2021 Annual Report
Vision
Energizing a sustainable world
Mis sion
Leading the quest to change the world as the trusted sustainability partner creating valued,
single-sourced, efficient energy solutions delivered with passion, expertise, teamwork and a
relentless focus on customer satisfaction.
Values
Ameresco’s values shape our culture and the way we conduct business. Our values are aligned
with CARING about our stakeholders and are instrumental in guiding every aspect of our business.
About Ameresco, Inc.
Leading the Clean Energy Transformation
Ameresco, Inc. (NYSE:AMRC) is a leading cleantech integrator and
renewable energy asset developer, owner and operator.
Our comprehensive portfolio includes energy efficiency, infrastructure upgrades,
asset sustainability and renewable energy solutions. Our approach begins by
addressing energy demand with analytics and efficiency measures to reduce energy
consumption. Then, we right-size innovative options for energy supply with renewable
and distributed solutions. As a long-term partner, we can also provide ongoing
operations and maintenance services to support customers’ energy objectives.
Ameresco’s sustainability services in support of a collective net zero carbon
future include upgrades to a facility’s energy infrastructure and the development,
construction, and operation of distributed energy resources.
Technical independence coupled with our advanced technology portfolio allows us
to integrate best-in-class solutions for the unique needs of each customer while
delivering practical financial solutions. Whether focused on securing infrastructure
upgrades, addressing decarbonization goals, or creating resiliency, our customers
benefit from a single integrator of comprehensive clean technology solutions.
Drawing from over 20 years of experience, Ameresco has successfully completed
energy saving, environmentally responsible projects with Federal, state and local
governments, healthcare and educational institutions, housing authorities, and
commercial and industrial customers across North America and Europe.
Your Trusted Sustainabilit y Par tner
Our business is founded on providing comprehensive, sustainable solutions that
reduce greenhouse gas emissions for our customers. Ameresco is committed to
continuing to deliver comprehensive projects that help accelerate the global
transition to a net zero future. In pursuit of energizing a sustainable world, we are
proud that Ameresco’s renewable energy assets and customer projects delivered a
carbon offset equivalent to approximately 13.6 million metric tons of carbon dioxide
during 2021 and over 75 million cumulative metric tons since going public in 2010.
A g g r e g ate M et r i c To n s o f C O 2 Avo i d e d p e r Ye a r
13.6M
12.6M
11.2M
9.7M
14M
12M
10M
8M
6M
4M
2M
8.3M
7.1M
5.9M
4.9M
3.8M
2.8M
2.1M
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2021 offset equivalent
to greenhouse
gas emissions from
~33B
MILES
driven by an average
passenger vehicle
2021 offset equivalent
to carbon dioxide
emissions from
2021 offset equivalent
to carbon
sequestered by
~1.7M
HOMES
energy use
for one year
~16M
ACRES
of U.S. forests
in one year
$152.7M
FY 2021
Adjusted EBITDA
343 MWe
Energy Assets
in Operation
$3.05B
Awarded & Contracted
Project Backlog
$1.1B
Operations &
Maintenance
(O&M) Backlog
$1.1B
Energy Asset
Revenue Visibility
Figures as of 12/31/2021
Let ter from
the CEO
Dear Shareholders,
2021 was an outstanding year of growth
Three grid scale battery energy storage
and profit for Ameresco as our dedicated
systems (BESS) are designed to provide
employees, in cooperation with our
2.15 GWh of reliable energy throughout
customers, executed in a difficult operating
SCE’s service territory. Then, our
environment to deliver record results.
enterprise project with Wells Fargo is
Total 2021 revenue was up 18% from the
designed to provide solar generation to
prior year to $1.2 billion, and net income
100 of the organization’s properties across
attributable to common shareholders was
7 states. Finally, our project with USCG
up 30% to $70.5 million.
TRACEN Petaluma integrates both
We entered 2022 with a record $5 billion
in revenue visibility, including over $3 billion
of contracted and awarded project backlog
and $2 billion from our operating energy
asset and O&M portfolio. We ended the
year with 343 MWe of energy assets in
aggressive resiliency and net zero targets.
Supporting decarbonization, this project is
the Department of Homeland Security’s
largest solar installation integrated within
USCG’s first BESS and renewable
energy-powered microgrid.
operation, growing our base by 22%,
These exemplary customers are leading
and aggressively backfilled our assets in
the charge on climate action, and our team
development & construction to 414 MWe.
is proud to do our part in their journey.
This gives us tremendous confidence in
Ameresco’s multi-year growth trajectory.
I must take this opportunity to thank
our customers for their ongoing support
When I think about our success last
and reliance in Ameresco as the
year, I can’t help but believe that our
industry’s trusted sustainability partner.
greatest strength is our people. Our
Communities, organizations, and utilities
team of professionals thrived with an
alike are seeking solutions that address
entrepreneurial spirit and a nimble
approach to getting projects done. They
worked tirelessly to navigate challenging
their increasing energy costs, resiliency
needs and carbon reduction goals.
A clean energy transition is upon us,
circumstances between the ongoing
and it is time to act.
pandemic and the effects of climate change
in their own communities. I’m inspired
every day by how our people execute with
purpose and passion, coming out of these
unprecedented times stronger than ever,
and for that I am forever grateful.
Last year, we also made a point to practice
what we preach. It was imperative that we
turn the lens inward to examine our
contributions to climate change. We
measured our own carbon footprint and
committed to net zero operations by 2040.
We continue to invest in people and
I encourage you to read our 2021 ESG
advanced technologies to maintain our
report – Doing Well by Doing Good:
position as a market leader and capture
Innovation. Action. Integrity. – to learn
emerging opportunities. Our accelerated
more about Ameresco’s climate, diversity,
growth is being driven by an expanding
philanthropic & governance commitments.
addressable market, both related to
industry trends – decarbonization,
resiliency, policy support – and Ameresco’s
investments in expertise, new cleantech
offerings, and flexible financial solutions.
We have evolved with our customers as
they commit to meaningful climate action.
Three are at top of my mind: Southern
California Edison (SCE), Wells Fargo, and
US Coast Guard (USCG) Training Center
(TRACEN) Petaluma.
First, the largest contract in Ameresco’s
history was awarded by SCE to maximize
grid resiliency and energy security.
As the race towards clean energy propels
the market in the coming years, Ameresco
will remain steadfast in our position as an
industry leader. We enter 2022 in the
strongest position in our history.
I believe that both our near term and long-
term prospects have never been better in
our lasting pursuit to energize
a sustainable world.
Sincerely,
George Sakellaris, President & CEO
Customer Highlights
USCG Training Center Petaluma
Petaluma, California, USA
Southern California Edison
California, USA
Facing a range of energy security and resiliency
challenges endemic to the climate and regional
power infrastructure in northern California, the
USCG selected Ameresco to enhance TRACEN
Petaluma’s electric infrastructure and resiliency
posture. A new microgrid is designed to integrate
existing distributed backup generators with
a new 5 MW solar array and an 11.6 MWh
BESS to power the entire site in the event of
an outage. Planned improvements also feature
the deployment of new power distribution
transformers, smart controls in 10 buildings
across campus, LED lighting improvements for
over 8,000 fixtures, installation of new electric
vehicle charging infrastructure, and HVAC
equipment upgrades. The $43 million project
will be the USCG’s first BESS project and the
Department of Homeland Security’s largest
solar renewable energy project integrated
within the USCG’s first fully functional,
renewable energy-powered microgrid.
Due to the impact of extreme weather
events in the state, Southern California
Edison contracted Ameresco in October
2021 to design and build three grid scale
battery energy storage systems at existing
substation parcels throughout their service
territory. The energy storage systems
are designed to address the emergency
reliability risks identified in the California
Governor’s Emergency Proclamation
focused on utilizing clean energy resources
to address electric power shortages resulting
from extended drought, wildfire, and
heatwaves. The three distinct distribution-
level substation parcels equate to 537.5
MW with a four-hour duration for a total of
2,150 MWh and will maximize reliability
and resiliency of the grid by charging
during periods of excess generation and
discharging during periods of need.
Kefalonia Wind Farm
Kefalonia, Greece
Located against the picturesque backdrop of Kefalonia Island, the Kefalonia
Wind Project tasked Ameresco with the design and construction of four 2.3 MW wind
turbines that will be operated and maintained under an additional 14-year fixed price
contract. The €9.8 million renewable energy project, developed with PPC Renewables SA,
a wholly owned subsidiary of Public Power Corporation SA, Greece’s largest power
generation company, will supply clean energy to the area, ensuring that the island’s natural
beauty and resources are preserved for future generations. The project will advance Greece’s
environmental sustainability goals by improving the country’s overall environmental footprint
and is expected to reduce carbon dioxide emissions by 22,000 tons each year.
Customer Highlights
St. John’s College
Santa Fe, New Mexico, USA
Wellesley College
Wellesley, Massachusetts, USA
The third oldest college in the United States,
St. John’s College chose Ameresco to
upgrade parts of its Santa Fe campus
building’s infrastructure, as well as provide
energy conservation and efficiency solutions.
The projects include campus-wide LED
lighting retrofits, re-roofing and rooftop
HVAC retrofits on three buildings, boiler and
air handling unit replacements, and water
infrastructure upgrades in the dormitories.
In addition, St. John’s and Ameresco
collaboratively implemented several Covid
mitigation strategies to improve air quality
and optimize indoor air circulation to reduce
the spread of the disease and lower the risk
of exposure, which played a key role in
St. John’s preparations to enable students
to return to campus.
Ameresco was selected by Wellesley
College to replace the campus’ Central
Utility Plant to significantly reduce the use
of natural gas while cutting utility demand
costs. Using cutting-edge technology,
Ameresco replaced the aging plant with
4MW of power generation, paralleling
switchgear, 800 ton efficient electric chillers,
a 600 HP firetube pony boiler, a 5-cell
cooling tower and a 4,000 ton thermal
energy storage system. The plant’s electric
generators are designed to operate primarily
in “peak shaving” mode to increase cost
savings and decrease the strain on the local
utility during the peak times of the year. The
project furthers Wellesley College’s goal of
reducing campus greenhouse gas emissions
by 37% by 2026 and positions the college as
taking a leading role among higher education
in pursuing a more sustainable future.
Paul Brown Stadium
Hamilton County, Ohio, USA
Focused on reducing its carbon impact, Hamilton County, OH partnered with Ameresco
to implement energy efficiency and smart technology upgrades at Paul Brown Stadium,
home of the NFL’s Cincinnati Bengals. The energy savings performance contract included
replacing over 20,000 outdated light fixtures and the installation of LED tech sports field
lights and a new, state-of-the-art DMX lighting control and monitoring system to improve field
visibility. Ameresco also installed multiple HVAC control systems to the Club areas of the
stadium to alleviate temperature control problems while reducing energy costs. The lighting
and infrastructure upgrades are designed to enhance the overall athlete and fan experience
while generating over $1.4M savings in annual energy and operational costs for Hamilton County.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒
☐
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________.
Commission File Number: 001-34811
Ameresco, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
111 Speen Street, Suite 410
Framingham, Massachusetts
(Address of Principal Executive Offices)
04-3512838
(I.R.S. Employer
Identification No.)
01701
(Zip Code)
(508) 661-2200
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, par value $0.0001 per share
Trading Symbol
AMRC
Name of each exchange on which registered
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or
an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☑
Emerging growth company ☐
Accelerated Filer ☐
Non-accelerated filer ☐
Smaller reporting 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
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☑
The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the
common equity was last sold on the New York Stock Exchange on June 30, 2021, the last business day of the registrant’s most recently completed
second fiscal quarter, was $1,929,538,589.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
Class
Class A Common Stock, $0.0001 par value per share
Class B Common Stock, $0.0001 par value per share
Shares outstanding as of February 25, 2022
33,724,309
18,000,000
Portions of the definitive proxy statement for our 2022 annual meeting of stockholders are incorporated by reference into Part III.
DOCUMENTS INCORPORATED BY REFERENCE
AMERESCO, INC.
TABLE OF CONTENTS
NOTE ABOUT FORWARD-LOOKING STATEMENTS
PART I
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINE SAFETY DISCLOSURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES . . . . . . . . . . . . . .
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . .
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE . . . . . .
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . .
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 1.
ITEM 1A.
ITEM 1B.
ITEM 2.
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 7.
ITEM 7A.
ITEM 8.
ITEM 9.
ITEM 9A.
ITEM 9B.
ITEM 10.
ITEM 11.
ITEM 12.
ITEM 13.
ITEM 14.
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES . . . . . . . . . . . . . . . . . . . . .
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
Page
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NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K (”Form 10-K” or “Report”) contains “forward-looking statements” within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (“the Exchange Act”). All statements, other than statements of
historical fact, including statements regarding our strategy, future operations, future financial position, future revenues, projected
costs, prospects, plans, objectives of management, expected market growth and other characterizations of future events or
circumstances are forward-looking statements. These statements are often, but not exclusively, identified by the use of words such
as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “target,” “project,” “predict” or “continue,” and
similar expressions or variations. These forward-looking statements include, among other things, statements about:
•
•
•
•
•
•
•
•
•
•
•
•
•
our expectations as to the future growth of our business and associated expenses,
our expectations as to revenue generation,
the future availability of borrowings under our revolving credit facility,
the expected future growth of the market for energy efficiency and renewable energy solutions,
our backlog, awarded projects and recurring revenue and the timing of such matters,
our expectations as to acquisition activity,
the impact of any restructuring,
the uses of future earnings,
our intention to repurchase shares of our Class A common stock,
the expected energy and cost savings of our projects,
the expected energy production capacity of our renewable energy plants,
the results of the SEC’s investigation into our revenue recognition and compensation practices in our software-as-a-
service businesses, and
the impact of the current COVID-19 pandemic.
These forward-looking statements are based on current expectations and assumptions that are subject to risks, uncertainties, and
other factors that could cause actual results and the timing of certain events to differ materially and adversely from the future
results expressed or implied by such forward-looking statements. Risks, uncertainties, and factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the section titled “Risk Factors,” set forth in Item 1A of this
Form 10-K and elsewhere in this Report. The forward-looking statements in this Form 10-K represent our views as of the date of
this Report. Subsequent events and developments may cause our views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we have no current intention of doing so and undertake no obligation to do
so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as
representing our views as of any date subsequent to the date of this Form 10-K.
ADDITIONAL NOTES
The terms “Ameresco,” “Company,” “we,” “our,” “us,” or “ourselves” included in this Report mean Ameresco, Inc. and its
consolidated subsidiaries, collectively.
Rounding adjustments applied to individual numbers and percentages shown in this Report may result in these figures differing
immaterially from their absolute values.
Item 1. Business
Company Overview
PART I
Ameresco is a leading clean technology integrator with a comprehensive portfolio of energy efficiency and renewable energy
supply solutions.
Our core services include the development, design, arrangement of financing, construction, and installation of solutions that
deliver measurable cost and energy savings while enhancing the operations, energy security, infrastructure, and resiliency of a
facility. These solutions range from upgrades to a facility’s energy infrastructure to the development, construction, and operation
of renewable energy plants. As a trusted sustainability partner, we are always on a mission to help customers lower their overall
carbon footprint and reduce their environmental impact.
Our product independence coupled with our deep technical bench allows us to integrate best-in-class advanced technology
solutions for the unique needs of each customer.
Drawing from decades of experience, we develop these tailored energy projects for federal, state, and local governments,
educational and healthcare institutions, airports, public housing authorities, commercial/industrial customers, and utilities across
North America and the U.K.
We have sourced and raised approximately $3.9 billion in project financing while delivering $11.2 billion in energy solutions
since our inception. Our growth is driven by staying ahead of the curve and at the leading edge of innovation taking place in the
energy sector, offering new products and services to new and existing customers. In 2020, we launched our first owned and
operated wind power project in Ireland, that became our first renewable energy asset outside of North America.
Mergers and acquisitions of complementary businesses and assets have been an important part of our growth enabling us to
broaden our service offerings, expand our geographical reach, and continue to be an important component to our growth strategy.
Over the past three years, we have acquired businesses and energy assets under construction in Washington DC, Hawaii,
Massachusetts, New York, Illinois, Connecticut, Ohio and Florida.
To best serve our expansive customer base, we have approximately 65 regional offices located throughout North America and the
U.K. and more than 1,200 dedicated energy and business professionals with years of proven experience and a strong commitment
to customer satisfaction. We offer our customers the resources needed to successfully plan, finance, execute and operate energy
programs to create real, sustained economic and operating benefits to fulfill their unique requirements.
1
Our Services
Our portfolio of services aims to create value and provide energy efficient and renewable solutions to the organizations we serve
in the pursuit of a sustainable future.
Energy Efficiency Measures & Upgrades
Energy Infrastructure
• Water management, efficiency and reclamation
Renewable energy, storage & microgrids
•
Heating, ventilation, cooling, building envelope
•
Smart metering and controls
•
Chillers and boilers
•
•
•
Renewable Energy, Storage & Microgrids
Solar photovoltaic (“PV”)
Combined heat and power (“CHP”) and co-
generation plants
Geothermal
Renewable natural gas (“RNG”)
•
•
• Wind power
• Microgrid
•
•
•
Battery storage
EV charging infrastructure
Hydrogen
•
•
•
•
Smart building modernization and retrofits
Design-build new construction
Utilize a full range of technologies related to
building systems, facility infrastructure, energy-
and water-consuming systems
Integrated project design and implementation
Energy Analytics & Supply
•
•
•
Energy supply management
Proprietary asset management software
Energy procurement services
Operations & Maintenance (“O&M”)
End-to-end technical guidance
Skilled technicians to operate and maintain
renewable energy systems
•
•
One of our core services is the development, design, engineering, and installation of projects (“Projects”) that reduce the energy
and O&M costs of our customers’ facilities. These Projects generally include a variety of measures that incorporate innovative
technology and techniques, customized for the facility and designed to improve the efficiency of major building systems, such as
heating, ventilation, cooling and lighting systems, while enhancing the comfort and usability of the buildings.
We also offer the ability to incorporate analytical tools that provide improved building energy management capabilities and
enable customers to identify opportunities for energy cost savings. We typically commit to customers that our energy efficiency
projects will satisfy agreed upon performance standards upon installation or achieve specified increases in energy efficiency.
Generally, the forecasted lifetime energy and operating cost savings of the energy efficiency measures we install defrays all or
almost all of the cost of such measures. In many cases, we assist customers in obtaining third-party financing, grants, or rebates
for the cost of constructing the facility improvements, resulting in little or no upfront capital expenditure by the customer. After a
project is complete, we may operate, maintain and repair the customer’s energy systems under a multi-year O&M contract,
designed to provide us with recurring revenue and visibility into the customer’s evolving needs.
In addition, we serve certain customers by developing and building small-scale renewable energy plants located at or close to a
customer’s site. Depending on the customer’s preference, we will either retain ownership of the completed plant or build it for the
customer. Most of our small-scale renewable energy plants to date consist of solar PV installations and plants constructed adjacent
to landfills, that use landfill gas (“LFG”) to generate energy. We also design and build, and own, operate and maintain plants that
utilize biogas from wastewater treatment processes. Our largest renewable energy project that we operate for a customer uses
biomass as the primary source of energy. For information on how we finance the projects that we own and operate, please see the
disclosures under Note 2, “Summary of Significant Accounting Policies”, Note 9, “Debt and Financing Lease Liabilities” and
Note 11, “Variable Interest Entities and Equity Method Investments” to our consolidated financial statements in Item 8 of this
Report.
Our Lines of Business
Smart Energy Solutions Projects
Our Smart Energy Solutions Projects are primarily energy efficiency projects, which entail the design, engineering, and
installation of an ever-increasing array of innovative technologies and techniques to improve the energy efficiency and control the
operation, of a building’s energy- and water-consuming systems. In certain projects, we provide financing and design and
construct a central plant or cogeneration system providing power, heat and/or cooling to a building, or a small-scale plant that
produces electricity, gas, heat or cooling from renewable sources of energy for a customer, as well as battery energy storage. Our
projects generally range in size and scope from a one-month project to design and retrofit a lighting system to a more complex 30-
month project to design and install a central plant or cogeneration system or other small-scale plant. Projects we have constructed
or are currently working on include designing, engineering and installing energy conservation and resiliency measures across
2
school buildings, large, complex energy conservation, and energy security projects for the federal government, and municipal-
scale street lighting projects incorporating smart city controls.
O&M
After an energy efficiency or renewable energy project is completed, we often provide ongoing O&M services under multi-year
contracts. These services offer end-to-end technical guidance and include operating, maintaining, and repairing facility energy
systems, such as boilers, chillers, and building controls, as well as central power and small-scale plants. For larger projects, we
frequently maintain staff on-site to perform these services. In addition to providing O&M services for our own projects, we also
provide similar services on projects we did not construct for various customers.
Ameresco-owned Energy Assets
Our service offerings also include the sale of electricity, heat, cooling, processed biogas, and renewable biomethane fuel from the
portfolio of assets that we own and operate.
We have constructed and are currently developing, designing, and constructing a wide range of renewable energy plants using:
•
•
•
•
•
•
biogas (generated from landfills, wastewater treatment plants, and the agricultural sector)
advanced biofuels
biomass and other bio-derived fuels
solar PV
wind and hydro sources of energy
battery storage
Most of our renewable energy assets to date have involved the generation and sale of:
•
•
electricity from solar PV
electricity, thermal, renewable fuel, or biomethane using biogas as a feedstock
In the case of our biogas-fueled projects, we purchase biogas that otherwise would be combusted or vented, process it, and either
use it as a renewable fuel source in our energy plants to produce and sell electricity and/or thermal, or sell it as a renewable fuel
source to a third party. We also design and build, and operate and maintain facilities that process biogas into biomethane (or
RNG) that can be transported, primarily through the nation’s natural gas pipeline grid or in some cases through tanker trucks, and
sold to third parties. For Ameresco-owned and operated energy assets, we typically enter into long-term agreements with third
parties for the sale of the energy produced by the facility.
As of December 31, 2021, we owned and operated 147 small-scale renewable energy plants and solar PV installations which
generate electricity or deliver renewable gas fuel with a combined capacity of approximately 343 megawatt equivalents (“MWe”),
and have energy assets in development and construction with a combined capacity of approximately 414 MWe.
The table below shows the type and number of plants we owned as of December 31, 2021:
Plants Owned and Operated
Biogas: RNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Biogas: non-RNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Solar assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total plants owned and operated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantity
6
22
116
3
147
Other
Our service and product offerings also include photovoltaic solar energy products and systems (“integrated-PV”), consulting, and
enterprise energy management services.
Customer Arrangements
Energy Savings Performance Contracts (“ESPCs”)
For our energy efficiency projects, we typically enter into ESPCs, under which we agree to develop, design, engineer and
construct a project and also commit that the project will satisfy agreed upon performance standards that vary from project to
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project. These performance commitments are typically based on the design, capacity, efficiency, or operation of the specific
equipment and systems we install. Our commitments generally fall into three categories:
•
•
Pre-agreed energy reduction commitment: our customer reviews the project design in advance and agrees that, upon or
shortly after completion of the installation of the specified equipment comprising the project, the commitment will have
been met.
Equipment-level commitment: we commit to a level of energy use reduction based on the difference in use measured
first with the existing equipment and then with the replacement equipment.
• Whole building-level commitment: requires demonstration of energy usage reduction for a whole building, often based
on readings of the utility meter where usage is measured. Depending on the project, the measurement and demonstration
may be required only once, upon installation, based on an analysis of one or more sample installations, or may be
required to be repeated at agreed upon intervals generally over periods of up to 25 years. We often assist these customers
in identifying and obtaining financing through rebate programs, grant programs, third-party lenders, and other sources.
Under our contracts, we typically do not take responsibility for a wide variety of factors outside of our control and exclude or
adjust for such factors in commitment calculations. These factors include, among others, variations in energy prices and utility
rates, weather, facility occupancy schedules, the amount of energy-using equipment in a facility, and the failure of the customer to
operate or maintain the project properly. Typically, our performance commitments apply to the aggregate overall performance of
a project rather than to individual energy efficiency measures. Therefore, to the extent an individual measure underperforms, it
may be offset by other measures that overperform during the same period. In the event that an energy efficiency project does not
perform according to the agreed upon specifications, our agreements typically allow us to satisfy our obligation by adjusting or
modifying the installed equipment, installing additional measures to provide substitute energy savings or paying the customer for
lost energy savings based on the assumed conditions specified in the agreement. Many of our equipment supply, local design, and
installation subcontracts contain provisions that enable us to seek recourse against our vendors or subcontractors if there is a
deficiency in our energy reduction commitment. See “We may have liability to our customers under our ESPCs if our projects fail
to deliver the energy use reductions to which we are committed under the contract” in Item 1A, Risk Factors.
Federal Government Contracts, Indefinite Delivery, Indefinite Quantity (“IDIQ”) Agreements
The projects that we perform for governmental agencies are governed by particular qualification and contracting regimes. Certain
states require qualification with an appropriate state agency as a precondition to performing work or appearing as a qualified
energy service provider for state, county, and local agencies within the state. For example, the Commonwealth of Massachusetts
and the states of Colorado and Washington pre-qualify energy service providers and provide contract documents that serve as the
starting point for negotiations with potential governmental customers. Most of the work that we perform for the federal
government is performed under IDIQ agreements between government agencies and us. These IDIQ agreements allow us to
contract with the relevant agencies to implement energy projects, but no work may be performed unless we and the agency agree
on a task order or delivery order governing the provision of a specific project. The government agencies enter into contracts for
specific projects on a competitive basis. We and our affiliates are currently parties to an IDIQ agreement with the U.S.
Department of Energy (“DOE”) expiring in 2026. We are also party to similar agreements with other federal agencies, including
the U.S. Army Corps of Engineers and the U.S. General Services Administration.
Payments by the federal government for energy efficiency measures are based on the services provided and the products installed
but are limited to the savings derived from such measures, calculated in accordance with federal regulatory guidelines and the
specific contract’s terms. The savings are typically determined by comparing energy use and other costs before and after the
installation of the energy efficiency measures, adjusted for changes that affect energy use and other costs but are not caused by the
energy efficiency measures.
Energy Supply Contracts
For projects involving the construction of a small-scale renewable energy plant that we own and operate, we generally enter into
(i) long-term power purchase agreements (“PPAs”) to supply electricity, (ii) long-term energy supply agreements (“ESAs”) to
supply medium British Thermal Unit (“BTU”) biogas or thermal energy, or (iii) gas purchase agreements (“GPAs”) to supply
RNG to a third party. These third parties include, but are not limited to, brokers, traders, utilities, municipalities, industrial
facilities, or other large purchasers of energy. The rights to use the site for the plant and the purchase of raw feedstock fuel for the
plant are also obtained by us under long-term agreements with terms at least as long as the associated output supply agreement.
Our supply agreements typically provide for fixed prices or prices that escalate at a fixed rate or vary based on a market
benchmark. See “We may assume responsibility under customer contracts for factors outside our control, including, in connection
with some customer projects, the risk that fuel prices will increase” in Item 1A, Risk Factors.
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Our Business Segments
Our reportable business segments for the year ended December 31, 2021 were as follows:
•
•
•
U.S. Regions
U.S. Federal
Canada
•
•
Non-Solar Distributed Generation (“Non-Solar
DG”)
All Other
On January 1, 2021, we changed the structure of our internal organization and our U.S. Regions segment now includes our U.S.-
based enterprise energy management services previously included in our “All Other” segment. As a result, previously reported
amounts have been reclassified for comparative purposes. Our U.S. Regions, U.S. Federal and Canada segments offer energy
efficiency products and services which include the design, engineering, and installation of equipment and other measures to
improve the efficiency and control the operation of a facility’s energy infrastructure, renewable energy solutions, and services
which include the construction of small-scale plants that we own or develop for customers that produce electricity, gas, heat, or
cooling from renewable sources of energy and O&M services. Our Non-Solar DG segment sells electricity, thermal, processed
renewable gas fuel, or biomethane produced from renewable sources of energy, other than solar, and generated by small-scale
plants that we own and operate, as well as O&M services for customer owned small-scale plants. Our U.S. Regions segment also
includes certain small-scale solar grid-tie plants developed for customers. The “All Other” category offers enterprise energy
management services, consulting services, and the sale of solar PV energy products and systems which we refer to as integrated-
PV.
The table below shows the percentage of revenues by segment for the last three years:
2021
2020
2019
% of Revenues by Segment (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Solar DG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43.5 %
32.3 %
4.1 %
11.3 %
8.8 %
39.2 %
36.6 %
4.6 %
10.3 %
9.3 %
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0 %
100.0 %
42.6 %
33.2 %
4.4 %
9.8 %
10.0 %
100.0 %
(1) See Note 3 “Revenue from Contracts with Customers” for our disaggregated revenue and Note 20 “Business Segment Information” for
additional information.
Sales and Marketing
Our sales and marketing approach is to offer customers customized and comprehensive energy efficiency solutions tailored to
meet their economic, operational, and technical needs. The sales, design and construction process for energy efficiency and
renewable energy projects recently has been averaging from 18 to 54 months. We identify project opportunities through referrals,
requests for proposals (“RFPs”), conferences and events, website, digital campaigns, telemarketing, and repeat business from
existing customers. Our direct sales force develops and follows up on customer leads. As of December 31, 2021, we had 179
employees in direct sales.
In preparation for a proposal, our team typically conducts a preliminary audit of the customer’s needs and requirements and
identifies areas to enhance efficiencies and reduce costs. We collect and analyze the customer’s utility bill and other data related
to energy use. If the bills are complex or numerous, we often utilize our proprietary enterprise energy management software tools
to scan, compile and analyze the information. Our experienced engineers visit and assess the customer’s current energy systems
and infrastructure. Through our knowledge of the federal, state, and local governmental and utility environments, we assess the
availability of energy, utility or environmental-based payments for usage reductions or renewable power generation, which helps
us optimize the economic benefits of a proposed project for a customer. Once awarded a project, we perform a more detailed audit
of the customer’s facilities, which serves as the basis for the final specifications of the project and final contract terms.
For renewable energy plants that are not built or located on a customer’s site or use sources of energy not within the customer’s
control, the sales process also involves the identification of sites with attractive sources of renewable energy and obtaining
necessary rights and governmental permits to develop a plant on that site. For example, for LFG projects, we start with gaining
control of an LFG resource located close to the prospective customer. For solar and wind projects, we look for sites where utilities
are interested in purchasing renewable energy power at rates that are sufficient to make a project feasible. Where governmental
agencies control the site and resource, such as a landfill owned by a municipality, the customer may be required to issue an RFP
5
to use the site or resource. Once we believe we are likely to obtain the rights to the site and the resource, we seek customers for
the energy output of the potential project, with whom we can enter into a long-term PPA.
Customers
We strive to be a trusted sustainability partner creating valued, single-sourced, efficient energy solutions delivered with passion,
expertise, teamwork, and a relentless focus on customer satisfaction.
Our customers choose to prioritize efficiency and the development of clean, green energy sources and our solutions are
customized to serve the specific needs of each customer and meaningfully reduce or offset their carbon footprint. From energy
conservation through a variety of measures to the generation of green, renewable power, our customers and their communities
reap the benefits of reducing energy consumption, costs, and associated carbon emissions.
In 2021, we served customers throughout the United States, Canada, the U.K., and Greece and approximately 67.0% of our
revenues were derived from federal, state, provincial, or local government entities, including public housing authorities and public
universities. Our federal customers include various divisions of the U.S. federal government. The U.S. federal government is
considered a single customer and segment for reporting purposes (see table above under “Our Segments”). For the year ended
December 31, 2021, our largest 20 customers accounted for approximately 64.0% of our total revenues. Other than the U.S.
federal government, one customer represented 10.2% of our revenues during this period.
See “Provisions in our government contracts may harm our business, financial condition and operating results” in Item 1A, Risk
Factors for a discussion of special considerations applicable to government contracting and “The loss of one of our significant
customers or our failure to perform our contract with that customer in accordance with its terms could adversely affect us” in Item
1A, Risk Factors for further discussion.
Competition
While we face significant competition from a large number of companies, we believe that few offer the objective technical
expertise and full range of services we do.
Our principal competitors include:
•
•
•
•
•
Smart Energy Solutions: Constellation Energy Group, Inc. (an Exelon company), Energy Systems Group, Honeywell,
Johnson Controls, NORESCO (a unit of Carrier Global Corporation), Schneider Electric, Siemens Building
Technologies, and Trane Technologies (an Ingersoll-Rand company). We compete primarily on the basis of our
comprehensive, independent offering of energy efficiency and renewable energy services and the breadth and depth of
our expertise.
Renewable energy plants: many large independent power producers and utilities, as well as a large number of
developers of renewable energy projects.
LFG market: primarily large, national project developers and owners of landfills who self-develop projects using LFG
from their own landfills.
Solar PV market: Borrego Solar Systems, BlueWave Solar, Citizens Energy Group, Clean Energy Collective, Nexamp
Inc., SunPower Corp., Solect Energy, and Syncarpha Capital. We compete for renewable energy projects primarily on
the basis of our experience, reputation, and ability to identify and complete high quality and cost-effective projects.
O&M services: EMCOR Energy Services, Comfort Systems USA, Honeywell, Johnson Controls, and Veolia. In this
area, we compete primarily on the basis of our expertise and quality of service.
See “We operate in a highly competitive industry, and our current or future competitors may be able to compete more effectively
than we do, which could have a material adverse effect on our business, revenues, growth rates, and market share” in Item 1A,
Risk Factors for further discussion of competition.
Regulatory
Various regulations affect the conduct of our business. Federal and state legislation and regulations enable us to enter into ESPCs
with government agencies in the United States. The applicable regulatory requirements for ESPCs differ in each state and between
agencies of the federal government.
Our projects must conform to all applicable electric reliability, building and safety, and environmental regulations and codes,
which vary from place to place and time to time. Various federal, state, provincial, and local permits are required to construct an
energy efficiency project or renewable energy plant.
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Renewable energy projects are also subject to specific governmental safety and economic regulation. States and the federal
government typically do not regulate the transportation or sale of LFG unless it is combined with and distributed with natural gas,
but this is not uniform among states and may change from time to time. States regulate the retail sale and distribution of natural
gas to end-users, although regulatory exemptions from regulation are available in some states for limited gas delivery activities,
such as sales only to a single customer. The sale and distribution of electricity at the retail level is subject to state and provincial
regulation, and the sale and transmission of electricity at the wholesale level is subject to federal regulation. While we do not own
or operate retail-level electric distribution systems or wholesale-level transmission systems, the prices for the products we offer
can be affected by the tariffs, rules and regulations applicable to such systems, as well as the prices that the owners of such
systems are able to charge. The construction of power generation projects typically is regulated at the state and provincial levels,
and the operation of these projects also may be subject to state and provincial regulation as “utilities.” At the federal level, the
ownership and operation of, and sale of power from, generation facilities may be subject to regulation under the Public Utility
Holding Company Act of 2005 (“PUHCA”), the Federal Power Act (“FPA”), and Public Utility Regulatory Policies Act of 1978
(“PURPA”). However, because all of the plants that we have constructed and operated to date are small power “qualifying
facilities” under PURPA, they are subject to less regulation under the FPA, PUHCA and related state utility laws than traditional
utilities.
If we pursue projects employing different technologies or with a single project electrical capacity greater than 20 megawatts, we
could become subject to some of the regulatory schemes which do not apply to our current projects. In addition, the state,
provincial, and federal regulations that govern qualifying facilities and other power sellers frequently change, and the effect of
these changes on our business cannot be predicted.
LFG power generation facilities require an air emissions permit, which may be difficult to obtain in certain jurisdictions.
Renewable energy projects may also be eligible for certain governmental or government-related incentives from time to time,
including tax credits, cash payments in lieu of tax credits, and the ability to sell associated environmental attributes, including
carbon credits. Government incentives and mandates typically vary by jurisdiction.
Some of the demand reduction services we provide for utilities and institutional customers are subject to regulatory tariffs
imposed under federal and state utility laws. In addition, the operation of, and electrical interconnection for, our renewable energy
projects are subject to federal, state, or provincial interconnection and federal reliability standards also set forth in utility tariffs.
These tariffs specify rules, business practices, and economic terms to which we are subject. The tariffs are drafted by the utilities
and approved by the utilities’ state, provincial, or federal regulatory commissions.
See our section entitled “Risks related to Regulations or Governmental Actions” in Item 1A, Risk Factors.
Human Capital Management
We believe our employees are Ameresco’s greatest resource, as they come together to creatively integrate our advanced
technology portfolio and develop innovative, transformative energy solutions for our customers.
The diversity of our team coupled with our deep bench of technical expertise enables us to tackle the most complex energy
opportunities. Supporting our employees and the communities in which we serve is paramount to our success.
We focus on team-based employee philanthropy, wellness-focused employee benefits, and donating our time to our local
communities through education and training.
As of December 31, 2021, we had a total of 1,272 employees based in 46 states, the District of Columbia, four Canadian
provinces, and three office locations throughout the U.K.
