Ameresco, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Maresco, Inc. Second Quarter 2019 Earnings Call. At this time, all participants are on a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to our host, Ms. Leila Dillon, Vice President, Marketing and Communications. Ms. Dillon, you may begin.

Thank you, and good morning, everyone. We appreciate you joining us for today's call. Joining me here are George Sakolaris, Amoresco's Chairman, President, and Chief Executive Officer, Mark Chiplock, Vice President, Corporate Controller, and Chief Accounting Officer, and Doran Hull, Senior Vice President and Chief Financial Officer. Before I turn the call over to George, I would like to make a brief statement regarding forward-looking remarks. This call contains forward-looking information regarding future events and the future financial performance of the company. We caution you that such statements are predictions based upon management's current expectations or beliefs. Actual results may differ materially as a result of risks and uncertainties that pertain to our business. We refer you to the company's press release issued this morning and to our SEC filings. These documents discuss important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. We assume no obligation to revise any forward-looking statements made on today's call. In addition, we will be referring to non-GAAP financial measures during this call. These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles. A Gap to Non-Gap Reconciliation, as well as an explanation behind the use of non-gap financial measures, is available in our press release and in the appendix of the slides, which can be downloaded from our website. I will now turn the call over to George.

George? Thank you, Leila, and good morning, everyone. Our second quarter results were solid and in line with our expectations. we are on track for strong second half comparisons and have outstanding visibility for 2020 and beyond. And Maresco continues to execute on its long-term strategy of growing recurring revenue businesses. We are doing this by leveraging our institutional knowledge of innovative technology and our broad geographic footprint. In this year's second quarter, we succeeded to post it a 6% increase in net income, and a 10% increase in adjusted EBITDA on modest revenue growth. This is the result of the continued shift towards higher margin energy asset and O&M revenues. The contribution from these businesses more than offset our investments in acquiring and developing the strong talent needed to compete in the advanced technology markets. Our energy asset business continues to show impressive pipeline growth. Total assets in development more than doubled from the second quarter of 2018, reaching 258 megawatts equivalent by quarter's end. Our assets in development now exceed the number of megawatts we currently have in operation, Executing this pipeline will lead to continued visibility and growth. During the quarter, we placed an additional 14 megawatts in operation, bringing our year-to-date total to 21 megawatts. Diversification of technology and geography continues to be a priority for the company's energy asset business. We have balanced our historic concentration of New England-based solar assets with our biogas assets spread throughout the country. We are now supplementing this base with solar and other distributed energy resources in all regions. In Q1, we began commercial operation of Phoenix RNG Plant and we held the ribbon-carrying ceremony in Q2. This asset is the largest biogas to RNG facility as a wastewater treatment plant in the U.S. It provides the city with substantial economic benefits and helps it to achieve its ambitious sustainability goals. We continue to actively pursue large R&D opportunities around the country. We have a good pipeline of green gas projects, four in our reported assets in development metric, as well as the five to six earlier stage projects we have spoken about in previous calls. In addition, market data indicates that there is a healthy available market of biogas facilities fed by landfill gas, sewage treatment plants, and other feedstocks. We believe our technical expertise and client relationships will allow us to grow our leading market share in this space. We see increased market awareness of biogas with many government and institutional clients actively looking to add this resource to their renewable energy mix. As with any energy project, green gas projects have some variability in market pricing. However, we maintain a positive outlook for renewable fuels and continue to take a disciplined approach to developing this asset class. While our RNG operations continue to rapidly grow, solar remains an important contributor to Maresco's energy asset business. We were pleased to have passed the 100 megawatt milestone for operating solar assets during the quarter. We continue to aggressively leverage our existing footprint across North America to expand this business. Moving to our smart energy project business. At the end of the second quarter, our contracted backlog was up 16% year over year to $789 million. This growth was driven by strong performance in our U.S. region, as well as great execution in our federal business. Our people continue to win and execute technically difficult projects. These comprehensive projects comprise a greater percentage of our pipeline. And these projects not only save our customers money, but they also provide resiliency and security along with measurable environmental benefits. Multiple factors are driving demand for energy and water solutions. that include or add resiliency to new or existing projects. The Department of Defense supports, and I quote, pursuing energy security and energy resiliency for continuity of operations for a minimum of 14 days at military bases, unquote. In addition, many municipalities, universities, hospitals, and other institutional clients are investing in resiliency programs such as microgrids, CHP, and battery storage. These advanced technologies are becoming more common in the projects we are winning and executing. And, of course, this trend plays very well into MRSQ's core technical competency. One project which perfectly highlights this trend is our recently completed $91 million project at the Marine Corps Air Legislation Performance Contract Installation at Paris Isle. The system will ensure a reliable, secure energy supply to the base while reducing lifecycle operating costs and managing future commodity price volatility. The project combines distributed generation, battery storage, and secure microgrid controls. This gives the facility the ability to continue its operations even in the event of a storm or other related loss of electricity from the local grid. The project will save $6.9 million in annual utility and operational costs, reduce utility energy demand by 75% and water consumption by 25%. And Amerasco will operate and maintain this project under a 22-year contract. Cost savings and the environmental benefits of renewable energy continue to be important considerations for our customers. For example, our recent solar project at NASA's facility in Wallops Island, Virginia. We reduced the facility's carbon footprint by over 4,000 metric tons per year. A combination of our earlier efficiency project, additional infrastructure upgrades, and a new solar project will lower the energy spending by $3.6 million annually. In summary, the second quarter was a period of solid execution for Amoresco, setting the stage for healthy growth in the periods ahead. Before I turn the call over to Mark to review the financials, I would like to thank him for his tireless work as our interim CFO during our search process. Mark remains a key part of the MRESCO team as Vice President, Corporate Controller, and Chief Accounting Officer. I would also like to formally welcome our new Chief Financial Officer, Doran Cole. Doran joined us from Rana Shola, a global renewable energy company where he most recently served as Chief Executive Officer North America and Group Vice President of Strategy. Doran has held many financial roles throughout his career and has a long history in the renewable energy industry. Doran would like to say a few words. Doran?