Ameresco, Inc. (AMRC) Q4 2020 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and welcome to the Q4 2020 Ameresco Incorporated Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. Thank you. And without further ado, I would like to hand the conference over to Ms. Leila Dillon, Senior Vice President, Corporate Marketing. Ma'am, you may begin.

Thank you, Paul, 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?

Thank you, Leila, and good afternoon. I hope everyone is staying healthy and safe. First, I would like to thank our employees, customers, and partners as we all continue to effectively manage through these complex times. 2020 was a year filled with both difficulties and opportunities and our people rose to the challenge delivering outstanding results. This year we increased revenues by 19% and EPS by 42%. I would also like to briefly comment on the recent changes in administration in Washington, D.C. while we work hard to make sure that Ameresco thrives regardless of the person or party in charge, we are very pleased with some of the early steps taken by the new administration, including rejoining the Paris Climate Accord and the emphasis placed on a low-carbon future. We believe this leadership and direction from the top will create significant additional business opportunities, not only with the federal government, but also with our client base as climate considerations become a key element of their decision-making process. While environmental initiatives have been a strong project driver for some of the markets we serve, we are now seeing significant interest from the commercial and industrial market segment as companies prepare their strategies to achieve carbon neutrality. The fourth quarter captured a year of record performance driven by our comprehensive advanced technology solutions across our regions and markets delivering results above expectations. Despite the challenging business environment due to COVID-19, our team came together and executed across all levels, pulling in construction where possible, securing opportunistic work when available, and focusing squarely on the dynamic needs of our customers. Even with a particularly strong fourth quarter in 2019, we were able to continue to show year-over-year revenue growth led by our Federal Solutions Group. As in previous quarters this year, we took advantage of continued improved access to work sites to execute on our contracted backlog. Our energy assets and operation and maintenance businesses continued to provide Ameresco with predictable, long-term recurring revenue, which is especially important during these economically uncertain times. These two businesses support our visibility with an operational maintenance contracted backlog of $1.1 billion and estimated energy asset contracted revenues and incentives of $900 million. We were particularly pleased to have increased our energy assets in development and construction to over 350 megawatts. Notably, we added two new RNG opportunities with a line of sight to additional projects in this fast-growing sector. I would just like to point out that we are realizing energy as a service and contract structure to implement comprehensive solutions. We're seeing an increase in interest, not only with our existing customers, but also with a large underpenetrated commercial and industrial markets as corporate ESG mandates and economics have aligned. Our under energy as a service offering, Ameresco delivers energy infrastructure improvements and related technologies directly to an end-use customer under a long-term service agreement, much like many of our long-term federal energy savings performance contracts. Our customers have no upfront capital costs and Ameresco is paid by the customer out of the energy savings and other deliverables determined by each contract. Our energy as a service offering is flexible in order to accommodate a broad range of customer needs. Projects may include a full spectrum of energy conservation measures and renewable assets, while others may only include one or two technologies. Our customers benefit from reduced pressure on their borrowing capacity, credit metrics, and balances while Ameresco gains another profitable, long-term recurring revenue stream. We also achieved another important milestone during the quarter with the publication of our first environmental social governance (ESG) report entitled "Doing Well by Doing Good." This report highlights 20 years of ESG achievements and importantly defines a comprehensive list of ESG goals for the future. ESG has always been part of the DNA with Ameresco, with over 60 million metric tons of CO2 offset by our projects and assets. Objectivity in our solutions and diversity in our team are key components of who we are as a company and ensuring we have the best talent at Ameresco is always our top priority. We’ll continue to invest heavily in social programs and focus on the policies that create a healthy and diverse workplace for our employees. We are reinforcing our commitment to the communities in which we operate, further focusing on our volunteerism month in expanding regional scholarship programs where entrepreneurs can support students. Our management is aligned to achieve our ambitious ESG goals, and we look forward to updating everyone on our ESG achievements. This year, we continue to build our contracted and awarded backlog with clean technology solutions for our clients. With a growing need for green power balanced with the need for grid stability, we continue to integrate smart infrastructure, battery storage, and other clean technology solutions in many projects. Backlog projects are great examples with flow-to-solar, battery storage, and a microgrid. We also announced our first wind farm in County Kerry, Ireland. We’ve completed several solar installations across the U.S., including Foothill Lanesville in California, Wappingers school district in New York, and 11 sites within the New Bedford Housing Authority in Massachusetts. We work with several smart cities on LED lighting conversions including the Oregon Department of Transportation and the City of Medford in Oregon, the City of Phoenix in Arizona, the City of Virginia in Minnesota, and the City of Lawrence in Massachusetts. Additionally, many smart cities focused on automatic water meter infrastructure, including our project with the City of Gainesville and the Woodlands water project in Texas. All of these projects demonstrate Ameresco’s evolution into a comprehensive clean tech integrator and renewable asset developer, owner, and operator. The energy industry is going through a great transformation as distributed energy resources, microgrids, and renewables are becoming more prevalent as we move towards resiliency and carbon neutrality, and as the economics become even more compelling. I will now turn the call over to Doran to provide some comments on our financial performance. Doran?

