Ameresco representatives present check for one time donation to the Village of DePue as a part of the project for beneficial reuse of the landfill and community support of clean energy. (Photo: Business Wire)Ameresco representatives present check for one time donation to the Village of DePue as a part of the project for beneficial reuse of the landfill and community support of clean energy. (Photo: Business Wire)FRAMINGHAM, Mass. & DEPUE, Ill.--(BUSINESS WIRE)--Ameresco, Inc., (NYSE: AMRC), a leading cleant ...

Core Insights - Ameresco, Inc. has received a Silver Award for Energy, Cleantech, and Environment Company of the Year in the 2024 Globee® Awards for American Business, highlighting its leadership in the cleantech sector [1] - The award recognizes Ameresco's commitment to supporting customers in the clean energy transition and its success in delivering energy-efficient and renewable solutions [2] Company Achievements - Ameresco's renewable energy assets and customer projects achieved a carbon offset equivalent to approximately 14.7 million metric tons of CO2 in 2022, demonstrating significant environmental impact [2] - The company offers a comprehensive portfolio of sustainable solutions that reduce energy consumption and operating costs, upgrade facilities with no upfront cost, and enhance occupant comfort [2] Company Overview - Founded in 2000, Ameresco, Inc. is a leading cleantech integrator and renewable energy asset developer, with a focus on helping customers achieve net-zero decarbonization and energy resiliency [4] - The company operates with over 1,300 employees across North America and Europe, providing local expertise and successfully completing projects for various sectors, including government, healthcare, and education [4]

Ameresco, Inc. (NYSE:AMRC) Q3 2023 Results Conference Call November 6, 2023 4:30 PM ET Company Participants Leila Dillon - SVP, Marketing & Communications George Sakellaris - Chairman, President & CEO Doran Hole - EVP, CFO Mark Chiplock - SVP, CAO Joshua Baribeau - SVP, Finance and Corporate Treasury Conference Call Participants Christopher Souther - B. Riley Eric Stine - Craig-Hallum George Gianarikas - Canaccord Genuity Greg Wasikowski - Webber Research & Advisory Joseph Osha - Guggenheim Julien Dumoulin ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) For the nine months ended September 30, 2023, Ameresco reported decreased revenue and net income due to project timing, while assets and liabilities increased, driven by energy asset growth and financing [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets increased to $3.46 billion and total liabilities to $2.51 billion, primarily driven by growth in energy assets and long-term debt, with stockholders' equity modestly rising Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,030,123 | $1,001,351 | | **Energy assets, net** | $1,656,585 | $1,181,525 | | **Total Assets** | **$3,460,993** | **$2,876,821** | | **Total Current Liabilities** | $882,342 | $812,068 | | **Long-term debt and financing lease liabilities, net** | $1,022,256 | $568,635 | | **Total Liabilities** | $2,513,692 | $1,957,167 | | **Total Stockholders' Equity** | $899,126 | $873,031 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For Q3 2023, revenues decreased 24.1% to $335.1 million and net income fell 24.9%, while nine-month revenues dropped 37.5% to $933.3 million and net income decreased 61.4%, primarily due to large project timing Performance Summary (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $335,149 | $441,296 | $933,265 | $1,492,695 | | **Gross Profit** | $63,656 | $79,556 | $172,253 | $229,237 | | **Operating Income** | $21,430 | $38,938 | $48,143 | $110,678 | | **Net Income** | $20,842 | $27,735 | $30,812 | $79,906 | | **Diluted EPS** | $0.40 | $0.51 | $0.54 | $1.44 | [Condensed Consolidated Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, net cash used in operating activities improved to $40.4 million, while investing activities increased to $465.2 million due to energy asset investments, and financing activities provided $532.4 million from new debt Cash Flow Summary (Nine Months Ended Sep 30, in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $(40,421) | $(273,169) | | **Net Cash from Investing Activities** | $(465,193) | $(202,664) | | **Net Cash from Financing Activities** | $532,401 | $554,194 | | **Net increase in cash** | $25,807 | $76,504 | - Capital investment in energy assets significantly increased to **$445.5 million** in the first nine months of 2023, compared to **$182.1 million** in the same period of 2022[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=15&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail key accounting policies, the acquisition of Enerqos Energy Solutions for $13.4 million, a substantial increase in total debt to $1.46 billion for energy asset growth, and a 52.1% effective tax benefit from IRA credits - On March 30, 2023, the company acquired Enerqos Energy Solutions S.r.l. for a total purchase consideration of **$13.4 million**, resulting in **$6.9 million** of goodwill[57](index=57&type=chunk)[58](index=58&type=chunk) - Total debt and financing lease liabilities increased from **$915.7 million** at year-end 2022 to **$1.46 billion** as of September 30, 2023, mainly due to increased non-recourse construction revolvers and term loans[89](index=89&type=chunk) - The company recorded an income tax benefit of **$10.6 million** for the nine months ended Sep 30, 2023, resulting in an effective tax rate of **-52.1%**, primarily due to benefits from the Inflation Reduction Act (IRA), including investment tax credits and Section 179D deductions[103](index=103&type=chunk)[104](index=104&type=chunk) - Contracted backlog stood at **$2.43 billion** as of September 30, 2023, with approximately **35%** expected to be recognized as revenue in the next twelve months[54](index=54&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes revenue and net income declines to large project timing, highlights a strong $3.7 billion backlog and $1.8 billion assets in development, notes IRA impacts and supply chain challenges, and confirms sufficient liquidity through new debt financing [Key Factors and Trends](index=37&type=section&id=Key%20Factors%20and%20Trends) The business environment is shaped by the IRA causing project delays, ongoing global supply chain issues, potential U.S. government shutdown risks, and management of delays and potential liquidated damages for SCE battery storage projects - The Inflation Reduction Act (IRA) is seen as favorable, but has led to some project delays as customers evaluate its benefits and funding mechanisms[157](index=157&type=chunk) - Global factors like supply chain disruptions, labor