Ameresco (AMRC) Q3 2026 earnings review
Ameresco signs $737 million in contracts, but unbilled work drains cash
Ameresco, which builds energy projects and runs power plants for governments, utilities and data centers, turned its unsigned project awards into signed contracts while its headline profit jump came from rule changes. Sales rose 10% from a year ago, and chief executive George Sakellaris converted $737 million of awarded orders into signed contracts. The company raised its full-year profit outlook, but it said the higher profit targets come entirely from counting 100% of its joint ventures and recognizing tax credits upfront.
| Revenue | $580.3M +10.3% from a year ago |
|---|---|
| Cash profit (Adjusted EBITDA), old method | $77.9M +5.7% from a year ago by our math (reported +24% on new JV rules) |
| Signed project backlog | $2,593M +12.6% from last quarter ($737M converted) |
| Full-year revenue outlook | Raised $40M middle of the range: 10.8% growth (profit ranges raised on accounting only) |
⚖️ Verdict: 🟢 Bullish
The story got better because the near-term backlog hole closed. Last quarter, signed contracts due within a year fell while unsigned awards grew; this quarter's conversions lifted the 12-month signed book by 11% from last quarter and allowed a $40 million raise to the full-year sales plan. Two cautions remain: unbilled work on the balance sheet reached $1 billion, which held adjusted operating cash flow to $4 million, and part of the gross margin gain came from stretching out power plant depreciation schedules.
The question now is whether Ameresco can turn its $1 billion of unbilled project work into cash and finish its delayed power plants before year-end. Either fourth-quarter project milestones trigger customer payments and a wave of plant completions, or rapid construction growth continues to absorb cash into 2027. Fourth-quarter operating cash flow and megawatts placed in service will settle it.
🐂 Bull Case
Signed Contracts Rebounded by $737 Million
Ameresco tracks project orders in two stages: awarded backlog, where a customer has picked the company but has not signed a contract, and contracted backlog, where the contract is signed. Last quarter, awarded orders jumped while signed contracts shrank. In the third quarter, chief executive George Sakellaris said the energy contractor converted $737 million from awarded into signed contracts, "building visibility as we head into 2027".
- Total signed project backlog: $2.59 billion, up 13% from last quarter and up 5% from a year ago
- Signed backlog due within 12 months: $1.23 billion, up 11% from last quarter and down 2% from a year ago
- New project financing commitments: $106 million secured in the quarter, following $471 million in the second quarter
That conversion matters because Ameresco cannot book construction revenue until a customer signs. Adding $291 million net to the signed book after subtracting the quarter's $446 million of project revenue reverses last quarter's drop and lifts the revenue floor for the next four quarters.
What to watch: signed backlog due within 12 months in the fourth-quarter report. A reading above $1.25 billion would return the near-term book to year-over-year growth and support double-digit project sales in 2027.
Data Center and European Awards Lift Backlog 39%
Even after moving $737 million into signed contracts, Ameresco's unsigned awarded backlog rose to $4.56 billion because customers handed the company $875 million in new project awards. Total project backlog reached a record $7.15 billion, up 39% from a year ago. Data centers now account for 25% of that total, or about $1.79 billion by our math, up from 24% last quarter.
Sakellaris said the quarter's $200 million of data center awards came from an "expanded scope of work for Ameresco at an existing project", while federal infrastructure and Europe drove over $675 million in other wins. In Europe, the joint venture with Sunel generated $45.2 million of cash profit before interest, taxes and depreciation in the first nine months, already beating the $28.9 million it earned in all of 2025.
What to watch: how much of the $1.79 billion data center backlog moves from awarded to signed contracts over the next two quarters. Converting those awards into signed contracts is the step that locks in equipment orders and construction schedules.
Service and Power Plant Sales Grew 20%
Alongside building projects for customers, Ameresco owns and runs 827 megawatts of solar, battery and biogas power plants (Energy Assets) and maintains completed sites under long-term operations and maintenance (O&M) contracts. Both recurring businesses grew 20% from a year ago in the third quarter, twice the pace of the construction unit.