Thank you, George. And good afternoon, everyone. I’ll now go through the company’s fourth quarter financial performance and our 2021 outlook. Please refer to our press release and supplemental slides posted on our website for additional financial information. During the fourth quarter, we saw continued revenue growth and increased operating leverage, which contributed to another quarter of strong EBITDA growth. As you may recall, Q4 of 2019 had particularly strong revenue due to large federal contract slippage. So we are very pleased to have achieved year-over-year growth. Revenue grew 3% year-on-year and over 11% sequentially with growth across our core businesses, again led by the strong performance of our Federal Solutions Group. We continue to prioritize contracted backlog execution, taking advantage of improved access to sites across our footprint as we navigated the COVID-19 work environment. Gross margin remained consistent as the growth of higher margin O&M and asset revenue continued to offset the increase in our growing design-build work. Ameresco benefited from our past investments and the highly scalable nature of our business model. Revenue growth, higher utilization, and reduced spending levels, including travel-related expenses, were key drivers of our net income and EBITDA performance. While SG&A expenses will increase in a post-pandemic environment, we believe a portion of the savings are permanent and will benefit our operating leverage in the future. Net income attributable to common shareholders was $23.5 million, an increase of 5%. Adjusted EBITDA, a non-GAAP measure, was $35.7 million, a 21% increase year-over-year. During the quarter, we focused on executing our contracted backlog, converting a significant amount to revenue. Our year-over-year decline in contracted backlog was due to four large federal contracts signed in Q4 last year. However, we had very strong new awards this quarter, as our awarded backlog grew 14% year-over-year, increasing to approximately $1.3 billion at year-end. Our total project backlog stands at $2.2 billion. Our assets in development grew to over 350 megawatts with strong contributions across several business units representing multiple technologies, a figure that exceeds our 282 megawatts of operating energy assets. We have approximately $2 billion in long-term contracted revenue and incentives between O&M and our operating energy assets. These higher margin, recurring revenue businesses accounted for approximately two-thirds of our 2020 EBITDA and we believe will provide us with high-quality recurring revenue streams for years to come. Ameresco’s cash flows and liquidity remain strong with ample cash and available credit to support our growing project business and execute our asset development pipeline. We ended the quarter with over $66 million of cash on hand. Adjusted cash flow from operations was $35 million for the quarter and $146 million for the year. In addition to strong working capital, we have broad access to project financing and tax equity, and we also have the ability to monetize development assets. During the quarter, we secured over $70 million in project financing and generated $16 million from energy asset sales. Before turning to our full-year 2021 outlook, I’d like to make a quick comment on Q1 2021. During the first quarter of last year, we saw a discrete tax benefit from the CARES Act, favorable weather conditions, and a proactive revenue pull forward in response to the onset of the COVID-19 pandemic. This year, first quarter weather patterns have impacted production and commissioning of some of our energy assets, which may result in less favorable comparisons. All of this has been factored into our annual guidance. With that let’s now turn to our full-year outlook. We expect 2021 total revenue to be in the range of $1.1 million to $1.15 billion representing 9% year-on-year growth at the midpoint. We are forecasting adjusted EBITDA to be between $135 million and $145 million, representing 19% growth at the midpoint. Non-GAAP EPS is expected to be in the range of $18 to $26, which after adjusting for 2020 EPS for one-time tax items realized represents 16% growth at the midpoint. We expect a higher effective tax rate of approximately 12% to 18% for the year. During 2021, we anticipate commissioning between 60 megawatts and 80 megawatts of energy assets and expect total capital expenditures to be $200 million to $250 million. The bulk of this investment will be funded through project financing. Now I’d like to turn the call back over to George for closing comments.