shortages, and inflation negatively impacted results in the first nine months of 2023 and are expected to continue[158](index=158&type=chunk)[161](index=161&type=chunk) - The company is working with Southern California Edison (SCE) to evaluate force majeure claims for delays on three BESS projects, potentially facing up to **$89 million** in liquidated damages if unsuccessful[168](index=168&type=chunk) [Backlog and Assets in Development](index=38&type=section&id=Backlog%20and%20Assets%20in%20Development) The company's total project backlog grew significantly to $3.7 billion and assets in development increased to $1.8 billion as of September 30, 2023, indicating strong future growth potential Project & O&M Backlog (in thousands) | Backlog Type | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | **Total Project Backlog** | $3,701,340 | $2,626,775 | | - Fully-contracted | $1,188,460 | $933,295 | | - Awarded, not yet signed | $2,512,880 | $1,693,480 | | **O&M Backlog** | $1,237,985 | $1,245,790 | - Assets in development increased to an estimated **$1.8 billion** at September 30, 2023, from **$1.4 billion** at the same time in 2022[175](index=175&type=chunk) [Results of Operations](index=40&type=section&id=Results%20of%20Operations) For Q3 2023, revenue decreased 24.1% and operating income fell 45.0%, while nine-month revenue dropped 37.5% and operating income 56.5%, primarily due to lower project revenue from the large SCE battery storage project Q3 Year-Over-Year Comparison (in thousands) | Metric | Q3 2023 | Q3 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $335,149 | $441,296 | $(106,147) | (24.1)% | | **Gross Profit** | $63,656 | $79,556 | $(15,900) | (20.0)% | | **Operating Income** | $21,430 | $38,938 | $(17,508) | (45.0)% | | **Net Income** | $20,842 | $27,735 | $(6,893) | (24.9)% | Nine Months Year-Over-Year Comparison (in thousands) | Metric | YTD 2023 | YTD 2022 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $933,265 | $1,492,695 | $(559,430) | (37.5)% | | **Gross Profit** | $172,253 | $229,237 | $(56,984) | (24.9)% | | **Operating Income** | $48,143 | $110,678 | $(62,535) | (56.5)% | | **Net Income** | $30,812 | $79,906 | $(49,094) | (61.4)% | [Business Segment Analysis](index=41&type=section&id=Business%20Segment%20Analysis) For the nine months ended September 30, 2023, revenue declines were concentrated in U.S. Regions and U.S. Federal segments due to project timing, while the All Other segment grew significantly, and income before taxes decreased across most segments Revenues by Segment (Nine Months Ended Sep 30, in thousands) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | U.S. Regions | $406,593 | $983,111 | (58.6)% | | U.S. Federal | $226,916 | $276,198 | (17.8)% | | Canada | $51,140 | $43,999 | 16.2% | | Alternative Fuels | $85,974 | $87,874 | (2.2)% | | All Other | $162,642 | $101,513 | 60.2% | Income Before Taxes by Segment (Nine Months Ended Sep 30, in thousands) | Segment | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | U.S. Regions | $33,401 | $77,407 | (56.9)% | | U.S. Federal | $26,227 | $36,623 | (28.4)% | | Canada | $3,027 | $1,482 | 104.3% | | Alternative Fuels | $7,445 | $18,891 | (60.6)% | | All Other | $6,514 | $8,952 | (27.2)% | [Liquidity and Capital Resources](index=43&type=section&id=Liquidity%20and%20Capital%20Resources) The company funds operations through cash flow and significant debt financing, having raised $566.4 million from non-recourse loans and $100.3 million from sale-leasebacks in the first nine months of 2023, and believes current liquidity is sufficient through at least November 2024 - The company believes cash, working capital, and availability under its credit facilities will be sufficient to fund operations through at least November 2024[188](index=188&type=chunk) - In August 2023, the company entered into a two-phased agreement to acquire an energy asset project and Bright Canyon Energy Corporation (BCE), involving cash, seller financing, and assumed debt[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk) - The company has actively used project financing, raising **$566.4 million** from non-recourse loans and **$100.3 million** from sale-leasebacks in the first nine months of 2023 to fund renewable energy plant construction[198](index=198&type=chunk)[199](index=199&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of September 30, 2023, there have been no significant changes in the company's market risk exposures compared to those described in its 2022 Form 10-K - There have been no significant changes in market risk exposures that materially affected the quantitative and qualitative disclosures as described in Item 7A to the 2022 Form 10-K[212](index=212&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2023, with updates made to internal controls for a new ERP system and complex lease agreements - Management concluded that as of the evaluation date, the company's disclosure controls and procedures were effective at a reasonable assurance level[213](index=213&type=chunk) - Changes to internal controls were made to accommodate a new ERP system and to handle complex lease agreements with non-monetary, in-kind consideration[215](index=215&type=chunk) [PART II - OTHER INFORMATION](index=47&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to various legal proceedings in the ordinary course of business but does not anticipate any material adverse effects on its financial condition or operations - The company does not believe that any currently pending or threatened legal proceedings will have a material adverse effect on its business, results of operations, or financial condition[217](index=217&type=chunk) [Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section refers to the detailed risk factors in the 2022 Form 10-K, indicating no material changes to those risks - The report directs readers to the "Risk Factors" section in the 2022 Form 10-K for a comprehensive description of business risks[218](index=218&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase shares in Q3 2023, with approximately $5.9 million remaining available under its stock repurchase program as of September 30, 2023 - No shares were repurchased in Q3 2023. Approximately **$5.9 million** remains authorized for repurchase under the existing program as of September 30, 2023[219](index=219&type=chunk) [Other Information](index=47&type=section&id=Item%205.%20Other%20Information) This section discloses Director Jennifer Miller's adoption of a Rule 10b5-1 trading plan on May 22, 2023, for the potential sale of up to 40,000 shares - Director Jennifer Miller adopted a Rule 10b5-1 trading arrangement on May 22, 2023, to sell up to **40,000 shares** of Class A common stock[223](index=223&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including an amendment to the credit agreement, officer certifications, and financial statements in Inline XBRL [Signatures](index=50&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q filing

