Annual Report 2 023
Vis ion
Energizing a sustainable world
Mission
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.
Val ue s
Ameresco’s values shape our culture and the way we conduct business. Our values are aligned with
C.A.R.I.N.G. about our stakeholders and are instrumental in guiding every aspect of our business.
About Ameresco
Leading the Clean Energy Transition
as a Full - Ser vice Energy Par tner
$163M
2023 Adjusted EBITDA
Ameresco, Inc. (NYSE:AMRC) is a leading cleantech integrator and renewable
energy asset developer, owner and operator. Our comprehensive portfolio includes
solutions that help customers decarbonize to net zero and build energy resiliency
while leveraging smart, connected technologies to drive cost savings.
$1.4B
2023 Revenue
From implementing energy efficiency and infrastructure upgrades to developing,
constructing, and operating distributed energy resources – we are a trusted
sustainability partner. Technical independence coupled with our advanced technology
portfolio allows us to integrate best-in-class solutions for the unique needs of each
customer, paired with practical financial solutions. We design solutions that deliver:
● Cost Savings & Resource Efficiency: Integrating trusted, dynamic, and
cost-saving technologies to improve operations and the built environment –
our portfolio of smart and efficient solutions power the needs of today and
possibilities of tomorrow.
● Resiliency & Energy Security: Firm, renewable energy supply to ensure
mission continuity – enhanced with microgrids, battery energy storage
systems, and beyond to provide grid stability and address peak demand.
● Decarbonize to Net Zero: Make meaningful progress on climate action –
from energy efficiency and demand reduction, to electrification and
renewable generation. Develop a clean energy supply and leverage carbon
reporting and sustainability advisory services.
Drawing from more than 20 years of experience, Ameresco has successfully completed
energy saving, environmentally responsible projects with Federal, state and local
governments, utilities, healthcare and educational institutions, housing authorities,
and commercial and industrial customers. With its corporate headquarters in
Framingham, MA, USA, Ameresco has more than 1,500 employees providing local
expertise across North America and Europe.
Use of Non-GAAP Financial Measures: This summary and CEO message include references to adjusted EBITDA, which is a Non-GAAP financial
measure. As non-GAAP financial measures are not intended to be considered in isolation or as a substitute for GAAP financial measures, you should
carefully read the Form 10-K included in this Annual Report, which includes our consolidated financial statements prepared in accordance with
GAAP. For a description of the NonGAAP financial measures, including the reasons management uses these measures and a reconciliation of the
Non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the section in the
back of Ameresco’s earnings release issued on February 28, 2024, available at https://ir.ameresco.com/news-events/press-releases/detail/612/
ameresco-reports-fourth-quarter-and-full-year-2023
Caution concerning forward-looking statements: Additionally, the CEO message includes statements that, to the extent they are not recitations
of historical fact, constitute forward-looking statements within the meaning of the federal securities laws, and are based on Ameresco’s current
expectations and assumptions. For a discussion identifying important factors that could cause actual results to differ materially from those anticipated
in the forward-looking statements, see the company’s filings with the Securities and Exchange Commission, including “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Risk Factors” in the Form 10-K portion of this Annual Report.
$3.9B
Awarded & Contracted
Project Backlog
508 MWe
Operating Energy Assets
669 MWe
Energy Assets in Development
$1.2B
Operations & Maintenance Backlog
16M MT
2023 Carbon Emission Reduction
110M+ MT
Cumulative Carbon Emission
Reduction Since 2010
$14B+
Energy Solutions Delivered
Fellow Shareholders,
2023 marked a challenging year for both
Notably, our energy assets under
the renewables industry and for Ameresco.
development include innovative battery
16 million metric tons of CO2 was avoided
during 2023 from our renewable energy
We exited the year with a strong fourth
solutions such as the upcoming installation
assets and customer projects. We continue
quarter including a record backlog and
of a 50 MW / 200 MWh system with Silicon
to witness our customers prioritizing near-
asset development metrics.
Valley Power, and plans to place three RNG
term action towards energy resilience and
plants in operation in 2024. During 2023 we
decarbonization goals.
These metrics, together with our intense
focus on execution, point to 2024 being a
year of considerable growth.
The company’s total project backlog was a
record $3.9 billion at the end of 2023,
up approximately 50% versus 2022 with
new awards for the year of $2.2 billion. Our
focus on conversion helped drive a 32%
year-over-year increase in our contracted
backlog which ended the year at $1.3 billion.
Our project backlog represents a very well-
balanced mix of performance contracts and
placed 118 MWe of assets into operation,
bringing our Operating Energy Assets to
over 500 MWe. We ended the year with
669 MWe of Ameresco owned assets in
development and construction.
At the core, adoption of solutions across our
cleantech portfolio are driven by economic
returns and cost savings to our customers.
I cannot emphasize enough the near-term
benefits of energy efficiency projects, which
We closed the year with over $7 billion in
offer immediate economic and environmental
multi-year visibility of profitable revenue
impact. Energy-efficient infrastructure
attributable to our project backlog and
upgrades can reduce consumption up to
energy asset development – a record-high
30%, delivering a measurable impact on both
for Ameresco – despite the headwinds
the bottom line and decarbonization goals.
faced throughout 2023.
It’s a critical first step in the decarbonization
journey, with tangible results.
design-build work with particular strength
Elevated power prices, greater demand for
from the federal government sector.
electricity and grid resiliency combined with
I am proud that we ended the year on
We continue to make great strides in
growing our UK and European footprint
as well. We experienced a year of strong
organic and acquisitive growth, including our
successful Enerqos acquisition in Italy, and
momentum with our partner Sunel Group for
construction of 300 MW design-build solar
parks across the UK for Sonnedix, a global
renewable energy producer.
In parallel, we are growing our energy assets
portfolio at a strong pace, contributing to our
excellent long-term visibility. Our diversified
mix of solar, battery, renewable natural gas
(RNG), and biofuel assets supports growth
of this important recurring revenue stream.
attractive incentives have created a very
a high note, even in light of a difficult
favorable backdrop for renewable energy
industry environment. We head into 2024
and energy efficiency solutions. It has also
with positive momentum and an optimistic
strained some parts of the system. The
outlook. Our top focus for the next year is
industry continues to experience lengthening
the execution of our tremendous project
award conversions, interconnection and
backlog and assets in development, the
permitting delays, supply chain disruptions
generation of cash flow, and investment in
and shortages of critical equipment and
our team. Our short- and long-term success
skilled labor. With a focus on execution and
is undoubtedly driven by our people – the
cost efficiencies, Ameresco continues to
deep bench of technical experts who are
take steps to adapt to this new environment.
transforming the industry and bringing our
Demand remains robust, and our ability to
customer projects to fruition.
effectively compete and win new business
Ameresco is well positioned for 2024 and
demonstrates how well aligned Ameresco’s
beyond. We are energized by the opportunity
capabilities and offerings are with our
to make sustained and vital contributions to
customers’ priorities.
We are unwavering in our commitment to
climate action as we energize a sustainable
world and are proud that approximately
the clean energy transition. Thank you to our
team, customers, and shareholders for your
continued support.
Sincerely,
George Sakellaris
President & CEO
Customer Highlights
United Power
Color ad o, USA
Ameresco partnered with United Power, an electric cooperative serving homes, farms,
and businesses across Colorado’s northern Front Range, to provide eight battery
arrays – four 11.75 MW and four 7.84 MW – across eight different substation sites.
With a total storage capacity of 313.34 MWh, these batteries will enable the cooperative
to store and dispatch power efficiently during periods of high consumption while
seamlessly integrating renewable resources into their operations. As the largest
wholly-owned asset contract in Ameresco history, this project underscores the global
need for energy storage to bolster clean and sustainable power sources.
Cit y of Memphis | Memphis Light , Gas & Water
Tenn e s se e, USA
In partnership with the City of Memphis and Memphis Light, Gas and Water (MLGW),
Ameresco was chosen to lead a comprehensive LED streetlighting, controls and networking
project designed to reduce energy costs citywide and enhance operations and maintenance
capabilities with the upgrade of over 77,000 fixtures to LED. The smart lighting and
controls provide a foundation for additional smart city applications. In addition to improving
illumination, enhancing safety, and increasing reliability, the project supports workforce and
community development through hiring local businesses to recycle and install LED lighting
and sourcing electrical controls and materials – serving as a blueprint for how utilities can
support sustainability for cities and improve the quality of life and safety for its citizens.
Joint Forces Training Base Los Alamitos
Cali for nia , USA
Ameresco acquired a solar and storage microgrid asset at Joint Forces Training Base
(JFTB) in Los Alamitos, CA from Bright Canyon Energy to provide the Army and California’s
National Guard with 100% backup power in the event of a grid emergency. The overall
system includes 31 MW of solar generation, 20 MW / 40 MWh of battery energy storage,
3 MW of reciprocating engines, and microgrid controls. During normal grid conditions, the
solar and battery export energy to the grid capable of powering more than 5,000 homes. By
adding locally-generated carbon-free renewable electricity to the grid and integrating with
backup reciprocating engines, the asset will allow JFTB to continue operating as Southern
California’s emergency response hub during a natural or man-made disaster.
Customer Highlights
Schaef f ler Aerospace Canada Inc.
O nt a r io, Canad a
In collaboration with Schaeffler Aerospace Canada Inc. – a sector of the motion technology
company, The Schaeffler Group – Ameresco will launch a large-scale energy efficiency
and decarbonization project at the company’s Stratford, Ontario plant. The project will
address the plant’s cooling, heating, and air quality issues with high efficiency chiller and
boiler system and an updated building automation system to integrate the new HVAC
equipment. With an estimated generation of 1,180,000 kWh of electrical savings, the
project is designed to reduce greenhouse gas (GHG) emissions by 15% and will advance
The Schaeffler Group’s environmental goals.
Benson Valley Landf ill Gas to RNG Plant
Kent uc k y, USA
Ameresco was chosen by Republic Services to develop, construct, own and operate the
Benson Valley Landfill Gas to Renewable Natural Gas (RNG) plant, a facility that supports
the cities, counties, and businesses of Central Kentucky. Reaching commercial operation
in August of 2023, the Benson Valley RNG plant is capable of processing over 2,000
standard cubic feet per minute of raw landfill gas and will provide clean energy resources
to the regional economy. The plant is designed to significantly reduce GHG emissions
and will contribute to Republic Services’ longstanding sustainability goal to beneficially
reuse 50% more of their biogas by 2030. With 12 projects currently online and another 10
in development, our 17-year collaboration with Republic Services continues to support the
development of renewable energy facilities and reduce harmful emissions.
Delf ini Solar Project
D r a ma , G re ec e
Ameresco Energy Hellas S.A. – a wholly-owned subsidiary of Ameresco and Sunel Group,
an international developer and EPC contractor for energy projects – was selected by
Cero Generation as the contractors for the Delfini Solar Project. The 100 MWp solar PV
park located in Prosotsani Drama, Greece is the country’s first renewable energy project
to utilize a private power purchase agreement that does not benefit from government
subsidies on electricity costs. In addition to expanding Cero Generation’s Greek portfolio,
the Delfini Solar Project is bringing cheaper, cleaner power to Greece and in support
of the government’s ambitious clean energy transition goals.
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, 2023
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 (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
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 the 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 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. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in
the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑
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, 2023, the last business day of the registrant’s most recently completed
second fiscal quarter, was $1,550,437,708.
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 23, 2024
34,282,945
18,000,000
Portions of the definitive proxy statement for our 2024 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 1C.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16 . . . . . . . FORM 10-K SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART IV
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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 and other financing arrangements,
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,
the expected energy and cost savings of our projects,
the expected energy production capacity of our renewable energy plants,
the impact of the ongoing macroeconomic challenges and global unrest, including supply chain disruptions, and shortage
of materials,
the status of and our expectations related to the subordinated debt raise,
our expectations related to our agreement with SCE including the impact of any delays,
the impact of the U.S. Department of Commerce’s solar panel import investigation, and
the impact of regulation, including the Inflation Reduction Act (“IRA”)
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 and renewable energy asset developer, owner, and operator. Our
comprehensive portfolio includes energy efficiency, infrastructure upgrades, asset sustainability, and renewable energy solutions.
Our core offerings 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, transportation and
infrastructure, and utilities across the United States, Canada, and Europe.
We have sourced and raised approximately $5.5 billion in project financing while delivering $14.4 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 addition to organic growth, strategic acquisitions of complementary businesses and assets, and entering into joint venture
arrangements has been, and continues to be an important component to our growth strategy. These strategies enable us to broaden
our service offerings and expand our geographical reach.
To best serve our expansive customer base, as of December 31, 2023, we have approximately 60 offices located throughout North
America, and Europe and more than 1,500 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 sustained economic and operating benefits to fulfill their unique requirements.
1
Our Services
Our portfolio of service and product offerings aim 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
•
•
•
Enterprise energy management services
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
•
•
Our core services are the development, design, engineering, and installation of projects designed to 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 designed to 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 are
designed to defray all or almost all of the cost of such measures. In many cases, we assist customers in obtaining private 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, which 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 designed to improve the energy efficiency and
control the operation, of a building’s energy- and water-consuming systems. In certain projects, we 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 36-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 school buildings,
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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
Ameresco-owned energy assets are small-scale power plants that we develop, design, construct, finance and own/operate and are
included in our consolidated balance sheets. These assets may sell electricity, heat, cooling, processed biogas, or renewable
biomethane fuel under short-or long-term contracts. We also offer Energy as a Service (“EaaS”), where we design, construct,
finance and own/operate various energy conservation measures on a customer’s site and sell them the output or availability of
these items under a short-or long-term contract.
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 or battery storage
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
renewable natural gas) 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. 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.
As of December 31, 2023, we owned and operated 185 small-scale renewable energy plants including solar PV installations
which generate electricity or deliver renewable gas fuel with a combined capacity of approximately 508 megawatt equivalents
(“MWe”) and have energy assets in development and construction with a combined capacity of approximately 717 MWe, which
includes 48 MWe attributable to a non-controlling interest.
The table below shows the type and number of plants we owned and operated as of December 31, 2023:
Plants Owned and Operated
Biogas: RNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Biogas: non-RNG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Solar and battery assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total plants owned and operated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quantity
5
22
151
7
185
3
Other
Our other lines of business 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 for a customer and also commit that the project will satisfy agreed upon performance standards that vary from
project to 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:
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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.
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 Indefinite Delivery, Indefinite Quantity (“IDIQ”) and Multiple Award Construction Contract
agreements between government agencies and us. These agreements allow us to contract with the relevant agencies to implement
energy and infrastructure 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 agreements with other federal agencies, including the U.S. Army Corps of Engineers, the
Naval Facilities Engineering Command (NAVFAC) Mid-Atlantic, 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.
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Energy Supply Contracts
For the energy assets 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, (iii) gas purchase agreements (“GPAs”) to supply RNG, or (iv) EaaS contracts where we sell the output or
availability of various energy conservation measures to third parties.
The third parties we enter into PPAs, ESAs, or EaaS contracts with include but are not limited to municipalities, the Federal
government, commercial and industrial customers, or utilities. The third parties we sell RNG to include, but are not limited to,
brokers, traders, utilities, municipalities, industrial facilities, or other large purchasers of energy.
Our Business Segments
Our company is primarily organized by region, where each region may perform our key services under our various lines of
business. Our reportable business segments largely follow our regional segmentation. For the year ended December 31, 2023, our
reportable business segments were as follows:
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U.S. Regions
U.S. Federal
Canada
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Alternative Fuels
Europe
All Other
Europe was formerly included in “All Other”. As a result, previously reported amounts have been reclassified for comparative
purposes due to the growth in the segment in 2023.
Our U.S. Regions, U.S. Federal, Canada, and Europe 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 and the development and 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 Alternative Fuels segment sells electricity and processed RNG derived from biomethane from small-scale plants that we own
and operate and provides O&M services for customer owned small-scale RNG plants.
The “All Other” category offers 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:
% of Revenues by Segment (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
2021
40.5 %
29.3 %
5.1 %
8.5 %
11.1 %
5.5 %
61.6 %
21.5 %
3.2 %
6.3 %
3.4 %
4.0 %
45.3 %
32.3 %
4.1 %
9.1 %
3.8 %
5.4 %
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.0 %
100.0 %
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. 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, 2023, we had 168 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
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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
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 2023, we served customers throughout the United States, Canada, and Europe. Approximately 71.8% of our revenues were
derived from federal, state, provincial, or local government entities, including public housing authorities, public universities, and
municipal utilities. 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 Business Segments”). For the
year ended December 31, 2023, our largest 20 customers accounted for approximately 56.4% of our total revenues. Other than the
U.S. federal government, no customers represented 10% or more 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 on 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:
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Smart Energy Solutions: McKinstry, CM3 Building Solutions, CMTA, Inc. (a Legence company), SitelogIQ, ABM
Industries, Inc., Southland Industries, Energy Systems Group, LLC, 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.
Energy Assets: In the LFG and RNG market our principal competitors primarily include large, national project
developers and owners of landfills who self-develop projects using LFG from their own landfills, and other national
renewable natural gas developers/owners such as Archaea Energy, Montauk Renewables, Vanguard Renewables, Opal
Fuels, and divisions of large multi-national oil and gas conglomerates. In the Solar PV and Battery Storage market our
principal competitors include NextEra Energy, Inc., Engie SA, Invenergy, EDF Renewables, and Clearway Energy
Group LLC. We may also compete with many large independent power producers and utilities, as well as a large number
of smaller developers of renewable energy projects. In EaaS, our competitors include Engie SA, Enel X, Schneider
Electric SE, and Redaptive, Inc. 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.
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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. We are also subject to local regulations in the international jurisdictions where we
operate, including Canada, Italy, the United Kingdom, and Greece.
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.
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”). Some of our renewable energy projects which are operating as exempt wholesale generators or operating under a
special exemption from PUHCA are currently subject to rate regulation for wholesale power sales by the Federal Energy
Regulatory Commission (“FERC”) under the FPA and must comply with certain FERC reporting requirements.
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.
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As of December 31, 2023, we had a total of 1,503 employees based in 46 U.S. states, including the District of Columbia, eight
Canadian provinces, seven office locations throughout the United Kingdom, and one office in Italy.
Philanthropic Activities
We actively participate in philanthropic activities that support our local communities and provide an opportunity for dynamic
team building. During 2023, we hosted eight volunteer initiatives sponsored by eight members of our executive management
team, our employees were encouraged to use paid community service days to donate time and creative energy to these events as
well as organizations that touch them personally and to give back to the environment and their communities. As a result, we
experienced increased participation in both the utilization of our volunteer hours and activities.
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.
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 STEM Like a Girl, New England Women in
Energy and the Environment, Massachusetts Rehabilitation Commission, Recruit Military, Hiring Our Heroes, and the Society of
Women Engineers (Portland, OR Chapter).
During the year ended December 31, 2023, our global workforce is made up of 23% female and 77% male. In addition, 33% of
our executive management team are female and 21% of our managers are female.
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 medical providers have always been at the top of our criteria list,
we also continued to focus our 2023 benefit offerings on choice and specifically 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. Through several options of applications of corporate programs, we continued
our partnership and memberships to Care.com, Gympass, and Headspace and Virgin Pulse mobile apps.
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. During 2023 we have improved upon our performance management process and rolled out a formal
mentorship program pairing employees with mentors within our leadership team focusing on established goals and guidance with
various skills.
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.
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 2023 Environmental, Social and Governance Report to be
published in 2024 which will be available at www.ameresco.com.
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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.
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 cycle for energy efficiency and renewable energy projects in general take from 18 to 42 months, 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 macroeconomic conditions and we 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, 2023 and 2022, we had backlog of approximately $1.3 billion and $1.0 billion, respectively, in expected
future revenues under signed customer contracts for the installation or construction of projects, which we sometimes refer to as
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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 $2.6 billion and $1.6 billion, respectively. As of December 31, 2023 and 2022, we
had O&M backlog of approximately $1.2 billion. 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
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.
If we are not able to complete, perform or operate our projects on a profitable basis or as we have committed to our customers,
we could become subject to liquidated damages, and our reputation and our results of operations could be adversely impacted.
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 or delays in receiving components and equipment that meet our requirements,
failure or delays in obtaining all necessary rights to land access and use,
failure or delays in receiving quality performance of contractors and other third-party service providers,
increases (including as a result of inflation) in the cost of labor, equipment, and commodities needed to construct or
operate projects,
failure or delays in obtaining permitting and addressing other regulatory issues, license revocation, and changes in legal
requirements,
failure or delays in obtaining other governmental support or approvals, or in overcoming objections from members of the
public or adjoining landowners,
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,
environmental, archaeological or geological conditions
health or similar issues, a pandemic, or epidemic, such as COVID-19,
labor disputes and work stoppages,
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• mishandling of hazardous substances and waste, and other events outside of our control.