Thank you, Doran. In closing, I want to again take a minute to thank our customers, partners, and employees for their exceptional efforts in 2020. During a time of unprecedented challenges, we were fortunate to safely execute on the work we set out to do and together with our customers, we demonstrated resiliency at its finest. We are in the early stages of this great energy transformation, and Ameresco is well positioned to take advantage of the evolving opportunities. I look to the future with tremendous excitement. Investment in the health of our environment has become a focus for so many of our current and prospective customers. Our backlog and our new proposals are full of advanced technologies, including distributed energy resources, solar batteries energy storage, microgrids, smart buildings, smart cities, and more. The economics have shifted, enabling us to integrate and implement game-changing, environmentally transformative clean technology projects. We believe Ameresco is very well positioned for 2021 and beyond. Operator, I would now like to open the call to questions.

Thank you, sir. Our first question is from Noah Kaye with Oppenheimer. Your line is open.

To start, I appreciate the commentary in your remarks around the backlog dynamics and some of the puts and takes year-over-year. Maybe first of all, do you expect to exit 2021 with higher backlog, in particular on the contracted side? Can you comment around any contracting dynamics associated with the transition and administration and then just broadly what you're seeing in terms of the pipeline given the dynamics you pointed out around broad-based sustainability drivers?

Sure. Good to talk to you. It's Doran. I'll try to take this first one. So the contracted backlog, the key element of that has to do with conversion timing. We have been awarded backlog that's built up quite substantially. I think that I've mentioned this in prior quarters where the awarded backlog was actually building and increasing, and we weren't really expecting it to be so because of the COVID crisis. But as people shifted and adjusted to that working environment, the RFPs and the awards kept going. Now, the contract negotiation is a lot of hard work to get all the way through to converting awards to contracts. I think there's not an overarching theme to the way that we see this year going in terms of contract conversion. We expect it to kind of continue at pace. As we discussed, executing on the contracted backlog has emptied the contracted backlog out and converted it to revenue, but the awarded backlog is building. Our expectation is we'll see those conversions come throughout the year at an ordinary pace. Again, it's hard to look out on a quarter-by-quarter basis due to the lumpiness of executing or converting awards to contracts. Other than that, I think it should be pretty well normalized.

Very helpful. Thank you. Just turning to the energy assets and the growth trajectory there, I think one point we're considering is you put a very high probability of completion on your assets in development. So, you've added to RNG projects in the pipeline here, and we should assume you've got a pretty good line of sight to getting those done. What is reasonable to expect now in terms of the run rate on getting new projects, RNG projects done? How many do you think you can add to the portfolio per year over the next two to three years? What does the run rate look like?

