What happened

Reversing course from the 11% decline they had suffered from the start of the new year through February, shares of Ameresco (NYSE:AMRC), a leader in energy efficiency solutions for facilities throughout North American and Europe, climbed 26% in March. 

Responding favorably to the company's fourth-quarter earnings report, investors shrugged off the company's decline in free cash flow -- a year-over-year drop of 31%, according to Morningstar -- and instead focused on the more encouraging figures. So let's dig in deeper and find what powered investors' enthusiasm.

A man looks at a financial chart featuring an uptrend with arms raised in celebration.

Image source: Getty Images.

So what

Dismissing off the decreasing amount of cash in Ameresco's pockets, investors instead celebrated several of the company's accomplishments during the past year. Driven by a 39% increase in U.S. government contracts and a 23% increase in small-scale infrastructure, Ameresco reported year-over-year revenue growth of 3%. Although it may seem like a meager amount, the company's revenue was in line with the forecast that management issued in the beginning of 2016. Furthermore, it suggests that management's revenue forecast for fiscal 2017 -- a range of $665 to $700 million -- is attainable. Should Ameresco achieve the middle of this guidance, it would represent 4.8% year-over-year growth.

Even more than the top-linegrowth, investors were certainly pleased with Ameresco's adjusted EBITDA growth. In fiscal 2016, the company reported adjusted EBITDA (which excludes unallocated corporate expenses) of $56.2 million -- a 23% increase over the $45.9 million it reported in fiscal 2015. Perhaps the more auspicious sign for investors, however, was the company's adjusted EBITDA margin expansion. Whereas the company reported an adjusted EBITDA margin of 7.3% in fiscal 2015, the margin was 8.6% in fiscal 2016.

Finally, the company's earnings report raised investors' confidence that there is smooth sailing ahead. Ameresco reported a total project backlog of $1.5 billion -- a year-over-year increase of 11%. More impressive, though, is the 37% growth in the contracted backlog. In fact, the company reports that it has $830 million in operations and maintenance backlog -- a high-margin business -- which extends over the next 15 to 20 years. Moreover, although President Trump seems less than enthusiastic about the renewable energy and energy efficiency industries, George Sakellaris, Ameresco's president and CEO, seems hopeful that the company will remain an attractive option for federal contracts. On the recent earnings call, Sakellaris, commenting on work with Washington, said, "We have been working with all the agencies and so far they continue to ask for new request for proposals."

Now what

It's clear in reviewing Ameresco's fiscal 2016 earnings report that the company is poised for continued growth. But in the coming months (and years), it's important for investors to continually monitor the revenue growth, ensuring that the company is successfully converting its impressive backlog to actual sales.

Investors may also want to follow the company's share repurchase program. According to its earnings release, Ameresco's board of directors recently approved an increase -- from $10 million to $15 million -- of the buyback program. Consequently, investors will want to make sure that any growth is not the result of a mere decrease in the share count.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.