Any of these factors could give rise to construction delays, costs in excess of our expectations or cause us not to meet
commitments given to our customers. We have, for example, experienced disruptions in development, installation and
construction as a result of continued supply chain and logistics challenges, facility closures, 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 which has impacted our construction timelines, and this trend may continue. Furthermore, while the passage of the
IRA may increase the demand for our service and project offerings, it has also increased demand and cost for labor, equipment
and commodities needed for our projects. 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,
give rise to liquidated damages or penalties, cause projects to be unprofitable for us, or otherwise impair our business, financial
condition, and operating results.
For example, our Turnkey Engineering, Procurement, Construction and Maintenance Agreement and the underlying purchase
orders dated as of October 21, 2021 (the “SCE Agreement”) with SCE obligated us to achieve certain substantial completion
milestone dates for the facilities no later than August 1, 2022, and for at least two years thereafter meet specified availability and
capacity guarantees. As previously disclosed, due to supply chain delays, weather and other events, we were unable to complete
the projects by the guaranteed completion date of August 1, 2022 and made force majeure claims related to such delays. We have
been working with SCE to analyze the applicability of force majeure relief to the project delays and SCE has notified us that they
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intend to withhold liquidated damages for at least one of the three projects. If we fail to satisfy certain milestone obligations, fail
come to an agreement with SCE or otherwise resolve matters related to substantial completion or related force majeure relief, 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. This could have a material adverse effect on our reputation, business or results
of operations.
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, 2023 and 2022, 72% and 46%, respectively, of our revenues have been
derived from sales to federal, state, provincial, or local governmental entities, including public housing authorities, public
universities, and municipal utilities. 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, 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
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 SCE, 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. Furthermore, the terms of financing arrangements that we may
enter into, including increases in interest rates as compared to historical rates, have in the past and could in the future impact the
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profitability of our projects. In addition, 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.
Project development or construction activities may require us to make significant investments without first obtaining project
financing or having final customer contracts, which could increase our costs and impair our ability to recover our
investments.
We are at times 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 or financed. 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. We have for example in the past commenced, and may in the future commence, development of certain
projects, such as battery and solar projects, prior to having entered into final binding contracts with the customer or financing
party.
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 or enter into contracts with the customer, 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 and could have an adverse impact our ability to finance our operations.
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. For example, some of our large projects are with
subsidiaries of Hawaiian Electric Industries and the impact of the August 2023 wildfires on Hawaiian Electric Industries financial
condition could have a negative impact on these projects and our financial condition and ability to complete such projects. 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 or at prices that are
acceptable to us 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 at acceptable prices. 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
and challenges. 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 and the Middle East.
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
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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, growth, and operating results.
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 remainder of 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 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.
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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
energy services and renewable energy industries, is high and may intensify with the IRA driving more demand for clean energy
product and service offerings and as such demand for skilled personnel in the industry. 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.
We have been and may continue to be impacted by macroeconomic conditions such as supply chain challenges, a shortfall of
certain products needed for our business, and inflationary pressures.
Global trade challenges including supply chain delays continue to persist and have been exacerbated by global unrest and wars.
These conditions may have long-lasting adverse impact on us and our industries. These conditions, combined with an increased
demand for certain products needed for our business, such as lithium-ion battery cells and solar panels has created a shortfall of
and increased costs for these products and has caused challenges and delays in our projects and may impact the profitability of our
projects. We cannot predict the duration of these global challenges or their impact on our business. If we experience unfavorable
global market conditions, our business, prospects, financial condition, and operating results may be harmed.
For example, we are dependent on the continued supply of lithium-ion battery cells for our energy storage products, and we will
require substantially more cells to grow our battery storage business based on our current plans. Currently, we rely on limited
number of suppliers for these cells. Any disruption in the supply of battery cells from our suppliers could limit our growth for
projects involving battery energy storage. In addition, the cost and mass production of battery cells, depends in part upon the
prices and availability of raw materials such as lithium, nickel, cobalt and/or other metals. The prices for these materials fluctuate
and their available supply may be unstable, depending on market conditions, regulation and global demand for these materials. As
a result of increased global production of energy storage products and electric vehicles, suppliers of these raw materials may be
unable to meet our volume or timing needs. Any reduced availability of these materials may adversely impact our access to
battery cells and our growth, and any increases in their prices may reduce our profitability if we cannot recoup such costs in our
project pricing. Moreover, our inability to meet demand may harm our brand, growth, prospects and operating results.
Extreme weather events and other natural disasters, particularly those exacerbated by climate change, could materially affect
our ability to complete our projects and develop our assets.
Extreme weather-related incidents and other natural disasters, including wildfires, mudslides, hurricanes, and other storms, can
interfere with our ability to complete our projects and develop our assets. Furthermore, such events can impact the operation of
assets we own or have provided energy and other performance commitments for. These risks are increasing, as climate change has
exacerbated some of the conditions that lead to these extreme weather events and natural disasters. Such an event can result in lost
revenue and increased expense thereby having a negative effect on our financial condition and business operations.
A failure of our information technology (“IT”) and data security infrastructure or cyber or other security incidents,
vulnerabilities or other deficiencies, could adversely impact our business, reputation or results of operation or could cause us
to default under our contractual obligations.
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. Our existing systems or any new ones we
implement may not perform as expected 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, 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.
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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. Such cyber and other security threats could
compromise the assets we own and operate or 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 and other cyberattacks. In such instances, we may 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 assets, systems and data,
there can be no assurance that our efforts will prevent these threats. Because the techniques used to obtain unauthorized access, to
disable or degrade systems, and to generate cyberattacks change frequently, have become increasingly more 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 protect
against these attacks and to identify and remediate any security vulnerabilities. To the extent that any attacks, disruptions or
security breach results in a loss or damage to our data, or an inappropriate disclosure of information, or adversely impact the
assets we own or operate, 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 and operating results.
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, others may be
smaller and able to adapt to the constantly changing demand of the market more quickly. The passage of the IRA and the
opportunities it brings could intensify competition in our industry. 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, downtime to our plants such as biogas or biomass; or a faster than
expected diminishment of such supply. For example, in 2022 we had to undertake some unscheduled maintenance at some of our
RNG plants impacting the energy output from such plants. 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.
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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.
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.
Operation of energy assets involves significant risks and hazards customary to the energy industry and may be further
impacted by the effects of climate change. We may not have adequate insurance to cover these risks and hazards, or other risks
beyond our control.
Hazards such as fire, explosion, structural collapse and machinery failure are inherent risks in our operations. These and other
hazards can cause significant personal injury or loss of life, severe damage to and destruction of property, plant and equipment
and contamination of, or damage to, the environment. The occurrence of any one of these events may result in curtailment of our
operations or liability to third parties for damages, environmental cleanup costs, personal injury, property damage and fines and/or
penalties, any of which could be substantial. Strategic targets, such as energy-related facilities, may also be at greater risk of
hostile cyber intrusions or other security attacks, including those targeting information systems as well as electronic control
systems. Such events could severely disrupt business operations and result in loss of service to customers, as well as create
significant expense to repair security breaches or system damage.
Furthermore, certain of our facilities, projects and suppliers are located in or operate operations in locations that are susceptible to
natural disasters. The frequency of weather-related natural disasters may be increasing due to climate change. The occurrence of a
natural disaster, such as tornados, earthquakes, droughts, floods, wildfires or localized extended outages of critical utilities or
transportation systems, or any critical resource shortages, affecting us could cause a significant interruption in our business or
damage or destroy our facilities. While we maintain insurance to protect against these and other risks, some of these events may
be excluded from insurance coverage or our coverage may not be sufficient against all hazards or liabilities to which we may be
subject. Insurance may also not continue to be available at all or at rates or on terms similar to those presently available. Any
losses not covered by insurance could have a material adverse effect on our business, financial condition, results of operations and
cash flows.
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.
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In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances
relating to our new 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,
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.
We own, and in the future may acquire or establish, operating or development projects in joint ventures. Joint ventures inherently
involve a lesser degree of control over business operations. 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 delays, litigation and increased expenses. Some of our joint venture projects may be capital intensive
and if our joint venture partner does not contribute capital they are required to, this could result in delays in our development
projects and increased our capital expenditures. 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 Europe. 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 Europe, 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,
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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; and
political unrest, war, incidents of terrorism, pandemics, or responses to such events.
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 or the imposition of additional taxes, tariffs, duties, or other assessments on renewable
energy or the equipment necessary to generate or deliver it, 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
provide us with tax and other incentives that reduce our costs or increase our revenues. In addition, the U.S. government generally
has not taken action to materially burden the international supply chain, which has been important to the development of
renewable energy facilities at acceptable prices. Any reductions or modifications to, or the elimination of, governmental
incentives or policies that support renewable energy or the imposition of additional taxes, tariffs, duties or other assessments on
renewable energy or the equipment necessary to generate or deliver it, could result in, among other things, the lack of a
satisfactory market for the development and/or financing of renewable energy projects, or adversely impact our ability to
complete projects for existing customers and obtain project commitments from new customers. If the U.S. Supreme Court restricts
federal agencies’ ability to interpret vague or broad legislation this could also negatively impact the market for the projects and
services we provide and our ability to finance them.
For example, recent guidance issued by the Treasury Department and the IRS specified certain types of RNG equipment that is
ineligible for the ITC could negatively impact the profitability of our RNG business and our ability to finance our RNG projects.
Additionally, import duties or other import restrictions could restrict the global supply of, and raise prices for, supplies needed for
our business, such as polysilicon and solar products, batteries, and semiconductors. Such duties or restrictions could increase the
overall cost of our product offerings and reduce our ability to offer competitive pricing in certain markets. For example, in August
2023, the U.S. Department of Commerce issued a final ruling in the Auxin Solar trade case that will lead to higher tariffs on
certain imported solar products from Malaysia, Vietnam, Thailand, and Cambodia beginning in June 2024. Similarly, other
changes in trade regulations or the enforcement of the Uyghur Forced Labor Prevention Act could increase demand and thereby
increase prices for compliant products needed for project development. Failure to comply with trade restrictions and other
governmental restrictions could subject us to fines and penalties. This could have a negative impact on our business and results of
operation. Due to the uncertainty in the regulatory and legislative processes, we cannot determine the effect any 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
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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 number 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 and we may not be able to utilize the full value of tax credits and incentives
available under the IRA or may become subject to penalties if we fail to meet requirements for these credits and incentives.
This may have an adverse effect on our business and operating results.
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. The IRA contains extended and expanded clean energy tax
credits such as the Investment Tax Credit (“ITC”), the Production Tax Credit (“PTC”), and created other financial incentives
designed to promote the development of certain domestic clean energy projects. In order to receive the full value of such credits
and incentives, our projects must satisfy a number of requirements including prevailing wage and apprenticeship requirements. If
we fail to comply with these requirements, the value of the credits may be limited, and we may become subject to financial
penalties. Uncertainty remains under the IRA on which types of projects are eligible for the tax credits and incentives and how
projects can demonstrate compliance with the requirements, we may not receive full value of the tax credits and incentives, which
could increase our income tax expense, reduce our net income and adversely impact the profitability of our projects or our ability
to finance our projects. There is also uncertainly if IRA incentives may be reduced or repealed in the future, especially following
the 2024 elections. In addition, the timing of when assets are placed in service has in the past and could in the future impact our
tax rate. If we experience unexpected delays in this timing, we may not be able to take advantage of the ITC as expected. If we are
not able to utilize the ITC as expected this could have an adverse effect of our financial results.
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, along with the IRA, also made changes to the way the
deduction is calculated. If those changes or clarifying guidance issued by the IRS 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 2020 through 2023 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 and tax reserves, 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.
Furthermore, the Organization for Economic Cooperation and Development (OECD) Inclusive Framework of 137 jurisdictions
have joined a two-pillar plan to reform international taxation rules. The first pillar is focused on the allocation of taxing rights
between countries for in-scope multinational enterprises that sell goods and services into countries with little or no local physical
presence and is intended to apply to multinational enterprises with global turnover above 20 billion euros. The second pillar is
focused on developing a global minimum tax rate of at least 15 percent applicable to in-scope multinational enterprises and is
intended to apply to multinational enterprises with annual consolidated group revenue in excess of 750 million euro. While
substantial work remains to be completed by the OECD and national governments on the implementation of these proposals,
future tax reform resulting from these developments may result in changes to long-standing tax principles, which could adversely
affect our effective tax rate or result in higher cash tax liabilities.
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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. We have over the past few years experienced longer lead times in the permitting process for projects and such delays
have and may further impair or delay our ability to develop projects. Delays could also increase the cost so substantially that the
projects are no longer attractive to us. If we were to commence construction in anticipation of obtaining the final, non-appealable
permits needed for a 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 commitments 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 one of our subsidiaries. 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 are currently party to an IDIQ
agreement with the U.S. Department of Energy expiring in 2028. 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 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, most 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. Some of our renewable energy projects which are operating as
exempt wholesale generators or operating under a special exemption from PUHCA are currently subject to rate regulation for
wholesale power sales by the Federal Energy Regulatory Commission (“FERC”) under the FPA and must comply with certain
FERC reporting requirements. Also, we may acquire interests in or develop additional 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 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
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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. Many of our current generating projects are 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.
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.
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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, energy asset 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 $200 million revolving senior secured credit facility and $75 million term loan that mature March 2025 as well as a
$220 million delayed draw term loan that matures April 15, 2024 (collectively, the “Senior Credit Facilities”). As of
December 31, 2023, the balance of our Senior Credit Facilities was $279.9 million, $65.0 million of which was outstanding under
the delayed draw term loan. 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. The Senior Credit Facilities are subject to quarter end ratio
covenants, including a maximum ratio of total funded debt to EBITDA and a debt service coverage ratio (each as defined in the
agreement and described in more detail in this Form 10-K) as well as certain other customary operational covenants. EBITDA for
purposes of the facilities excludes the results of certain renewable energy projects that we own and which we finance in separate
subsidiaries through project financing and the results of our joint ventures. In addition, our project financing term loans and
construction loans require us to comply with a variety of financial and operational covenants. Our failure to comply with the
covenants under our project financing debt or our Senior Credit Facilities 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 under our project financing debt or our Senior Credit Facilities, 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 or to
prevent foreclosure on the collateral securing the debt.
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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 or limited 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 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.
Furthermore, our $300 million construction and development loan, which we use to finance a number of our early stage
development and construction projects, requires us, in the case of default under the facility, a default under our Senior Credit
Facilities or a change in control of Ameresco, to make required capital contributions to the borrower entity who then would be
required to use the proceeds from the capital contributions to repay the construction and development loan. The loss of our
ownership interest in a subsidiary or some or all of a subsidiary’s assets or the requirement to make capital contributions under
our construction and development loan could have a material adverse effect on our business, financial condition and operating
results.
If we fail to comply with the obligation in our Senior Credit Facilities to use commercially reasonable efforts to raise a
minimum of $100 million equity or subordinated debt financing, we could be in default under the Senor Credit Facilities or if
the terms of such financing are not favorable to us our financial condition may be adversely impacted
Our Senior Credit Facilities require us to use commercially reasonable efforts (assuming normal market conditions) to raise a
minimum of $100 million equity or subordinated debt financing by April 15, 2024. We are currently pursuing a subordinated debt
financing but there are no assurances that we will be able to complete such financing on favorable terms or at all. If we fail to
comply with the obligation, our lenders could declare that an event of default has occurred and accelerate our indebtedness and we
may not have sufficient funds available for repayment.
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, 2023, our Class A common stock has traded at a low of $18.40 and a high of
$65.86. 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
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, and certain of his family members own all of our Class B common stock, which, together with their
Class A common stock, represents approximately 74.5% of the combined voting power of our outstanding Class A and Class B
23
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 2016, we announced a stock repurchase program under which the Company is authorized to repurchase, in the aggregate, up to
$17.6 million of our Class A common stock. 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. Our utilization
of the share repurchase program depends upon a variety of factors, including the trading price of our Class A common stock,
liquidity, securities laws restrictions, tax and other regulatory restrictions, alternative uses of capital, and market and economic
conditions. Any stock repurchase would be 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.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Information Technology and Cybersecurity Risk Management
As is the case for all large companies, we are regularly subject to cyberattacks and other cyber incidents and, therefore,
cybersecurity occupies a pivotal role within our risk management process. We adhere to a risk-based, multi-layered “defense in
depth” approach that is dedicated to the identification, protection, detection, response, and recovery from cyber threats and
incidents. We understand that a single technology, process, or business control cannot wholly prevent or mitigate all potential
risks. Therefore, we employ a multitude of technologies, processes, and controls, each functioning independently but collectively
forming a cohesive strategy aimed at minimizing risk. This strategy is evaluated through various means, such as frequent research
and industry security briefings among our information technology group, internal and external audits, independent program
assessments, control attestation reports, penetration testing, and other exercises that gauge its effectiveness. Threats and incidents
connected with third party service providers are considered and managed under this process as well.
We engage external parties, including consultants, independent privacy assessors, computer security firms and risk management
and governance experts, to enhance our cybersecurity oversight. For example, we have engaged an outside consulting firm with
expertise in the field to help us assess our systems, monitor risk and implement best practices and to support the internal audit of
our cyber security programs and we regularly consults with industry groups on emerging industry trends. In addition, as part of
our overall risk mitigation strategy, we also maintain cyber insurance coverage. Our cybersecurity policies, standards and
procedures include cyber and data breach response plans, which are periodically assessed against the National Institute of
Standards and Technology Cybersecurity Framework.
We do not believe that there are currently any risks from cybersecurity threats that are reasonably likely to materially affect us or
our business strategy, results of operations or financial condition.
Cybersecurity Governance and Oversight
The Audit Committee of our Board of Directors provides direct oversight over cybersecurity risk. The Audit Committee receives
and provides feedback on periodic updates from management regarding cybersecurity. Agendas for quarterly updates are
developed and adjusted throughout the year to adapt to any emerging risks or key topics and include, a wide range of information,
including the prevailing cybersecurity threat landscape, investments in infrastructure, trainings programs and opportunities for
bolstering the security of our company's systems and the protection of our products and operations. The full Board of Directors
receives regular reports from the Audit Committee and our management on our cyber security program and the emerging threat
landscape.
24
We have a Senior Vice President of Information Technology whose team is responsible for leading company-wide cybersecurity
strategy, policy, standards and processes and works across relevant units of Ameresco. Our Senior Vice President of Information
Technology has more than thirty years of experience in cybersecurity and information technology and based on his long career
with Ameresco he has a deep understanding of our information technology and business needs and the cyber security
opportunities and risks we face.
In actioning our cyber security strategy, our management together with our Senior Vice President of Information Technology
evaluate the materiality of any cybersecurity threats and incidents utilizing both qualitative and quantitative considerations. Our
internal audit team also provides independent testing on aspects of the operations of our cybersecurity program and the supporting
control framework.
Our cybersecurity program is designed to ensure the confidentiality, integrity, and availability of data and systems as well as to
ensure timely identification of and response to any incidents. This design is geared toward supporting our business objectives and
the needs of our valued customers, employees, and other stakeholders. We firmly believe that cybersecurity is a collective
responsibility that extends to every employee, and we prioritize it as an ongoing objective. To increase our employees' awareness
of cyber threats, we provide education and share best practices through a security awareness training program. This includes
receiving regular exercises, cyber-event simulations, training programs and an annual attestation to our Technology Acceptable
Use Policy.
See “A failure of our information technology (“IT”) and data security infrastructure or cyber or other security incidents,
vulnerabilities or other deficiencies, could adversely impact our business, reputation or results of operation or could cause us to
default under our contractual obligations.” in Item 1A, Risk Factors.
Item 2. Properties
Our corporate headquarters is located in Framingham, Massachusetts, where we occupy approximately 23,000 square feet under a
lease expiring on June 30, 2025. We occupy regional offices in Phoenix, Arizona; Oak Brook, Illinois; Portland, Maine;
Columbia, Maryland; Charlotte, North Carolina; Knoxville, Tennessee; Renton, Washington, Richmond Hill, Ontario; London,
England; and Milan, Italy each less than 20,000 square feet, under lease agreements. In addition, we lease space, typically of
lesser size, for 49 field offices throughout North America and Europe. We also own 183 small-scale renewable energy plants
throughout North America and two 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.
