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Ameresco Inc (NYSE:AMRC)
Q1 2020 Earnings Call
May 4, 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 Incorporated First Quarter Earnings call. [Operator Instructions]

As a reminder, this call is being recorded. 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, Robert, and good afternoon, 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 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 made on today's call. In addition, we 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, 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. 2020 marks not only the 50th anniversary of Earth Day, but also the 20th anniversary of the founding of Ameresco. Since our inception in 2000, we have seen tremendous technology advancements across our industry. When we started this business, we entered into an addressable ESCO market of about $2 billion to $3 billion annually, which grew to $7 billion to $8 billion in recent years. And with our investments in distributed generation, energy infrastructure, battery storage, microgrids and smart technologies, we have evolved our business and now participate in a combined market opportunity of 30 -- of $20 billion to $30 billion annually. We have witnessed a heightened awareness of the importance of energy savings and renewables. During this time, we have been consistently profitable. We have built over $7 billion of projects and our customers have been able to annually realize approximately $1 billion of energy savings. In the past 10 years alone, we have helped reduce over 55 million metric tons of CO2 from the atmosphere. We are very proud of the accomplishments and grateful to our customers and our employees. Unfortunately, this 20-year anniversary is also marked by one of the largest health crisis to face the world in many years.

Much like the energy solutions we provide, Ameresco, as a company is resilient. In the face of COVID-19 pandemic, we prioritize the health and welfare of our employees and the communities in which we operate. The company quickly established risk prevention policies consistent with current CDC guidelines and state, province and local health agencies. These policies are being monitored and updated as new information comes [Phonetic] to light. Our geographic footprint of over 70 offices allows us maximum flexibility in our operations, more efficient execution on our projects, and greatly reduces the risks associated with having all employees in a single location. Our employees' transition to the work-from-home environment was accomplished seamlessly as we already had the required technologies in place. We are also using this time and our technology platform to invest in our people with a number of employee-training initiatives under way.

Our work in the field continues with few disruptions and added protections at these sites. Ameresco's work qualifies as an essential service in most jurisdictions where we operate, which has enabled us to continue to execute on both project contracts and the build-out of our energy assets. Early in the crisis, we worked closely with many of our customers to move ahead of schedule on some projects to avoid potential delays. This is a good example of how Ameresco is working hand-in-hand with our customers to ensure the development, design, deployment and operation of their critical infrastructure. We have also built a tremendous amount of resiliency into Ameresco's business model. As many of you know, we have purposely continued to build out our energy asset portfolio in operational and maintenance business, specifically to add a greater level of visibility and predictability through higher-margin recurring revenues. We also entered this year with record levels of contracted backlog in our project business, providing further visibility for this year and beyond.

2020 is off to an excellent start with strong first quarter results. While Doran will go into our first quarter financials in more detail, I do want to touch upon some key highlights to the quarter. Revenue of $212 million represents the highest first quarter revenue in the company's 20-year history, growing 42% compared to last year's first quarter results. We gained significant operating leverage from this increased revenue level, growing our net income by 50% to $6.2 million, adjusted EBITDA by 50% to $21.2 million and non-GAAP EPS to $0.15 from $0.02 one year ago.

We continue to execute smartly and safely to minimize disruptions from both our contracted project backlog and energy assets in development. Our customers remain as committed as ever, although many of them have had to shift near-term focus, resulting in a slower-than-normal pace of pipeline activity, as they prioritize the COVID-19 crisis. We do, however, expect the pace of new business activity to resume later in the third and fourth quarter. We have also shifted our focus to executing on our existing work in progress on both projects and assets, given our great existing project backlog and assets in development. Given these dynamics, we expect our project backlog and assets in development metrics to remain relatively stable in the near term.