Financial Data and Key Metrics Changes - Second quarter revenue was $327.1 million, exceeding guidance by approximately $37 million, with adjusted EBITDA at the higher end of the range [12][13] - Gross margin expanded to 17.9%, driven by a decline in lower-margin contracts as a percentage of total revenue [13] - The company ended the quarter with a record total project backlog of $3.2 billion, a 9% sequential increase [5][13] Business Line Data and Key Metrics Changes - Energy Asset revenue grew by 17% year-over-year, attributed to an increased number of operating assets [12] - Operations and Maintenance (O&M) business delivered 9% growth, while other business lines increased by 4% due to higher demand for utility, SaaS, and consulting services [12] Market Data and Key Metrics Changes - The company added $493 million in new project awards during the quarter, bringing total awards for the first half of the year to nearly $1 billion [5] - The Inflation Reduction Act has significantly boosted the adoption of standalone battery storage systems, which now represent 41% of assets in development [6][8] Company Strategy and Development Direction - The company aims to achieve net zero emissions from internal operations by 2040 and has set a target for emissions reduction through the Science-Based Targets initiative by 2025 [11] - The focus on large battery energy storage contracts is a key growth area, with the company positioned as a leader in this market due to its technical expertise and supplier relationships [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term growth, supported by a strong project backlog and visibility into future revenues exceeding $6.7 billion [19] - The company reaffirmed its 2023 guidance, anticipating adjusted EBITDA growth of 5% at the midpoint, despite challenges from the completion of large projects [18] Other Important Information - The EPA's ruling on Renewable Fuel Standard targets has positively impacted the price of D3 RINs, enhancing long-term visibility for the company's RNG operations [9][10] - The company is committed to maintaining a flexible business model that allows for both project and asset business lines to capitalize on the growing demand for renewable energy solutions [17] Q&A Session Summary Question: Clarification on revenue guidance and performance - Management indicated that while there has been better-than-expected performance, they are not changing overall guidance due to timing shifts in project awards [21][22] Question: Project margins and operating leverage - Management noted that project margins were impacted by a mix of lower-margin contracts and cost overruns, but they expect margins to improve in the second half of the year [23][24] Question: Impact of RFS decision on guidance - The increase in RIN prices has a positive but not significant impact on guidance, as the company maintains conservative assumptions [25][26] Question: Insights into pricing environment and project margins - Management reported strong bidding activity and larger project sizes, which contribute to profitability despite lower margins on certain contracts [28][29] Question: Update on European market traction - The company is experiencing strong activity in Europe, with successful projects in Italy and Greece, and anticipates further growth [31][32] Question: Storage business procurement process - The company is expanding relationships with battery suppliers and is more selective in procurement processes following learnings from previous projects [34][35] Question: Focus on free cash flow generation - Management emphasized flexibility in project and asset business strategies, with no prescriptive move towards one over the other [40][41] Question: Update on RNG projects and construction timelines - Construction of RNG projects is progressing well, with several expected to come online in 2024 [58][59] Question: Approach to RIN monetization - The company plans to hedge 50% of output while selling the rest in the open market, benefiting from improved RIN pricing visibility [47][48] Question: CapEx expectations for the year - Management indicated that CapEx was front-end loaded due to the timing of larger projects, with substantial amounts already spent [78][79] Question: Update on the Bristol project - The company is pleased with the progress on the Bristol project, although approvals have been slower than anticipated [80]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 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 04-3512838 (State ...

Ameresco, Inc. (NYSE:AMRC) Q1 2023 Earnings Conference Call May 1, 2023 4:30 PM ET Company Participants Leila Dillon - Investor Relations George Sakellaris - Chairman, President and Chief Executive Officer Doran Hole - Executive Vice President and Chief Financial Officer Josh Baribeau - Senior Vice President, Finance Conference Call Participants Noah Kaye - Oppenheimer & Company Stephen Gengaro - Stifel Tim Mulrooney - William Blair Julien Dumoulin-Smith - Bank of America Eric Stine - Craig-Hallum George Gi ...

Q1 2023 Supplemental Information May 1, 2023 ameresco.com © 2023 Ameresco, Inc. All rights reserved. Safe Harbor 2 Forward Looking Statements Any statements in this presentation about future expectations, plans and prospects for Ameresco, Inc., including statements about market conditions, pipeline, visibility and backlog, as well as estimated future revenues, net income, adjusted EBITDA, Non-GAAP EPS, gross margin, capital investments, other financial guidance and longer term outlook, statements about our ...