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.
25
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 23, 2024, 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, 2018 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.
26
Ameresco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Russell 2000 Index . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Clean Edge Green Energy Index . . . .
12/31/2018
$100.00
$100.00
$100.00
12/31/2019
$124.11
$125.52
$142.67
12/30/2020
$370.50
$150.58
$406.35
12/30/2021
$577.59
$172.90
$395.62
12/30/2022
$405.25
$137.56
$276.35
12/31/2023
$224.61
$160.85
$248.97
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 year ended December 31, 2023. As of December 31, 2023, 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,
27
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]
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 the U.S., Canada, and Europe, 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, and joint venture arrangements have
been an important part of our growth enabling us to broaden our service offerings and expand our geographical reach. During
2022, we entered into joint venture arrangements in Greece and California and acquired an operating wind farm in Ireland. During
2023, we acquired Enerqos Energy Solutions S.r.l. (“Enerqos”) a renewable energy and energy efficiency company headquartered
in Milan, Italy and entered into a joint venture agreement with Bristol City, U.K. to transform the way the city generates,
distributes, stores and uses energy.
On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and the ability to acquire
100% of the stock of Bright Canyon Energy Corporation (“BCE”) in a two-phased transaction, exclusive of each other. Phase 1,
the purchase of the energy asset project, closed on August 4, 2023. In the second phase, which closed on January 12, 2024, we
acquired BCE, including its interest in one of our consolidated joint ventures and its interests in project subsidiaries developing or
with rights to develop solar, battery, and microgrid assets.
Key Factors and Trends
The Inflation Reduction Act
The IRA was signed into law on August 16, 2022. The bill invests nearly $369 billion in energy and climate policies. The
provisions of the IRA are intended to, among other things, incentivize domestic clean energy investment, manufacturing, and
deployment. The IRA incentivizes the deployment of clean energy technologies by extending and expanding federal incentives
such as the ITC and the Production Tax Credit (“PTC”). We view the enactment of the IRA as favorable for the overall business
climate for the renewable energy industry. However, there is uncertainty related to the applicability of the IRA to our current and
planned projects and the scope of the IRA and its interpretations may change if there is a change in the U.S. administration or if
government agencies’ authority to interpret federal law is restricted as a result of the Supreme Court’s review of the Chevron
doctrine under which federal government agencies have been awarded board authority to interpret broad or ambiguous legislation.
We may also continue to experience a delay in our sales cycles and new award activity as our customers consider the applicability
28
of the IRA and as financing projects may take longer as result of this uncertainty. The IRA may increase the competition in our
industry and as such increase the demand and cost for labor, equipment and commodities needed for our projects.
Supply Chain Disruptions and Other Global Factors
We continue to monitor the impact of global economic conditions on our operations, financial results, and liquidity, including the
result of supply chain challenges, war in Ukraine and the Middle East, evolving relations between the U.S. and China, and other
geopolitical tensions. The impact to our future operations and results of operations as a result of these global trends remains
uncertain and the challenges we face, including increases in costs for logistics and supply chains, intermittent supplier delays, and
shortages of certain components needed for our business, such as lithium-ion battery cells, semiconductors, and other components
required for our clean energy solutions may continue or become more pronounced.
During the year ended December 31, 2023, we were impacted by supply chain disruptions and varying levels of inflation, as a
result macroeconomic conditions, causing delays in the timely delivery of material to customer sites and delays and disruptions in
the completion of certain projects, including those pursuant to the SCE Agreement, and increased shipping and transportation
costs, as well as increased component and labor costs. This negatively impacted our results of operations during the year ended
December 31, 2023. We expect the trends of supply chain challenges to continue beyond this year. We continue to monitor
macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate to address the challenges
presented from these conditions.
In August 2023, the U.S. Department of Commerce issued a final ruling in the Auxin Solar trade case related to solar tariff
imports that will lead to higher tariffs on certain imported solar products from Malaysia, Vietnam, Thailand, and Cambodia
beginning in June 2024. Similarly, other changes in trade regulations and the enforcement of the Uyghur Forced Labor Prevention
Act, could disrupt the solar panel supply chain, increase the cost for solar cells and panels, and ultimately impact the demand for
clean energy solutions. We are closely monitoring the investigation and any regulations issued in connection with it.
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 or the imposition of
additional taxes, tariffs, duties, or other assessments on renewable energy or the equipment necessary to generate or deliver it, for
energy efficiency 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 is expected to 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, hurricanes, 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” and “Extreme weather events and other natural disasters, particularly those
exacerbated by climate change, could materially affect our ability to complete our projects and develop our assets” in Item 1A,
Risk Factors.
29
The Southern California Edison (“SCE”) Agreement
In October 2021, we entered into a contract with SCE to design and build three grid scale BESS at three sites near existing
substation parcels throughout SCE’s service territory in California with an aggregate capacity of 537.5 MW (“the SCE
Agreement”). 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. As previously disclosed, due to
supply chain delays, weather and other events, we were unable to complete the projects by August 1, 2022 (the “Guaranteed
Completion Date”) and made related force majeure claims. In late 2022, SCE also instructed us to adjust the completion of the
sites into 2023. Under the SCE Agreement, a failure to reach the Guaranteed Completion Date could, under certain circumstances,
result in liquidated damages up to a maximum amount of $89 million being applied. We have been working with SCE to analyze
the applicability and scope of force majeure relief based on our force majeure claims. In February 2024, in response to us issuing
an invoice to SCE for one of the sites, SCE notified us that they intend to withhold liquidated damages for that project. Our view
is that liquidated damages should not be applied. If we fail to come to an agreement with SCE about the applicability and scope of
force majeure relief and liquidated damages, we may be required to pay liquidated damages up to an aggregate maximum of $89
million and may not be able to recover costs associated with the force majeure events.
We are working closely with SCE on the final steps toward substantial completion for two of the three projects. Construction
activities and preparation for commissioning have begun for the third project, which was significantly impacted by the heavy
rainfall in California in 2023. This last site is expected to reach substantial completion in the summer of 2024.
A majority of our revenues under this contract were recognized in 2022 based upon costs incurred in 2022 relative to total
expected costs on this project.
Stock-based Compensation
During the year ended December 31, 2023, we granted 170,000 common stock options to certain employees and 66,247 restricted
stock units to our employees and non-employee directors under our 2020 Stock Incentive Plan. Our stock-based compensation
expense decreased from $15.0 million for the year ended December 31, 2022 to $10.3 million for the year ended December 31,
2023. Stock-based compensation decreased in 2023, primarily due to the reversal of previously recognized expense of
approximately $5.1 million related to performance-based option grants as the estimated probability of such awards vesting was
reduced to zero based on the expected attainment of certain performance targets due to revised results in 2023.
In addition, our unrecognized stock-based compensation expense decreased from $46.7 million at December 31, 2022 to $30.1
million at December 31, 2023, and is expected to be recognized over a weighted-average period of two 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 (1)
Fully-contracted backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
As of December 31,
2023
2022
1,323,742 $
1,001,325
Awarded, not yet signed customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,555,197
1,638,640
Total project backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,878,939 $
2,639,965
12-month project backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
718,577 $
595,020
(1) Project backlog net of minority interests
O&M Backlog
Fully-contracted backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,221,661 $
1,231,120
12-month O&M backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
88,930 $
89,520
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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
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 design/build project value of small-scale renewable energy plants that have
been awarded or for which we have secured development rights, were estimated at $2,445.9 million as of December 31, 2023,
including $89.8 million attributable to a non-controlling interest, and $1,625.7 million as of December 31, 2022. The portion
related to spending for EaaS assets was approximately $399.8 million and $36.4 million at December 31, 2023 and 2022,
respectively. These are also important metrics because they help 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,
2023
2022
Year-Over-Year Change
Dollar
Amount
% of
Revenues
Dollar
Amount
% of
Revenues
Dollar
Change
% Change
Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,374,633
100.0 % $ 1,824,422
100.0 % $ (449,789)
84.1 % (405,385)
(44,404)
15.9 %
111
0.1 %
8.7 %
— %
2,650
3,831
(24.7) %
(26.4) %
(15.3) %
6.7 %
1.7 %
100.0 %
(38.2) %
61.1 %
Cost of revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings from unconsolidated entities
1,128,204
246,429
1,758
82.1 % 1,533,589
17.9 % 290,833
1,647
0.1 %
Selling, general and administrative expenses . . .
162,138
11.8 % 159,488
Asset impairments . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . .
Other expenses, net . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . .
3,831
82,218
43,949
38,269
0.3 %
—
6.0 % 132,992
7.3 %
(50,774)
3.2 %
27,273
1.5 %
16,676
2.8 % 105,719
5.8 %
(67,450)
(63.8) %
Income tax (benefit) provision . . . . . . . . . . . . . .
(25,635)
(1.9) %
7,170
0.4 %
(32,805)
457.5 %
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 63,904
Net income attributable to non-controlling
interest and redeemable non-controlling interest $
Net income attributable to common
shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 62,470
(1,434)
4.6 % $ 98,549
5.4 % $ (34,645)
(35.2) %
(0.1) % $
(3,623)
(0.2) % $
(2,189)
(60.4) %
4.5 % $ 94,926
5.2 % $ (32,456)
(34.2) %
(1) A comparison of our 2022 and 2021 results can be found in Item 7 of our 2022 Form 10-K filed with the SEC.
31
Our results of operations for the year-ended December 31, 2023 reflect a year-over-year decline in terms of revenues, operating
income, and net income attributable to common shareholders. All financial result comparisons are against the prior year period.
•
•
•
•
•
•
•
•
Revenue: total revenues decreased primarily due to a $480.0 million, or 32%, decrease in our project revenue attributed
to the timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects,
including our SCE battery storage project.
Cost of Revenues and Gross Profit: the decrease in cost of revenues is primarily due to the decrease in project revenues
described above, however, our gross profit as a percent of revenues increased due to the lower revenue contribution from
our lower margin, design-build SCE battery storage project.
Selling, General and Administrative Expenses: the increase is primarily due to higher professional fees of $2.5 million,
higher project development fees of $2.1 million, partially offset by lower net salaries and benefits of $4.6 million as a
result of a decrease in non-cash stock-based compensation expense.
Asset Impairments: This year includes impairment charges of $1.6 million recorded in 2023 related to two of our landfill
gas to energy assets, and a goodwill impairment charge of $2.2 million related to one of our reporting units.
Other Expenses, Net: Other expenses, net, includes gains and losses from derivatives transactions, foreign currency
transactions, interest expense, interest income, amortization of financing costs and certain government incentives. Other
expenses, net increased primarily due to higher interest expenses, net of interest income of $9.7 million related to
increased levels of project debt, a higher average balance on our senior secured debt facility, factoring fees in Italy of
$5.8 million, and a decrease in government incentives received of $2.0 million.
Income before Income Taxes: the decrease is due to reasons described above.
Income Tax Expense (Benefit): the provision 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 rate was lower in 2023 as compared to 2022 primarily due to higher deductions
under the Section 179D Energy Efficient Commercial Buildings Deduction for both 2023 under the IRA and for prior
periods which were documented and claimed on amended tax returns during 2023, deferred state tax benefits resulting
from reduced state tax rates in future periods. The tax benefit rate for 2022 was favorable, 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.
Net Income and Earnings Per Share: Net income attributable to common shareholders decreased due to the reasons
described above. Basic earnings per share for 2023 was $1.20, a decrease of $0.63 per share compared to 2022. Diluted
earnings per share for 2023 was $1.17, a decrease of $0.61 per share, compared to 2022.
Business Segment Analysis
Our reportable segments for the year ended December 31, 2023 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and
Europe. The remaining amounts are included in “All Other”. Europe was formerly included in “All Other” but was disaggregated
due to growth in the segment in 2023. 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
2023
2022
Dollar Change
% Change
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
557,122 $
1,123,343 $
(566,221)
(50.4) %
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
402,884
70,110
117,075
152,842
74,600
391,891
58,558
114,459
61,645
74,526
10,993
11,552
2,616
91,197
74
2.8
19.7
2.3
147.9
0.1
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,374,633 $
1,824,422 $
(449,789)
(24.7) %
•
U.S. Regions: the decrease is primarily due to a $584.1 million, or 56%, decrease in project revenues attributable to the
timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects,
including our SCE battery storage project, versus the prior year partially offset by a $13.1 million, or 28%, increase in
revenue from the growth of our energy assets in operation.
32
•
•
•
U.S. Federal: the increase is primarily due to a $8.4 million, or 3%, 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 and a $1.6 million, or 3%,
increase in O&M revenue.
Canada: the increase is primarily due to higher project revenues which were partially offset by unfavorable foreign
exchange rates.
Alternative Fuels: the increase is primarily due to a $2.3 million, or 2%, increase in energy asset revenues resulting from
the continued growth of our operating portfolio, increased production levels and more favorable pricing on renewable
identification numbers (“RIN’s”) generated from our renewable natural gas facilities.
• Europe: revenues increased year-over-year primarily due to higher project revenue of $85.1 million, or 158%, resulting
from increased overall activity which included revenues of $52.2 million related to the acquisition of Enerqos earlier in
2023 and increased revenues in Greece of $28.3 million.
• All Other: All other revenues is consistent with the prior year.
Income before Income Taxes and Unallocated Corporate Activity
Year Ended December 31,
Year-Over-Year Change
(In Thousands)
2023
2022
Dollar Change
% Change
U.S. Regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
38,746 $
49,237
88,531 $
50,866
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alternative Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,813
6,215
4,188
4,442
2,554
22,989
5,589
6,370
Unallocated corporate activity . . . . . . . . . . . . . . . . . .
(68,372)
(71,180)
(49,785)
(1,629)
1,259
(16,774)
(1,401)
(1,928)
2,808
(56.2) %
(3.2)
49.3
(73.0)
(25.1)
(30.3)
3.9
Income before income taxes . . . . . . . . . . . . . . . . . . $
38,269 $
105,719 $
(67,450)
(63.8) %
• U.S. Regions: the decrease is primarily due to the lower revenues described above, partially offset by lower salaries and
•
•
•
•
•
•
benefit costs and lower project development costs.
U.S. Federal: the decrease is due primarily to higher interest expense.
Canada: the increase is primarily due to the increase in project revenues described above partially offset by higher
project development costs.
Alternative Fuels: the decrease is primarily due to higher direct costs related to unplanned downtime, higher interest
expense, higher depreciation expense related to the timing of assets placed in operations and impairment charges
recorded in 2023 related to two of our landfill gas to energy assets.
Europe: the decrease is primarily due to factoring fees of $5.8 million, increased salaries and benefits, net, and
depreciation and amortization as a result of the acquisition of Enerqos, partially offset by the increased revenues noted
above.
All Other: the decrease is primarily due to increased salaries and benefits, net.
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 improved primarily due to lower net salaries and benefit costs of $4.7 million, related to a decrease in non-cash
stock-based compensation expense, and higher interest income partially offset by higher interest expense of $3.2 million.
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 Note 13 “Equity and Earnings per Share” for additional information.
Working capital requirements can be susceptible to fluctuations during the year due to timing differences between costs incurred,
the timing of milestone-based customer invoices and actual cash collections. Working capital may also be affected by seasonality,
33
growth rate of revenue, long lead-time equipment purchase patterns, advances from Federal ESPC projects, and payment terms
for payables relative to customer receivables.
We expect to incur additional expenditures in connection with the following activities:
equity investments, energy 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 large projects
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, plus develop and sell transactions, tax equity transfers, and our general
access to credit and equity markets, will be sufficient to fund our operations through at least February 2025. With the adjustments
to the anticipated timeline for completing the SCE battery storage projects, we requested an additional extension to the maturity
date for the remaining principal amount of the delayed draw term loan A under our senior secured credit facility, which is
scheduled to mature April 15, 2024.
We continue to 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 and debt service requirements. This may include limiting discretionary spending across
the organization and re-prioritizing our capital projects amid times of political unrest, the duration of supply challenges, and the
rate and duration of the inflationary pressures. For example, recent increases in inflation and interest rates have impacted overall
market returns on assets. We have therefore been particularly prudent in our capital commitments over the past few quarters,
ensuring that our assets in development continue to align with our hurdle rates.
August 2023 Purchase and Sale Agreement
On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and the right to acquire
100% of the stock of BCE in a two-phased transaction, exclusive of each other. Phase 1, the purchase of the energy asset project,
closed on August 4, 2023 and did not constitute a business in accordance with ASC 805-50, Business Combinations.
The adjusted purchase price for phase 1 was $88.0 million, of which $5.0 million was paid in cash, $46.7 million was financed
through a seller’s note, and we assumed a construction loan on the energy asset project for $36.3 million. We are in process of
converting the construction loan to a term loan. We also received cash of $11.2 million. During the year ended December 31,
2023, we paid $18.4 million in principal on the seller’s note, the balance of which was paid in January 2024. We also agreed to
sell back to the seller investment tax credits for the project acquired as part of this transaction for the fair market value of these
credits and we received $21.0 million in January 2024 for the transfer of these credits. In addition, we assumed a land lease for the
energy asset project. See Note 8 Leases for additional information on the lease.
In the second phase, which closed on January 12, 2024, we acquired BCE, including its interest in one of our consolidated joint
venture and its interests in project subsidiaries developing or with rights to develop solar, battery, and microgrid assets for a
purchase price of $39.1 million, of which $6.6 million was paid at the closing. The remaining $32.5 million was financed by a
seller’s note accruing interest of 5.0% and is payable in August 2024. We may be required to make additional contingent
payments for this acquisition based on certain projects achieving commercial operation and if the projects qualify for higher
energy tax credits than expected.
Senior Secured Credit Facility — Revolver and Term Loans
During the year ended December 31, 2023, we entered into three amendments to our fifth amended and restated senior secured
credit facility, which extended the maturity date of our delayed draw term loan A, resulted in $155.0 million paid for the year
ended December 31, 2023, $10.0 million due and paid on January 31, 2024 and February 14, 2024, and $10.0 million due on
March 31, 2024. The remaining principal amount of our delayed draw term loan is $35.0 million which is due on April 15, 2024.
The overall rate table for all loans under the current agreement was also increased by 0.25%. The amendment increased the total
funded debt to EBITDA covenant ratio from a maximum of 3.50 to 3.75 for the quarter ending December 31, 2023, and 3.50
thereafter.
As of December 31, 2023, the balance on the senior secured credit facility was $279.9 million and we had funds available of
$37.5 million.
After the end of the year, we announced that we had engaged an investment bank to raise subordinated debt as required by the
December 2023 amendment to our senior secured credit facility. The debt raise, if successful, would be used to repay outstanding
amounts on the senior secured credit facility.
34
Energy Asset Financing
Energy Asset Construction Facilities, Financing Facilities, 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., except to the extent of completion guarantees and EPC contracts and certain
equity contribution obligations under our August 2023 Construction Credit Facility as described in more detail below.
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.
Material energy asset construction and term loan financings during the year ended December 31, 2023 were as follows:
•
•
• March 2023 Construction Credit Facility, 2.00% - we entered into a credit agreement for a construction facility with a
total commitment of CAD$100.0 million and as of December 31, 2023, no funds were drawn under this facility.
April 2023 Construction Credit Facility, 6.82%, due July 1, 2024 - one of our consolidated joint venture subsidiaries
(“JV”) entered into a construction loan agreement with two lenders for a principal amount of up to $140.8 million under
an energy asset credit facility. At the closing, the JV drew down $90.9 million for construction of an energy asset and
subsequently drew down an additional $43.5 million. The loan will be repaid after the energy asset project achieves
provisional acceptance, through a sale-leaseback financing under lease agreements entered into between the same parties,
as part of the closing documents. We acquired the remaining interest in this JV in January 2024 when we closed on the
acquisition of BCE.
August 2023 Construction Credit Facility, 9.34%, due August 31, 2026 - we entered into a construction and development
loan agreement which provides a loan in a principal amount of up to $300.0 million. At the closing, we drew down
$200.0 million under this facility, of which approximately $187.0 million was used to reimburse Ameresco for
development and construction costs. Subsequent to closing, we drew down an additional $78.9 million. The loan
contains a one-year extension option that can be exercised if certain circumstances are met, including payment of a $3.0
million extension fee. The obligations under the loan are guaranteed by all the related subsidiaries and are secured by the
subsidiaries’ assets as well as our equity interest in the borrower entity and in the case of default under the facility, a
default under our Senior Secured Credit Facility or a change in control of Ameresco, Inc., we are required to make
capital contributions to the borrower entity who then would be required to use the proceeds from the capital contributions
to repay the construction and development loan.