Before handing the call over to Doran, I want to point out the potential business opportunities we anticipate post COVID-19. Many companies, institutions and government entities will exit this crisis in a challenged financial position with the need to reduce their operating budgets. At the same time, many of these organizations are facing declining revenue opportunities and a history of deferred spending on vital infrastructure. In this environment, we believe that Ameresco's guaranteed cost savings from energy efficiency and distributed energy assets will be in greater demand. As this demand increases, we are able to offer our customers flexible financial solutions that do not require any upfront capital. Even before COVID-19, an interesting funding model called public-private partnership or P3 has been finding increased interest across the industry. Public-private partnerships are long-term contractual arrangements between a public entity and a private partner that deliver and fund needed infrastructure and services. The higher education sector has demonstrated considerable interest in the P3 model with a few high-profile contract awards that will outsource their entire energy and water infrastructure. Ameresco is aggressively pursuing such opportunities with strategic focus on small- and medium-size colleges and universities where we have significant relationships and a competitive advantage.

We entered 2020 with an outstanding backlog, multiple recurring revenue streams and a great competitive position and platform, allowing us to achieve impressive results even in a challenging environment. While the COVID-19 crisis presents near-term challenges, we expect to look back on 2020 as yet another year of strong growth and important company milestones. And as we look beyond the COVID-19 crisis, we believe we will experience an even greater demand for energy savings contracts, providing critical infrastructure upgrades while returning meaningful savings to our customers. We are well prepared for these expanding market opportunities in front of us.

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

Doran Hole -- Senior Vice President and Chief Financial Officer

Thank you, George, and good afternoon, everyone. As I review the company's first quarter 2020 financial highlights, I ask that you please refer to our press release and supplemental slides for more complete financial information. Our strategy of creating a more predictable and resilient business model paid off once again this quarter, as we generated impressive results and have the visibility to maintain our guidance even in the face of the COVID-19 crisis. Execution on our contracted project backlog, along with the recurring revenue streams produced by our company-owned assets and O&M business led to financial results that are strong and well-diversified from a geographic and client perspective. First quarter revenue of $212 million increased 42% from the previous year, driven by much higher projects business in a quarter that is usually impacted by seasonality. As noted, the company, along with our customers, work tirelessly to proactively deploy more resources on projects in anticipation of potential COVID-19-related slowdowns. We estimate that we were able to pull forward approximately $20 million of revenue from these efforts. With a large percentage of project revenues, gross margin of 18.1% was impacted by our mix during the quarter. That said, gross profit dollars exceeded our expectations for the quarter, while controlled opex growth provided strong operating leverage for the company. Also benefiting our bottom-line during the quarter was a $2 million discrete tax benefit from the CARES Act. Our liquidity remains strong, giving us the ability to fund our growth strategy. The company ended the quarter with $40 million of cash on the balance sheet. And during the quarter, we also amended our senior credit facility to provide additional availability under our revolving credit line. We have not seen a material change in the market for non-recourse project financing. And furthermore, we believe that we continue to have the ability to monetize our asset pipeline and recycle the proceeds into additional opportunities.

Project backlog saw a small decrease sequentially as we executed on a significant amount of contracted backlog during the quarter. Although award activity slightly slowed during the quarter, our total project backlog remained strong at $2.2 billion, representing growth of 7% from the same quarter last year. We made a calculated shift to focus on our backlog. Since we are considered to be an essential business, we have been able to deliver on most of our contracted projects. While we may face minor delays with travel and logistical challenges, we are confident in our ability to continue to execute throughout the remainder of the year.

