Ameresco, Inc 10-Q for FY2023 Q1

Ameresco, Inc. (AMRC)

10-Q 2023-05-02 For: 2023-03-31

Added on April 10, 2026

About this 10-Q

Ameresco, Inc filed this 10-Q on May 2, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $271.04M; down 42.8% from $474M a year earlier
Net income: $1.1M; down 93.7% from net income of $17.38M a year earlier
Diluted EPS: $0.02; down 93.8% from $0.32 a year earlier

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Delaware						04-3512838
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
111 Speen Street, Suite 410 Framingham, Massachusetts						01701
(Address of Principal Executive Offices)						(Zip Code)


Title of Each Class	Trading Symbol	Name of exchange on which registered
Class A Common Stock, par value $0.0001 per share	AMRC	New York Stock Exchange


Large accelerated filer ☑	Accelerated Filer o	Non-accelerated filer o	Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


Class			Shares outstanding as of April 28, 2023
Class A Common Stock, $0.0001 par value per share			34,121,362
Class B Common Stock, $0.0001 par value per share			18,000,000


						Page
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at March 31 , 202 3 (Unaudited) and December 31, 202 2						1
Condensed Consolidated Statements of Income for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						6
Notes to Condensed Consolidated Financial Statements (Unaudited)						8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						25
Item 3. Quantitative and Qualitative Disclosures About Market Risk						33
Item 4. Controls and Procedures						33

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						34
Item 1A. Risk Factors						34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						34

Item 6. Exhibits						35
Signatures						36


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	178,939	$	115,534
Restricted cash (1)	21,232		20,782
Accounts receivable, net of allowance of $971 and $911, respectively (1)	130,940		174,009
Accounts receivable retainage, net	35,625		38,057
Costs and estimated earnings in excess of billings (1)	497,762		576,363
Inventory, net	13,609		14,218
Prepaid expenses and other current assets (1)	56,311		38,617
Income tax receivable	7,626		7,746
Project development costs, net	15,930		16,025
Total current assets (1)	957,974		1,001,351
Federal ESPC receivable	539,820		509,507
Property and equipment, net (1)	16,865		15,707
Energy assets, net (1)	1,270,230		1,181,525
Deferred income tax assets, net	3,049		3,045
Goodwill, net	77,810		70,633
Intangible assets, net	8,666		4,693
Operating lease assets (1)	38,189		38,224
Restricted cash, non-current portion (1)	13,406		13,572
Other assets (1)	41,339		38,564
Total assets (1)	$	2,967,348	$	2,876,821
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	313,459	$	331,479
Accounts payable (1)	285,465		349,126
Accrued expenses and other current liabilities (1)	115,044		89,166
Current portions of operating lease liabilities (1)	5,868		5,829
Billings in excess of cost and estimated earnings	39,326		34,796
Income taxes payable	7,950		1,672
Total current liabilities (1)	767,112		812,068
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	631,676		568,635
Federal ESPC liabilities	520,816		478,497
Deferred income tax liabilities, net	2,869		9,181
Deferred grant income	7,424		7,590
Long-term operating lease liabilities, net of current portion (1)	31,779		31,703
Other liabilities (1)	64,200		49,493
Commitments and contingencies (Note 10)
Redeemable non-controlling interests, net	46,700		46,623


	Three Months Ended March 31,
	2023		2022
Revenues	$	271,042	$	474,002
Cost of revenues	221,094		405,624
Gross profit	49,948		68,378
Earnings from unconsolidated entities	450		637
Selling, general and administrative expenses	41,301		40,329
Operating income	9,097		28,686
Other expenses, net	8,043		7,081
Income before income taxes	1,054		21,605
Income tax (benefit) provision	(503)		2,307
Net income	1,557		19,298
Net income attributable to non-controlling interests and redeemable non-controlling interests	(455)		(1,914)
Net income attributable to common shareholders	$	1,102	$	17,384

Net income per share attributable to common shareholders:
Basic	$	0.02	$	0.34
Diluted	$	0.02	$	0.32
Weighted average common shares outstanding:
Basic	51,963		51,744
Diluted	53,261		53,636