October 2022 Financing Facility, 6.70%, due August 31, 2039 - during 2023, we entered into an amendment and an
amended and restated loan agreement that increased the original commitment of $125.0 million to $500.0 million,
increased the interest rate to 6.70% and changed the maturity date to August 31, 2039. The loan also provides for a
residual percentage of distributable cash flows payable after the maturity date of the loan, until the earlier of the lender
achieving an 8.51% internal rate of return (“IRR”) on funds borrowed under the facility, or the facility discharge date
which was extended to August 31, 2049. During 2023, we drew down a total of $276.7 million under this facility.
•
As of December 31, 2023, our total construction and term loans outstanding was $1.0 billion. See Note 9 “Debt and Financing
Lease Liabilities” for additional information about these loans.
Sale-leasebacks and Financing Leases
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.
As of December 31, 2023, our total sale-leasebacks classified as long-term financing facilities outstanding was $185.7 million.
As of December 31, 2023, our total financing leases outstanding was $13.9 million. These are our sale-leaseback arrangements
entered into as of December 31, 2018 which remain under the previous guidance.
35
See Notes 8 “Leases” and 9 “Debt and Financing Lease Liabilities” for additional information on these financing facilities.
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.
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 $533.1 million in principal amounts as
of December 31, 2023 and $478.5 million as of December 31, 2022. 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 $154.3 million during the year
ended December 31, 2023 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 $260.4 million during the year ended December 31, 2023. 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.
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,
2023
2022
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
79,271 $
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
227,000 $
Availability under revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
37,489 $
115,534
189,283
345
Cash Flows
The following table summarizes our changes in cash, cash equivalents, and restricted cash:
(In Thousands)
Year Ended December 31,
2023
2022
Cash flows used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(69,991) $
(338,288)
Cash flows used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(566,943)
640,803
(81)
(328,358)
730,227
(747)
Net increase (decrease) in cash, cash equivalents, and restricted cash . . . . . . . . . . . . . . . . . . $
3,788 $
62,834
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.
36
Cash Flows from Operating Activities
Our cash flow from operating activities in 2023 improved over 2022 primarily due to a $259.4 million and $49.2 million increase
in cash flows from unbilled revenue (costs and estimated earnings in excess of billings) and accounts receivable, respectively, due
to the timing of when certain projects are invoiced, including our SCE battery storage project, partially offset by a decrease of
$34.6 million in net income.
Cash Flows from Investing Activities
During 2023, we made capital investments of $538.4 million in new energy assets and $7.6 million in major maintenance of
energy assets, compared to $304.6 million and $18.0 million, respectively, in 2022. This year we paid $9.2 million, net of cash
received, for an acquisition and also contributed $6.0 million to joint venture investments.
We currently plan to invest approximately $350.0 million to $400.0 million in capital investments in 2024, principally for the
construction or acquisition of new renewable energy plants.
Cash Flows from Financing Activities
Our primary sources of financing during 2023 were proceeds of $843.5 million from long-term debt financings and construction
revolvers, $168.9 million from advances on Federal ESPC projects and energy assets, partially offset by repayments of long-term
debt totaling $303.1 million, net payments on our senior secured revolving credit facility of $43.0 million, and distributions to
non-controlling interests of $21.8 million.
During 2022, we received net proceeds of $468.5 million from long-term debt financings, $252.7 million from advances on
Federal ESPC projects and energy assets, partially offset by repayments of long-term debt totaling $161.9 million.
We currently plan additional financings of $300.0 million to $350.0 million in 2024 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
37
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 (fourth quarter) for goodwill and
intangible assets that have indefinite lives. In 2023, we changed the assessment date from December 31, 2023 to October 31,
2023. 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 assessment during the year ended December 31, 2023, one reporting unit had a fair value that was 2% less than the
carrying value and we recorded a $1,644 goodwill impairment, which was $2,222 net of tax and was primarily driven by a decline
in projected cash flows, including revenues and profitability. One reporting unit with goodwill had an estimated fair value that
exceeded its carrying value by 16%. All other reporting units with goodwill had estimated fair values that exceeded their carrying
values by at least 65% as of December 31, 2023.
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. However, the IRA signed by the President on August 16, 2022 increased the ITC rate back to 30% for
projects placed in service after January 1, 2022 and before January 1, 2033. 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. On December 23, 2022, the IRS issued Announcement 2023-1
which clarified the energy efficiency standards which will be applied to projects placed in service for 2021 and 2022. 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
38
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. 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 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, 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 $79.3 million as of December 31, 2023 and $115.5 million as of December 31, 2022.
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 derivative 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. In the past, we entered into 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, and may do so in the future.
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.
39
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 “Summary of Significant Accounting Policies”, 18 “Fair Value Measurement”,
and 19 “Derivative Instruments and Hedging Activities” 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,
GBP, and Euro. Also, a significant number of employees are located in Canada and Europe, 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
United Kingdom. The Euro has been designated as the functional currency for our operations in Europe. 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, United Kingdom, and European subsidiaries into U.S.
dollars using a weighted average exchange rate for the applicable fiscal period. We translate the assets and liabilities of these
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 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, 2023, due to the weakening of the Canadian dollar and GBP versus the U.S. dollar, our foreign currency
translation resulted in a gain of $1.6 million which we recorded as an increase in accumulated other comprehensive income,
compared to a loss of $3.4 million for the year ended December 31, 2022. 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, 2023 and December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the years ended December 31, 2023, December 31, 2022, and
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, December 31,
2022, and December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the
years ended December 31, 2023, December 31, 2022, and December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2023, December 31, 2022, and
December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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, 2023 and
2022, 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 years in the three-year period ended December 31, 2023, and the related
notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial
reporting as of December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2023, 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, 2023, 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 the 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, management tests the Company’s goodwill, which had a balance of
$75.6 million as of December 31, 2023, for impairment, at the reporting unit level, at October 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. During the year ended December 31, 2023, the Company recorded a goodwill impairment of $2,222 at one
reporting unit.
We identified the annual goodwill impairment assessment for the Company’s reporting unit where impairment was identified as a
critical audit matter because of the significant estimates and assumptions used by management when estimating the fair value of
the reporting unit, including management’s forecasts of revenue and expense growth rates, management’s selection of the
discount rate for the income approach and management’s estimates of the multiples of earnings of comparable entities with
similar operations and economic characteristics for the market approach. 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, 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 and testing certain contracts contributing to the revenue forecast.
• We tested the underlying data used by management in their development of forecasts of revenue and expense growth
rates for accuracy and completeness by agreeing it to source data.
• We utilized valuation specialists to assist in the following procedures, among others:
◦ 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 a market participant discount rate using publicly available market data and comparing that discount
rate to the discount rate 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’s projects line of business, which relates to the
construction of energy efficiency projects, including the design, engineering and installation of technologies and techniques to
improve energy efficiency and control the operation of a building’s energy-and-water-consuming systems, recognized revenue of
$1.37 billion during the year ended December 31, 2023. 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.
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
43
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, 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:
◦ Testing the initial project budget by the development of an independent margin expectation for the projects
combined with inquiry with the project management team and/or comparing selected items from the underlying
budget to the source information used to develop the project budget.
◦ 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 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
February 29, 2024
44
AMERESCO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
2023
2022
ASSETS
Current assets:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
79,271 $
62,311
153,362
33,826
636,163
13,637
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)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
123,391
5,775
20,735
1,128,471
609,265
17,395
1,689,424
75,587
6,808
58,586
12,094
26,411
89,735
3,713,776 $
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Total assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Current portions of long-term debt and financing lease liabilities, net of unamortized
discount (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 (Note 15)
Redeemable non-controlling interests, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
322,247 $
402,752
108,831
13,569
52,903
1,169
901,471
1,170,075
533,054
4,479
6,974
42,258
82,714
115,534
20,782
174,009
38,057
576,363
14,218
38,617
7,746
16,025
1,001,351
509,507
15,707
1,181,525
70,633
4,693
38,224
13,572
3,045
38,564
2,876,821
331,479
349,126
89,166
5,829
34,796
1,672
812,068
568,635
478,497
9,181
7,590
31,703
49,493
46,865
46,623
(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) of $312,701 as of December 31, 2023 and $213,913 as of
December 31, 2022. Includes liabilities of consolidated VIEs of $199,063 as of December 31, 2023 and $50,729 as of December 31, 2022. See
Note 11.
45
AMERESCO, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts) (Continued)
December 31,
2023
2022
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and
outstanding at December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,378,990
shares issued and 34,277,195 shares outstanding at December 31, 2023, 36,050,157 shares
issued and 33,948,362 shares outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . . . . .
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000
shares issued and outstanding at December 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 2,101,795 shares at December 31, 2023 and 2022 . . . . . . . . . . . . . .
Stockholders’ equity before non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities, redeemable non-controlling interests and stockholders’ equity . . . . . . $
3
2
320,892
595,911
(3,045)
(11,788)
901,975
23,911
925,886
3,713,776 $
—
3
2
306,314
533,549
(4,051)
(11,788)
824,029
49,002
873,031
2,876,821
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . .
Asset impairments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax (benefit) provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to non-controlling interest and redeemable non-
controlling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to common shareholders . . . . . . . . . . . . . . . . . . . . $
Net income per share attributable to common shareholders:
Year Ended December 31,
2023
1,374,633 $
1,128,204
246,429
1,758
162,138
3,831
82,218
43,949
38,269
(25,635)
63,904
2022
1,824,422 $
1,533,589
290,833
1,647
159,488
—
132,992
27,273
105,719
7,170
98,549
2021
1,215,697
985,340
230,357
(118)
132,904
1,901
95,434
17,290
78,144
(2,047)
80,191
(1,434)
62,470 $
(3,623)
94,926 $
(9,733)
70,458
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.20 $
1.17 $
1.83 $
1.78 $
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
52,140
53,228
51,841
53,278
1.38
1.35
50,855
52,268
`
See accompanying notes to consolidated financial statements.
47
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other comprehensive income (loss):
Unrealized (loss) gain from interest rate hedges, net of tax effect of
$(190), $2,039, and $662, respectively . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . . . . . . . .
Total other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income attributable to non-controlling interests and
redeemable non-controlling interests: . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation adjustments
$
Comprehensive income attributable to non-controlling interests and
redeemable non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Comprehensive income attributable to common shareholders . . . . . . . . $
Year Ended December 31,
2023
2022
2021
63,904 $
98,549 $
80,191
(538)
1,574
1,036
64,940
6,017
(3,401)
2,616
101,165
(1,434)
(30) $
(1,464) $
63,476 $
(3,623)
— $
(3,623) $
97,542 $
2,793
(170)
2,623
82,814
(9,733)
—
(9,733)
73,081
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)
Redeemable
Non-
controlling
Interests
(“RNCI”)
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
Non-
controlling
Interest
(“NCI”)
Total
Stockholders'
Equity
Balance, December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . $
38,850
30,224,654
$
3
18,000,000
$
2
145,496
$ 368,390
2,101,795
$ (11,788) $
(9,290) $
—
$
492,813
Equity offering of common stock, net of offering costs of
$6,416 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain from interest rate hedges, net . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . .
Contributions from RNCI, net of tax equity financing fees . . .
Distributions to RNCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of tax equity financing fees . . . . . . . . . . . . . . . . . . .
Investment fund call option exercise . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
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)
—
—
—
—
—
Balance, December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,182
33,716,309
3
18,000,000
2
283,982
438,732
2,101,795
(11,788)
(6,667)
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain from interest rate hedges, net . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . .
Distributions to RNCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of tax equity financing fees . . . . . . . . . . . . . . . . . . .
Investment fund call option exercise . . . . . . . . . . . . . . . . . . . .
Contributions from NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
(1,039)
109
(2,162)
—
3,533
195,888
—
36,165
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
3,954
15,046
2,009
—
—
—
—
1,323
—
—
—
—
—
—
—
—
(109)
—
—
94,926
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,017
(3,401)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
48,912
90
120,084
5,563
8,716
1,364
2,793
(170)
—
—
(116)
2,759
70,458
704,264
3,954
15,046
2,009
6,017
(3,401)
—
(109)
1,323
48,912
95,016
Balance, December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . .
46,623
33,948,362
3
18,000,000
2
306,314
533,549
2,101,795
(11,788)
(4,051)
49,002
873,031
Exercise of stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . .
Employee stock purchase plan . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock units released . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized loss from interest rate hedges, net . . . . . . . . . . . . .
Foreign currency translation adjustment . . . . . . . . . . . . . . . . .
Distributions to RNCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion of tax equity financing fees . . . . . . . . . . . . . . . . . . .
Adjustment to investment fund call option exercise . . . . . . . .
Contributions from NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to NCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
(632)
108
195
—
—
571
246,250
—
60,003
22,580
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
2,438
10,318
2,017
—
—
—
—
—
(195)
—
—
—
—
—
—
—
—
—
—
(108)
—
—
—
62,470
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(538)
1,544
—
—
—
—
—
—
—
—
—
—
—
30
—
—
—
4,203
(30,187)
863
2,438
10,318
2,017
—
(538)
1,574
—
(108)
(195)
4,203
(30,187)
63,333
Balance, December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . $
46,865
34,277,195
$
3
18,000,000
$
2
$ 320,892
$ 595,911
2,101,795
$ (11,788) $
(3,045) $
23,911
$
925,886
See accompanying notes to consolidated financial statements.
49
AMERESCO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
63,904 $
98,549 $
80,191
Year Ended December 31,
2023
2022
2021
Adjustments to reconcile net income to net cash flows from operating
activities:
Depreciation of energy assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs . . . . . . . . . . . . . . .
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase in fair value of contingent consideration . . . . . . . . . . . . . . . .
Accretion of ARO liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (recoveries of) for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived assets / loss on write-off . . . . . . . . . . . . . . . . . .
In-kind lease expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of equity investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Earnings) loss from unconsolidated entities . . . . . . . . . . . . . . . . . . . . . . .
Net (gain) loss from derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized foreign exchange (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . .
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 receivable (payable), net . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities:
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital investment in energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital investment in major maintenance of energy assets . . . . . . . . . . . .
Grant award proceeds for energy assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of equity investment . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions, net of cash received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions to equity and other investments . . . . . . . . . . . . . . . . . . . . . .
Loans to joint venture investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . .
50
59,390
4,155
4,201
2,366
347
258
2,222
356
1,710
(3,164)
—
(1,758)
(1,108)
10,318
(27,602)
(368)
52,647
4,337
(260,378)
581
(13,211)
(41,125)
(5,486)
(6,896)
53,238
26,202
3,559
1,314
(69,991)
(5,713)
(538,418)
(7,636)
—
—
(9,182)
(5,429)
(565)
(566,943)
49,755
2,665
4,211
1,858
1,614
146
—
(382)
937
—
—
(1,647)
(212)
15,046
3,918
(123)
3,477
4,716
(259,499)
(5,411)
(272,629)
(3,182)
(685)
(11,327)
36,155
449
(5,074)
(1,613)
(338,288)
(5,296)
(304,596)
(18,007)
—
—
—
—
(459)
(328,358)
43,113
3,143
2,849
321
—
123
—
187
1,901
—
(575)
118
240
8,716
(4,760)
142
(15,953)
(12,882)
(249,728)
(232)
(113,192)
1,770
1,949
(1,870)
83,473
(693)
(5,036)
4,389
(172,296)
(4,896)
(170,277)
(8,602)
774
1,672
(14,928)
(9,000)
—
(205,257)
See accompanying notes to consolidated financial statements.
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 . . . . . . . . . . . . . . . . . . . . .
Payment of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Payments on) proceeds from senior secured revolving credit facility,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from long-term debt financings . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Federal ESPC projects . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net proceeds from energy asset receivable financing arrangements . . . .
Investment fund call option exercise . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions from non-controlling interest . . . . . . . . . . . . . . . . . . . . . . .
Distributions to non-controlling interest . . . . . . . . . . . . . . . . . . . . . . . . .
(Distributions to) proceeds from 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 increase (decrease) 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 contributions from non-controlling interest
$
Non-cash financing for energy asset project acquisition . . . . . . . . . . . . . $
Non-cash portion of investment fund call option exercise . . . . . . . . . . . . $
Year Ended December 31,
2023
2022
2021
— $
(9,315)
4,455
(1,866)
(43,000)
843,498
154,338
14,512
—
3,738
(21,842)
(658)
(303,057)
640,803
(81)
3,788
149,888
153,676 $
80,251 $
3,834 $
99,164 $
78,382 $
464 $
82,964 $
— $
— $
(3,695)
5,963
—
137,900
468,476
238,360
14,341
(839)
32,706
—
(1,128)
(161,857)
730,227
(747)
62,834
87,054
149,888 $
32,954 $
7,278 $
293,427 $
88,793 $
16,206 $
— $
1,323 $
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
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 Europe. We provide solutions, both services and products, which
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 three investment funds formed to fund the purchase and operation of solar
energy systems, which are consolidated with Ameresco as variable interest entities (“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 a majority of our operational VIEs. When we have determined we are the
primary beneficiary, 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 income, 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”).
Reclassification and Rounding
Certain prior period amounts were reclassified to conform to the presentation in the current period. We round amounts in the
consolidated financial statements to thousands and calculate all percentages and per-share data from the underlying whole-dollar
amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding.
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 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, 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, income taxes, and potential liability in conjunction with contingent
consideration.
Self-insured Health Insurance
We are self-insured for employee health insurance and the maximum exposure in fiscal year 2023 under the plan was $200 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
52
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
expenses and other current liabilities. The liability is calculated based on historical data, which considers both the frequency and
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
Global factors have continued to result in global supply chain disruptions, certain governmental travel and other restrictions, and
inflationary pressures.
We have considered the impact of general global economic conditions 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 including supply chain disruptions, varying levels of inflation, payments of outstanding receivable amounts beyond normal
payment terms, workforce disruptions, and uncertain demand. As of the date of issuance of these consolidated financial
statements, we cannot reasonably estimate the extent to which macroeconomic conditions may impact our financial condition,
liquidity, or results of operations in the foreseeable future. The ultimate impact of the general global economic conditions on our
business is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time.
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 global factors and determined that the estimate of credit losses was not significantly impacted as of December 31, 2023 and
2022.
Changes in the allowance for credit losses was as follows:
Allowance for credit loss, beginning of period . . . . . . . . . . . . . . . . . . . . . . $
911 $
2,263 $
Charges to (recoveries of) costs and expenses, net . . . . . . . . . . . . . . . . . .
Account write-offs and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
356
(364)
(382)
(970)
Allowance for credit loss, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . $
903 $
911 $
2,266
187
(190)
2,263
Year Ended December 31,
2023
2022
2021
53
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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, 2023 and 2022, 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.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist primarily of other receivables, deferred project costs, and other short-term
prepaid expenditures that will be expensed within one year.
Prepaid expenses and other current assets comprised of the following:
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Deferred project costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other Receivables
Year Ended December 31,
2023
2022
74,454 $
38,240
10,697
123,391 $
16,877
13,556
8,184
38,617
Ameresco’s wholly-owned subsidiary in Italy entered into factoring agreements to sell certain receivables to unrelated third-party
financial institutions on a non-recourse basis. These transactions are accounted for in accordance with Accounting Standards
Codification (“ASC”) Topic 860, Transfers and Servicing, and result in a reduction in accounts receivable because the agreements
transfer effective control over the receivables, and related risk, to the buyers. Our Italian subsidiary does not retain any interest in
the underlying accounts receivable once sold. Trade accounts receivables balances sold are removed from the consolidated
balance sheets, and cash received is reflected in operating activities in the consolidated statements of cash flows. Other
receivables sold without recourse total $39,923 at December 31, 2023 and are included in other receivables in the table above.
Factoring fees during the twelve months ended December 31, 2023 were $5,844 and are included in other expense, net in the
consolidated statements of income. See Note 17. Other Expenses, Net.
Other receivables also include $20,970 which represents the fair value of the portion of investment tax credits that we are
contractually required to transfer, which is related to the project we acquired on August 4, 2023. See the Government Grants
paragraph below and Note 7. Energy Assets, Net for additional details.
Deferred Project Costs
Deferred project costs include costs incurred on active projects which will be reclassified to energy assets once a change order or
other contract resolution is finalized.
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.
54
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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.
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
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, asset retirement
obligations (“AROs”), 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 includes upgrades and the refurbishment or replacing of components that are integral to
the energy assets operating. In these instances, the costs associated with major maintenance 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.