Philanthropic Activities
We actively participate in philanthropic activities that support our local communities and provide an opportunity for dynamic
team building. During 2021, our employees were encouraged to use paid community service days to donate time and creative
energy to the organizations that touch them personally and to give back to the environment and their communities.
Diversity, Equity, Inclusion and Justice
We welcome, support, and celebrate unique ways of thinking. We believe innovation demands diversity of thought, and Ameresco
has done well by welcoming and celebrating employees from diverse backgrounds. We are proud to be an equal opportunity
workplace and an Affirmative Action employer.
To educate, support, and promote the culture of diversity, equity, inclusion and justice at Ameresco, diversity in the workplace is
discussed at all levels in the organization. Annual diversity in the workplace training is rolled out to all Ameresco employees.
7
This comprehensive training is critical to ensuring we are focused on educating our teams and fostering a culture that is all-
inclusive.
Recruiting is a key element in our commitment to diversity, equity, inclusion and justice. Our talent team focuses on attracting
and recruiting a diverse workforce by partnering with organizations such as the National Society of Women in Construction,
Browning The Green Space, New England Women in Energy and the Environment, Hire Heroes USA, and Dolce Center for
Advancement of Veterans and Service Members.
We have demonstrated meaningful growth over the last five years in the number and percentage of employees from diverse
backgrounds, with these classes representing 43% of all employees as of December 31, 2021. In addition, we have a 39% rolling
three-year average of diverse promotions among all promotions throughout Ameresco. In 2021, 37% of all management position
promotions were employees with diverse backgrounds. Diverse backgrounds include women, ethnicity, veterans, and individuals
with a disability. This data represents U.S. employees only due to personal information privacy regulations in Canada and Europe.
Benefits with a Purpose
The health, safety, and well-being of our employees continues to be a top priority at Ameresco. In addition to competitive salaries,
we are committed to regularly evaluating a competitive benefits portfolio, striving to provide resources to our employees that
assist with work-life balance.
While employee healthcare costs and access to a wide variety of doctors have always been at the top of our criteria list, we also
focused our 2022 benefit renewal objectives on expanding our mental health and well-being offerings. We wanted to ensure our
employees have a variety of help and resources available, offered in platforms and services they felt comfortable using, should
they need it.
In addition, we offered a comprehensive Employee Assistance Plan to all Ameresco employees and their family members should
they need assistance with any life planning matters. And in support of some of the new applications and corporate programs, we
rolled out memberships to Care.com, Gympass, and the Headspace mobile app.
Energy Outside the Office
Whether it is through our philanthropic activities, our quest to provide an inclusive culture, or our focus on the well-being of our
people, Ameresco benefits from the open communication seen between our employees. We encourage activities outside of our
offices to enhance the employee experience. While the COVID-19 pandemic continues to present challenges for in-person
gatherings, our employees have continued to find creative ways to interact virtually and in-person with proper safety protocols in
place.
Career Advancement
Ameresco strives to implement creative ways for our employees to support career advancement. To facilitate our employees’
career development with a focus on retention, we have improved on the frequency of career path discussions, training, and
succession planning. Career path training was offered to all employees in 2021 and we intend to continue it in the coming years.
The career path discussions identified specific training programs, mentorship opportunities, continued degree programs and
certification programs – all of which will provide the tools necessary to assist our employees in their career development.
When it comes to the innovative solutions that we deliver to our customers, it is critical for the Ameresco team to be at the
forefront. Every month our Corporate Marketing Team hosts a Center of Excellence in Advance Technology training session
available to all employees. Each session features a different topic to cover various aspects of Ameresco’s solution portfolio and is
presented by our internal subject matter experts. All employees are encouraged to attend live and participate in the Q&A.
In 2021, we invested in a Learning Management System (“LMS”) in our Workday Enterprise Management platform to centralize
and have the capability to measure development metrics such as training hours per employee. The new LMS system allows for
easy access to training materials and more frequent training as needed.
We provide a tuition reimbursement program to support career development within our organization. In addition, we support
employee growth by investing in career advancing certification programs for our employees.
For more information on our initiatives noted above, please see our 2021 Environmental, Social and Governance Report which is
available at www.ameresco.com.
8
Seasonality
See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect
on our operating results” in Item 1A, Risk Factors and “Overview — Effects of Seasonality” in Item 7, Management’s Discussion
and Analysis of Financial Condition and Results of Operations” for a discussion of seasonality in our business.
Geographic Information
Financial information about our domestic and international operations may be found in Note 16, “Geographic Information” of our
consolidated financial statements included in Item 8 of this Form 10-K, which information is incorporated herein by reference.
Additional Information
Periodic reports, proxy statements, and other information are available to the public, free of charge, on our website,
www.ameresco.com, as soon as reasonably practicable after they have been filed with the Securities and Exchange Commission
(“SEC”), and through the SEC’s website, www.sec.gov. We include our website address in this report only as an inactive textual
reference and do not intend it to be an active link to our website. None of the material on our website is part of this Report.
Executive Officers
The following is a list of our executive officers, their ages as of February 25, 2022 and their principal positions:
Name
George P. Sakellaris . . . . . . . . . . . .
Michael T. Bakas . . . . . . . . . . . . . .
Nicole A. Bulgarino . . . . . . . . . . . .
David J. Corrsin . . . . . . . . . . . . . . .
Robert Georgeoff . . . . . . . . . . . . . .
Britta MacIntosh . . . . . . . . . . . . . . .
Louis P. Maltezos . . . . . . . . . . . . . .
Spencer Doran Hole . . . . . . . . . . . .
Mark A. Chiplock . . . . . . . . . . . . . .
Lauren K. Todd . . . . . . . . . . . . . . .
Age
75
53
49
63
57
54
55
53
52
46
Position (s)
Chairman of the Board of Directors, President, and Chief Executive Officer
Executive Vice President, Distributed Energy Systems
Executive Vice President and General Manager, Federal Solutions
Executive Vice President, General Counsel, and Secretary and Director
Executive Vice President, South Region
Senior Vice President, Western Region and U.K. and Europe Operations
Executive Vice President, Central Region and Canada Operations
Executive Vice President and Chief Financial Officer
Senior Vice President of Finance and Chief Accounting Officer
Senior Vice President, Human Resources and Operations
George P. Sakellaris: Mr. Sakellaris has served as chairman of our board of directors and our president and chief executive
officer since founding Ameresco in 2000.
Michael T. Bakas: Mr. Bakas has served as our executive vice president, distributed energy systems, since November 2017. Prior
to this, Mr. Bakas served in various capacities with our company since 2000, including as our senior vice president, renewable
energy, from March 2010 to November 2017.
Nicole A. Bulgarino: Ms. Bulgarino has served as our executive vice president and general manager of federal solutions since
May 2017. Prior to this, Ms. Bulgarino served in various capacities with our company since 2004, including as our senior vice
president and general manager of federal solutions from May 2015 to May 2017.
David J. Corrsin: Mr. Corrsin has served as our executive vice president, general counsel, and secretary, as well as a director,
since 2000.
Robert Georgeoff: Mr. Georgeoff has served as our executive vice president, south region, since February 2021. Prior to this, Mr.
Georgeoff served in various management capacities with our company since 2011, including as vice president, south region and
President at Ameresco Southwest, a subsidiary of Ameresco, from August 2011 through February 2021.
Britta MacIntosh: Ms. MacIntosh has served as our senior vice president of the west region and UK & Europe operations since
July 2020. Prior to this, Ms. MacIntosh served as our vice president of U.K. operations from February 2016 to July 2020.
Louis P. Maltezos: Mr. Maltezos has served as executive vice president since April 2009 and oversees central region and Canada
operations. Prior to this, Mr. Maltezos served in various management capacities with our company since 2004, including as vice
president and general manager of our Midwest regions from June 2004 to April 2009.
Spencer Doran Hole: Mr. Hole has served as our executive vice president and chief financial officer since February 2022 and
served as senior vice president and chief financial officer since July 2019. Prior to joining Ameresco, Mr. Hole served as chief
9
executive officer, North America and Group vice president - strategy at ReneSola Ltd., a manufacturer and supplier of green
energy products, since November 2017 and served as the chief financial officer for the US division of ReneSola since December
2016.
Mark A. Chiplock: Mr. Chiplock has served as senior vice president of finance and chief accounting officer since February 2022
and served as vice president of finance and chief accounting officer since July 2019. Prior to this, Mr. Chiplock served as our
interim chief financial officer and treasurer from October 2018 through July 2019 and as our corporate controller from June 2014
to December 2019.
Lauren K. Todd: Ms. Todd has served as senior vice president, human resources and operations since May 2021. Prior to this,
Ms. Todd served in various capacities with our company since 2012, including as vice president, human resources and operations
from April 2016 to May 2021.
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Item 1A. Risk Factors
We face many risks. If any of the events or circumstances described below actually occur, we and our businesses, financial
condition or results of operations could suffer, and the trading price of our Class A Common Stock could decline. Our current
and potential investors should consider the following risks and the information contained under the heading “Cautionary Note
Regarding Forward-Looking Statements” before deciding to invest in our securities.
Risks Related to Our Business
If demand for our energy efficiency and renewable energy solutions does not develop as we expect, our revenues will suffer,
and our business will be harmed.
We believe, and our growth plans assume, that the market for energy efficiency and renewable energy solutions will continue to
grow, that we will increase our penetration of this market and that our revenues from selling into this market will continue to
increase over time. If our expectations as to the size of this market and our ability to sell our products and services in this market
are not correct, our revenues will suffer, and our business will be harmed.
In order to secure contracts for new projects, we typically face a long and variable selling cycle that requires significant
resource commitments and requires a long lead time before we realize revenues.
The sales, design, and construction process for energy efficiency and renewable energy projects recently has been taking from 18
to 54 months on average, with sales to federal government and housing authority customers tending to require the longest sales
processes. Our sales cycle has been further lengthened as a result of the impacts of the COVID-19 pandemic. We cannot predict
the timeline of the COVID-19 pandemic and, therefore, cannot predict the timeline for our selling cycle in the current conditions.
Our existing and potential customers generally follow extended budgeting and procurement processes, and sometimes must
engage in regulatory approval processes related to our services. Our customers often use outside consultants and advisors, which
contributes to a longer sales cycle. Most of our potential customers issue an RFP, as part of their consideration of alternatives for
their proposed project. In preparation for responding to an RFP, we typically conduct a preliminary audit of the customer’s needs
and the opportunity to reduce its energy costs. For projects involving a renewable energy plant that is not located on a customer’s
site or that uses sources of energy not within the customer’s control, the sales process also involves the identification of sites with
attractive sources of renewable energy, such as a landfill or a favorable site for solar PV, and it may involve obtaining necessary
rights and governmental permits to develop a project on that site. If we are awarded a project, we then perform a more detailed
audit of the customer’s facilities, which serves as the basis for the final specifications of the project. We then must negotiate and
execute a contract with the customer. In addition, we or the customer typically need to obtain financing for the project.
This extended sales process requires the dedication of significant time by our sales and management personnel and our use of
significant financial resources, with no certainty of success or recovery of our related expenses. A potential customer may go
through the entire sales process and not accept our proposal. All of these factors can contribute to fluctuations in our quarterly
financial performance and increase the likelihood that our operating results in a particular quarter will fall below investor
expectations. These factors could also adversely affect our business, financial condition and operating results due to increased
spending by us that is not offset by increased revenues.
We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer
contracts.
As of December 31, 2021 and 2020, we had backlog of approximately $1,509.3 million and $895.7 million, respectively, in
expected future revenues under signed customer contracts for the installation or construction of projects, which we sometimes
refer to as fully-contracted backlog; and we also had been awarded projects for which we do not yet have signed customer
contracts with estimated total future revenues of an additional $1,542.8 million and $1,318.7 million, respectively. As of
December 31, 2021 and 2020, we had O&M backlog of approximately $1,131.7 million and $1,131.1 million, respectively. Our
O&M backlog represents expected future revenues under signed multi-year customer contracts for the delivery of O&M services,
primarily for energy efficiency and renewable energy construction projects completed by us for our customers.
Our customers have the right under some circumstances to terminate contracts or defer the timing of our services and their
payments to us. In addition, our government contracts are subject to the risks described below under “Provisions in government
contracts may harm our business, financial condition and operating results.” The payment estimates for projects that have been
awarded to us but for which we have not yet signed contracts have been prepared by management and are based upon a number of
assumptions, including that the size and scope of the awarded projects will not change prior to the signing of customer contracts,
that we or our customers will be able to obtain any necessary third-party financing for the awarded projects, and that we and our
customers will reach agreement on and execute contracts for the awarded projects. We are not always able to enter into a contract
for an awarded project on the terms proposed. As a result, we may not receive all of the revenues that we include in the awarded
projects component of our backlog or that we estimate we will receive under awarded projects. If we do not receive all of the
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revenue we currently expect to receive, our future operating results will be adversely affected. In addition, a delay in the receipt of
revenues, even if such revenues are eventually received, may cause our operating results for a particular quarter to fall below our
expectations.
We may be unable to complete or operate our projects on a profitable basis or as we have committed to our customers.
Development, installation, and construction of our energy efficiency and renewable energy projects, and operation of our
renewable energy projects, entails many risks, including:
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failure to receive critical components and equipment that meet our design specifications and can be delivered on
schedule,
failure to obtain all necessary rights to land access and use,
failure to receive quality and timely performance of third-party services,
increases (including as a result of inflation) in the cost of labor, equipment, and commodities needed to construct or
operate projects,
permitting and other regulatory issues, license revocation, and changes in legal requirements,
shortages of equipment or skilled labor,
unforeseen engineering problems,
failure of a customer to accept or pay for renewable energy that we supply,
weather interferences, catastrophic events including fires, explosions, earthquakes, droughts, and acts of terrorism; and
accidents involving personal injury or the loss of life,
health or similar issues, a pandemic, or epidemic, such as COVID-19,
labor disputes and work stoppages,
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Any of these factors could give rise to construction delays and construction and other costs in excess of our expectations. We
have, for example, experienced disruptions in development, installation and construction as a result of COVID-19 and the related
quarantines, facility closures, and supply chain, travel and logistics challenges, and we may continue to experience such
disruptions. In addition, the impacts of climate change have caused us to experience more frequent and severe weather
interferences, and this trend may continue. These factors and events could prevent us from completing construction of our
projects, cause defaults under our financing agreements or under contracts that require completion of project construction by a
certain time, cause projects to be unprofitable for us, or otherwise impair our business, financial condition and operating results.
A significant decline in the fiscal health of federal, state, provincial, and local governments could reduce demand for our
energy efficiency and renewable energy projects.
Historically, including for the years ended December 31, 2021 and 2020, more than 67% of our revenues have been derived from
sales to federal, state, provincial, or local governmental entities, including public housing authorities and public universities. We
expect revenues from this market sector to continue to comprise a significant percentage of our revenues for the foreseeable
future. A significant decline in the fiscal health of these existing and potential customers may make it difficult for them to enter
into contracts for our services or to obtain financing necessary to fund such contracts, or may cause them to seek to renegotiate or
terminate existing agreements with us. In addition, if there is a partial or full shutdown of any federal, state, provincial or local
governing body this may adversely impact our financial performance.
Provisions in our government contracts may harm our business, financial condition and operating results.
A significant majority of our fully-contracted backlog and awarded projects is attributable to customers that are governmental
entities. Our contracts with the federal government and its agencies, and with state, provincial, and local governments,
customarily contain provisions that give the government substantial rights and remedies, many of which are not typically found in
commercial contracts, including provisions that allow the government to:
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terminate existing contracts, in whole or in part, for any reason or no reason,
reduce or modify contracts or subcontracts,
decline to award future contracts if actual or apparent organizational conflicts of interest are discovered, or to impose
organizational conflict mitigation measures as a condition of eligibility for an award,
suspend or debar the contractor from doing business with the government or a specific government agency, and
pursue criminal or civil remedies under the False Claims Act, False Statements Act, and similar remedy provisions
unique to government contracting.
Under general principles of government contracting law, if the government terminates a contract for convenience, the terminated
company may recover only its incurred or committed costs, settlement expenses, and profit on work completed prior to the
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termination. If the government terminates a contract for default, the defaulting company is entitled to recover costs incurred and
associated profits on accepted items only and may be liable for excess costs incurred by the government in procuring undelivered
items from another source. In most of our contracts with the federal government, the government has agreed to make a payment to
us in the event that it terminates the agreement early. The termination payment is designed to compensate us for the cost of
construction plus financing costs and profit on the work completed.
In ESPCs for governmental entities, the methodologies for computing energy savings may be less favorable than for non-
governmental customers and may be modified during the contract period. We may be liable for price reductions if the projected
savings cannot be substantiated. In addition to the right of the federal government to terminate its contracts with us, federal
government contracts are conditioned upon the continuing approval by Congress of the necessary spending to honor such
contracts. Congress often appropriates funds for a program on a September 30 fiscal-year basis even though contract performance
may take more than one year. Consequently, at the beginning of many major Governmental programs, contracts often may not be
fully funded, and additional monies are then committed to the contract only if, as and when appropriations are made by Congress
for future fiscal years. Similar practices are likely to also affect the availability of funding for our contracts with Canadian, as well
as state, provincial, and local government entities. If one or more of our government contracts were terminated or reduced, or if
appropriations for the funding of one or more of our contracts is delayed or terminated, our business, financial condition and
operating results could be adversely affected.
The projects we undertake for our customers generally require significant capital, which our customers or we may finance
through third parties, and such financing may not be available to our customers or to us on favorable terms, if at all.
Our projects for customers are typically financed by third parties. For small-scale renewable energy plants that we own, as well as
certain larger projects for customers, such as the battery storage project with Southern California Edison Company, we typically
rely on a combination of our working capital and debt to finance construction costs. If we or our customers are unable to raise
funds on acceptable terms when needed or if we do not have sufficient working capital or availability under our existing financing
arrangements, we may be unable to secure customer contracts, the size of contracts we do obtain may be smaller or we could be
required to delay the development and construction of projects, reduce the scope of those projects or otherwise restrict our
operations. Delays in customer projects could also subject us to claims by customers. The terms of financing arrangements that we
may enter into, including increases in interest rates as compared to historical rates, could impact the profitability of our projects.
Furthermore, any inability by us or our customers to raise the funds necessary to finance our projects or construction costs could
materially harm our business, financial condition, and operating results.
The loss of Southern California Edison Company (“SCE”), which is one of our most significant customers, or our failure to
perform on our contract with that customer in accordance with its terms could adversely affect us.
We expect that a material portion of our revenue for 2022 will be generated from our design and build of battery energy storage
system facilities for SCE under our Turnkey Engineering, Procurement, Construction and Maintenance Agreement and the
underlying purchase orders dated as of October 21, 2021 (the “SCE Agreement”) with SCE. The SCE Agreement and related
purchase orders obligate us to achieve certain substantial completion milestone dates (as they may be extended) for the facilities
no later than August 1, 2022, and for at least two years thereafter meet specified availability and capacity guarantees. The SCE
Agreement also requires us to expend significant capital, and if we are unable to fund such capital needs on acceptable terms, on a
timely basis, or at all, this could adversely impact the construction timeline under the agreement. If we fail to satisfy these
milestone obligations or fail to meet the availability and capacity guarantees, we may be subject to liquidated damages and under
certain circumstances SCE may have a right to terminate the agreement. The requirement to pay liquidated damages or the loss of
business from SCE could have a material adverse effect on our reputation, business or results of operations.
Project development or construction activities may not be successful, and we may make significant investments without first
obtaining project financing, which could increase our costs and impair our ability to recover our investments.
The development and construction of small-scale renewable energy plants and other energy infrastructure projects involve
numerous risks. We may be required to spend significant sums for preliminary engineering, permitting, legal and other expenses
before we can determine whether a project is feasible, economically attractive or capable of being built. In addition, we will often
choose to bear the costs of such efforts prior to obtaining project financing, prior to getting final regulatory approval and prior to
our final sale to a customer, if any.
Successful completion of a particular project may be adversely affected by numerous factors, including: failures or delays in
obtaining desired or necessary land rights, including ownership, leases and/or easements; failures or delays in obtaining necessary
permits, licenses, or other governmental support or approvals, or in overcoming objections from members of the public or
adjoining land owners; uncertainties relating to land costs for projects; unforeseen engineering problems; access to available
transmission for electricity generated by our small-scale renewable energy plants; construction delays and contractor performance
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shortfalls; work stoppages or labor disruptions and compliance with labor regulations; cost over-runs; availability of products and
components from suppliers; adverse weather conditions; environmental, archaeological and geological conditions; and availability
of construction and permanent financing.
If we are unable to complete the development of a small-scale renewable energy plants or fail to meet one or more agreed target
construction milestone dates, we may be subject to liquidated damages and/or penalties under the Engineering Procurement and
Construction agreement or other agreements relating to the power plant or project, and we typically will not be able to recover our
investment in the project. We expect to invest a significant amount of capital to develop projects whether owned by us or by third
parties. If we are unable to complete the development of a project, we may write-down or write-off some or all of these
capitalized investments, which would have an adverse impact on our net income in the period in which the loss is recognized.
We are exposed to the credit risk of some of our customers.
Most of our revenues are derived under multi-year or long-term contracts with our customers, and our revenues are therefore
dependent to a large extent on the creditworthiness of our customers. During periods of economic downturn, our exposure to
credit risks from our customers’ increases, and our efforts to monitor and mitigate the associated risks may not be effective in
reducing our credit risks. Our reliance on one or a few customers for a material portion of our revenue further exacerbates this
risk. In the event of non-payment by one or more of our customers, our business, financial condition and operating results could
be adversely affected.
Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect
on our operating results.
We are subject to seasonal fluctuations and construction cycles, particularly in climates that experience colder weather during the
winter months, such as the northern United States and Canada, and climates that experience extreme weather events, such as
wildfires, storms, or flooding, or at educational institutions, where large projects are typically carried out during summer months
when their facilities are unoccupied. In addition, government customers, many of which have fiscal years that do not coincide
with ours, typically follow annual procurement cycles and appropriate funds on a fiscal-year basis even though contract
performance may take more than one year. Further, government contracting cycles can be affected by the timing of, and delays in,
the legislative process related to government programs and incentives that help drive demand for energy efficiency and renewable
energy projects. As a result, our revenues and operating income in the third and fourth quarter are typically higher, and our
revenues and operating income in the first quarter are typically lower, than in other quarters of the year. As a result of such
fluctuations, we may occasionally experience declines in revenue or earnings as compared to the immediately preceding quarter,
and comparisons of our operating results on a period-to-period basis may not be meaningful.
Failure of third parties to manufacture quality products or provide reliable services in a timely manner could cause delays in
the delivery of our services and completion of our projects, which could damage our reputation, have a negative impact on our
relationships with our customers and adversely affect our growth.
Our success depends on our ability to provide services and complete projects in a timely manner, which in part depends on the
ability of third parties to provide us with timely and reliable products and services. In providing our services and completing our
projects, we rely on products that meet our design specifications and components manufactured and supplied by third parties, as
well as on services performed by subcontractors. We also rely on subcontractors to perform substantially all of the construction
and installation work related to our projects; and we often need to engage subcontractors with whom we have no experience for
our projects. We, our subcontractors and other third parties have been impacted by the global supply chain delays as well as
quarantine and other restrictions imposed because of the COVID-19 pandemic. This has resulted in and may continue to result in
delays in our ability to provide our services and complete our projects in a timely manner. In addition, some of the third parties we
engage for our design, construction and operation projects operate internationally and our reliance on their products and services
may be impacted by economic, political, and labor conditions in those regions as well as the uncertainty caused by the evolving
relations between the United States and these regions, including China.
If any of our subcontractors are unable to provide services that meet or exceed our customers’ expectations or satisfy our
contractual commitments, our reputation, business and operating results could be harmed. In addition, if we are unable to avail
ourselves of warranty and other contractual protections with providers of products and services, we may incur liability to our
customers or additional costs related to the affected products and components, which could have a material adverse effect on our
business, financial condition, and operating results. Moreover, any delays, malfunctions, inefficiencies, or interruptions in these
products or services could adversely affect the quality and performance of our solutions and require considerable expense to
establish alternate sources for such products and services. This could cause us to experience difficulty retaining current customers
and attracting new customers, and could harm our brand, reputation, and growth.
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We may have liability to our customers under our ESPCs if our projects fail to deliver the energy use reductions to which we
are committed under the contract.
For our energy efficiency projects, we typically enter into ESPCs under which we commit that the projects will satisfy agreed-
upon performance standards appropriate to the project. These commitments are typically structured as guarantees of increased
energy efficiency that are based on the design, capacity, efficiency, or operation of the specific equipment and systems we install.
Our commitments generally fall into three categories: pre-agreed, equipment-level and whole building-level. Under a pre-agreed
efficiency commitment, our customer reviews the project design in advance and agrees that, upon or shortly after completion of
installation of the specified equipment comprising the project, the pre-agreed increase in energy efficiency will have been met.
Under an equipment-level commitment, we commit to a level of increased energy efficiency based on the difference in use
measured first with the existing equipment and then with the replacement equipment upon completion of installation. A whole
building-level commitment requires future measurement and verification of increased energy efficiency for a whole building,
often based on readings of the utility meter where usage is measured. Depending on the project, the measurement and verification
may be required only once, upon installation, based on an analysis of one or more sample installations, or may be required to be
repeated at agreed upon intervals generally over periods of up to 25 years.
Under our contracts, we typically do not take responsibility for a wide variety of factors outside our control and exclude or adjust
for such factors in commitment calculations. These factors include variations in energy prices and utility rates, weather, facility
occupancy schedules, the amount of energy-using equipment in a facility, and failure of the customer to operate or maintain the
project properly. We rely in part on warranties from our equipment suppliers and subcontractors to back-stop the warranties we
provide to our customers and, where appropriate, pass on the warranties to our customers. However, the warranties we provide to
our customers are sometimes broader in scope or longer in duration than the corresponding warranties we receive from our
suppliers and subcontractors, and we bear the risk for any differences, as well as the risk of warranty default by our suppliers and
subcontractors.
Typically, our performance commitments apply to the aggregate overall performance of a project rather than to individual energy
efficiency measures. Therefore, to the extent an individual measure underperforms, it may be offset by other measures that
overperform during the same period. In the event that an energy efficiency project does not perform according to the agreed-upon
specifications, our agreements typically allow us to satisfy our obligation by adjusting or modifying the installed equipment,
installing additional measures to provide substitute energy savings, or paying the customer for lost energy savings based on the
assumed conditions specified in the agreement. However, we may incur additional or increased liabilities or expenses under our
ESPCs in the future. Such liabilities or expenses could be substantial, and they could materially harm our business, financial
condition, or operating results. In addition, any disputes with a customer over the extent to which we bear responsibility to
improve performance or make payments to the customer may diminish our prospects for future business from that customer or
damage our reputation in the marketplace.
We may assume responsibility under customer contracts for factors outside our control, including, in connection with some
customer projects, the risk that fuel prices will increase.
We typically do not take responsibility under our contracts for a wide variety of factors outside our control. We have, however, in
a limited number of contracts assumed some level of risk and responsibility for certain factors — sometimes only to the extent
that variations exceed specified thresholds — and may also do so under certain contracts in the future, particularly in our contracts
for renewable energy projects. For example, under a contract for the construction and operation of a cogeneration facility at the
U.S. Department of Energy Savannah River Site in South Carolina, a subsidiary of ours is exposed to the risk that the price of the
biomass that will be used to fuel the cogeneration facility may rise during the 19-year performance period of the contract. Several
provisions in that contract mitigate the price risk. In addition, although we typically structure our contracts so that our obligation
to supply a customer with biogas, electricity or steam, for example, does not exceed the quantity produced by the production
facility, in some circumstances we may commit to supply a customer with specified minimum quantities based on our projections
of the facility’s production capacity. In such circumstances, if we are unable to meet such commitments, we may be required to
incur additional costs or face penalties. Despite the steps we have taken to mitigate risks under these and other contracts, such
steps may not be sufficient to avoid the need to incur increased costs to satisfy our commitments, and such costs could be
material. Increased costs that we are unable to pass through to our customers could have a material adverse effect on our operating
results.
Our business depends on experienced and skilled personnel and substantial specialty subcontractor resources, and if we lose
key personnel or if we are unable to attract and integrate additional skilled personnel, it will be more difficult for us to manage
our business and complete projects.
The success of our business and construction projects depends in large part on the skill of our personnel and on trade labor
resources, including with certain specialty subcontractor skills. Competition for personnel, particularly those with expertise in the
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energy services and renewable energy industries, is high. In the event we are unable to attract, hire and retain the requisite
personnel and subcontractors, we may experience delays in completing projects in accordance with project schedules and budgets.
Further, any increase in demand for personnel and specialty subcontractors may result in higher costs, causing us to exceed the
budget on a project. Either of these circumstances may have an adverse effect on our business, financial condition, and operating
results, harm our reputation among and relationships with our customers and cause us to curtail our pursuit of new projects.
Our future success is particularly dependent on the vision, skills, experience, and effort of our senior management team, including
our executive officers and our founder, principal stockholder, president, and chief executive officer, George P. Sakellaris. If we
were to lose the services of any of our executive officers or key employees, our ability to effectively manage our operations and
implement our strategy could be harmed and our business may suffer.
If we cannot obtain surety bonds and letters of credit, our ability to operate may be restricted.
Federal and state laws require us to secure the performance of certain long-term obligations through surety bonds and letters of
credit. In addition, we are occasionally required to provide bid bonds or performance bonds to secure our performance under
energy efficiency contracts. In the future, we may have difficulty procuring or maintaining surety bonds or letters of credit, and
obtaining them may become more expensive, require us to post cash collateral or otherwise involve unfavorable terms. Because
we are sometimes required to have performance bonds or letters of credit in place before projects can commence or continue, our
failure to obtain or maintain those bonds and letters of credit would adversely affect our ability to begin and complete projects,
and thus could have a material adverse effect on our business, financial condition and operating results.
We operate in a highly competitive industry, and our current or future competitors may be able to compete more effectively
than we do, which could have a material adverse effect on our business, revenues, growth rates, and market share.
Our industry is highly competitive, with many companies of varying size and business models, many of which have their own
proprietary technologies, competing for the same business as we do. Many of our competitors have longer operating histories and
greater resources than us and could focus their substantial financial resources to develop a competitive advantage. Our
competitors may also offer energy solutions at prices below cost, devote significant sales forces to competing with us or attempt
to recruit our key personnel by increasing compensation, any of which could improve their competitive positions. Any of these
competitive factors could make it more difficult for us to attract and retain customers, cause us to lower our prices in order to
compete, and reduce our market share and revenues, any of which could have a material adverse effect on our financial condition
and operating results. We can provide no assurance that we will continue to effectively compete against our current competitors or
additional companies that may enter our markets. In addition, we may also face competition based on technological
developments that reduce demand for electricity, increase power supplies through existing infrastructure or otherwise compete
with our products and services. We also encounter competition in the form of potential customers electing to develop solutions or
perform services internally rather than engaging an outside provider such as us.
Our small-scale renewable energy plants may not generate expected levels of output.
The small-scale renewable energy plants that we construct and own are subject to various operating risks that may cause them to
generate less than expected amounts of processed biogas, electricity, or thermal energy. These risks include a failure or
degradation of our, our customers’ or utilities’ equipment; an inability to find suitable replacement equipment or parts; less than
expected supply of the plant’s source of renewable energy, such as biogas or biomass; or a faster than expected diminishment of
such supply. Any extended interruption in the plant’s operation, or failure of the plant for any reason to generate the expected
amount of output, could have a material adverse effect on our business and operating results. In addition, we have in the past, and
could in the future, incur material asset impairment charges if any of our renewable energy plants incur operational issues that
indicate that our expected future cash flows from the plant are less than its carrying value. Any such impairment charge could
have a material adverse effect on our operating results in the period in which the charge is recorded.
We have not entered into long-term offtake agreements for a portion of the output from our small-scale renewable energy
plants and a portion of the related renewable identification numbers (“RINs”) are not subject to long term contracts.
We have not entered into long-term offtake agreements for a portion of the output from our small-scale renewable energy plants,
particularly RNG and non-RNG plants, and we may sell portions of the processed RNG, medium-BTU gas or electricity produced
by the facility at wholesale prices, which are exposed to market fluctuations and risks. Similarly, we have not entered into long-
term agreements with respect to the RINs for which the production and sale of such biofuel may qualify. The failure to sell such
processed RNG, medium-BTU gas, electricity, or the related RINs at a favorable price, or at all could have a material adverse
effect on our business and operating results.
We may not be able to replace expiring offtake agreements with contracts on similar terms. If we are unable to replace an
expired offtake agreement with an acceptable new contract, we may be required to remove the small-scale renewable energy
plant from the site or, alternatively, we may sell the assets to the customer.
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We may not be able to replace an expiring offtake agreement with a contract on equivalent terms and conditions, including at
prices that permit operation of the related facility on a profitable basis. If we are unable to replace an expiring offtake agreement
with an acceptable new revenue contract, the affected site may temporarily or permanently cease operations or we may be
required to sell the power produced by the facility at wholesale prices which are exposed to market fluctuations and risks. In the
case of a solar photovoltaic installation that ceases operations, the offtake agreement terms generally require that we remove the
assets, including fixing or reimbursing the site owner for any damages caused by the assets or the removal of such assets.
Alternatively, we may agree to sell the assets to the site owner, but the terms and conditions, including price, that we would
receive in any sale, and the sale price may not be sufficient to replace the revenue previously generated by the small-scale
renewable energy plant.
We plan to expand our business in part through future acquisitions and joint ventures, but we may not be able to identify or
complete suitable acquisitions.
Historically, acquisitions have been a significant part of our growth strategy. We plan to continue to use acquisitions of companies
or assets and co-investments with third parties using joint ventures to expand our project skill-sets and capabilities, expand our
geographic markets, add experienced management, increase our product and service offerings and add to our energy producing
asset portfolio. However, we may be unable to implement this growth strategy if we cannot identify suitable acquisition or joint
venture candidates or partners, reach agreement with targets on acceptable terms or arrange required financing for acquisitions or
joint ventures on acceptable terms. In addition, the time and effort involved in identifying acquisition or joint venture candidates
and consummate transactions may divert the attention and efforts of members of our management from the operations of our
company.
We may be required to write-off or impair capitalized costs or intangible assets in the future, or we may incur restructuring
costs or other charges, each of which could harm our earnings.
In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances
relating to our acquisitions, pending acquisitions, project development costs, interest costs related to project financing and certain
energy assets. In addition, we have considerable unamortized assets. From time to time in future periods, we may be required to
incur a charge against earnings in an amount equal to any unamortized capitalized expenditures and advances, net of any portion
thereof that we estimate will be recoverable, through sale or otherwise, relating to: (i) any operation or other asset that is being
sold, permanently shut down, impaired or has not generated or is not expected to generate sufficient cash flow; (ii) any pending
acquisition that is not consummated; (iii) any project that is not expected to be successfully completed; and (iv) any goodwill or
other intangible assets that are determined to be impaired.
In response to such charges and costs and other market factors, we may be required to implement restructuring plans in an effort
to reduce the size and cost of our operations and to better match our resources with our market opportunities. As a result of such
actions, we would expect to incur restructuring expenses and accounting charges which may be material. Several factors could
cause a restructuring to adversely affect our business, financial condition, and results of operations. These include potential
disruption of our operations, the development of our small-scale renewable energy projects and other aspects of our business.
Employee morale and productivity could also suffer and result in unintended employee attrition. Any restructuring would require
substantial management time and attention and may divert management from other important work. Moreover, we could
encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.
See also Note 2, “Summary of Significant Accounting Policies” and Note 5, “Goodwill and Intangible Assets, Net”, to our
consolidated financial statements appearing in Item 8 of this Report.
Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our
business, financial condition or operating results, and our use of joint ventures could expose us to additional risks and
liabilities.
If we are successful in consummating acquisitions, those acquisitions could subject us to a number of risks, including:
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the purchase price we pay could significantly deplete our cash reserves or result in dilution to our existing stockholders,
we may find that the acquired company or assets do not improve our customer offerings or market position as planned,
we may have difficulty integrating the operations and personnel of the acquired company,
key personnel and customers of the acquired company may terminate their relationships with the acquired company as a
result of the acquisition,
we may experience additional financial and accounting challenges and complexities in areas such as tax planning and
financial reporting,
we may incur additional costs and expenses related to complying with additional laws, rules or regulations in new
jurisdictions,
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we may assume or be held liable for risks and liabilities (including for environmental-related costs) as a result of our
acquisitions, some of which we may not discover during our due diligence or adequately adjust for in our acquisition
arrangements,
our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the
complexity of managing geographically or culturally diverse enterprises,
we may incur one-time write-offs or restructuring charges in connection with the acquisition,
we may acquire goodwill and other intangible assets that are subject to amortization or impairment tests, which could
result in future charges to earnings, and
we may not be able to realize the cost savings or other financial benefits we anticipated.
