Ameresco, Inc 10-Q for FY2020 Q1

Ameresco, Inc. (AMRC)

10-Q 2020-05-05 For: 2020-03-31

Added on April 10, 2026

About this 10-Q

Ameresco, Inc filed this 10-Q on May 5, 2020, covering the quarter ended March 31, 2020 (FY2020 Q1).

Headline figures

Quarter ended March 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $212.41M; up 41.5% from $150.11M a year earlier
Net income: $6.2M; up 49.5% from net income of $4.15M a year earlier
Diluted EPS: $0.13; up 44.4% from $0.09 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)


Class	New York Stock Exchange Symbol	Shares outstanding as of May 1 , 2020
Class A Common Stock, $0.0001 par value per share	AMRC	29,567,741
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 , 20 20 (Unaudited) and December 31, 201 9		1

Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 (Unaudited)		3

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (Unaudited)		4

Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three months ended March 31, 2020 and 2019 (Unaudited)		5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (Unaudited)		6

Notes to Condensed Consolidated Financial Statements (Unaudited)		8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		34

Item 3. Quantitative and Qualitative Disclosures About Market Risk		42

Item 4. Controls and Procedures		42

PART II - OTHER INFORMATION
Item 1. Legal Proceedings		43

Item 1A. Risk Factors		43

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43

Item 5. Other Information		43

Item 6. Exhibits		48

Signatures	49

Exhibit Index	48


	March 31,		December 31,
	2020		2019
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ⁽¹⁾	$	40,351	$	33,223
Restricted cash ⁽¹⁾	15,012		20,006
Accounts receivable, net of allowance of $2,120 and $2,260 respectively ⁽¹⁾	110,742		95,863
Accounts receivable retainage, net	21,265		16,976
Costs and estimated earnings in excess of billings ⁽¹⁾	189,566		202,243
Inventory, net	9,229		9,236
Prepaid expenses and other current assets ⁽¹⁾	28,052		29,424
Income tax receivable	7,135		5,033
Project development costs	16,740		13,188
Total current assets ⁽¹⁾	438,092		425,192
Federal ESPC receivable	239,156		230,616
Property and equipment, net ⁽¹⁾	9,952		10,104
Energy assets, net ⁽¹⁾	596,492		579,461
Deferred income taxes, net	2,470		—
Goodwill	57,741		58,414
Intangible assets, net	1,408		1,614
Operating lease assets ⁽¹⁾	32,444		32,791
Other assets ⁽¹⁾	35,828		35,821
Total assets ⁽¹⁾	$	1,413,583	$	1,374,013

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities ⁽¹⁾	$	69,282	$	69,969
Accounts payable ⁽¹⁾	182,354		202,416
Accrued expenses and other current liabilities ⁽¹⁾	32,528		31,356
Current portions of operating lease liabilities ⁽¹⁾	5,360		5,802
Billings in excess of cost and estimated earnings	25,350		26,618
Income taxes payable	1,205		486
Total current liabilities ⁽¹⁾	316,079		336,647
Long-term debt and financing lease liabilities, net of current portions and deferred financing fees ⁽¹⁾	285,553		266,181
Federal ESPC liabilities	276,177		245,037
Deferred income taxes, net	—		115
Deferred grant income	6,682		6,885
Long-term operating lease liabilities, net of current portion ⁽¹⁾	29,104		29,101
Other liabilities ⁽¹⁾	35,872		29,575
Commitments and contingencies (Note 9)

Redeemable non-controlling interests	31,939		31,616


AMERESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)
(in thousands, except share amounts)
	March 31,		December 31,
	2020		2019
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 31,611,956 shares issued and 29,510,161 shares outstanding at March 31, 2020, 31,331,345 shares issued and 29,230,005 shares outstanding at December 31, 2019	3		3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at March 31, 2020 and December 31, 2019	2		2
Additional paid-in capital	136,591		133,688
Retained earnings	320,660		314,459
Accumulated other comprehensive loss, net	(13,291)		(7,514)