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
55
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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. See Note 7. for disclosure on our long-lived asset impairment during the year
ended December 31, 2023.
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. 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
during the years ended December 31, 2019 and 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.
Deferred grant income of $6,974 and $7,590 in the accompanying consolidated balance sheets as of December 31, 2023 and 2022,
respectively, represents the benefit of the basis difference to be amortized to depreciation expense over the life of the related
property.
Non-refundable Transferable Credits Policy Elections
We elect to apply government grant accounting, outside of income taxes, to the portion of the transferable Investment Tax Credit
(“ITC”) that we intend to sell. We have an existing policy to account for government grants by analogy to International
Accounting Standard (“IAS”) 20 and shall present the credit as a reduction in the cost of the related energy asset and shall
measure the grant of the nonmonetary asset at fair value. Based on these policy elections, the benefit of the grant in the amount of
$20,970 will be recognized in profit or loss as a reduction to depreciation expense over the life of the energy asset.
We elect to account for credits we intend to use to offset our tax liability under Topic 740. For the initial recognition of the ITC
that was not sold in the amount of $8,618, we recognized a deferred tax asset for an allowable carryforward as we benefited in the
year the credit was generated. Possible limitations on the carryforward were considered and it was determined that no valuation
allowance was required. We also utilized the flow-through method regarding the presentation in the consolidated statements of
income, which resulted in a reduction in the income tax provision.
Acquisitions
For acquisitions that meet the definition of a business combination, we apply the acquisition method of accounting in accordance
with 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
56
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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 October 2021, the Financial Standards Accounting Board (“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.
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 during the fourth quarter and on an interim basis whenever
events or changes in circumstances indicate that the carrying value may not be fully recoverable. In 2023, we changed the
assessment date from December 31, 2023 to October 31, 2023.
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. See Note 5 for discussion about our goodwill impairment during the year ended December 31, 2023.
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.
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
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AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
December 31, 2018 remain under the previous guidance. See the Sale-leasebacks and Financing Leases 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 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, investments in unconsolidated joint ventures, the non-current portions of project
development costs, accounts receivable retainages, sale-leaseback deferred loss, deferred contract costs, and assets held for sale.
For additional information about assets held for sale, please see Note 21.
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities includes use and franchise tax payable of $39,974 and $47,041 as of December 31,
2023 and 2022, respectively, as well as accrued payroll and payroll related expenses, sales tax payable, current portion of
contingent consideration, and other accrued operating expenses.
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.
Sale-leasebacks and Financing Leases
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.
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AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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 are accounted for as long-term financing liabilities with interest rates based upon the
underlying details of each specific transaction.
We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous
guidance. We 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 recorded 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.
See Notes 8 and 9 for details of our sales-leaseback and financing lease 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 operations and maintenance
(“O&M”) contracts which expire at various dates through 2050. 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
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
59
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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. 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 $10,687, $10,904 and $11,726 of operating lease revenue under these
agreements during the years ended December 31, 2023, 2022, and 2021, respectively.
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.
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AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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.
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, 2023 and 2022, respectively. See Note 10 for additional
information on income taxes.
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AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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, 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, and short-term borrowings approximate fair value.
The carrying value of long-term variable-rate debt approximates fair value. 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.
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,
decrease, 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
62
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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 years ended December 31, 2023, December 31, 2022, and December 31, 2021
there were no shares repurchased.
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. Some of our debt
agreements contain make-whole provisions which we account for 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.
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
VIE 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
63
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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, 2023, all the VIEs that make up our investment funds (tax equity
partnerships) are similar in purpose, design, and our involvement and are aggregated together. Our other consolidated VIEs are
similar in purpose, design, and our involvement, and as such, are aggregated together. See Notes 11 and 12 for additional
disclosures.
Equity and Cost 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 and
cost method investments. See Note 11 for additional information on our equity and cost method investments.
Non-Controlling Interests and Redeemable Non-Controlling Interests
Non-controlling interests represent the portion of equity (net assets) in a VIE not attributable, directly or indirectly, to us. For
some of our VIEs we perform the attribution of income or loss and comprehensive income or loss on the basis of our relative
ownership interests and the non-controlling interests. These non-controlling interests which do not contain redemption features
are classified within equity on our consolidated balance sheets.
In June 2018, October 2018 and December 2019, we formed investment funds (tax equity partnerships) 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, 2023, we had three such investment funds remaining, 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
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
Reference Rate Reform
In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):
Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04, as amended by ASU 2021-01 in
January 2021, directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the
publication of certain London interbank offered rate (“LIBOR”) rates beginning December 31, 2021, with complete elimination of
the publication of the LIBOR rates by June 30, 2023. The guidance provides optional expedients and exceptions for applying
GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform by virtue of referencing
LIBOR, or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020, and then was
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AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
amended by ASU 2022-06 in December 2022, extending the adoption date to no later than December 31, 2024, with early
adoption permitted. We adopted this guidance beginning January 1, 2023 upon entering amendments to credit agreements which
introduced the secured overnight financing rate as administrated by the Federal Reserve Bank of New York to replace LIBOR as
the benchmark. The adoption of this guidance did not have a material impact on our consolidated financial statements.
Derivatives and Hedging
In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer
Method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio to be hedged
under the method. ASU 2022-01 is effective for our fiscal year ending beginning after December 15, 2022. We adopted this
accounting standard as of January 1, 2023 and the adoption did not have an impact on our consolidated financial statements.
Fair Value Measurement
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity
Securities Subject to Contractual Sale Restrictions, which clarifies the measurement criteria for equity securities and refines the
disclosure requirements for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for our fiscal year
beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting standard would
have on our consolidated financial statements.
Investments - Equity Method and Joint Ventures
In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for
Investments in Tax Credit Structures Using the Proportional Amortization Method, which defines consistent accounting for equity
investments for the purpose of receiving income tax credits and other income tax benefits. ASU 2023-02 is effective for our fiscal
year ending beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting
standard would have on our consolidated financial statements.
Business Combinations— Joint Venture Formations
In August 2023, the FASB issued ASU 2023-05, Business Combinations— Joint Venture Formations (Subtopic 805-60)
Recognition and Initial Measurement, which addresses the accounting for contributions made to a joint venture, upon formation,
in a joint venture’s separate financial statements. ASU 2023-05 is effective prospectively for all joint venture formations with a
formation date on or after January 1, 2025. We are currently evaluating the impact that adopting this new accounting standard
would have on our consolidated financial statements.
Disclosure Improvements - Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative
In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements - Codification Amendments in Response to the
SEC’s Disclosure Update and Simplification Initiative, which updates the disclosure or presentation requirements for a variety of
topics in the codification. ASU 2023-06 is effective from the date on which the SEC’s removal of that related disclosure from
Regulation S-X or Regulation S-K, with early adoption prohibited. We will monitor the removal of the requirements from the
current regulations and adopt the related amendments, but we do not anticipate this new guidance will have a material impact on
our consolidated financial statements as we are currently subject to SEC requirements.
Segment Reporting (Topic 820) - Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 820) - Improvements to Reportable Segment
Disclosures, which improves reportable segment disclosures by requiring enhanced disclosures for significant segment expenses
and other segment items. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within
fiscal years beginning after December 15, 2024. We are currently evaluating the impact that adopting this new accounting
standard would have on our consolidated financial statements.
Income Taxes (Topic 740) - Improvements to Income Tax Disclosures
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to
enhance the income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated
information related to income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are
currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.
65
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, 2023 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and
Europe. The remaining amounts are included in “All Other”. Europe was formerly included in “All Other” but was disaggregated
due to growth in the segment in 2023. 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, 2023:
U.S. Regions
U.S. Federal
Canada
Alternative
Fuels
Europe
All Other
Total
Project revenue . . . . . . . . . $ 465,342 $ 342,238 $
53,737 $
— $ 138,730 $
1,250 $ 1,001,297
O&M revenue . . . . . . . . .
Energy assets . . . . . . . . . .
Integrated-PV . . . . . . . . . .
Other . . . . . . . . . . . . . . . . .
26,210
60,450
4
5,116
53,496
6,326
—
824
100
4,223
—
12,050
10,697
106,359
—
19
1,980
1,531
—
10,601
—
—
45,739
27,611
92,483
178,889
45,743
56,221
Total revenues . . . . . . . . $ 557,122 $ 402,884 $
70,110 $ 117,075 $ 152,842 $
74,600 $ 1,374,633
The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December
31, 2022:
U.S. Regions
U.S. Federal
Canada
Alternative
Fuels
Europe
All Other
Total
Project revenue . . . . . . . . $ 1,049,465 $ 333,846 $
44,273 $
— $
53,680 $
— $ 1,481,264
O&M revenue . . . . . . . . .
Energy assets . . . . . . . . . .
Integrated-PV . . . . . . . . . .
Other . . . . . . . . . . . . . . . .
22,217
47,372
—
4,289
51,857
5,822
—
366
42
4,447
—
9,796
10,377
104,082
—
—
471
368
—
7,126
1
—
49,696
24,829
84,965
162,091
49,696
46,406
Total revenues . . . . . . . . $ 1,123,343 $ 391,891 $
58,558 $ 114,459 $
61,645 $
74,526 $ 1,824,422
The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December
31, 2021:
U.S. Regions
U.S. Federal
Canada
Alternative
Fuels
Europe
All Other
Total
Project revenue . . . . . . . . $ 488,507 $ 340,686 $
36,776 $
— $
37,970 $
21 $ 903,960
O&M revenue . . . . . . . . .
Energy assets . . . . . . . . . .
Integrated-PV . . . . . . . . . .
Other . . . . . . . . . . . . . . . .
21,551
39,433
—
1,627
47,072
4,913
—
277
71
9,288
4,532
101,811
—
8,104
—
124
631
562
—
7,001
—
—
41,202
23,538
78,613
151,251
41,202
40,671
Total revenues . . . . . . . . $ 551,118 $ 392,948 $
49,483 $ 111,223 $
46,164 $
64,761 $ 1,215,697
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 . . . . . . . . . . . . . . . . . .
95 %
96 %
95 %
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,
2023
2022
2021
66
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
153,362 $
Accounts receivable retainage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
33,826
174,009
38,057
December 31, 2023
December 31, 2022
Contract Assets
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
636,163
576,363
Contract Liabilities
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of cost and estimated earnings, non-current (1) . . . . . . . . . . . . . . . . . . . .
Total contract liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
52,903
18,393
71,296 $
34,796
7,617
42,413
(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, 2023 was primarily due to revenue recognized of $940,317, offset
in part by billings of $886,788. Contract assets also increased due to reclassifications, primarily from contract liabilities as a result
of timing of customer payments. The increase in contract liabilities was primarily driven by the receipt of advance payments from
customers, and related billings, as well as reclassifications from contract assets as a result of timing of customer payments. The
advance payments and reclassifications exceeded the recognition of revenue as performance obligations were satisfied. For the
year ended December 31, 2023, we recognized revenue of $160,713 and billed $184,174 to customers that had balances which
were included in contract liabilities at December 31, 2022.
The increase in contract assets for the year ended December 31, 2022 was primarily due to revenue recognized of $1,371,455,
offset in part by billings of $1,103,926. Contract assets also increased due to reclassifications, primarily from contract liabilities as
a result of timing of customer payments. The increase in contract liabilities was primarily driven by the receipt of advance
payments from customers, and related billings, as well as reclassifications from contract assets as a result of timing of customer
payments. The advance payments and reclassifications exceeded the recognition of revenue as performance obligations were
satisfied. For the year ended December 31, 2022, we recognized revenue of $135,506, and billed $129,749 to customers that had
balances which were included in contract liabilities at December 31, 2021.
Performance Obligations
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, 2023, we had
fully-contracted backlog of $2,545,403 and approximately 32% 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, 2023 and 2022, 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, 2023
and 2022, the amortization of commission costs related to contracts was not material and have been included in the accompanying
consolidated statements of income.
67
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Project Development Costs
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:
Project development costs recognized . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,051 $
15,507 $
12,737
No impairment charges in connection with our commission costs or project development costs were recorded during the years
ended December 31, 2023, 2022 and 2021.
Year Ended December 31,
2023
2022
2021
4. BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS
Enerqos Energy Solutions S.r.l. (“Enerqos”)
On February 24, 2023, we signed a definitive purchase and sale agreement to acquire Enerqos, a renewable energy and energy
efficiency company headquartered in Milan, Italy. The acquisition closed on March 30, 2023 and the total purchase consideration
was $13,445, of which $9,535 has been paid. There is no contingent consideration related to this acquisition. Cash acquired was
$353, debt assumed was $3,951, and a deferred tax liability, net of $931 was recorded. In accordance with the SEC’s Regulation
S-X and GAAP, we evaluated and determined that Enerqos is not deemed to be a significant subsidiary, therefore, we are not
presenting the pro-forma effects of this acquisition on our operations.
The estimated goodwill of $6,855 from the Enerqos acquisition consists largely of expected benefits, including the combined
entities experience 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 adjustments. Any measurement period adjustments made 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.
The results of the acquisition since the date of the acquisition have been included in our operations as presented in the
accompanying consolidated statements of income, consolidated statements of comprehensive income and consolidated statements
of cash flows. For the year ended December 31, 2023, we recognized $52,241 of revenue and $1,758 of net income relating to
Enerqos since the acquisition closed.
68
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
A summary of the cumulative consideration paid, allocation of the purchase price, and adjustments made for the Enerqos
acquisition are presented in the table below:
Preliminary March
31, 2023
Measurement
Period Adjustment
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Long-term debt assumed, net of current portions . . . . . . . . . . . . . . .
FX adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of consideration transferred . . . . . . . . . . . . . . . . . . . . . . $
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . .
Project development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment and energy assets . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . .
Current portions of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income tax liabilities, net . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized identifiable assets acquired and liabilities assumed . . $
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,535 $
3,951
(41)
13,445 $
190
6,230
8,985
16,504
5,140
1,234
4,438
163
(15,480)
(4,510)
(15,165)
(931)
(208)
6,590 $
6,855 $
As Adjusted
December 31, 2023
9,535
3,951
(41)
13,445
— $
—
—
— $
—
—
—
—
—
—
—
—
—
165
—
—
—
165 $
(165) $
190
6,230
8,985
16,504
5,140
1,234
4,438
163
(15,480)
(4,345)
(15,165)
(931)
(208)
6,755
6,690
Juice Technologies, Inc. (d/b/a Plug Smart)
In November 2021, we entered into a stock purchase agreement to acquire all of the stock 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. In December 2021, we completed the acquisition of Plug Smart and
as of December 31, 2023, we paid $21,767 in cash. See table below and Note 18 for additional information on contingent
consideration.
69
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
A summary of the cumulative consideration paid, allocation of the purchase price, and adjustments made for the Plug Smart
acquisition are presented in the table below:
Preliminary
December 31, 2021
Measurement
Period Adjustment
As Adjusted
December 31, 2022
17,692
2,141
750
510
21,093
— $
(19)
—
(128)
(147) $
—
—
—
—
(409)
—
—
(127)
—
—
—
—
2,771
3,370
1,663
1,499
5,945
488
(1,795)
(1,091)
(145)
(2,464)
(1,693)
(343)
8,205
12,888
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Fair value of earn out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hold-back . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Working capital adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of consideration transferred . . . . . . . . . . . . . . . . . . . . . . . . $
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Costs and estimated earnings in excess of billings . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . .
17,692 $
2,160
750
638
21,240 $
2,771
3,370
1,663
1,499
6,354
488
(1,795)
(964)
(145)
(2,464)
(1,693)
(343)
Recognized identifiable assets acquired and liabilities assumed . . . . . $
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,741 $
12,499 $
(536) $
389 $
70
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
5. GOODWILL AND INTANGIBLE ASSETS, NET
Goodwill, Net
Our annual goodwill impairment review is performed during the fourth quarter each year-end using a quantitative approach. 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 during the fourth quarter ended December 31, 2023, one reporting unit
had a fair value that was 2% less than the carrying value and we recorded a $1,644 goodwill impairment, which was $2,222 after
taking into account the effect of deferred income taxes. The impairment was primarily driven by a decline in projected cash flows,
including revenues and profitability. The impairment charges are included in the asset impairments within the consolidated
statements of income for the year ended December 31, 2023. All other reporting units with goodwill had estimated fair values that
exceeded their carrying values by at least 16% as of December 31, 2023 and 20% as of December 31, 2022. There was no
goodwill impairment for the years ended December 31, 2022 and 2021.
The changes in the goodwill balances by reportable segment are as follows:
U.S. Regions
U.S. Federal
Canada
Alternative
Fuels
Europe
Other
Total
Carrying Value of Goodwill
Balance, December 31, 2021 . $
Remeasurement adjustments
Foreign currency translation
Balance, December 31, 2022 .
Goodwill acquired during
the year . . . . . . . . . . . . . . . . .
Remeasurement adjustments
Impairment charges, net of
tax . . . . . . . . . . . . . . . . . . . . .
Foreign currency translation
Balance, December 31, 2023 . $
39,204 $
389
—
39,593
3,981 $
—
—
3,981
3,454 $
—
(218)
3,236
—
—
—
—
—
—
— $
—
—
—
—
—
6,627 $
(695)
5,932
6,855
(165)
17,891 $
—
—
17,891
—
—
71,157
389
(913)
70,633
6,855
(165)
(2,222)
—
37,371 $
—
—
3,981 $
—
73
3,309 $
—
—
— $
—
413
13,035 $
—
—
17,891 $
(2,222)
486
75,587
Accumulated Goodwill Impairment
Balance, December 31, 2022 . $
Balance, December 31, 2023 . $
— $
(2,222) $
— $
— $
(1,016) $
(1,016) $
— $
— $
— $
— $
— $
— $
(1,016)
(3,238)
71
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,
2023
2022
Gross carrying amount
Customer contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,859 $
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21,182
3,013
2,723
1,370
37,147
8,859
14,979
3,013
2,723
765
30,339
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,808 $
8,288
17,755
2,980
2,713
541
32,277
8,288
13,066
2,980
2,713
537
27,584
4,693
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, 2023, 2022, and 2021.
The table below sets forth amortization expense:
Location
Customer contracts . . . . . Cost of revenues
Customer relationships . . Selling, general and administrative expenses
Technology . . . . . . . . . . . Selling, general and administrative expenses
Tradenames . . . . . . . . . . . Selling, general and administrative expenses
Year Ended December 31,
2023
2022
2021
$
— $
551 $
2,141
—
225
1,303
1
3
Total amortization expense
$
2,366 $
1,858 $
—
310
8
3
321
72
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:
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,147
2,146
1,714
640
161
6,808
Estimated
Amortization
Expense
6. PROPERTY AND EQUIPMENT, NET
Property and equipment, net consisted of the following:
December 31,
2023
2022
Furniture and office equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,207 $
Computer equipment and software costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automobiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,199
2,570
2,041
6,943
42,960
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(25,565)
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
17,395 $
3,023
22,179
2,483
1,896
6,781
36,362
(20,655)
15,707
The following table sets forth our depreciation expense on property and equipment:
Location
Year Ended December 31,
2023
2022
2021
Selling, general & administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . $
4,155 $
2,665 $
3,143
7. ENERGY ASSETS, NET
Energy assets, net consisted of the following:
Energy assets (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: accumulated depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,054,145 $
1,493,913
(364,721)
(312,388)
Energy assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,689,424 $
1,181,525
(1) Includes financing lease assets (see Note 8), capitalized interest and ARO assets (see tables below). Also includes the energy asset project
acquired in August 2023. See section below for additional information.
December 31,
2023
2022
73
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Energy Asset Acquisitions
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.
August 2023 Purchase and Sale Agreement
On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and rights to acquire 100%
of the stock of Bright Canyon Energy Corporation (“BCE”) in a two-phased transaction exclusive of each other. Phase 1, the
purchase of the energy asset project, closed on August 4, 2023 and did not constitute a business in accordance with ASC 805-50,
Business Combinations.
The adjusted purchase price for phase 1 was $87,964, of which $5,000 was paid in cash, $46,694 was financed through a seller’s
note, and we assumed a construction loan on the energy asset project for $36,270. We also acquired cash of $11,206. During the
year ended December 31, 2023, we paid $18,400 in principal on the sellers note and at December 31, 2023, the balance of the
seller’s note was $28,294. See Note 9 for additional information about these loans. We agreed to sell back to the seller investment
tax credits for the project acquired as part of this transaction for the fair market value of these credits in early in 2024 and
recorded $20,970 in other receivables which is included in prepaid expenses and other current assets in the consolidated balance
sheets. This amount was collected in January 2024. We also assumed a land lease for the energy asset project. See Note 8. for
additional information on the lease.