Look, we've been trying to grow our asset portfolio at least 20% per year and a little bit more, but what's happening this year is we said 60 to 80 megawatts installed on solar because we had about 20 megawatts that slipped because of the interconnection with COVID-19. A good deal of this has been hard to interconnect. We have 20 megawatts shifted from last year to this year, which most likely will be up and running by the middle of the second quarter or so. So, we transformed the whole company now to develop our assets across the country. I think we are getting to what I will call a point where we develop in some of these assets. We have decent traction in the marketplace, and you see a good pickup. Although we were very happy to see the addition of 2 RNG assets into the development over this last quarter. Doran, do you want to add?

No, I think you're correct. The funnel is actually pretty healthy on both the RNG side as well as other energy asset technologies. I think we mentioned that we're targeting $200 million to $250 million in CapEx on assets this year. I would say that the cadence we're expecting is press two plants being placed into service in 2022. And then after that, call it two to three more years of the cadence that we're aiming for, but beyond that, I don't think we can provide much more color.

You're getting two plants done this year and then another two in 2022 or are you actually going to do…

It's one this year, one this year.

Our next question is from Eric Stine with Craig-Hallum. Your line is open.

Maybe just following up on the RNG question or line of questioning there, when you think about it going forward, I mean, is there any way to break down the pipeline or how you think things might play out landfill versus dairy RNG just thinking about how much more valuable the credits are, especially LCFS?

Yes, sure. I mean, I think it's fair to say that on the dairy side, what the activity we've been seeing is at the early stage, and we're evaluating opportunities there. We've got a couple of things that we're looking at, but nothing that's included in our 351 megawatts. Our focus is based on the historical relationship we have with landfill companies. We have the expertise on the development, the construction, and the operation and maintenance for these plants at the wastewater treatment plants and landfills, and we're obviously trying to capitalize on that and that's where the bulk of our pipeline will come from. I think, however, on the ag side, we're evaluating it for sure.

And then maybe just back to results. In the previous questions, you were talking about backlog expectations for the year, but as you think about 2021, I mean, it's pretty impressive that you continue to pull work forward, but yet you gave guidance for substantial growth year-over-year. So you called C&I, but just wondering what are some of the other areas that you think will lead results in 2021?

Well, 2021, as a starting point, our 12-month contracted backlog is sitting around $600 million, which is better than it was last year. We have contracted O&M and contracted PTA revenue, etc., which helps us build that revenue projection. I can't point to a particular sector that will bring in the additional growth. I think the broad-based momentum behind the industry and the business, and what we see in our funnel, drives us to believe in the numbers that we put forward.

No, basically it's uniform across the regions and across the customer segments. The one that I will say is picking up at a faster pace than the rest of the segments is the C&I market. We were starting with a much smaller base to begin with, but the activity level is very good. The only drawback with those people is that they move fast, but most of the projects end up in design and build, but they move faster through the pipeline and consequently help a lot with the top-line as well as profitability.

Our next question is from the line of Chris Souther with B. Riley. Your line is open.

Thanks for taking my question here and congrats on the results and outlook here. Maybe you could just touch quickly on, I guess the kings for a year. It sounds like the first quarter is going to be a bit weaker. Would you be able to provide just a bit more color on what the visibility might be for the year, at this point based on what's contracted and how the visibility might have been improving with some of the weather stuff starting to improve over the last week or two?

I mean, I think the bit that I can talk about is that as you may have appreciated from prior years, the business does tend to be a little bit back-ended towards the later half of the year. And in terms of energy assets, the severe weather events will impact production, etc. And as we look at completing the RNG plant this year, obviously that will result in a pickup that's going to be back-ended. Furthermore, I think the installation, the commercial operation date of a lot of the energy assets we’re going to be putting in service will also be somewhat back-ended. You might see some additional pickups later in the year, kind of beyond that. I’m not sure Mark has any additional comments on seasonality.

No, I think we would expect it to fall in one of the seasonal patterns, and we identified some of the unusual items in Q1 just from a year-over-year perspective. However, the cadence of the year should play out over a normal seasonal pattern.

