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Ameresco Inc (NYSE:AMRC)
Q4 2019 Earnings Call
Mar 2, 2020, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Ameresco, Inc. Fourth Quarter and Full Year 2019 Earnings Conference Call. [Operator Instructions] Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]

I would now like to turn the conference over to your host, Ms. Leila Dillon, Vice President, Marketing and Communications. Ms. Dillon, you may begin.

Leila Dillon -- Vice President, Marketing and Communications

Thank you, Valerie and good morning, everyone. We appreciate you joining us for today's call. Joining me here are George Sakellaris, Ameresco's Chairman, President and Chief Executive Officer; Doran Hole, Senior Vice President and Chief Financial Officer; and Mark Chiplock, Vice President and Corporate Controller 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 GAAP to non-GAAP reconciliation as well as an explanation behind the use of non-GAAP 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?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Thank you, Leila and good afternoon, everyone. Before we discuss our results, I would like to briefly address the recent rumors regarding a potential sale of Ameresco. Well, 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. Ameresco ended 2019 with record results across several key metrics. Importantly, which have started this year with a broad technical capabilities and the backlog to produce another year of strong performance.

During the fourth quarter, our team did an outstanding job. We leverage the strength of every business unit to deliver on all facets. We grew our total backlog by 15% to $2.3 billion in our assets and development by 80% to a record levels. We converted a great number of major 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, microgrids 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. We have 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 has 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. Ameresco recently replaced of a 100,000 legacy streetlights 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 Ameresco.

As we look to the future, it's clear that the trend is moving toward a low or carbon-free environment and away from fossil fuels. There is a report from Bloomberg shows that clean energy purchases by corporations through power purchase agreements are set in records. And this 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 Airl Lines, Microsoft and BlackRock. Ameresco 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 fits their unique needs.

Furthermore, we are able to give them through financial flexibility. They can hold the solutions themselves or we can retain ownership. We support both models. Our project is independent and broad technical expertise combined with financial flexibility are important differentiators for Ameresco in this increasingly complex marketplace. We are also seeing in the growing demand for resiliency. A high profile great shutdowns experienced in California demonstrates the negative economic impact of great instability and power supply interruptions. Increasingly, we are seeing utilities, municipalities, hospital, 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 provide an on-site power, energy storage and microgrid controls for added energy security and resiliency. There are many basis around the country that are incorporated solutions into their infrastructure. A good example is our recently announced project that Portsmouth Naval Shipyard in Kittery, Maine, as part of this project, Ameresco will add a new 7.5 megawatt combined heat and power plant and install 1 megawatt battery storage space system to expand the microgrids system from the shipyard. Ameresco will also provide operation and maintenance services. We are currently delivering similar solutions to other federal customers across the country.

There is a report from Navigant 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 addition 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 increase our hedging activity for our 2020 RIN production. Renewable natural gas continues to experience a significant increase in demand as organizations dependent on natural gas look at incorporating this green gas into their mix. Regarding transportation sector is taken the lead in recent years, we are seeing particular interest from the natural gas utility industry and institutions with many already announced plans to increase purchases of renewable natural gas as part of their overall fuel supply. We believe this increased demand will allow us to find good off-take 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. In addition, our operational maintenance backlog grew at an impressive 22% to $1.1 billion, further strengthening our future recurring revenue base. 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 Ameresco'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 internal resources in place to benefit from this fast-growing market. 2020 should again be a year of records for Ameresco.

I will now turn the call over to Doron to review the financials. Doron?

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Thank you, George and good afternoon, everyone. As I review the company's fourth quarter and full year 2019 financial highlights. I ask that you please refer to our press release and supplemental slides for more complete financial information. The investments we've made to build our advanced technology capabilities are beginning to pay off. We had record growth in project and O&M backlog as well as another solid quarter of increasing our assets in development. Our smart energy solutions project backlog at quarter end was $2.3 billion, comprised of $1.1 billion in contracted backlog and $1.2 billion in awarded projects with $290 million of new awards won during the quarter.