Furthermore, the use of joint ventures can result in additional risks as a result of our holding non-controlling interests in or having
shared responsibility for managing the affairs of the joint venture. For example, our joint venture partners may have economic and
business interests that are inconsistent with ours, we may lack sole decision-making authority, and disputes between us and our
joint venture partners could subject us to litigation and increased expenses. These factors could have a material adverse effect on
our business, financial condition, and operating results.
International expansion is one of our growth strategies, and international operations will expose us to additional risks that we
do not face in the United States, which could have an adverse effect on our operating results.
We generate a portion of our revenues from operations outside of the United States, mainly in Canada and the United Kingdom.
International expansion is one of our growth strategies, and we expect our revenues and operations outside of the United States
will expand in the future. These operations will be subject to a variety of risks that we do not face in the United States, and that
we may face only to a limited degree in Canada and the United Kingdom, including:
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building and managing a highly experienced foreign workforce and overseeing and ensuring the performance of foreign
subcontractors,
increased travel, infrastructure and legal and compliance costs associated with multiple international locations,
additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or
investment,
imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from
those in the United States,
increased exposure to foreign currency exchange rate risk,
longer payment cycles for sales in some foreign countries and potential difficulties in enforcing contracts and collecting
accounts receivable,
difficulties in repatriating overseas earnings,
international and regional economic, political and labor conditions in the countries in which we operate, including the
uncertainty caused by the United Kingdom’s departure from the European Union (Brexit) on January 31, 2020 and the
effects of the Trade and Cooperation Agreement between the European Union and the United Kingdom signed on
December 30, 2020, and the uncertainty caused by the evolving relations between the United States and China; and
political unrest, war, incidents of terrorism, pandemics, or responses to such events, including fluctuations in the severity
and duration of the COVID-19 pandemic and resulting restrictions on business activity which may vary significantly by
region.
Our overall success in international markets will depend, in part, on our ability to succeed in differing legal, regulatory, economic,
social, and political conditions. We may not be successful in developing and implementing policies and strategies that will be
effective in managing these risks in each country where we do business. Our failure to manage these risks successfully could harm
our international operations, reduce our international sales, and increase our costs, thus adversely affecting our business, financial
condition and operating results. Some of our third-party business partners have international operations and are also subject to
these risks and if our third-party business partners are unable to appropriately manage these risks, our business may be harmed.
Risks related to Regulations or Governmental Actions
Our business depends in part on federal, state, provincial and local government support for energy efficiency and renewable
energy, and a decline in such support could harm our business.
We depend in part on legislation and government policies that support energy efficiency and renewable energy projects that
enhance the economic feasibility of our energy efficiency services and small-scale renewable energy projects. This support
includes legislation and regulations that authorize and regulate the manner in which certain governmental entities do business with
us; encourage or subsidize governmental procurement of our services; encourage or in some cases require other customers to
procure power from renewable or low-emission sources, to reduce their electricity use or otherwise to procure our services; and
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provide us with tax and other incentives that reduce our costs or increase our revenues. Without this support, on which projects
frequently rely for economic feasibility, our ability to complete projects for existing customers and obtain project commitments
from new customers could be adversely affected. Due to the uncertainty in the regulatory and legislative processes, we cannot
determine the effect such legislation and regulation may have on our products and operations.
A substantial portion of our earnings are derived from the sale of renewable energy certificates (“RECs”) and other
environmental attributes, and our failure to be able to sell such attributes could materially adversely affect our business,
financial condition and results of operation.
A substantial portion of our earnings are attributable to our sale of renewable energy certificates (“RECs”) and other
environmental attributes generated by our energy assets. These attributes are used as compliance purposes for state-specific or
U.S. federal policy.
We own and operate solar PV installations which derive a significant portion of their revenues from the sale of solar renewable
energy certificates (“SRECs”), which are produced as a result of generating electricity. The value of these SRECs is determined
by the supply and demand of SRECs in the states in which the solar PV installations are installed. Supply is driven by the amount
of installations and demand is driven by state-specific laws relating to renewable portfolio standards.
We also own and operate renewable natural gas plants that may deliver biofuels into to the nation’s natural gas pipeline grid. Such
biofuel may qualify for certain environmental attribute mechanisms, such as RINs which are used for compliance purposes under
the Renewable Fuel Standard (“RFS”) program. The RFS is a U.S. federal policy that requires transportation fuel to contain a
minimum volume of renewable fuel. The U.S. Environmental Protection Agency (“EPA”) administers the RFS program and may
periodically undertake regulatory action involving the RFS, including annual volume standards for renewable fuel. Some of our
biofuel may also qualify for various state incentives, such as the Low Carbon Fuel Standard (“LCFS”), the pricing or availability
of which may fluctuate.
We sometimes seek to sell forward a portion of our SRECs and other environmental attributes under contracts to fix the revenues
from those attributes for financing purposes or hedge against future declines in prices of such environmental attributes. If our
renewable energy facilities do not generate the amount of renewable energy attributes sold under such forward contracts or if for
any reason the renewable energy we generate does not produce SRECs or other environmental attributes for a particular state, we
may be required to make up the shortfall of SRECs or other environmental attributes under such forward contracts through
purchases on the open market or make payments of liquidated damages. RECs are created through state law requirements for
utilities to purchase a portion of their energy from renewable energy sources and changes in state laws or regulation relating to
RECs may adversely affect the availability of RECs or other environmental attributes and the future prices for RECs or other
environmental attributes, which could have an adverse effect on our business, financial condition, and results of operations.
We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase
our income tax expense and reduce our net income.
Our provision for income taxes is subject to volatility and could be adversely affected by changes in tax laws or regulations,
particularly changes in tax incentives in support of energy efficiency. For example, certain deductions relating to energy
efficiency have expiration dates which could significantly alter the existing tax code, including the removal of these credits prior
to their scheduled expiration. The 30% investment tax credit (“ITC”) relating to the installation of solar power fell to 26% in 2020
which will be retained for solar projects that begin construction through the end of 2022. It will decrease to 22% in 2023 and 10%
in 2024 and future years. We took advantage of the Safe Harbor commence-construction provisions contained in IRS Notice
2018-59 by pre-purchasing solar equipment in 2019 thereby preserving the ability to take 30% ITC for projects placed in service
before 2024. If these or other deductions and credits expire without being extended, or otherwise are reduced or eliminated, our
effective tax rate would increase, which could increase our income tax expense and reduce our net income.
Our tax rate has historically been significantly impacted by the IRC Section 179D deduction. This deduction is related to energy
efficient improvements we provide under government contracts. The Consolidated Appropriations Act, 2021 made permanent the
Section 179D Energy Efficient Commercial Building Deduction. That Act made changes to the way the deduction is calculated. If
those changes result in lower levels of energy efficiency improvements, it could impact the deduction available and the tax rate.
In addition, like other companies, we may be subject to examination of our income tax returns by the U.S. Internal Revenue
Service and other tax authorities; our U.S. federal tax returns for 2018 through 2021 are subject to audit by federal, state and
foreign tax authorities. Though we regularly assess the likelihood of adverse outcomes from such examinations and the adequacy
of our provision for income taxes, there can be no assurance that such provision is sufficient and that a determination by a tax
authority will not have an adverse effect on our net income.
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Changes in the laws and regulations governing the public procurement of ESPCs could have a material impact on our
business.
We derive a significant amount of our revenue from ESPCs with our government customers. While federal, state and local
government rules governing such contracts vary, such rules may, for example, permit the funding of such projects through long-
term financing arrangements; permit long-term payback periods from the savings realized through such contracts; allow units of
government to exclude debt related to such projects from the calculation of their statutory debt limitation; allow for award of
contracts on a “best value” instead of “lowest cost” basis; and allow for the use of sole source providers. To the extent these rules
become more restrictive in the future, our business could be harmed.
We need governmental approvals and permits, and we typically must meet specified qualifications, in order to undertake our
energy efficiency projects and construct, own and operate our small-scale renewable energy projects, and any failure to do so
would harm our business.
The design, construction, and operation of our energy efficiency and small-scale renewable energy projects require various
governmental approvals and permits and may be subject to the imposition of related conditions that vary by jurisdiction. In some
cases, these approvals and permits require periodic renewal. We cannot predict whether all permits required for a given project
will be granted or whether the conditions associated with the permits will be achievable. The denial of a permit essential to a
project or the imposition of impractical conditions would impair our ability to develop the project. In addition, we cannot predict
whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities
and appeals. Delay in the review and permitting process for a project can impair or delay our ability to develop that project or
increase the cost so substantially that the project is no longer attractive to us. We have experienced delays in developing our
projects due to delays in obtaining permits and may experience delays in the future. If we were to commence construction in
anticipation of obtaining the final, non-appealable permits needed for that project, we would be subject to the risk of being unable
to complete the project if all the permits were not obtained. If this were to occur, we would likely lose a significant portion of our
investment in the project and could incur a loss as a result. Further, the continued operations of our projects require continuous
compliance with permit conditions. This compliance may require capital improvements or result in reduced operations. Any
failure to procure, maintain and comply with necessary permits would adversely affect ongoing development, construction and
continuing operation of our projects.
In addition, the projects we perform for governmental agencies are governed by particular qualification and contracting regimes.
Certain states require qualification with an appropriate state agency as a precondition to performing work or appearing as a
qualified energy service provider for state, county, and local agencies within the state. For example, the Commonwealth of
Massachusetts and the states of Colorado and Washington pre-qualify energy service providers and provide contract documents
that serve as the starting point for negotiations with potential governmental clients. Most of the work that we perform for the
federal government is performed under IDIQ agreements between a government agency and us or a subsidiary. These IDIQ
agreements allow us to contract with the relevant agencies to implement energy projects, but no work may be performed unless
we and the agency agree on a task order or delivery order governing the provision of a specific project. The government agencies
enter into contracts for specific projects on a competitive basis. We and our subsidiaries and affiliates are currently party to an
IDIQ agreement with the U.S. Department of Energy expiring in 2026. We are also party to similar agreements with other federal
agencies, including the U.S. Army Corps of Engineers and the U.S. General Services Administration. If we are unable to maintain
or renew our IDIQ qualification under the U.S. Department of Energy program for ESPCs, or similar federal or state qualification
regimes, our business could be materially harmed.
Many of our small-scale renewable energy projects are, and other future projects may be, subject to or affected by U.S. federal
energy regulation or other regulations that govern the operation, ownership, and sale of the facility, or the sale of electricity
from the facility.
PUHCA and the FPA regulate public utility holding companies and their subsidiaries and place constraints on the conduct of their
business. The FPA regulates wholesale sales of electricity and the transmission of electricity in interstate commerce by public
utilities. Under PURPA, all of our current small-scale renewable energy projects are small power “qualifying facilities” (facilities
meeting statutory size, fuel, and filing requirements) that are exempt from regulations under PUHCA, most provisions of the FPA
and state rate and financial regulation. None of our renewable energy projects are currently subject to rate regulation for
wholesale power sales by the Federal Energy Regulatory Commission (“FERC”) under the FPA, but certain of our projects that
are under construction or development could become subject to such regulation in the future. Also, we may acquire interests in or
develop generating projects that are not qualifying facilities. Non-qualifying facility projects would be fully subject to FERC
corporate and rate regulation, and would be required to obtain FERC acceptance of their rate schedules for wholesale sales of
energy, capacity, and ancillary services, which requires substantial disclosures to and discretionary approvals from FERC. FERC
may revoke or revise an entity’s authorization to make wholesale sales at negotiated, or market-based, rates if FERC determines
that we can exercise market power in transmission or generation, create barriers to entry or engage in abusive affiliate transactions
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or market manipulation. In addition, many public utilities (including any non-qualifying facility generator in which we may
invest) are subject to FERC reporting requirements that impose administrative burdens and that, if violated, can expose the
company to civil penalties or other risks.
All of our wholesale electric power sales are subject to certain market behavior rules. These rules change from time to time, by
virtue of FERC rulemaking proceedings and FERC-ordered amendments to utilities’ or power pools’ FERC tariffs. If we are
deemed to have violated these rules, we will be subject to potential disgorgement of profits associated with the violation and/or
suspension or revocation of our market-based rate authority, as well as potential criminal and civil penalties. If we were to lose
market-based rate authority for any non-qualifying facility project we may acquire or develop in the future, we would be required
to obtain FERC’s acceptance of a cost-based rate schedule and could become subject to, among other things, the burdensome
accounting, record keeping and reporting requirements that are imposed on public utilities with cost-based rate schedules. This
could have an adverse effect on the rates we charge for power from our projects and our cost of regulatory compliance.
Wholesale electric power sales are subject to increasing regulation. The terms and conditions for power sales, and the right to
enter and remain in the wholesale electric sector, are subject to FERC oversight. Due to major regulatory restructuring initiatives
at the federal and state levels, the U.S. electric industry has undergone substantial changes over the past decade. We cannot
predict the future design of wholesale power markets, or the ultimate effect ongoing regulatory changes will have on our business.
Other proposals to further regulate the sector may be made and legislative or other attention to the electric power market
restructuring process may delay or reverse the movement towards competitive markets.
If we become subject to additional regulation under PUHCA, FPA, or other regulatory frameworks, if existing regulatory
requirements become more onerous, or if other material changes to the regulation of the electric power markets take place, our
business, financial condition, and operating results could be adversely affected.
Changes in utility regulation and tariffs could adversely affect our business.
Our business is affected by regulations and tariffs that govern the activities and rates of utilities. For example, utility companies
are commonly allowed by regulatory authorities to charge fees to some business customers for disconnecting from the electric
grid or for having the capacity to use power from the electric grid for back-up purposes. These fees could increase the cost to our
customers of taking advantage of our services and make them less desirable, thereby harming our business, financial condition,
and operating results. Our current generating projects are all operated as qualifying facilities. FERC regulations under the FPA
confer upon these facilities key rights to interconnection with local utilities and can entitle qualifying facilities to enter into power
purchase agreements with local utilities, from which the qualifying facilities benefit. Changes to these federal laws and
regulations could increase our regulatory burdens and costs and could reduce our revenues. State regulatory agencies could award
renewable energy certificates or credits that our electric generation facilities produce to our power purchasers, thereby reducing
the power sales revenues we otherwise would earn. In addition, modifications to the pricing policies of utilities could require
renewable energy systems to charge lower prices in order to compete with the price of electricity from the electric grid and may
reduce the economic attractiveness of certain energy efficiency measures.
Some of the demand-reduction services we provide for utilities and institutional clients are subject to regulatory tariffs imposed
under federal and state utility laws. In addition, the operation of, and electrical interconnection for, our renewable energy projects
are subject to federal, state, or provincial interconnection and federal reliability standards that are also set forth in utility tariffs.
These tariffs specify rules, business practices, and economic terms to which we are subject. The tariffs are drafted by the utilities
and approved by the utilities’ state and federal regulatory commissions. These tariffs change frequently, and it is possible that
future changes will increase our administrative burden or adversely affect the terms and conditions under which we render service
to our customers.
The Securities and Exchange Commission’s investigation into our revenue recognition and compensation practices in our
software-as-a-service businesses could result in a restatement of our consolidated financial statements, investment in
remediation of our internal controls, sanctions, or penalties, distraction of our management, and litigation from third parties,
each of which could adversely affect or cause variability in our financial results.
We are cooperating with requests by the staff of the United States Securities and Exchange Commission, or SEC, for information
with respect to revenue recognition for our software-as-a-service businesses during the period beginning January 1, 2014 The
Audit Committee of our Board of Directors is overseeing a review by our outside counsel of our software-as-a-service revenue
recognition, including review procedures with respect to the revenue recognized during the period from 2018 to September 30,
2020. Although, our review to date has not identified material misstatements of our financial results, the SEC’s inquiry is not
complete, and there can be no assurance that SEC will not reach a contrary conclusion. In that event, we may be required to
restate previously filed financial statements and invest in remediation of our internal controls; the SEC or another regulator could
make further inquiries or pursue further action that could result in significant costs, expenses, sanctions, and penalties; we may be
subject to litigation from shareholders; and our management may be distracted by these circumstances.
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Compliance with environmental laws could adversely affect our operating results.
Costs of compliance with federal, state, provincial, local and other foreign existing and future environmental regulations could
adversely affect our cash flow and profitability. We are required to comply with numerous environmental laws and regulations
and to obtain numerous governmental permits in connection with energy efficiency and renewable energy projects. In addition,
we may become subject to additional legislation and regulation regarding climate change, and we may incur significant additional
costs to comply with existing and new requirements. If we fail to comply with these requirements, we could be subject to civil or
criminal liability, damages, and fines. Existing environmental regulations could be revised or reinterpreted, and new laws and
regulations could be adopted or become applicable to us or our projects, and future changes in environmental laws and
regulations, including those intended to combat climate change, could occur. These factors may materially increase the amount
we must invest to bring our projects into compliance and impose additional expense on our operations. In addition, private
lawsuits or enforcement actions by federal, state, provincial, and/or foreign regulatory agencies may materially increase our costs.
Certain environmental laws make us potentially liable on a joint and several basis for the remediation of contamination at or
emanating from properties or facilities we currently or formerly owned or operated or properties to which we arranged for the
disposal of hazardous substances. Such liability is not limited to the cleanup of contamination we actually caused. Although we
seek to obtain indemnities against liabilities relating to historical contamination at the facilities we own or operate, we cannot
provide any assurance that we will not incur liability relating to the remediation of contamination, including contamination we did
not cause. We may not be able to obtain or maintain, from time to time, all required environmental regulatory approvals. A delay
in obtaining any required environmental regulatory approvals or failure to obtain and comply with them could adversely affect our
business and operating results.
Our activities and operations are subject to numerous health and safety laws and regulations, and if we violate such
regulations, we could face penalties and fines.
We are subject to numerous health and safety laws and regulations in each of the jurisdictions in which we operate. These laws
and regulations require us to obtain and maintain permits and approvals and implement health and safety programs and
procedures to control risks associated with our projects. Compliance with those laws and regulations can require us to incur
substantial costs. Moreover, if our compliance programs are not successful, we could be subject to penalties or to revocation of
our permits, which may require us to curtail or cease operations of the affected projects. Violations of laws, regulations and permit
requirements may also result in criminal sanctions or injunctions. Health and safety laws, regulations and permit requirements
may change or become more stringent. Any such changes could require us to incur materially higher costs than we currently have.
Our costs of complying with current and future health and safety laws, regulations and permit requirements, and any liabilities,
fines or other sanctions resulting from violations of them, could adversely affect our business, financial condition, and operating
results.
We are subject to various privacy and consumer protection laws.
Our privacy policy is posted on our website, and any failure by us or our vendor or other business partners to comply with it or
with federal, state, or international privacy, data protection or security laws or regulations could result in regulatory or litigation-
related actions against us, legal liability, fines, damages and other costs. We may also incur substantial expenses and costs in
connection with maintaining compliance with such laws. Globally, laws such as the General Data Protection Regulation
(“GDPR”) in Europe and new and emerging state laws in the United States on privacy, data, and related technologies, have
created new compliance obligations and significantly increases fines for noncompliance. Although we take steps to protect the
security of our customers’ personal information, we may be required to expend significant resources to comply with data breach
requirements if third parties improperly obtain and use the personal information of our customers or we otherwise experience a
data loss with respect to customers’ personal information. A major breach of our network security and systems could have
negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer
demand for our services, and harm to our reputation and brand.
Risks Related to our Indebtedness
Our senior credit facility, project financing term loans and construction loans contain financial and operating restrictions that
may limit our business activities and our access to credit and they may not be sufficient to fund our capital needs and growth.
Provisions in our senior credit facility and term loan, project financing term loans and construction loans impose customary
restrictions on our and certain of our subsidiaries’ business activities and uses of cash and other collateral. These agreements also
contain other customary covenants, including covenants that require us to meet specified financial ratios and financial tests.
We have a $180 million revolving senior secured credit facility and $65 million term loan that mature June 2024 (collectively, the
“Senior Credit Facilities”), which are subject to the quarter end ratio covenant described below as well as certain other customary
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operational covenants. As of December 31, 2021, the balance of our Senior Credit Facilities were $97.8 million. These Senior
Credit Facilities may not be sufficient to meet our needs as our business grows, and we may be unable to extend or replace them
on acceptable terms, or at all. Under these facilities, we are required to maintain a maximum ratio of total funded debt to EBITDA
(as defined in the agreement) of less than 3.5 to 1.0. We are also required to maintain a debt service coverage ratio (as defined in
the agreements) of at least 1.5 to 1.0. EBITDA for purposes of the facilities excludes the results of certain renewable energy
projects that we own and for which financing from others remains outstanding.
In addition, our project financing term loans and construction loans require us to comply with a variety of financial and
operational covenants. Although we do not consider it likely that we will fail to comply with any material covenants for the next
twelve months, we cannot assure that we will be able to do so. Our failure to comply with these covenants may result in the
declaration of an event of default and cause us to be unable to borrow under our Senior Credit Facilities. In addition to preventing
additional borrowings under these facilities, an event of default, if not cured or waived, may result in the acceleration of the
maturity of indebtedness outstanding under it or the applicable project financing term loan, which would require us to pay all
amounts outstanding. If an event of default occurs, we may not be able to cure it within any applicable cure period, if at all.
Certain of our debt agreements, including our Senior Credit Facilities, also contain subjective acceleration clauses based on a
lender deeming that a “material adverse change” in our business has occurred. If these clauses are implicated, and the lender
declares that an event of default has occurred, the outstanding indebtedness would likely be immediately due and owing. If the
maturity of our indebtedness is accelerated, we may not have sufficient funds available for repayment or we may not have the
ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us or at all.
If our subsidiaries default on their obligations under their debt instruments, we may need to make payments to lenders to
prevent foreclosure on the collateral securing the debt.
We typically set up subsidiaries to own and finance our renewable energy projects. These subsidiaries incur various types of debt
which can be used to finance one or more projects. This debt is typically structured as non-recourse debt, which means it is
repayable solely from the revenues from the projects financed by the debt and is secured by such projects’ physical assets, major
contracts and cash accounts and a pledge of our equity interests in the subsidiaries involved in the projects. Although our
subsidiary debt is typically non-recourse to Ameresco, if a subsidiary of ours defaults on such obligations, or if one project out of
several financed by a particular subsidiary’s indebtedness encounters difficulties or is terminated, then we may from time to time
determine to provide financial support to the subsidiary in order to maintain rights to the project or otherwise avoid the adverse
consequences of a default. In the event a subsidiary defaults on its indebtedness, its creditors may foreclose on the collateral
securing the indebtedness, which may result in our losing our ownership interest in some or all of the subsidiary’s assets. The loss
of our ownership interest in a subsidiary or some or all of a subsidiary’s assets could have a material adverse effect on our
business, financial condition and operating results.
The LIBOR calculation method under certain of our financing arrangements may change as LIBOR is expected to be phased
out by June 2023.
Our senior credit facility and certain of our project financing term loans permit or require interest on the outstanding principal
balance to be calculated based on LIBOR. The U.K. Financial Conduct Authority (the “FCA”) announced in 2017 that it will no
longer require banks to submit rates for the calculation of LIBOR after 2021. This date has been extended to June 30, 2023. As a
result, actions by the FCA, other regulators, or law enforcement agencies may result in changes to the method by which LIBOR is
calculated. At this time, it is not possible to predict the effect of any such changes or any other reforms to LIBOR that may be
enacted in the U.K. or elsewhere.
Risks Related to Ownership of Our Class A Common Stock
The trading price of our Class A common stock is volatile.
The trading price of our Class A common stock is volatile and could be subject to wide fluctuations, some of which are beyond
our control. During the year ended December 31, 2021, our Class A common stock has traded at a low of $37.70 and a high of
$101.86. The stock market in general has experienced extreme price and volume fluctuations that have often been unrelated or
disproportionate to the operating performance of publicly traded companies. If the stock market in general experiences a
significant decline, the trading price of our Class A common stock could decline for reasons unrelated to our business, financial
condition, or operating results. As a result of this volatility, you may not be able to sell your Class A common stock at or above
the price you paid for it, and you may lose some or all of your investment. Additionally, although historically there has not been a
large short position in our Class A common stock, securities of certain companies have recently experienced extreme and
significant volatility as a result of a large aggregate short position driving up the stock price over a short period of time, which is
known as a “short squeeze.” Furthermore, some companies that have had volatile market prices for their securities have had
securities class actions filed against them. If a suit were filed against us, regardless of its merits or outcome, it would likely result
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in substantial costs and divert management’s attention and resources. This could have a material adverse effect on our business,
operating results, and financial condition.
Holders of our Class A common stock are entitled to one vote per share, and holders of our Class B common stock are entitled
to five votes per share. The lower voting power of our Class A common stock may negatively affect the attractiveness of our
Class A common stock to investors and, as a result, its market value.
We have two classes of common stock: Class A common stock, which is listed on the NYSE and which is entitled to one vote per
share, and Class B common stock, which is not listed on any security exchange and is entitled to five votes per share. The
difference in the voting power of our Class A and Class B common stock could diminish the market value of our Class A
common stock because of the superior voting rights of our Class B common stock and the power those rights confer.
For the foreseeable future, Mr. Sakellaris or his affiliates will be able to control the selection of all members of our board of
directors, as well as virtually every other matter that requires stockholder approval, which will severely limit the ability of other
stockholders to influence corporate matters.
Except in certain limited circumstances required by applicable law, holders of Class A and Class B common stock vote together
as a single class on all matters to be voted on by our stockholders. Mr. Sakellaris, our founder, principal stockholder, president,
and chief executive officer, owns all of our Class B common stock, which, together with his Class A common stock, represents
approximately 74% of the combined voting power of our outstanding Class A and Class B common stock. Under our restated
certificate of incorporation, holders of shares of Class B common stock may generally transfer those shares to family members,
including spouses and descendants or the spouses of such descendants, as well as to affiliated entities, without having the shares
automatically convert into shares of Class A common stock. Therefore, Mr. Sakellaris, his affiliates, and his family members and
descendants will, for the foreseeable future, be able to control the outcome of the voting on virtually all matters requiring
stockholder approval, including the election of directors and significant corporate transactions such as an acquisition of our
company, even if they come to own, in the aggregate, as little as 20% of the economic interest of the outstanding shares of our
Class A and Class B common stock. Moreover, these persons may take actions in their own interests that you or our other
stockholders do not view as beneficial.
Though we may repurchase shares of our Class A common stock pursuant to our share repurchase program, we are not
obligated to do so and if we do, we may purchase only a limited number of shares of Class A common stock.
In May 2016, we announced a stock repurchase program under which the Company is currently authorized to repurchase, in the
aggregate, up to $17.6 million of our outstanding Class A common stock. However, we are not obligated to acquire any shares of
our Class A common stock, and holders of our Class A common stock should not rely on the share repurchase program to
increase their liquidity. The amount and timing of any share repurchases will depend upon a variety of factors, including the
trading price of our Class A common stock, liquidity, securities laws restrictions, other regulatory restrictions, potential
alternative uses of capital, and market and economic conditions. We intend to purchase through open market transactions or in
privately negotiated transactions, in accordance with applicable securities laws and regulatory limitations. We may reduce or
eliminate our share repurchase program in the future. The reduction or elimination of our share repurchase program, particularly if
we do not repurchase the full number of shares authorized under the program, could adversely affect the market price of our
common stock.
General Risk Factors
A failure of our information technology (“IT”) and data security infrastructure, or if we or our vendors experience cyber
security incidents or have a vulnerability or other deficiency in cybersecurity, could adversely impact our business and
operations.
We rely upon the capacity, reliability, and security of our IT and data security infrastructure and our ability to expand and
continually update this infrastructure in response to the changing needs of our business. As we implement new systems, they may
not perform as expected. We also face the challenge of supporting our older systems and implementing necessary upgrades. If we
experience a problem with the functioning or a security breach of our IT systems, including during system upgrades and/or new
system implementations, the resulting disruptions could have an adverse effect on our business. We receive and store personal
information in connection with our human resources operations and other aspects of our business. Despite our implementation of
security measures, our IT systems are vulnerable to damages from computer viruses, natural disasters, unauthorized access, cyber-
attacks, and other similar disruptions, and we have experienced such incidents in the past. Any system failure, accident, or
security breach could result in disruptions to our operations. A material network breach in the security of our IT systems could
include the theft of our intellectual property, trade secrets, customer information, human resources information, or other
confidential matter.
24
We have been subject to and may in the future experience cybersecurity threats, including advanced and persistent cyberattacks,
phishing and social engineering schemes, particularly on internet applications. Furthermore, some of the assets we own or operate
constitute critical infrastructure which could become targets for cyberattacks. These threats could compromise the confidentiality,
availability, and integrity of data in our systems. In addition, cybersecurity incidents at our vendors, customers and partners may
have similar negative impact on our business operations. For example, we engage third-party vendors who receive and store
personal and sensitive information in connection with our operations, including our human resources functions such as
background checks. We do not have control over or access to the IT infrastructure of these vendors. Our vendors have and may in
the future experience network breaches, unauthorized access, hacking and other cyberattacks. In such instances, we are not be
able to fully investigate the incidents and may not be able to implement measures to defend such attacks. Furthermore, third-party
vendors may not notify us of such incidents timely or at all, making it more difficult for us to identify and mitigate cybersecurity
risks. Although we devote resources to our cybersecurity programs and have implemented security measures to protect our
systems and data, and to prevent, detect and respond to data security incidents, there can be no assurance that our efforts will
prevent these threats. Because the techniques used to obtain unauthorized access, or to disable or degrade systems, change
frequently, have become increasingly more complex and sophisticated, and may be difficult to detect for periods of time, we may
not anticipate these acts or respond adequately or timely.
As these threats continue to evolve and increase, we may be required to devote significant additional resources in order to modify
and enhance our security controls and to identify and remediate any security vulnerabilities. To the extent that any disruptions or
security breach results in a loss or damage to our data, or an inappropriate disclosure of confidential, personal, proprietary or
customer information, or inability for us to operate the assets we own or operate for our customers, it could cause significant
damage to our reputation, affect our relationships with our customers and employees, lead to claims against us and ultimately
harm our business.
The COVID-19 pandemic has had and may continue to have an adverse effect on our business and future public health
threats or outbreaks of communicable diseases could have a material adverse effect on our operations and financial results.
We may face risks related to public health threats or outbreaks of communicable diseases. A widespread healthcare crisis, such as
an outbreak of a communicable disease could adversely affect the global economy our ability to conduct business for an indefinite
period of time. For example, the ongoing COVID-19 pandemic, has negatively impacted global economy, disrupted financial
markets and international trade and significantly impacted global supply chains. In addition, Federal, state, and local governments
have implemented various mitigation measures, including travel restrictions, border closings, and limitations on business. Some of
these actions have adversely impacted and may continue to adversely impact the ability of our employees, contractors, suppliers,
customers, and other business partners to conduct business activities, and depending on development of the pandemic, could
ultimately do so for an indefinite period of time. The COVID-19 impacts described above could have a material adverse effect on
our results of operations, financial condition, and liquidity. In particular, the continued effects of COVID-19 and efforts to contain
the virus:
•
•
•
•
•
has lengthened and could continue to lengthen our sales cycles,
could cause us to experience an increase in delayed payments from customers and uncollectible accounts,
has caused and could continue to cause delays and disruptions in the completion of certain projects (including as a result
of the global supply chain challenges),
could impact availability of qualified personnel and general labor shortages, and
could cause other unpredictable events.
Vaccines for COVID-19 continue to be administered in the United States and other countries around the world, but the extent and
rate of vaccine adoption, the long-term efficacy of these vaccines, and other factors remain uncertain, and the potential for a
material impact on our results of operations, financial condition, and liquidity increases the longer the virus impacts activity levels
in the United States and globally. Furthermore, current or future vaccine requirements (such as the executive order issued by
President Biden in October 2021, which required us as an employer with federal government contracts to ensure that our U.S.-
based employees, contractors, and subcontractors, that work on or in support of federal contracts, were fully vaccinated) may
result in additional compliance cost and impact our ability to retain and recruit critically skilled workforce. Overall, the situation
surrounding COVID-19 remains fluid and the extent to which it may impact our business, operating results, financial condition, or
liquidity will depend on future developments, including the duration of the outbreak, the emergence and spread of more
transmissible variants, travel restrictions, business, workforce disruptions, and the effectiveness of actions taken to contain and
treat the disease.
Item 1B. Unresolved Staff Comments
None.
25
Item 2. Properties
Our corporate headquarters is located in Framingham, Massachusetts, where we occupy approximately 27,000 square feet under a
lease expiring on June 30, 2025. We occupy nine regional offices in Phoenix, Arizona; Islandia, New York; Oak Brook, Illinois;
Columbia, Maryland; Charlotte, North Carolina; Knoxville, Tennessee; Tomball, Texas; Spokane, Washington, and Richmond
Hill, Ontario, each less than 25,000 square feet, under lease or sublease agreements. In addition, we lease space, typically of lesser
size, for 56 field offices throughout North America and the U.K. We also own 146 small-scale renewable energy plants
throughout North America and one in Ireland, which are located on sites we own or lease, or sites provided by customers. We
expect to add new facilities and expand existing facilities as we continue to add employees and expand our business into new
geographic areas.
Item 3. Legal Proceedings
In the ordinary conduct of our business we are subject to periodic lawsuits, investigations, and claims. Although we cannot predict
with certainty the ultimate resolution of such lawsuits, investigations, and claims against us, we do not believe that any currently
pending or threatened legal proceedings to which we are a party will have a material adverse effect on our business, results of
operations, or financial condition.
We are cooperating with requests by the staff of the United States Securities and Exchange Commission, or SEC, for information
with respect to revenue recognition for our software-as-a-service, or SaaS, businesses during the period beginning January 1, 2014
through September 30, 2020. The Audit Committee of our Board of Directors is overseeing a review by our outside counsel of our
software-as-a-service revenue recognition, including review procedures with respect to the revenue recognized during the period
from 2018 to September 30, 2020. The review to date has not identified material misstatements of our financial results. We intend
to continue to cooperate fully with the SEC and promptly address any material accounting errors or material control weaknesses
which may be identified in connection with the inquiry and review.
For additional information about certain proceedings, please refer to Note 15, “Commitments and Contingencies”, to our
consolidated financial statements included in this Report, which is incorporated into this item by reference.
Item 4. Mine Safety Disclosures
Not applicable.
26
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities
Our Class A common stock trades on the New York Stock Exchange under the symbol “AMRC”.
As of February 25, 2022, and according to the records of our transfer agent, there were 11 shareholders of record of our Class A
common stock. A substantially greater number of holders of our Class A common stock are “street name” or beneficial holders,
whose shares are held of record by banks, brokers, and other financial institutions.
Our Class B common stock is not publicly traded and is held of record by George P. Sakellaris, our founder, principal
stockholder, president, and chief executive officer, and a trust which Mr. Sakellaris’s immediate family members are trustee and
beneficiaries.
Dividend Policy
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain earnings, if any, to finance
the growth and development of our business and do not expect to pay any cash dividends for the foreseeable future. Our revolving
senior secured credit facility contains provisions that limit our ability to declare and pay cash dividends during the term of that
agreement. Payment of future dividends, if any, will be at the discretion of our board of directors and will depend on our financial
condition, results of operations, capital requirements, restrictions contained in current or future financing instruments, provisions
of applicable law and other factors our board of directors deems relevant.
Stock Performance Graph
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the
SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 (the
“Securities Act”) or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph compares the cumulative total return attained by our Class A common shareholders with the Russell 2000
index and the NASDAQ Clean Edge Green Energy index. The information presented assumes an investment of $100 on
December 31, 2016 and that all dividends were reinvested. The graph shows the value that each of these investments would have
had at the end of each year.
27
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN (1)
Among Ameresco, Inc., the Russell 2000 Index
and the NASDAQ Clean Edge Green Energy Index
Ameresco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Russell 2000 Index . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Clean Edge Green Energy Index . . . .
12/31/2016
$100.00
$100.00
$100.00
12/31/2017
$156.36
$114.65
$132.05
12/31/2018
$256.36
$102.02
$116.05
12/31/2019
$318.18
$128.06
$165.57
12/31/2020
$949.82
$153.62
$471.59
12/31/2021
$1,480.73
$176.39
$459.13
(1) $100 invested on December 31, 2016 in our Class A common stock or index, including reinvestment of dividends, as of December 31, 2021.
Shareholder returns over the indicated period should not be considered indicative of future shareholder returns.
Issuer Purchases of Equity Securities
We did not repurchase any shares of our common stock under our stock repurchase program authorized by the Board of Directors
on April 27, 2016 (the “Repurchase Program”) during the quarter ended December 31, 2021. As of December 31, 2021, there
were shares having a dollar value of approximately $5.9 million that may yet be purchased under the Repurchase Program.
Under the Repurchase Program, we are authorized to repurchase up to $17.6 million of our Class A common stock. Stock
repurchases may be made from time to time through the open market and privately negotiated transactions. The amount and
timing of any share repurchases will depend upon a variety of factors, including the trading price of our Class A common stock,
liquidity, securities laws restrictions, other regulatory restrictions, potential alternative uses of capital, and market and economic
conditions. The Repurchase Program may be suspended or terminated at any time without prior notice and has no expiration date.