PART I - FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Ameresco, Inc.'s unaudited condensed consolidated financial statements include balance sheets, income, comprehensive income, equity, and cash flows, with detailed notes on accounting policies and disclosures [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$2,967,348 thousand** at March 31, 2023, from $2,876,821 thousand at December 31, 2022, reflecting investments and financing activities Condensed Consolidated Balance Sheets (Selected Items, in thousands) | Indicator | March 31, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **ASSETS** | | | | Total current assets | $957,974 | $1,001,351 | | Energy assets, net | $1,270,230 | $1,181,525 | | Goodwill, net | $77,810 | $70,633 | | Total assets | $2,967,348 | $2,876,821 | | **LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY** | | | | Total current liabilities | $767,112 | $812,068 | | Long-term debt and financing lease liabilities, net | $631,676 | $568,635 | | Redeemable non-controlling interests, net | $46,700 | $46,623 | | Total stockholders' equity | $894,772 | $873,031 | | Total liabilities, redeemable non-controlling interests and stockholders' equity | $2,967,348 | $2,876,821 | [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2023 revenues decreased by **42.8%** and net income attributable to common shareholders by **93.7%** year-over-year, primarily due to project revenue timing Condensed Consolidated Statements of Income (Selected Items, in thousands) | Indicator | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Revenues | $271,042 | $474,002 | | Cost of revenues | $221,094 | $405,624 | | Gross profit | $49,948 | $68,378 | | Operating income | $9,097 | $28,686 | | Income before income taxes | $1,054 | $21,605 | | Income tax (benefit) provision | $(503) | $2,307 | | Net income | $1,557 | $19,298 | | Net income attributable to common shareholders | $1,102 | $17,384 | | Basic EPS | $0.02 | $0.34 | | Diluted EPS | $0.02 | $0.32 | [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2023 significantly decreased to **$971 thousand** from $22,076 thousand, mainly due to unrealized loss from interest rate hedges Condensed Consolidated Statements of Comprehensive Income (in thousands) | Indicator | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Net income | $1,557 | $19,298 | | Unrealized (loss) gain from interest rate hedges, net of tax | $(868) | $2,711 | | Foreign currency translation adjustments | $282 | $67 | | Total other comprehensive (loss) income | $(586) | $2,778 | | Comprehensive income | $971 | $22,076 | | Comprehensive income attributable to common shareholders | $508 | $20,162 | [Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Non-Controlling%20Interests%20and%20Stockholders'%20Equity) Total stockholders' equity increased to **$894,772 thousand** at March 31, 2023, driven by non-controlling interests and stock-based compensation Changes in Stockholders' Equity (Selected Items, in thousands) | Indicator | Balance, Dec 31, 2022 | Exercise of stock options | Stock-based compensation expense | Unrealized loss from interest rate hedges, net | Foreign currency translation adjustment | Contributions from noncontrolling interests | Net income | Balance, Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Additional paid-in capital | $306,314 | $571 | $4,037 | — | — | — | — | $310,726 | | Retained earnings | $533,549 | — | — | — | — | — | $1,102 | $534,624 | | Accumulated other comprehensive loss, net | $(4,051) | — | — | $(868) | $282 | — | — | $(4,645) | | Non-controlling interests | $49,002 | — | — | — | $8 | $16,417 | $423 | $65,850 | | **Total stockholders' equity** | **$873,031** | **$571** | **$4,037** | **$(868)** | **$282** | **$16,417** | **$1,525** | **$894,772** | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net increase in cash, cash equivalents, and restricted cash was **$63,689 thousand** for Q1 2023, driven by operating and financing activities Condensed Consolidated Statements of Cash Flows (Selected Items, in thousands) | Cash Flow Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Cash flows from operating activities | $58,772 | $(276,122) | | Cash flows from investing activities | $(101,253) | $(57,733) | | Cash flows from financing activities | $106,128 | $355,400 | | Effect of exchange rate changes on cash | $42 | $(196) | | Net increase in cash, cash equivalents, and restricted cash | $63,689 | $21,349 | | Cash, cash equivalents, and restricted cash, end of period | $213,577 | $108,403 | | Cash paid for interest | $13,135 | $4,488 | | Cash paid for income taxes | $323 | $78 | | Accrued purchases of energy assets | $97,542 | $40,683 | [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed disclosures cover financial reporting, accounting policies, revenue, acquisitions, debt, taxes, and other financial instruments [1. BASIS OF PRESENTATION](index=13&type=section&id=1.%20BASIS%20OF%20PRESENTATION) Unaudited financial statements prepared under GAAP, with Q1 2023 results not indicative of the full year, noting global risks - Unaudited condensed consolidated financial statements prepared in conformity with GAAP, with results not necessarily indicative of the full year[27](index=27&type=chunk)[28](index=28&type=chunk) - Global factors such as supply chain disruptions, inflationary pressures, and geopolitical tensions are significant risks and uncertainties impacting future operations and liquidity[30](index=30&type=chunk)[31](index=31&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Adopted ASU 2020-04 and 2022-01 with no material impact, evaluating ASU 2022-03 and 2023-02 for future periods Allowance for Credit Losses (in thousands) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Allowance for credit losses, beginning of period | $911 | $2,263 | | Provision for bad debts | $93 | $237 | | Account write-offs and other | $(33) | $(235) | | Allowance for credit losses, end of period | $971 | $2,265 | - Adopted ASU 2020-04 (Reference Rate Reform) and ASU 2022-01 (Derivatives and Hedging) with no material impact on financial statements[35](index=35&type=chunk)[36](index=36&type=chunk) - Currently evaluating the impact of ASU 2022-03 (Fair Value Measurement) and ASU 2023-02 (Investments - Equity Method and Joint Ventures), effective for fiscal years beginning after December 15, 2023[37](index=37&type=chunk)[38](index=38&type=chunk) [3. REVENUE FROM CONTRACTS WITH CUSTOMERS](index=14&type=section&id=3.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Total revenues decreased by **42.8%** year-over-year in Q1 2023, primarily due to lower project revenue, with **93%** recognized over time Revenue Disaggregation by Line of Business and Reportable Segment (Q1 2023, in thousands) | Segment | Project revenue | O&M revenue | Energy assets | Integrated-PV | Other | Total revenues | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. Regions | $104,320 | $5,529 | $13,651 | — | $869 | $124,369 | | U.S. Federal | $45,549 | $12,700 | $1,076 | — | $231 | $59,556 | | Canada | $14,911 | $10 | $762 | — | $2,728 | $18,411 | | Alternative Fuels | — | $3,686 | $24,653 | — | — | $28,339 | | All Other | $18,450 | $333 | $630 | $11,944 | $9,010 | $40,367 | | **Total** | **$183,230** | **$22,258** | **$40,772** | **$11,944** | **$12,838** | **$271,042** | Revenue Disaggregation by Line of Business and Reportable Segment (Q1 2022, in thousands) | Segment | Project revenue | O&M revenue | Energy assets | Integrated-PV | Other | Total revenues | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | U.S. Regions | $298,632 | $5,080 | $10,018 | — | $790 | $314,520 | | U.S. Federal | $62,217 | $12,297 | $1,090 | — | $42 | $75,646 | | Canada | $13,951 | $11 | $761 | — | $2,449 | $17,172 | | Alternative Fuels | — | $2,774 | $26,487 | — | — | $29,261 | | All Other | $18,604 | $91 | $72 | $11,356 | $7,280 | $37,403 | | **Total** | **$393,404** | **$20,253** | **$38,428** | **$11,356** | **$10,561** | **$474,002** | Revenue Recognized Over Time and by Geographic Area (in thousands) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Percentage of revenue recognized over time | 93% | 96% | | **Revenues by Geographic Area** | | | | United States | $233,084 | $438,391 | | Canada | $17,234 | $15,988 | | Other | $20,724 | $19,623 | | **Total revenues** | **$271,042** | **$474,002** | Contract Balances (in thousands) | Contract Balance | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Accounts receivable, net | $130,940 | $174,009 | | Accounts receivable retainage, net | $35,625 | $38,057 | | Costs and estimated earnings in excess of billings (Contract Assets) | $497,762 | $576,363 | | Billings in excess of cost and estimated earnings (Contract Liabilities) | $39,326 | $34,796 | | Billings in excess of cost and estimated earnings, non-current | $12,510 | $7,617 | | Total contract liabilities | $51,836 | $42,413 | - Contracted backlog at March 31, 2023, was **$2,222,460 thousand**, with approximately **33%** expected to be recognized in the next twelve months[52](index=52&type=chunk) - Project development costs of **$2,612 thousand** were recognized in Q1 2023 on projects converted to customer contracts, down from $4,209 thousand in Q1 2022[53](index=53&type=chunk) [4. BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS](index=17&type=section&id=4.%20BUSINESS%20ACQUISITIONS%20AND%20RELATED%20TRANSACTIONS) Acquired Enerqos Energy Solutions S.r.l. for **$13,584 thousand**, expanding clean energy in Italy and resulting in **$6,996 thousand** goodwill - Acquired Enerqos Energy Solutions S.r.l. on March 30, 2023, for **$13,584 thousand**, with **$9,535 thousand** paid to date[55](index=55&type=chunk) - Estimated goodwill from Enerqos acquisition is **$6,996 thousand**, largely attributed to expected benefits and the acquired workforce[56](index=56&type=chunk) [5. GOODWILL AND INTANGIBLE ASSETS, NET](index=17&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS,%20NET) Goodwill increased to **$77,810 thousand** at March 31, 2023, due to the Enerqos acquisition, while amortization expense decreased Goodwill Carrying Value by Reportable Segment (in thousands) | Segment | Balance, Dec 31, 2022 | Goodwill acquired | Currency effects | Balance, Mar 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | U.S. Regions | $39,593 | — | — | $39,593 | | U.S. Federal | $3,981 | — | — | $3,981 | | Canada | $3,236 | — | $4 | $3,240 | | Alternative Fuels | — | — | — | — | | All Other | $23,823 | $6,996 | $177 | $30,996 | | **Total** | **$70,633** | **$6,996** | **$181** | **$77,810** | Definite-Lived Intangible Assets, Net (in thousands) | Indicator | As of March 31, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | Gross carrying amount | $36,700 | $32,277 | | Less - accumulated amortization | $(28,034) | $(27,584) | | **Intangible assets, net** | **$8,666** | **$4,693** | Amortization Expense (in thousands) | Asset type | Location | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | :--- | | Customer contracts | Cost of revenues | — | $184 | | All other intangible assets | Selling, general and administrative expenses | $302 | $394 | | **Total amortization expense** | | **$302** | **$578** | [6. ENERGY ASSETS, NET](index=18&type=section&id=6.%20ENERGY%20ASSETS,%20NET) Energy assets, net, increased to **$1,270,230 thousand** at March 31, 2023, reflecting capital investment, with higher capitalized interest Energy Assets, Net (in thousands) | Indicator | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Energy assets | $1,596,171 | $1,493,913 | | Less - accumulated depreciation and amortization | $(325,941) | $(312,388) | | **Energy assets, net** | **$1,270,230** | **$1,181,525** | Depreciation and Amortization Expense on Energy Assets (in thousands) | Location | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Cost of revenues | $13,341 | $11,806 | Capitalized Interest and ARO Assets/Liabilities (in thousands) | Indicator | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Capitalized interest | $6,376 | $1,312 | | **ARO Assets/Liabilities** | March 31, 2023 | December 31, 2022 | | ARO assets, net (Energy assets, net) | $3,612 | $2,359 | | ARO liabilities, non-current (Other liabilities) | $4,424 | $3,052 | | Depreciation expense of ARO assets (Q1 2023) | $55 | $37 | | Accretion expense of ARO liabilities (Q1 2023) | $66 | $36 | [7. LEASES](index=19&type=section&id=7.%20LEASES) Operating lease assets remained stable, total lease costs decreased slightly, and one energy asset was sold and leased back for **$4,139 thousand** Operating and Financing Lease Information (in thousands) | Indicator | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Operating Leases:** | | | | Operating lease assets | $38,189 | $38,224 | | Total operating lease liabilities | $37,647 | $37,532 | | Weighted-average remaining lease term | 13 years | 13 years | | Weighted-average discount rate | 6.0 % | 6.0 % | | **Financing Leases:** | | | | Energy assets | $28,839 | $29,365 | | Total financing lease liabilities | $16,031 | $16,060 | | Weighted-average remaining lease term | 14 years | 14 years | Lease Costs (in thousands) | Lease Type | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Operating lease costs | $2,120 | $2,291 | | Financing lease amortization expense | $526 | $355 | | Financing lease interest on lease liabilities | $444 | $559 | | **Total lease costs** | **$3,090** | **$3,205** | - Sold and leased back one energy asset for **$4,139 thousand** in cash proceeds under the August 2018 master lease and participation agreement during Q1 2023[76](index=76&type=chunk) [8. DEBT AND FINANCING LEASE LIABILITIES](index=21&type=section&id=8.