Notably, our contracted backlog of $1.1 billion grew 52% year-over-year to a new record high, adding to our clear visibility for 2020 and beyond. Our assets and development reached a record 321 megawatts at the end of the year, representing 80% year-over-year growth. We added a net 34 megawatts in Q4, including a number of new RNG opportunities and a large, comprehensive microgrid project in the C&I sector, which we look forward to talking about more in the future. These new additions reflect our ability to capture market share in the growing green gas and microgrid markets through Ameresco asset ownership.

Fourth quarter revenue of $307 million reflected very strong growth, as we converted the large federal government contracts in our awarded backlog into contracted backlog. Full year revenues increased 10% to $866.9 million from $787.1 million last year, driven by strength in the projects business. Our annual results were negatively impacted by a decline in RIN prices, reducing gross profit, net income and EBITDA by approximately $7 million, $4.3 million of which directly impacted Q4. However, since year-end, we have proactively taken advantage of the recent rebound in RIN prices by hedging more of our expected production.

We believe this strategy will decrease the impact of RIN volatility on our 2020 results. Offsetting the RIN pricing impact was the retroactive extension of the 179D tax deduction that increased fourth quarter and full year net income. This benefit was recognized fully in Q4 2019 and included $4.2 million or $0.09 a share for projects completed in 2018 and $3.3 million or $0.07 per share for projects completed in 2019. But the 179D benefit will continue through the end of 2020.

Now let me provide some color on our financial expectations. 2020 should be another year of solid revenue and earnings growth, supported by our strong backlog Ameresco expects 2020 total revenue to be in the range of $910 million to $980 million, representing 9% year-on-year growth at the midpoint. We are forecasting adjusted EBITDA to be between $102 million to $112 million, representing 17.5% growth at the midpoint.

Non-GAAP EPS is expected to be in the range of $0.86 to $0.96. We anticipate gross margin will be in the range of 18.5% to 19.5% due to a greater mix of lower margin projects in our contracted backlog, that will be executed during the year. Interest and other expense will grow to approximately $17 million to $19 million, as we continue to finance additional company-owned assets. We expect an effective tax rate of approximately 8% to 12% for the year, as the company continues to benefit from the extension of the 179D tax deduction. This guidance excludes the impact of any non-controlling interest activity and any additional charges relating to the company's restructuring activities as well as any related tax impact.

Now I'd like to turn the call back over to George for closing comments.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Thank you, Doron. Here are four points, I would like to leave with you. First, market continue -- conditions are strong and Ameresco continues to gain recognition for our flexible and a great value propositions. Second, we expect to have a strong 2020, thanks to our substantial contracted project backlog and our fast growing asset development pipeline. Third, the investments that we have made in technology, people and platforms should benefit Ameresco and shareholders in 2020 and beyond. And fourth, we believe that we are in the early stages of this industry's growth as we continue to drive toward our mission of a sustainable low carbon future. We look forward to seeing many of you at our upcoming investor conferences.

And with that now Valerie, we would now like to open the call to questions. Thanks.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Chris Van Horn of B. Riley FBR. Your line is open.

Chris Van Horn -- B. Riley FBR -- Analyst

Good afternoon. Thanks for taking my call.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Good afternoon, Chris.

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Hey, Chris.

Chris Van Horn -- B. Riley FBR -- Analyst

So I just wanted to talk about the guidance for a minute. Could you give us a sense of the puts and takes on that -- on the revenue range, is it mainly due to timing of awards or are there other macro factors that you might be thinking about there?

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Yeah, I think my take -- it's Doron, is it's probably more about timing of converting awards to contracts, then it is about actually getting awards when I look at that range.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

We have a very good position regardless to how much revenue we expect to come from executed contracts and how much is coming from awarded contracts that we plan to convert. But we feel pretty good with the range that we have given. I don't know if...

Chris Van Horn -- B. Riley FBR -- Analyst

Okay. Got it. Thanks. And then you mentioned in your comment around the outlook that -- the gross profit will grow at a higher rate, but that margin might be somewhat affected by mix, anything specific to call out there on the mix side?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yeah. That is a good point. What is happening, the business is shifting little bit and we get more what I would call design-build projects. And a good example might be, couple of customers will design and the plans assets that which we will own and operate at the end of -- during the process they say, no, we will own those assets. So you will design, develop them and build them for us. And the margin on those particular projects, of course, the risks are substantially lower, not similar to the margins that we get under performance contracts. And we have several, what I'd call, legacy, some of the streetlights jobs that we have and some of the design build jobs that we have for the Federal government that they are considerably lower margins and some of them, they have two-year time horizon to get implemented.

