Executive Summary / Key Takeaways

• Ameresco ($AMRC) is strategically positioned as a diversified energy solutions provider, leveraging its flexible business model across projects, operations & maintenance (O&M), and energy asset ownership to meet surging demand for energy efficiency, infrastructure upgrades, and resilient power.
• The company delivered strong Q3 2025 financial results, with revenue growth driven by project execution and expanding energy assets, and improved gross margins due to a favorable mix of higher-margin projects.
• Ameresco is actively capitalizing on the "speed to power" imperative for data centers and industrial clients, with significant initiatives like the Lemoore data center project (up to 350 MW) and a 50 MW battery energy storage system for Nucor (NUE).
• Despite potential short-term federal contract delays and supply chain challenges, Ameresco's robust $5.14 billion project backlog and $1.5 billion O&M backlog, coupled with strategic diversification into Europe and emerging technologies like Small Modular Reactors (SMRs), underpin its long-term growth targets of 10% revenue and 20% adjusted EBITDA.
• Investors should monitor Ameresco's continued execution on its large backlog, its ability to effectively manage interest rate and tariff impacts through contract structures, and its expansion into new, high-demand markets, which are critical to sustaining its competitive edge and profitability.

The Energy Transition's Architect: Ameresco's Strategic Foundation

Ameresco, Inc. ($AMRC), incorporated in 2000, has spent 25 years establishing itself as a pivotal energy solutions provider, delivering over $16 billion in customer solutions focused on reducing energy consumption, enhancing infrastructure, and driving decarbonization. The company's core business model is built on flexibility, offering a comprehensive portfolio that includes implementing smart energy efficiency solutions, upgrading aging infrastructure, and developing, constructing, and operating distributed energy resources. This allows Ameresco to design and build projects, provide long-term O&M services, or own energy assets with long-term offtake agreements, a meaningful differentiator in the market.

The industry landscape is currently defined by a confluence of powerful trends: increasing global power demand, rising utility rates, and deteriorating grid reliability. These factors, exacerbated by the push for electrification, the explosive growth of data centers, and the advent of AI, are creating robust demand for distributed, diversified, and resilient energy solutions. Ameresco's domain knowledge and ability to deliver large, complex solutions are core capabilities that enable it to thrive in this dynamic environment.

In the competitive arena, Ameresco operates alongside diversified industrial conglomerates and specialized energy firms. While larger players like Johnson Controls International (JCI), Honeywell International (HON), and Siemens AG (SI) offer broader building automation and electrification solutions, and NextEra Energy, Inc. (NEE) focuses on utility-scale renewables, Ameresco carves out a strong niche with its integrated approach and specialized expertise. Ameresco's business model, which allows it to tailor financial solutions, sets it apart from traditional engineering and construction (EPC) and energy service companies (ESCOs). Qualitatively, Ameresco's focus on renewable energy projects and energy resilience solutions positions it as a specialized player, potentially offering greater efficiency in renewable integrations compared to JCI's broader building automation services. While HON excels in advanced automation and efficiency tools, Ameresco's hands-on project development and ownership model can deliver superior energy production efficiency. Against SI's global reach, Ameresco's U.S.-centric renewable integrations can offer materially lower operating costs for distributed generation. Compared to NEE's utility-scale focus, Ameresco's strength lies in customized, distributed solutions that are often easier to implement for diverse clients.

Ameresco's competitive advantages stem from its proprietary project development capabilities and strong relationships, particularly with government and institutional clients. Its integrated energy solutions and O&M services foster customer loyalty, leading to recurring revenue and potentially superior margins through efficient project management. However, Ameresco's smaller scale compared to some larger competitors can lead to higher customer acquisition costs and potential dependencies on supply chains for renewable components, which could impact financial performance. Barriers to entry in this sector, such as regulatory approvals, specialized expertise, and high capital needs, help protect Ameresco's market position.

Technological Edge and Innovation Driving Growth

Ameresco's technological differentiation is central to its ability to meet the evolving demands of the energy transition. The company's comprehensive portfolio spans smart energy efficiency, infrastructure upgrades, and a diverse range of distributed energy resources, including battery energy storage systems (BESS), microgrids, renewable natural gas (RNG), solar, hydroelectric, and firm generation assets like natural gas generators and fuel cells.