On December 28, 2023, we executed an amended and restated purchase and sale agreement, which primarily revised the timing of
payments on phase 2. In the second phase, which closed on January 12, 2024, we acquired BCE, including its interest in a
consolidated joint venture and its interests in project subsidiaries developing or with rights to develop solar, battery, and
microgrid assets for a purchase price of $39,100.
November 2023 Purchase Agreement
On November 1, 2023, we purchased a solar asset project for $3,128, of which $1,251 has been paid to date. The remaining
balance of $1,877 is included in accrued expenses and other current liabilities in the consolidated balance sheets at December 31,
2023. The payments are due when certain conditions as outlined in the agreement are met.
2022 Energy Asset Acquisitions
During the year ended December 31, 2022, we purchased two energy projects, one solar and one wind, for $11,022.
Depreciation and Amortization
The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization:
Location
Cost of revenues (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023
2022
2021
59,390 $
49,755 $
43,113
Year Ended December 31,
(1) Includes depreciation and amortization expense on financing lease assets. See Note 8.
Capitalized Interest
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:
Capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
43,561 $
13,050 $
2,814
Year Ended December 31,
2023
2022
2021
Long-lived Asset Impairment
During December 2023, there was a triggering event which caused us to perform an impairment analysis on an energy asset
group. The triggering event was related to the requirement to shut down the plant and replace transmission lines due to transfer
74
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
trip issues. We determined that the cost to overhaul the transfer trip line would be cost prohibitive, therefore, we made a decision
to shut the plant down. As a result, we recorded an impairment charge of $1,298, which fully impaired this asset group. During
December 2023, there was an additional energy asset group that had successive years of losses, the PPA expires in November
2024, and we expect losses to continue in 2024, therefore, we recorded an impairment charge of $311, which fully impaired this
asset group. Both of these asset groups were within the Alternative Fuels segment.
During September 2021, there was a triggering event which caused us to perform an impairment analysis on an energy asset group
within the Alternative Fuels 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.
The impairment charges are included in asset impairments within the consolidated statements of income for the years ended
December 31, 2023 and 2021. There were no impairment charges for the year ended December 31, 2022.
Customer Energy Asset Projects
We include certain customer energy asset projects in our energy assets, as we control and operate the assets as well as obtain
financing during the construction and operating periods of the assets. We also carry a liability associated with these energy assets
as we have an obligation to the customer for performance of the asset. Provided that performance criteria are met, the customer is
responsible for repayment of the liability to the financing party. As of December 31, 2023 there were six energy asset projects
which were included in energy assets and as of December 31, 2022, there were five.
The liabilities recognized in association with these customer energy assets were as follows:
Location
December 31,
2023
2022
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
598 $
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
41,680
Total customer energy asset projects liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
42,278 $
261
27,168
27,429
ARO Assets and ARO Liabilities
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
Location
ARO liabilities, non-current . . . . . . . . . . . . . . Other liabilities
December 31,
2023
2022
4,800 $
2,359
5,960 $
3,052
$
$
Year Ended December 31,
2023
2022
2021
Depreciation expense of ARO assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accretion expense of ARO liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
215 $
258 $
146 $
146 $
113
123
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 2032. 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
75
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
through fiscal 2059. 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.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
10,504 $
9,199 $
9,740
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,
2023
2022
2021
December 31,
2023
2022
Operating Leases
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
58,586
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average remaining lease term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Includes sale-leaseback transactions entered into prior to January 1, 2019.
13,569
42,258
55,827
18 years
6.6 %
27,262
871
13,057
13,928
13 years
12.05 %
$
$
$
$
$
$
38,224
5,829
31,703
37,532
13 years
6.0 %
29,365
1,992
14,068
16,060
14 years
12.1 %
76
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,
2023
2022
2021
Operating Leases
Operating lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
9,416 $
8,372 $
8,780
Financing Leases
Amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total financing lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,103
1,804
3,907
2,104
2,147
4,251
2,129
2,541
4,670
Total lease costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,323 $
12,623 $
13,450
Supplemental cash flow information related to our leases was as follows:
Year Ended December 31,
2023
2022
Cash paid for amounts included in the measurement of operating lease liabilities . . . . . . . . . . $
Right-of-use assets obtained in exchange for new operating lease liabilities (1) . . . . . . . . . . . . $
10,724 $
25,225 $
7,978
4,872
(1) Includes non-monetary lease transactions of $13,941. See disclosure below for additional information. . . . . . . . . . . . . . . . . . .
The table below sets forth our estimated minimum future lease obligations under our leases:
Operating Leases
Financing Leases
Year ended December 31,
2024
2025
2026
2027
2028
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
Total minimum lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
16,390 $
11,068
5,813
4,781
4,186
79,489
121,727 $
65,900
55,827 $
2,317
2,213
2,054
1,922
1,955
15,935
26,396
12,468
13,928
We have a future lease commitment for a ground lease which does not yet meet the criteria for recording a ROU asset or ROU
liability. The net present value of this commitment totals $10,500 as of December 31, 2023 which relate to lease payments to be
made over a 20-year period. The energy asset project related to this lease was sold during the year ended December 31, 2023, and
once the final closing takes place in 2024 this lease will be assigned to the buyer.
Non-monetary Lease Transactions
We have two lease liabilities consisting of payment obligations that will be settled with non-monetary consideration. The lease
liabilities relating to non-monetary consideration were recorded during the twelve months ended December 31, 2023 based on the
fair market value of the project services or back up power expected to be provided, as noted below.
In January 2023, a 37-year land lease commenced with the United States Navy (“Navy”), which expires in 2059. We are working
to complete an In-Kind Consideration Project (“IKCP”), which the Navy will credit as consideration towards our lease obligation
upon the Navy’s final acceptance of the IKCP.
77
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
In August 2023, we acquired an energy asset project and assumed the related 30-year land lease agreement with the United States
Army (“Army”), which commenced in 2022 and expires in 2052. We are providing backup power as a stand ready obligation as
consideration towards our lease obligation. See Note 7 Energy Assets, Net for additional information.
Sale-leasebacks and Financing Leases
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,
2023
2022
Deferred loss, short-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred loss, long-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
115
1,340
Total deferred loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,455 $
Deferred gain, short-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred gain, long-term, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
345
4,085
Total deferred gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,430 $
115
1,455
1,570
345
4,430
4,775
Net gains from amortization expense in cost of revenues related to deferred gains and losses were $230, $383 and $230 for the
years ended December 31, 2023, 2022, and 2021, respectively.
August 2018 Master Sale-leaseback
We enter into amendments to our August 2018 master lease and participation agreement from to time to time, which may extend
the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we entered into amendments to this facility which extended the current maturity date
to March 31, 2024.
We sold and leased back six energy assets for $103,129 in cash proceeds under this facility during the year ended December 31,
2023. The agreements have low interest rates ranging from 0% to 1.17%, as a result of tax credits which were transferred to the
counterparty. As of December 31, 2023, a majority of the total commitment of $350,000 remained available under this lending
commitment.
December 2020 Master Sale-leaseback
We enter into amendments to our December 2020 master lease and participation agreement from to time to time, which may
extend the maturity date, increase the availability, or modify other covenants.
During the year ended December 31, 2023, we sold and leased back three energy assets for $9,201 in cash proceeds under this
facility. As of December 31, 2023, no funding is available under this lending commitment.
See Note 9 for additional information on these financing facilities.
78
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
9. DEBT AND FINANCING LEASE LIABILITIES
Debt was comprised of the following:
Senior secured credit facility, 9.12%, due January 2024 to March 2025 (1) (8) . . . . . . . . . . . . . . . . . . . . . $
279,900 $
477,900
As of December 31,
2023
2022
June 2020 construction revolver, 6.96%, due March 2024 (2) (8)
July 2020 construction revolver, 5.92%, due June 2023 (2) (8)
April 2023 construction credit facility, 6.82%, due July 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
August 2023 construction credit facility, 9.34%, due August 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2023 construction revolver, 6.85%, due April 2030 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,705 $
—
134,415
278,858
36,270
39,536
5,855
—
—
—
Subtotal energy asset construction facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
470,248 $
45,391
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
. . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
January 2006 variable rate term loan, 0.00%, due June 2024 (2) (3)
October 2011 term loan, 6.11% due June 2028 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2012 variable rate term loan, 7.88%, due June 2025 (4) (8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
September 2015 variable rate term loan, 7.21%, due March 2028 (4) (8)
August 2016 term loan, 4.95%, due June 2031 (4)
March 2017 term loan, 5.00%, due March 2028 (4)
April 2017 term loan, 4.50%, due April 2027 (5)
April 2017 term loan, 5.61%, due February 2034 (4)
June 2017 variable rate term loan, 7.81%, due December 2027 (4) (8)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2018 term loan, 5.15%, due December 2038 (2) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2018 variable rate term loan, 7.41%, due June 2033 (2) (8) (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2018 variable rate term loan, 7.86%, due October 2029 (2) (8) (5)
. . . . . . . . . . . . . . . . . . . . . . . . .
November 2020 fixed rate note, 3.58%, due December 2027 (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2021 fixed rate note, 4.92%, due June 2045 (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 2021 fixed rate note, 3.25%, due March 2046 (2) (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 2021 variable rate term loan, 9.01%, due July 2030 (2) (4) (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2022 fixed rate shelf note, 5.45%, due March 2042 (2) (4)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2022 fixed rate financing facility, 6.70%, due August 2039 . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2023 fixed rate shelf note 5.99%, due, December 2047 (2) (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2023 seller's promissory note, 5.00%, due January 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
August 2023 fixed rate note, 5.70%, due April 2047 (2)
Various Enerqos financing facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— $
1,976
34,453
13,747
2,253
—
—
1,348
7,158
21,063
6,592
6,145
2,004
3,489
35,090
2,140
6,395
349,093
21,984
28,294
3,520
17,786
3,403
2,348
37,204
14,084
2,588
2,258
1,846
1,437
7,874
23,255
6,951
6,977
2,425
3,474
37,302
2,915
6,859
92,203
—
—
—
—
Subtotal energy asset term loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
564,530 $
255,403
August 2018 master sale-leaseback, 0.00% to 1.86%, due July 2039 to July 2047 (3) (6) . . . . . . . . . . . . . $
December 2020 master sale-leaseback, 0.00%, due December 2040 to March 2043 (4) (6)
. . . . . . . . . . . .
22,194
163,504 $
104,011
Subtotal sale-leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
185,698 $
16,912
120,923
Financing leases (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
13,928 $
16,060
Total debt and financing leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,514,304 $
Less: current maturities, net of unamortized discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: unamortized discount and debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
322,247
21,982
915,677
331,479
15,563
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt
issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,170,075 $
568,635
79
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(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 $12,468 in future interest
payments as of December 31, 2023 and $14,212 as of December 31, 2022. See Note 8.
(8) These agreements are now using the Secured Overnight Financing Rate (“SOFR”) as the primary reference rate used to calculate interest.
The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2023:
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
324,423
298,569
340,080
62,162
59,250
429,820
Total maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,514,304
Senior Secured Credit Facility - Revolver and Term Loans
In March 2022, we entered into the fifth amended and restated senior secured credit facility with five banks, which included the
following amendments:
•
•
•
•
•
•
•
•
increased the aggregate amount of total commitments from $245,000 to $495,000,
increased the aggregate amount of the revolving commitments from $180,000 to $200,000,
increased the existing term loan A from $65,000 to $75,000,
extended the maturity date of the revolving commitment and term loan A from June 28, 2024 to March 4, 2025,
added a delayed draw term loan A for up to $220,000 through a September 4, 2023 maturity date,
increased the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.50 for the quarter ended
March 31, 2022; 4.25 for the quarter ending June 30, 2022, 4.00 for the quarters ending September 30, 2022 and
December 31, 2022; and 3.50 thereafter,
specified the debt service coverage ratio (the ratio of (a) cash flow of the core Ameresco companies, to (b) debt service
of the core Ameresco companies as of the end of each fiscal quarter) to be less than 1.5, and
increased our limit under an energy conversation project financing to $650,000, which provides us with flexibility to
grow our federal business further.
We accounted for this amendment as a modification and at closing we incurred $2,048 in lenders fees which were reflected as
debt discount and $352 in third party fees which were reflected as debt issuance costs. The unamortized debt discount and
issuance costs of the previous agreement are being amortized over the remaining term of the amended agreement, with the
exception of $96 of costs relating to a previous syndicated lender which did not participate in this amendment. These costs were
expensed in other expenses, net during the year ended December 31, 2023.
In June 2022, we entered into the first amendment to the fifth amended and restated senior secured credit facility, which increased
the maximum indebtedness incurred under an energy conservation project financing from $650,000 to $725,000 from and after
April 1, 2022, to and including December 30, 2022. As of December 31, 2022, the maximum indebtedness incurred under an
energy conservation project financing reverted back to $650,000.
On March 17, 2023, we entered into amendment number two to the fifth amended and restated senior secured credit facility with
five banks to increase the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.00 for the quarters ending
March 31, 2023 and June 30, 2023, and 3.50 thereafter.
80
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
On August 24, 2023, we entered into amendment number three to the fifth amended and restated senior secured credit facility to
extend the maturity date of the delayed draw term loan A, such that after paying $55,000 in connection with the amendment in
August 2023, $45,000 was due November 15, 2023, and the remaining principal amount was due December 15, 2023. The
amendment also increased the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.25 for the quarter ending
September 30, 2023, and 3.50 thereafter.
On December 11, 2023, we entered into amendment number four to the fifth amended and restated senior secured credit facility to
extend the maturity date of the delayed draw term loan A where $10,000 was due and paid on both January 31, 2024 and
February 14, 2024, and an additional $10,000 payment due is on March 31, 2024. The remaining principal amount of $35,000 is
due on April 15, 2024. There is also an additional 0.125% fee on the delayed draw term loan A, with $81 due on January 31,
2024, $69 due on February 29, 2024, and $56 due on March 31, 2024. The overall rate table for all loans under the current
agreement was also increased by 0.25%. The amendment also increased the total funded debt to EBITDA covenant ratio from a
maximum of 3.50 to 3.75 for the quarter ending December 31, 2023, and 3.50 thereafter. We made principal payments on the
delayed draw term loan A totaling $155,000 during the year ended December 31, 2023.
The amendment also added a covenant that requires Ameresco to use commercially reasonable efforts assuming normal market
conditions to raise and, by April 15, 2024, close on a minimum of $100,000 equity or subordinated debt financing if the Cathode
site under the Southern California Edison (“SCE”) contract does not achieve substantial completion by January 31, 2024, which
was not achieved. Net proceeds from such financing would be required to be used to repay outstanding amounts on the senior
secured credit facility.
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 senior credit facility:
Rate as of
December 31,
2023
As of December 31,
2023
2022
8.70 % $
Term loan A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.70 % $
Delayed draw term loan A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.54 % $
Revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total senior secured credit facility outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Less: unamortized debt discount and debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Total senior secured credit facility outstanding, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
75,000 $
65,000 $
139,900 $
279,900 $
(884) $
279,016 $
75,000
220,000
182,900
477,900
(1,562)
476,338
As of December 31, 2023, funds of $37,489 were available for borrowing under the revolving credit facility and we had $12,868
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 (i) each term loan shall bear interest at the term SOFR for
such interest period plus the applicable rate for such facility; (ii) each base rate loan shall bear interest at a rate per annum equal to
the base rate plus the applicable rate; (iii) each alternative currency daily rate loan shall bear at a rate per annum equal to the
alternative currency daily rate plus the applicable rate; (iv) each alternative currency term rate loan shall bear interest at a rate per
annum equal to the alternative currency term rate for such interest period plus the applicable rate; and (v) each swingline loan
shall bear interest at a rate per annum equal to the base rate plus the applicable rate.
The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of
$1,250 beginning in the first quarter of 2024, 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.
81
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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 core domestic 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 limited 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.
Energy Asset Construction Facilities
June 2020 Construction Revolver, 6.96%, due March 2024
In June 2020, we entered into a revolving construction loan agreement with a bank, with an aggregate borrowing capacity of
$100,000 for use in financing the construction cost of our owned projects.
In December 2022, we amended and restated the June 2020 construction loan agreement which modified the reference rate from
LIBOR to SOFR as a result of the expected cessation of LIBOR. Per the amendment, this instrument will bear interest at the
applicable term SOFR rate plus an applicable margin of 1.61%.
During the year ended December 31, 2023, we entered into amendments to extend this revolver and the current maturity date is
March 2024.
During the year ended December 31, 2023, we drew down $11,809 under this revolver. As of December 31, 2023, $20,705 was
outstanding and $79,295 was available for borrowing.
March 2023 Construction Credit Facility, 2.00%
On March 31, 2023, we entered into a credit agreement for a construction facility with a total commitment of CAD$100,000
which has an availability period of five years. As of December 31, 2023, no funds were drawn under this facility. During the
availability period the loans will bear interest at a fixed rate of 2.00% and during the operating period the rate will range from
1.00% to 3.00% as set forth in the agreement. The maturity date is the earlier of twenty years from project commencement date or
one year prior to the termination date of the last remaining energy services agreements.
April 2023 Construction Credit Facility, 6.82%, due July 2024
On April 18, 2023, one of our consolidated joint venture subsidiaries (“JV”) entered into a construction loan agreement with two
lenders for a principal amount of up to $140,844 under an energy asset credit facility. At the closing, the JV drew down $90,921
for construction of an energy asset and subsequently drew down an additional $43,493 as of December 31, 2023.
Monthly payments of interest only on the loan will be due and payable in accordance with the provisions as set forth in the
agreement. Any outstanding principal of the loan shall be paid in full no later than the maturity date (or in any event upon
acceleration of the loan), together with all accrued and unpaid interest on such amount. The loan will be repaid after the energy
82
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
asset project achieves provisional acceptance, through a sale-leaseback financing under lease agreements entered into between the
same parties, as part of the closing documents.
We acquired the remaining interest in this JV in January 2024 when we closed on the acquisition of BCE.
August 2023 Construction Credit Facility, 9.34%, due August 2026
On August 18, 2023, we entered into a construction and development loan agreement which provides a loan in a principal amount
of up to $300,000. At the closing, we drew down $200,000 under this facility, of which approximately $187,000 was used to
reimburse Ameresco for development and construction costs. Subsequent to closing, we drew down an additional $78,857.
The loan bears interest at a rate of 4.00% plus the greater of (i) Term SOFR for a one-month tenor and (ii) the 10-year United
States treasury rate and a fee equal to 0.250% of any unused committed principal amount. The loan matures on August 31, 2026,
with a one-year extension option that can be exercised if certain circumstances are met, including payment of a $3,000 extension
fee. We plan to accrue the extension fee if the extension becomes probable.
The obligations under the loan are guaranteed by all the related subsidiaries and are secured by the subsidiaries’ assets as well as
our equity interest in the borrower entity and in the case of default under the facility, a default under our Senior Secured Credit
Facility or a change in control of Ameresco, Inc., we are required to make capital contributions to the borrower entity who then
would be required to use the proceeds from the capital contributions to repay the construction and development loan.
Energy Asset Financing Facilities and Term Loans
October 2022 Financing Facility, 6.70%, due August 2039
In October 2022, one of our subsidiaries entered into a loan agreement with a new lender under a credit facility, refinancing a
previous credit facility originally signed on October 23, 2020, which was scheduled to expire March 31, 2026.
The new loan was scheduled to mature on October 26, 2037, provided a principal amount of up to $125,000 and bore interest at a
rate of 6.50% with a residual percentage of distributable cash flows payable after the maturity date of the loan, until the earlier of
the lender achieving an 8.25% “IRR” on funds borrowed under the facility, or the facility discharge date on October 26, 2047. The
principal and interest payments are due in quarterly installments based on a five-year amortization schedule with the principal
payments being adjusted based on the distributable cash flows from the three renewable natural gas projects owned and operated
by the project companies. No up-front, commitment or structuring fees were payable on the credit facility. The obligations under
the loan are guaranteed by all the related subsidiaries and are secured by the subsidiaries’ assets as well as our equity interest in
the signing subsidiary. Borrowings under the credit facility are otherwise non-recourse to Ameresco.