But one of the good [Indecipherable] whether it's we built an asset for a particular customer or a street lighting job for a particulars municipality. We have a pretty good trailing operation and maintenance contracts associated with those particular clients. And they give us pretty good margin on the O&M contract. In addition to that, many of these clients, they are our customers. There will be many repeat business associated with them. So even though that on the top line we might see that the gross profit margin dropping a little bit, but what is accretive or the profit point of view, they're contributed considerably. So it's a good thing at the end of the day.

Chris Van Horn -- B. Riley FBR -- Analyst

Yeah. Okay. Got it. Last for me. SG&A was flat from a dollar perspective on really good strong growth in revenues. Is that just based on the operational controls you have in place or is there anything else that we should be thinking about there?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

No, it's the operational control that we have in place. We're always cognizant of the fact, one of the things in a growing company and especially based on the fact that last year we had to invest about $5 million in opex and what I call the peoples and platform in order to be able to compete even in this competitive market, the advanced technology market. But on the other hand, we have done a good job or may be fine tuning the organization a little bit and make the additions where we need them and the substractions where they are not as effective.

Chris Van Horn -- B. Riley FBR -- Analyst

Okay. Got it. Thanks so much for the time. And congrats on the quarter.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Leila Dillon -- Vice President, Marketing and Communications

Thanks, Chris.

Operator

Thank you. Our next question comes from Noah Kaye of Oppenheimer. Your line is open.

Noah Kaye -- Oppenheimer -- Analyst

Okay. Thanks very much. A couple of questions to run through here. First, what were the megawatt equivalent placed in service in 2019?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Placed in service.

Noah Kaye -- Oppenheimer -- Analyst

Yeah. How many megawatt placed in service in 2019?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

36 or 34?

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

34. 34 placed in service in 2019.

Noah Kaye -- Oppenheimer -- Analyst

Okay. And what are you assuming for 2020?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

About 50. And what I'd like to point out, we will little bit disappointed on the installations for what we placed in service for megawatts this year. And you might know, most of our assets that we will into place in service, they were in Massachusetts and Rhode Island and some they were in New York, but especially in Massachusetts and Rhode Island we had substantial delays because of the cluster studies of the utilities they have to do. And that sets us back, I would say, six to nine months of about 20 megawatt of installation. And actually some other projects were impacted and it shifts the time to a later date.

Noah Kaye -- Oppenheimer -- Analyst

Okay. And then you added 25 megawatt to the RNG pipeline in development. So can you tell us or remind us when do you see the 66 megawatts coming online? And when will those projects reach full ramp? Just the general schedule for the next couple of years?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yeah. We have given some kind of color before. McCarty Road, it would be at the end of this year, otherwise that will be started somewhat late in the fourth quarter. Then we have two more, Keller and Forward, that they will be comeing at close to the end of next year. Then right now we plan -- we are hoping that we will have three for the year after that. That's the plan. We're building the organization to be able to get one, two and then three of this plants in service.

And what I'd like to point out on -- regarding on the green gas development. It's a new area that we put a lot of emphasis because of what's happening in other markets besides the transportation sector. And we hope that by the end of this year, we'll be able in a position where we will have executed some long-term contracts with some of the good credit-worthy entities and that will give us better visibility as far as revenues, earnings and cash flow associated with this project.

Noah Kaye -- Oppenheimer -- Analyst

Okay. And that -- thanks, George, for anticipating my next question. So you noted in the release that RINs were $7 million drag in '19. What RIN price are you assuming in 2020 guidance?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

We don't disclose that number, but I will say you that more than 50% we have hedged in the marketplace right now. I think it's 52 to 54 and we're continuing to find opportunities. But pretty much though, we put those hedges, the last couple of months, and it does not take a great scientist to figure out where those prices are. And I think that's -- you will find that we are around the neighborhood of what the numbers they are trading.

Noah Kaye -- Oppenheimer -- Analyst

Or maybe the RIN prices because of the court rulings have doubled in the last couple of months. So you say your hedges on after price is doubled?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

We put the hedges after the increase.