Looking at the backlog being kind of down year-over-year, obviously with the moving pieces with the large contract last year and having more of the contracted backlog for this year compared to a year ago. Maybe you can kind of just walk through the mix within the contracted backlog between commercial, federal, and any kind of color you can provide there. And I’m curious that in the fourth quarter, based on the election, was there any kind of slowdown in the federal just award, just kind of waiting to see what the new administration wanted to do or anything like that? Do you think we could see a pickup from the federal side over the next couple of weeks and months with the executive order or different things like that? What are your thoughts?

A couple of things. Last year in the fourth quarter, we had these huge three large total contracts that got signed. They were full contracts that could take $13 billion to the top line and had very good profitability. This year, because of COVID-19, we had a couple of large federal contracts, but they slipped from being executed to the last quarter, but most likely they will be executed this quarter. So we do have some slippage on the executed contracts because of the COVID-19 situation, but it indicates that even though we have all these constraints, the awarded backlog did pick up. The 12-month backlog is the driving force for the numbers for this year as we started the quarter at a higher level than last year, and I think that's very telling.

In addition to that, we have higher revenues coming from the assets we operate, so for what has been a pretty good year, and I think as time goes on and we get out of the COVID-19 situation, I believe the market drivers are strong enough that you will see a pickup, let's say if COVID-19 goes away by the middle of the year or later.

Are you seeing any impacts from your recent activity in Texas? Obviously, the weather brought to the forefront some of the solutions you might be able to provide around resiliency and things like that. I'm just curious to see, are you seeing increased interest in Texas, California, and other places that have experienced severe weather?

No question about it. As George pointed out in his remarks, the cold weather and its impacts affected us this year. We lost a significant amount of time for a few weeks. In fact, we lost the Woodland project due to cold weather; it took a few days to get some of the equipment delivered to the site. So we had some impact because of the weather, but we took into account that by the end of the year, we will catch up.

That's why I’m so excited about the distributed energy resources and where the market is going. What happened there is a single contingency, like the weather can take out the whole grid. Just picture if we have all the wind farms up and down, which are estimated to generate 30,000 megawatts. If we must have some type of backup to distributed generation and distributed energy storage, we will be in big trouble.

Our next question is from Jon Dorsheimer from Canaccord. Your line is open.

Hi guys, congratulations on just a fantastic quarter and New Year. Nice to see.

Thank you, Jon.

A couple of questions. I mean, a lot has been asked, but I guess maybe just in a different way. The COVID redundancies, Doran, in terms of OpEx, can you explain how should we think about that in terms of duplicative work that needs to occur to keep your employees safe once we kind of get through the virus?

To be honest, I haven’t really been thinking about it in terms of duplication of any particular element. I think that when I look at OpEx and productivity as we kind of emerge and start to see more people at the offices and certainly more people in the field, there’s an element of productivity associated with the continued hyper engagement of employees working from home. All of the technological savviness that's come with everybody reacting the way that they have is going to carry through. I think we’ll see some creep back up in the travel budgets which will be necessary. But nevertheless, I think that it’s not something that I’m necessarily putting my finger on a number. It does give me comfort in terms of the stability of our OpEx.

Got it. I’m assuming guidance was done post the ERCOT issue in Texas. And so I’m just wondering, as you think about '21, were you probably just on the heels of kind of seeing that, or are you still in the process in terms of the fallout and exactly what went on in that market? Is that fair to say? I'm just trying to figure out how much of that is probably baked into the expectations.

We did a pretty deep dive and figured out where we are, where we're going to be. Because we have people on the ground, we got a pretty quick reaction in finding out the various elements of operating these plants—what was impacted and what wasn’t impacted, how quickly it's going to come online. We considered all of that.