These technologies offer specific, tangible benefits. For instance, Ameresco's BESS deployments provide rapidly deployable, on-demand power and significant resilience, critical for industrial customers and data centers. Batteries now constitute a substantial 41% of Ameresco's assets in development, compared to 22% of battery-operating assets, demonstrating a strategic pivot towards this high-growth area. Firm generation assets, such as natural gas generators, account for 22% of total assets in development, highlighting the company's focus on reliable, continuous power supply. The Lemoore data center initiative with CyrusOne, for example, will combine fuel cells, solar, and battery storage to deliver cutting-edge energy infrastructure, with plans to install up to 350 megawatts. This project exemplifies Ameresco's capability to provide integrated, resilient power solutions at scale.

Beyond current deployments, Ameresco is actively investing in next-generation technologies. The company has hired an executive to focus on developing partnerships in Small Modular Reactors (SMRs), recognizing their potential for firm, clean energy. Ameresco is exploring different SMR technologies, including microreactors, through partnerships with companies like Terrestrial Energy and TerraInnovatum. While these projects are several years out from commercial operation, the early engagement positions Ameresco to be a key player in future energy infrastructure development, particularly for customers requiring high-density, 24/7 power. This technological roadmap contributes significantly to Ameresco's competitive moat, enabling it to offer advanced solutions that command higher margins, strengthen its market positioning, and support long-term growth.

Financial Performance and Operational Momentum

Ameresco delivered a strong financial performance in the third quarter of 2025, building on consistent execution and strategic growth. Total revenues for the three months ended September 30, 2025, increased to $525.99 million, up 5% year-over-year. This growth was primarily driven by a 6% increase in project revenues, attributed to the timing of revenue recognition on active projects, and a 6% increase in energy asset revenue due to the continued expansion of the operating portfolio.

Gross profit for the quarter was $84.33 million, with gross profit as a percentage of revenues improving to 16%, up from 15.4% in the prior year. This improvement was primarily due to a more favorable mix of higher-margin projects. Selling, General and Administrative (SGA) expenses increased to $43.37 million, primarily due to higher professional fees and payroll and related benefits, partially offset by lower project development, travel, and insurance expenses. Operating income for the quarter stood at $42.35 million, a 20.5% increase year-over-year. Net income attributable to common shareholders was $18.53 million, or $0.35 per diluted share, compared to $17.60 million, or $0.33 per diluted share, in Q3 2024.

Segment-wise, Europe demonstrated exceptional growth, with revenues surging 174.1% year-over-year to $144.23 million for Q3 2025, driven by increased activity in joint ventures in Greece and Romania. The U.S. Federal segment saw a slight revenue increase of 0.4% in Q3 2025, though its nine-month revenue decreased by 26.3% due to project timing and the reversal of revenue from a solar project sale that was no longer probable. The North America Regions segment experienced a 18.5% revenue decrease in Q3 2025, primarily due to project timing, partially offset by growth in energy assets and O&M revenue. Renewable Fuels revenue decreased by 13.5% in Q3 2025, mainly due to project timing.

Ameresco's operational achievements underscore its financial performance. The total project backlog reached a record $5.14 billion at September 30, 2025, with contracted project backlog growing 33% year-over-year to $2.5 billion. The O&M backlog also expanded by over $158 million to approximately $1.5 billion. These backlogs provide significant long-term revenue visibility, exceeding $10 billion when combined with operating energy assets.

From a liquidity standpoint, Ameresco ended Q3 2025 with $95.51 million in cash and cash equivalents. Total corporate debt was $243 million as of December 31, 2024, declining from $273 million due to proceeds from the sale of the AEG business.

The company's debt-to-EBITDA leverage ratio under its senior secured facility was 3.2x, remaining below the covenant level of 3.5x. Ameresco secured approximately $180 million in new project financing commitments during Q3 2025. Cash flows from operating activities for the nine months ended September 30, 2025, decreased to $37.47 million from $99.22 million in the prior year, primarily due to increased cash outflows in unbilled revenue, deferred revenue, and prepaid expenses, partially offset by higher net income and increased cash inflows from accounts receivable and Federal ESPC receivable. The company plans to invest an additional $50 million to $100 million in capital expenditures during the remainder of 2025, primarily for new renewable energy plants, expecting to fund the majority with project finance debt, tax equity, or tax credit sales.

Strategic Outlook and Growth Drivers

Ameresco's outlook for 2025 remains robust, with the company reaffirming its guidance ranges for the year. Management anticipates revenue of $1.9 billion and adjusted EBITDA of $235 million at the midpoint of its ranges. This guidance is underpinned by strong execution, a substantial backlog, and an expanding presence in high-demand energy infrastructure solutions. The company expects to place approximately 100 to 120 megawatts of energy assets into service in 2025, including one to two RNG plants.