Item 6. [Reserved]
28
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our
consolidated financial statements and the related notes and other financial information included in Item 8 of this Report. Some of
the information contained in this discussion and analysis are set forth elsewhere in this Report, including information with
respect to our plans and strategy for our business and related financing, and includes forward-looking statements that involve
risks and uncertainties. You should review the “Risk Factors” included in Item 1A of this Report for a discussion of important
factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Overview
Ameresco is a leading clean technology integrator with a comprehensive portfolio of energy efficiency and renewable energy
supply solutions. We help organizations meet energy saving and energy management challenges with an integrated,
comprehensive approach to energy efficiency and renewable energy. Leveraging budget neutral solutions, including ESPCs and
PPAs, we aim to eliminate the financial barriers that traditionally hamper energy efficiency and renewable energy projects.
Drawing from decades of experience, Ameresco develops tailored energy management projects for its customers in the
commercial, industrial, local, state and federal government, K-12 education, higher education, healthcare, public housing sectors,
and utilities.
We provide solutions primarily throughout North America and the U.K. and our revenues are derived principally from energy
efficiency projects, which entail the design, engineering, and installation of equipment and other measures that incorporate a
range of innovative technology and techniques to improve the efficiency and control the operation of a facility’s energy
infrastructure; this can include designing and constructing a central plant or cogeneration system for a customer providing power,
heat and/or cooling to a building, or other small-scale plant that produces electricity, gas, heat or cooling from renewable sources
of energy. We also derive revenue from long-term O&M contracts, energy supply contracts for renewable energy operating assets
that we own, integrated-PV, and consulting and enterprise energy management services.
In addition to organic growth, strategic acquisitions of complementary businesses and assets have been an important part of our
growth enabling us to broaden our service offerings and expand our geographical reach. In December 2021, we completed the
acquisition of Plug Smart, an Ohio-based energy services company that specializes in the development and implementation of
budget neutral capital improvement projects including building controls and building automation systems. This acquisition allows
us to expand our existing pipeline and solution offerings in the smart buildings sector. The pro forma effects of this acquisition
were not material to our operations for the fiscal years presented.
Key Factors and Trends
The SCE Agreement
In October 2021, we entered into a contract with SCE to design and build three grid scale battery energy storage systems at
existing substation parcels throughout SCE’s service territory in California. The engineering, procurement and construction price
is approximately $892.0 million, in the aggregate, including two years of O&M revenues, subject to customary potential
adjustments for changes in the work.
We are obligated under the SCE Agreement to achieve substantial completion of all facilities, subject to extension for customary
force majeure events and customer-caused delays, no later than August 1, 2022 (the “Guaranteed Completion Date”). If we fail to
achieve substantial completion of any of the facilities by the Guaranteed Completion Date, as extended, we are obligated to pay
liquidated damages. In addition, we provided availability and capacity guarantees under the SCE Agreement, failure of which
entitles the customer to liquidated damages. We expect a material portion of our revenue for 2022 will be generated from this
SCE Agreement, and expect a material portion of the contract expenditures under this agreement will be incurred during the first
half of 2022. If we fail to achieve the milestone dates or fail to meet the availability and capacity guarantees, we may be subject to
liquidated damages and under certain circumstances SCE may have a right to terminate the agreement. See “The loss of SCE,
which is one of our most significant customers or our failure to perform our contract with that customer in accordance with its
terms could adversely affect us” in Item 1A, Risk Factors for further discussion.
COVID-19
Fiscal year 2020 was marked with unrivaled global challenges, including the public health and economic downturn caused by the
COVID-19 pandemic. During the first half of 2020, after COVID-19 was declared a pandemic by the World Health Organization,
we experienced some delays in our project award conversions and some construction slowdowns due to shelter-in-place
29
restrictions, however, the opportunities to reduce emissions and limit the effects of climate change remained. We responded to the
pandemic by ensuring the health and safety of our employees. We implemented a seamless transition to remote operations for
many months, and, while following all CDC guidelines, continued front-line work at our essential facilities.
The resurgence of COVID-19 and its variants during the latter part of 2021 has caused some governments to extend travel and
other restrictions. On September 9, 2021, President Biden issued an Executive Order requiring COVID-19 vaccinations for
Federal employees. As a result, we implemented this mandate for our employees and subcontractors who work in our Federal
business segment. This vaccine mandate was blocked by a federal district court in Texas in January 2022 and the directive is now
on hold pending a Justice Department appeal of the ruling. Future vaccine requirements could result in a potential loss of
employees or subcontractors who have not been vaccinated or impact our ability to retain and recruit critically skilled workforce.
See “The Covid-19 pandemic has had and may continue to have an adverse effect on our business and future public health threats
or outbreaks of communicable diseases could have a material adverse effect on our operations and financial results” in Item 1A.
Risk Factors in this Form 10-K, for discussion of this risk.
We continue to monitor the impact of COVID-19 on our operations, financial results, and liquidity. The impact to our future
operations and results, however, remains uncertain and will depend on a number of factors, including, but not limited to, the
emergence and spread of more transmissible variants, the overall duration and severity of the pandemic and its impact on the
global economy, our customers, and business and workforce disruptions.
Supply Chain Disruptions
During the second half of the year ended December 31, 2021, we experienced supply chain disruptions resulting in delays in the
timely delivery of material to customer sites and delays and disruptions in the completion of certain projects. This negatively
impacted our results of operations during this time. We expect this trend to continue into 2022. See “We may be unable to
complete or operate our projects on a profitable basis or as we have committed to our customers”, “Failure of third parties to
manufacture quality products or provide reliable services in a timely manner could cause delays in the delivery of our services and
completion of our projects, which could damage our reputation, have a negative impact on our relationships with our customers
and adversely affect our growth”, and “The COVID-19 pandemic has had and may continue to have an adverse effect on our
business and future public health threats or outbreaks of communicable diseases could have a material adverse effect on our
operations and financial results” in Item 1A. Risk Factors..
The Energy Act of 2020
On December 27, 2020, the President signed the Consolidated Appropriations Act, 2021 into law, a legislative package that
included the Energy Act of 2020, reauthorizing a number of U.S. Department of Energy programs, with a $2.3 trillion spending
bill containing appropriations for fiscal year 2021, COVID-19 relief funds, and extensions of a number of expiring tax incentives
important to the energy sector. It includes $35 billion in energy research and development programs, a two-year extension of the
26% Investment Tax Credit (“ITC”) rate for solar power that will retain the current 26% credits for solar projects that begin
construction through the end of 2022. In addition, the Section 179D Energy Efficient Commercial Building Deduction, which
historically has impacted our tax rate significantly, was made permanent under the tax code.
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”)
On March 27, 2020, the U.S. government enacted the CARES Act which includes modifications to the limitation on business
interest expense and net operating loss provisions and provides a payment delay of employer payroll taxes during 2020 after the
date of enactment. The payment of $2.3 million of employer payroll taxes otherwise due in 2020 was paid in December 2021 and
the remaining $2.3 million is due by December 31, 2022. The CARES Act permitted net operating losses from the 2018, 2019,
and 2020 tax years to be carried back to the previous five tax years (beginning with the earliest year first). We received a federal
income tax refund of approximately $4.0 million as a result of the CARES Act which permitted us to carry our 2018 operating
loss back to previous years and utilize Alternative Minimum Tax Credits.
Climate Change and Effects of Seasonality
The global emphasis on climate change and reducing carbon emissions has created opportunities for our industry. Sustainability
has been at the forefront of our business since its inception and we are committed to staying at the leading edge of innovation
taking place in the energy sector. We believe the next decade will be marked by dramatic changes in the power infrastructure with
resources shifting to more distributed assets, storage, and microgrids to increase overall reliability and resiliency. The
sustainability efforts are impacted by regulations, and changes in the regulatory climate may impact the demand for our products
and offerings. See “Our business depends in part on federal, state, provincial and local government support for energy efficiency
30
and renewable energy, and a decline in such support could harm our business” and “Compliance with environmental laws could
adversely affect our operating results” in Item 1A, Risk Factors..
Climate change also brings risks, as the impacts have caused us to experience more frequent and severe weather interferences, and
this trend may continue. We are subject to seasonal fluctuations and construction cycles, particularly in climates that experience
colder weather during the winter months, such as the northern United States and Canada, and climates that experience extreme
weather events, such as wildfires, storms or flooding, or at educational institutions, where large projects are typically carried out
during summer months when their facilities are unoccupied. In addition, government customers, many of which have fiscal years
that do not coincide with ours, typically follow annual procurement cycles and appropriate funds on a fiscal-year basis even
though contract performance may take more than one year. Further, government contracting cycles can be affected by the timing
of, and delays in, the legislative process related to government programs and incentives that help drive demand for energy
efficiency and renewable energy projects. As a result, our revenues and operating income in the third and fourth quarter are
typically higher, and our revenues and operating income in the first quarter are typically lower, than in other quarters of the year,
however, this may become harder to predict with the potential effects of climate change. As a result of such fluctuations, we may
occasionally experience declines in revenues or earnings as compared to the immediately preceding quarter, and comparisons of
our operating results on a period-to-period basis may not be meaningful.
Our annual and quarterly financial results are also subject to significant fluctuations as a result of other factors, many of which are
outside our control. See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could
have an adverse effect on our operating results” in Item 1A, Risk Factors.
Stock-based Compensation
During the year ended December 31, 2021, we granted 1,341,500 common stock options to certain employees under our 2020
Stock Incentive Plan. As a result, our stock-based compensation expense increased from $1.9 million for the year ended
December 31, 2020 to $8.7 million for the year ended December 31, 2021. The increase in the number of stock options granted
and higher grant date fair value resulted in the increased stock-based compensation in 2021. In addition, our unrecognized stock-
based compensation expense increased from $12.1 million at December 31, 2020 to $41.1 million at December 31, 2021, and is
expected to be recognized over a weighted-average period of three years. See Note 14 “Stock-based Compensation and Other
Employee Benefits” for additional information.
Backlog and Awarded Projects
Backlog is an important metric for us because we believe strong order backlogs indicate growing demand and a healthy business
over the medium to long term, conversely, a declining backlog could imply lower demand.
The following table presents our backlog:
(In Thousands)
Project Backlog
As of December 31,
2021
2020
Fully-contracted backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,509,300 $
895,660
Awarded, not yet signed customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,542,760
1,318,660
Total project backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,052,060 $
2,214,320
12-month project backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,296,410 $
593,860
O&M Backlog
Fully-contracted backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,131,660 $
1,131,110
12-month O&M backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
70,306 $
63,980
Total project backlog represents energy efficiency projects that are active within our sales cycle. Our sales cycle begins with the
initial contact with the customer and ends, when successful, with a signed contract, also referred to as fully-contracted backlog.
Our sales cycle recently has been averaging 18 to 42 months. Awarded backlog is created when a potential customer awards a
project to Ameresco following a request for proposal. Once a project is awarded but not yet contracted, we typically conduct a
detailed energy audit to determine the scope of the project as well as identify the savings that may be expected to be generated
from upgrading the customer’s energy infrastructure. At this point, we also determine the subcontractor, what equipment will be
used, and assist in arranging for third party financing, as applicable. Recently, awarded projects have been taking an average of 12
to 24 months to result in a signed contract and convert to fully-contracted backlog. It may take longer, as it depends on the size
31
and complexity of the project. Historically, approximately 90% of our awarded backlog projects have resulted in a signed
contract. After the customer and Ameresco agree to the terms of the contract and the contract becomes executed, the project
moves to fully-contracted backlog. The contracts reflected in our fully-contracted backlog typically have a construction period of
12 to 36 months and we typically expect to recognize revenue for such contracts over the same period.
Our O&M backlog represents expected future revenues under signed multi-year customer contracts for the delivery of O&M
services, primarily for energy efficiency and renewable energy construction projects completed by us for our customers.
We define our 12-month backlog as the estimated amount of revenues that we expect to recognize in the next twelve months from
our fully-contracted backlog. See Note 2 “Summary of Significant Accounting Policies” for our revenue recognition policies. See
“We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer
contracts” and “In order to secure contracts for new projects, we typically face a long and variable selling cycle that requires
significant resource commitments and requires a long lead time before we realize revenues” in Item 1A, Risk Factors.
Assets in Development
Assets in development, which represents the potential estimated design/build construction value of small-scale renewable energy
plants that have been awarded or for which we have secured development rights, was $1,247.5 million as of December 31, 2021
and $1,021.8 million as of December 31, 2020. This is another important metric because it helps us gauge our future capacity to
generate electricity or deliver renewable gas fuel which contributes to our recurring revenue stream.
Results of Operations
The following table sets forth certain financial data from the consolidated statements of income for the periods indicated (1):
(In Thousands)
Year Ended December 31,
2021
2020
Year-Over-Year Change
Dollar
Amount
% of
Revenues
Dollar
Amount
% of
Revenues
Dollar
Change
% Change
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,215,697
100.0 % $ 1,032,275
100.0 % $ 183,422
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . .
985,340
81.1 % 844,726
81.8 % 140,614
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . .
230,357
18.9 % 187,549
18.2 %
42,808
Selling, general and administrative expenses . . .
134,923
11.1 % 116,050
11.2 %
18,873
Operating income . . . . . . . . . . . . . . . . . . . . .
Other expenses, net . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . .
95,434
17,290
78,144
7.9 %
71,499
6.9 %
23,935
1.4 %
15,071
1.5 %
2,219
6.4 %
56,428
5.5 %
21,716
17.8 %
16.6 %
22.8 %
16.3 %
33.5 %
14.7 %
38.5 %
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . .
(2,047)
(0.2) %
(494)
— %
(1,553)
314.4 %
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,191
Net income attributable to redeemable non-
controlling interest . . . . . . . . . . . . . . . . . . . . . . . $
(9,733)
Net income attributable to common
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,458
6.6 % $ 56,922
5.5 % $ 23,269
40.9 %
(0.8) % $
(2,870)
(0.3) % $
(6,863)
239.1 %
5.8 % $ 54,052
5.2 % $ 16,406
30.4 %
(1) A comparison of our 2020 and 2019 results can be found in Item 7 of our 2020 Form 10-K filed with the SEC.
Our results of operations for the year-ended December 31, 2021 reflect year-over-year growth in terms of revenues, operating
income, and net income attributable to common shareholders. All financial result comparisons are against the prior year period.
Our strong operating results are due to the following:
•
•
Revenue: total revenues increased primarily due to a $139.4 million, or 18%, increase in our project revenue attributed to
the timing of revenue recognized as a result of the phase of active projects versus the prior year, including our SCE
battery storage project, a $33.1 million, or 28%, increase in our energy asset revenue attributed to the continued growth
of our operating portfolio, strong renewable gas production and higher pricing on RINs generated from certain non-solar
distributed generation assets in operation, and a $6.3 million increase in O&M revenue.
Cost of Revenues and Gross Profit: the increase in cost of revenues is primarily due to the increase in project revenues
described above. The increase in gross profit as a percentage of revenue increased as our revenue mix continued to shift
towards our higher margin recurring Energy Assets and O&M businesses.
32
•
•
•
•
•
Selling, General and Administrative Expenses: the increase is primarily due to higher net salaries and benefits of $18.4
million as a result of increased headcount and an increase in non-cash stock-based compensation expense.
Other Expenses, Net: Other expenses, net, includes gains and losses from derivatives transactions, foreign currency
transactions, interest expense, interest income, amortization of deferred financing costs and certain government
incentives. Other expenses, net increased primarily due to a foreign currency transaction loss of $0.9 million compared to
a foreign currency transaction gain of $0.5 million in 2020, a loss on derivatives of $0.2 million compared to a gain of
$0.7 million in 2020, and a decrease in government incentives of $0.8 million, partially offset by lower interest expenses
of $1.1 million related to a lower average balance on our senior secured debt facility and lower interest rates on this
facility.
Income before Income Taxes: the increase is due to reasons described above.
Income Tax Benefit: the benefit for income taxes is based on various rates set by federal, state, provincial, and local
authorities and is affected by permanent and temporary differences between financial accounting and tax reporting
requirements. The effective tax benefit rate was lower in 2021 as compared to 2020 primarily due to increases in the
benefits associated with energy efficiency tax incentives including Section 48 Solar Investment Tax Credits, deductions
associated with the Section 179D Commercial Buildings Energy Efficiency Tax Deduction and compensation deductions
resulting from employee stock option disqualifying dispositions. The tax benefit rate for 2020 was favorable, which was
affected by the release of a previously established valuation allowance on the Canadian tax assets and the benefit of
employee stock option compensation. We additionally realized tax rate benefits associated with net operating loss
carrybacks made possible by the passing of the CARES Act on March 27, 2020 and tax basis adjustments on certain
partnership flip transactions.
Net Income and Earnings Per Share: Net income attributable to common shareholders increased due to the reasons
described above. Basic earnings per share for 2021 was $1.38 an increase of $0.25 per share compared to 2020. Diluted
earnings per share for 2021 was $1.35, an increase of $0.25 per share, compared to 2020. The equity offering in March
2021 increased the weighted average shares outstanding by approximately 2,333,000 shares, which lowered basic and
diluted earnings per share by $0.07 and $0.06 per share, respectively.
Business Segment Analysis
Our reportable segments for the year ended December 31, 2021 were U.S. Regions, U.S. Federal, Canada, Non-Solar Distributed
Generation (“Non-Solar DG”), and All Other. On January 1, 2021, we changed the structure of our internal organization, and our
U.S. Regions segment now includes our U.S.-based enterprise energy management services previously included in our “All
Other” segment. As a result, previously reported amounts have been reclassified for comparative purposes. See Note 20 “Business
Segment Information” for additional information about our segments.
Revenues
(In Thousands)
Year Ended December 31,
Year-Over-Year Change
2021
2020
Dollar Change
% Change
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
528,293 $
404,152 $
124,141
30.7 %
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Solar DG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
392,948
49,457
137,243
107,756
377,882
47,797
106,417
96,027
15,066
1,660
30,826
11,729
4.0
3.5
29.0
12.2
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,215,697 $
1,032,275 $
183,422
17.8 %
•
•
•
•
•
U.S. Regions: the increase is primarily due to a $116.0 million, or 33%, increase in project revenues attributable to the
timing of revenue recognized as a result of the phase of active projects, including our SCE battery storage project, versus
the prior year and a $5.1 million, or 15%, increase in revenue from the growth of our energy assets in operation.
U.S. Federal: the increase is primarily due to a $13.1 million, or 4%, increase in project revenue attributable to the
timing of revenue recognized as a result of the phase of active projects compared to the prior year.
Canada: the increase is primarily due to favorable foreign exchange rates.
Non-Solar DG: the increase is primarily due to a $26.7 million, or 35%, increase in energy asset revenues resulting from
the continued growth of our operating portfolio, increased renewable gas production levels and higher pricing on RINs
generated from certain non-solar distributed generation assets in operation.
All Other: the increase is primarily due to an increase in project revenues in the U.K. related to an increase in volume
and progression of certain active projects, partially offset by a decrease in project revenues in Greece.
33
Income before Taxes and Unallocated Corporate Activity
Year Ended December 31,
Year-Over-Year Change
(In Thousands)
2021
2020
Dollar Change
% Change
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
40,051 $
28,339 $
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-Solar DG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,386
1,584
26,345
6,195
44,560
2,560
13,040
8,117
Unallocated corporate activity . . . . . . . . . . . . . . . . . .
(48,417)
(40,188)
Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . $
78,144 $
56,428 $
11,712
7,826
(976)
13,305
(1,922)
(8,229)
21,716
41.3 %
17.6
(38.1)
102.0
(23.7)
20.5
38.5 %
•
•
•
•
•
•
U.S. Regions: the increase is primarily due to the increase in revenues described above, a $1.8 million decrease in
project development costs, a $1.5 million decrease in bad debt expense, partially offset by an increase of $3.8 million in
salary and benefit costs resulting from increased headcount and higher health insurance costs.
U.S. Federal: the increase is due to the increase in revenues described above, partially offset by an increase in salaries
and benefits of $2.3 million resulting from increased average salaries and higher health insurance costs.
Canada: the decrease is primarily due to a $0.5 million increase in salaries and benefits, a $0.8 million increase in
project development costs, partially offset by an increase in revenues described above.
Non-Solar DG: the increase is primarily due to the higher contribution attributed to the increase in higher margin energy
asset revenue described above, partially offset by higher mark to market losses on our unhedged commodity gas swaps,
and higher interest expense.
All Other: the decrease is due to higher operating expenses, primarily salaries and benefits and project development
costs, partially offset by higher revenues noted above.
Unallocated corporate activity includes all corporate level selling, general and administrative expenses and other
expenses not allocated to the reportable segments. We do not allocate any indirect expenses to the segments. Corporate
activity increased primarily due to higher salaries and benefit costs of $9.3 million, which includes a $6.8 million
increase in non-cash stock-based compensation expense due to increased option grants with a higher grant date fair
value.
Liquidity and Capital Resources
Overview
Since inception, we have funded operations primarily through cash flow from operations, advances from Federal ESPC projects,
our senior secured credit facility and various forms of other debt (see “Project Financing” below). In addition, in March 2021, we
completed an underwritten public offering of 2,875,000 shares of our Class A Common Stock, for total net proceeds of $120.1
million. See below, Note 9 “Debt and Financing Lease Liabilities”, and Note 13 “Equity and Earnings per Share” for additional
information.
Working capital requirements, which can be susceptible to fluctuations during the year due to seasonal demands, generally result
from revenue growth, our solar equipment purchase patterns, the timing of funding under various contracts, or advances from
Federal ESPC projects, and payment terms for receivables and payables.
We expect to incur additional expenditures in connection with the following activities:
equity investments, project asset acquisitions and business acquisitions that we may fund from time to time
capital investment in current and future energy assets
•
•
• material, equipment, and other expenditures for our SCE battery storage project, particularly during the first half of 2022
We regularly monitor and assess our ability to meet funding requirements. We believe that cash and cash equivalents, working
capital and availability under our revolving senior secured credit facility, combined with our right (subject to lender consent) to
increase our revolving credit facility by $100.0 million, and our general access to credit and equity markets, will be sufficient to
fund our operations for twelve months from filing this Report and thereafter. However, we consistently evaluate and take action,
as necessary, to preserve adequate liquidity and ensure that our business can continue to operate and that we can meet our capital
requirements during these uncertain times. This may include limiting discretionary spending across the organization and re-
34
prioritizing our capital projects amid times of international political unrest and for the time periods we expect to fund significant
capital expenditures for our SCE battery storage project and depending on the evolution of the COVID-19 pandemic.
Equity Offering
On March 9, 2021, we closed on an underwritten public offering of 2,500,000 shares of our Class A common stock at a public
offering price of $44.00 per share. Net proceeds from the offering were $104.3 million, after deducting offering costs of $5.7
million. On March 15, 2021, we closed on the underwriters’ option to purchase 375,000 additional shares of our Class A common
stock from us at $44.00 per share, resulting in net proceeds of $15.8 million after deducting offering costs of $0.7 million. In the
offering, selling shareholders sold 805,000 shares of our Class A Common Stock at a public offering price of $44.00 per share,
less the underwriting discount. We did not receive any proceeds from the sale of the shares by the selling stockholders. We used
$80.0 million of the net proceeds to repay in full the outstanding U.S. dollar balance under our senior secured revolving credit
facility and used the remaining proceeds for general corporate purposes.
Senior Secured Credit Facility — Revolver and Term Loan
In June 2021, we entered into an amendment to our senior secured revolving credit facility with three banks which increased the
amount of the revolving commitment by the lenders under the credit facility from $115.0 million to $180.0 million. The
amendment also increased the total funded debt to EBITDA covenant ratio from a maximum of 3.25 to 3.50, and decreased the
Eurocurrency rate floor from 1% to 0%. At December 31, 2021, our senior secured credit facility outstanding was $97.8 million,
and we had funds of $121.2 million available under the revolving credit facility.
Project Financing
Construction and Term Loans
We have entered into a number of construction and term loan agreements for the purpose of constructing and owning certain
renewable energy plants. The physical assets and the operating agreements related to the renewable energy plants are generally
owned by wholly owned, single member “special purpose” subsidiaries of Ameresco. These construction and term loans are
structured as project financings made directly to a subsidiary, and upon commercial operation and achieving certain milestones in
the credit agreement, the related construction loan converts into a term loan. While we are required under generally accepted
accounting principles (“GAAP”) to reflect these loans as liabilities on our consolidated balance sheets, they are generally non-
recourse and not direct obligations of Ameresco, Inc. As of December 31, 2021, our construction and term loans outstanding were
$249.8 million.
Our project financing facilities contain various financial and other covenant requirements which include debt service coverage
ratios and total funded debt to EBITDA, as defined. Any failure to comply with the financial or other covenants of our project
financings would result in inability to distribute funds from the wholly-owned subsidiary to Ameresco, Inc. or constitute an event
of default in which the lenders may have the ability to accelerate the amounts outstanding, including all accrued interest and
unpaid fees.
Federal ESPC Liabilities
We have arrangements with certain third-parties to provide advances to us during the construction or installation of projects for
certain customers, typically federal governmental entities, in exchange for our assignment to the lenders of our rights to the long-
term receivables arising from the ESPCs related to such projects. These financings totaled $532.3 million in principal amounts as
of December 31, 2021 and $440.2 million as of December 31, 2020. Under the terms of these financing arrangements, we are
required to complete the construction or installation of the project in accordance with the contract with our customer, and the
liability remains on our consolidated balance sheets until the completed project is accepted by the customer.
We are the primary obligor for financing received, but only until final acceptance of the work by the customer. At this point
recourse to us ceases and the ESPC receivables are transferred to the investor. The transfers of receivables under these agreements
do not qualify for sales accounting until final customer acceptance of the work, so the advances from the investors are not
classified as operating cash flows. Cash draws that we received under these ESPC agreements were $159.2 million during the year
ended December 31, 2021 and are recorded as financing cash inflows. The use of the cash received under these arrangements is to
pay project costs classified as operating cash flows and totaled $249.7 million during the year ended December 31, 2021. Due to
the manner in which the ESPC contracts with the third-party investors are structured, our reported operating cash flows are
materially impacted by the fact that operating cash flows only reflect the ESPC contract expenditure outflows and do not reflect
any inflows from the corresponding contract revenues. Upon acceptance of the project by the federal customer the ESPC
receivable and corresponding ESPC liability are removed from our consolidated balance sheets as a non-cash settlement. See Note
2, “Summary of Significant Accounting Policies”, to our consolidated financial statements in this Report.
35
Sale-Leaseback and Financing Liabilities
We have entered into sale-leaseback arrangements for solar PV energy assets with multiple investors and in accordance with
Topic 842, Leases, all sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and
the proceeds received from the transactions were recorded as long-term financing facilities. See Notes 8 “Leases” and 9 “Debt and
Financing Lease Liabilities” for additional information on these financing facilities. As of December 31, 2021, our financing
leases and financing liabilities outstanding were $123.8 million, and $228.6 million remained available under these lending
commitments, although this full amount is not expected to be used.
While we are required under GAAP to reflect these lease payments as liabilities on our consolidated balance sheets, they are
generally non-recourse and not direct obligations of Ameresco Inc., except that we have guaranteed certain obligations relating to
taxes and project warranties, operation, and maintenance.
Other
We issue letters of credit and performance bonds, from time to time, with our third-party lenders, to provide collateral.
Selected Measures of Liquidity and Capital Resources
(In Thousands)
December 31,
2021
2020
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
50,450 $
164,361 $
Availability under revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
121,176 $
66,422
107,618
50,011
Cash Flows
The following table summarizes our changes in cash and cash equivalents:
(In Thousands)
Year Ended December 31,
2021
2020
Cash flows used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(172,296) $
(102,583)
Cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(205,257)
365,461
309
(181,015)
305,169
2
Net (decrease) increase in cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . $
(11,783) $
21,573
Our service offering also includes the development, construction, and operation of small-scale renewable energy plants. Small-
scale renewable energy projects, or energy assets, can either be developed for the portfolio of assets that we own and operate or
designed and built for customers. Expenditures related to projects that we own are recorded as cash outflows from investing
activities. Expenditures related to projects that we build for customers are recorded as cash outflows from operating activities as
cost of revenues.
Cash Flows from Operating Activities
Our cash flow from operating activities in 2021 decreased over 2020 primarily due to a $132.7 million increase in unbilled
revenue (costs and estimated earnings in excess of billings) due to the timing of when certain projects are invoiced, including our
SCE battery storage project, and an increase of $22.7 million in Federal ESPC receivables, partially offset by an increase of $54.4
million in accounts payable, accrued expenses and other current liabilities and an increase of $23.3 million in net income.
Cash Flows from Investing Activities
During 2021, we paid $14.9 million, net of cash received, for the acquisition of Plug Smart and also contributed $9.0 million to an
equity investment. We also spent $4.9 million related to purchases of other property and equipment, which is $2.7 million more
than last year and made capital investments, net of grant proceeds, of $178.1 million related to the development and acquisition of
renewable energy plants, which is comparable to last year.
We currently plan to invest approximately $225.0 million to $275.0 million in capital investments in 2022, principally for the
construction or acquisition of new renewable energy plants.
36
Cash Flows from Financing Activities
Our primary sources of financing during 2021 were proceeds of $186.0 million from long-term debt financings, $161.2 million
from advances on Federal ESPC projects and energy assets and net proceeds of $120.1 million from our equity offering. These
proceeds were partially offset by repayments of long-term debt totaling $98.2 million.
During 2020, proceeds from Federal ESPC projects and energy assets provided $250.3 million in cash and received long-term
debt financing proceeds of $116.1 million. These proceeds were partially offset by repayments of long-term debt totaling $73.6
million.
We currently plan additional financings of $175.0 million to $225.0 million in 2022 to fund the construction or acquisition of new
renewable energy plants as discussed above.
We may also, from time to time, finance our operations through issuance or offering of equity or debt securities.
Critical Accounting Policies and Estimates
Preparing our consolidated financial statements in accordance with GAAP involves us making estimates and assumptions that
affect reported amounts of assets and liabilities, net sales, and expenses, and related disclosures in the accompanying notes at the
date of our financial statements. We base our estimates on historical experience, industry and market trends, and on various other
assumptions that we believe to be reasonable under the circumstances. However, by their nature, estimates are subject to various
assumptions and uncertainties, and changes in circumstances could cause actual results to differ from these estimates, sometimes
materially.
We believe that our policies and estimates that require our most significant judgments are considered our critical accounting
policies and are discussed below. In addition, refer to Note 2 “Summary of Significant Accounting Policies” for further details.
Revenue Recognition
As described in Note 2, we recognize revenue from the installation or construction of projects over time using the cost-based input
method. We use the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation.
When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such
costs, we record the entire estimated loss in the period the loss becomes known. In addition, some contracts contain an element of
variable consideration, including liquidated damages and/or penalties, which requires payment to the customer in the event that
construction timelines or milestones are not met. We estimate the total consideration payable by the customer when the contracts
contain variable consideration provisions, based on the most likely amount anticipated to be recognized for transferring the
promised goods or services. As a result, we may constrain revenue to the extent that a significant reversal in the amount of
cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently
resolved.
To the extent a contract is deemed to have multiple performance obligations, we allocate the transaction price of the contract to
each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract.
Significant judgement is required to estimate the total expected costs and variable consideration for projects that typically have a
construction period of 12 to 36 months. Any increase or decrease in estimated costs to complete a performance obligation without
a corresponding change to the contract price could impact the calculation of cumulative revenue to date and gross profit on the
project. Similarly, if we recognize revenue based upon our current estimate of variable consideration, and our estimate is later
adjusted, we may be required to increase or decrease cumulative revenue to date and gross profit on the project. Factors that may
result in a change to our estimates include unforeseen engineering problems, construction delays, the performance of contractors
and major material suppliers, and unusual weather conditions, among others.
We have a long history of working with multiple types of projects and preparing cost estimates, and we rely on the expertise of
key personnel to prepare what we believe are reasonable best estimates given available facts and circumstances. Due to the nature
of the work involved, however, judgment is involved to estimate the costs to complete and the amounts estimated could have a
material impact on the revenue we recognize in each accounting period. We cannot estimate unforeseen events and circumstances
which may result in actual results being materially different from previous estimates.
Impairment Assessments
We evaluate our long-lived assets, including goodwill and intangible assets, for impairment as events or changes in circumstances
indicate the carrying value of these assets may not be fully recoverable, and at least annually (December 31st) for goodwill and
37
intangible assets that have indefinite lives. Examples of such triggering events applicable to our assets include a significant
decrease in the market price of a long-lived asset or asset group, a current-period operating or cash flow loss combined with a
history of operating or cash flow losses, a projection or forecast that demonstrates continuing losses associated with the use of a
long-lived asset or asset group, or adverse industry or economic trends.
We evaluate recoverability of long-lived assets and definite-lived intangible assets by estimating the undiscounted future cash
flows associated with the expected uses and eventual disposition of those assets. When these comparisons indicate that the
carrying value of those assets is greater than the undiscounted cash flows, we recognize an impairment loss for the amount that
the carrying value exceeds the fair value.
The process of evaluating the potential impairment of long-lived assets, goodwill and intangible assets requires significant
judgment. For goodwill, we estimate the reporting unit’s fair value and compare it with the carrying value of the reporting unit,
including goodwill. If the fair value is greater than the carrying value of its reporting unit, no impairment is recorded. Fair value is
determined using both an income approach and a market approach. The estimates and assumptions used in our calculations
include revenue growth rates, expense growth rates, expected capital expenditures to determine projected cash flows, expected tax
rates and an estimated discount rate to determine present value of expected cash flows. These estimates are based on historical
experiences, our projections of future operating activity and our weighted-average cost of capital. Unforeseen events and changes
in circumstances or market conditions could adversely affect these estimates, which could result in an impairment charge.
Based on our goodwill impairment assessment, all of our reporting units with goodwill had estimated fair values that exceeded
their carrying values by at least 61% as of December 31, 2021 and 67% as of December 31, 2020. During the year ended
December 31, 2021, we recognized a long-lived asset impairment charge of $1.9 million on one of our energy asset groups. See
Note 7 “Energy Assets” for additional information.
Income Taxes
We are subject to income taxes in the U.S. and five foreign jurisdictions. Significant judgment is required in determining income
tax expense, deferred tax assets and liabilities and uncertain tax positions. The underlying assumptions are also highly susceptible
to change from period to period. We took advantage of the Safe Harbor commence-construction provisions contained in IRS
Notice 2018-59 by pre-purchasing solar equipment in 2019 thereby preserving the ability to take 30% ITC for projects placed in
service before 2024. If these or other deductions and credits expire without being extended, or otherwise are reduced or
eliminated, our effective tax rate would increase, which could increase our income tax expense and reduce our net income. In
addition, our tax rate has historically been significantly impacted by the IRC Section 179D deduction. This deduction is related to
energy-efficient improvements we provide under government contracts. The Consolidated Appropriations Act, 2021 made
permanent the Section 179D Energy Efficient Commercial Building Deduction. That Act made changes to the way the deduction
is calculated. If those changes result in lower levels of energy efficiency improvements, it could impact the deduction available
and the tax rate.
We accrue for the estimated additional tax and interest that may result from tax authorities disputing uncertain tax positions. We
believe we have made adequate provisions for income taxes for all years that are subject to audit based upon the latest information
available. We operate within multiple taxing jurisdictions and are subject to tax audits in these jurisdictions. These audits can
involve complex issues and may require an extended period of time to resolve. We recognize tax benefits from uncertain tax
positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing
authorities based on the technical merits of the position. Although we believe that we have adequately reserved for our uncertain
tax positions, we can provide no assurance that the final tax outcome of these matters will not be materially different. We adjust
these reserves when facts and circumstances change, such as the closing of a tax audit or the refinement of an estimate. To the
extent that the final tax outcome of these matters is different than the amounts recorded, such differences may affect the provision
for income taxes in the period in which such determination is made and could have an impact on our results of operations.
On a quarterly basis, we assess our current and projected earnings by jurisdiction to determine whether or not our earnings during
the periods when the temporary differences become deductible will be sufficient to realize the related future tax benefits. Should
we determine that we would not be able to realize all or part of our net deferred tax asset in a particular jurisdiction in the future, a
valuation allowance to the deferred tax asset would be charged to income in the period such determination was made. This
valuation allowance is maintained for deferred tax assets that we estimate are more likely than not to be unrealizable based on
available evidence at the time the estimate is made. In 2020 we determined that it was more likely than not that the non-capital net
operating loss carryforwards at our Canadian parent company would be realized before they expire. In 2020 we reversed the
previously established valuation allowance on the tax assets associated with the carryforwards. The determination of whether a
valuation allowance for deferred tax assets is appropriate is subject to considerable judgment and requires an evaluation of all
positive and negative evidence, including our historical financial results, the source and consistency of those results, whether they
38
should be adjusted for certain one-time or nonrecurring items, whether losses cumulatively exceed income over a reasonable
period of time, the availability of tax planning strategies, availability of carryback and carryforward periods, and other factors,
including our expectations of future taxable income. Adjustments to income tax expense to the extent we establish a valuation
allowance or adjust this allowance in a period could have a material impact on our financial condition and results of operations.