Got it. And then George, you mentioned one of my favorite topics, resiliency versus efficiency. The two are paradoxically opposed. I'm just curious; we’ve been talking about efficiency and moving towards more efficient systems, but many mistake the idea that that move is at the cost of resiliency. So in essence, any of these systems we want to consider what the trade-offs are in terms of moving to efficiency and how that translates into the cost of resiliency. I’m assuming as a trusted partner, you're able to help those customers through discussions that you have been able to create value. How much do you see the starting point of a project versus what the customer thinks they want versus where they end up?

That is a very good question. I agree that some of the energy policies continue to favor what I call large renewable asset development. It’s a great resource to develop all those wind farms along the East Coast. However, I think people will realize that distributed energy resources combined with battery storage make much more economic sense, and you will see more policies that reflect that. I believe the energy efficiency and resiliency are very well related. If you tackle an energy-efficient measure on a facility and you reduce their consumption by 30%, now you have to back up 30% less than otherwise would have to back up. The unique factor is how we can create efficiencies. However, many still don’t realize it yet. I firmly believe that the energy market is going to evolve faster than anticipated due to resiliency.

What I've been saying is that the missing piece of this puzzle that will take this energy transformation to work is effective storage and energy storage.

Our next question is from Craig Irwin with ROTH Capital. Your line is open.

Good evening and thanks for taking my questions. I wanted to discuss operating expenses a little bit. So in 2020 on a full-year basis, you were actually down a couple hundred thousand over 2019 levels. I imagine COVID helped with a lot of travel and some of the other business development expenses probably coming off. But can you maybe describe what contributed to that and the 220 basis point leverage you saw in revenue for operating expenses?

The COVID-related travel savings were definitely a portion of it. The other aspect is when you look at all the line items across our operating expenses, one of the largest items has to do with the utilization of staff. When we have folks working on proposals, those human capital costs end up in OpEx. However, if folks are working on awarded projects or contracted projects, those costs actually end up being capitalized into the projects. In 2020, due to COVID, the proposal activity was down, but construction and contracted backlog execution were up. So you saw a little shift in that number. I suspect that accounts for most of the variance, apart from any potential reductions in travel expenses.

The primary driver is the shift. When COVID-19 came into play, we saw a slowdown in accessing customers. We evolved into digital meetings, such as Zoom calls for about six to ten months. We said we would shift some of those people developing projects to execute the projects, which is why you saw the pickup in our revenue last year and the execution we had. It helped a lot to refocus a good chunk of the people.

I think that's right. Yes. So then just to follow up on that, is it fair to say that this continues in 2021? We see similar dynamics and very strong work activity out there while most of us are still working from home or at least social distancing?

We thought about that when we developed the plan a couple of months ago but felt we have to refocus again on building the pipeline and the awards, which is why we saw a little bit of the pickup this last quarter. We want to become a dominant player in this marketplace, so we have to make investments in developing the pipeline and the business.

Understood. Understood. So then this quarter, if we looked at your implied guidance, you were $32 million about the top end of the range or $52 million above the middle of the range, so a very nice finish to the year. You saw gross margin improvements sequentially of 30 basis points. Last year, you were sort of in the middle of the range, and you saw gross margin deterioration sequentially in the fourth quarter. Can you talk about the contributions—what's different this year versus last year? Is this really a business mix or is there maybe an execution component? Were there any project change outs in this 18.5% gross margin number that you printed?

No, it wasn't a project change out. It was quietly broad because last year, to go ahead, Mark...

Last year, if you remember, in Q4, we had margins deteriorate due to adjustments related to the RIN prices. If I think you look through 2020, I think the margins were no unusual items; it was really just a function of the mix of the projects that we had. As we've been talking about, this is a good mix of design-build and our projects, but some of that is offset by advanced technology projects and some of our federal projects. As we come into 2021, it was a little more normalized coming out of the end of last year just because of the RIN prices. During 2020, there was also improvement in RIN prices that helped contribute to a gradual improvement.