Noah Kaye -- Oppenheimer -- Analyst

Okay. Very good, very good. So longer term here, if I listen to your previous answer, you're indicating that there's potential to get long-term offtakers for some of these projects. How close do you feel you are to signing some of those contracts? Is that a 2020 type announcement you expect?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

I wouldn't comment on it, most likely toward the end of the year. We get going back and forth, and some of them, they are large institutions or some of the utilities they take time. But I will say this much, though, that we have a lot of, a lot of interest.

Noah Kaye -- Oppenheimer -- Analyst

Okay. And then...

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

We got to get them to the prices as we like too for the long term. Many of them, they -- they're trying to get 20 year contracts.

Noah Kaye -- Oppenheimer -- Analyst

20 year contracts you said?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Well, we had a couple of people that we are looking for. Yes, that doesn't mean we're going to give them.

Noah Kaye -- Oppenheimer -- Analyst

Okay. Just one quick one on the project side. And congratulations on this massive increase in contracted backlog. I mean this is, obviously, by far and away, the biggest number you've had going into a year. Just want to understand, as you look at what's in that backlog as far as mix, do the mix headwinds that you are calling out for 2020, do those continue in 2021 based on the mix of what you booked in the contracted backlog? Or as you look out a little bit farther beyond 2020, is the margin profile look a little bit better? How should we think about that?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

I will say this much. The headwinds that we forecasted in 2020, it has a lot to do, of course, with the mix of the project. And the fact that -- the other thing on these projects that people have to realize is that, many of them, they are two, three year projects and is two, three year construction. However, having said that, in 2021 and further down the road, we're seeing that the margins gradually will start be coming up.

And the other thing that 2020 that it [Indecipherable] a little bit, let's say, you get 20 megawatts of solar plants that have got delayed, deferred by six to nine months, if we get them completed this past year, they will contribute, if you go back to our analysis, $0.25 million EBITDA per megawatt, we would have another $5 million of EBITDA coming in this year. So...

Noah Kaye -- Oppenheimer -- Analyst

Very good. Thank you for taking the questions.

Leila Dillon -- Vice President, Marketing and Communications

Thanks, Noah.

Operator

Our next question comes from Craig Irwin of Roth Capital Partner. Your line is open.

Craig Irwin -- Roth Capital Partner -- Analyst

Good evening and thanks for taking my questions. So George, when we take the different disclosures over the course of the year for EBITDA by line of business, I know the math is not perfect, but it walks us into a number for the fourth quarter for the assets business, it's actually more than $20 million, more than 70% of the EBITDA in the quarter of the assets business and materially higher than any number you've had in history. Can you maybe describe for us things that were driving strength in the asset business in the fourth quarter? Were there any specific items that you were able to monetize? And how does this progress sequentially going into 2020? And should we expect to build incrementally on this in the fourth quarter of 2020 as we continue to commission new projects?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yeah. As we have said in the past periodically, because we want to -- we don't want to overleverage our balance sheet. And if you look at our backlog, and you'd say, "Oh, George, you guys have 321 megawatts of assets in development." A good chunk of that, we will be monetizing and especially, will we find the rates or the cap rates that people will underwrite, especially solar projects.

So in the fourth quarter, we did monetize not one, some projects that we have in construction rather than take building it for our own balance sheet, we sold them. And you will see us continue to do that periodically. We did it in the past. And it will be part of our business. Even this year, we have in our plan. But most likely though, we will not wait till the last -- the fourth quarter to do that. And we plan to do it throughout the year.

Craig Irwin -- Roth Capital Partner -- Analyst

Okay. Excellent. Can you...

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

But the EBITDA contribution from the assets, when you look at it from the whole company on a year, and that's why we're driving the recurring revenue, we are -- for the year up to 68% when you combine O&M and assets.

Craig Irwin -- Roth Capital Partner -- Analyst

Very strong, very, very strong.

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Craig, let me jump in one quick thing. If you're looking at the supplemental slides, just to note that we did make a slight adjustment the way we're allocating our corporate opex for...

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

That's another point.

