Ameresco's Q3 2025: Contradictions Emerge on Data Center Growth, Federal Shutdown Impact, and Project vs. Asset Strategy

Date of Call: November 3, 2025

Financials Results

• Revenue: Grew 5% year-over-year
• EPS: $0.35 per diluted share (GAAP and non-GAAP)
• Gross Margin: 16%, improved sequentially and versus prior year

Guidance:

• Reaffirming 2025 guidance ranges.
• Remain on track to place 100–120 MW of additional energy assets into operation this year.
• Do not expect a prolonged federal shutdown to have a material impact on Q4 results (may shift timing of some awards).
• Long-term targets: ~10% revenue growth and ~20% adjusted EBITDA growth over multi-year horizon.

Business Commentary:

• Strong Financial Performance:
• Ameresco delivered revenue growth of 5% year-over-year, with adjusted EBITDA increasing by 13%.

• This growth was driven by robust execution across projects, sustained momentum in the energy assets segment, and reliable O&M recurring income.

• Expansion into Data Centers:

• The company reported significant opportunities in data centers, with a strong pipeline extending beyond federal government projects.

• This growth is attributed to the need for resilient firm power and increasing demand for electrification and data center demand.

• Diversification and Strategic Partnerships:

• Ameresco's energy asset portfolio grew, with an increase in assets in development to 626 megawatts, including 16 megawatts placed into operation in Q3.

• Diversification and strategic partnerships, including the joint venture with Sunel in Europe, contributed to this expansion.

• Resilience in Key Markets:

• Projects backlog reached $5.1 billion, with $450 million in new project awards, indicating substantial growth in the total project backlog.
• Demand is driven by factors such as increasing electricity demand due to electrification, rising utility rates, and grid instability.

Sentiment Analysis:

Overall Tone: Positive

• Management described the quarter as "another quarter of excellent execution" with "growth across our key metrics," noted total project backlog up to $5.1B, contracted backlog up 33% to $2.5B, adjusted EBITDA up 13% to $70.4M, and reaffirmed guidance and long‑term growth targets — all signaling confident, positive tone.

Q&A:

• Question from Noah Kaye (Oppenheimer & Co. Inc.): Can you frame the data center opportunity — similar scope to Lemoore, other scope possibilities, and timing to see orders materialize?
  Response: Focus is on providing energy infrastructure (behind‑the‑meter solutions) similar to Lemoore; commercial projects will mirror that scope and are intended for rapid deployment.

• Question from Noah Kaye (Oppenheimer & Co. Inc.): On the CyrusOne/Lemoore financing: size of Ameresco's commitment, partner capital and timing for market details?
  Response: Expect to bring an equity partner; Lemoore opportunity could be as large as ~350 MW; CapEx details not yet disclosed.

• Question from Eric Stine (Craig-Hallum Capital Group LLC): Given the Lemoore announcement, what has it meant for pipeline development and replication?
  Response: Lemoore serves as an anchor project with development and permitting well advanced and will be used to replicate the model for future data center opportunities.

• Question from Eric Stine (Craig-Hallum Capital Group LLC): On Q4 guidance dynamics and potential impact from federal work/government shutdown—why reaffirm guidance despite execution risks?
  Response: Federal work is ~20% of revenue so potential slippage from a shutdown is unlikely to materially affect Q4; guidance is disciplined and considered realistic given execution plans.

• Question from Ben Kallo (Robert W. Baird & Co.): Are data center projects materially different from prior engineering/construction work and do they require new skills/risks?
  Response: Work is similar to federal mission‑critical projects; main differences are larger scale and faster timelines, but no new material technical risks anticipated.

• Question from Ben Kallo (Robert W. Baird & Co.): With storage representing a large portion of backlog, how has battery procurement changed and how do you manage tariff/CIAC risks?
  Response: Actively diversifying the supply chain and safe‑harboring projects to mitigate CIAC/tariff risk; falling battery costs provide a natural hedge over time.

• Question from Julien Dumoulin-Smith (Jefferies LLC): Will data center opportunities get you back to 10% revenue / 20% adjusted EBITDA growth (high‑teens/20% EBITDA CAGR)?
  Response: Data center demand plus contracted awards provide confidence to achieve the long‑term 10% revenue / 20% adjusted EBITDA targets over a 3–5 year cycle, though not guaranteed annually.