Our Ameresco assets business faced similar dynamics during the quarter. Operating energy assets ended the quarter at 255 megawatts with 298 megawatts of assets in development and construction. Similar to our projects business, our focus during the COVID-19 crisis has been and will continue to be on execution of this strong backlog of assets in development. Given our strong first quarter results and visibility into the remainder of the year, Ameresco is maintaining the guidance we provided with our fourth quarter results. While we normally do not provide quarterly guidance, given the unusual circumstances, we will provide some color on the second quarter. We anticipate second quarter revenue to be down sequentially due to the proactive pull forward of $20 million of project revenue that contributed to our strong first quarter revenue results. We also expect an additional $10 million of revenue will be pushed out of the second quarter to the second half of the year as a result of project delays. Combination of the revenue shifts, along with incremental remobilization costs will reduce second quarter operating income by approximately $6 million. Full-year 2020 results should be another year of solid revenue and earnings growth. We are confirming our guidance from earlier in the year, specifically with 2020 total revenue to be in the range of $910 million to $980 million, adjusted EBITDA to be between $102 million and $112 million, and non-GAAP EPS in the range of $0.86 to $0.96. To provide some additional detail, we anticipate gross margin to range from 18.5% to 19.5% with interest and other expense at approximately $17 million to $19 million. This guidance excludes the impact of any non-controlling interest activity and any additional charges related to the company's restructuring activities as well as any related tax impact.

Our guidance is predicated on current COVID-19 restrictions and disruptions not worsening, and with a slow return to a more normal operating environment starting by mid-year. 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, Doran. To conclude the call, I would like to leave you with three key takeaways. First, despite this challenging time, our recurring revenue streams and great contracted backlog give us stability and good visibility for 2020 and beyond. Second, we have the cash and access to funding that allow us to execute on our strong asset development pipeline. And third, once the COVID-19 crisis subsides, we believe that customer needs will drive even greater energy savings and distributed energy generation opportunities.

Before we take your questions, I would like to, again, thank our employees, our customers and our partners for making Ameresco a great success story and for their extra hard work during these challenging times. The entire team hopes that you and your families stay safe.

Operator, I would now like to open the call to questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] We will start our first question with the line of Noah Kaye. Your line is now open.

Noah Kaye -- Oppenheimer -- Analyst

Hi, good afternoon. Thanks for taking the question. And first, it's good to hear your voices and I hope that you, your family, and those -- your employees in Europe [Phonetic] are all doing well. So let me just convey that upfront. Maybe can you comment on the cadence of 2Q so far on the project side, just -- anticipating just $10 million of revenue delay, that's -- it's really not much at all and weekend [Phonetic] change of lost revenue. So help us understand what you've seen so far to give you confidence there. Did delays really present at the beginning of, say, in the month and start to ease up over time? Just kind of help us understand how you're getting to this $10 million expectation.

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

Yes. First, with $20 million, we pull it forward because we had more people, more resources, allocate them into the various job sites. And that helped a lot. And we had, of course, in order to change that schedule, worked with our customers in order to be able to accelerate that construction and worked out very well. And what we have experienced in some of our jobs, what we call project delays, is a particular job, there might be shut down for a week or two, and then we have to secure the site and then coming back and remobilize again and get going again. And during the month of April, various states were closing. And most of the jobs, especially in hospitals, it happened in a couple of situations, a couple of school systems and so on. And the other thing that's happening in some of the sites, let's say, if one of the sub-contractors tests positive, then we have to stop construction, clean the site and then probably take another week, so we remobilize resources for that particular site. But -- and then, in addition to that, we pretty much -- on the construction side, we shut down in Ontario and UK. But we continue to work there to do design and development work and so on, and we anticipate that they will come back by June 15. And that's all the indications right now. So that's why -- I know it's a small number, but the thing that is going to hurt us a little bit, too, it's the margin, too, for the quarter. Because every time you close down a particular site, and then you start again, it costs you a little bit more money. And the other thing that's happening, let's say, you have electrical sub-contractors, you have mechanical sub-contractors, we have to control the number of people on any particular site. So we have to follow the rules and regulations as they might become -- practice safety otherwise for -- whether it's our employees or the sub-contractors' employees and be cognizant of that. This is the estimate that we have from the various units. We had a meeting couple -- a week ago or so, and the number looks reasonable. Let's say even if it's a little bit more, we feel very confident though it has just been shifted to the next course. And the same -- where we have seen more delays is what I would call in the delays in going out with new RFPs as well as moving contracts from the awarded to the executed contracts. And that's why I made the statement. The customers, though, remain committed and engaged. And our people, we make sure that we stay in close contact with them. And they say to us, you guys wait. Once we get over this crisis, we will be with you. And that's why, again, we feel very comfortable that we will see the pickup later on the awards as well as moving contracts from the awarded to the executed. I'm sorry. Go ahead.