%20DEBT%20AND%20FINANCING%20LEASE%20LIABILITIES) Total debt and financing lease liabilities increased to **$963,307 thousand**, driven by new notes, an amended loan, and acquired debt Debt and Financing Lease Liabilities (in thousands) | Debt Type | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Senior secured revolving credit facility | $182,900 | $182,900 | | Senior secured term loans | $295,000 | $295,000 | | Non-recourse construction revolvers | $47,090 | $45,391 | | Non-recourse term loans | $296,880 | $255,403 | | Non-recourse long-term financing facilities | $121,455 | $120,923 | | Non-recourse financing lease liabilities | $16,031 | $16,060 | | Acquired debt | $3,951 | — | | **Total debt and financing lease liabilities** | **$963,307** | **$915,677** | | Less: current maturities | $(313,459) | $(331,479) | | Less: unamortized discount and debt issuance costs | $(18,172) | $(15,563) | | **Long-term debt and financing lease liabilities, net** | **$631,676** | **$568,635** | - On March 17, 2023, the company amended its senior secured credit facility, increasing the total funded debt to EBITDA covenant ratio from **3.50 to 4.00** for Q1 and Q2 2023[81](index=81&type=chunk) - Issued three senior secured Shelf Notes for **$22,625 thousand** at a fixed rate of **5.99%** due December 31, 2047, incurring **$282 thousand** in fees and recording a derivative instrument for make-whole provisions with an initial value of **$3,123 thousand**[82](index=82&type=chunk) - Entered into an amended and restated financing agreement for a non-recourse variable rate term loan, extending maturity to March 28, 2028, with a rate of **6.38%** at March 31, 2023[83](index=83&type=chunk) - Drew down the remaining **$30,000 thousand** under a non-recourse fixed rate note (**6.50%**, due October 31, 2037), bringing the outstanding balance to **$114,919 thousand**[84](index=84&type=chunk) - Entered into a new construction credit facility with a total commitment of **CAD$100,000 thousand**, with no funds drawn as of March 31, 2023[86](index=86&type=chunk) [9. INCOME TAXES](index=22&type=section&id=9.%20INCOME%20TAXES) Ameresco recorded an income tax benefit of **$503 thousand** for Q1 2023, with an effective annualized tax rate benefit of **47.7%** due to tax credits Income Tax (Benefit) Provision (in thousands) | Indicator | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Income tax (benefit) provision | $(503) | $2,307 | | Estimated effective annualized tax rate | 47.7% benefit | 10.7% expense | - The effective tax rate is lower in 2023 due to investment tax credits from solar and storage plants and higher Section 179D deductions under the IRA[88](index=88&type=chunk) Unrecognized Tax Benefits (in thousands) | Indicator | December 31, 2022 | March 31, 2023 | | :--- | :--- | :--- | | Gross Tax Unrecognized Benefits | $900 | $900 | | Amount that would favorably affect effective income tax rate (net of federal benefit) | $450 | $450 | [10. COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=10.%20COMMITMENTS%20AND%20CONTINGENCIES) Legal proceedings are not expected to have a material adverse effect, and contingent consideration for Plug Smart increased to **$3,921 thousand** - No material adverse effect expected from current legal proceedings[92](index=92&type=chunk) - Fair value of contingent consideration for Plug Smart acquisition increased to **$3,921 thousand** at March 31, 2023, from $3,800 thousand at December 31, 2022, based on future EBITDA targets[94](index=94&type=chunk) [11. FAIR VALUE MEASUREMENT](index=23&type=section&id=11.%20FAIR%20VALUE%20MEASUREMENT) Financial instruments are measured at fair value, with total liabilities increasing to **$12,460 thousand**, primarily using Level 2 and 3 inputs Fair Value of Financial Instruments (in thousands) | Instrument | Input Level | Fair Value (March 31, 2023) | Fair Value (December 31, 2022) | | :--- | :--- | :--- | :--- | | **Assets:** | | | | | Interest rate swap instruments | 2 | $3,564 | $5,202 | | **Total assets** | | **$3,564** | **$5,202** | | **Liabilities:** | | | | | Interest rate swap instruments | 2 | $6 | $9 | | Make-whole provisions | 2 | $8,175 | $5,348 | | Contingent consideration | 3 | $4,279 | $4,158 | | **Total liabilities** | | **$12,460** | **$9,515** | Changes in Fair Value of Contingent Consideration Liability (Level 3, in thousands) | Indicator | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Balance, beginning of period | $4,158 | $2,838 | | Changes in fair value included in earnings | $121 | $(19) | | Payment of contingent consideration | — | $1,614 | | Remeasurement period adjustment | — | $(275) | | **Balance, end of period** | **$4,279** | **$4,158** | Fair Value and Carrying Value of Long-Term Debt (excluding financing leases, in thousands) | Indicator | As of March 31, 2023 (Fair Value) | As of March 31, 2023 (Carrying Value) | As of December 31, 2022 (Fair Value) | As of December 31, 2022 (Carrying Value) | | :--- | :--- | :--- | :--- | :--- | | Long-term debt (Level 2) | $915,732 | $929,104 | $869,771 | $884,054 | [12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES](index=24&type=section&id=12.%20DERIVATIVE%20INSTRUMENTS%20AND%20HEDGING%20ACTIVITIES) Adopted ASU 2020-04 for interest rate swaps, dedesignated one swap, and entered a new cash flow hedge, with make-whole provisions increasing - Adopted ASU 2020-04 for two interest rate swap contracts, transitioning from LIBOR to SOFR[102](index=102&type=chunk) - Dedesignated one interest rate swap and entered into a new interest rate swap contract to hedge **$14,084 thousand** of an extended loan facility, designated as a cash flow hedge[102](index=102&type=chunk) Fair Value of Derivative Instruments (in thousands) | Derivative Type | Balance Sheet Location | Fair Value (March 31, 2023) | Fair Value (December 31, 2022) | | :--- | :--- | :--- | :--- | | **Designated as Hedging Instruments:** | | | | | Interest rate swap contracts (Assets) | Other assets | $630 | $1,748 | | Interest rate swap contracts (Liabilities) | Other liabilities | $6 | $9 | | **Not Designated as Hedging Instruments:** | | | | | Interest rate swap contracts (Assets) | Other assets | $2,934 | $3,454 | | Make-whole provisions (Liabilities) | Other liabilities | $8,175 | $5,348 | Effects of Derivative Instruments on Income (in thousands) | Derivative Type | Location of Loss (Gain) | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | :--- | | **Designated as Hedging Instruments:** | | | | | Interest rate swap contracts | Other expenses, net | $11 | $481 | | **Not Designated as Hedging Instruments:** | | | | | Interest rate swap contracts | Other expenses, net | $458 | $(1,262) | | Commodity swap contracts | Other expenses, net | — | $2,606 | | Make-whole provisions | Other expenses, net | $(295) | $278 | Changes in Accumulated Other Comprehensive Income (AOCI) from Hedging Instruments (in thousands) | Indicator | Three Months Ended March 31, 2023 | | :--- | :--- | | Accumulated gain in AOCI at beginning of period | $1,284 | | Unrealized loss recognized in AOCI | $(879) | | Loss reclassified from AOCI to other expenses, net | $11 | | Loss on derivatives | $(868) | | **Accumulated gain in AOCI at end of period** | **$416** | [13. VARIABLE INTEREST ENTITIES AND EQUITY METHOD INVESTMENTS](index=26&type=section&id=13.