, you know, as we've always been neutral on technology, different technology solutions, we want to have different partners to be able to address our, especially on the federal side. We're excited, and I think the opportunity is very real, especially with the Army announcements that just came out a couple weeks ago and more from the Department of Energy that we believe that it's certainly in the future, but probably a few more years than 2027. Great.

spk04

Good to hear. Thanks, Nicole. I'll turn it back. Thanks, Ryan.

Operator

And again, everyone, if you would like to ask a question, press star 1 on your telephone keypad.

spk10

Next question comes from the line of George Chanaricas with Cane Corr Genuity. Are you there, George?

Josh Barabow | Chief Investment Officer

Operator, let's reprompt. Folks, I see a lot of you coming in and out. Right now, the queue is not showing anybody. So if you want to come in, just hit star one. We'll get you in.

spk10

Again, everyone, if you would like to ask a question, press star one on your telephone keypad.

Operator

Seeing no further questions at this time, ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. jsPDF 3.0.3 D:20260606085937-00'00'