Noah Kaye -- Oppenheimer -- Analyst

That makes sense. Just so I understand the first part of what you said, what kind of screening have you had to put in place? Are you implementing broadly to make sure that your contractors and your sub-contractors are kind of following all appropriate health protocols?

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

You're talking about -- I don't know if I understood the question right.

Noah Kaye -- Oppenheimer -- Analyst

Yes. Can you just talk about what kind of testing and screening requirements you put in place to monitor for COVID among the labor force on these jobs and to minimize the risk that you're going to have in these types of shutdowns?

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

Yes. All the CDC guidelines, we've been following them. And pretty much all our employees with -- and actually now when we start-up in the office, we bought the infrared thermometers that anybody before they come into the office, we will take their temperature. Everybody has to wear a mask on the particular sites and they maintain the distance and so on. So we've been following all those guidelines.

Noah Kaye -- Oppenheimer -- Analyst

Okay. That's very helpful. And then just quickly on the energy assets, any change in expectations on the timeline for deploying, say, 50 megawatts of renewable assets this year? And are you still comfortable that McCarty Road will come online by year-end?

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

Yes. The schedule is that McCarty Road will come online by the end of the year. And I think it's scheduled something like late November, beginning of December. And then we had a total, I think, on the last call, we mentioned 50 megawatts of total capacity installed by the end of the year. And we still maintain that. I'd like to point out there are a couple of projects on that. That is a pretty good site. And if by any reason, the utilities delay the interconnection, that might be slipping to early next year. But as far as us delivering on the construction, we don't encounter any problems.

Noah Kaye -- Oppenheimer -- Analyst

Understood. Well, thank you and good luck and good health to you all.

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

Thank you very much. Same to you.

Operator

And our next question will be coming from the line of Chris Van Horn. Your line is now open.

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

Good afternoon. Thanks for taking my call and congrats on the solid execution in the quarter.

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

Thanks, Chris.

Doran Hole -- Senior Vice President and Chief Financial Officer

Thanks, Chris.

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

So just want to talk about the puts and takes on your adjusted EBITDA guidance. Is some of that due -- from mix, is some of that from cost controls? Is any one of those weighted more than the other?

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

Yes. Actually, Mark actually did the actual calculation. I'll let him answer that.

Mark Chiplock -- Vice President, Controller and Chief Accounting Officer

Yes. I mean, Chris, I think, as you know, it's a function of all that. I mean, it's certainly going to be impacted by mix, and we've got some good visibility there in terms of the projects that will drive revenue for the remainder of the year for the revenue that we're expecting for the next nine months, about 80% of that is going to come from contractor or contracted backlog, based on the project revenue side. We've got another 16% that we expect to come from awards that we'll convert to contracts and then just a little bit of book and burn. Yes. We're certainly going to expect to maintain some discipline with opex. But yes, we feel pretty comfortable with the EBITDA ranges holding steady for the rest of the year.

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

Okay. Got it. And then when I think about your backlog, do I -- do you use kind of the sales mix that you provided on Slide 5 as kind of a template of what backlog might look like? Or is backlog going to shift more toward that recurring and less project work? Any clarity there?

Mark Chiplock -- Vice President, Controller and Chief Accounting Officer

I mean Q1 is generally heavier recurring just because seasonality wise, the projects can be a little bit lower. That should start to even itself out, and we expect a heavier mix of the projects at the back end of the year. So from our project backlog progression, we'd expect that to pick up by the end of the year and we start to see the percentage from assets and recurring start to level out a little bit.