Treasury stock, at cost, 2,101,795 shares at March 31, 2020 and 2,101,340 shares at December 31, 2019	(11,788)		(11,782)
Total stockholders’ equity	432,177		428,856
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	1,413,583	$	1,374,013


☑						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


	Three Months Ended March 31,
	2020		2019
Revenues	$	212,413	$	150,112
Cost of revenues	173,967		117,480
Gross profit	38,446		32,632
Selling, general and administrative expenses	28,924		26,083
Operating income	9,522		6,549
Other expenses, net	5,389		3,421
Income before (benefit) provision for income taxes	4,133		3,128
Income tax (benefit) provision	(2,503)		257
Net income	6,636		2,871
Net loss (income) attributable to redeemable non-controlling interests	(435)		1,276
Net income attributable to common shareholders	$	6,201	$	4,147
Net income per share attributable to common shareholders:
Basic	$	0.13	$	0.09
Diluted	$	0.13	$	0.09
Weighted average common shares outstanding:
Basic	47,384		46,293
Diluted	48,497		47,654


													Accumulated
	Redeemable								Additional				Other						Total
	Non-Controlling		Class A Common Stock				Class B Common Stock						Paid-in		Retained	Comprehensive		Treasury Stock			Stockholders’
	Interests		Shares	Amount		Shares	Amount		Capital		Earnings		Loss		Shares	Amount			Equity
Balance, December 31, 2018	$	14,719	28,275,506	$	3	18,000,000	$	2	$	124,651	$	269,806	$	(5,949)	2,091,040	$	(11,638)		$	376,875
Cumulative impact from the adoptions of ASU-No. 2018-02 (Note 2)	—		—	—		—	—		—		217		(217)		—	—			—

Exercise of stock options	—		61,920	—		—	—		649		—		—		—	—			649
Stock-based compensation expense	—		—	—		—	—		385		—		—		—	—			385


Unrealized loss from interest rate hedge, net	—		—	—		—	—		—		—		(925)		—	—			(925)
Foreign currency translation adjustment	—		—	—		—	—		—		—		606		—	—			606

Distributions to redeemable non-controlling interests	(102)		—	—		—	—		—		—		—		—	—			—
Net (loss) income	(1,276)		—	—		—	—		—		4,147		—		—	—			4,147
Balance, March 31, 2019	$	13,341	28,337,426	$	3	18,000,000	$	2	$	125,685	$	274,170	$	(6,485)	2,091,040	$	(11,638)		$	381,737

Balance, December 31, 2019	$	31,616	29,230,005	$	3	18,000,000	$	2	$	133,688	$	314,459	$	(7,514)	2,101,340	$	(11,782)		$	428,856

Exercise of stock options	—		280,611	—		—	—		2,474		—		—		—	—			2,474
Stock-based compensation expense	—		—	—		—	—		429		—		—		—	—			429

Open market purchase of common shares	—		(455)	—		—	—		—		—		—		455	(6)			(6)
Unrealized loss from interest rate hedge, net	—		—	—		—	—		—		—		(3,465)		—	—			(3,465)
Foreign currency translation adjustment	—		—	—		—	—		—		—		(2,312)		—	—			(2,312)

Distributions to redeemable non-controlling interests	(112)		—	—		—	—		—		—		—		—	—			—
Net income	435		—	—		—	—		—		6,201		—		—	—			6,201
Balance, March 31, 2020	$	31,939	29,510,161	$	3	18,000,000	$	2	$	136,591	$	320,660	$	(13,291)	2,101,795	$	(11,788)		$	432,177


AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued)
(in thousands)
(Unaudited)
	Three Months Ended March 31,
	2020		2019
Cash flows from financing activities:

Payments of financing fees	$	(155)	$	—
Proceeds from exercises of options and ESPP	2,473		649
Repurchase of common stock	(6)		—
Proceeds from senior secured credit facility, net	31,000		11,373

Proceeds from Federal ESPC projects	61,198		39,598
Proceeds for energy assets from Federal ESPC	1,541		1,732


Distributions to redeemable non-controlling interests, net	(103)		(103)