			Class A Common Stock			Class B Common Stock									Treasury Stock
	Redeemable Non-controlling Interests		Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	Amount		Non-controlling Interests		Total Stockholders’ Equity
Balance, December 31, 2021	$	46,182	33,716,309	$	3	18,000,000	$	2	$	283,982	$	438,732	$	(6,667)	2,101,795	$	(11,788)	$	—	$	704,264


Exercise of stock options	—		92,655	—		—	—		1,708		—		—		—	—		—		1,708
Stock-based compensation expense	—		—	—		—	—		3,531		—		—		—	—		—		3,531


Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		2,711		—	—		—		2,711
Foreign currency translation adjustment	—		—	—		—	—		—		—		67		—	—		—		67

Distributions to redeemable non-controlling interests	(448)		—	—		—	—		—				—		—	—		—		—

Accretion of tax equity financing fees	28		—	—		—	—				(28)		—		—	—		—		(28)
Investment fund call option exercise	(238)								238									—		238
Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		6,335		6,335
Net income	1,914		—	—		—	—		—		17,384		—		—	—		—		17,384
Balance, March 31, 2022	$	47,438	33,808,964	$	3	18,000,000	$	2	$	289,459	$	456,088	$	(3,889)	2,101,795	$	(11,788)	$	6,335	$	736,210

Balance, December 31, 2022	$	46,623	33,948,362	$	3	18,000,000	$	2	$	306,314	$	533,549	$	(4,051)	2,101,795	$	(11,788)	$	49,002	$	873,031

Exercise of stock options	—		82,000	—		—	—		571		—		—		—	—		—		571
Stock-based compensation expense	—		—	—		—	—		4,037		—		—		—	—		—		4,037


Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(868)		—	—		—		(868)
Foreign currency translation adjustment	—		—	—		—	—						274		—	—		8		282

Distributions to redeemable non-controlling interests	(178)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	27		—	—		—	—		—		(27)		—		—	—		—		(27)
Investment fund call option exercise	196		—	—		—	—		(196)		—		—		—	—		—		(196)
Contributions from non-controlling interests	—		—	—		—	—		—		—		—		—	—		16,417		16,417
Net income	32		—	—		—	—		—		1,102		—		—	—		423		1,525
Balance, March 31, 2023	$	46,700	34,030,362	$	3	18,000,000	$	2	$	310,726	$	534,624	$	(4,645)	2,101,795	$	(11,788)	$	65,850	$	894,772


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited) (Continued)

	Three Months Ended March 31,
	2023		2022
Cash flows from financing activities:

Payments of debt discount and debt issuance costs	$	(366)	$	(2,570)
Proceeds from exercises of options and ESPP	571		1,708

Proceeds from senior secured revolving credit facility, net	—		76,000
Proceeds from long-term debt financings	58,188		286,744
Proceeds from Federal ESPC projects	42,309		64,788
Net proceeds from energy asset receivable financing arrangements	4,438		1,925

Contributions from non-controlling interests	16,308		4,594
Distributions to redeemable non-controlling interests, net	(161)		(357)
Payments on long-term debt and financing leases	(15,159)		(77,432)
Cash flows from financing activities	106,128		355,400
Effect of exchange rate changes on cash	42		(196)
Net increase in cash, cash equivalents, and restricted cash	63,689		21,349
Cash, cash equivalents, and restricted cash, beginning of period	149,888		87,054
Cash, cash equivalents, and restricted cash, end of period	$	213,577	$	108,403

Supplemental disclosures of cash flow information:
Cash paid for interest	$	13,135	$	4,488
Cash paid for income taxes	$	323	$	78

Accrued purchases of energy assets	$	97,542	$	40,683
Non-cash contributions from non-controlling interest	$	109	$	—


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		All Other		Total
Project revenue	$	104,320	$	45,549	$	14,911	$	—	$	18,450	$	183,230
O&M revenue	5,529		12,700		10		3,686		333		22,258
Energy assets	13,651		1,076		762		24,653		630		40,772
Integrated-PV	—		—		—		—		11,944		11,944
Other	869		231		2,728		—		9,010		12,838
Total revenues	$	124,369	$	59,556	$	18,411	$	28,339	$	40,367	$	271,042