Owned power plant sales reached $75.4 million and service sales hit $37.0 million. Profitability in the service division jumped: its cash profit margin before interest, taxes and depreciation reached 24.5% of sales, up from 8.5% a year earlier. Together, owned power plants and maintenance contracts brought in 19% of third-quarter revenue but generated 54% of total cash profit.
What to watch: service division cash profit margin in the fourth quarter. Holding above 20% would show that newer third-party solar and battery maintenance contracts carry permanently higher margins than legacy building contracts.
🐻 Bear Case
Accounting Changes Created the Profit and Outlook Gains
Ameresco reported cash profit before interest, taxes and depreciation (Adjusted EBITDA) of $91.7 million, up 24% from a year ago, and profit per share excluding one-offs of $0.88. It also raised its full-year ranges for both measures. However, the company said the new full-year ranges "reflect only these changes and does not reflect a change in our operational outlook. Our full year adjusted EBITDA and Non-GAAP EPS would otherwise have been unchanged."
- Joint venture rule change: Non-GAAP profit now includes 100% of the Sunel and Neogenyx joint ventures instead of only Ameresco's share, adding $13.9 million to Q3 Adjusted EBITDA and $0.28 to Non-GAAP EPS
- Like-for-like Q3 Adjusted EBITDA: $77.9 million under the old method, up 5.7% from a year ago by our math rather than 24%
- Power plant depreciation: extending asset useful lives cut Energy Assets depreciation by $3.3 million from a year ago, lifting gross margin by 0.6 percentage points of revenue by our math
Gross margin rose 3.1 percentage points from a year ago to 18.7% as cost of revenues fell from 84.4% of sales to 81.3%. Part of that gain came from stretching out depreciation schedules on power plants, and the rest of the headline profit beat came from counting partner-owned joint venture profits and recognizing tax credits upfront.
What to watch: the non-controlling interest deduction in the fourth-quarter reconciliation table. That line shows how much of the headline cash profit actually belongs to joint venture partners rather than Ameresco shareholders.
Unbilled Work Hit $1 Billion and Drained Cash
Because Ameresco books construction revenue as work progresses on long-term projects, it records sales before it can send an invoice. That gap sits on the balance sheet as unbilled revenue. In the third quarter, unbilled revenue climbed another $111 million to pass $1.00 billion, up $201 million since the start of the year.
That working-capital build is starving the company of cash. Operating cash flow was negative $8.9 million in the quarter and negative $60.3 million over the first nine months. Even on the company's preferred measure — Adjusted Cash from Operations, which adds back $12.6 million of financing proceeds from federal energy savings contracts — cash generation fell 94% from a year ago to $3.7 million, and the eight-quarter rolling average slipped from $29.6 million to $25.7 million.
What to watch: unbilled revenue and Adjusted Cash from Operations in the fourth quarter. Management has pointed to the second half for cash recovery, so a fourth quarter that fails to shrink the $1.00 billion unbilled balance would show that faster project growth requires permanent working capital.
Risks this quarter didn't answer
One operational slowdown and three standing legal and balance-sheet risks received no update or resolution in the third-quarter earnings release.
- Slow power plant completions: Ameresco placed only 3 megawatts of energy assets into operation in Q3 (36 megawatts in the first nine months) and removed the 100–120 megawatt full-year target from its outlook table; Q4 installations will show if projects slipped into 2027.
- Southern California Edison penalty risk: up to $89 million in potential liquidated damages for delayed battery projects remained unmentioned in the release; the 10-Q filing's commitments note will show if the exposure changed.
- Sale-leaseback covenant waivers: temporary waivers on three August 2018 master sale-leaseback lien defaults were set to expire between August and December 2026; the 10-Q debt footnote will show if lenders extended or resolved them.
- Equipment lead times and Powin deposits: the release gave no update on transformer and turbine wait times or the $26.7 million in deposits tied up in the Powin bankruptcy; the 10-Q contingencies note will carry the reading.
💲 Other KPIs
Corporate debt to cash profit fell to 2.9x from 3.2x last quarter, widening the cushion below the 3.5x bank limit. Total corporate debt edged down to $380.4 million from $384.8 million in the second quarter, while unrestricted cash rose to $128.5 million, helped by partner cash contributions into the Neogenyx joint venture.