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

Okay. Got it. And then just last one for me. There's a lot of chatter around municipal and government budgets and the pressure that they're seeing. We're hearing that the cost savings and the value-add that some of the projects you do are -- those projects are going to be maintained, if not kind of added to, to help kind of weather the storm. Is that a fair assessment? Is that what you're seeing in the marketplace?

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

Yes. And that's why I say because there will be budgetary constraints that they will need to do many of these upgrades and save money on their budgets. And that's why we think that the business will pick up at the other end of the COVID-19. If you -- our business model is that it's a third-party financing. So they don't have to come up with the upfront capital. So we help them reduce their operating expenditures. So it's budget neutral, you may say, the offering that we have, and that's why the federal government loves it so much.

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

Got it. Makes sense. Well, thank you so much for the time and stay safe everyone.

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

Same to you. Thank you.

Operator

And our next question will be coming from the line of Chad Simmer [Phonetic]. Your line is now open.

Unidentified Participant

Thanks. Congratulations on a solid quarter.

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

Thank you very much.

Unidentified Participant

I was wondering if you could just comment on the debt markets. And specifically, while I recognize one of the benefits to your business model is the fact that you're not taking on direct risk, your customers -- you're still reliant on a liquid and sound lending market. And what we're seeing, aside from the injection of liquidity from the Fed, is somewhat concerning. So I'm just wondering how you think about sort of an optimistic rebound post COVID and juxtapose that against what you're seeing in the debt markets.

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

Yes. I will let Doran handle that. But my overall comment, I will say that we see an opportunity, but I will let Doran explain it.

Doran Hole -- Senior Vice President and Chief Financial Officer

Yes, sure. So I think there's -- I've just got to kind of split this into two pieces. One is the market for the lenders who participate in the energy financing on the energy efficiency side, which is the project side of our business. And we certainly haven't seen a pullback on that side. Again, this is companies who are financing the guaranteed savings from the energy savings contracts. When we move into the kind of Ameresco asset side of things, we have not seen a slowdown in the project financing. We are engaged in a number of lending relationships. And our indications thus far have been that each and every one of those institutions is still willing to step up and make new loans, do refinancings, whatever it might be. And spread activity, while rumored to be pretty heavy, I don't think we're necessarily seeing it when the rubber hits the road at the end of the day when we negotiate -- when we renegotiate terms. So we haven't really seen the impact of that. And I think that furthermore, what you're probably seeing is the -- when you think post COVID, really that comes down to is will the broader capital markets be there and be available? And again, that -- you've seen the bond market start to open up a little bit again. Obviously, the spreads are not back anywhere where we'd be interested in pursuing things. But I think we're not seeing the pullback thus far.

Unidentified Participant

That's helpful. Thanks. And then I have a two-part follow-up, if you would. And one is kind of internal as well as external. I guess for the internal question, the work-from-home environment has provided with many of the other companies that I cover data points that are suggestive that productivity is actually increasing from some of the sales force that forcing function of Zoom meetings being -- or virtual meetings, not limited to Zoom, being acceptable, has allowed for sales folks to increase the closing ratio or the number of sales calls. So one, are you seeing any of that kind of play out?

And then I guess the flip side to that would be that potential contagion into C&I starts, which, obviously, if you're seeing virtualization is a benefit that may have negative implications on starts. And I'm wondering what your thoughts are on both of those. Thanks.

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

Yes. Yes. If I -- first, speaking for myself, I've been very pleasantly surprised the way that working from home it has worked. And we're going to have to start thinking about -- rethink of how we do some things and how we maybe, ultimately, we will actually probably reduce operating costs in the company because we learn different things. As far as doing virtual meetings with particular customers, when it comes to the initial meetings and the contact, I will say yes. But the thing that we have run into delays when you need the Board to meet and have a virtual meeting on the Board presentation in order to approve the projects or a school committee meeting or a college trustees. This is where we have seen some delays. And I will say this much though that the last week, two of those meetings are going to happen, and we will be bugging them, telling them to have it virtual, and Dave just told me one of them, they went ahead and did it. So I don't know what's going to happen, but it's a way of doing business and some of the boards and trustees and so on and the school committee meetings, maybe they will get to that point. It's a much more efficient way rather than have to travel to the particular location. We will save a lot of traveling expenditures.