	March 31, 2023		December 31, 2022
Accounts receivable, net	$	130,940	$	174,009
Accounts receivable retainage, net	$	35,625	$	38,057
Contract Assets:
Costs and estimated earnings in excess of billings	$	497,762	$	576,363
Contract Liabilities:
Billings in excess of cost and estimated earnings	$	39,326	$	34,796
Billings in excess of cost and estimated earnings, non-current (1)	12,510		7,617
Total contract liabilities	$	51,836	$	42,413


	March 31, 2022		December 31, 2021
Accounts receivable, net	$	204,082	$	161,970
Accounts receivable retainage, net	$	40,555	$	43,067
Contract Assets:
Costs and estimated earnings in excess of billings	$	460,240	$	306,172
Contract Liabilities:
Billings in excess of cost and estimated earnings	$	31,729	$	35,918
Billings in excess of cost and estimated earnings, non-current (1)	$	6,322	$	6,481
Total contract liabilities	$	38,051	$	42,399

(1) Performance obligations that are expected to be completed beyond the next twelve months and are included in other liabilities in the condensed consolidated balance sheets.


	As of March 31, 2023		As of December 31, 2022
Gross carrying amount	$	36,700	32,277
Less - accumulated amortization	(28,034)		(27,584)
Intangible assets, net	$	8,666	$	4,693


	Operating Leases		Financing Leases
Year ended December 31,
2023	$	6,138	$	3,598
2024	6,790		2,565
2025	5,537		2,213
2026	3,455		2,054
2027	2,814		1,922
Thereafter	30,998		17,890
Total minimum lease payments	55,732		30,242
Less: interest	18,085		14,211
Present value of lease liabilities	$	37,647	$	16,031


	March 31, 2023		December 31, 2022
Senior secured revolving credit facility (1)	$	182,900	$	182,900
Senior secured term loans	295,000		295,000
Non-recourse construction revolvers (4)	47,090		45,391
Non-recourse term loans (4)	296,880		255,403
Non-recourse long-term financing facilities (2)	121,455		120,923
Non-recourse financing lease liabilities (3)	16,031		16,060
Acquired debt (5)	3,951		—
Total debt and financing lease liabilities	963,307		915,677
Less: current maturities	313,459		331,479
Less: unamortized discount and debt issuance costs	18,172		15,563
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs	$	631,676	$	568,635

(1) At March 31, 2023, funds of $4,345 were available for borrowing under this facility.
(2) These facilities are accounted for as failed sale leasebacks and are classified as long-term financing facilities. See Note 7 for additional disclosures.
(3) Financing lease liabilities are sale-leaseback arrangements under previous guidance. See Note 7 for additional disclosures.

(4) Most of these agreements are now using the Secured Overnight Financing Rate (“SOFR”) as the primary reference rate used to calculate interest.
(5) Debt acquired in connection with the acquisition of Enerqos. See Note 4 for additional information.


		Fair Value as of
	Level	March 31, 2023		December 31, 2022
Assets:
Interest rate swap instruments	2	$	3,564	$	5,202

Total assets		$	3,564	$	5,202
Liabilities:
Interest rate swap instruments	2	$	6	$	9

Make-whole provisions	2	8,175		5,348
Contingent consideration	3	4,279		4,158
Total liabilities		$	12,460	$	9,515


	As of March 31, 2023				As of December 31, 2022
	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt (Level 2)	$	915,732	$	929,104	$	869,771	$	884,054


		Three Months Ended March 31,
Asset type	Location	2023		2022
Customer contracts	Cost of revenues	$	—	$	184
All other intangible assets	Selling, general and administrative expenses	302		394
Total amortization expense		$	302	$	578


	March 31, 2023		December 31, 2022
Energy assets (1)	$	1,596,171	$	1,493,913
Less - accumulated depreciation and amortization	(325,941)		(312,388)
Energy assets, net	$	1,270,230	$	1,181,525

(1) Includes financing lease assets (see Note 7), capitalized interest and Asset retirement obligations (“ARO”) assets (see tables below).