Financing costs rose 17.6% from a year ago as total project and corporate debt reached $2.01 billion, up from $1.88 billion at the end of 2025. Over the first nine months, net interest expense climbed 22.6% to $77.5 million, forcing management to raise its full-year interest and other expense forecast by $10 million.
Diluted shares increased 0.6% from a year ago and fell slightly from 53.8 million last quarter. Instead of issuing common stock to pay for the $357.2 million of capital investments made in the first nine months, the energy contractor used non-recourse project debt and $294.4 million of joint venture partner capital.
🔮 Guidance
Raised. Ameresco narrowed the range and lifted the middle by $40 million to $2.14 billion, or 10.8% growth from 2025. After three quarters at $2.10 billion, this is the first move this year. By our math, the full-year midpoint leaves $642.8 million for the fourth quarter, or 10.6% growth against last year's record fourth quarter.
New. The fourth-quarter plan calls for $637.5 million at the middle of the range, up 9.7% from a year ago and up 9.9% from the third quarter. Together with third-quarter sales, that puts second-half revenue at $1.22 billion, $35 million above the middle of what the prior full-year plan implied.
Raised on accounting changes. The middle of the range moved up $40 million to $300 million, or 20.2% growth over recast 2025 results. The company stated that the increase comes entirely from including 100% of its consolidated joint ventures and recasting tax credits, and that the operational outlook is unchanged. Prior moves this year were -$22.5M, $0M, and now +$40M.
New. The plan points to $85 million at the middle of the range, up 12.5% from a year ago (recast) but down 7.4% from the third quarter. That matches the $85.8 million left over by the full-year outlook.
Raised on accounting changes. The middle of the range rose $0.65 to $1.90, following moves of -$0.055 and +$0.08 earlier this year. Because 2025 was recast up to $3.54 under the new upfront tax-credit accounting rule, the new $1.90 midpoint still represents a 46.3% drop from 2025 due to smaller tax benefits this year. Without the accounting and joint venture changes, the plan was unchanged.
New. The fourth-quarter target averages $1.00 per share, up from $0.88 in the third quarter and down 39.8% from the recast $1.66 earned in the fourth quarter of 2025. That aligns with the $0.99 per share implied by the full-year range.
Raised tax benefit. Management now expects an income tax benefit equal to about 50% of pre-tax income, up from a 25% to 40% benefit range last quarter and 10% to 20% in the first quarter. The larger benefit reflects the third-quarter adoption of upfront accounting for transferable investment tax credits.
Increased cost. After holding the range at $95–100 million for three quarters while actual interest costs ran higher, the company raised its full-year expense forecast by $10 million. Nine-month net interest and other expenses already total $78.6 million, leaving $28.9 million for the fourth quarter at the middle of the range.
Unchanged. The full-year forecast stays at $115.5 million at the middle of the range for a fourth straight quarter. Extending the useful lives of operating energy assets lowered third-quarter depreciation to $26.0 million from $33.0 million in the second quarter, bringing nine-month depreciation and amortization to $91.0 million and keeping the full-year cap within reach.
❓ Key Questions
Did the 100–120 megawatt power plant target slip?
Ameresco put only 3 megawatts of owned energy assets into service in the third quarter (36 megawatts in nine months) and dropped the 100–120 megawatt full-year line from its outlook table. How many megawatts will reach operation in the fourth quarter?
When will the $1.00 billion of unbilled revenue collect?
Unbilled revenue rose another $111 million in the quarter to $1.00 billion, holding Adjusted Cash from Operations to $3.7 million. How much of that unbilled balance will convert into billed invoices and cash before year-end?
What is the new depreciation life for power plants?
Gross margin gained about 0.6 percentage points from a year ago because Ameresco lengthened the useful lives of its energy assets, cutting segment depreciation by $3.3 million. Which asset types were extended, and by how many years?
How much of the data center book is signed?
Ameresco added a $200 million scope expansion to its data center awards, bringing data centers to 25% of total backlog (~$1.79 billion). Have any of the five awarded data center projects converted into signed contracts yet?
Will financial segments change to match the two pillars?
Management markets the company around Power Infrastructure and Buildings & Public Infrastructure, but the release still reports results under Projects, Energy Assets and O&M. Will annual segment reporting change, or are the pillars for marketing only?