At the closing, we drew down $80,000 under this facility, approximately $26,530 of which was used to repay all amounts
outstanding under the prior loan and the remainder was used to terminate swap obligations, pay transaction costs, make permitted
distributions to Ameresco and for the project companies’ working capital needs. In addition, we terminated an interest rate swap
and a commodity swap related to the prior loan before their maturity dates. These swap terminations resulted in a settlement gain
on undesignated derivatives of $694. On December 21, 2022, we drew down an additional $15,000 under this facility.
On March 31, 2023, we drew down $30,000 under this facility and on May 31, 2023, we entered into the first amendment to the
loan agreement that increased the original commitment of $125,000 by an additional $90,000 to $215,000 and at closing we drew
down the $90,000.
The first amendment also contained the following amended terms:
•
•
The loan bears interest on the unpaid principal amount thereof from the date made through repayment at an interest rate
of 6.38% per annum compared to the original rate of 6.50%.
The loan maturity date was changed from October 26, 2037 to May 31, 2038
On September 28, 2023, we amended and restated this facility to increase the maximum commitment from $215,000 to $500,000,
to continue existing loans to project companies, to add certain renewable natural gas project companies to the loan portfolio, and
to provide that additional wholly- and majority-owned project companies may be added to the loan portfolio subject to certain
conditions.
At the closing of the amendment and restatement, we drew down an additional $135,544 under the loan, which was used to pay
transaction costs, reimburse project costs incurred by us, make other permitted distributions to Ameresco, and to fund the required
83
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
reserve accounts. Subject to certain conditions, the facility allows for additional draws to be made up to the remaining principal
amount to fund the construction and operation of renewable natural gas projects owned and operated by the project companies.
The amendment and restatement also contained the following amended terms:
•
•
•
The loan bears interest at a rate of 6.70% with a residual percentage of distributable cash flows payable after the maturity
date of the loan, until the earlier of the lender achieving an 8.51% internal rate of return (“IRR”) on funds borrowed
under the facility, or the facility discharge date which was extended to August 31, 2049.
The loan maturity date was changed from May 31, 2038 to August 31, 2039
All borrowings may be paid before maturity in whole or in part at RNG Holdings’ option after August 30, 2027 provided
that the lender’s IRR is achieved, and against a prepayment of 102% of par for prepayments between August 31, 2027
and August 31, 2029 and 101% of par for prepayments between September 1, 2029 and August 30, 2031. No call
premium applies for payments after August 30, 2031.
At closing, we incurred lender’s fees of $509, which was recorded as debt discount, and $305 in debt issuance costs which were
expensed in other expenses, net during the year ended December 31, 2023.
In December 2023, we drew down an additional $21,176 under this facility and as of December 31, 2023, $348,020 was
outstanding, net of unamortized debt discount and issuance costs of $1,073.
June 2022 Term Shelf Notes, 5.45%, due March 2042 under July 2021 Financing Facility
In June 2022, two senior secured notes (“Shelf Notes”) due March 31, 2042 were issued under our shelf facility, with gross
proceeds of $7,113. The Shelf Notes bear interest at a fixed rate of 5.45% per annum and are payable quarterly commencing
September 30, 2022.
March 2023 Term Shelf Notes 5.99%, due December 2047 under July 2021 Financing Facility
On March 28, 2023, three senior secured notes (“Shelf Notes”) due December 31, 2047 were issued under our shelf facility, with
gross proceeds of $22,625. The Shelf Notes bear interest at a fixed rate of 5.99% per annum and are payable quarterly
commencing June 30, 2023. At closing, we incurred $282 in lender fees and debt issuance costs. In connection with the Shelf
Notes, we recorded a derivative instrument for make-whole provisions with an initial value of $3,123, which was recorded as a
debt discount.
September 2015 Variable Rate Term Loan, 7.21%, due March 2028
On March 30, 2023, we entered into an amended and restated financing agreement (“Amended Agreement”) with the existing
bank that extended the maturity date of the loan from March 30, 2023 to March 28, 2028. The Amended Agreement consists of a
term loan of $14,084, an incremental term loan of $359 and a letter of credit of $899. The term loan bears interest at a variable
rate, with interest payments due in quarterly installments. The rate at December 31, 2023 was 7.21% per annum. The remaining
principal balance and unpaid interest is due March 28, 2028. As a result of this refinancing, we entered into a new interest rate
swap contract with an initial notional amount of $14,084 and termination date of December 31, 2040. See Note 19 Derivative
Instruments and Hedging Activities for additional information on this new swap contract.
Debt Instruments - Energy Project Asset Acquisition
As discussed in Note 4, on August 4, 2023, we acquired an energy asset project. The adjusted purchase price for phase 1 was
$87,964.
August 2023 Construction Revolver, 6.85%, due April 2030
In connection with the acquisition, we assumed a construction loan in the amount of $36,270. The construction loan bears interest
at a monthly variable SOFR term rate, which was 6.85% per annum. Subject to the terms and conditions contained in the assumed
credit agreement, the construction loan should have been converted into a term loan on or prior to July 31, 2023. On February 26,
2024, we received a waiver on this default and converted $36,270 of the construction loan into a term loan, which has a maturity
date of April 2030. Therefore, the construction loan was classified as non-current at December 31, 2023.
August 2023 Seller’s Promissory Note, 5.00%, due January 2024
We financed a portion of the purchase price for this acquisition through a seller’s note in the amount of $46,694.
84
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
In September 2023, we paid $12,500 in principal on the seller’s promissory note and paid interest at a rate of 5.00%. As of
December 31, 2023, the balance of the seller’s note was $28,294 after $5,900 was paid on December 27, 2023. The remaining
balance was paid in January 2024, without bearing interest.
Various Enerqos Financing Facilities
Enerqos has several financing facilities with maturity dates from March 31, 2024 to June 30, 2028 with interest rates ranging from
5.1% to 8.0%.
10. INCOME TAXES
The following table sets forth components of income before income taxes:
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
30,211 $
98,004 $
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,058
7,715
Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
38,269 $
105,719 $
74,256
3,888
78,144
The components of the provision (benefit) for income taxes were as follows:
Year Ended December 31,
2023
2022
2021
Year Ended December 31,
2023
2022
2021
Current income tax provision (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
34 $
(722) $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
372
1,255
1,661
733
1,202
1,213
Deferred income tax (benefit) provision:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax (benefit) provision . . . . . . . . . . . . . . . . . . . . . . . . . . $
(22,677)
(5,657)
1,038
(27,296)
(25,635) $
2,528
2,300
1,129
5,957
7,170 $
(779)
1,779
844
1,844
(8,025)
3,561
573
(3,891)
(2,047)
Our deferred tax assets and liabilities result primarily from temporary differences between financial reporting and tax recognition
of depreciation, energy efficiency, sale-leasebacks and other accruals, and net operating loss carryforwards.
85
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Deferred tax assets and liabilities consisted of the following:
December 31,
2023
2022
Deferred income tax assets:
Compensation accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4,137 $
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sale-leasebacks and other accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,906
49,300
28,565
8,273
82,827
2,114
Gross deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
181,122
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,704)
3,306
4,111
32,945
18,395
—
71,433
2,132
132,322
(3,621)
Total deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
177,418 $
128,701
Deferred income tax liabilities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(137,966) $
(122,762)
Deferred effect of derivative liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian capital cost, allowance and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United Kingdom goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside basis difference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2,166)
(5,738)
(1,324)
(852)
(6,599)
(841)
(1,640)
(3,098)
—
(952)
(5,038)
(1,347)
Total deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(155,486)
(134,837)
Deferred income tax assets (liabilities), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
21,932 $
(6,136)
Our valuation allowance related to the following items:
December 31,
2023
2022
Interest rate swaps (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign net operating loss (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State net operating loss at one of our subsidiaries (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
3,702
2
3,704 $
49
3,555
17
3,621
(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.
86
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
As of December 31, 2023, we had the following tax loss and credit carryforwards to offset taxable income in prior and future
years:
Federal net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Canadian net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ireland net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Spain net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
69,130
91,411
32,527
324
2,302
Total tax loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
195,694
Indefinite
Various
2028 through 2043
Indefinite
Indefinite
Amount
Expiration Period
Federal Energy Investment and Production tax credit carryforward . . . . . . . $
82,768
2030 through 2043
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 principle reason for the difference between the statutory rate and the estimated annual effective rate for 2023 were the effects
of tax deductions related to the Section 179D Commercial Buildings Energy-Efficiency deduction, investment tax credits we are
entitled from solar plants which have been placed into service during 2023 and, the deferred benefit for a reduction in future state
taxes. The Section 179D deduction available for 2023 was substantially higher compared to prior years because of enhancements
to Section 179D in the IRA. In addition, we were able to identify and document a large Section 179D eligible from a prior year
that had not previously been available. We also benefited from the deferred effect of a reduction in our future state tax rates
resulting from apportionment changes in a major state.
The principal reasons for the difference between the statutory rate and the estimated annual effective rate for 2022 were the
effects of investment tax credits we are entitled from solar plants which have been placed into service during 2022, 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 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
(“ASHRAE”) Standard by which energy improvements are measured. On December 23, 2022, the IRS issued Announcement
2023-1 which clarified the ASHRAE energy efficiency standards which will be applied to projects placed in service for 2021 and
2022.
87
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following is a reconciliation of the effective tax rates:
Year Ended December 31,
2023
Income before (benefit) provision for income taxes . . . . . . . . . . . . . . . . $
38,269
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,036
(774)
(3,213)
667
(200)
4
$
$
$
$
2022
105,719
22,201
3,844
(575)
2,198
59
353
Energy efficiency preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(30,359)
(21,410)
Foreign items and rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment State Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
458
(66)
(227)
81
(42)
37
—
(411)
(159)
1,033
2021
78,144
16,410
2,648
(502)
2,572
286
(4,618)
(17,639)
4
—
(2,546)
337
1,001
Total income tax (benefit) provision . . . . . . . . . . . . . . . . . . . . . . . . . . $
(25,635)
$
7,170
$
(2,047)
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.0 %
(2.0) %
(8.4) %
1.7 %
(0.5) %
— %
21.0 %
3.6 %
(0.5) %
2.1 %
0.1 %
0.3 %
Energy efficiency preferences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(79.3) %
(20.3) %
Foreign items and rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment State Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redeemable non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2 %
(0.2) %
(0.6) %
0.2 %
(0.1) %
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(67.0) %
— %
— %
(0.4) %
(0.2) %
1.1 %
6.8 %
21.0 %
3.4 %
(0.6) %
3.3 %
0.4 %
(5.9) %
(23.2) %
— %
— %
(3.3) %
0.4 %
1.9 %
(2.6) %
The following table provides a reconciliation of gross unrecognized tax benefits which are included in other liabilities within the
consolidated balance sheets:
Balance, beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Additions for current year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions of prior year tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Year Ended December 31,
2023
2022
900 $
100
(200)
800 $
900
—
—
900
The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future
periods was $310 as of December 31, 2023 and $450 as of December 31, 2022 (both net of the federal benefit on state amounts).
88
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share 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, 2023 and 2022, we estimated that there were no earnings for which repatriation tax has not been provided.
The tax years 2020 through 2023 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 $22 in 2023, $22 in 2022, and $14 in 2021.
11. VARIABLE INTEREST ENTITIES AND EQUITY METHOD INVESTMENTS
Investment Funds
Over a period of five years (2015 through 2019), we formed five investment funds (tax equity partnerships) 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, 2023, we had three 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.
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 or cost 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.
89
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The table below presents a summary of amounts related to our VIEs reflected in Note 1 on our consolidated balance sheets:
As of December 31,
2023
2022
Investment
Funds
Other VIEs
Total VIEs
Investment
Funds
Other VIEs
Total VIEs
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . $
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total VIE assets . . . . . . . . . . . . . . . . . . . . . . . . $
Current portions of long-term debt and financing
lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total VIE liabilities . . . . . . . . . . . . . . . . . . . . . . $
Equity and Cost Method Investments
5,099 $
—
—
662
33
5,794
—
79,104
4,748
73
10
16,780 $
—
1,977
13,409
3,749
35,915
267
173,808
12,908
—
74
89,729 $ 222,972 $ 312,701 $
21,879 $
—
1,977
14,071
3,782
41,709
267
252,912
17,656
73
84
1,715 $
799
24
951
35
3,524
89
84,081
4,901
73
30
10,107
799
590
952
14,322
26,770
89
182,050
4,901
73
30
92,698 $ 121,215 $ 213,913
8,392 $
—
566
1
14,287
23,246
—
97,969
—
—
—
2,190 $ 132,427 $ 134,617 $
1,440
241
133
4,004
6,490
22,780
6,953
168,650
7,930
23,021
7,086
172,654
2,087 $
48
304
117
2,556
— $
8,007
12,255
—
20,262
2,087
8,055
12,559
117
22,818
17,167
—
17,167
19,177
—
19,177
5,063
356
3,823
—
26,590 $ 172,473 $ 199,063 $
8,886
356
5,159
866
27,758 $
—
2,709
22,971 $
5,159
3,575
50,729
Unconsolidated VIEs/joint ventures are accounted for under the equity or cost method. As of the years ended December 31, 2023
and December 31, 2022, we had seven and five unconsolidated joint ventures, respectively. During the year ended December 31,
2023, we invested $5,554 in two new joint ventures. No other material investments were made.
Our investment balances for these equity and cost method investments 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 in the consolidated statements of income.
The following table sets forth the carrying value of our equity and cost method investments in joint ventures:
As of December 31,
2023
2022
Equity and cost method investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
18,709 $
10,855
We are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying value show above.
12. REDEEMABLE NON-CONTROLLING INTERESTS
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.
90
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table sets forth information about the call and put options for our investment funds outstanding as of December 31,
2023:
Call Option
Put Option
Investment
Fund
Number
1
2
3
Formation Date
June 2018
October 2018
December 2019
Start Date
April 2024
June 2024
March 2026
End Date
October 2024
December 2024
September 2026
Purchase
Price
(1)
(1)
(2)
Start Date
October 2024
December 2024
September 2026 September 2027
End Date
April 2025
June 2025
Purchase
Price
(3)
(3)
(4)
(1) 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.
(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) 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 estimate and subject to change based on last funding date.
(3) 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.
(4) 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.
The call options are exercisable beginning on the date that specified conditions are met for each respective fund. In December
2022 we finalized our purchase of an investor’s membership interest for $839 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, 2023 and 2022, 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.
91
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,
2023
2022
2021
62,470 $
(108)
62,362 $
94,926 $
(116)
94,810 $
70,458
(116)
70,342
52,140
51,841
50,855
1,087
53,228
1,437
53,278
1,413
52,268
1.38
1.35
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1.20 $
1.17 $
1.83 $
1.78 $
Potentially dilutive shares (1)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,707
1,108
1,443
(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 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, RSUs, and other stock-based awards. As of December 31, 2023, there were 1,991 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,
2023, 2022, and 2021.
The following table summarizes the collective activity under the plan:
Number of
Options
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
Aggregate
Intrinsic Value
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2023 . . . . . . . . . . . . . . . . .
Options exercisable at December 31, 2023 . . . . . . . . . . .
Expected to vest at December 31, 2023 . . . . . . . . . . . . .
4,533
170
(246)
(193)
(9)
4,255 $
1,867 $
2,387 $
45.799
41.871
9.900
62.365
63.311
46.932
25.241
63.900
6.6 years $
5.3 years $
7.6 years $
27,539
25,775
1,764
92
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table sets forth additional disclosures about our plan:
Year Ended December 31,
2023
2022
2021
Aggregate intrinsic value of options exercised . . . . . . . . . . . . . . . . . . . . . . . $
Cash received from stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . . . $
Weighted-average fair value of stock options granted . . . . . . . . . . . . . . . . . $
Stock-based compensation expense (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
Income tax benefit from stock-based compensation expense
8,511 $
2,438 $
23.99 $
10,318 $
1,102 $
9,775 $
3,954 $
37.87 $
15,046 $
659 $
33,494
5,563
28.94
8,716
4,932
(1) Included in selling, general, and administrative expenses in the accompanying consolidated statements of income and includes expense in
connection with our ESPP and RSUs.
Under the terms of our 2020 Plan, all options expire if not exercised within ten years after the grant date. We typically award
options that 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. 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.
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,
2023
—%
2022
—%
2021
—%
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.35% -4.44%
1.69%-3.82%
0.92%-1.46%
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54%-56%
Expected life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5 years
51%-53%
6.5 years
48%-50%
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, 2023, there was approximately $30,075 of unrecognized compensation expense related to non-vested stock
option awards and RSUs that is expected to be recognized over a weighted-average period of 2.0 years.
Restricted Stock Units
During the year ended December 31, 2023, we granted awards of RSUs to our employees and non-employee directors under our
2020 Plan. These RSUs represent a promise to deliver shares to participants at a future date after certain vesting conditions are
met. RSUs do not have the voting rights of common stock and the shares underlying RSUs are not considered issued and
outstanding upon grant. The fair value of RSUs is based on the closing stock price of our common stock on the grant-date and
expensed over the requisite service period of the award.
93
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The following table summarizes the activity under the plan:
Number of Options
Weighted-Average Grant
Date Fair Value Per
Share
Outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at December 31, 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13 $
66
(23)
(4)
52 $
52.94
45.33
47.83
48.39
45.90
Total stock-based compensation expense for the year ended December 31, 2023 related to RSUs was $1,690.
As of December 31, 2023, 23 of the RSUs were vested and there was $1,604 of unrecognized compensation expense related to
RSUs that is expected to be recognized over a period of approximately one year.
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, 2023 and 2022, we issued 60 and 36 shares, respectively, under the ESPP. As of
December 31, 2023 and 2022, the amount that had been withheld from employees for future purchases under the ESPP was $182
and $179, 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 United Kingdom, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
7,561 $
6,974 $
Group Personal Pension Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Registered Retirement Savings Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
652
429
290
406
Total matching contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8,642 $
7,670 $
6,189
252
405
6,846
Year Ended December 31,
2023
2022
2021
94
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
We are involved in a variety of other claims and other legal proceedings generally incidental to our normal business activities.
When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated,
it is accrued through a charge to earnings and, if material, disclosed below. When only a range of amounts is reasonably estimable
and no amount within the range is more likely than another, the low end of the range is recorded. While the ultimate amount of
liability incurred in any of these matters is dependent on future developments, in our opinion, the recorded liability is adequate to
cover the future payment of such liability and claims. However, the final outcome of any of these claims and legal proceedings
cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be
significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in
earnings in the periods in which such adjustments become known. For any other claims where a loss may be reasonably possible,
but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if potentially material, is
disclosed below. We routinely review relevant information with respect to our matters and update our accruals, disclosures and
estimates of reasonably possible loss based on such reviews. While the outcome of any of these matters 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.
In October 2021, we entered into a contract with SCE to design and build three grid scale BESS at three sites near existing
substation parcels throughout SCE’s service territory in California with an aggregate capacity of 537.5 MW (“the SCE
Agreement”). As previously disclosed, due to supply chain delays, weather and other events, we were unable to complete the
projects by August 1, 2022 (the “Guaranteed Completion Date”) and made related force majeure claims. In late 2022, SCE also
instructed us to adjust the completion of the sites into 2023. Under the SCE Agreement, a failure to reach the Guaranteed
Completion Date could, under certain circumstances, result in liquidated damages up to a maximum amount of $89 million being
applied. We have been working with SCE to analyze the applicability and scope of force majeure relief based on our force
majeure claims. In February 2024, in response to us issuing an invoice to SCE for one of the sites, SCE notified us that they
intend to withhold liquidated damages for that project. Our view is that liquidated damages should not be applied. It is at least
reasonably possible we may incur an obligation to pay liquidated damages up to the maximum amount.
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.” During the year ended December 31, 2021, we accrued a reasonable estimate of the loss, which was included in accrued
expenses and other current liabilities in our consolidated balance sheets, and we accrued a loss recovery from insurance proceeds
which was included in prepaid expenses and other current assets in our consolidated balance sheets. 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, 2021. During the year ended December 31, 2022, we entered into a settlement agreement and the net
settlement was paid and the loss recovery from insurance proceeds was reversed during this same period.
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 re-evaluated each period and at December 31, 2023 it was determined that the cumulative revenue earn-out targets
were not achieved, and the term expired. Therefore, we decreased the contingent consideration by $358 to $0, which was included
in selling, general and administrative expenses in our consolidated statements of income during the year ended December 31,
2023
In December 2021, we completed an 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, 2022. During the year ended December 31, 2022, a payment of $275 was made for the month of December
2021 EBITDA target and during the year ended December 31, 2023, a payment of $3,040 was made for the fiscal year 2022
95
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
EBITDA target. The fair value of the remaining contingent consideration was $1,465 at December 31, 2023. An increase of $705
in the fair value of contingent consideration was included in selling, general and administrative expenses in our consolidated
statements of income during the year ended December 31, 2023. The current portion of the contingent consideration is included in
accrued expenses and other current liabilities and the non-current portion is included in other liabilities on the consolidated
balance sheets.