Payments on long-term debt	(12,019)		(5,716)
Cash flows from financing activities	83,929		47,533
Effect of exchange rate changes on cash	(509)		140
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,432		(36,513)
Cash, cash equivalents, and restricted cash, beginning of period	77,264		97,914
Cash, cash equivalents, and restricted cash, end of period	$	79,696	$	61,401

Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,917	$	3,391
Cash paid for income taxes	$	183	$	197
Non-cash Federal ESPC settlement	$	29,297	$	5,629
Accrued purchases of energy assets	$	34,308	$	16,247


	March 31, 2020		March 31, 2019
Allowance for credit loss, beginning of period	$	2,260	$	2,765
Charges to costs and expenses, net	49		77
Account write-offs and other	(189)		(29)
Allowance for credit loss, end of period	$	2,120	$	2,813


	US Regions		U.S. Federal		Canada		Non-Solar DG		All Other		Total
Line of Business
Three Months Ended March 31, 2020
Project revenue	$	71,493	$	56,114	$	8,864	$	2,371	$	5,587	$	144,429
O&M revenue	4,352		11,626		9		2,015		60		18,062
Energy assets	8,554		719		663		17,986		300		28,222
Other	328		286		1,856		352		18,878		21,700
Total revenues	$	84,727	$	68,745	$	11,392	$	22,724	$	24,825	$	212,413
Three Months Ended March 31, 2019
Project revenue	$	45,704	$	32,353	$	5,234	$	1,074	$	3,067	$	87,432
O&M revenue	3,318		9,858		—		2,035		—		15,211
Energy assets	6,021		643		320		17,699		302		24,985
Other	554		203		1,594		422		19,711		22,484
Total revenues	$	55,597	$	43,057	$	7,148	$	21,230	$	23,080	$	150,112


	March 31, 2020		December 31, 2019
Accounts receivable, net	$	110,742	$	95,863
Accounts receivable retainage, net	21,265		16,976
Contract Assets:
Costs and estimated earnings in excess of billings	189,566		202,243
Contract Liabilities:
Billings in excess of cost and estimated earnings	30,670		32,178


	March 31, 2019		December 31, 2018
Accounts receivable, net	$	81,896	$	85,985
Accounts receivable retainage, net	14,762		13,516
Contract Assets:
Costs and estimated earnings in excess of billings	92,264		86,842
Contract Liabilities:
Billings in excess of cost and estimated earnings	31,483		30,706


	U.S. Regions		U.S. Federal		Canada		Non-solar DG		Other		Total
Balance, December 31, 2019	$	26,705	$	3,981	$	3,369	$	—	$	24,359	$	58,414


Currency effects	—		—		(274)		—		(399)		(673)
Balance, March 31, 2020	$	26,705	$	3,981	$	3,095	$	—	$	23,960	$	57,741
Accumulated Goodwill Impairment
Balance, December 31, 2019	$	—	$	—	$	(1,016)	$	—	$	—	$	(1,016)
Balance, March 31, 2020	$	—	$	—	$	(1,016)	$	—	$	—	$	(1,016)


	As of March 31,		As of December 31,
	2020		2019
Gross Carrying Amount
Customer contracts	$	7,749	$	7,904
Customer relationships	12,449		12,749
Non-compete agreements	2,995		3,037
Technology	2,691		2,732
Trade names	539		544
	26,423		26,966
Accumulated Amortization
Customer contracts	7,711		7,844
Customer relationships	11,112		11,236
Non-compete agreements	2,995		3,037
Technology	2,669		2,704
Trade names	528		531
	25,015		25,352
Intangible assets, net	$	1,408	$	1,614


	March 31,		December 31,
	2020		2019
Financing lease assets	$	42,402	$	42,402
Less - accumulated depreciation and amortization	(6,800)		(6,268)
Financing lease assets, net	$	35,602	$	36,134


	Operating Leases		Financing Leases
Year ended December 31,
2020	$	5,816	$	7,852
2021	6,506		6,792
2022	5,895		5,178
2023	4,607		3,676
2024	3,791		2,565
Thereafter	22,723		24,080
Total minimum lease payments	$	49,338	$	50,143
Less: interest	14,874		21,765
Present value of lease liabilities	$	34,464	$	28,378