Recent Accounting Pronouncements
See Note 2 of the “Notes to Consolidated Financial Statements” for a discussion of recent accounting standards.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to changes in interest rates and foreign currency exchange rates because we finance certain operations through
fixed and variable rate debt instruments and denominate our transactions in U.S. dollars, Canadian dollars, and British pounds
sterling (“GBP”) and Euros. Changes in these rates may have an impact on future cash flows and earnings. We manage these risks
through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial
instruments.
Interest Rate Risk
We had cash and cash equivalents totaling $50.5 million as of December 31, 2021 and $66.4 million as of December 31, 2020.
Our exposure to interest rate risk primarily relates to the interest expense paid on our senior secured credit facility.
Derivative Instruments
We do not enter into financial instruments for trading or speculative purposes. However, through our subsidiaries we do enter into
derivative instruments for purposes other than trading purposes. Certain of the term loans that we use to finance our renewable
energy projects bear variable interest rates that are indexed to short-term market rates. We have entered into interest rate swaps in
connection with these term loans in order to seek to hedge our exposure to adverse changes in the applicable short-term market
rate. In some instances, the conditions of our renewable energy project term loans require us to enter into interest rate swap
agreements in order to mitigate our exposure to adverse movements in market interest rates. All but three of the interest rate
swaps that we have entered into qualify and have been designated as cash flow hedges. We have entered into one commodity
swap contracts in order to hedge our exposure to adverse changes in the short-term market rates of natural gas, which have not
been designated for hedge accounting.
We have also entered into term loan agreements that contain make-whole provisions that qualify as embedded derivatives and are
required to be bifurcated from their host term loan agreement and valued separately. These derivatives cannot be hedged.
By using derivative instruments, we are subject to credit and market risk. The fair market value of the interest rate and commodity
swaps are determined by using valuation models whose inputs are derived using market observable inputs, including interest rate
yield curves, and reflects the asset or liability position as of the end of each reporting period. When the fair value of a derivative
contract is positive, the counterparty owes us, thus creating a receivable risk for us. We are exposed to counterparty credit risk in
the event of non-performance by counterparties to our derivative agreements. We minimize counterparty credit (or repayment)
risk by entering into transactions with major financial institutions of investment grade credit rating. The fair value of these make-
whole provisions was determined based on available market data and a with and without model.
Our exposure to market interest rate risk is not hedged in a manner that completely eliminates the effects of changing market
conditions on earnings or cash flow. See Notes 2, 18 and 19 included in Item 8 of this Report for additional information about our
derivative instruments.
Foreign Currency Risk
We have revenues, expenses, assets, and liabilities that are denominated in foreign currencies, principally the Canadian dollar and
British pound sterling. Also, a significant number of employees are located in Canada and the U.K., and our subsidiaries in those
countries transact business in those respective currencies. As a result, we have designated the Canadian dollar as the functional
currency for Canadian operations. Similarly, the GBP has been designated as the functional currency for our operations in the
U.K. When we consolidate the operations of these foreign subsidiaries into our financial results, because we report our results in
U.S. dollars, we are required to translate the financial results and position of our foreign subsidiaries from their respective
functional currencies into U.S. dollars. We translate the revenues, expenses, gains, and losses from our Canadian and U.K.
subsidiaries into U.S. dollars using a weighted average exchange rate for the applicable fiscal period. We translate the assets and
liabilities of our Canadian and U.K. subsidiaries into U.S. dollars at the exchange rate in effect at the applicable balance sheet
date. Translation adjustments are not included in determining net income for the period but are disclosed and accumulated in a
39
separate component of consolidated equity until sale or until a complete or substantially complete liquidation of the net
investment in our foreign subsidiary takes place. Changes in the values of these items from one period to the next which result
from exchange rate fluctuations are recorded in our consolidated statements of changes in stockholders’ equity as accumulated
other comprehensive income (loss). For the year ended December 31, 2021, due to the weakening of the GBP versus the U.S.
dollar, our foreign currency translation resulted in a loss of $0.2 million which we recorded as a decrease in accumulated other
comprehensive loss. For the year ended December 31, 2020, we recorded a currency translation gain of $1.0 million. As a
consequence, gross profit, operating results, profitability, and cash flows are impacted by relative changes in the value of the
Canadian dollar and GBP. We have not repatriated earnings from our foreign subsidiaries but have elected to invest in new
business opportunities there. See Note 10, “Income Taxes” to our consolidated financial statements in this Report. We do not
hedge our exposure to foreign currency exchange risk.
40
Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID: 49) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the years ended December 31, 2021, December 31, 2020 and
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, December 31, 2020
and December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Redeemable Non-controlling Interests and Stockholders’ Equity for the
years ended December 31 ,2021, December 31, 2020 and December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2021, December 31, 2020 and
December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
42
45
47
48
49
50
52
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Ameresco, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Ameresco, Inc. (the Company) as of December 31, 2021 and
2020, and the related consolidated statements of income, comprehensive income, changes in redeemable non-controlling interests
and stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes
(collectively, the financial statements). We also have audited the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the
Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission in 2013.
Basis for Opinion
The Company's management is responsible for these financial statements, for maintaining effective internal control over financial
reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company's financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and
are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of
the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
42
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and
we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.
Goodwill Impairment
As described in Notes 2 and 5 to the financial statements, the Company’s goodwill balance was $71.2 million as of December 31,
2021. Management tests goodwill for impairment, at the reporting unit level, as of December 31 of each fiscal year, or more
frequently if events or changes in circumstances indicate the asset might be impaired. To test goodwill for impairment,
management compares the estimated fair value of each reporting unit with the carrying amount of each reporting unit, including
the recorded goodwill. In estimating the fair value of each reporting unit, management uses a methodology which combines an
income approach, using a discounted cash flows method, with a market approach, using a peer-based guideline company method
based on the average of published multiples of earnings of comparable entities with similar operations and economic
characteristics.
We identified the goodwill impairment assessment for certain of the Company’s reporting units as a critical audit matter because
of the significant estimates and assumptions used by management when estimating the fair value of the these reporting units,
including management’s forecasts of revenue and expense growth rates and management’s selection of the discount rates for the
income approaches and management’s estimates of the multiples of earnings of comparable entities with similar operations and
economic characteristics for the market approaches. Auditing management’s estimates and assumptions involved a high degree of
auditor judgment and increased audit effort, including the use of our valuation specialists, due to the impact these assumptions
have on the goodwill impairment assessment.
Our audit procedures related to the assessment of goodwill impairment included the following, among others:
• We obtained an understanding of the relevant controls relating to management’s goodwill impairment assessment and
tested such controls for design and operating effectiveness, including controls over management’s review of the
significant assumptions used in the estimate of fair value of certain of the Company’s reporting units, including
forecasted revenue and expense growth rates, the selected discount rates, and the selected multiples of earnings.
• We evaluated the reasonableness of management’s forecasts of revenue and expense growth rates by comparing the
projections to historical results.
• We tested the underlying data used by management in their development of forecasts of revenue and expense growth
rates for accuracy and completeness.
• We evaluated the reasonableness of management’s selection of comparable entities with similar operations and economic
characteristics.
• With the assistance of our valuation specialists, we evaluated the reasonableness of the Company’s valuation
methodology and significant assumptions by:
◦ Evaluating the reasonableness of the discount rate and multiples of earnings by comparing the underlying source
information to publicly available market data and verifying the accuracy of the calculations.
◦ Developing an independent expectation of discount rates and compared against that selected by management.
◦ Evaluating the appropriateness of the valuation methods used by management and testing their mathematical
accuracy.
Revenue from Contracts with Customers – Project Revenue
As described in Notes 2 and 3 to the financial statements, the Company recognized revenue of $903.96 million during the year
ended December 31, 2021 from the projects line of business which relates to the construction of energy efficiency projects,
including the design, engineering and installation of an array of innovative technologies and techniques to improve energy
efficiency and control the operation of a building’s energy- and-water-consuming systems. Typically, the Company provides a
service of integrating a complex set of tasks and components such as design, engineering, construction management, and
equipment procurement for a project contract. The Company’s project revenues are generated from long-term contracts whereby
revenue is recognized over time using the cost-based input method. The Company uses total costs incurred on the project relative
to the total expected costs to estimate progression towards the satisfaction of the performance obligation.
43
Estimating the amount of project revenue to record from the Company’s long-term contracts requires management’s judgment in
estimating final construction contract profits, which are driven by the total estimated consideration payable by the customer and
total estimated contract costs. The Company estimates the total consideration payable by the customer when the contracts contain
variable consideration provisions, which can include liquidated damages and/or penalties, based on the most likely amount
anticipated to be recognized for transferring the promised goods or services. As a result, the Company may constrain revenue to
the extent that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty
associated with the variable consideration is subsequently resolved. Anticipated contract costs can be incurred over several years
and are largely determined based on negotiated or estimated purchase contract terms and consider factors such as historical
performance, seasonal and construction schedule risks, estimated subcontractor costs and contingency costs.
We identified the Company’s accounting for revenue recognition from the project line of business to be a critical audit matter due
to the significant judgments used by management related to the estimation of final construction profits. Estimating the final
construction profit on these long-term contracts requires management to develop estimates of the total consideration payable by
the customer, when contracts contain variable consideration provisions, as well as total expected contract costs, including costs
associated with labor, materials, equipment, subcontracting and outside engineering cost. Auditing management’s estimates and
assumptions involved a high degree of auditor judgment and increased audit effort due to the impact these assumptions have on
the revenue recognized.
Our audit procedures related to project revenue included the following, among others:
• We obtained an understanding of the relevant controls related to the recognition of project revenue and tested such
controls for design and operating effectiveness, including controls over the determination of the final estimated
construction profit, which includes management’s review of the assumptions and key inputs used to recognize revenue
on project contracts using the cost-to-cost input method, including costs associated with labor, materials, equipment,
subcontracting and outside engineering along with estimates of total consideration payable when contracts contain
variable consideration provisions.
• We performed substantive analytical procedures on the Company’s project revenue line of business, with a focus on
significant changes in gross margin, contract budgets and contract pricing from the prior year, on contracts open in both
the current year and prior year.
• We selected a sample of project contracts and evaluated the estimates of total costs for each of the project contracts by:
◦ Evaluating management’s judgments related to the Company’s ability to achieve the estimates of final
construction contract profit as well as achievement on project timelines by performing corroborating inquiries
with Company personnel, including project managers, and comparing the estimates to documentation such as
management’s internal budgets and specified contract terms.
◦ Confirmation of project progression with customers, including identification of any delays in project timeline.
/s/ RSM US LLP
We have served as the Company's auditor since 2010.
Boston, Massachusetts
March 1, 2022
44
AMERESCO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
2021
2020
ASSETS
Current assets:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash and cash equivalents (1)
Restricted cash (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project development costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal ESPC receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy assets, net (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease assets (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash, non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
50,450 $
24,267
161,970
43,067
306,172
8,807
25,377
5,261
13,214
638,585
557,669
13,117
856,531
71,157
6,961
41,982
12,337
3,703
22,779
2,224,821 $
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt and financing lease liabilities (1) . . . . . . . . . . . . . . . . . . . . $
Accounts payable (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities (1)
Long-term debt and financing lease liabilities, net of current portion, unamortized discount,
and debt issuance costs (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal ESPC liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred grant income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term operating lease liabilities, net of current portion (1) . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,934 $
308,963
43,311
6,276
35,918
822
474,224
377,184
532,287
3,871
8,498
35,135
43,176
66,422
22,063
125,010
30,189
185,960
8,575
26,854
9,803
15,839
490,715
396,725
8,982
729,378
58,714
927
39,151
10,352
3,864
15,307
1,754,115
69,362
230,916
41,748
6,106
33,984
981
383,097
311,674
440,223
6,227
8,271
35,300
37,660
(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) of $124,454 as of December 31, 2021 and $162,198 as of
December 31, 2020. Includes non-recourse liabilities of consolidated VIEs of $31,125 as of December 31, 2021 and $33,335 as of December 31,
2020. See Note 11.
45
46,182
38,850
AMERESCO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts) (Continued)
December 31,
2021
2020
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and
outstanding at December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 35,818,104
shares issued and 33,716,309 shares outstanding at December 31, 2021, 32,326,449 shares
issued and 30,224,654 shares outstanding at December 31, 2020 . . . . . . . . . . . . . . . . . . . . .
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000
shares issued and outstanding at December 31, 2021 and 2020 . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 2,101,795 shares at December 31, 2021 and 2020 . . . . . . . . . . . . . .
Total stockholder’s equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities, redeemable non-controlling interests and stockholders’ equity . . . . . . $
3
2
283,982
438,732
(6,667)
(11,788)
704,264
2,224,821 $
—
3
2
145,496
368,390
(9,290)
(11,788)
492,813
1,754,115
See accompanying notes to consolidated financial statements.
46
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (income) loss attributable to redeemable non-controlling interest . . . .
Net income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . $
Net income per share attributable to common shareholders:
Year Ended December 31,
2021
1,215,697 $
985,340
230,357
134,923
95,434
17,290
78,144
(2,047)
80,191
(9,733)
70,458 $
2020
1,032,275 $
844,726
187,549
116,050
71,499
15,071
56,428
(494)
56,922
(2,870)
54,052 $
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.38 $
1.35 $
1.13 $
1.10 $
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50,855
52,268
47,702
49,006
`
See accompanying notes to consolidated financial statements.
2019
866,933
698,815
168,118
116,504
51,614
15,061
36,553
(3,748)
40,301
4,135
44,436
0.95
0.93
46,586
47,774
47
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss):
Unrealized gain (loss) from interest rate hedges, net of tax effect of
$662, $(1,014) and $(984), respectively . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive (income) loss attributable to redeemable non-
controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to common shareholders . . . . . . . . $
Year Ended December 31,
2021
2020
2019
80,191 $
56,922 $
40,301
2,793
(170)
2,623
82,814
(2,784)
1,008
(1,776)
55,146
(9,733)
73,081 $
(2,870)
52,276 $
(2,944)
1,379
(1,565)
38,736
4,135
42,871
See accompanying notes to consolidated financial statements.
48
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
(In thousands, except share amounts)
Balance, December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . $
14,719
28,275,506 $
3
18,000,000 $
2 $ 124,651 $ 269,806
2,091,040 $ (11,638) $
(5,949) $
376,875
Redeemable
Non-
controlling
Interests
Class A Common
Stock
Class B Common
Stock
Shares
Amount
Shares
Amount
Additional
Paid-in
Capital
Retained
Earnings
Treasury Stock
Shares
Amount
Accumulated
Other
Comprehensive
Loss
Total
Stockholders'
Equity
Cumulative impact from the adoption of ASU No. 2018-02
Exercise of stock options, net . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . .
Open market purchase of common shares . . . . . . . . . . . . . .
Unrealized loss from interest rate hedges, net . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . .
Contributions from redeemable non-controlling interests . .
Distributions to redeemable non-controlling interests . . . . .
Net (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of stock options, net . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . .
Open market purchase of common shares . . . . . . . . . . . . . .
Unrealized loss from interest rate hedges, net . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . .
Contributions from redeemable non-controlling interests,
net of tax equity financing fees of $622 . . . . . . . . . . . . . . . .
Distributions to redeemable non-controlling interests . . . . .
Accretion of tax equity financing fees . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
Equity offering of common stock, net of offering costs of
$6,416 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of stock options, net . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain from interest rate hedges, net . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . .
Contributions from redeemable non-controlling interests,
net of tax equity financing fees of $65 . . . . . . . . . . . . . . . . .
Distributions to redeemable non-controlling interests . . . . .
Accretion of tax equity financing fees . . . . . . . . . . . . . . . . .
Investment fund call option exercise . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . $
—
—
—
—
—
—
—
21,835
(803)
(4,135)
—
915,834
—
48,965
(10,300)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,742
1,620
675
—
—
—
—
—
—
217
—
—
—
—
—
—
—
—
44,436
—
—
—
—
—
—
—
—
10,300
(144)
—
—
—
—
—
—
—
—
—
—
(217)
—
—
—
—
(2,727)
1,379
—
—
—
31,616
29,230,005
3
18,000,000
2
133,688
314,459
2,101,340
(11,782)
(7,514)
—
—
—
—
—
—
5,777
(1,534)
121
2,870
946,139
—
48,965
(455)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8,995
1,933
880
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(121)
54,052
—
—
—
455
—
—
—
—
—
—
—
—
—
(6)
—
—
—
—
—
—
—
—
—
—
(2,784)
1,008
—
—
—
—
38,850
30,224,654
3
18,000,000
2
145,496
368,390
2,101,795
(11,788)
(9,290)
—
—
—
—
—
—
2,251
(1,009)
116
(3,759)
9,733
2,875,000
587,775
—
28,880
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
120,084
5,563
8,716
1,364
—
—
—
—
—
2,759
—
—
—
—
—
—
—
—
(116)
—
—
70,458
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,793
(170)
—
—
—
—
—
—
6,742
1,620
675
(144)
(2,727)
1,379
—
—
44,436
428,856
8,995
1,933
880
(6)
(2,784)
1,008
—
—
(121)
54,052
492,813
120,084
5,563
8,716
1,364
2,793
(170)
—
—
(116)
2,759
70,458
46,182
33,716,309 $
3
18,000,000 $
2 $ 283,982 $ 438,732
2,101,795 $ (11,788) $
(6,667) $
704,264
See accompanying notes to consolidated financial statements.
49
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
80,191 $
56,922 $
40,301
Year Ended December 31,
2021
2020
2019
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation of energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of ARO and contingent consideration . . . . . . . . . . . . . . . . . . . .
Provision for (recoveries of) bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets / loss on disposal . . . . . . . . . . . . . . . . . . .
Gain on sale of equity investments / deconsolidation of a VIE . . . . . . . . .
Net loss (gain) from derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized foreign exchange loss (gain), net . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities: . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal ESPC receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . .
Project development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other current liabilities . . . . . . .
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital investment in energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Grant award proceeds for energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of equity investment . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, net of cash received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions to equity investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,113
3,143
2,849
321
123
187
1,901
(575)
240
8,716
(4,760)
142
(15,953)
(12,882)
(249,728)
(232)
(113,192)
1,770
1,949
(1,752)
83,473
(693)
(5,036)
4,389
(172,296)
(4,896)
(178,879)
774
1,672
(14,928)
(9,000)
(205,257)
38,039
3,317
2,686
685
93
282
2,696
—
(705)
1,933
3,401
(306)
(24,178)
(13,113)
(227,078)
660
19,474
517
(3,085)
536
29,047
8,042
1,844
(4,292)
(102,583)
(2,211)
(180,546)
1,874
—
—
(132)
(181,015)
35,543
2,987
2,229
909
137
(216)
—
(2,160)
(1,068)
1,620
(3,346)
(130)
(8,499)
(3,370)
(188,060)
(1,471)
(106,696)
(18,397)
8,120
1,056
43,531
2,662
(1,625)
(350)
(196,293)
(6,674)
(134,738)
784
—
(1,294)
(301)
(142,223)
See accompanying notes to consolidated financial statements.
50
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Continued)
Cash flows from financing activities:
Proceeds from equity offering, net of offering costs . . . . . . . . . . . . . . . . $
Payments of debt discount and debt issuance costs . . . . . . . . . . . . . . . . .
Proceeds from exercises of options and ESPP . . . . . . . . . . . . . . . . . . . . .
Repurchase of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Payments on) proceeds from senior secured credit facility, net . . . . . . .
Proceeds from long-term debt financings . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Federal ESPC projects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds for energy assets from Federal ESPC . . . . . . . . . . . . . . . . . . . .
Investment fund call option exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from investments by redeemable non-controlling interests, net
Payments on long-term debt and financing leases . . . . . . . . . . . . . . . . . .
Cash flows from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease) increase in cash, cash equivalents, and restricted cash . . . .
Cash, cash equivalents, and restricted cash, beginning of year . . . . . . . . .
Cash, cash equivalents, and restricted cash, end of year . . . . . . . . . . . . . . . $
Supplemental disclosures of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-cash Federal ESPC settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accrued purchases of energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-cash portion of investment fund call option exercise . . . . . . . . . . . $
Conversion of revolver to term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended December 31,
2021
2020
2019
120,084 $
(2,919)
6,927
—
(8,073)
185,994
159,216
2,033
(1,000)
1,399
(98,200)
365,461
309
(11,783)
98,837
87,054 $
18,782 $
2,670 $
67,286 $
37,064 $
2,759 $
— $
— $
(5,234)
9,875
(6)
3,000
116,067
248,917
1,378
—
4,805
(73,633)
305,169
2
21,573
77,264
98,837 $
20,143 $
1,465 $
54,139 $
43,807 $
— $
— $
—
(1,666)
7,417
(144)
73,347
43,883
199,358
2,277
—
21,372
(28,425)
317,419
447
(20,650)
97,914
77,264
17,467
3,897
242,519
35,248
—
25,000
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated
balance sheets to the total of the same such amounts shown above:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . .
$
50,450 $
24,267
12,337
87,054 $
66,422 $
22,063
10,352
98,837 $
33,223
20,006
24,035
77,264
Year Ended December 31,
2021
2020
2019
See accompanying notes to consolidated financial statements.
51
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
1. DESCRIPTION OF BUSINESS
Ameresco, Inc. (including its subsidiaries, the “Company,” “Ameresco”, “we,” “our,” or “us”) was organized as a Delaware
corporation on April 25, 2000. We are a leading cleantech integrator and renewable energy asset developer, owner and operator.
Our comprehensive portfolio includes energy efficiency, infrastructure upgrades, asset sustainability and renewable energy
solutions delivered to clients throughout North America and the United Kingdom. We provide solutions, both services and
products, that enable our customers to reduce their energy consumption, lower their operating and maintenance costs and realize
environmental benefits. Our comprehensive set of solutions includes upgrades to a facility’s energy infrastructure and the
development, construction, and operation of distributed energy resources. We also sell certain solar photovoltaic (“solar PV”)
equipment worldwide and operate in the United States, Canada and Europe. We have successfully completed energy saving,
environmentally responsible projects with Federal, state and local governments, healthcare and educational institutions, housing
authorities, and commercial and industrial customers.
We are compensated through a variety of methods, including: 1) direct payments based on fee-for-services contracts (utilizing
lump-sum or cost-plus pricing methodologies), 2) the sale of energy from our energy assets, and 3) direct payment for solar PV
equipment and systems.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Ameresco, our subsidiaries, certain contracts in
which we have a controlling financial interest and four investment funds formed to fund the purchase and operation of solar
energy systems, which are consolidated with Ameresco as VIEs. We use a qualitative approach in assessing the consolidation
requirement for VIEs. This approach focuses on determining whether we have the power to direct the activities of the VIE that
most significantly affect the VIE’s economic performance and whether we have the obligation to absorb losses or the right to
receive benefits that could potentially be significant to the VIE. For all periods presented, we have determined that we are the
primary beneficiary in all of our operational VIEs. We evaluate our relationships with the VIEs on an ongoing basis to ensure that
we continue to be the primary beneficiary. All significant intercompany accounts and transactions have been eliminated. Gains
and losses from the translation of all foreign currency financial statements are recorded in accumulated other comprehensive loss,
net, within stockholders’ equity. We prepare our consolidated financial statements in conformity with the accounting principles
generally accepted in the United States of America (“GAAP”). Certain prior period amounts were reclassified or rounded to
conform to the presentation in the current period.
Reclassification
Certain prior period amounts were reclassified to conform to the presentation in the current period.
Use of Estimates
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Changes in circumstances could cause actual results to differ materially from
those estimates. The most significant estimates and assumptions used in these consolidated financial statements relate to
management’s estimates of final construction contract profit in accordance with accounting for long-term contracts, allowance for
credit losses, inventory reserves, realization of project development costs, leases, fair value of derivative financial instruments,
accounting for business acquisitions, stock-based awards, impairment of goodwill and long-lived assets, asset retirement
obligations (“AROs”), income taxes, self-insurance reserves, potential liability in conjunction with certain commitments and
contingencies, and recognition of the investors’ share of net assets of certain subsidiaries as redeemable non-controlling interests.
Self-insured Health Insurance
We are self-insured for employee health insurance and the maximum exposure in fiscal year 2021 under the plan was $150 per
covered participant, after which reinsurance takes effect. The liability for unpaid claims and associated expenses, including
incurred but not reported claims, is determined by management and reflected in our consolidated balance sheets in accrued
expenses and other current liabilities. The liability is calculated based on historical data, which considers both the frequency and
52
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
settlement amount of claims. Our estimated accrual for this liability could be different than our ultimate obligation if variables
such as the frequency or amount of future claims differ significantly from management’s assumptions.
Significant Risks and Uncertainties
The COVID-19 pandemic has continued to result in global supply chain disruptions and the resurgence of COVID-19 and its
variants has caused some governments to extend travel and other restrictions. On September 9, 2021, President Biden issued an
Executive Order requiring COVID-19 vaccinations for Federal employees. As a result, we implemented this mandate for our
employees and subcontractors who work in our Federal business segment.
We have considered the impact of COVID-19 on the assumptions and estimates used, which may change in response to this
evolving situation. Results of future operations and liquidity could be adversely impacted by a number of factors associated with
the COVID-19 pandemic including payments of outstanding receivable amounts beyond normal payment terms, supply chain
disruptions, potential loss of employees due to vaccine mandates, and uncertain demand. As of the date of issuance of these
consolidated financial statements, we cannot reasonably estimate the extent to which the COVID-19 pandemic may impact our
financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the pandemic on us is
highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time, even after
the pandemic subsides.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which
includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment
delay of employer payroll taxes during 2020 after the date of enactment. The payment of $2,266 of employer payroll taxes
otherwise due in 2020 was paid in December 2021 and the remaining $2,266 is due by December 31, 2022. The CARES Act
permitted net operating losses from the 2018, 2019, and 2020 tax years to be carried back to the previous five tax years (beginning
with the earliest year first).
Cash and Cash Equivalents
Cash and cash equivalents include cash on deposit, overnight repurchase agreements and amounts invested in highly liquid money
market funds. Cash equivalents consist of short-term investments with original maturities of three months or less. We maintain
our accounts with financial institutions and the balances in such accounts, at times, exceed federally insured limits. This credit
risk is divided among a number of financial institutions that management believes to be of high quality. The carrying amount of
cash and cash equivalents approximates its fair value measured using level 1 inputs per the fair value hierarchy as defined in Note
18.
Restricted Cash
Restricted cash consists of cash and cash equivalents held in escrow accounts in association with operations and maintenance
(“O&M”) reserve accounts, cash collateralized letters of credit, as well as cash required under term loans to be maintained in
reserve accounts until all obligations have been indefeasibly paid in full for energy assets. The carrying amount of the cash and
cash equivalents in these accounts approximates its fair value measured using level 1 inputs per the fair value hierarchy as defined
in Note 18. Restricted cash also includes funds held for clients, which represent assets that, based upon our intent, are restricted
for use solely for the purposes of satisfying the obligations to remit funds to third parties, primarily utility service providers,
relating to our enterprise energy management services.
Accounts Receivable
Accounts receivable are stated at the amount management expects to collect from outstanding balances. Our methodology to
estimate the allowance for credit losses includes quarterly assessments of historical bad debt write-off experience, current
economic and market conditions, management’s evaluation of outstanding accounts receivable, anticipated recoveries and our
forecasts. Due to the short-term nature of our receivables, the estimate of credit losses is primarily based on aged accounts
receivable balances and the financial condition of our customers. In addition, specific allowance amounts are established to record
the appropriate provision for customers that have a higher probability of default. Bad debts are written off against the allowance
when identified. As part of our assessment, we also considered the current and expected future economic and market conditions
due to the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted as of
December 31, 2021 and 2020.
53
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Changes in the allowance for credit losses was as follows:
Year Ended December 31,
2021
2020
2019
Allowance for credit loss, beginning of period . . . . . . . . . . . . . . . . . . . . . . $
2,266 $
2,260 $
Charges to (recoveries of) costs and expenses, net . . . . . . . . . . . . . . . . . . .
Account write-offs and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
187
(190)
282
(276)
Allowance for credit loss, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,263 $
2,266 $
2,765
(216)
(289)
2,260
Accounts Receivable Retainage
Accounts receivable retainage represents amounts due from customers, but where payments are withheld contractually until
certain construction milestones are met. Amounts retained typically range from 5% to 10% of the total invoice. We classify
retainages that are expected to be billed in the next twelve months as current assets. As of December 31, 2021 and 2020, no
amounts were determined to be uncollectible.
Inventory
Inventories, which consist primarily of PV solar panels, batteries and related accessories, are stated at the lower of cost (“first-in,
first-out” method) or net realizable value (determined as the estimated selling prices in the ordinary course of business, less
reasonably predictable costs of completion, disposal, and transportation). Provisions have been made to reduce the carrying value
of inventory to the net realizable value.
Federal ESPC Receivable
Federal ESPC receivable represents the amount to be paid by various federal government agencies for work performed and earned
by Ameresco under specific ESPCs. We assign certain of our rights to receive those payments to third-parties that provide
construction and permanent financing for such contracts. Upon completion and acceptance of the project by the government,
typically within 24 to 36 months of construction commencement, the assigned ESPC receivable from the government and
corresponding ESPC liability are eliminated from our consolidated financial statements.
Project Development Costs
We capitalize only those costs incurred in connection with the development of energy projects, primarily direct labor, interest
costs, outside contractor services, consulting fees, legal fees, and travel, if incurred after a point in time where the realization of
related revenue becomes probable. Project development costs incurred prior to the probable realization of revenue are expensed as
incurred. We classify project development efforts that are expected to proceed to construction activity in the next twelve months
as a current asset. We periodically review these balances and write off any amounts where the realization of the related revenue is
no longer probable. Project development costs of $2,217 and $1,543 were included in other long-term assets as of December 31,
2021 and 2020, respectively.
Property and Equipment
Property and equipment consist primarily of office and computer equipment, and is recorded at cost. Major additions and
improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance, and repairs
that do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation and amortization of property
and equipment are computed on a straight-line basis over the following estimated useful lives:
Asset Classification
Furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Computer equipment and software costs . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated Useful Life
Five years
Three to five years
Lesser of term of lease or five years
Five years
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Unlimited
54
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Gains or losses on disposal of property and equipment are reflected in selling, general, and administrative expenses in the
consolidated statements of income.
Energy Assets
Energy assets consist of costs of materials, direct labor, interest costs, outside contract services, deposits, and project development
costs incurred in connection with the construction of small-scale renewable energy plants that we own. These amounts are
capitalized and amortized to cost of revenues in our consolidated statements of income on a straight-line basis over the lives of the
related assets or the terms of the related contracts.
Routine maintenance costs are expensed as incurred in our consolidated statements of income to the extent that they do not extend
the life of the asset. Major maintenance, upgrades, and overhauls are required for certain components of our energy assets. In
these instances, the costs associated with these upgrades are capitalized and are depreciated over the shorter of the remaining life
of the asset or the period up to the next required major maintenance or overhaul.
Financing lease assets and accumulated depreciation of financing lease assets are included in energy assets. For additional
information see the Sale-Leaseback section below and Notes 7 and 8.
Capitalized Interest
We capitalize interest costs relating to construction financing during the period of construction on energy assets we own.
Capitalized interest is included in energy assets, net, in our consolidated balance sheets. Capitalized interest is amortized to cost of
revenues in our consolidated statements of income on a straight-line basis over the useful life of the associated energy asset.
Long-lived Asset Impairment
We evaluate our long-lived assets, including operating lease right-of-use assets, for impairment as events or changes in
circumstances indicate the carrying value of these assets may not be fully recoverable. Examples of such triggering events
applicable to our assets include a significant decrease in the market price of a long-lived asset or asset group or a current-period
operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates
continuing losses associated with the use of a long-lived asset or asset group.
We evaluate recoverability of long-lived assets to be held and used by estimating the undiscounted future cash flows before
interest associated with the expected uses and eventual disposition of those assets. When these comparisons indicate that the
carrying value of those assets is greater than the undiscounted cash flows, we recognize an impairment loss for the amount that
the carrying value exceeds the fair value of the asset group. Impairment losses are reflected in selling, general, and administrative
expenses in the consolidated statements of income.
Government Grants
From time to time, we have applied for and received cash grant awards from the U.S. Treasury Department (the “Treasury”) under
Section 1603 of the American Recovery and Reinvestment Act of 2009 (the “Act”). The Act authorized the Treasury to make
payments to eligible persons who place in service qualifying renewable energy projects. The grants are paid in lieu of investment
tax credits. All of the cash proceeds from the grants were used and recorded as a reduction in the cost basis of the applicable
energy assets. If we dispose of the property, or the property ceases to qualify as specified energy property, within five years from
the date the property is placed in service, then a prorated portion of the Section 1603 payment must be repaid. For tax purposes,
the Section 1603 payments are not included in federal and certain state taxable income and the basis of the property is reduced by
50% of the payment received.
We last received a Section 1603 grant during the year ended December 31, 2014. No further Section 1603 grant payments are
expected to be received as the program has expired and no repayments will be required.
We received grant proceeds from the Canadian government in connection with the construction of our energy assets in Canada of
$774 during the year ended December 31, 2021 and $1,874 during the year ended December 31, 2020. We have a contribution
agreement in place with Natural Resources Canada to fund 50% of the construction costs on a specific pilot project in Ontario.
Cash proceeds are recorded as a deferred grant liability. Following commercial operation, the grant is subject to repayment to the
government for a five-year period.
55
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Deferred grant income of $8,498 and $8,271 in the accompanying consolidated balance sheets as of December 31, 2021 and 2020,
respectively, represents the benefit of the basis difference to be amortized to depreciation expense over the life of the related
property.
Acquisitions
For acquisitions that meet the definition of a business combination, we apply the acquisition method of accounting in accordance
with Accounting Standards Codification (“ASC”) 805, Business Combinations, where assets acquired and liabilities assumed are
recorded at fair value at the date of each acquisition. Any excess of the consideration we transferred over the amounts recognized
for assets acquired and liabilities assumed is recorded as goodwill. Intangible assets, if identified, are also recorded.
Determining the fair value of certain assets and liabilities assumed is judgmental in nature, often involves the use of significant
estimates and assumptions, and is calculated using level 3 inputs per the fair value hierarchy as defined in Note 18. We continue
to evaluate acquisitions for a period not to exceed one year after the acquisition date of each transaction to determine whether any
additional adjustments are needed to the allocation of the purchase price. The results of the acquired companies are included in
our consolidated statements of income, comprehensive income, and cash flows from the date of the respective acquisition.
The consideration for our acquisitions often includes future payments that are contingent upon the occurrence of a particular
event. We record a contingent consideration obligation for such contingent consideration payments at fair value on the acquisition
date. We estimate the fair value of contingent consideration obligations through valuation models that incorporate probability
adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments. Each reporting
period we revalue the contingent consideration obligations associated with our acquisitions to fair value and record changes in the
fair value within the selling, general, and administrative expenses in our consolidated statements of income. Increases or
decreases in the fair value of the contingent consideration obligations can result from changes in assumed discount periods and
rates, changes in the assumed timing and amount of revenue and expense estimates and changes in assumed probability with
respect to the attainment of certain financial and operational metrics, among others. Significant judgment is employed in
determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and
economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of
contingent consideration recorded at each reporting period. Deferred consideration related to certain holdbacks and completion
payments are considered short-term in nature. These amounts are recorded at full value and are only revalued if one of those
underlying assumptions changes. See Note 4 for additional information about our acquisitions.
In accordance with ASC 805, Business Combinations, our solar project acquisitions do not constitute a business as the assets
acquired in each case could be considered a single asset or group of similar assets that made up substantially all of the fair market
value of the acquisitions. See Note 7 for information on solar projects we have purchased or are under definitive agreement to
purchase.
Goodwill
As noted in the Acquisitions section above, our goodwill is derived when we acquire another business. Goodwill is not amortized,
but the potential impairment of goodwill is assessed at least annually (December 31st) and on an interim basis whenever events or
changes in circumstances indicate that the carrying value may not be fully recoverable.
We estimate the fair value of our reporting units and compare it with the carrying value of the reporting unit, including goodwill.
If the fair value is greater than the carrying value of the reporting unit, no impairment is recorded. Fair value is determined using
both an income approach and a market approach. If the fair value is less than the carrying value, an impairment loss is recognized
for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount
of goodwill allocated to that reporting unit. The impairment charge would be recorded to earnings in the consolidated statements
of income. Judgment is required in determining whether an event has occurred that may impair the value of goodwill or
identifiable intangible assets.
Intangible Assets
Acquired intangible assets, other than goodwill, that are subject to amortization include customer contracts, customer
relationships, technology, trade names and non-compete agreements. The intangible assets are amortized over periods ranging
from one to fifteen years from their respective acquisition dates. We evaluate our intangible assets for impairment consistent with,
and part of, our long-lived asset evaluation, as discussed in Energy Assets above. See Notes 4 and 5 for additional disclosures.
