Energy and renewable energy projects company Ameresco (NYSE: AMRC) announced better-than-expected revenue in Q2 CY2025, with sales up 7.8% year on year to $472.3 million. The company’s full-year revenue guidance of $1.9 billion at the midpoint came in 0.6% above analysts’ estimates. Its non-GAAP profit of $0.27 per share was significantly above analysts’ consensus estimates.

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StockStory’s Take

Ameresco's second quarter delivered financial and operational results that exceeded Wall Street’s expectations, driving a significant positive reaction in the market. Management attributed this outperformance to broad-based strength across geographies and customer segments, with a notable contribution from European operations and an expanding energy asset portfolio. CEO George Sakellaris emphasized the company’s ability to capitalize on rising electricity demand and grid reliability concerns, stating, “Higher power prices drive customer demand for both our core energy efficiency solutions and our integrated on-site generation offerings.” The quarter also benefited from margin expansion, as Ameresco focused on higher-value project execution and disciplined cost management.

Looking forward, management’s guidance is shaped by a robust project backlog, continued growth in energy infrastructure solutions, and steady momentum in the European market. Ameresco expects policy shifts and regulatory changes, particularly in the U.S. and Europe, to create new opportunities, while the company’s diversification across technologies and regions remains a strategic advantage. CFO Mark Chiplock pointed to a strong pipeline of projects and disciplined backlog conversion as supporting future earnings, stating, “Our visibility of future revenues remains outstanding, and we believe the demand for a diverse portfolio of solutions remains strong.” The company is also preparing for potential impacts from supply chain and regulatory developments in battery storage and renewable natural gas.

Key Insights from Management’s Remarks

Ameresco’s management cited revenue growth from European projects, expanding energy assets, and disciplined project selection as primary drivers of second quarter results and margin improvement.

• European market momentum: Management highlighted the growing contribution of European joint ventures, especially with Sunel, as a key factor in both revenue growth and diversification. Europe now accounts for about 20% of Ameresco’s total project backlog, with recent hires to accelerate market penetration.
• Energy asset expansion: The company’s energy asset portfolio grew to nearly 750 megawatts, with recurring operations and maintenance (O&M) revenue maintaining steady growth. CFO Mark Chiplock noted the successful deployment of new battery storage and renewable natural gas assets as drivers of higher profitability.
• Backlog conversion discipline: Ameresco’s contracted project backlog increased 46% year over year, reflecting effective conversion of awarded projects and a focus on higher-margin contracts. Management emphasized that recent projects, particularly in Europe, are now being signed at improved margin levels compared to initial market entry.
• Supply chain and equipment management: While management acknowledged tightness in transformers and some gas turbines, they reported minimal project delays. The company has adjusted procurement strategies and, where necessary, negotiated contract terms to mitigate tariff and supply risks, especially for battery storage systems.
• Strategic workforce redeployment: Ameresco proactively shifted teams from solar development to battery storage and other growth areas, ensuring labor resources align with the most attractive project segments. This operational flexibility supports continued execution despite market and regulatory changes.

Drivers of Future Performance

Ameresco’s outlook is anchored by a growing backlog, cross-market diversification, and ongoing investment in energy infrastructure and storage solutions, as well as adaptability to evolving regulatory and supply chain conditions.

• European expansion and market mix: Management expects Europe to grow faster than the U.S. in the near term, driven by increasing demand for battery storage and infrastructure projects across multiple countries. The recently hired executive team is accelerating organic growth, and management remains open to acquisitions if strategic opportunities arise.
• Battery supply and regulatory adaptation: The company is closely monitoring supply chain risks due to tariffs and foreign entity restrictions on battery imports. Management is negotiating flexible contract terms with customers, pursuing domestic suppliers, and incorporating tariff adjustment clauses to protect margins and ensure project delivery.
• Renewable natural gas and policy tailwinds: Ameresco plans to bring ten new renewable natural gas plants online over the next two to three years, leveraging investment tax credits and supportive federal policies. The company anticipates that ongoing regulatory clarity, like the 45Z tax credit and evolving environmental standards, will further drive growth in this segment.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be paying close attention to (1) the pace of backlog conversion and margin trends in both U.S. and European markets, (2) the impact of supply chain adaptation on battery storage and renewable natural gas projects, and (3) execution of new project awards in emerging sectors such as data centers and small modular reactors. Progress in workforce realignment and regulatory adaptation will also be key indicators of ongoing performance.

Ameresco currently trades at $19.29, up from $16.73 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).

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