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Creating those doughnut charts this time. So just note the difference in the footnote on that slide. We kind of took a look back at that and decided that it would be more appropriate for us to allocate this on the full year based on the percentage contribution of revenue of those varying lines of business as opposed to where it was excluded, OK? As you're analyzing this, it's worthwhile taking a look at the comparison of those two footnotes, OK?

Craig Irwin -- Roth Capital Partner -- Analyst

Okay. Thank you for that. So then can we talk about the projects that are likely to start contributing in 2020? The new projects that you'll be building this year that you should commission before the end of the year. What are the specific geographies? And should we expect above or below trend start-up and then intermediate-term profitability on these projects based on geography or other operating parameters, like it's a landfill gas plant or a wastewater plant or maybe something else?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

We have one plant that will be coming on this year, you're talking about the renewable natural gas plant. And that's the McCarty Road plant and that will not contribute any revenue or EBITDA this year. We plan to see that plant coming late in the fourth quarter. If I were a betting man, I would say Christmas holidays and so on and so forth in trying to develop this plant, you won't see much in the -- until the first quarter.

And the other two plants now that will be coming in 2021, right now, they are scheduled for contributing late, I will say, the third and fourth quarter and primarily the fourth quarter of 2020.

Craig Irwin -- Roth Capital Partner -- Analyst

Okay. And then given the geographies in California that you qualify for both RIN generation and the low-carbon fuel standard, would this be typical in profitability?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

The plants, the two plants that are Forward and Keller, they are in California. Yes, the other one is the McCarty Road that's in Texas, we're trying to get it there. And we think we might be able to do it. But right now, I wouldn't plan on it. Do you want to add that?

Craig Irwin -- Roth Capital Partner -- Analyst

Okay. And then last question, if I may. Reading the details of the Canadian -- sorry, Doran, I think you want to say something?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

No, go ahead, Craig.

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

No, go ahead.

Craig Irwin -- Roth Capital Partner -- Analyst

Reading the details of the Canadian clean fuel standards and what's expected to come out this summer, many people are interpreting what's been said to say that basically, customers can start banking carbon credits for compliance in the future of green gas projects starting probably the end of June of this year. It seems like there's about to be a flood of green gas projects now in Canada, and we'll have two significant markets, not just California and the other LCFS markets, but the Canadian LCFS markets coming on as well.

Can you maybe talk about the breadth of your capability to handle incremental projects. I know you mentioned your balance sheet as a constraining factor. But would you maybe take on another five projects, if you could find credible projects with really attractive economics that could generate attractive returns over the next few years?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yes, yes, yes, we can. The only thing that -- and that's why in the past, I did not go very aggressively on this business, even though I think we have got -- have the capabilities, better capabilities than anybody else in the business because we hold the way we can develop our own projects, design them, build, operate them and maintain where many others, they buy other people's project.

The thing that has helped me back in the past is exactly what happened to us this last quarter, being able to have, what I call, reasonable long-term contracts, 10-year contracts and so on. And even though we might sacrifice and take lower price than what we might get on the open market for RINs, it will give us better leverage of this project and better return -- better predictability and better return on equity at the end of the day, because many of these projects that we have right now, we have 50% equity, 50% debt. So even though from the later point of view, they look great, they put more strength on your balance sheet. So -- but we have the capabilities, and we are building up. I say we're going to go to three projects by 2022. And if we could get the projects, we could build that a little bit sooner.

The other thing I want to caution you, Craig, and everybody else on the call, it's -- at the license, many -- and permitting various plants, the plants that we have in California, they are very, very difficult site, whether the transmission line that you have to interconnect into the main pipeline or the local permitting of this plant, that's the biggest bottleneck that we have right now. And that's why the timing of -- we are cautious on the timing of these projects. It's difficult to permit. I would say that, not much. But on the other hand, once you get them up and running, they are great assets to have.

Craig Irwin -- Roth Capital Partner -- Analyst

And one last question I should ask on the live call. Your contracted backlog $1.1 billion, I think it was almost $290 million higher than your last record, I think, at just under $820 million. You did increase your guidance above sort of where we and the Street were looking for, for this year, but that magnitude of strength in the contracted backlog kind of suggest that you're looking at contracted backlog as maybe longer in duration than what you've seen in contracted backlog, looking back over the last many quarters?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

You hit the nail on the head. Yes, you hit the nail on the head. They are longer durations. And the other thing that you have with some of these longer duration contracts, you don't have that much flexibility to accelerate revenues and so on. They are financed over the three year terms. The payment schedule is over three year terms or two whatever the case might be for 30 months. So you built according to the schedule that it's on those plan.

