Suzanne Messere - IR George P. Sakellaris - Chairman, CEO and President Andrew B. Spence - VP and CFO John Granara - VP, Finance and Chief Accounting Officer.

Jim Giannakouros - Oppenheimer and Company.

Good day, ladies and gentlemen, thank you for standing by and welcome to the Ameresco Fourth Quarter 2014 Earnings Call. At this time all participants are in a listen-only mode. [Operator Instructions]. I would now like to turn the conference over to host, Ms. Suzanne Messere. Ma’am you may begin..

Thank you, Eric, and good morning, everyone. Thank you for joining us today for Ameresco's fourth quarter and full year 2014 earnings conference call. I'm joined today by George Sakellaris, Ameresco's Chairman, President and Chief Executive Officer; and Andrew Spence, the company's Chief Financial Officer.

Also Ameresco’s Chief Accounting Officer, John Granara will be available during the Q&A portion of the call. On today's call management will share brief highlights from the prepared remarks we published this morning. Following the brief highlights from the quarter management will take questions from the audience.

Before I turn the call over to George and Andrew I would like to make a brief statement regarding forward-looking remarks. Today's call contains forward-looking information regarding future events and the future financial performance of the company.

Ameresco cautions you that such statements are just predictions and actual results may differ materially as a result of risks and uncertainties that pertain to our business.

Ameresco refers you to the company's press release issued this morning and its annual report on Form 10-K filed with the SEC on March 17, 2014, which discusses important factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements.

Ameresco assumes no obligation to revise any forward-looking statements made on today's call. In addition, the company 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 GAAP to non-GAAP reconciliation as well as an explanation behind the use of non-GAAP financial measures is available in our press release as well as our prepared remarks. I will now turn the call over to George Sakellaris.

George?.

retail and industrial. They establish a sustainability partnership with their customer and then design, develop and implement projects that help their customers achieve their goals. Within the retail segment, implementations include energy efficiency measures; whereas, for industrial customers, the focus is on distributed generation.

It is a very targeted approach that focuses on building long-term customer relationships that lead to multiple projects and add-on services. We believe that customer relationship building and greater penetration within existing customers is the key to C&I growth in the U.S. market as well.

For 2015 Ameresco expects to earn total revenues in the range of $610 million to $640 million. The company also expects adjusted EBITDA for 2015 to be in the range of $43 million to $48 million and net income per diluted share to be in the range of $0.16 to $0.24.

And now I do like to turn the call over to Andrew to provide more details about our financial results and our guidance assumptions.

Andrew?.

Project revenues from contracted backlog of approximately $310 million; Project revenues from awarded projects and proposals in the range of $100 million to $120 million; The remainder of revenues is expected to come from all other service offerings; Gross margin in the range of 19% to 20%; Operating expenses as a percentage of revenue of 16% to 17%; An effective tax rate of 25% using the midpoint of our guidance range; and weighted average common shares outstanding of $47 million.

And with that I’ll turn the discussion back to George..

Thank you Andrew. We are pleased with 2014. It was a year of recovery and improvement. We improved financial results and made great progress from a strategic point of view. We decided to keep more of the solar assets we develop for our own portfolio, which is expected to provide much better economics over the long-term.

We renewed our focus on developing integrated projects that highlight our unique technical expertise. Finally, we expanded our value-added service capabilities in the UK for local and multinational commercial and industrial customers. We have remained confident about long-term industry fundamentals throughout.

Due to 2014 progress and 2015 expectations we have also gained confidence regarding near-term industry fundamentals. We anticipate that our traditional U.S. energy services segments will experience broad-based revenue growth in 2015 and are on a path to achieve growth rates that are within current industry expectations.

We are pleased that we have a positive outlook for 2015 and that our guidance reflects modest revenue growth and the potential for a strong improvement in EBITDA. Now we do like to answer your questions and I will turn the call back over to our coordinator, Eric..

Thank you. [Operator Instructions]. And our first question comes from [indiscernible] from Northland..

Good morning. Congratulations on a strong quarter and the improving outlook. I just wanted to discuss expectations further for 2015.

Can you give us roughly what you are thinking in terms of adjusted free cash flow and perhaps on a related note how much cash you expect to have available for equity and projects apart from the 20 megawatt of solar you are discussing?.