56
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Leases
Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset during the reasonably certain lease term
and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities for
significant lease arrangements are recognized at commencement based on the present value of lease payments over the lease term.
We use our incremental borrowing rate, which is updated annually or when a significant event occurs that would indicate a
significant change in rates, to calculate the present value of lease payments. The operating lease ROU asset also includes any
lease payments related to initial direct cost and prepayments and excludes lease incentives. Lease expense is recognized on a
straight-line basis over the lease term which may include options to extend or terminate the lease when it is reasonably certain that
we will exercise that option. Our ROU assets are evaluated for impairment using the same method as described above under the
Long-lived Asset Impairment section.
We do not record ROU assets and corresponding lease liabilities for leases with an initial term of 12 months or less (“short-term
leases”) as we recognize lease expense for these leases as incurred over the lease term.
We elected the package of practical expedients and did not reassess lease classifications of existing contracts or leases at adoption
or the initial direct costs associated with existing leases. Accordingly, our sale-leaseback arrangements entered into as of
December 31, 2018 remain under the previous guidance. See the Sale-leasebacks section below and Note 8 for additional
information on these sale-leasebacks.
We have historical leases under ASC 840, Leases, which may have lease and non-lease components. Upon adoption of Topic 842,
we elected to continue to account for these historical leases as a single component, as permitted by Topic 842. As of January 1,
2019, as it relates to all prospective leases, we allocate consideration to lease and non-lease components based on pricing
information in the respective lease agreement, or, if this information is not available, we make a good faith estimate based on the
available pricing information at the time of the lease agreement. See Note 8 for additional information about our leases.
Other Assets
Other assets consist primarily of notes and contracts receivable due to Ameresco from various customers and also includes the fair
value of derivatives determined to be assets, the non-current portions of project development costs, accounts receivable
retainages, sale-leaseback deferred loss and deferred contract costs.
Asset Retirement Obligations
We recognize a liability for the fair value of required AROs on a discounted basis when these obligations are incurred and can be
reasonably estimated, which is typically at the time the assets are in development, installed or operating. Over time, the liabilities
increase due to the change in present value, and initial capitalized costs are depreciated over the useful life of the related assets.
Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement cost
incurred is recognized as an operating gain or loss in the consolidated statements of income. See Note 7 for additional disclosures
on our AROs.
Federal ESPC Liabilities
Federal ESPC liabilities, for both projects and energy assets, represent the advances received from third-parties under agreements
to finance certain ESPC projects with various federal government agencies. For projects related to the construction or installation
of certain energy savings equipment or facilities developed for the government customer, the ESPC receivable from the
government and corresponding ESPC liability is eliminated from our consolidated balance sheets upon completion and acceptance
of the project by the government, typically within 24 to 36 months of construction commencement. We remain the primary
obligor for financing received until recourse to us ceases for the ESPC receivables transferred to the investor upon final
acceptance of the work by the government customer.
For small-scale energy assets developed for a government customer that we own and operate, we remain the primary obligor for
financing received until the liability is eliminated from our consolidated balance sheets as contract payments assigned by the
customer are transferred to the investor upon final acceptance of the work by the government customer.
57
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Sale-leasebacks
We entered into sale-leaseback arrangements that provided for the sale of solar PV energy assets to third-party investors and the
simultaneous leaseback of the energy assets, which we then operate and maintain, recognizing revenue through the sale of the
electricity and solar renewable energy credits generated by these energy assets.
In sale-leaseback arrangements, we first determine whether the solar PV energy asset under the sale-leaseback arrangement is
“integral equipment”. A solar PV energy asset is determined to be integral equipment when the cost to remove the energy asset
from its existing location, including the shipping and reinstallation costs of the solar PV energy asset at the new site, and any
diminution in fair value, exceeds 10% of the fair value of the solar PV energy asset at the time of its original installation. When
the leaseback arrangement expires, we have the option to purchase the solar PV energy asset for the then fair market value or, in
certain circumstances, renew the lease for an extended term. We have determined that none of the solar PV energy assets sold to
date under the sale-leaseback program have been considered integral equipment as the cost to remove the energy asset from its
existing location would not exceed 10% of its original fair value.
For solar PV energy assets that are not considered integral equipment, we determine if the leaseback should be classified as a
financing lease or an operating lease. We determined that most of the solar PV energy assets sold to date under the sale-leaseback
program have been financing leases and we initially recorded a financing lease asset and financing lease obligation in our
consolidated balance sheets equal to the lower of the present value of our future minimum leaseback payments or the fair value of
the solar PV energy asset. We deferred any gain or loss, which represents the excess or shortfall of cash received from the
investor compared to the net book value of the asset, at the time of the sale. We record the long-term portion of any deferred gain
in other liabilities or deferred loss in other assets and the current portion in accrued expenses and other current liabilities or
prepaid expenses and other current assets in our consolidated balance sheets. The deferred amounts are amortized over the lease
term and are included in cost of revenues in our consolidated statements of income.
In accordance with our adoption of Topic 842, sale-leaseback transactions are accounted for as financing liabilities on a
prospective basis as we retain control of the underlying assets. As these transactions meet the criteria of a failed sale, the proceeds
received in prospective transactions, as of January 1, 2019, are accounted for as long-term financing liabilities with interest rates
based upon the underlying details of each specific transaction. See Notes 8 and 9 for details of our sale lease-back and financing
liability transactions.
Debt Issuance Costs
Debt issuance costs include external costs incurred to obtain financing. Debt issuance costs are amortized over the respective term
of the financing using the effective interest method, with the exception of our revolving credit facility and construction loans, as
discussed in Note 9, which are amortized on a straight-line basis over the term of the agreement. Debt issuance costs are presented
on the consolidated balance sheets along with unamortized debt discounts as a reduction to long-term debt and financing lease
liabilities.
Other Liabilities
Other liabilities consist primarily of the long-term portion of deferred revenue related to multi-year operation and maintenance
contracts which expire at various dates through 2047. Other liabilities also include the fair value of derivatives and the long-term
portions of sale-leaseback deferred gains. See Note 19 for additional derivative disclosures.
Revenue Recognition
We are a provider of comprehensive energy services, including energy efficiency, infrastructure upgrades, energy security and
resilience, asset sustainability, and renewable energy solutions for businesses and organizations. Our sustainability services
include capital and operational upgrades to a facility's energy infrastructure and the development, construction, ownership, and
operation of renewable energy plants. Our revenue is generated from the primary lines of business described below and is
recognized in accordance with Revenue from Contracts with Customers (Topic 606).
Projects
Our Projects service relates to energy efficiency projects, which include the design, engineering, and installation of an array of
innovative technologies and techniques to improve energy efficiency and control the operation of a building’s energy- and water-
consuming systems. Renewable energy products and services include, but are not limited to, the design and construction of a
58
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
central plant or cogeneration system providing power, heat and/or cooling to a building, or a small-scale plant that produces
electricity, gas, heat or cooling from renewable sources of energy.
We recognize revenue from the installation or construction of projects over time using the cost-based input method. We use the
total costs incurred on the project relative to the total expected costs to account for the satisfaction of the performance obligation.
When the estimate on a contract indicates a loss, or reduces the likelihood of recoverability of such costs, we record the entire
estimated loss in the period the loss becomes known. In addition, some contracts contain an element of variable consideration,
including liquidated damages and/or penalties, which requires payment to the customer in the event that construction timelines or
milestones are not met. We estimate the total consideration payable by the customer when the contracts contain variable
consideration provisions, based on the most likely amount anticipated to be recognized for transferring the promised goods or
services. As a result, we may constrain revenue to the extent that a significant reversal in the amount of cumulative revenue
recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Contracts are often modified for a change in scope or other requirements. Contract modifications exist when the modification
either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or
services that are not distinct from the existing performance obligations. The effect of a contract modification on the transaction
price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue
(either as an increase or decrease) on a cumulative catch-up basis.
O&M
After an energy efficiency or renewable energy project is completed, we often provide ongoing O&M services under a multi-year
contract. These services include operating, maintaining and repairing facility energy systems such as boilers, chillers, and building
controls, as well as central power and other small-scale plants. For larger projects, we frequently maintain staff on-site to perform
these services.
Maintenance revenue is recognized using the input method to recognize revenue. In most cases, O&M fees are fixed annual fees
and we record the revenue on a straight-line basis because the on-site O&M services are typically a distinct series of promises and
those services have the same pattern of transfer to the customer (i.e., evenly over time). Some O&M service contract fees are
based on time expended and in those cases, revenue is recorded based on the time expended in that month.
Energy Assets
Our service offerings include the sale of electricity, heat, cooling, processed biogas, and renewable biomethane fuel from the
portfolio of assets that we own and operate. We have constructed and are currently designing and constructing a wide range of
renewable energy plants using biogas, solar, biomass, other bio-derived fuels, wind, and hydro sources of energy. Most of our
renewable energy projects to date have involved the generation of electricity from solar PV and the sale of electricity, thermal,
renewable fuel, or biomethane using biogas as a feedstock. We purchase the biogas that otherwise would be combusted or vented,
process it, and either sell it or use it in our energy plants. We have also designed and built, own, operate and maintain plants that
take biogas generated in the anaerobic digesters of wastewater treatment plants and turn it into renewable natural gas that is either
used to generate energy on-site or that can be sold through the nation’s natural gas pipeline grid. We typically enter into a long-
term power purchase agreement (“PPA”) for the sale of the energy where we own and operate energy producing assets. Many of
our energy assets also produce environmental attributes, including renewable energy credits and RINs. In most cases, we sell
these attributes under separate agreements with parties other than the PPA customer.
In accordance with specific PPA contract terms, we recognize revenues from the sale and delivery of the energy output from
renewable energy plants over time as produced and delivered to the customer. Environmental attributes revenue is recognized at a
point in time when the environmental attributes are transferred to the customer in accordance with the transfer protocols of the
environmental attributes market that we operate in. In the cases where environmental attributes are sold to the same customer as
the energy output, we record revenue monthly for both the energy output and the environmental attribute output, as generated and
delivered to the customer. We have determined that certain PPAs contained a lease component in accordance with ASC 840,
Leases, prior to the adoption of Topic 842. We recognized $11,726, $9,143 and $8,189 of operating lease revenue under these
agreements during the years ended December 31, 2021, 2020, and 2019, respectively.
59
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Other
Our service and product offerings also include integrated-PV, engineering, consulting, and enterprise energy management
services, which we recognize over time as the services are provided. We recognize revenue from the sale of solar materials at a
point in time when we have transferred physical control of the asset to the customer upon shipment or delivery.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account.
Performance obligations are satisfied as of a point in time or over time and are supported by contracts with customers. For most of
our contracts, there are multiple promises of goods or services. Typically, we provide a significant service of integrating a
complex set of tasks and components such as design, engineering, construction management, and equipment procurement for a
project contract. The bundle of goods and services are provided to deliver one output for which the customer has contracted. In
these cases, we consider the bundle of goods and services to be a single performance obligation. We may also promise to provide
distinct goods or services within a contract, such as a project contract for installation of energy conservation measures and post-
installation O&M services. In these cases we separate the contract into more than one performance obligation and allocate the
total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the
promised goods or services underlying each performance obligation.
Contract Acquisition Costs
We are required to account for certain acquisition costs over the life of the contract, consisting primarily of commissions.
Commission costs are incurred commencing at contract signing. Commission costs are allocated across all performance
obligations and deferred and amortized consistent with the pattern of revenue recognition.
Contract Assets and Contract Liabilities
Contract assets represent our rights to consideration in exchange for services transferred to a customer that have not been billed as
of the reporting date. Our rights to consideration are generally unconditional at the time our performance obligations are satisfied.
Unbilled revenue, presented as costs and estimated earnings in excess of billings, represent amounts earned and billable that were
not invoiced at the end of the fiscal period.
When we receive consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or
services to the customer under the terms of a sales contract, we record deferred revenue, which represents a contract liability.
Deferred revenue, presented as billings in excess of cost and estimated earnings, typically results from billings in excess of costs
incurred and advance payments received on project contracts.
At the inception of a contract, we expect the period between when we satisfy our performance obligations, and when the customer
pays for the services, will be one year or less. As such, we elected to apply the practical expedient which allows us not to adjust
the promised amount of consideration for the effects of a significant financing component, when a financing component is
present.
Cost of Revenues
Cost of revenues includes the cost of labor, materials, equipment, subcontracting and outside engineering that are required for the
development and installation of projects, as well as preconstruction costs, sales incentives, associated travel, inventory
obsolescence charges, amortization of intangible assets related to customer contracts, and, if applicable, costs of procuring
financing. A majority of our contracts have fixed price terms, however, in some cases we negotiate protections, such as a cost-
plus structure, to mitigate the risk of rising prices for materials, services, and equipment.
Cost of revenues also includes the costs of maintaining and operating the small-scale renewable energy plants that we own,
including the cost of fuel (if any) and depreciation charges.
Income Taxes
We account for income taxes based on the liability method that requires the recognition of deferred income taxes based on
expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities.
We calculate deferred income taxes using the enacted tax rates in effect for the year in which the differences are expected to be
reflected in the tax return.
60
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax
positions. The evaluation of uncertain tax positions is based on factors that include changes in tax law, the measurement of tax
positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and
changes in facts or circumstances related to a tax position. We evaluate uncertain tax positions on a quarterly basis and adjust the
level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.
Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished through either
payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the
position meet the “more-likely-than-not” threshold or the liability becomes effectively settled through the examination process.
We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination
procedures, including all appeals and administrative reviews; we have no plans to appeal or litigate any aspect of the tax position;
and we believe that it is highly unlikely that the taxing authority would examine or re-examine the related tax position. We also
accrue for potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.
Under the guidance, we have recorded long term deferred tax assets and deferred tax liabilities based on the underlying
jurisdiction in the consolidated balance sheets as of December 31, 2021 and 2020, respectively. See Note 10 for additional
information on income taxes.
Foreign Currency
The local currency of our foreign operations is considered the functional currency of such operations. All assets and liabilities of
these foreign operations are translated into U.S. dollars at year-end exchange rates. Income and expense items are translated at
average exchange rates prevailing during the year. Translation adjustments are accumulated as a separate component of
stockholders’ equity. Foreign currency translation gains and losses are reported in the consolidated statements of comprehensive
income. Foreign currency transaction gains and losses are reported within other expenses, net in the consolidated statements of
income. See Note 17.
Fair Value Measurements
We follow the guidance related to fair value measurements for all of our non-financial assets and non-financial liabilities, except
for those recognized at fair value in the financial statements at least annually. These assets include goodwill and long-lived assets
measured at fair value for impairment assessments, and non-financial assets and liabilities initially measured at fair value in a
business combination.
Financial instruments consist of cash and cash equivalents, restricted cash, accounts and notes receivable, long-term contract
receivables, accounts payable, accrued expenses and other current liabilities, financing lease assets and liabilities, contingent
consideration, short- and long-term borrowings, make-whole provisions, interest rate swaps, and commodity swaps. Because of
their short maturity, the carrying amounts of cash and cash equivalents, restricted cash, accounts and notes receivable, accounts
payable, accrued expenses and other current liabilities, contingent consideration, and short-term borrowings approximate fair
value.
The carrying value of long-term variable-rate debt approximates fair value. As of December 31, 2021, the carrying value of our
long-term debt is less than its fair value of $442,429 by approximately $5,537. Fair value of our debt is based on quoted market
prices or on rates available to us for debt with similar terms and maturities, which are level two inputs of the fair value hierarchy,
as defined in Note 18.
Stock-based Compensation Expense
We measure and record stock-based compensation expense for all stock-based payment awards based on estimated fair value. We
may provide stock-based awards of shares of restricted common stock and grants of stock options to employees, directors, outside
consultants, and others through various equity plans including our Employee Stock Purchase Plan (the “ESPP”) for employees.
Stock-based compensation expense, net of actual forfeitures, is recognized based on the grant-date fair value on a straight-line
basis over the requisite service period of the awards. Certain option grants have performance conditions that must be achieved
prior to vesting and are expensed based on the expected achievement at each reporting period. We estimate the fair value of the
stock-based awards, including stock options, using the Black-Scholes option-pricing model. Determining the fair value of stock-
based awards requires the use of highly subjective assumptions, including the fair value of the common stock underlying the
award, the expected term of the award and expected stock price volatility.
61
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The assumptions used in determining the fair value of stock-based awards represent management’s estimates, which involve
inherent uncertainties and the application of management judgment. The risk-free interest rates are based on the U.S. Treasury
yield curve in effect at the time of grant, with maturities approximating the expected life of the stock options.
We have no history of paying dividends. Additionally, as of each of the grant dates, there was no expectation that we would pay
dividends over the expected life of the options. The expected life of the awards is estimated based upon the period stock option
holders will retain their vested options before exercising them. We use historical volatility as the expected volatility assumption
required in the Black-Scholes model.
We recognize compensation expense for only the portion of options that are expected to vest. If there are any modifications or
cancellations of the underlying invested securities or the terms of the stock option, it may be necessary to accelerate, increase or
cancel any remaining unamortized stock-based compensation expense.
Share Repurchase Program
In April 2016, our Board of Directors authorized the repurchase of up to $10,000 of our Class A common stock from time to time
on the open market or in privately negotiated transactions. Our Board of Directors authorized an increase in the share repurchase
to $15,000 of our Class A common stock in February 2017 and to $17,553 of our Class A common stock in August 2019. The
timing and amount of any shares repurchased will be determined by management based on its evaluation of market conditions and
other factors. Any repurchased shares will be available for use in connection with our stock plans and for other corporate
purposes. The repurchase program has and will be funded using our working capital and borrowings under our revolving line of
credit. We account for share repurchases using the cost method and the cost of the share repurchase is recorded entirely in
treasury stock, a contra equity account. During the year ended December 31, 2021, we repurchased no shares. During the year
ended December 31, 2020, we repurchased 0.5 shares of common stock in the amount of $6, net of fees of immaterial amounts,
and during the year ended December 31, 2019, we repurchased 10.3 shares of common stock in the amount of $144, net of fees of
immaterial amounts.
Derivative Financial Instruments
In the normal course of business, we utilize derivatives contracts as part of our risk management strategy to manage exposure to
market fluctuations in interest and commodity rates. These instruments are subject to various credit and market risks. Controls and
monitoring procedures for these instruments have been established and are routinely reevaluated. Credit risk represents the
potential loss that may occur because a party to a transaction fails to perform according to the terms of the contract. The measure
of credit exposure is the replacement cost of contracts with a positive fair value. We seek to manage credit risk by entering into
financial instrument transactions only through counterparties that we believe are creditworthy.
Market risk represents the potential loss due to the decrease in the value of a financial instrument caused primarily by changes in
interest rates and commodity prices. We seek to manage market risk by establishing and monitoring limits on the types and degree
of risk that may be undertaken. As a matter of policy, we do not use derivatives for speculative purposes and consider the use of
derivatives with all financing transactions to mitigate risk.
We account for our interest rate and commodity swaps as derivative financial instruments in accordance with ASC Topic 815,
Derivatives and Hedging. Under this guidance, derivatives are carried on our consolidated balance sheets at fair value which is
determined based on observable market data in combination with expected cash flows for each instrument. We account for our
make-whole provisions as embedded derivatives in accordance with related guidance. Under this guidance, the derivative is
bifurcated from its host contract and recorded on our consolidated balance sheets at fair value by either comparing it against the
rates of similar debt instruments under similar terms without a make-whole provision obtained from various highly rated third-
party pricing sources or evaluating the present value of the prepayment fee.
We recognize cash flows from derivative instruments not designated as hedges as operating activities in the consolidated
statements of cash flows. We recognize all changes in fair value on interest rate swaps designated as effective cash flow hedges in
our consolidated statements of comprehensive income. Changes in fair value on derivatives not designated as hedges are
recognized in our consolidated statements of income. See Notes 18 and 19 for additional information on our derivative
instruments.
62
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Earnings Per Share
Basic earnings per share is calculated using our weighted-average outstanding common shares, including vested restricted shares.
When the effects are not anti-dilutive, diluted earnings per share is calculated using the weighted-average outstanding common
shares; the dilutive effect of convertible preferred stock, under the “if converted” method; and the treasury stock method with
regard to warrants and stock options; all as determined under the treasury stock method. See Note 13 for our computation of
earnings per share.
Variable Interest Entities
Certain contracts are executed jointly through partnership and joint venture arrangements with unrelated third parties. The
arrangements are often formed for the single business purpose of executing a specific project and allow us to share risks and/or
secure specialty skills required for project execution.
We evaluate each partnership and joint venture at inception to determine if it qualifies as a VIE under ASC 810, Consolidation. A
variable interest entity is an entity used for business purposes that either (i) does not have equity investors with voting rights or
(ii) has equity investors who are not required to provide sufficient financial resources for the entity to support its activities without
additional subordinated financial support. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial
determination of whether the partnership or joint venture is a VIE.
We also evaluate whether we are the primary beneficiary of each VIE and consolidate the VIE if we have both (i) the power to
direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits
from, the entity that could potentially be significant to the VIE. We consider the contractual agreements that define the ownership
structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the
respective parties in determining whether we qualify as the primary beneficiary. We also consider all parties that have direct or
implicit variable interests when determining whether we are the primary beneficiary. As required by ASC 810, management's
assessment of whether we are the primary beneficiary of a VIE is continuously performed.
We generally aggregate the disclosures of our VIEs based on certain qualitative and quantitative factors including the purpose and
design of the underlying VIEs, the nature of the assets in the VIE, and the type of involvement we have with the VIE including
our role and type of interest held in the VIE. As of December 31, 2021, all the VIEs that make up our investment funds are similar
in purpose, design, and our involvement and, as such, are aggregated in one disclosure. See Notes 11 and 12 for additional
disclosures.
Equity Method Investments
We have entered into a number of joint ventures and using the methodology described above for VIEs, we determined that we are
not the primary beneficiary. We do not consolidate the operations of these joint ventures and treat the joint ventures as equity
method investments. See Note 11 for additional information on our equity method investments.
Redeemable Non-Controlling Interests
In September 2015, June 2017, June 2018, October 2018 and December 2019, we formed investment funds with different third-
party investors which granted the applicable investor ownership interests in the net assets of certain of our renewable energy
project subsidiaries. As of December 31, 2021, we have four such investment funds each with a different third-party investor.
We entered into these agreements in order to finance the costs of constructing energy assets which are under long-term customer
contracts. We have determined that these entities qualify as VIEs and that we are the primary beneficiary in the operational
partnerships for accounting purposes. Accordingly, we consolidate the assets and liabilities and operating results of the entities in
our consolidated financial statements. We recognize the investors’ share of the net assets of the subsidiaries as redeemable non-
controlling interests in our consolidated balance sheets.
We have determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements and that
the appropriate methodology for attributing income and loss to the redeemable non-controlling interests each period is a balance
sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts
of income and loss attributed to the redeemable non-controlling interests in the consolidated statements of income reflect changes
in the amounts the investors would hypothetically receive at each balance sheet date under the liquidation provisions of the
contractual agreements, assuming the net assets of this funding structure were liquidated at recorded amounts. The investors’ non-
controlling interest in the results of operations of this funding structure is determined as the difference in the non-controlling
63
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
interest’s claim under the HLBV method at the start and end of each reporting period, after taking into account any capital
transactions, such as contributions or distributions, between our subsidiaries and the investors.
We classified the non-controlling interests with redemption features that are not solely within our control outside of permanent
equity on our consolidated balance sheets. The redeemable non-controlling interests will be reported using the greater of their
carrying value at each reporting date as determined by the HLBV method or the estimated redemption values in each reporting
period. See Notes 11 and 12 for additional information.
Recent Accounting Pronouncements
Income Taxes
In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”)
2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain
exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among
reporting entities. ASU 2019-12 is effective for our fiscal year beginning after December 15, 2020. We adopted this guidance as
of January 1, 2021 and the adoption did not have an impact on our consolidated financial statements.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting. ASU 2020-04, which provides optional guidance for a limited period of time to ease the potential
burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Companies can apply the
ASU immediately, however, the guidance will only be available until December 31, 2022. We are currently evaluating the impact
that adopting this new accounting standard would have on our consolidated financial statements and related disclosures.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in ASU 2021-01
provide optional expedients to the current guidance on contract modification and hedge accounting from the expected market
transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to
applicable contract modifications through December 31, 2022. We are currently evaluating the impact that adopting this new
accounting standard would have on our consolidated financial statements and related disclosures.
Codification Improvements
In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this ASU represent changes to
clarify the ASC, correct unintended application of guidance, or make minor improvements to the ASC that are not expected to
have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is
effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early
adoption permitted. The amendments in this ASU should be applied retrospectively. We adopted this guidance as of January 1,
2021 and the adoption did not have an impact on our consolidated financial statements.
Business Combinations
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and
Contract Liabilities from Contracts with Customers, which requires entities to apply Topic 606 to recognize and measure contract
assets and contract liabilities in a business combination. ASU 2021-08 is effective for our fiscal year beginning after December
15, 2022, however, early adoption is permitted. We early adopted this new accounting standard as of January 1, 2021 and applied
it to our December 2021 acquisition discussed in Note 4. We elected the practical expedient related to contract modifications
made before the acquisition date and the adoption did not have a material impact on our consolidated financial statements.
Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about
Government Assistance, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires
annual disclosures about certain types of government assistance received. ASU 2021-10 is effective for our fiscal year beginning
after December 15, 2021. We are currently evaluating the impact that adopting this new accounting standard would have on our
consolidated financial statements.
64
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
Our reportable segments for the year ended December 31, 2021 were U.S. Regions, U.S. Federal, Canada, Non-Solar Distributed
Generation (“Non-Solar DG”), and All Other. On January 1, 2021, we changed the structure of our internal organization, and our
U.S. Regions segment now includes our U.S.-based enterprise energy management services previously included in our “All
Other” segment. As a result, previously reported amounts have been reclassified for comparative purposes.
The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December
31, 2021:
US Regions
U.S. Federal
Canada
Non-Solar DG
All Other
Total
Project revenue . . . . . . . . . . . . . . $
463,173 $
340,686 $
36,755 $
25,377 $
37,969 $
903,960
O&M revenue . . . . . . . . . . . . . . .
Energy assets . . . . . . . . . . . . . . . .
Integrated-PV . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
21,117
39,533
—
4,470
47,072
4,913
—
277
71
4,529
—
8,102
9,724
101,804
—
338
629
472
41,202
27,484
78,613
151,251
41,202
40,671
Total revenues . . . . . . . . . . . . . $
528,293 $
392,948 $
49,457 $
137,243 $
107,756 $ 1,215,697
The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December
31, 2020:
US Regions
U.S. Federal
Canada
Non-Solar DG
All Other
Total
Project revenue . . . . . . . . . . . . . . $
347,137 $
327,626 $
36,708 $
21,883 $
31,252 $
764,606
O&M revenue . . . . . . . . . . . . . . .
Energy assets . . . . . . . . . . . . . . .
Integrated-PV . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
18,209
34,403
—
4,403
45,423
4,358
—
475
169
4,075
—
6,845
8,261
75,150
—
1,123
300
211
39,112
25,152
72,362
118,197
39,112
37,998
Total revenues . . . . . . . . . . . . . $
404,152 $
377,882 $
47,797 $
106,417 $
96,027 $ 1,032,275
The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December
31, 2019:
US Regions
U.S. Federal
Canada
Non-Solar DG
All Other
Total
Project revenue . . . . . . . . . . . . . . $
321,973 $
240,656 $
27,995 $
9,221 $
11,219 $
611,064
O&M revenue . . . . . . . . . . . . . . .
Energy assets . . . . . . . . . . . . . . .
Integrated-PV . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . .
15,753
25,719
—
5,803
41,599
3,652
—
1,519
5
3,306
—
6,613
9,183
65,365
—
914
169
—
47,953
28,316
66,709
98,042
47,953
43,165
Total revenues . . . . . . . . . . . . . $
369,248 $
287,426 $
37,919 $
84,683 $
87,657 $
866,933
See Note 16 for our revenue disaggregated by geographical region.
The following table presents information related to our revenue recognized over time:
Percentage of revenue recognized over time . . . . . . . . . . . . . . . . . .
94 %
94 %
92 %
The remainder of our revenue is for products and services transferred at a point in time, at which point revenue is recognized.
Year Ended December 31,
2021
2020
2019
65
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Contract Balances
The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
161,970 $
Accounts receivable retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
43,067
125,010
30,189
December 31, 2021
December 31, 2020
Contract Assets
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
306,172
185,960
Contract Liabilities
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of cost and estimated earnings, non-current (1) . . . . . . . . . . . . . . . . . . . .
Total contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
35,918
6,481
42,399 $
33,984
6,631
40,615
(1) Performance obligations that are expected to be completed beyond the next twelve months and are included in other liabilities in the
consolidated balance sheets.
The increase in contract assets for the year ended December 31, 2021 was primarily due to revenue recognized of $708,384, offset
in part by billings of $618,041. The increase in contract liabilities was primarily driven by the receipt of advance payments from
customers, and related billings, exceeding recognition of revenue as performance obligations were satisfied. For the year ended
December 31, 2021, we recognized revenue of $207,746 and billed $181,284 to customers that had balances which were included
in contract liabilities at December 31, 2020. Changes in contract liabilities are also driven by reclassifications to or from contract
assets as a result of timing of customer payments, as well as acquired contract assets and liabilities.
The decrease in contract assets for the year ended December 31, 2020 was primarily due to billings of $644,583, offset in part by
revenue recognized of $618,839. The increase in contract liabilities was primarily driven by the receipt of advance payments from
customers, and related billings, exceeding recognition of revenue as performance obligations were satisfied. For the year ended
December 31, 2020, we recognized revenue of $132,622, and billed customers $140,275 to customers that had balances which
were included in contract liabilities at December 31, 2019.
Backlog
Our remaining performance obligations (“fully-contracted backlog”) represent the unrecognized revenue value of our contract
commitments. Our backlog may vary significantly each reporting period based on the timing of major new contract commitments
and the fully-contracted backlog may fluctuate with currency movements. In addition, our customers have the right, under some
circumstances, to terminate contracts or defer the timing of our services and their payments to us. At December 31, 2021, we had
fully-contracted backlog of $2,640,960 and approximately 52% of our fully-contracted backlog is anticipated to be recognized as
revenue in the next twelve months. The remaining performance obligations primarily relate to the energy efficiency and
renewable energy construction projects, including long-term O&M services related to these projects. The long-term services have
varying initial contract terms, up to 25 years.
We applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i)
contracts with an original expected term of one year or less or (ii) contracts for which we recognize revenue in proportion to the
amount we have the right to invoice for services performed.
Contract Acquisition Costs
As of December 31, 2021 and 2020, we had capitalized commission costs of $1,735, related to contracts that were not completed,
which were included in other assets in the accompanying consolidated balance sheets. For contracts that have a duration of less
than one year, we follow a practical expedient and expense these costs when incurred. During the years ended December 31, 2021
and 2020, the amortization of commission costs related to contracts was not material and have been included in the accompanying
consolidated statements of income.
66
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table presents information related to our project development costs recognized in the consolidated statements of
income on projects that converted to customer contracts:
Year Ended December 31,
2021
2020
2019
Project development costs recognized . . . . . . . . . . . . . . . . . . . . . . . . . . $
12,737 $
12,790 $
35,172
No impairment charges in connection with our commission costs or project development costs were recorded during the years
ended December 31, 2021 and 2020.
4. BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS
In November 2021, we entered into a stock purchase agreement to acquire all of the stock of Juice Technologies, Inc. (d/b/a Plug
Smart), an Ohio-based energy services company that specializes in the development and implementation of budget neutral capital
improvement projects including building controls and building automation systems. In December 2021, we completed the
acquisition of Plug Smart, which allows us to expand our existing pipeline and solution offerings in the smart buildings sector.
Total purchase consideration was $21,240, of which $17,692 has been paid to date. The consideration also includes a hold-back of
$750 and other accruals related to possible adjustments to net working capital at the acquisition date and future claims about
representations and warranties by the sellers, if any, and a potential contingent consideration earn-out that had a fair value of
$2,160 on the date of acquisition. The earn-out includes contingent consideration of up to $5,000 based upon meeting certain
future EBITDA targets over the next five years. Cash acquired was $2,771 and no debt was assumed. The transaction costs, pro-
forma effects of this acquisition on our operations, and contribution to revenue and net income for the year ended December 31,
2021 and periods presented in the consolidated statements of income were not material.
The estimated goodwill of $12,499 from the Plug Smart acquisition consists largely of expected benefits, including the combined
entities experience, technical problem-solving capabilities, and the acquired workforce. This goodwill is not deductible for
income tax purposes. The estimated fair value of tangible and intangible assets acquired and liabilities assumed are based on
management's estimates and assumptions that are preliminary and subject to final working capital adjustments as of the
acquisition date. Any measurement period adjustments made to working capital within one year from acquisition date, are
recorded as adjustments to goodwill. Any adjustments made beyond the measurement period will be included in our consolidated
statements of income.
In January 2019, we completed an acquisition of a Massachusetts based solar operations and maintenance firm for consideration
of $1,294. No debt was assumed. The pro-forma effect of this acquisition on our operations was not material.
The fair value of the contingent consideration from the 2018 acquisition of Chelsea Group Limited was $678 as of December 31,
2020, and remained consistent as of December 31, 2021.
See Note 18 for additional information on contingent consideration.
A summary of the cumulative consideration paid and the allocation of the purchase price of all of the acquisitions in each
respective year is presented in the table below. We did not complete any acquisitions during the year ended December 31, 2020.
67
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,771 $
2021
2019
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment and energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . .
3,370
1,663
1,499
—
12,499
6,354
488
(1,795)
(964)
(145)
(2,464)
(1,693)
(343)
—
232
—
2
315
337
500
—
(30)
(1)
—
(61)
—
—
Purchase price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Purchase price, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total fair value of consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
21,240 $
18,469 $
21,240 $
1,294
1,294
1,294
5. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill, Net
The changes in the goodwill balances by reportable segment are as follows:
U.S. Regions
U.S. Federal
Canada
Other
Total
Carrying Value of Goodwill
Balance, December 31, 2019 . . . . . . . . . . . $
26,705 $
3,981 $
3,369 $
24,359 $
58,414
Foreign currency translation . . . . . . . . . . .
Balance, December 31, 2020 . . . . . . . . . . .
Goodwill acquired during the year . . . . . .
Foreign currency translation . . . . . . . . . . .
—
26,705
12,499
—
—
3,981
—
—
72
3,441
—
13
228
24,587
—
(69)
300
58,714
12,499
(56)
Balance, December 31, 2021 . . . . . . . . . . . $
39,204 $
3,981 $
3,454 $
24,518 $
71,157
Accumulated Goodwill Impairment
Balance, December 31, 2020 . . . . . . . . . . . $
Balance, December 31, 2021 . . . . . . . . . . . $
— $
— $
— $
— $
(1,016) $
(1,016) $
— $
— $
(1,016)
(1,016)
Our annual goodwill impairment review was performed each year-end using a quantitative approach, and we determined that
there was no goodwill impairment for the years ended December 31, 2021 and 2020. We tested goodwill for impairment at the
reporting unit level utilizing the income approach which included a discounted cash flow method with a market approach. Based
on our assessment, all our reporting units with goodwill had estimated fair values that exceeded their carrying values by at least
61% as of December 31, 2021 and 67% as of December 31, 2020. During the course of our valuation analysis for the year ended
December 31, 2020, we determined that although the fair value of our U.S. Federal reporting unit exceeded the carrying amount
of this reporting unit, the carrying value of the reporting unit was negative.
68
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Intangible Assets, Net
Definite-lived intangible assets, net consisted of the following:
As of December 31,
2021
2020
Gross carrying amount
Customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,459 $
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-compete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total gross carrying amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated Amortization
Customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-compete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18,723
3,054
2,745
545
33,526
7,961
12,268
3,054
2,744
538
26,565
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,961 $
7,977
12,914
3,061
2,743
545
27,240
7,977
12,006
3,061
2,734
535
26,313
927
Customer contracts are amortized ratably over the period of the acquired customer contracts ranging in periods from
approximately one to eight years. All other intangible assets are amortized over periods ranging from approximately four to
fifteen years, as defined by the nature of the respective intangible asset.
Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives. We annually assess
whether a change in the useful life is necessary, or more frequently if events or circumstances warrant. No changes to useful lives
were made during the years ended December 31, 2021, 2020, and 2019.
