Ameresco, Inc. (AMRC) Cash Flow Statement

The persistent gap between net income and operating cash flow, with negative OCF in five of the last ten quarters, suggests that percentage-of-completion accounting may be recognizing revenue ahead of cash collections. The large working capital swings, particularly the -$140.4M change in 2026Q2, imply that project billing milestones are lagging behind cost incurrence, which could signal collection risk or project delays. Investors should monitor whether this cash conversion pattern improves as the company's backlog converts to billings.

The FCF trajectory shows no sign of near-term inflection, as capital expenditures and working capital outflows continue to outpace operating cash generation. Even in quarters with positive operating cash flow, such as 2024Q2's $53.3M, FCF remained negative due to elevated capex. This pattern suggests the company is in a sustained investment phase, but the scale of negative FCF relative to revenue raises questions about the efficiency of capital deployment and the timeline to positive FCF.

The capex-to-revenue ratio has been volatile but generally elevated, averaging over 20% across the last ten quarters, which is consistent with the company's strategy of building owned energy assets. The spike in 2026Q2 suggests a significant commitment to new projects, possibly in RNG or solar, but the near-term cash drain is substantial. Given the company's thin net margins, the payback on these investments will need to be carefully monitored to ensure they generate adequate returns.

The volatility in working capital, with swings ranging from -$140.4M to +$24.0M, suggests that the company's project milestones and client payment terms are causing significant timing mismatches. The persistent negative working capital changes in recent quarters may indicate that costs are being incurred ahead of billings, which could strain liquidity if the trend continues. Analysts should watch for improvements in the 'Costs in Excess of Billings' line item as a sign of better project cash conversion.

The absence of shareholder returns is consistent with a company in a high-growth, capital-intensive phase, but it also means that investors are relying entirely on capital appreciation. The company's elevated leverage, with a debt-to-equity ratio of 1.73, suggests that cash flow is being prioritized for debt obligations and project funding. Given the negative FCF, the lack of distributions is prudent, but it limits the stock's appeal for income-focused investors.