But on the other hand, it's great, great visibility. And we lever the company by taking some of the design-build opportunities where they might be with existing client with the federal government. And you heard about the great post office job that we did in New York, but the post office is a great client of us. We're doing some assets that we will own about five of their facilities and so on. So it's a good opportunity.

Craig Irwin -- Roth Capital Partner -- Analyst

Well, congratulations on the strong progress, again another great quarter. Thanks for taking my questions.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Thank you very, very much. Thank you, Chris.

Operator

Thank you. [Operator Instructions]. Our next question comes from Pavel Molchanov of Raymond James. Your line is open.

Pavel Molchanov -- Raymond James -- Analyst

Thanks for taking my question, guys. Good to get on your call the first time. First about the [Speech Overlap] first about the quarterly progression. So this past year was unusually back-end loaded, more than a third of your full year revenue came in Q4. Do you anticipate 2020 being equally back-end weighted?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

I will say not as much, but it will be back-end weighted as far as the third and the fourth quarter. And Mark knows the schedule of this project as much better than I do.

Mark A. Chiplock -- Vice President, Corporate Controller and Chief Accounting Officer

No. I think that's just generally, that's typical. I mean, I think 2019 was a little bit more unusual just given some of the large federal projects that we contracted late in the year. But I think next year would be a little bit more normal compared to previous years. But generally, just given construction schedules and seasonality, it's generally heavier in the back half of the year.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yeah, it's a good point. And we had almost $35 million or close to it of what we call investments in development. But once all those contracts were executed, immediately that goes into revenue because we have that this year. And if you -- that backlog, it was developed for the last two or three years. And it was imperative that those contracts get executed by the end of the year because of the IDIQ expiration date, the sunset date here. And I'm glad to say that each and every one of those contracts did get executed.

Pavel Molchanov -- Raymond James -- Analyst

Understood. Let me ask a more kind of high-level conceptual question. We're seeing more and more private sector companies, large Fortune 500 enterprises, setting these low carbon or even zero carbon targets. And historically, your business has been more oriented toward the public or the nonprofit sector. Are you seeing actual uplift in business from these ESG driven corporate decarbonization initiatives?

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Yes, very, very much so. I mean, we have talked before Kaiser Permanente. And actually, just about every major bank is talking about clients now. And we're doing design build. So we can pivot, we're doing a considerable amount of work right now what I would call for the C&I sector, primarily, solar plants or combined heat and power and microgrids resiliency issues that they have faced. But the ESG issue, that's why I mentioned it on my remarks, is becoming the driver. And it's a driver because the economics of all these advanced technologies have come down, and these projects, they pencil out for the particular customers. And Doran, do you want to say something?

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

No, Pavel, what I would say is that, the C&I customers are starting to look at the cost of carbon as they evaluate these projects. And taking that into account when considering the cost, it's a different calculus than your traditional ESPC calculation, but they are moving forward with it. And I'd say that the ESG motivation is definitely there for all of these enterprise contracts that we've gotten on the solar side with nationwide coverage. We've got -- as I mentioned in the comments, we've got a microgrid coming in the C&I sector that's going to be an asset on the balance sheet, that's a very exciting move. So it's definitely happened.

Pavel Molchanov -- Raymond James -- Analyst

Thank you very much.

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Thank you.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Leila Dillon -- Vice President, Marketing and Communications

George P. Sakellaris -- Chairman of the Board, President and Chief Executive Officer

Spencer Doran Hole -- Senior Vice President and Chief Financial Officer

Mark A. Chiplock -- Vice President, Corporate Controller and Chief Accounting Officer

Chris Van Horn -- B. Riley FBR -- Analyst

Noah Kaye -- Oppenheimer -- Analyst

Craig Irwin -- Roth Capital Partner -- Analyst

Pavel Molchanov -- Raymond James -- Analyst

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