Valuentum Exclusive Analysis for the Discerning Investor

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Image Source: Ameresco Inc – First Quarter of 2022 Earnings Press Release. 

The rise of ESG investing and the political shift towards encouraging developments within the realm of green energy--from renewable energy projects to efforts to reduce water consumption and much more--has created numerous opportunities for investors. Ameresco offers energy efficiency solutions, infrastructure upgrades, and renewable energy solutions to its customers. The company also operates some of the renewable energy facilities it helps develop such as solar farms and biogas plants. Ameresco provides its services all over the globe, though the US remains its most important market (and the source of over 90% of its revenues). In the US, Ameresco will often help its clients secure the financing needed to fund relevant projects, particularly for its federal government customers. We include Ameresco as an idea in the ESG Newsletter portfolio and view its capital appreciation upside favorably. Due to Ameresco utilizing energy savings performance contracts (‘ESPC’), its financials can be a messy read. ESPCs enable its governmental customers in the US to finance infrastructure upgrades without needing to tap their capital budgets by taking advantage of the expected future energy cost savings. The company generally experiences large working capital builds on an annual basis due to growth in its federal ESPC receivables asset, a product of Ameresco’s overall business growing, making gauging its free cash flows a more difficult task.