Ameresco, Inc.

Today, ladies and gentlemen, thank you for standing by and welcome to the AmeriESCO Inc. Fourth Quarter and Full Year 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session and instructions will follow at that time. As a reminder, this call is being recorded. I will now turn the conference over to your host, Ms. Lela Dillon, Vice President, Marketing and Communications. Ms. Dillon, you may begin.

Thank you, Valerie, and good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George Sakalaris, MRSCO's Chairman, President, and Chief Executive Officer, Doran Hull, Senior Vice President and Chief Financial Officer, and Mark Chiplock, Vice President and Chief Accounting 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 on 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 afternoon 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 based on today's call. In addition, we will be referring to non-GAAP financial measures during the 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, Lila, and good afternoon, everyone. Before we discuss our results, I would like to quickly address the recent rumors regarding a potential sale of Amoresco. While we do not typically comment on specific market rumors, we can only say that we are not currently engaged in any sale process and that we are aggressively pursuing our business plan as an independent company. And with that, now our results. Maresco ended 2019 with record results across several key metrics. Importantly, we have started this year with a broad technical capability and the backlog to produce another year of strong performance. During the fourth quarter, our team did an outstanding job. We leveraged the strength of every business unit to deliver on all facets. We grew our total backlog by 15% to $2.3 billion, and our assets in development by 80% to record levels. We converted a great number of measure awards to contracts as expected, and we executed on our contracted backlog, which enabled us to realize record revenue. We now look forward. with great visibility and excitement as we take advantage of the game-changing industry advancements. The economics of advanced technologies have dramatically improved and are now a key driver for renewable energy, energy efficiency, combined heat and power, microbreeds, and energy storage projects. Over the last decade, The cost of these advanced technologies have dropped significantly, making many installations and upgrades economical for our customers. While the sharp decline in the price of solar power tends to get most of the attention, other technologies have also seen a significant drop in cost and increase in performance. For instance, prices for LED lighting have dropped by over 90% in the last decade, leading to tremendous cross-market adoption. Municipalities in particular have taken advantage of this technology to retrofit their street lighting. Maresco recently replaced over 100,000 legacy street lights with high-efficiency LEDs in the city of Phoenix. The city will save over $3.5 million per year for lower electricity costs in addition to substantial operation and maintenance savings. The cost of many of these advanced technologies, including LEDs, solar, battery storage, microgrids, and CHP continue to fall, driving more and more attractive economics for our customers and for Amoresco. As we look to the future, It's clear that the trend is moving towards a low or carbon-free environment away from fossil fuels. A recent report from Bloomberg showed that clean energy purchases by corporations through power purchase agreements are setting records. And these purchases increased by an impressive 44% in 2019. The report notes, that corporations are facing increasing pressure from stock shareholders to decarbonize and energy consumption and diversify their energy sources, as exemplified by recent releases from Delta Airlines, Microfrost, and Blockrack. And MySQL is well positioned to take advantage of this trend, as we work closely with our customers, providing them with best-in-class advanced technology solutions that fit their unique needs. Furthermore, we are able to give them true financial flexibility. They can own the solutions themselves, or we can retain ownership. We support both models. Our product independence and broad technical expertise, combined with financial flexibility, are important differentiators for Amoresco in this increasingly complex marketplace. We are also seeing the growing demand for resiliency. The high-profile grid shutdowns experienced in California demonstrate the negative economic impact of grid instability and power supply interruptions. Increasingly, we are seeing utilities, municipalities, hospitals, higher education, and corporations look to implement solutions that will enable them to rapidly rebound from these ever-increasing widespread interruptions. The military has proven to be an important early adopter of innovative technologies, providing on-site power, energy storage, and microgrid controls for added energy security and resiliency. There are many bases around the country that are incorporating these solutions into their infrastructure. A quick example is our recently announced project at Port Smith Naval Shipyard in Kittery, Maine. As part of this project, MRS will add a new 7.5 megawatt combined heat and power plant and install a 1 megawatt battery storage system to expand the microgrid system for the shipyard. MRS will also provide operational maintenance services. We are currently delivering similar solutions to other federal customers across the country. A recent report from Navigate Research estimates that the global market for microgrids is expected to grow at a 28% annual growth rate through the end of this decade. Our energy asset business was also very active this quarter with a number of new awards, including five additional renewable natural gas opportunities representing a total of approximately 25 megawatts. Our robust asset development pipeline will allow us to more than double our megawatts in operation in the coming years. This will significantly increase our base of recurring revenues, earnings, and cash flows. While 2019 was impacted by lower RIN prices, we are pleased to see a sharp price rebound already in this first quarter. As such, we have taken advantage of the positive move and increased our hedging activity for our 2020 RIN production. Renewable natural gas continues to experience a significant increase in demand as organizations dependent for natural gas look at incorporating this green gas into their mix. While the transportation sector has taken the lead in recent years, we are seeing particular interest from the natural gas utility industry and institutions, with many already announcing plans to increase purchases of renewable natural gas as part of their overall fuel supply. This increased demand will allow us to find good off-state partners for our green gas under long-term contracts, thus giving us better long-term visibility into the cash flows from these projects. At the end of 2019, total assets in development reached 321 megawatts. We expect our assets in development to continue to grow at a healthy rate. Our operational maintenance backlog grew at an impressive 22% to $1.1 billion, further strengthening our future recurring revenue pace. As a key enabler of the low-carbon future, we look forward to disclosing more ESG-related data for both our customers and our investors. We are proud to report that in 2019 alone, Maresco's renewable energy assets and customer projects delivered a carbon offset equivalent to over 11 million metric tons of CO2. This is equivalent to the carbon absorbed by almost 15 million acres of forest in one year. We are entering 2020 with outstanding long-term visibility. exciting market opportunities, and a great competitive position and platform, and the eternal resources in place to benefit from this fast-growing market. 2020 should again be a year of records for Maresco. I will now turn the call over to Doran to review the financials. Doran?