The table below sets forth amortization expense:
Customer contracts . . . . . Cost of revenues
Location
Customer relationships . . Selling, general and administrative expenses
Non-compete agreements Selling, general and administrative expenses
Technology . . . . . . . . . . . Selling, general and administrative expenses
Tradenames . . . . . . . . . . . Selling, general and administrative expenses
Year Ended December 31,
2021
2020
2019
$
— $
59 $
310
—
8
3
604
—
19
3
Total amortization expense
$
321 $
685 $
90
806
1
12
—
909
69
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Amortization expense for our definite-lived intangible assets for the next five years to be included in selling, general, and
administrative expenses is as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
1,892
1,300
1,299
1,298
1,172
—
6,961
Estimated
Amortization
Expense
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
December 31,
2021
2020
Furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,008 $
Computer equipment and software costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,593
2,472
1,419
6,781
31,273
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(18,156)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,117 $
2,905
14,531
2,373
1,268
3,041
24,118
(15,136)
8,982
The following table sets forth our depreciation expense on property and equipment:
Location
Year Ended December 31,
2021
2020
2019
Selling, general & administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . $
3,143 $
3,317 $
2,987
7. ENERGY ASSETS, NET
Energy assets, net consisted of the following:
Energy assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,120,712 $
954,426
(264,181)
(225,048)
Energy assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
856,531 $
729,378
(1) Includes financing lease assets (see Note 8), capitalized interest and ARO assets (see tables below).
December 31,
2021
2020
70
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization:
Location
Cost of revenues (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2021
2020
2019
43,113 $
38,039 $
35,543
Year Ended December 31,
(1) Includes depreciation and amortization expense on financing lease assets. See Note 8.
The following table presents the interest costs relating to construction financing during the period of construction, which were
capitalized as part of energy assets, net:
Year Ended December 31,
2021
2020
2019
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,814 $
4,341 $
2,966
During September 2021, there was a triggering event which caused us to perform an impairment analysis on an energy asset group
within the Non-solar DG segment. This triggering event was related to a decision by the applicable state environmental agency to
discontinue an environmental permit. This action materially modified the obligation of the landfill owner to continue maintaining
the wellfield, therefore, we plan to decommission the impacted landfill gas plant. As a result, we recorded an impairment charge
of $1,901, which fully impaired this asset group.
During August 2020, we performed an engine overhaul on one of our energy assets, however, the engine consistently failed to
achieve emissions compliance and we considered the engine unsalvageable. As a result of this event, we performed an impairment
analysis on this energy asset group within the Non-Solar DG segment and recorded an impairment charge of $1,028, which fully
impaired this asset group.
The impairment charges are included in selling, general, and administrative expenses within the consolidated statements of
income for the years ended December 31, 2021 and 2020.
We assessed the impact that the current macroeconomic environment surrounding the COVID-19 pandemic has or is expected to
have on the business, and concluded that it was not a triggering event for impairment purposes and there was no indication of
impairment of long-lived assets, except as indicated above, for the years ended December 31, 2021 and 2020.
As of December 31, 2021 there were four ESPC asset projects which were included in energy assets and as of December 31,
2020, there were three. We control and operate the assets as well as obtain financing during the construction period of the assets.
We record a liability associated with these energy assets as we have an obligation to the customer for performance of the asset,
although, the customer is responsible for payments to the lender based on the energy asset’s production.
The liabilities recognized in association with these ESPC assets were as follows:
Location
December 31,
2021
2020
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
245 $
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,827
Total ESPC projects liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,072 $
229
10,794
11,023
71
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
In order to expand our portfolio of energy assets, we have acquired energy projects, which did not constitute businesses under the
guidance discussed in Note 2.
We acquired and closed on the following energy projects:
Number of projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase price (1)
Remaining deferred purchase consideration on previously closed projects (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . $
December 31,
2021
2020
1
3,461 $
303 $
1
1,251
1,446
(1) The 2020 purchase price included cash we paid in the amount of $1,031, issuance of a promissory note payable to the sellers of $204,
detailed further in Note 9, and $16 of rollover equity in connection with shares of one of our subsidiaries issued to the sellers.
(2) Included in accrued expenses and other current liabilities.
We also have definitive agreements to purchase an additional eight solar projects from a developer for a total purchase price of
$10,242, however, the closing on these sites is uncertain. No payments have been made to the developers of the projects.
Our ARO assets and ARO liabilities relate to the removal of equipment and pipelines at certain renewable gas projects and
obligations related to the decommissioning of certain solar facilities.
The following tables sets forth information related to our ARO assets and ARO liabilities:
ARO assets, net . . . . . . . . . . . . . . . . . . . . . . . Energy assets, net
$
1,939 $
1,468
Location
December 31,
2021
2020
ARO liabilities, current . . . . . . . . . . . . . . . . . Accrued expenses and other current liabilities $
6 $
ARO liabilities, non-current . . . . . . . . . . . . . . Other liabilities
2,342
$
2,348 $
Year Ended December 31,
2021
2020
2019
86
1,561
1,647
Depreciation expense of ARO assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accretion expense of ARO liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
113 $
123 $
78 $
93 $
45
44
8. LEASES
We enter into a variety of operating lease agreements through the normal course of business including certain administrative
offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2029. The
agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and
repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates
through fiscal 2050. The office and land leases make up a significant portion of our operating lease activity. Many of these leases
have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal
options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum
lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the
commercial operation date used to calculate the ROU asset and minimum lease payments.
A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We utilized each
lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on
changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be
recorded to the consolidated statements of income as part of our operating lease costs.
72
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with
comparable terms and a synthetic credit rating calculated by a third party. We elected to apply the discount rate using the
remaining lease term at the date of adoption.
We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile
trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases
or are not material.
Rent and related expenses were as follows:
Rent and related expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,740 $
8,891 $
8,179
We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-
leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.
The table below sets forth supplemental balance sheet information related to leases:
Year Ended December 31,
2021
2020
2019
December 31,
2021
2020
Operating Leases
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
41,982
Current portion of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average remaining lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing Leases (1)
Energy assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current portions of financing lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term financing lease liabilities, net of current portion, unamortized discount and debt
issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total financing lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,276
35,135
41,411
12 years
5.7 %
31,876
3,125
16,101
19,226
$
$
$
$
$
$
39,151
6,106
35,300
41,406
12 years
5.9 %
34,005
4,273
19,227
23,500
Weighted-average remaining lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15 years
12.08 %
16 years
11.94 %
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019 and failed sales under ASC 842.
73
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The costs related to our leases were as follows:
Year Ended December 31,
2021
2020
Operating Leases
Operating lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,780 $
7,970
Financing Leases
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total financing lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,129
2,541
4,670
2,129
3,019
5,148
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,450 $
13,118
Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2021
2020
Cash paid for amounts included in the measurement of operating lease liabilities . . . . . . . . . . $
Right-of-use assets obtained in exchange for new operating lease liabilities . . . . . . . . . . . . . . $
11,385 $
10,007 $
7,600
12,158
The table below sets forth our estimated minimum future lease obligations under our leases:
Operating Leases
Financing Leases
Year ended December 31,
2022
2023
2024
2025
2026
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,331 $
7,162
5,989
4,790
2,971
29,540
58,783 $
17,372
41,411 $
5,178
3,676
2,565
2,213
2,054
19,812
35,498
16,272
19,226
Sale-leasebacks
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous
guidance.
The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:
December 31,
2021
2020
Deferred loss, short-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred loss, long-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
1,571
Total deferred loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,686 $
Deferred gain, short-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred gain, long-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
345
4,775
5,120 $
115
1,686
1,801
345
5,120
5,465
74
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Net gains and (losses) from amortization expense in cost of revenues related to deferred gains and losses were $230, $228 and
$230 for the years ended December 31, 2021, 2020, and 2019, respectively.
During the year ended December 31, 2019, we amended an August 2018 agreement with an investor to extend the end date of the
agreement to November 24, 2019 and sold and leased back three energy assets for $13,700 in cash. The agreements have low
interest rates ranging from 0% to 0.28%, as a result of tax credits which were transferred to the counterparty.
In January 2020, we amended the August 2018 agreement to extend the end date of the agreement to November 24, 2020 and
increased the maximum funding amount up to $150,000. In December 2020, we amended the agreement to extend the end date of
the agreement to February 22, 2021 and in February 2021, we entered into a fourth amendment to extend this agreement to May
23, 2021. We entered into a fifth amendment dated March 22, 2021 to our August 2018 agreement and increased the maximum
funding amount from $150,000 up to $350,000 and extended the end date of the agreement from May 23, 2021 to March 31,
2022.
We sold and leased back ten energy assets for $83,138 under this facility during the year ended December 31, 2021. The lease
agreements executed in connection with the sale of these energy assets bear interest at a rate of 0% to 1.17%, as a result of tax
credits which were transferred to the counterparty. As of December 31, 2021, approximately $228,569 remained available under
this lending commitment. In January 2022, we sold and leased back one energy asset for $6,644 under this facility.
During the year ended December 31, 2020, we entered into a master lease agreement with an investor and sold and leased back
two energy assets for $4,342 in cash. On July 9, 2021, we entered into an amendment to our master lease agreement which
increased our maximum commitment from $4,500 to $23,559 and extended the end date of the agreement to December 31, 2021.
During the ended December 31, 2021, we sold and leased back one energy asset for $3,281. The lease agreements executed in
connection with the sale of these energy assets bear interest at a rate of 0%, as a result of tax credits which were transferred to the
counterparty, and have an expiration date of December 30, 2030, with an option to extend to December 30, 2040.
All sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds
received from the transactions were recorded as long-term financing facilities. See Note 9 for additional information on these
financing facilities.
75
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
9. DEBT AND FINANCING LEASE LIABILITIES
Long-term debt was comprised of the following:
Senior secured credit facility, 2.66%, due June 2024 (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
97,813 $
110,761
As of December 31,
2021
2020
Construction revolver, 1.74%, due March 2022 (2)
Construction revolver, 1.99%, due July 2022 (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,935 $
7,763
Subtotal non-recourse construction revolvers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,698 $
Term loans, due 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Variable rate term loan, 2.49%, due June 2024 (2) (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 6.11% due June 2028 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 2.49%, due May 2025 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 2.99%, due March 2023 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 4.95%, due July 2031 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 5.00%, due March 2028 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 4.50%, due April 2027 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 5.61%, due February 2034 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 2.69%, due December 2027 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 6.24%, due March 2026 (2) (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loan, 5.15%, due December 2038 (2) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 2.29%, due June 2033 (2) (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 2.61%, due October 2029 (2) (5)
Fixed rate note, 5.00%, due April 2040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rate note, 3.58%, due December 2027 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rate note, 4.92%, due June 2045 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed rate note, 3.25%, due March 2046 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable rate term loan, 3.63%, due July 2030 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
4,264
2,933
38,844
14,442
3,157
2,688
10,302
2,423
9,238
38,753
25,465
7,657
7,762
224
3,072
3,776
39,474
3,662
15,177
11,581
26,758
12,142
6,081
3,339
40,750
14,867
3,527
3,118
18,403
2,589
10,541
34,451
27,695
8,348
8,503
222
3,548
—
—
—
Subtotal non-recourse term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
218,136 $
198,124
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term financing facility, 0.28%, due July 2039 (3) (6)
Long-term financing facility, —%, due November 2039 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due July 2040 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due December 2040 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due December 2040 (4) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, 1.17%, due March 2041 (3) (6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due March 2041 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due July 2041 (4) (6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, 0.03%, due September 2041 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, 0.41%, due October 2041 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, 0.23%, due November 2041 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, —%, due December 2041 (3) (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term financing facility, 0.13%, due December 2041 (3) (6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,462 $
6,361
1,050
14,130
2,810
850
18,378
2,151
3,382
2,822
1,880
43,712
3,627
3,625
6,675
1,107
18,287
2,924
—
—
—
—
—
—
—
—
Subtotal non-recourse long-term financing facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
104,615 $
32,618
Continued on next page
76
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Financing leases (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
19,226 $
23,500
As of December 31,
2021
2020
Total debt and financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
471,488 $
391,761
Less: current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: unamortized discount and debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78,934
15,370
69,362
10,725
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt
issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
377,184 $
311,674
(1) Facility has interest at varying rates monthly in arrears.
(2) These agreements have acceleration causes that, in the event of default, as defined, the payee has the option to accelerate payment terms
and make the remaining principal and the required interest balance due according to the agreement.
(3) Facility is payable in semi-annual installments.
(4) Facility is payable in quarterly installments.
(5) Facility is payable in monthly installments.
(6) These agreements are sale-leaseback arrangements and are accounted for as failed sales under the guidance and are classified as
financing liabilities. See Note 8.
(7) Financing leases are sale-leaseback arrangements under previous guidance and do not include approximately $16,272 in future interest
payments as of December 31, 2021 and $18,791 as of December 31, 2020. See Note 8.
The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2021:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
78,934
49,931
116,071
51,961
34,213
140,378
471,488
Senior Secured Credit Facility - Revolver and Term Loan
On June 28, 2019, we entered into a fourth amended and restated bank credit facility with three banks. The new credit facility
replaced and extended our existing credit facility, which was scheduled to expire on June 30, 2020. The amended term loan
increased amounts outstanding to $65,000 and contains quarterly repayment provisions discussed further below. The amended
revolving credit and term loan facility mature on June 28, 2024, when all amounts will be due and payable in full. The June 28,
2019 amendment increased the total commitment under the amended credit facility (revolving credit, term loan and swing line)
from $125,000 to $185,000.
In March 2020, we amended this credit facility which increased the total funded debt to EBITDA covenant ratio to a maximum of
3.75 for the year ended December 31, 2020, which reverted back to 3.25 on March 31, 2021. The amendment also increased the
Eurocurrency rate floor from 0% to 1%.
On June 22, 2021, we entered into the second amendment to the fourth amended and restated bank credit facility we have
syndicated with three banks, which increased the amount of the revolving commitment by the lenders under the credit facility by
$65,000 and included the following amendments:
•
•
•
increased the aggregate amount of the revolving commitments from $115,000 to $180,000 through the existing June 28,
2024 maturity date,
increased the total funded debt to EBITDA covenant ratio from a maximum of 3.25 to 3.50, and
decreased the Eurocurrency rate floor from 1% to 0%.
We accounted for this amendment as a modification and at closing we incurred $78 in lender fees which were reflected as debt
discount. The unamortized debt discount and issuance costs are being amortized over the remaining term of the amended
agreement.
77
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The revolving credit facility may be increased up to an additional $100,000 in increments of at least $25,000 at the approval of
lenders, subject to certain conditions. Up to $20,000 of the revolving credit facility may be borrowed in Canadian dollars, Euros,
or pounds sterling. We are the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by
certain of our direct and indirect wholly owned domestic subsidiaries and are secured by a pledge of all of Ameresco’s and such
subsidiary guarantors’ assets, other than the equity interests of certain subsidiaries and assets held in non-core subsidiaries (as
defined in the agreement).
The table below sets forth amounts outstanding under the credit facility, net of unamortized debt discounts and debt issuance
costs:
Rate as of
December 31,
2021
As of December 31,
2021
2020
Term loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . .
Total senior secured credit facility outstanding (1)
1.95 % $
3.50 % $
$
52,720 $
44,681 $
97,401 $
57,574
52,696
110,270
(1) Net of unamortized debt discount and debt issuance costs of $412 in 2021 and $491 in 2020.
As of December 31, 2021, funds of $121,176 were available for borrowing under the revolving credit facility and we had $13,824
in letters of credit outstanding. We expect to use the remaining funds available under the credit facility for general corporate
purposes, including permitted acquisitions, refinancing of existing indebtedness and working capital.
The interest rate for borrowings under the credit facility is based on, at our option, either (1) a base rate equal to a margin of
0.50% or 0.25%, depending on our ratio of total funded debt to EBITDA (as defined in the agreement), over the highest of (a) the
federal funds effective rate, plus 0.50%, (b) Bank of America’s prime rate and (c) a rate based on the London interbank deposit
rate (“LIBOR”) plus 1.50%, or (2) the one-, two- three- or six-month LIBOR plus a margin of 2.00% or 1.75%, depending on our
ratio of total funded debt to EBITDA, as defined. A commitment fee of 0.375% is payable quarterly on the undrawn portion of the
revolving credit facility.
The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of
$1,219, with the balance due at maturity. All borrowings may be paid before maturity in whole or in part at our option without
penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.
The credit facility limits Ameresco’s and our subsidiaries’ ability to, among other things: incur additional indebtedness; incur
liens or guarantee obligations; merge, liquidate or dispose of assets; make acquisitions or other investments; enter into hedging
agreements; pay dividends and make other distributions and engage in transactions with affiliates, except in the ordinary course of
business on an arms’ length basis.
Under the credit facility, Ameresco and our subsidiaries may not invest cash or property in, or loan to, our non-core subsidiaries
in aggregate amounts exceeding 49% of our consolidated stockholders’ equity. In addition, we and our core subsidiaries must
maintain a ratio of total funded debt to EBITDA as noted above, and a debt service coverage ratio (as defined in the agreement) of
at least 1.5 to 1.0.
Any failure to comply with the financial or other covenants of the credit facility would not only prevent us from being able to
borrow additional funds, but would constitute a default, permitting the lenders to, among other things, accelerate the amounts
outstanding, including all accrued interest and unpaid fees, under the credit facility, to terminate the credit facility, and enforce
liens against the collateral.
The credit facility also includes several other customary events of default, including a change in control of Ameresco, permitting
the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.
For purposes of our senior secured facility EBITDA, as defined, excludes the results of certain renewable energy projects that we
own and for which financing from others remains outstanding; total funded debt, as defined, includes amounts outstanding under
both the term loan and revolver portions of the senior secured credit facility plus other indebtedness, but excludes non-recourse
indebtedness of project company subsidiaries; and debt service, as defined, includes principal and interest payments on the
indebtedness included in total funded debt other than principal payments on the revolver portion of the facility.
78
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Variable Rate Term Loan, 6.24%, due March 2026
In October 2020, we entered into an amended and restated credit agreement with a bank primarily to increase the commitments
under the existing credit agreement and add projects eligible for financing. The new credit agreement increased the commitment
from $28,500 to $35,000 and included an option for the lender to increase the commitment by up to an additional $15,000 for a
total not to exceed $50,000.
In February 2021, the lender increased its commitment by $15,000 and we received net proceeds of $14,848. The quarterly
payments consist of $1,250 in principal plus an additional principal prepayment based on project cash flows in addition to interest
to be paid through the earlier of maturity, March 2026, or when the principal balance is paid in full. We accounted for this
amendment as a modification and at closing we incurred $150 in lender fees which were reflected as debt discount and $2 in
third-party fees which were expensed in selling, general and administrative expenses during the twelve months ended December
31, 2021. The unamortized debt discount and issuance costs from the October 2020 loan modification are being amortized over
the remaining term of the amended agreement. The balance of the loan outstanding as of December 31, 2021 was $38,016, net of
unamortized debt discount and issuance costs.
Construction Revolvers
Construction Revolver, 1.74%, due March 2022
In June 2020, we entered into a revolving credit agreement with a bank, with an aggregate borrowing capacity of $100,000 for use
in financing the construction cost of our owned projects. In March 2021, we entered into a third amendment to this agreement to
extend this facility from May 2021 to March 2022. All remaining unpaid amounts outstanding under the facility are due at that
time.
The balance of this construction revolver as of December 31, 2021 was $23,792, net of unamortized debt issuance costs and funds
of $76,065 were available for borrowing under this facility.
Construction Revolver, 1.99%, due July 2022
The balance of our July 2020 construction revolver as of December 31, 2021 was $7,638, net of unamortized debt discount and
issuance costs and we have funds of $22,237 available for borrowing under this construction revolver.
Fixed Rate Note, 3.25%, due March 2046 and Variable Rate Term Loan, 3.63%, due July 2030
On July 27, 2021, we entered into a $44,748 non-recourse debt agreement with a group of lenders. The financing facility consists
of gross proceeds of $40,683 in senior secured first lien term notes due March 2046 (“Senior Notes”), gross proceeds of $4,065 in
floating rate senior secured second lien term notes due July 2030 (“Second Lien Notes”), and a shelf facility of up to $60,000
available until July 2024. There were no notes issued under the shelf facility at December 31, 2021 and the lenders, in their sole
discretion, have the right to approve or deny our funding requests.
The Senior Notes bear interest at a fixed rate of 3.25% per annum, are payable quarterly commencing September 30, 2021, and
require that the project’s debt service coverage ratio for both the historical 12-month and projected 12-month periods at each
payment date equal or exceed 1.2 to 1.0.
The Second Lien Notes bear a floating rate equal to the applicable LIBOR rate plus 3.50% from July 27, 2021 to July 26, 2025
and on July 27, 2025 the rate increases to the applicable LIBOR rate plus 3.75%. The Second Lien Notes are payable on each
quarterly payment date commencing September 30, 2021, as specified in the debt agreement.
The agreement also requires us to maintain six months of scheduled payments of principal and interest as the minimum debt
service reserve and to make additional principal prepayments based on project cash flows and certain other conditions through the
earlier of maturity or when the principal balance is paid in full.
At closing, we incurred $957 in lender fees and debt issuance costs. In connection with the Senior Notes, we recorded a derivative
instrument for make-whole provisions with an initial value of $5,164, which was recorded as a debt discount. See Note 19 for
additional information. The aggregate balance of the Senior Notes and Second Lien Notes as of December 31, 2021 was $37,263,
net of unamortized debt discount and issuance costs.
79
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
10. INCOME TAXES
The following table sets forth components of income before income taxes:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
74,256 $
52,595 $
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,888
3,833
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
78,144 $
56,428 $
34,700
1,853
36,553
The components of the (benefit) provision for income taxes were as follows:
Year Ended December 31,
2021
2020
2019
Year Ended December 31,
2021
2020
2019
Current income tax provision (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(779) $
(4,566) $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,779
844
1,844
Deferred income tax (benefit) provision:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(8,025)
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,561
573
(3,891)
(2,047) $
1,522
298
(2,746)
3,655
2,207
(3,610)
2,252
(494) $
109
474
(1)
582
(4,794)
202
262
(4,330)
(3,748)
Our deferred tax assets and liabilities result primarily from temporary differences between financial reporting and tax recognition
of depreciation, energy efficiency and net operating loss carryforwards.
80
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Deferred tax assets and liabilities consisted of the following:
December 31,
2021
2020
Deferred income tax assets:
Compensation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,570 $
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,150
27,806
28,807
1,928
59,618
2,181
Gross deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127,060
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,039)
Total deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
123,021 $
2,485
3,861
15,583
14,435
2,587
42,084
1,270
82,305
(3,877)
78,428
Deferred income tax liabilities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(112,896) $
(66,694)
Deferred effect of derivative liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian capital cost, allowance and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside basis difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,541)
(984)
(718)
(7,050)
Total deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(123,189)
Deferred income tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(168) $
(284)
(2,195)
(732)
(10,886)
(80,791)
(2,363)
Our valuation allowance related to the following items:
December 31,
2021
2020
Interest rate swaps (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign net operating loss (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State net operating loss at one of our subsidiaries (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50 $
3,724
265
Total valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,039 $
106
3,479
292
3,877
(1) The deferred tax asset represents a future capital loss which can only be recognized for income tax purposes to the extent of capital gain
income. Although we anticipate sufficient future taxable income, it is more likely than not that it will not be the appropriate character to
allow for the recognition of the future capital loss.
(2) It is more likely than not that we will not generate sufficient taxable income at the foreign subsidiary level to utilize the net operating loss.
(3) It is more likely than not that we will not generate sufficient taxable income at the subsidiary level to utilize the net operating loss.
81
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
As of December 31, 2021, we had the following tax loss and credit carryforwards to offset taxable income in prior and future
years:
Amount
Expiration Period
Federal net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . .
Greece net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spain net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98,490
40,230
22,603
1,986
108
2,447
Total tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
165,864
Indefinite
Various
2028 through 2041
Indefinite
2026
Indefinite
Federal Energy Investment and Production tax credit carryforward . . . . . . . $
59,618
2030 through 2041
The provision for income taxes is based on the various rates set by federal and local authorities and is affected by permanent and
temporary differences between financial accounting and tax reporting requirements.
The principal reasons for the difference between the statutory rate and the estimated annual effective rate for 2021 were the
effects of investment tax credits we are entitled from solar plants which have been placed into service during 2021, the tax
deductions related to the Section 179D Commercial Buildings Energy-Efficiency deduction, the benefit of disqualifying
dispositions on certain employee stock options and favorable tax basis adjustments on certain partnership flip transactions.
The principal reasons for the difference between the statutory rate and the estimated annual effective rate for 2020 were the
effects of investment tax credits we are entitled from solar plants which have been placed into service during 2020, the tax
deductions related to the Section 179D deduction, the release of the previously established valuation allowance on the Canadian
tax assets and the benefit of employee stock option compensation. We additionally realized tax rate benefits associated with net
operating loss carrybacks made possible by the passing of the CARES Act on March 27, 2020 and tax basis adjustments on
certain partnership flip transactions.
The investment tax credits and production tax credits we may be entitled to fluctuate from year to year based on the cost of the
renewable energy plants we place in service and production levels at facilities we own in that year.
On December 27, 2020 the President signed the Consolidated Appropriations Act, 2021 H.R. 133, which among other things
made the Section 179D Energy Efficient Commercial Building Deduction permanent. The Section had previously been extended
for years up to December 31, 2020. That Act also made changes to the way in which the deduction is calculated including adding
an inflation adjustment and an update of the American Society of Heating, Refrigerating and Air-Conditioning Engineers
Standard by which energy improvements are measured.
82
2019
36,553
7,676
2,140
(53)
150
(925)
(169)
(12,699)
56
1,101
205
(1,230)
(3,748)
21.0 %
5.9 %
(0.1) %
0.4 %
(2.5) %
(0.5) %
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following is a reconciliation of the effective tax rates:
Income before benefit for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . $
Federal statutory tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . .
Net state impact of deferred rate change . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of reserve for uncertain tax positions . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy efficiency preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign items and rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
$
$
$
$
2021
78,144
16,410
2,648
(502)
2,572
286
(4,618)
(17,639)
4
(2,546)
337
1,001
2020
56,428
11,850
2,257
(29)
987
(124)
(2,922)
(8,595)
160
(767)
(4,308)
997
Total income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(2,047)
$
(494)
$
Effective tax rate:
Federal statutory rate expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . .
Net state impact of deferred rate change . . . . . . . . . . . . . . . . . . . . . . . . .
Nondeductible expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of reserve for uncertain tax positions . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy efficiency preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign items and rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.0 %
3.4 %
(0.6) %
3.3 %
0.4 %
(5.9) %
(23.2) %
— %
(3.3) %
0.4 %
1.9 %
(2.6) %
21.0 %
4.0 %
(0.1) %
1.7 %
(0.2) %
(5.2) %
(15.2) %
(34.7) %
0.3 %
(1.4) %
(7.6) %
1.8 %
(0.9) %
0.2 %
3.0 %
0.6 %
(3.6) %
(10.3) %
The following table provides a reconciliation of gross unrecognized tax benefits which are included in other liabilities within the
consolidated balance sheets:
Year Ended December 31,
2021
2020
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
600 $
Additions for current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions for prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
300
—
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
900 $
400
100
100
600
The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future
periods was $440 as of December 31, 2021 and $190 as of December 31, 2020 (both net of the federal benefit on state amounts).
We do not accrue U.S. tax for foreign earnings that we consider to be permanently reinvested outside the United States.
Consequently, we have not provided any withholding tax on the unremitted earnings of our foreign subsidiaries. As of
December 31, 2021 and 2020, we estimated that there were no earnings for which repatriation tax has not been provided.
83
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The tax years 2018 through 2021 remain open to examination by major taxing jurisdictions. We recognize interest and penalties
related to uncertain tax positions as components of our income tax provision (benefit) in our consolidated statements of income.
We increased income tax expense for these items by $14 in 2021, $0 in 2020, and $19 in 2019.
11. VARIABLE INTEREST ENTITIES AND EQUITY METHOD INVESTMENTS
Investment Funds
Over a period of five years (2015 through 2019), we formed five investment funds with third party investors which granted the
applicable investor ownership interests in the net assets of certain of our renewable energy project subsidiaries. As of
December 31, 2021, we had four such investment funds each with a different third-party investor.
We consolidate the investment funds, and all inter-company balances and transactions between Ameresco and the investment
funds are eliminated in our consolidated financial statements. We determined that the investment funds meet the definition of a
VIE. We use a qualitative approach in assessing the consolidation requirement for VIEs that focuses on determining whether we
have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether we
have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
We have considered the provisions within the contractual arrangements that grant us power to manage and make decisions that
affect the operation of these VIEs, including determining the solar energy systems and associated long term customer contracts to
be sold or contributed to the VIEs, and installation, operation, and maintenance of the solar energy systems. We considered the
rights granted to the other investors under the contractual arrangements to be more protective in nature rather than participating
rights. As such, we determined that we are the primary beneficiary of the VIEs for all periods presented. We evaluate our
relationships with VIEs on an ongoing basis to ensure that we continue to be the primary beneficiary.
Under the related agreements, cash distributions of income and other receipts by the funds, net of agreed-upon expenses and
estimated expenses, tax benefits and detriments of income and loss, and tax benefits of tax credits, are assigned to the funds’
investor and our subsidiaries as specified in contractual arrangements. Certain of these arrangements have call and put options to
acquire the investor’s equity interest as specified in the contractual agreements. See Note 12 for additional information about
these investment funds and the call and put options.
84
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The table below presents a summary of amounts related to our investment funds reflected in Note 1 on our consolidated balance
sheets:
As of December 31,
2021
2020
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,915 $
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total VIE current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash, non-current portion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
822
656
1,421
151
7,965
1,266
108,498
6,271
418
36
5,828
3,185
834
968
120
10,935
1,266
143,133
6,439
331
94
Total VIE assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
124,454 $
162,198
Current portions of long-term debt and financing lease liabilities . . . . . . . . . . . . . . . . . . . . . . . $
2,210 $
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portions of operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total VIE current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt and financing lease liabilities, net of current portion, unamortized discount
and debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term operating lease liabilities, net of current portion . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
47
643
142
3,042
20,952
6,558
573
Total VIE liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
31,125 $
2,230
311
1,092
125
3,758
22,822
6,220
535
33,335
Other Variable Interest Entities
We execute certain contracts jointly with third parties through various forms of joint ventures. Although the joint ventures own
and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture
partners, or by other subcontractors under subcontracting agreements with the joint ventures. Many of these joint ventures are
formed for a specific project. The assets of these joint ventures generally consist almost entirely of cash and land, and the
liabilities of our joint ventures generally consist almost entirely of amounts due to the joint venture partners.
We follow guidance on the consolidation of VIEs that requires companies to utilize a qualitative approach to determine whether it
is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the
factors that indicate a party has the power to direct the activities that most significantly impact the joint ventures economic
performance, including powers granted to the joint ventures program manager, powers contained in the joint venture governing
board and, to a certain extent, a company's economic interest in the joint venture. We analyze our joint ventures and classify them
as either:
•
•
a VIE that must be consolidated because we are the primary beneficiary or the joint venture is not a VIE and we hold the
majority voting interest with no significant participative rights available to the other partners, or
a VIE that does not require consolidation and is treated as an equity method investment because we are not the primary
beneficiary or the joint venture is not a VIE and we do not hold the majority voting interest.
Many of our joint ventures are deemed to be VIEs because they lack sufficient equity to finance the activities of the joint venture.
In January 2019, we entered into a joint venture with one other party to co-own an entity whose purpose is owning and leasing a
parcel of land and attached structures to third-party entities. The joint venture has no employees and is controlled by the board of
directors made up of representatives from both companies. Prior to January 2019, we had determined we were the primary
85
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
beneficiary of the VIE and fully consolidated the entity. Upon the formation of the joint venture, based on the assessment of
considerations referenced above, we determined we were no longer the primary beneficiary and deconsolidated the VIE and
recorded our investment in the joint venture as an equity method investment. With the deconsolidation of the VIE and the
recognition of the equity method investment we recognized a gain of $2,160 in operating income and recorded an equity method
investment of $1,361 in other assets during the year ended December 31, 2019. In addition, we loaned the joint venture $1,506
and made an initial contribution at its formation in exchange for 50% of the shares in the joint venture. During the year ended
December 31, 2021, we sold this equity investment for cash proceeds of $1,672 and recognized a gain of $571, which is included
in selling, general and administrative expense in our consolidated statements of income.
Equity Method Investments
Unconsolidated joint ventures are accounted for under the equity method. For these joint ventures, our investment balances are
included in other assets on the consolidated balance sheets and our pro rata share of net income or loss is included in operating
income.
During the year ended December 31, 2021, we entered into three joint ventures and invested $9,000 in one of them. No other
material investments were made. Activity under these joint ventures as of December 31, 2021 was not material.
The following table provides information about our equity method investments in joint ventures:
Equity method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Expense recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
12. REDEEMABLE NON-CONTROLLING INTERESTS
As of December 31,
2021
2020
9,206 $
118 $
1,189
225
Our subsidiaries with membership interests in the investment funds we formed have the right to elect to require the non-
controlling interest holder to sell all of its membership units to our subsidiaries, a call option. Our investment funds also include
rights for the non-controlling interest holder to elect to require our subsidiaries to purchase all of the non-controlling membership
interests in the fund, a put option.
The following table sets forth information about the call and put options for our investment funds outstanding as of December 31,
2021:
Call Option
Put Option
Investment
Fund
Number
1
2
3
4
Formation Date
April 2017
June 2018
October 2018
December 2019
Start Date
December 2022
April 2024
June 2024
March 2026
End Date
June 2023
October 2024
December 2024
September 2026
Purchase
Price
(1)
(2)
(2)
(3)
Start Date
End Date
December 2023 December 2024
October 2024
December 2024
September 2026 September 2027
April 2025
June 2025
Purchase
Price
(4)
(5)
(5)
(6)
(1) Purchase price is equal to the fair market value of such interest at the time the option is exercised.
(2) Purchase price is equal to the greater of (i) the fair market value of such interests at the time the option is exercised or (ii) 7% of the
investors’ contributed capital balance at the time the option is exercisable.
(3) Purchase price is equal to the greater of (i) the fair market value of such interests at the time the option is exercised or (ii) 5% of the
investors’ contributed capital balance at the time the option is exercisable. The call options are exercisable beginning on the date that
specified conditions are met for each respective fund. These dates are estimates, which are subject to change based on the final funding date.
(4) Purchase price is the lessor of fair market value at the time the option is exercised and a specified amount, ranging from $659 to $917.
(5) Purchase price is the sum of (i) the fair market value at the time the option is exercised, and (ii) the closing costs incurred by the investor
in connection with the exercise of the put option.
(6) Purchase price is the lessor of fair market value at the time the option is exercised and the sum of (i) 5% of the investors’ contributed
capital balance at the time the option is exercisable, and (ii) the fair market value of any unpaid tax law change losses incurred by the
investor in connection with the exercise of the put option. These dates are estimates, which are subject to change based on the final funding
date.
86
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The call options are exercisable beginning on the date that specified conditions are met for each respective fund. The call option
period for one of our investment funds began in March 2021. In September 2021 we finalized our purchase of the investor’s
membership interest for $1,000 in cash and reclassified the remaining redeemable non-controlling interest balance to paid-in
capital to reflect the additional contribution from us to our wholly-owned subsidiary.
Because the put options represent redemption features that are not solely within our control, the non-controlling interests in these
funds are presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their
carrying value (which is impacted by attribution under the HLBV method) or their estimated redemption value at each reporting
period. At both December 31, 2021 and 2020, redeemable non-controlling interests were reported in the accompanying
consolidated balance sheets at their carrying values, as the carrying value at each reporting period was greater than the estimated
redemption value.
13. EQUITY AND EARNINGS PER SHARE
Equity Offering
On March 9, 2021, we closed on an underwritten public offering of 2,500 shares of our Class A common stock at a public offering
price of $44.00 per share. Net proceeds from the offering were $104,326, after deducting offering costs of $5,674. On March 15,
2021, we closed on the underwriters’ option to purchase 375 additional shares of Class A common stock from us, resulting in net
proceeds of $15,758 after deducting offering costs of $742. We used $80,000 of the net proceeds to repay in full the outstanding
U.S. dollar balance under our senior secured revolving credit facility and used the remaining proceeds for general corporate
purposes.
In the offering, selling shareholders sold 805 shares of our Class A Common Stock at a public offering price of $44.00 per share,
less the underwriting discount. We did not receive any proceeds from the sale of the shares by the selling stockholders.
Common and Preferred Stock
The rights of the holders of our Class A common stock and Class B common stock are identical, except with respect to voting and
conversion. Each share of our Class A common stock is entitled to one vote per share and is not convertible into any other shares
of our capital stock. Each share of our Class B common stock is entitled to five votes per share, is convertible at any time into one
share of Class A common stock at the option of the holder of such share and will automatically convert into one share of Class A
common stock upon the occurrence of certain specified events, including a transfer of such shares (other than to such holder’s
family members, descendants or certain affiliated persons or entities). Our Board of Directors is authorized to fix the rights and
terms for any series of preferred stock without additional shareholder approval.
87
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Earnings Per Share
The following is a reconciliation of the numerator and denominator for the computation of basic and diluted earnings per share:
Numerator:
Net income attributable to common shareholders . . . . . . . . . . . . . . . . . $
Adjustment for accretion of tax equity financing fees . . . . . . . . . . . . .