See Notes 4 and 18 for additional information.
16. GEOGRAPHIC INFORMATION
The following table presents our long-lived assets related to our operations by geographic area:
As of December 31,
2023
2022
Long-lived Tangible Assets
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,670,322 $
23,549
12,948
1,162,705
24,590
9,937
Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,706,819 $
1,197,232
We attribute revenues to customers based on the location of the customer. The following table presents revenues by geographic
region:
Revenues
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,161,775 $
1,712,326 $
1,126,141
Canada . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,367
149,491
53,461
58,635
45,782
43,774
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,374,633 $
1,824,422 $
1,215,697
Year Ended December 31,
2023
2022
2021
17. OTHER EXPENSES, NET
The following table presents the components of other expenses, net:
Year Ended December 31,
2023
2022
2021
(Gain) loss on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest expense, net of interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,108) $
36,169
Amortization of debt discount and debt issuance costs . . . . . . . . . . . . . . . .
Foreign currency transaction (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Government incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Factoring fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,201
(581)
(576)
5,844
(906) $
26,423
4,211
144
240
14,361
2,849
852
(2,599)
(1,012)
—
—
Other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
43,949 $
27,273 $
17,290
96
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
Estimated amortization expense for existing debt discount and debt issuance costs for the next five succeeding fiscal years is as
follows:
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
5,801
3,158
2,363
1,378
1,245
Estimated
Amortization
18. FAIR VALUE MEASUREMENT
We recognize certain 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 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
2023
2022
Assets
Interest rate swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities
Interest rate swap instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2
2
2
3
$
$
$
3,970 $
5,202
629 $
6,012
1,465
8,106 $
9
5,348
4,158
9,515
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 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
97
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
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.
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 16.9%, and estimated EBITDA volatility of 75.0%.
The balances and subsequent key assumptions used in the model were as follows:
At December 31,
2023
2022
Balance of remaining contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
1,465
$
3,800
Risk-adjusted discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated EBITDA volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16.9 %
70.0 %
16.9 %
75.0 %
The balance of contingent consideration from the acquisition of certain assets of Chelsea Group Limited was decreased to $0 at
December 31, 2023 from $358 at December 31, 2022 as the cumulative revenue earn-out targets were not achieved and the term
expired
The following table sets forth a summary of changes in the fair value of contingent consideration liabilities classified as level 3:
Year Ended December 31,
2023
2022
Contingent consideration liabilities balance at the beginning of year . . . . . . . . . . . . . . . . . . . . $
Remeasurement period adjustment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value included in earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of contingent consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration liabilities balance at the end of year . . . . . . . . . . . . . . . . . . . . . . . . . $
4,158 $
—
347
(3,040)
1,465 $
2,838
(19)
1,614
(275)
4,158
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, 2023 and 2022, 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,
2023 and 2022.
The following table sets forth the fair value and the carrying value of our long-term debt, excluding financing leases:
December 31, 2023
December 31, 2022
Fair Value
Carrying Value
Fair Value
Carrying Value
Long-term debt value (level 2) . . . . . . . . . . . . . . . . . . . . $
1,466,458 $
1,478,394 $
869,771 $
884,054
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 Enerqos acquisition, as noted in Note 4, there were no other assets recorded at fair value on a non-recurring basis as of
December 31, 2023 or 2022.
98
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
19. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
During the twelve months ended December 31, 2023, we adopted ASU 2020-04, Reference Rate Reform, for six interest rate
swap contracts with the transition from LIBOR to SOFR as the reference rate. In March 2023, we dedesignated one interest rate
swap contract for a previous loan facility and entered into a new interest rate swap contract to hedge $14,084 of the extended loan
facility. The new interest rate swap was designated as a cash flow hedge. In June 2023, we prepaid one loan facility and
terminated the related swap prior to its maturity date. In August 2023, we acquired one interest rate swap through an energy asset
project acquisition. This interest rate swap was not designated as an effective hedge and we recorded the change in the valuation
in other expenses, net in our consolidated statements of income. See Note 7 for additional information about this energy asset
project acquisition.
The following table presents information about the fair value amounts of our derivative instruments:
Balance Sheet
Location
Derivatives as of December 31,
2023
2022
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
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
Make-whole provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other liabilities
$
$
$
$
$
1,023 $
— $
2,947 $
629 $
6,012 $
1,748
9
3,454
—
5,348
As of December 31, 2023, all but three of our freestanding derivatives were designated as hedging instruments and as of
December 31, 2022, all but two 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,
2023
2022
2021
Derivatives Designated as Hedging Instruments
Interest rate swap contracts . . . . . . . . . . . . . . . . . . . . Other expenses, net
$
(770) $
1,037 $
2,086
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
$
$
$
1,354 $
— $
(2,462) $
(2,738) $
2,338 $
(506) $
(996)
2,325
(1,089)
The following table presents the changes in AOCI, net of taxes, from our hedging instruments:
Derivatives Designated as Hedging Instruments:
Accumulated gain in AOCI at the beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Unrealized gain recognized in AOCI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain reclassified from AOCI to other expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AOCI at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,284
232
(770)
746
Year Ended
December 31, 2023
99
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, 2023:
Active Interest Rate Swaps
Expiration Date
11-Year, 5.77% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
October 2029
15-Year, 5.24% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2033
10-Year, 4.74% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2027
8-Year, 3.49% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8-Year, 3.49% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
June 2028
June 2028
13-Year, 0.72% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2033
13-Year, 0.72% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
March 2033
17.75-Year, 3.16% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 2040
18-Year, 3.81% Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
July 2041
$
$
$
$
$
$
$
$
$
Initial Notional
Amount ($)
9,200
10,000
14,100
14,643
10,734
Status
Designated
Designated
Designated
Designated
Designated
9,505 Not Designated
6,968 Not Designated
14,084
Designated
32,021 Not Designated
Other Derivatives
Classification
Effective Date
Expiration Date
Fair Value ($)
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Make-whole provisions . . . . . . . . . . . . . . . . .
Liability
Liability
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
June 2022
May 2028
April 2045
March 2046
March 2042
March 2023
December 2047
$
$
$
$
$
$
$
$
$
223
49
35
33
6
37
2,334
997
2,298
20. BUSINESS SEGMENT INFORMATION
Our reportable segments for the year ended December 31, 2023 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and
Europe. The remaining amounts are included in “All Other”. Europe was formerly included in “All Other” but was disaggregated
due to growth in the segment in 2023. As a result, previously reported amounts have been reclassified for comparative purposes.
Our U.S. Regions, U.S. Federal, Canada, and Europe 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 Alternative Fuels 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 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, 2023, 2022, and 2021, 71.8%, 46.0%, and 67.0%, respectively, of our revenues have been
derived from federal, state, provincial, or local government entities, including public housing authorities, public universities and
municipal utilities. The U.S. federal government, which is considered a single customer for reporting purposes, constituted 29.3%,
21.5%, and 32.3% of our consolidated revenues for the years ended December 31, 2023, 2022, and 2021, 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 39.6% of our revenues during the year ended December 31, 2022. 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.
100
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
The table below presents our business segment information and reconciliation to our consolidated financial statements:
U.S. Regions U.S. Federal
Canada
Alternative
Fuels
Europe
All Other
Total
2023
Revenues . . . . . . . . . . . . . . . . . . $ 557,122 $ 402,884 $
Earnings from unconsolidated
entities . . . . . . . . . . . . . . . . . . . .
(Gain) loss on derivatives . . . . .
Net interest expense (income) .
Depreciation and intangible
asset amortization . . . . . . . . . . .
Unallocated corporate activity .
Income before taxes, excluding
unallocated corporate activity . .
—
(2,326)
6,169
1,758
857
1,429
27,060
—
5,343
—
49,237
38,746
70,110 $ 117,075 $ 152,842 $
74,600 $ 1,374,633
—
(136)
834
1,626
—
—
497
16,019
26,160
—
—
—
2,477
2,290
—
—
—
(6)
1,758
(1,108)
26,922
1,650
—
64,129
(68,372)
3,813
6,215
4,188
4,442
106,641
2022
Revenues . . . . . . . . . . . . . . . . . .
Earnings from unconsolidated
entities . . . . . . . . . . . . . . . . . . . .
(Gain) loss on derivatives . . . . .
Net interest expense (income) .
Depreciation and intangible
asset amortization . . . . . . . . . . .
Unallocated corporate activity .
Income before taxes, excluding
unallocated corporate activity . .
2021
Revenues . . . . . . . . . . . . . . . . . .
Loss from unconsolidated
entities . . . . . . . . . . . . . . . . . . . .
(Gain) loss on derivatives . . . . .
Net interest expense . . . . . . . . .
Depreciation and intangible
asset amortization . . . . . . . . . . .
Unallocated corporate activity .
Income before taxes, excluding
unallocated corporate activity . .
1,123,343
391,891
58,558
114,459
61,645
74,526
1,824,422
—
(354)
6,948
21,463
—
1,647
—
1,231
4,905
—
—
(152)
917
1,702
—
—
294
8,657
23,354
—
—
—
25
575
—
—
—
(3)
1,647
(212)
17,775
433
—
52,432
(71,180)
88,531
50,866
2,554
22,989
5,589
6,370
176,899
551,118
392,948
49,483
111,223
46,164
64,761
1,215,697
(56)
(1,017)
6,255
15,699
—
—
—
1,294
4,666
—
—
(73)
879
1,872
—
—
1,330
5,793
21,080
—
(62)
—
378
716
—
—
—
—
724
—
(118)
240
14,599
44,757
(47,361)
38,285
52,388
1,581
27,774
2,997
2,480
125,505
See Note 3 for additional information about our revenues by product line.
21. ASSETS HELD FOR SALE
During the year ended December 31, 2023, we determined that there were 5 energy asset projects under construction that were
considered to be assets held for sale, since these assets were being marketed for sale and all the criteria to be classified as held for
sale under ASC 360, Property, Plant and Equipment—Impairment or Disposal of Long-Lived Assets, had been met. The carrying
value of these assets was $38,404, with liabilities directly associated with assets classified as held for sale of $8,351 as of
December 31, 2023. Assets held for sale are measured at the lower of their carrying value or the fair value less cost to sell.
The table below reflects the assets and liabilities associated with assets held for sale by segment:
101
AMERESCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
December 31, 2023
U.S. Regions
U.S. Federal
Total
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
18,895 $
18,253 $
Operating lease assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,256
—
Assets classified as held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
20,151 $
18,253 $
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5,418)
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Billings in excess of cost and estimated earnings . . . . . . . . . . . . . . . . . . . . . .
(14)
—
Long-term operating lease liabilities, net of current portion . . . . . . . . . . . . . .
(1,230)
(601)
—
(1,088)
—
Liabilities directly associated with assets classified as held for sale . . . . . . $
(6,662) $
(1,689) $
37,148
1,256
38,404
(6,019)
(14)
(1,088)
(1,230)
(8,351)
22. SUBSEQUENT EVENTS
On February 9, 2024, we signed an Equity Purchase Agreement to sell a 40% membership interest of Ameresco Roxana RNG
LLC to Republic Services Renewable Energy, LLC for a purchase price of $28,864.
102
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, 2023. 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, 2023, our internal control over
financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2023 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
During the year ended December 31, 2022, we implemented a new Enterprise Resource Planning (“ERP”) system. In connection
with this ERP implementation, we updated and will continue to update our internal control over financial reporting, as necessary,
to accommodate modifications to our business processes and accounting procedures. We do not believe this implementation has
had or will have a material adverse effect on our internal control over financial reporting.
During the year ended December 31, 2023, two leases commenced under lease agreements that contained in-kind consideration in
the form of services. In connection with these complex lease agreements unique to Ameresco, we updated the design of existing
lease controls to support modifications to our business processes and related accounting procedures.
103
Except as disclosed above, there were no changes in our internal control over financial reporting 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
Director and Officer Trading Arrangements
A portion of the compensation of our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) is in the form of
equity awards and, from time to time, directors and officers engage in open-market transactions with respect to the securities
acquired pursuant to such equity awards or other shares of Class A common stock held by such individuals, including to satisfy
tax withholding obligations when equity awards vest or are exercised, and for diversification or other personal reasons.
Transactions in our securities by directors and officers are required to be made in accordance with our insider trading policy,
which requires that the transactions be in accordance with applicable U.S. federal securities laws that prohibit trading while in
possession of material nonpublic information. Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables
directors and officers to prearrange transactions in a company’s securities in a manner that avoids concerns about initiating
transactions while in possession of material nonpublic information.
The following table describes, for the fourth quarter of 2023, each trading arrangement for the sale or purchase of our securities
adopted or terminated by our directors and officers that is either (1) a contract, instruction or written plan intended to satisfy the
affirmative defense conditions of Rule 10b5-1(c) (a “Rule 10b5-1 trading arrangement”) or (2) a “non-Rule 10b5-1 trading
arrangement” (as defined in Item 408(c) of Regulation S-K):
Name (Title)
Action Taken (Date of
Action)
Type of Trading
Arrangement
Nature of Trading
Arrangement
Duration of Trading
Arrangement
Aggregate Number of
Securities
George Sakellaris,
President, Chief
Executive Officer
and Director
Termination
(November 13,
2023)
Nicole Bulgarino,
Executive Vice
President and
General Manager,
Federal Solutions
Termination
(November 20,
2023)
Durable Rule
10b5-1 trading
arrangement for
sell-to-cover
transactions relating
to all equity awards
that have or may be
granted (1)
Durable Rule
10b5-1 trading
arrangement for
sell-to-cover
transactions relating
to all equity awards
that have or may be
granted (3)
Sale
(2)
(2)
Sale
(2)
(2)
(1) Adopted on March 8, 2023.
(2) This trading arrangement provided for the automatic sale of shares underlying RSUs in an amount sufficient to satisfy the
applicable tax withholding obligation, with the proceeds of the sale delivered to us in satisfaction of the applicable tax
withholding obligation. The number of shares subject to covered RSUs that could have been sold under this trading arrangement
was unknown as the number would have varied based on the extent to which vesting conditions were satisfied, the market price of
tour Class A common stock at the time of settlement and the potential future grant of additional RSUs subject to this arrangement.
(3) Adopted on March 9, 2023.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
104
Item 10. Directors, Executive Officers, and Corporate Governance
PART III
The complete response to this Item regarding the backgrounds of our executive officers and directors and other information
required by Items 401, 405 and 407 of Regulation S-K will be contained in our definitive proxy statement for our 2024 annual
meeting of stockholders
Code of Business Conduct and Ethics: 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.
Item 11. Executive Compensation
The response to this item is incorporated by reference from the discussion contained in the definitive proxy statement for our 2024
annual meeting of stockholders.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The response to this item is incorporated by reference from the discussion contained in the definitive proxy statement for our 2024
annual meeting of stockholders.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The response to this item is incorporated by reference from the discussion contained in the definitive proxy statement for our 2024
annual meeting of stockholders.
Item 14. Principal Accountant Fees and Services
The response to this item is incorporated by reference from the discussion contained in the definitive proxy statement for our 2024
annual meeting of stockholders.
105
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 and incorporated herein by reference.
Second Amended and Restated By-Laws of Ameresco, Inc. Filed as Exhibit 3.1 to our Current Report on Form 8-K
filed with the Commission on April 24, 2023 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 and incorporated herein by reference.
Fifth Amended and Restated Credit Agreement dated as of March 4, 2022 among Ameresco, Inc., certain of its
subsidiaries, the lenders (as defined therein), BOFA Securities, Inc. as sole lead arranger and sole bookrunner 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 March 4, 2022 and incorporated herein by reference.
10.1.2 Amendment No. 1 to Fifth Amended and Restated Credit Agreement dated as of June 9, 2022 among Ameresco,
Inc., certain of its subsidiaries, the lenders (as defined therein), BOFA Securities, Inc. as sole lead arranger and sole
bookrunner and Bank of America, N.A. as administrative agent. Filed as Exhibit 10.1 to our Form 10-Q for the
quarter ended June 30, 2022 and filed with the Commission on August 2, 2023
10.1.3 Amendment No. 2 to Fifth Amended and Restated Credit Agreement dated March 17, 2023 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 10.3 to our Form 10-Q for the quarter ended March 31, 2023 and filed with
the Commission on May 2, 2023.
10.1.4 Amendment No. 3 to Fifth Amended and Restated Credit Agreement dated as of August 24, 2023 among Ameresco,
Inc., certain of its subsidiaries, the lenders (as defined therein), BOFA Securities, Inc. as sole lead arranger and sole
bookrunner 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 August 24, 2023 and incorporated herein by reference.
10.1.5 Amendment No. 4 to Fifth Amended and Restated Credit Agreement dated as of December 11, 2023 among
Ameresco, Inc., certain of its subsidiaries, the lenders (as defined therein), 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
December 11, 2023 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.
106
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 and incorporated herein by reference.
10.5.2+ Form of Indemnification Agreement entered into between Ameresco, Inc. and each employee director. Filed as
10.6+
10.7+
10.8+
10.9#
10.10+
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 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 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 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 and incorporated herein by reference.
Turnkey Engineering, Procurement, Construction and Maintenance Agreement dated as of October 21, 2021, by and
between Ameresco, Inc. and Southern California Edison Company. Filed as Exhibit 10.10 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2022 filed with the Commission on February 28, 2023 and
incorporated herein by reference.
Form of Non-Employee Director Restricted Stock Unit Agreement. Filed as Exhibit 10.11 to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2022 filed with the Commission on February 28, 2023 and
incorporated herein by reference.
10.11*+ Ameresco, Inc. Form of 2023 Executive/Employee RSU Award Agreement.
10.12+ Non-Employee Director Compensation Policy. Filed as Exhibit 10.12 to our Annual Report on Form 10-K for the
fiscal year ended December 31, 2022 filed with the Commission on February 28, 2023 and incorporated herein by
reference.
21.1*
23.1*
31.1*
31.2*
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
2002.
The following consolidated financial statements from Ameresco, Inc.’s Annual Report on Form 10-K for the year
ended December 31, 2023, 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)
101
104*
107
Exhibit
Number
*
**
+
#
Description
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.
Item 16. Form 10-K Summary
Not applicable.
108
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: February 29, 2024
AMERESCO, INC.
By:
/s/ George P. Sakellaris
George P. Sakellaris
President and Chief Executive Officer
109
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/ Claire Hughes Johnson
Claire Hughes Johnson
/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
/s/ Charles R. Patton
Charles R. Patton
Title
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer)
Senior Vice President and Chief Accounting
Officer
(Principal Accounting Officer)
Date
February 29, 2024
February 29, 2024
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
Director
February 29, 2024
110
Direc tors
George Sakellaris
Chairman, President and CEO, Ameresco
David Corrsin
Executive Vice President, General Counsel, Secretary, Ameresco
Claire Hughes Johnson
Corporate Officer and Advisor, Stripe
Jennifer L. Miller
Chief Business Sustainability Officer (Retired), Sappi North America;
Chair of Nominating and Corporate Governance Committee
Charles R. Patton
Executive Vice President, External Affairs (Retired),
American Electric Power Company, Inc.
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
C orpora te Headqua rters
Ameresco Inc.
111 Speen Street | Suite 410
Framingham, MA 01701 USA
+1-508-661-2200
Sto ck Listin g
Our common stock is traded on the New York Stock
Exchange under the symbol AMRC.
Transfer Agent
Equiniti Trust Company, LLC
Executive Officers
& Management
George Sakellaris
President and Chief Executive Officer
Michael Bakas
Executive Vice President
Nicole Bulgarino
Executive Vice President and General Manager,
Federal and Utility Solutions
Mark Chiplock
Senior Vice President and Chief Accounting Officer
Peter Christakis
Executive Vice President, East Region
David Corrsin
Executive Vice President, General Counsel,
Corporate Secretary and Director
Leila Dillon
Senior Vice President, Corporate Marketing and Communications
Doran Hole
Executive Vice President and Chief Financial Officer
Louis Maltezos
Executive Vice President, West Region and Canada
Lenka Patten
Senior Vice President and Chief Human Resources Officer
S ha re h old e r In for mation
Copies of all SEC filings, including our 10-K,
are available on our website under the Investor
Relations section.
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Ameresco Inc.
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