	March 31, 2023			December 31, 2022
Operating Leases:
Operating lease assets	$	38,189		$	38,224

Current portions of operating lease liabilities	$	5,868		$	5,829
Long-term portions of operating lease liabilities	31,779			31,703
Total operating lease liabilities	$	37,647		$	37,532
Weighted-average remaining lease term	13 years			13 years
Weighted-average discount rate	6.0		%	6.0		%

Financing Leases:
Energy assets	$	28,839		$	29,365

Current portions of financing lease liabilities	$	2,133		$	1,992
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs	13,898			14,068
Total financing lease liabilities	$	16,031		$	16,060
Weighted-average remaining lease term	14 years			14 years
Weighted-average discount rate	12.1		%	12.1		%


	Gross Unrecognized Tax Benefits
Balance, December 31, 2022	$	900



Balance, March 31, 2023	$	900


		Derivatives as of
		March 31, 2023		December 31, 2022
	Balance Sheet Location	Fair Value		Fair Value
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts	Other assets	$	630	$	1,748
Interest rate swap contracts	Other liabilities	$	6	$	9
Derivatives Not Designated as Hedging Instruments:
Interest rate swap contracts	Other assets	$	2,934	$	3,454



Make-whole provisions	Other liabilities	$	8,175	$	5,348


		Amount of Loss (Gain) Recognized in Net Income
	Location of Loss (Gain) Recognized in Net Income	Three Months Ended March 31,
		2023		2022
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts	Other expenses, net	$	11	$	481
Derivatives Not Designated as Hedging Instruments:
Interest rate swap contracts	Other expenses, net	$	458	$	(1,262)
Commodity swap contracts	Other expenses, net	$	—	$	2,606
Make-whole provisions	Other expenses, net	$	(295)	$	278


	Three Months Ended March 31, 2023
Derivatives Designated as Hedging Instruments:
Accumulated gain in AOCI at the beginning of the period	$	1,284

Unrealized loss recognized in AOCI	(879)
Loss reclassified from AOCI to other expenses, net	11
Loss on derivatives	(868)
Accumulated gain in AOCI at the end of the period	$	416


	March 31,		December 31,
	2023 (1)		2022 (1)
Cash and cash equivalents	$	5,486	$	10,107
Restricted cash	—		799
Accounts receivable, net	312		590
Costs and estimated earnings in excess of billings	3,714		952
Prepaid expenses and other current assets	8,206		14,322
Total VIE current assets	17,718		26,770
Property and equipment, net	312		89
Energy assets, net	213,946		182,050
Operating lease assets	5,914		4,901
Restricted cash, non-current portion	73		73
Other assets	703		30
Total VIE assets	$	238,666	$	213,913
Current portions of long-term debt and financing lease liabilities	$	2,177	$	2,087
Accounts payable	11,434		8,055
Accrued expenses and other current liabilities	1,552		12,559
Current portions of operating lease liabilities	231		117
Total VIE current liabilities	15,394		22,818
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs	19,703		19,177
Long-term operating lease liabilities, net of current portion	2,930		5,159
Other liabilities	3,794		3,575
Total VIE liabilities	$	41,821	$	50,729

(1) The amounts in the above table are reflected in Note 1 on our condensed consolidated balance sheets.


	As of
	March 31, 2023		December 31, 2022
Equity method investments	$	11,337	$	10,855


	Three Months Ended March 31,
(In thousands, except per share data)	2023		2022
Numerator:
Net income attributable to common shareholders	$	1,102	$	17,384
Adjustment for accretion of tax equity financing fees	(27)		(28)
Income attributable to common shareholders	$	1,075	$	17,356
Denominator:
Basic weighted-average shares outstanding	51,963		51,744
Effect of dilutive securities:
Stock options	1,298		1,892
Diluted weighted-average shares outstanding	53,261		53,636
Net income per share attributable to common shareholders:
Basic	$	0.02	$	0.34
Diluted	$	0.02	$	0.32

Potentially dilutive shares (1)	1,901		783

(1) Potentially dilutive shares attributable to stock options were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive.


	As of March 31,
(In Thousands)	2023		2022
Project Backlog
Fully-contracted backlog	$	1,007,620	$	1,342,150
Awarded, not yet signed customer contracts	1,963,760		1,754,050
Total project backlog	$	2,971,380	$	3,096,200
12-month project backlog	$	638,550	$	1,154,400

O&M Backlog
Fully-contracted backlog	$	1,214,840	$	1,211,620
12-month O&M backlog	$	86,020	$	73,400


1.	I have reviewed this Quarterly Report on Form 10-Q of Ameresco, Inc. (the “Registrant”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;
4.	The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
5.	The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.