Well I would say that our cash flow should be in line with EBITDA. I mean the actual operating, our net free cash flow will vary from a year-to-year based on particular timing of projects. But our expectation is that it should be somewhere around the adjusted EBITDA number.

With respect to investing in the projects one of the benefits of using the tax equity that we are sourcing is that is very close to 100% financing. So we are going to be relying on that to fund much of our capital investment during 2015. .

We feel very comfortable with the business plan that we have that we will have the cash whether it’s self-generated or used in the sale-lease back or some or the other options that Andrew pointed out that we have sufficient cash to execute on our plan..

Well given that, then this should be additional cash available for non-solar build out.

How are you thinking about the build out of landfill gas and other non-solar project assets this year? What will that ramp look like do you think and what are the opportunities such as…?.

The same that we always thought. We look at the particular project and if we feel that we will get the return on equity of around 18% or better after tax we will invest in those projects.

But what has happened on the LFG [ph] projects the last couple of years because gas -- the gas prices are so low, natural gas prices that the buyback of the output associated with those particular projects is not as good. That’s why you don’t see as much landfill gas to energy projects.

However though and I think we did mention it on the last call that the range market, it’s considerably better and right now we do have in our development stage of four green projects.

But in our projects in development we only report two of them because we feel much more comfortable that the two will move forward, are more likely to move forward go forward then for 2015 and so we plan to expand in what I will call other renewable asset, we will hold ourselves but we look at the return on equity invested in that particular project that we have.

We will invest. I am pretty comfortable that we will have the cash. The other good thing and that’s why we adapted this strategy to focus more investing in renewable assets we hold for our balance sheet.

In the past we -- the strategy was that we would take about half of the cash flow generated and then to our renewable assets that we would hold for our balance sheet and the other half we will do acquisitions. And that’s how we grow the company.

But with the availability of funds right now in the market place we feel much more comfortable positioned to accelerate the growth of that business. That’s why we made it a major initiative early last year and we achieved considerable traction. And that’s why you will see more focus in that area. .

Okay and maybe just turning to the project revenue business, what do you see George as the factors that you are really looking for this year that can make backlog growth start to accelerate and maybe where you are sort of aspiring for the total backlog to grow to by year end?.

Look, it will be nice to see a growth of the backlog by the year-end of I would say, what the industry is growing at least 7% to 8%. I don’t know if you have seen the forecast but now we can say [ph] that the industry we will grow at 7% to 8% and I think we would like to see at least that much.

And I always challenge my team, tell them that you guys do a little bit better than the industry we should do a little bit better. And I will never be content until I get to the 10% level, so you know how I am taking it. But look last year where we were the couple of years before, seeing a 7% increase of the contracted backlog we felt good about it.

We would have little bit more but that’s what it ended up being and because the other thing that has -- the time that it takes for a project to get converted, what we call the conversion time, it’s still 16 to 18 months which is very long.

But what I am trying to get the organization to learn to live within that constraint and that’s why people ask me when would you see an inflection point.

Until I see that timeline shrink considerably because then in the metrics we will change for our company a lot because the operating cost most likely will go down because you move projects much faster through the pipe as an organization. But the trends in the industry, especially in the United States are pretty good.

We still have the drag up in Canada but at least we will -- even though the revenues will go down for the year we will turn it to profitability. So we feel pretty good about that..

Okay, yes, I mean clearly you are seeing an improving outlook and I think it is based on your guidance. Maybe I know that, this is my last question, from a seasonal standpoint first quarter, first half tends to always be lower. Maybe this year you can give it a little bit of additional granularity on kind of the cadence of revenue. .

I am glad that you asked that question because if it didn’t come up we would bring it up ourselves. We expect the first quarter always for the year is very, very challenging for us and especially this year with all the storms I am expecting it to be even more challenging.

But we expect top line and bottom line to be very consistent with what we had last year in the first quarter..

So, this is John, so that last year we were in a $100 million range in revenue and about $8 million dollar loss so we expect that to be consistent. In terms of the cadence for the year and the quarterly, how that shapes up on the quarters we would expect that to be consistent as well.

Typically 40% of the revenue in the first half, 60% and we don’t -- I won’t give you anything beyond that in terms of how the second half of the year is going to look but I think typically we have seen in years past where that typically you would see a decrease in the fourth quarter but I would the last two years we’ve had the increase in revenue the last two years.