Income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . . $
Denominator:
Basic weighted-average shares outstanding . . . . . . . . . . . . . . . . . . . . . .
Effect of dilutive securities:
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted weighted-average shares outstanding . . . . . . . . . . . . . . . . . . . .
Net income per share attributable to common shareholders:
Year Ended December 31,
2021
2020
2019
70,458 $
(116)
70,342 $
54,052 $
(121)
53,931 $
44,436
—
44,436
50,855
47,702
46,586
1,413
52,268
1,304
49,006
1,188
47,774
0.95
0.93
806
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.38 $
1.35 $
1.13 $
1.10 $
Potentially dilutive shares (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,443
1,199
(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.
14. STOCK-BASED COMPENSATION AND OTHER EMPLOYEE BENEFITS
Our 2010 Stock Incentive Plan (the “2010 Plan”) was adopted by our Board of Directors in May 2010 and approved by our
stockholders in June 2010. The 2010 Plan provides for the grant of incentive stock options, non-statutory stock options,
performance-based stock options, restricted stock awards and other stock-based awards. Upon its effectiveness, 10,000 shares of
our Class A common stock were reserved for issuance under the 2010 Plan. As of December 31, 2020, there were no longer
shares available for grant under the 2010 Plan.
Our 2020 Stock Incentive Plan (the “2020 Plan”), was adopted by our Board of Directors in February 2020 and approved by our
stockholders in May 2020. The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, stock
appreciation rights, restricted stock awards and other stock-based awards. Upon its effectiveness, 5,000 shares of our Class A
common stock were reserved for issuance under the 2020 Plan. As of December 31, 2021, we granted options to purchase 1,552
shares of Class A common stock, of which 60 shares were forfeited or expired, leaving 3,508 shares available for grant under the
2020 Plan.
Stock Options
We did not grant awards to individuals who were not either an employee or director of ours during the years ended December 31,
2021, 2020, and 2019.
88
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table summarizes the collective activity under the plans:
Number of
Options
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
Outstanding at December 31, 2018 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2019 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2020 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2021 . . . . . . . . . . . . . . . . .
Options exercisable at December 31, 2021 . . . . . . . . . . .
Expected to vest at December 31, 2021 . . . . . . . . . . . . .
3,305 $
1,330
(916)
(210)
(4)
3,505
406
(946)
(49)
—
2,916
1,342
(588)
(134)
(4)
3,532 $
693 $
2,839 $
8.050
14.026
7.362
8.070
9.904
10.524
25.668
9.491
13.251
—
12.919
58.826
9.482
28.261
22.530
30.336
9.148
35.508
The following table sets forth additional disclosures about our plans:
7.6 years $
4.6 years $
8.4 years $
183,737
50,094
133,643
Year Ended December 31,
2021
2020
2019
Aggregate intrinsic value of options exercised . . . . . . . . . . . . . . . . . . . . . . . $
33,494 $
19,762 $
Cash received from stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average fair value of stock options granted . . . . . . . . . . . . . . . . . $
Stock-based compensation expense (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,563 $
28.94 $
8,716 $
8,995 $
11.52 $
1,933 $
7,154
6,742
6.33
1,620
(1) Included in selling, general, and administrative expenses in the accompanying consolidated statements of income and includes expense in
connection with our ESPP.
Under the terms of our 2010 Plan and 2020 Plan, all options expire if not exercised within ten years after the grant date. During
2011, we began awarding options which typically vest over a five-year period on an annual ratable basis. From time to time, we
award options providing for vesting over three years, with one-third vesting on each of the first three anniversaries of the grant
date. During the year ended December 31, 2019, we granted 1,000 common stock options to certain employees and directors
under our 2010 Stock Incentive Plan, which have a contractual life of ten years and vest based upon the achievement of specific
performance goals over three years. If the employee ceases to be employed by us for any reason before vested options have been
exercised, the employee has 90 days to exercise options that have vested as of the date of such employee’s termination, or they are
forfeited.
During August and September 2019, our Chief Executive Officer (“CEO”), who is also a significant shareholder of Ameresco,
exercised a nonqualified option to purchase 600 shares of our Class A common stock. In November 2019, we paid the required
withholding taxes of $2,292 to the Internal Revenue Service on the compensation element resulting from such exercise without a
corresponding withholding from the CEO due to an administrative oversight. Accordingly, we recorded a reimbursement due
from the CEO as of December 31, 2019 of $2,292, which was included in prepaid expenses and other current assets in the
accompanying consolidated balance sheet and was repaid in full in January 2020.
89
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
We use the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. We recognize
the compensation cost of stock-based awards on a straight-line basis over the requisite service period of the award.
The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock
price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.
The following table sets forth the significant assumptions used in the model:
Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
—%
2020
—%
2019
—%
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.92% -1.46%
0.35%-0.76%
1.60%-2.39%
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
48%-50%
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5 years
43%-48%
6.5 years
43%-44%
6.5 years
We will continue to use judgment in evaluating the expected term and volatility related to stock-based compensation on a
prospective basis and incorporate these factors into the Black-Scholes pricing model. We record forfeitures as they occur. Higher
volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant.
As of December 31, 2021, there was approximately $41,074 of unrecognized compensation expense related to non-vested stock
option awards that is expected to be recognized over a weighted-average period of 2.8 years.
Employee Stock Purchase Plan
Our 2017 Employee Stock Purchase Plan permits eligible employees to purchase up to an aggregate of 200 shares of the
Company’s Class A common stock. In May 2020, we amended our ESPP, which permits eligible employees to purchase up to an
aggregate of 350 shares of our Class A common stock. This plan commenced December 1, 2017 and was subsequently amended
in August 2018. The ESPP allows participants to purchase shares of common stock at a 5% discount from the fair market value of
the stock as determined on specific dates at six-month intervals.
During the years ended December 31, 2021 and 2020, we issued 29 and 49 shares, respectively, under the ESPP. As of
December 31, 2021 and 2020, the amount that had been withheld from employees for future purchases under the ESPP was $164
and $99, respectively.
Other Employee Benefits
We maintain a qualified 401(k) plan covering eligible U.S. employees who have completed the minimum service requirement, as
defined by the plans. The plans require us to contribute 100% of the first six percent of base compensation that a participant
contributes to the plans.
In 2016, we established a Group Personal Pension Plan for employees in the U.K., for eligible employees who may contribute a
portion of their compensation, subject to their age and other limitations established by HM Revenue & Customs. The plan
requires us to contribute 100% of the first six percent of base compensation that a participant contributes to the plans.
We also have a Registered Retirement Savings Plan for employees in Canada, for eligible employees who may contribute a
portion of their compensation. The plan requires us to contribute 100% of the first six percent of base compensation that a
participant contributes to the plans.
The following table sets forth our matching contributions under the plans:
401(k) plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Group Personal Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Registered Retirement Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total matching contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,189 $
252
405
6,846 $
5,650 $
202
348
6,200 $
5,452
190
356
5,998
Year Ended December 31,
2021
2020
2019
90
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
15. COMMITMENTS AND CONTINGENCIES
From time to time, we issue letters of credit and performance bonds with our third-party lenders, to provide collateral.
Legal Proceedings
On November 6, 2017, we were served with a complaint filed by a customer against nine contractors, including us, claiming both
physical damages to the customer’s tangible property and damages caused by various alleged defects in the design of the project
through negligent acts and/or omissions, breaches of contract and breaches of the “implied warranty of good and workmanlike
manner.” A mediation was held in January 2021, at which time we made an offer to settle the case, in an amount which we
believe would be covered by our insurance. The trial has been set for April 2022 and both parties are in the process of discovery.
Although the customer rejected our offer, both parties have agreed to continue to negotiate a settlement. We believe that it is
probable that a loss will be incurred and, therefore, have accrued a reasonable estimate of the loss, which is included in accrued
expenses and other current liabilities in our consolidated balance sheets as of December 31, 2021 and 2020. In addition, we have
accrued a loss recovery from insurance proceeds as we believe the receipt of such proceeds is probable. The loss recovery accrual
is included in prepaid expenses and other current assets in our consolidated balance sheets as of December 31, 2021 and 2020.
The estimated loss and the loss recovery were included in selling, general, and administrative expenses in our consolidated
statements of income for the year ended December 31, 2020 and there were no changes to our estimate during the year ended
December 31, 2021.
We are involved in a variety of other claims and other legal proceedings generally incidental to our normal business activities.
While the outcome of any of these proceedings cannot be accurately predicted, we do not believe the ultimate resolution of any of
these existing matters would have a material adverse effect on our financial condition or results of operations.
Commitments as a Result of Acquisitions
In August 2018, we completed an acquisition of Chelsea Group Limited which provided for a revenue earn-out contingent upon
the acquired business meeting certain cumulative revenue targets over five years from the acquisition date. We evaluated financial
forecasts of the acquired business and concluded that the fair value of this earn-out was approximately $555 upon acquisition. The
fair value was subsequently increased to $678 as of December 31, 2020, remained consistent as of December 31, 2021, and is
included in other liabilities on the consolidated balance sheets. The contingent consideration will be paid annually in May, if any
of the cumulative revenue targets are achieved. No payments have been made to date. The fair value of the earn-out will be re-
evaluated at each reporting period and adjustments will be recorded as needed.
In April 2020, we completed an acquisition of an energy project which provided for a profit earn-out contingent upon the acquired
project meeting certain financial return targets for a minimum of five years, and will continue annually thereafter, unless
termination conditions are met. We evaluated the financial forecasts of the acquired asset and concluded that fair value of the
earn-out was nil at completion of the acquisition. The contingent consideration will be re-evaluated at each reporting period and
will be paid annually beginning in 2021, if the financial return targets are achieved. No financial targets were achieved during the
year ended December 31, 2021, and no payments were made.
In December 2021, we completed our acquisition of Plug Smart which provided for an earn-out based on future EBITDA targets
beginning with EBITDA performance for the month of December 2021 and each fiscal year thereafter, over a five-year period
through December 31, 2026. The maximum cumulative earn-out is $5,000 and we evaluated financial forecasts of the acquired
business and concluded that the fair value of this earn-out was approximately $2,160 upon acquisition and remained consistent as
of December 31, 2021. The contingent consideration is included in other liabilities on the consolidated balance sheets.
See Notes 4 and 18 for additional information.
91
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
16. GEOGRAPHIC INFORMATION
The following table presents our long-lived assets related to our operations by geographic area:
As of December 31,
2021
2020
Long-lived Assets
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
839,231 $
2,453
27,964
Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
869,648 $
706,177
29,768
2,415
738,360
We attribute revenues to customers based on the location of the customer. The following table presents revenues by geographic
region:
Revenues
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,126,141 $
955,436 $
815,405
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,782
43,774
45,089
31,750
35,031
16,497
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,215,697 $
1,032,275 $
866,933
Year Ended December 31,
2021
2020
2019
17. OTHER EXPENSES, NET
The following table presents the components of other expenses, net:
Year Ended December 31,
2021
2020
2019
Loss (gain) on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
240 $
(705) $
Interest expense, net of interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs . . . . . . . . . . . . . . . .
Foreign currency transaction loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,361
2,849
852
Government incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,012)
15,422
2,686
(481)
(1,851)
(1,068)
13,841
2,229
59
—
Other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
17,290 $
15,071 $
15,061
Estimated amortization expense for existing debt discount and debt issuance costs for the next five succeeding fiscal years is as
follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
$
$
$
2,732
2,126
1,807
1,396
1,067
18. FAIR VALUE MEASUREMENT
We recognize our financial assets and liabilities at fair value on a recurring basis (at least annually). Fair value is defined as the
price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market
Estimated
Amortization
92
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
for the asset or liability in an orderly transaction between market participants on the measurement date. Three levels of inputs that
may be used to measure fair value are as follows:
Level 1: Inputs are based on unadjusted quoted prices for identical instruments traded in active markets.
Level 2: Inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar
instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are
observable in the market or can be corroborated by observable market data for substantially the full term of the assets or
liabilities.
Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar techniques.
The following table presents the input level used to determine the fair values of our financial instruments measured at fair value
on a recurring basis:
Fair Value as of December 31,
Level
2021
2020
Assets
Interest rate swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Interest rate swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
2
2
2
2
3
$
$
$
919 $
—
919 $
2
363
365
6,316 $
10,073
1,962
4,800
2,838
—
412
678
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
15,916 $
11,163
The fair value of our interest rate swaps was determined using cash flow analysis on the expected cash flow of the contract in
combination with observable market-based inputs, including interest rate curves and implied volatility. As part of this valuation,
we considered the credit ratings of the counterparties to the interest rate swaps to determine if a credit risk adjustment was
required.
The fair value of our commodity swaps was determined using a cash flow analysis on the expected cash flow of the contract in
combination with observable forward price inputs obtained from a third-party pricing source. As part of this valuation, we
considered the credit ratings of the counterparties to the commodity swaps to determine if a credit risk adjustment was required.
The fair value of our make-whole provisions was determined by comparing them against the rates of similar debt instruments
under similar terms without a make-whole provision obtained from various highly rated third-party pricing sources.
The fair value of our contingent consideration liabilities was determined by evaluating the acquired asset’s future financial
forecasts and evaluating which, if any, of the cumulative revenue targets, financial metrics and/or milestones are likely to be met.
We classified contingent consideration related to certain acquisitions within level 3 of the fair value hierarchy because the fair
value is derived using significant unobservable inputs, which include discount rates, probability-weighted cash flows, and
volatility. We determined the fair value of our contingent consideration obligations based on a probability-weighted income
approach derived from financial performance estimates and probability assessments of the attainment of certain targets for some
acquisitions. For other acquisitions, we derived the fair value of contingent consideration using a Monte Carlo simulation in an
option pricing framework. We established discount rates utilized in our valuation models based on the cost to borrow that would
be required by a market participant for similar instruments. In determining the probability of attaining certain technical, financial
and operational targets, we utilized data regarding similar milestone events from our own experience, while considering the
inherent difficulties and uncertainties in developing a product. On a quarterly basis, we reassess the probability factors associated
with the financial, operational, and technical targets for our contingent consideration obligations. Significant judgment is
employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.
93
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
We derived the fair value of the contingent consideration of $2,160 from the acquisition of Plug Smart in December 2021 using a
Monte Carlo simulated model. The key assumptions used in the model include two scenarios of EBITDA projections, a base case
and a higher case, a risk-adjusted discount rate of 14.2%, and estimated EBITDA volatility of 80.0%.
As of December 31, 2021, the key assumptions used in the model related to the contingent consideration from the acquisition of
certain assets of Chelsea Group Limited include a discount rate of 18% for purposes of discounting the low and base case
scenarios associated with achievement of the financial based earn-out. The probabilities assigned to these scenarios were 50% for
both the low and base case scenarios. An increase or decrease in the probability of achievement of any scenario could result in a
significant increase or decrease to the estimated fair value of the contingent consideration liability. The fair value of the
contingent consideration from this acquisition was $678 as of December 31, 2020 and remained consistent as of December 31,
2021.
The following table sets forth a summary of changes in the fair value of contingent consideration liability classified as level 3:
Year Ended December 31,
2021
2020
Contingent consideration liability balance at the beginning of year . . . . . . . . . . . . . . . . . . . . . $
678 $
Contingent consideration issued in connection with acquisitions . . . . . . . . . . . . . . . . . . . . . .
2,160
Contingent consideration liability balance at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,838 $
678
—
678
The fair value of financial instruments is determined by reference to observable market data and other valuation techniques, as
appropriate. Long-term debt is the only category of financial instruments where the difference between fair value and recorded
book value is notable. At December 31, 2021 and 2020, the fair value of our long-term debt was estimated using discounted cash
flows analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements which are
considered to be level two inputs. There have been no transfers in or out of level two or three for the years ended December 31,
2021 and 2020.
The following table sets forth the fair value and the carrying value of our long-term debt, excluding financing leases:
December 31, 2021
December 31, 2020
Fair Value
Carrying Value
Fair Value
Carrying Value
Long-term debt value (level 2) . . . . . . . . . . . . . . . . . . . . $
442,429 $
436,892 $
363,460 $
357,536
We are also required to periodically measure certain other assets at fair value on a nonrecurring basis, including long-lived assets,
goodwill, and other intangible assets. We calculated the fair value used in our annual goodwill impairment analysis utilizing a
discounted cash flow analysis and determined that the inputs used were level 3 inputs. Other than intangible assets acquired from
the Plug Smart acquisition, as noted in Note 4, there were no other assets recorded at fair value on a non-recurring basis as of
December 31, 2021 or 2020.
94
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
19. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The following table presents information about the fair value amounts of our derivative instruments:
Balance Sheet
Location
Derivatives as of December 31,
2021
2020
Fair Value
Fair Value
Derivatives Designated as Hedging Instruments
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Commodity swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other assets
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
Commodity swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
Make-whole provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
$
$
$
$
$
$
$
— $
6,316 $
919 $
— $
— $
1,962 $
4,800 $
—
9,994
2
363
79
—
412
As of December 31, 2021, all but four of our freestanding derivatives were designated as hedging instruments and as of
December 31, 2020, all but five of our derivatives were designated as hedging instruments.
The following tables present information about the effects of our derivative instruments on the consolidated statements of income
and consolidated statements of comprehensive income:
Location of (Gain) Loss
Recognized in Net
Income
Amount of (Gain) Loss Recognized in Net Income for the
Year Ended December 31,
2021
2020
2019
Derivatives Designated as Hedging Instruments
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . Other expenses, net
$
2,086 $
1,455 $
71
Derivatives Not Designated as Hedging Instruments
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . Other expenses, net
Commodity swap contracts . . . . . . . . . . . . . . . . . . . . Other expenses, net
Make-whole provisions . . . . . . . . . . . . . . . . . . . . . . . Other expenses, net
$
$
$
(996) $
2,325 $
(1,089) $
51 $
(165) $
(591) $
56
(234)
(890)
The following table presents the changes in AOCI, net of taxes, from our hedging instruments:
Derivatives Designated as Hedging Instruments:
Accumulated loss in AOCI at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Unrealized gain recognized in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss reclassified from AOCI to other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated loss in AOCI at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(7,526)
707
2,086
2,793
(4,733)
Year Ended
December 31, 2021
95
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following tables present all of our active derivative instruments as of December 31, 2021:
Active Interest Rate Swaps
Effective Date
Expiration Date
11-Year, 5.77% Fixed . . . . . . . . . . . . . . . . . .
October 2018
October 2029
15-Year, 5.24% Fixed . . . . . . . . . . . . . . . . . .
10-Year, 4.74% Fixed . . . . . . . . . . . . . . . . . .
June 2018
June 2017
June 2033
December 2027
15-Year, 3.26% Fixed . . . . . . . . . . . . . . . . . .
February 2023
December 2038
7-Year, 2.19% Fixed . . . . . . . . . . . . . . . . . . .
February 2016
February 2023
8-Year, 3.70% Fixed . . . . . . . . . . . . . . . . . . .
March 2020
8-Year, 3.70% Fixed . . . . . . . . . . . . . . . . . . .
March 2020
13-Year, 0.93% Fixed . . . . . . . . . . . . . . . . . .
13-Year, 0.93% Fixed . . . . . . . . . . . . . . . . . .
May 2020
May 2020
15.5-Year, 5.40% Fixed . . . . . . . . . . . . . . . .
September 2008
June 2028
June 2028
March 2033
March 2033
March 2024
2.75-Year, 0.41% Fixed . . . . . . . . . . . . . . . .
December 2020
September 2023
$
$
$
$
$
$
$
$
$
$
$
Initial Notional
Amount ($)
9,200
10,000
14,100
14,084
20,746
14,643
10,734
Status
Designated
Designated
Designated
Designated
Designated
Designated
Designated
9,505 Not Designated
6,968 Not Designated
13,081
Designated
26,250 Not Designated
Active Commodity Swaps
Effective Date
Expiration Date
Initial Notional
Amount (Volume)
Status
3.5-Year, $2.65 MMBtu Fixed . . . . . . . . . . .
December 2020
June 2024
3,296,160 Not Designated
Other Derivatives
Classification
Effective Date
Expiration Date
Fair Value ($)
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Liability
Liability
Liability
Liability
Liability
Liability
Liability
June/August 2018
December 2038
August 2016
April 2031
April 2017
February 2034
November 2020
December 2027
October 2011
May 2021
July 2021
May 2028
April 2045
March 2046
$
$
$
$
$
$
$
370
60
67
59
9
283
3,952
20. BUSINESS SEGMENT INFORMATION
Our reportable segments for the year ended December 31, 2021 were U.S. Regions, U.S. Federal, Canada, Non-Solar Distributed
Generation (“Non-Solar DG”), and All Other. On January 1, 2021, we changed the structure of our internal organization, and our
U.S. Regions segment now includes our U.S.-based enterprise energy management services previously included in our “All
Other” segment. As a result, previously reported amounts have been reclassified for comparative purposes.
Our U.S. Regions, U.S. Federal and Canada segments offer energy efficiency products and services which include the design,
engineering, and installation of equipment and other measures to improve the efficiency and control the operation of a facility’s
energy infrastructure, renewable energy solutions, and services which include the construction of small-scale plants that
Ameresco owns or develops for customers that produce electricity, gas, heat, or cooling from renewable sources of energy and
O&M services.
Our Non-Solar DG segment sells electricity, processed renewable gas fuel, heat or cooling, produced from renewable sources of
energy, other than solar, and generated by small-scale plants that we own and O&M services for customer owned small-scale
plants. Our U.S. Regions segment also includes certain small-scale solar grid-tie plants developed for customers. The “All Other”
category offers enterprise energy management services, consulting services, and the sale of solar PV energy products and systems
which we refer to as integrated-PV. These segments do not include results of other activities, such as corporate operating expenses
not specifically allocated to the segments. Certain reportable segments are an aggregation of operating segments.
For the years ended December 31, 2021, 2020, and 2019 more than 67% of our revenues have been derived from federal, state,
provincial, or local government entities, including public housing authorities and public universities. The U.S. federal
government, which is considered a single customer for reporting purposes, constituted 32.3%, 36.6%, and 33.2% of our
96
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
consolidated revenues for the years ended December 31, 2021, 2020, and 2019, respectively. Revenues from the U.S. federal
government are included in our U.S. Federal segment. Other than the U.S. federal government, one customer represented 10.2%
of our revenues during the year ended December 31, 2021 and revenues from this customer is included in our U.S. Regions
segment.
The reports of our chief operating decision maker do not include assets at the operating segment level.
The table below presents our business segment information and reconciliation to our consolidated financial statements:
U.S. Regions
U.S. Federal
Canada
Non-Solar DG
All Other
Total
Consolidated
2021
Revenues . . . . . . . . . . . . . . . . . . . . . . . . $ 528,293 $ 392,948 $
49,457 $ 137,243 $ 107,756 $ 1,215,697
(Gain) loss on derivatives . . . . . . . . . . .
(1,017)
6,255
16,057
—
—
1,294
4,666
—
(73)
879
1,872
—
1,330
5,793
21,080
—
—
327
1,081
—
240
14,548
44,756
(48,417)
40,051
52,386
1,584
26,345
6,195
126,561
Net interest expense . . . . . . . . . . . . . . .
Depreciation and intangible asset
amortization . . . . . . . . . . . . . . . . . . . . . .
Unallocated corporate activity . . . . . . .
Income before taxes, excluding
unallocated corporate activity . . . . . . . .
2020
Revenues . . . . . . . . . . . . . . . . . . . . . . . .
404,152
377,882
47,797
106,417
96,027
1,032,275
(Gain) loss on derivatives . . . . . . . . . . .
Net interest expense . . . . . . . . . . . . . . .
Depreciation and intangible asset
amortization . . . . . . . . . . . . . . . . . . . . . .
Unallocated corporate activity . . . . . . .
Income before taxes, excluding
unallocated corporate activity . . . . . . . .
(744)
6,392
12,627
—
—
1,694
3,945
—
153
699
1,580
—
(114)
4,467
20,717
—
—
95
1,268
—
(705)
13,347
40,137
(40,188)
28,339
44,560
2,560
13,040
8,117
96,616
2019
Revenues . . . . . . . . . . . . . . . . . . . . . . . .
369,248
287,426
37,919
84,683
87,657
866,933
Gain on derivatives . . . . . . . . . . . . . . . .
Net interest expense . . . . . . . . . . . . . . .
Depreciation and intangible asset
amortization . . . . . . . . . . . . . . . . . . . . . .
Unallocated corporate activity . . . . . . .
Income before taxes, excluding
unallocated corporate activity . . . . . . . .
(890)
6,582
10,318
—
—
623
3,427
—
—
691
1,397
—
(178)
5,338
—
(1,068)
(68)
13,166
21,359
—
1,208
—
37,709
(34,188)
18,536
40,553
562
3,813
7,277
70,741
See Note 3 for additional information about our revenues by product line.
97
Table of Contents
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the
effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as
of the end of the period covered by this annual report, or the evaluation date. Disclosure controls and procedures are designed to
ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Our management
recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Our management, after evaluating the effectiveness of our disclosure controls and procedures as of the
evaluation date, concluded that as of the evaluation date, our disclosure controls and procedures were effective at the reasonable
assurance level.
Management’s Annual Report on Internal Control over Financial Reporting
Our management, with the participation of our principal executive officer and principal financial officer, is responsible for
establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal
financial officers and effected by our board of directors, management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
GAAP. Our internal control over financial reporting includes those policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and
dispositions of our assets,
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of
our management and directors, and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
our assets that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making
this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control - Integrated Framework (2013).
Based on this assessment and those criteria, our management concluded that, as of December 31, 2021, our internal control over
financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2021 has been audited by RSM US LLP, an
independent registered public accounting firm, as stated in their report, which appears under Item 8.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, other than those stated above, during our most recent fiscal
quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information
None.
98
Table of Contents
Item 10. Directors, Executive Officers, and Corporate Governance
PART III
The information concerning our executive officers is set forth under the heading “Executive Officers” at the end of Item 1 in Part
I of this report.
We have adopted a code of business conduct and ethics that is applicable to all of our employees, officers and directors including
our chief executive officer and senior financial officers, which is available under the Investor Relations section of our website
located at www.ameresco.com. In addition, we intend to post on our website all disclosures that are required by law or applicable
NYSE listing standards concerning any amendments to, or waivers from, any provision of the code. We include our website
address in this report only as an inactive textual reference and do not intend it to be an active link to our website. None of the
material on our website is part of this Form 10-K.
The response to the remainder of this item is incorporated by reference from the discussion responsive thereto in the sections
titled “Corporate Governance” and “Stock Ownership - Section 16(a) Beneficial Ownership Reporting Compliance” contained in
the definitive proxy statement for our 2022 annual meeting of stockholders.
Item 11. Executive Compensation
The response to this item is incorporated by reference from the discussion responsive thereto in the sections titled “Executive
Compensation and Related Information” and “Corporate Governance” contained in the definitive proxy statement for our 2022
annual meeting of stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information
The following table provides information about the securities authorized for issuance under our equity compensation plans as of
December 31, 2021:
Equity Compensation Plan Information
(a)
(b)
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
Weighted-average
exercise price of
outstanding options,
warrants and rights
(c)
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
3,532,000 $
—
3,532,000 $
30.336
—
30.336
3,680,310
—
3,680,310
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan category
Equity compensation plans approved by security
holders (1) (2)
Equity compensation plans not approved by
security holders . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Consists of our 2010 stock incentive plan, 2020 stock incentive plan and our 2017 employee stock purchase plan.
(2) Consists of 3,508,500 shares of our class A common stock remaining available for future issuance are under our 2020 stock incentive
plan and 171,810 shares of our class A common stock remaining available for future issuance under our 2017 employee stock purchase
plan, including shares subject to purchase during the current purchase period. In addition to being available for future issuance upon
exercise of options that may be granted after December 31, 2021, shares under our 2010 and 2020 stock incentive plans may instead be
issued in the form of stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.
The response to the remainder of this item is incorporated by reference from the discussion responsive thereto in the section titled
“Stock Ownership” contained in the definitive proxy statement for our 2022 annual meeting of stockholders.
99
Table of Contents
Item 13. Certain Relationships and Related Transactions, and Director Independence
The response to this item is incorporated by reference from the discussion responsive thereto in the sections titled “Certain
Relationships and Related Person Transactions” and “Corporate Governance” contained in the definitive proxy statement for our
2022 annual meeting of stockholders.
Item 14. Principal Accountant Fees and Services
The response to this item is incorporated by reference from the discussion responsive thereto in the section titled “Proposal 2 -
Ratification of the Selection of our Independent Registered Public Accounting Firm” contained in the definitive proxy statement
for our 2022 annual meeting of stockholders.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a)(1) Financial Statements: See “Index to Consolidated Financial Statements”
(a)(2) Financial Statement Schedules: None
Schedules are omitted because they are not applicable, or are not required, or because the
information is included in the consolidated financial statements and notes thereto.
(a)(3) Exhibits:
Page
41
Exhibit
Number
3.1
3.2
4.1
4.16
10.1.1
Exhibit Description
Restated Certificate of Incorporation of Ameresco, Inc. Filed as Exhibit 3.1 to our Current Report on Form 8-K dated
July 27, 2010 and filed with the Commission on July 30, 2010 (file no. 001-34811) and incorporated herein by
reference.
Amended and Restated By-Laws of Ameresco, Inc. (as further amended May 22, 2014). Filed as Exhibit 3.1 to our
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2014 and filed with the Commission on July 31,
2014 (file no. 001-34811) and incorporated herein by reference. Filed as Exhibit 3.1 to our Registration Statement on
Form S-1 (pre-effective amendment no. 4; reg. no. 333-165821) and incorporated herein by reference.
Specimen Certificate evidencing shares of Class A common stock. Filed as Exhibit 4.1 to our Registration Statement
on Form S-1 (pre-effective amendment no. 4; reg. no. 333-165821) and incorporated herein by reference.
Description of Ameresco, Inc. Securities Registered under Section 12 of the Exchange Act. Filed as Exhibit 4.16 to
our Annual Report on Form 10-K for the year ended December 31, 2019 and filed with the Commission on March 4,
2020 (file no. 001-34811) and incorporated herein by reference.
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. Filed as Exhibit 10.1.2 to our Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 2020 and incorporated herein by reference.
10.3.1+ Ameresco, Inc. 2010 Stock Incentive Plan. Filed as Exhibit 10.10 to our Registration Statement on Form S-1 (pre-
effective amendment no. 4; reg. no. 333-165821) and incorporated herein by reference.
10.3.2+ Form of Incentive Stock Option Agreement granted under Ameresco, Inc. 2010 Stock Incentive Plan. Filed as
Exhibit 10.11 to our Registration Statement on Form S-1 (pre-effective amendment no. 4; reg. no. 333-165821) and
incorporated herein by reference.
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Exhibit
Number
10.3.3+ Form of Director Stock Option Agreement granted under Ameresco, Inc. 2010 Stock Incentive Plan. Filed as Exhibit
10.12 to our Registration Statement on Form S-1 (pre-effective amendment no. 4; reg. no. 333-165821) and
incorporated herein by reference.
Description
10.4.1+ Ameresco, Inc. 2020 Stock Incentive Plan. Filed as Exhibit 99.2 Ameresco, Inc. 2020 Stock Incentive Plan. Filed as
Exhibit 99.2 to our Registration Statement on Form S-8 (reg. no. 333-238792) and incorporated herein by reference.
10.4.2+ Form of Incentive Stock Option Agreement granted under Ameresco, Inc. 2020 Stock Incentive Plan. Filed as
Exhibit 10.2 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020.
10.4.3+ Form of Director Stock Option Agreement granted under Ameresco, Inc. 2020 Stock Incentive Plan. Filed as Exhibit
10.3 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2020.
10.5.1+ Form of Indemnification Agreement entered into between Ameresco, Inc. and each non-employee director. Filed as
Exhibit 10.6.1 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and filed with the
Commission on March 31, 2011 (file no. 001-34811) and incorporated herein by reference.
10.5.2+ Form of Indemnification Agreement entered into between Ameresco, Inc. and each employee director. Filed as
Exhibit 10.6.2 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and filed with the
Commission on March 31, 2011 (file no. 001-34811) and incorporated herein by reference.
Ameresco, Inc. 2017 Employee Stock Purchase Plan, as amended. Filed as Exhibit 10.8 to our Quarterly Report on
Form 10-Q for the fiscal quarter ended June 30, 2020 and filed with the Commission on August 4, 2020 (file no.
001-34811) and incorporated herein by reference.
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.
Executive Officer Stock Ownership Guidelines. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 2020 filed with the Commission on November 3, 2020 (file no. 001-34811) and
incorporated herein by reference.
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.
10.6+
10.7+
10.8+
10.9+
10.10* # Turnkey Engineering, Procurement, Construction and Maintenance Agreement dated as of October 21, 2021, by and
21.1*
23.1*
31.1*
31.2*
between Ameresco, Inc. and Southern California Edison Company.
Subsidiaries of Ameresco, Inc.
Consent of RSM US LLP.
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.
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
101
104*
*
**
+
#
2002.
The following consolidated financial statements from Ameresco, Inc.’s Annual Report on Form 10-K for the year
ended December 31, 2021, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance
Sheets (ii) Consolidated Statements of Income, (iii) Consolidated Statements of Comprehensive Income, (iv)
Consolidated Statement of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity, (v)
Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Filed herewith.
Furnished herewith.
Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of
Ameresco participates.
Certain portions of this exhibit are considered confidential and have been omitted as permitted under SEC rules and
regulations. Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURE
Date: March 1, 2022
AMERESCO, INC.
By:
/s/ George P. Sakellaris
George P. Sakellaris
President and Chief Executive Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has been signed below by
the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURES
Signature
/s/ George P. Sakellaris
George P. Sakellaris
/s/ Spencer Doran Hole
Spencer Doran Hole
/s/ Mark Chiplock
Mark Chiplock
/s/ David J. Corrsin
David J. Corrsin
/s/ Douglas I. Foy
Douglas I. Foy
/s/ Claire Hughes Johnson
Claire Hughes Johnson
/s/ Thomas S. Murley
Thomas S. Murley
/s/ Nickolas Stavropoulos
Nickolas Stavropoulos
/s/ Jennifer L. Miller
Jennifer L. Miller
/s/ Joseph W. Sutton
Joseph W. Sutton
/s/ Frank V. Wisneski
Frank V. Wisneski
Title
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Senior Vice President and Chief Financial
Officer
(Principal Financial Officer)
Date
March 1, 2022
March 1, 2022
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
March 1, 2022
Director
Director
Director
Director
Director
Director
Director
Director
103
Direc tors
Executiv e Offi cers & M anagement
George P. Sakellaris, P.E
Chairman, President and Chief Executive Officer, Ameresco
George P. Sakellaris, P.E.
President and Chief Executive Officer
David J. Corrsin
Executive Vice President, General Counsel, Secretary, Ameresco
Michael T. Bakas
Executive Vice President, Distributed Energy Systems
Douglas I. Foy
President, Serrafix Corporation; Chair of Nominating
and Corporate Governance Committee
Claire Hughes Johnson
Corporate Officer and Advisor, Stripe
Nicole A. Bulgarino, P.E.
Executive Vice President and General Manager, Federal Solutions
Mark Chiplock
Senior Vice President, Finance and Chief Accounting Officer
Jennifer L. Miller
Chief Business Sustainability Officer (Retired), Sappi North America
Thomas S. Murley
Principal, Two Lights Energy Advisors LLC
Nickolas Stavropoulos
President and Chief Operating Officer (Retired),
Pacific Gas and Electric Company
Joseph W. Sutton
Chief Executive Officer, Sutton Ventures Group;
Chair of Compensation Committee
Frank V. Wisneski
Partner (Retired), Wellington Management Company;
Chair of Audit Committee
Corpo rate Hea dquarters
Ameresco Inc.
111 Speen Street
Suite 410
Framingham, MA 01701
508-661-2200
Sto ck Listing
Peter Christakis, CEM
Senior Vice President, Construction & Operations
David J. Corrsin
Executive Vice President, General Counsel, Secretary
Leila Dillon
Senior Vice President, Marketing and Communications
Robert Georgeoff
Executive Vice President, South Region
Spencer Doran Hole
Executive Vice President, Chief Financial Officer
Britta MacIntosh
Senior Vice President, Western Region and UK & Europe Operations
Louis Maltezos
Executive Vice President, Central Region and Canada Operations
Lauren Todd
Senior Vice President, Human Resources and Operations
Shar ehol der I nformation
Copies of all SEC filings, including our 10-K, are available
on our website under the Investor Relations section.
Our common stock is traded on the New York
Stock Exchange under the symbol AMRC.
Gener al Inform ati on
Transfer Agent
American Stock Transfer and Trust
New York, NY
Ameresco Inc.
1-866-AMERESCO
www.ameresco.com
© 2022 Ameresco, Inc. Ameresco and the Ameresco logo, the orb symbol and the tagline
“Green. Clean. Sustainable.” are registered in the U.S. Patent and Trademark Office. All rights reserved.