A key strategic driver is the burgeoning demand from data centers and industrial customers for resilient, rapidly deployable power. Ameresco's Lemoore data center initiative with CyrusOne, aiming for up to 350 megawatts, exemplifies this opportunity. The company is also building a 40-megawatt firm power plant for Hawaiian Electric (HE) on Maui and has developed a 50 MW battery energy storage system for Nucor, North America's largest steel producer, with plans to add solar. These projects highlight Ameresco's ability to cater to the critical need for firm power beyond its traditional customer base.

The federal government market, despite recent policy shifts, continues to present significant opportunities. While a prolonged government shutdown could delay project award conversions, Ameresco does not anticipate a material impact on its Q4 2025 results. The company's budget-neutral Energy Savings Performance Contracts (ESPCs) align well with federal priorities for cost savings and infrastructure upgrades. Ameresco is also seeing new federal RFPs focused on resiliency and increasing power supply, including leveraging federal lands for critical energy infrastructure projects.

Ameresco's Renewable Fuels segment is poised for continued growth, benefiting from Investment Tax Credits (ITCs) and the Section 45Z Clean Fuels production tax credit, which is expected to provide an annual benefit of $8 million to $10 million from 2025 through 2027. The company has proactively safe harbored 10 RNG plants for future ITCs and employs a dynamic hedging strategy to manage RIN price volatility, with less than 30% of its expected 2025 RIN generation being merchant.

Geographic expansion, particularly in Europe, is another strategic pillar. Europe now accounts for approximately 20% of the total project backlog and is expected to grow faster than the U.S. market. Ameresco is pursuing organic growth and potential acquisitions in key European markets like Greece, Italy, Spain, and Romania, with a specific focus on the emerging battery storage market.

Risks and Challenges

Despite the positive outlook, Ameresco faces several risks and challenges. Global supply chain disruptions, varying levels of inflation, and workforce disruptions continue to pose operational and financial risks. The regulatory environment, particularly the "One Big Beautiful Bill Act" (OBBB Act), introduces new timing requirements for solar-only projects and phases down ITCs for energy storage projects, potentially impacting eligibility for tax credits and demand for offerings. Compliance with new domestic content and Foreign Entity of Concern (FEOC) provisions could also impair Ameresco's ability to qualify for incentives, affecting revenue and gross margins.

The U.S. government shutdown could delay federal project award conversions, although a material impact on Q4 2025 results is not anticipated. The ongoing dispute with Southern California Edison (EIX) regarding liquidated damages, potentially up to $89 million, remains a financial risk. The bankruptcy of Powin LLC, a battery energy storage system (BESS) supplier, has resulted in $26.68 million in deposits for unrealized transactions, with the range of loss currently estimated between $0 and $26.68 million. Climate change also presents risks through more frequent and severe weather interferences, which could impact project completion.

Ameresco is actively mitigating these risks through various strategies. For tariffs, the company is pre-purchasing equipment for ongoing projects and incorporating pass-through language into new contracts, aiming to shift cost increases to customers unless project margins allow for absorption. Diversifying its supply chain is also a key focus to reduce exposure to tariff impacts.

Conclusion

Ameresco stands as a compelling investment in the rapidly evolving energy transition landscape. Its 25-year history of innovation, coupled with a highly flexible and diversified business model, positions it to capitalize on the increasing global demand for energy efficiency, resilient infrastructure, and clean power. The company's strong financial performance in Q3 2025, marked by revenue growth and improved margins, reflects effective execution and strategic project selection.

Looking ahead, Ameresco's substantial project and O&M backlogs, combined with its aggressive pursuit of opportunities in high-growth sectors like data centers and industrial power, provide significant long-term visibility. The company's proactive approach to technological innovation, including its focus on advanced battery storage and emerging SMRs, further strengthens its competitive moat. While regulatory uncertainties, supply chain pressures, and specific project-related risks warrant careful monitoring, Ameresco's proven ability to adapt, its robust financial strategy, and its commitment to budget-neutral, high-value solutions underscore a resilient investment thesis. The company's strategic diversification across customers, technologies, and geographies is expected to maximize growth and earnings, supporting its long-term targets for revenue and adjusted EBITDA growth.