So not really going to shake the second half year-to-day, so I would just assume even..

Okay, that’s great detail, congratulations. Thanks so much..

Thank you..

[Operators Instructions]. And our next question comes from Jim Giannakouros from Oppenheimer. Please go ahead..

Good morning, everyone..

Good morning, Jim..

On the notion that energy saving is a value proposition, right, it is there, you mentioned that you are seeing an impact in LFG.

I understand it is a longer term consideration but have you seen an impact on awards or in your conversations on the map for your core ESPC target market just given the lower energy cost for the last six months or so?.

You know, we have not seen it.

The lower energy prices it has not impacted the other what I call the bread and butter, the energy saving business, and the reason behind it because even though natural gas prices are down, the oil savings in energy savings I think is less than 10% of -- and Suzanne is indicating is 5% from our total savings that we have in our mix.

And then the natural gas prices, as you know, even though the NYMEX less a few dollars [ph] that is not translated to what the consumer sees and most of our savings are electric savings. So electric savings are about 60%, 30% are gas savings and little bit oil and the rest of it is others.

So we have not seen a major impact but on the other hand, the psychological level of the customers’ perception might be there and that might have some impact but so far it has not been..

Got it. Okay, and that makes sense. Savannah River you mentioned that was -- was that signed or was that awarded prior, I am sorry, was that awarded or contracted backlog prior to the [indiscernible]..

Yeah, so that converted from the awarded backlog in Q3 to now contracted in Q4 and the total amount of that contract was $38 million. And that is the construction portion. There’s also going to be a health O&M portion for 20 years that will get into the back end of the construction project which will show up in 2016..

And I mentioned in my comments I think it is important with what else I said trying to develop good relationships with the particular customer and deliver top quality product and that particular customer is very, very happy with the work that we have done.

And especially if you recall last year and we had one time charges associated with the a [indiscernible] we had in that particular facility and we did a good job and we got pretty much, I would say a new contract out of it..

Right and on that O&M you are expecting that to be flat in ‘15, is that just a reflection, why is that, I mean if you are growing your construction activity off of a low from a couple of years ago and/or is there are any opportunities with customers that maybe you didn’t construct but maybe looking to outsource O&M when they come to you or is it, should be thinking about that revenue stream as really you construct it and then you tack on O&M?.

Yeah, Jim, this is John, so related to the O&M we actually had a contract that we amended in Q4 that is actually reducing the O&M of revenue prospectively for one particular site. So we are actually planning to make that up. So that’s going to be a decrease of about 5%. We are actually planning to make that up to get back to even.

So we are planning to have new O&M business this year. It is just to offset that decline related to that one particular project..

And then some of the projects that we are in implementation those O&M contracts will not kick in until next year. But in the strategic initiative is one of the major areas that we are focusing as well is to increase the O&M business..

Okay, that’s good to know that there is -- I was surprised to see that flat, so that makes sense, thank you for that color.

And last one if I may, OpEx as a percentage of sales, do you have a normalized target? I see benefits from restructuring and other cost containment actions that you have taken recently but you did run at a much lower OpEx as a percentage sales level prior to 2013..

Yeah, I think, so prior to 2013 I’ll just point out that the make-up of the business level was a bit different then I think the what we saw this past year is that we did increase our OpEx but most of it came from the acquisitions which ended up providing accretive from an adjusted EBITDA standpoint, they were accretive.

So on a GAAP basis it was breakeven or slightly above but it didn’t impact EPS materially. So although the OpEx had been increasing as a percentage of revenue we are getting adjusted EBITDA expansion.

So we are really looking at -- we should be able to get leverage on the corporate G&A and the overhead which is the fixed component of the operating expenses and then we are investing, we are developing projects and a portion of those expenses do hit operating expenses, so at least for this particular year we feel good with that 16% or 17% as we grow and as revenue grows we would expect to get operating leverage.

.

Got it. Thank you very much..

And there are no further questions at this time. I would like to turn it back to George Sakellaris for closing remarks..

If there are no more questions than with that I do like to thank you for joining us today in today call and looking forward to the next one. Thank you and have a good day..

Ladies and gentlemen, that does conclude today’s conference. Thank you for your attendance. You may now disconnect. Everyone have a great day..