Okay, excellent. And then my last question is everybody wants to talk about renewable gas, and I too should express my congratulations for the new projects in the pipeline. But I guess the most important question is, where you're hedged? Can you maybe update us on whether or not you've taken the opportunity with the nice rebound in D3-RIN prices to lock away more of your longer-term exposure? Do you have much exposure to the spot RIN market, if you could approximate that? And what other key items on the risk side, either to the plus or minus, do you think we need to look at for those three projects that are operating?

The RIN prices are up to 250 bucks right now, but we should point out that we’ve hedged almost 40%. We came into last quarter at hedging up to 78%. We try to be a little conservative with having a sufficient hedge. The long-term contract opportunities are out there, but the discounts are so large that I think we will wait for a few more months to see what's happened. We closely watch the markets, and we still see it's a great market that considers more profitability than other assets. We’ll watch it carefully. We want the end of the day to hedge or have longer-term contracts, hopefully seven years plus, and we’ll be able to get better project financing for those specific projects. We leverage our equity to extend beyond where we would otherwise go. Doran might want to add more color, but it's a key issue that we address.

I think the pattern we've had over the last couple of years is likely to continue, and because of what George mentioned about the gap between kind of the discounts that the long-term contracts are looking for. So I think we'll continue to be partially hedged and have some sort of medium-term off-take contracts, and the rest of it we'll continue to monetize or hedge on a short-term or one-year basis as we have been watching the market, not just the RIN price but the activity in Washington to see what the next move might be for the RVO, etc.

Excellent. We're very happy to hear you're only 40% hedged. The closing number today was 260 for the 2021 RIN, so that is a robust price after where we started last year. Congratulations on a really solid closeout for 2020; your team really executed.

Our last question is from Shahriar Pourreza with Guggenheim partners. Your line is open.

Just a follow-up on energy assets and sort of the cadence of new projects. Any thoughts about using your own currency to speed this up given where shares are trading right now? What sort of the governor would not increase that cadence given the opportunity set that's out there, particularly on the solar and RNG side, especially as we're thinking about beyond 2021 COVID impacts?

So on the energy assets side - I mean, this is Doran, I'll just say that we don’t want to overpay for assets. I don't think the company has gotten to where it is today without the strong ability to develop projects on a Greenfield basis. We will continue doing that, and this allows us to map out our CapEx as needed on development as well as construction as we develop these things ourselves. First and foremost, what I would say is particularly on the solar side, you have to be very careful when you're looking at inorganic situations. In terms of financing, we have obviously a multitude of financing sources that we can tap. We consider ourselves to have a lot of options, but we're not being impatient.

Got it. And just lastly, the Newport News project and the O&M opportunity look like a strong win. How do we think about maybe the cadence for other DOD opportunities like Norfolk heading into the new year and maybe just the shaping of the RFPs over the course of the year?

I see very healthy opportunities ahead, and I think that pickup will happen even more. In the previous administration, resiliency became the number one issue alongside infrastructure upgrades. I think this will persist with the current administration. You’ll see more and more projects having renewable aspects in requests for proposals because to achieve carbon neutrality with energy efficiency, you may end up getting only 50% carbon reduction; you need renewable resources for the rest. The federal government is ideal for this, whether it's solar, biomass, biogas, or battery storage. They can establish a strong example and drive the market in that direction.

There's no particular pattern that we can point to in terms of how the year will progress. The good thing about Ameresco is that we operate in a multitude of regions, including Canada, the UK, and across the U.S., plus federal government business. Energy asset opportunities are being generated out of all those regions, and the proposal funnel is diverse. This means that on the whole, we’ll see steady progression throughout the year. You may see that occasionally we will have a lumpy project that moves from one quarter to the next, but over the long term, I think we’re comfortable with a smooth cadence and growth.

That’s the end of our Q&A session. Ladies and gentlemen, thank you for your participation today. This concludes today's conference call. You may now disconnect. Have a great day and stay safe.

Thank you.

Thank you.