Unidentified Participant

Great. And so if you see that play out, any thoughts on C&I starts because that would be the consequence of sort of positive...

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

Yes. And actually, we have seen quite a bit of C&I start. And I did -- on the last call, we did say it, I mean, a substantial amount of the work that we do on the design build is from the C&I customers because sometimes we approach them and say, look, we want to develop a solar plan for your facility. And they say, yes, great. I say we want to own it. They say, great. And then you go down the road a little bit, and they have lower cost of capital than we do. They say, thank you very much. You design it. You develop a design and build it for us and we'll pay you. And we're seeing that quite a bit, and that part of the business is picking up, and we are making more of an effort in that space. And I think I did mention it last time that the C&I, they are getting into it because, especially in the distributed generation because it pencils out. Otherwise, it's economic. It's more economic for them. And of course, it has the environmental benefits attributes associated with it. So maybe these virtual meetings will probably accelerate that business. But we're paying attention to it, Greg [Phonetic].

Unidentified Participant

Great. Well, thank you very much.

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

Thank you.

Operator

[Operator Instructions] Next question comes from the line of Craig Irwin. Your line is now open.

Craig Irwin -- Roth Capital Partners -- Analyst

Good evening. I hope you're all well and thanks for taking my questions. First thing I wanted to ask is your EBITDA in this quarter was really impressive. Can you maybe clarify for us whether or not there were any individual project close-outs or one-time items that contributed to strength there? Or is this sort of a new stair at the bottom of the annual steps that we're looking at as Ameresco is building this really impressive assets business?

Mark Chiplock -- Vice President, Controller and Chief Accounting Officer

I can take that real quick. Craig, this is Mark. There really weren't -- wasn't much at all from a close-out perspective in Q1, very minimal. I mean, we had some minor impact, but it was very small. So yes, not a whole lot. It was really just the contribution from the projects themselves. That's generally just based on timing. So we don't normally plan for those anyway, but Q1, I can tell you that just really had no impact at all.

Craig Irwin -- Roth Capital Partners -- Analyst

So was -- can you give us a little bit more detail, maybe, Doran, on the mix contribution on the asset side? Was there anything that outperformed, specifically have the RIN issues maybe left you behind at this point? Are you seeing seasonality help you a little bit with PV? Was there anything particular that we can call out for the strength? Or is this really the new annual beginning as we do climb these stairs?

Doran Hole -- Senior Vice President and Chief Financial Officer

Yes, look, I'll jump in a couple of things. One is that as we talk about acceleration of some of the pull forward of revenue, some of that is in design build, where we've got a lot of incremental gross profit, not a whole lot of additional incremental opex going on to that. And I think that's a mix issue.

With respect to energy assets, we did see performance, especially on the solar side, look really good. I think, on a weather -- the weather adjusted, when you look at our projections, they don't really forecast for that kind of good weather. So solar certainly did well within the portfolio. So that's why you kind of saw that going up. I can't say that this is paradigm shift. I wouldn't describe it that way, though.

Craig Irwin -- Roth Capital Partners -- Analyst

Okay. Understood. Understood. So then a big picture question, right? Stimulus, particularly infrastructure is on a lot of people's minds. Looking down the runway, lot of people are thinking maybe this is something that goes more to municipal and state governments than roads and bridges. But either way, it's something that could be additive and incremental. Can you maybe describe for us what you're hearing on the infrastructure side? And everybody knows Trump's a builder, right? He comes from construction. And he didn't screw-up the performance contracting program when he came in in his presidency, like his predecessor.

Can you maybe describe for us what gives you confidence that he's not going to do something stupid like Obama did when he introduced the competing funding for performance contracting? And can you maybe shed a little bit of light on your discussions with DC [Phonetic]?