%20VARIABLE%20INTEREST%20ENTITIES%20AND%20EQUITY%20METHOD%20INVESTMENTS) Total VIE assets increased to **$238,666 thousand**, non-controlling interests contributed **$16,417 thousand**, and equity method investments rose to **$11,337 thousand** Variable Interest Entities (VIEs) Assets and Liabilities (in thousands) | Indicator | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total VIE assets** | **$238,666** | **$213,913** | | **Total VIE liabilities** | **$41,821** | **$50,729** | - Non-controlling interests contributed **$16,417 thousand** to a joint venture during Q1 2023[114](index=114&type=chunk) Equity Method Investments (in thousands) | Indicator | As of March 31, 2023 | As of December 31, 2022 | | :--- | :--- | :--- | | Equity method investments | $11,337 | $10,855 | [14. REDEEMABLE NON-CONTROLLING INTERESTS](index=27&type=section&id=14.%20REDEEMABLE%20NON-CONTROLLING%20INTERESTS) Redeemable non-controlling interests are recorded at carrying values exceeding estimated redemption values, including exercisable call and put options - Redeemable non-controlling interests are reported at carrying values, which exceeded estimated redemption values at March 31, 2023, and December 31, 2022[121](index=121&type=chunk) - Investment funds include call options (subsidiaries can require non-controlling interest holder to sell units) and put options (non-controlling interest holder can require subsidiaries to purchase units), exercisable upon meeting specified conditions[120](index=120&type=chunk) [15. EARNINGS PER SHARE](index=27&type=section&id=15.%20EARNINGS%20PER%20SHARE) Basic and diluted EPS decreased significantly to **$0.02** for Q1 2023, reflecting lower net income attributable to common shareholders Earnings Per Share (in thousands, except EPS) | Indicator | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Net income attributable to common shareholders | $1,102 | $17,384 | | Income attributable to common shareholders | $1,075 | $17,356 | | Basic weighted-average shares outstanding | 51,963 | 51,744 | | Diluted weighted-average shares outstanding | 53,261 | 53,636 | | Basic EPS | $0.02 | $0.34 | | Diluted EPS | $0.02 | $0.32 | - Potentially dilutive shares attributable to stock options (**1,901** in 2023, **783** in 2022) were excluded from diluted EPS computation as their effect would have been anti-dilutive[122](index=122&type=chunk) [16. STOCK-BASED COMPENSATION](index=28&type=section&id=16.%20STOCK-BASED%20COMPENSATION) Stock-based compensation expense increased to **$4,037 thousand** for Q1 2023, with **$45,827 thousand** unrecognized expense remaining Stock-Based Compensation Expense (in thousands) | Indicator | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Stock-based compensation expense | $4,037 | $3,531 | - Unrecognized compensation expense related to non-vested stock option awards was **$45,827 thousand** at March 31, 2023, with a weighted-average recognition period of **3.0 years**[125](index=125&type=chunk) - Granted **30 common stock options** and **47 RSUs** to employees under the 2020 Stock Incentive Plan during Q1 2023[126](index=126&type=chunk) [17. BUSINESS SEGMENT INFORMATION](index=28&type=section&id=17.%20BUSINESS%20SEGMENT%20INFORMATION) Ameresco operates through five segments, offering energy efficiency, renewable energy, O&M, and specialized services like alternative fuels and integrated-PV - Reportable segments include U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and All Other, providing energy efficiency, renewable energy solutions, and O&M services[127](index=127&type=chunk) - Alternative Fuels segment sells electricity and processed renewable natural gas (RNG) from owned plants and provides O&M for customer-owned RNG plants[127](index=127&type=chunk) - All Other category includes enterprise energy management, consulting, and integrated-PV sales[128](index=128&type=chunk) [18. OTHER EXPENSES, NET](index=29&type=section&id=18.%20OTHER%20EXPENSES,%20NET) Other expenses, net, increased to **$8,043 thousand** in Q1 2023 due to higher interest expense, partially offset by derivative losses and currency gains Components of Other Expenses, Net (in thousands) | Component | Three Months 2023 | Three Months 2022 | | :--- | :--- | :--- | | Loss on derivatives, net | $163 | $1,622 | | Interest expense, net of interest income | $7,193 | $4,489 | | Amortization of debt discount and debt issuance costs | $790 | $852 | | Foreign currency transaction loss (gain) | $(157) | $116 | | Government incentives | — | $2 | | **Other expenses, net** | **$8,043** | **$7,081** | [19. SUBSEQUENT EVENTS](index=29&type=section&id=19.%20SUBSEQUENT%20EVENTS) A joint venture secured a **$140,844 thousand** construction loan, and the company sold and leased back an energy asset for **$72,056 thousand** - On April 18, 2023, a consolidated joint venture subsidiary entered into a construction loan agreement for up to **$140,844 thousand**, drawing **$90,921 thousand** for an energy asset[135](index=135&type=chunk) - On April 20, 2023, the company sold and leased back one energy asset for **$72,056 thousand** in cash proceeds[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Ameresco's business, key trends, financial results by segment, liquidity, and capital resources, including the IRA's impact and SCE Agreement status [Overview](index=30&type=section&id=Overview) Ameresco is a clean technology integrator providing energy efficiency and renewable energy solutions, growing through organic efforts and strategic acquisitions - Ameresco is a clean technology integrator offering energy efficiency and renewable energy supply solutions, utilizing budget-neutral solutions like ESPCs and PPAs[137](index=137&type=chunk) - Provides solutions across North America and the U.K., deriving revenue from energy efficiency projects, O&M contracts, renewable energy operating assets, integrated-PV, and consulting services[138](index=138&type=chunk) - Acquired Enerqos Energy Solutions S.r.l. on March 30, 2023, to expand clean energy projects and solutions in Italy[139](index=139&type=chunk) [Key Factors and Trends](index=31&type=section&id=Key%20Factors%20and%20Trends) Key factors include the Inflation Reduction Act's favorable impact, ongoing supply chain disruptions, solar panel import investigation, and climate change risks - The Inflation Reduction Act (IRA) is viewed favorably for the renewable energy industry, incentivizing domestic clean energy investment and deployment through extended federal incentives like ITC and PTC[141](index=141&type=chunk) - Ongoing global supply chain disruptions, inflationary pressures, and geopolitical tensions continue to impact operations, causing project delays, increased shipping, component, and labor costs in Q1 2023[142](index=142&type=chunk)[143](index=143&type=chunk) - The U.S. Department of Commerce's investigation into solar panel