• Question from Julien Dumoulin-Smith (Jefferies LLC): How replicable is the data center model and what margins should be expected?
  Response: Model is replicable across customers; margins are expected to be in line with the company's corporate average (mix of asset and project economics).

• Question from Ryan Pfingst (B. Riley Securities, Inc.): Is Ameresco operationally positioned to support multiple large data center energy projects simultaneously?
  Response: Yes — dedicated unit established, resources reallocated, staff increased and Bright Canyon capabilities leveraged to scale operations and project delivery.

• Question from Ryan Pfingst (B. Riley Securities, Inc.): Does the new Terra Innovatum nuclear partnership feel like a near‑term opportunity turning into orders in '26/'27?
  Response: The nuclear opportunities are increasingly real but remain multi‑year in horizon; not expected to produce material orders in 2026–2027.

Contradiction Point 1

Data Center Opportunities and Growth Expectations

It involves differing perspectives on the growth opportunities in the data center market, which is a significant area for Ameresco's expansion.

Can you explain the data center model's replicability and possible irregular announcements? - Julien Dumoulin-Smith(Jefferies LLC, Research Division)

2025Q3: The demand for resilient power, particularly in the AI market, drives the replication of the data center model. Ameresco anticipates further opportunities for behind-meter solutions. - Nicole Bulgarino(President of Federal Solutions & Utility Infrastructure)

How could improved data center permitting affect Ameresco? - Noah Duke Kaye(Oppenheimer)

2025Q2: We're well-positioned to provide energy center services for data centers due to the power shortage and AI load. We are working on several projects, ranging in size and type, and are excited about the growth opportunities for Ameresco. - Nicole Allen Bulgarino(President of Federal Solutions & Utility Infrastructure)

Contradiction Point 2

Impact of Federal Government Shutdown on Business

It highlights differing expectations on the impact of the federal government shutdown on Ameresco's business operations.

How do the guidance assumptions account for the federal shutdown's impact on the business? - Eric Stine(Craig-Hallum Capital Group LLC, Research Division)

2025Q3: The federal government represents only 20% of Ameresco's business, and while there can be some slippage in revenue, it's not materially impacting Q4 results. - George Sakellaris(Founder, Chairman, CEO & President)

How do you view cash generation in the back half of the year, and what leverage factors should we watch for? - Noah Duke Kaye(Oppenheimer)

2025Q2: We are comfortable where we are with our leverage, and our lenders are as well. As EBITDA grows in the second half, we expect to see leverage improve. - Joshua Riggi Baribeau(Senior Director of Finance & Corporate Treasury)

Contradiction Point 3

Impact of Federal Shutdown on Business

It highlights the inconsistency in the perceived impact of the federal shutdown on Ameresco's business, which could influence investor expectations and financial planning.

How do the guidance assumptions account for the federal shutdown's impact on the business? - Eric Stine (Craig-Hallum Capital Group LLC, Research Division)

2025Q3: The federal government represents only 20% of Ameresco's business, and while there can be some slippage in revenue, it's not materially impacting Q4 results. - George Sakellaris(CEO)

Have you seen any impact from reduced federal workforce on your business? - Kashy Harrison (Piper Sandler)

2025Q1: We haven't seen any immediate impacts, but there could be administrative delays due to fewer personnel. However, we have built in some conservatism into our guidance. - Mark Chiplock(CFO)

Contradiction Point 4

Focus on Project vs Asset Ownership

It indicates a shift in strategic focus between project and asset ownership, which could affect the company's financial and operational strategies.

With data center opportunities, how can Ameresco achieve high teens or 20% EBITDA CAGR growth targets? - Julien Dumoulin-Smith (Jefferies LLC, Research Division)

2025Q3: The strong data center opportunities complement Ameresco's long-term growth targets. Ameresco remains confident in achieving its targets, especially with the current visibility and project pipeline. - Joshua Baribeau(Senior VP & Chief Investment Officer)

How have IRA-related changes affected your project versus asset ownership? - George Gianarikas (Canaccord Genuity)

2025Q1: In the current interest environment, we're focusing more on the project business due to cash flow. However, over 600 megawatts of assets are in development, providing future cash flow. The project business is strong, but we remain focused on both areas. - George Sakellaris(CEO)