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

Yes. I mean, one of the things that Ameresco has done very, very well, building out projects. So we have great execution of various projects. And most of the work that we do is infrastructure based because we're addressing boiler plants, chiller plants, combined heat and power, which is a cogeneration or take the Wood River -- the Savannah River plant that we've built, which was with wood, $200 million project. So we do large infrastructure projects. And the government actually -- that's why last year, the federal government has the largest execution on energy savings performance contracts because basically, they get the infrastructure upgrades with using third-party money. Now if they come up with a stimulus package, where it addresses more infrastructure upgrades, we can leverage those dollars to do more upgrades, whether it's a state facility, whether it's a municipality or the federal government, whatever the case might be. I don't think you can see us going into building bridges and roads. But on the other hand, the infrastructure in many other areas, even if it's away from the performance contract is just designed, built, because we have pivoted the company to be able to do design, build, work because that benefits the company, especially on the gross margin, they are lower gross margin, but they add gross margin dollars, contribute a lot, and that's how we are able to leverage the company. And many of those, from -- example I can use, from the RFP process to actually executing the contract, one of the largest contracts that we signed last year, design, build, it was six weeks and some other ones, it's even less time than that. So we love that kind of business. And we have pivoted the company to be able to do more and more design-build work. So we will take advantage. That's the bottom line. We will take advantage of that program. And I think it will be a contributor if it comes to pass.

Craig Irwin -- Roth Capital Partners -- Analyst

Great. Thank you for that. So another big picture question, right? So California, the low carbon fuel standard is obviously a big benefit to the green gas market, cellulosic gas and green gas in general. Something like 180 projects, most of them tiny, but in process there. And I know you guys are going to participate. Canada this summer is going to be filing its Clean Fuels program in the Canada Gazette, which will be the point that starts the clock for people to actually be able to start construction on new facilities. Can you talk to us a little bit about your project development in Canada historically?

Have you seen the Canadian market historically as an attractive market? How well prepared are you to maybe go in and serve the Canadian green gas opportunity, if we see this heat up the way it has in California?

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

Yes. We are talking to quite a few people up in Canada to develop some green gas sites in Canada. And as you probably know, we have a great presence up in Canada. We have five offices with the central located in Toronto, Canada. And with our group down here, we're leveraging our group and trying to develop some sites up in Canada. And I think we have couple right now that we are talking to people with very early stages. But what has happened in Canada, which is probably more interesting, some of the utilities, they are looking for green gas. And we are talking to couple of them maybe for long-term contracts, shipping some of the green gas from the United States to Canada.

So I think I mentioned it last time, and I will mention it again. We have a great pipeline right now of green gas plants. We did say that we have one be up and running by the end of this year. We have two coming up and running at the end of next year. We anticipate that we will have probably three the year after that. So we have a very good pipeline of green gas plants. But we are always looking for more. And we think that market is developing and for the better. I did mention last time that we are looking to get some long-term contracts. And we continue negotiating those contracts. It has slowed down a little bit because of the COVID-19 crisis. But for the long term, we think that's going to be a great, great opportunity for this company. It will be a great catalyst for us.

Craig Irwin -- Roth Capital Partners -- Analyst

Excellent. That's great to hear. Stay well everyone and thanks for taking my questions.

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

You're welcome.

Leila Dillon -- Vice President, Marketing and Communications

Thank you.

Operator

And we don't have any further questions. Presenter, please continue.

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

I guess none. So thank you very much all. I'm looking forward to our next call. Thanks.

Operator

[Operator Closing Remarks]

Duration: 47 minutes

Call participants:

Leila Dillon -- Vice President, Marketing and Communications

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

Doran Hole -- Senior Vice President and Chief Financial Officer

Mark Chiplock -- Vice President, Controller and Chief Accounting Officer

Noah Kaye -- Oppenheimer -- Analyst

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

Unidentified Participant

Craig Irwin -- Roth Capital Partners -- Analyst

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