		Fair Value as of
		March 31,		December 31,
	Level	2020		2019
Assets:
Interest rate swap instruments	2	$	—	$	15
Commodity swap instruments	2	246		198
Total assets		$	246	$	213
Liabilities:
Interest rate swap instruments	2	$	10,882	$	6,236

Interest make-whole provisions	2	733		918
Contingent consideration	3	678		678
Total liabilities		$	12,293	$	7,832


	Gross Unrecognized Tax Benefits
Balance, December 31, 2019	$	400
Additions for prior year tax positions	—
Settlements with tax authorities	—
Reductions of prior year tax positions	—
Balance, March 31, 2020	$	400


	As of January 1, 2019
	As Reported		842 Adjustment		Adjusted Balances
Operating Leases:
Operating lease assets	$	—	$	31,639	$	31,639
Current portions of operating lease liabilities	—		5,084		5,084
Long-term portions of operating lease liabilities	—		28,480		28,480
Total operating lease liabilities	$	—	$	33,564	$	33,564
Weighted-average remaining lease term					10 years
Weighted-average discount rate					6.0		%

Financing Leases:
Energy assets, net	$	38,263	$	—	$	38,263
Current portions of financing lease liabilities	4,956		—		4,956
Long-term financing lease liabilities, net of current portions and of deferred financing fees	28,407		—		28,407
Total financing lease liabilities	$	33,363	$	—	$	33,363
Weighted-average remaining lease term					18 years
Weighted-average discount rate					11.7		%


	Three Months Ended March 31, 2020		Three Months Ended March 31, 2019
Operating Lease:
Operating lease costs	$	1,826	$	1,838

Financing Lease:
Amortization expense	532		532
Interest on lease liabilities	801		949

Total lease costs	$	3,159	$	3,319


	Three Months Ended		Three Months Ended
	March 31, 2020		March 31, 2019
Contingent consideration liabilities balance at December 31, 2019 and 2018	$	678	$	600

Changes in the fair value of contingent consideration obligation	—		25
Contingent consideration liabilities balance at March 31, 2020 and 2019	$	678	$	625


	As of March 31, 2020						As of December 31, 2019
	Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt (Level 2)	$	332,683	$	326,459	$	309,377	$	307,508


	Location of (Gain) Loss Recognized in Net Income	Amount of (Gain) Loss Recognized in Net Income
		Three Months Ended March 31,
		2020		2019
Derivatives Designated as Hedging Instruments:
Interest rate swap contracts	Other expenses, net	$	99	$	(49)
Derivatives Not Designated as Hedging Instruments:
Interest rate swap contracts	Other expenses, net	$	10	$	—
Commodity swap contracts	Other expenses, net	(48)		—
Interest make-whole provision	Other expenses, net	(185)		(723)


	March 31,		December 31,
	2020⁽¹⁾		2019⁽¹⁾
Cash and cash equivalents	$	5,789	$	4,666
Restricted cash	586		586
Accounts receivable, net	462		532
Costs and estimated earnings in excess of billings	1,355		1,125
Prepaid expenses and other current assets	80		108
Total VIE current assets	8,272		7,017
Property and equipment, net	1,266		1,266
Energy assets, net	145,410		142,456
Operating lease assets	6,411		6,511
Other assets	1,660		1,662
Total VIE assets	$	163,019	$	158,912
Current portions of long-term debt and financing lease liabilities	$	2,234	$	2,252
Accounts payable	2,670		2,006
Accrued expenses and other current liabilities	1,623		2,203
Current portions of operating lease liabilities	106		102
Total VIE current liabilities	6,633		6,563
Long-term debt and financing lease liabilities, less current portions and net of deferred financing fees	24,214		24,654

Long-term portions of operating lease liabilities	6,173		6,180
Other liabilities	1,004		1,171
Total VIE liabilities	$	38,024	$	38,568


	Commencement Date	Maturity Date	Acceleration Clause⁽²⁾	Rate as of
								March 31, 2020		March 31, 2020	December 31, 2019
Senior secured credit facility, interest at varying rates monthly in arrears	June 2015	June 2024	NA	4.36	%	$	142,022	$	112,216
Variable rate term loan payable in semi-annual installments	January 2006	February 2021	Yes	3.70	%	625		625
Variable rate term loan payable in semi-annual installments	January 2006	June 2024	Yes	3.45	%	6,609		6,609
Term loan payable in quarterly installments	March 2011	March 2021	Yes	7.25	%	666		831
Term loan payable in monthly installments	October 2011	June 2028	NA	6.11	%	3,314		3,649
Variable rate term loan payable in quarterly installments	October 2012	May 2020	NA	4.95	%	27,617		28,217
Variable rate term loan payable in quarterly installments	September 2015	March 2023	NA	4.20	%	15,995		15,976
Term loan payable in quarterly installments	August 2016	July 2031	NA	4.95	%	3,392		3,769
Term loan payable in quarterly installments	March 2017	March 2028	NA	5.00	%	3,416		3,521
Term loan payable in monthly installments	April 2017	April 2027	NA	4.50	%	21,823		22,553
Term loan payable in quarterly installments	April 2017	February 2034	NA	5.61	%	2,487		2,706
Variable rate term loan payable in quarterly installments	June 2017	December 2027	NA	3.90	%	11,740		11,740
Variable rate term loan payable in quarterly installments	February 2018	August 2022	Yes	8.95	%	12,436		15,645
Term loan payable in quarterly installments	June 2018	December 2038	Yes	5.15	%	28,073		28,583
Variable rate term loan payable in semi-annual installments	June 2018	June 2033	Yes	3.50	%	9,003		9,003
Variable rate term loan payable in monthly/quarterly installments	October 2018	October 2029	Yes	3.94	%	8,923		9,092
Long term finance liability in semi-annual installments⁽³⁾	July 2019	July 2039	NA	0.28	%	3,785		3,841
Long term finance liability in semi-annual installments⁽³⁾	November 2019	November 2039	NA	—	%	6,970		8,794
Term loan payable in quarterly installments	December 2019	December 2021	Yes	6.500	%	24,167		27,226
Financing leases⁽¹⁾						28,378		28,497
						$	361,441	$	343,093
Less - current maturities						69,282		69,969
Less - deferred financing fees						6,606		6,943
Long term debt and financing lease liabilities						$	285,553	$	266,181


	Three Months Ended March 31,						Dollar		Percentage
	2020		2019		Change		Change
Revenues	$	212,413	$	150,112	$	62,301	41.5	%


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Jan 1, 2020 - Jan 31, 2020	—	—		—	$	5,903,540
Feb 1, 2020 - Feb 29, 2020	—	—		—	$	5,903,540
March 1, 2020 - March 31, 2020	455	13.87		455	$	5,897,229
Total	455	$	13.87	455	$	5,897,229


Exhibit Number			Description
10.1.1			Fourth Amended and Restated Credit and Security Agreement dated as of June 28, 2019 among Ameresco, Inc., certain guarantors party thereto, certain lenders party thereto from time to time and Bank of America, N.A. as Administrative Agent. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on July 1, 2019 (file no. 001-34811) and incorporated herein by reference.
10.1.2*			Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement dated March 31, 2020 among Ameresco, Inc., certain guarantors party thereto, certain lenders party thereto from time to time and Bank of America, N.A. as Administrative Agent.
10.2+			Ameresco, Inc. Executive Management Team Additional Annual Incentive Performance Program. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 and filed with the Commission on August 8, 2019 (file no. 001-34811) and incorporated herein by reference.
10.3+			Stock Ownership Guidelines. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on April 24, 2019 (file no. 001-34811) and incorporated herein by reference.
10.4+			Offer Letter between the Company and Doran Hole dated June 26, 2019. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on July 1, 2019 (file no. 001-34811) and incorporated herein by reference.
31.1*			Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Principal Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*			The following condensed consolidated financial statements from Ameresco, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
			*Filed herewith.
			+ Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of Ameresco participates.
			**Furnished herewith.