imports from Southeast Asia (potentially circumventing Chinese tariffs) continues, with a preliminary determination of circumvention[144](index=144&type=chunk) - While President Biden's executive action suspends duties until June 2024, future tariffs or trade restrictions could disrupt the solar supply chain and increase costs[145](index=145&type=chunk)[146](index=146&type=chunk) - Climate change creates opportunities for the industry but also brings risks, including more frequent and severe weather interferences and seasonal fluctuations impacting revenues and operating income, particularly in colder climates and during summer months for educational institutions[147](index=147&type=chunk)[148](index=148&type=chunk) [The Southern California Edison ("SCE") Agreement](index=32&type=section&id=The%20Southern%20California%20Edison%20(%22SCE%22)%20Agreement) The SCE Agreement for BESS projects faced delays due to supply issues and weather, with SCE accelerating **$125 million** in milestone payments - The SCE Agreement (approx. **$892.0 million** for **537.5 MW BESS**) faced delays due to COVID-19 related battery supply issues and record rainfall, leading to force majeure claims[150](index=150&type=chunk)[152](index=152&type=chunk) - SCE agreed to accelerate **$125 million** of future milestone payments in Q1 2023 due to schedule changes[151](index=151&type=chunk) - Two of the three projects are anticipated to achieve substantial completion in early summer 2023, despite ongoing weather-related delays impacting one energized project[153](index=153&type=chunk) [Stock-based Compensation](index=32&type=section&id=Stock-based%20Compensation) In Q1 2023, Ameresco granted **30,000** stock options and **47,434** RSUs, with **$45.8 million** unrecognized expense remaining - Granted **30,000 common stock options** and **47,434 RSUs** to employees in Q1 2023[154](index=154&type=chunk) - Unrecognized stock-based compensation expense was **$45.8 million** at March 31, 2023, to be recognized over a weighted-average period of **three years**[154](index=154&type=chunk) [Backlog and Awarded Projects](index=33&type=section&id=Backlog%20and%20Awarded%20Projects) Total project backlog decreased to **$2,971,380 thousand** at March 31, 2023, primarily due to SCE Agreement revenue recognition in 2022 Backlog (In Thousands) | Backlog Type | As of March 31, 2023 | As of March 31, 2022 | | :--- | :--- | :--- | | **Project Backlog:** | | | | Fully-contracted backlog | $1,007,620 | $1,342,150 | | Awarded, not yet signed customer contracts | $1,963,760 | $1,754,050 | | **Total project backlog** | **$2,971,380** | **$3,096,200** | | 12-month project backlog | $638,550 | $1,154,400 | | **O&M Backlog:** | | | | Fully-contracted backlog | $1,214,840 | $1,211,620 | | 12-month O&M backlog | $86,020 | $73,400 | - The decrease in fully-contracted and 12-month project backlog is primarily due to the majority of SCE Agreement revenues being recognized in 2022[157](index=157&type=chunk) - Sales cycle for projects averages **18 to 42 months**, with awarded backlog converting to fully-contracted backlog in **12 to 24 months**; historically, **~90%** of awarded backlog results in a signed contract[158](index=158&type=chunk) [Assets in Development](index=33&type=section&id=Assets%20in%20Development) Assets in development, representing potential small-scale renewable energy plants, increased to an estimated **$1.5 billion** at March 31, 2023 - Assets in development (potential design/build project value of small-scale renewable energy plants) were estimated at **$1.5 billion** at March 31, 2023, up from $1.3 billion at March 31, 2022[160](index=160&type=chunk) - The portion of assets in development related to spending for Energy as a Service assets was approximately **$41.2 million** at March 31, 2023, down from $60.0 million at March 31, 2022[160](index=160&type=chunk) [Results of Operations](index=34&type=section&id=Results%20of%20Operations) Q1 2023 saw a **42.8%** revenue decline and **93.7%** net income decrease, driven by lower project revenues and higher interest expenses, despite improved gross margin Consolidated Results of Operations (Q1 2023 vs. Q1 2022, in thousands) | Indicator | 2023 Amount | % of Revenues (2023) | 2022 Amount | % of Revenues (2022) | Year-Over-Year Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $271,042 | 100.0% | $474,002 | 100.0% | $(202,960) | (42.8)% | | Cost of revenues | $221,094 | 81.6% | $405,624 | 85.6% | $(184,530) | (45.5)% | | Gross profit | $49,948 | 18.4% | $68,378 | 14.4% | $(18,430) | (27.0)% | | Operating income | $9,097 | 3.4% | $28,686 | 6.1% | $(19,589) | (68.3)% | | Income before income taxes | $1,054 | 0.4% | $21,605 | 4.6% | $(20,551) | (95.1)% | | Income tax (benefit) provision | $(503) | (0.2)% | $2,307 | 0.5% | $(2,810) | (121.8)% | | Net income | $1,557 | 0.6% | $19,298 | 4.1% | $(17,741) | (91.9)% | | Net income attributable to common shareholders | $1,102 | 0.4% | $17,384 | 3.7% | $(16,282) | (93.7)% | - Revenues decreased primarily due to a **$210.2 million (53%)** decrease in project revenues, attributed to the timing of revenue recognition on active projects, including the SCE battery storage project[163](index=163&type=chunk) - Gross profit as a percentage of revenues increased due to lower revenue contribution from the lower-margin SCE battery storage project[163](index=163&type=chunk) - SG&A expenses increased due to higher professional fees and project development costs not realized, partially offset by lower miscellaneous costs from a prior-year legal settlement[163](index=163&type=chunk) - Other expenses, net, increased due to higher interest expenses (**$2.7 million**) related to increased senior secured debt, partially offset by a smaller net loss on derivatives[163](index=163&type=chunk) - Income tax shifted to a benefit due to additional investment tax credits from solar and storage plants and higher Section 179D deductions under the IRA[163](index=163&type=chunk) [Business Segment Analysis](index=35&type=section&id=Business%20Segment%20Analysis) U.S. Regions and Federal segments saw revenue declines, Canada and All Other segments grew, while Alternative Fuels declined due to lower production and higher costs Revenues by Business Segment (Q1 2023 vs. Q1 2022, in thousands) | Segment | 2023 | 2022 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. Regions | $124,369 | $314,520 | $(190,151) | (60.5)% | | U.S. Federal | $59,556 | $75,646 | $(16,090) | (21.3)% | | Canada | $18,411 | $17,172 | $1,239 | 7.2% | | Alternative Fuels | $28,339 | $29,261 | $(922) | (3.2)% | | All Other | $40,367 | $37,403 | $2,964 | 7.9% | | **Total revenues** | **$271,042** | **$474,002** | **$(202,960)** | **(42.8)%** | Income before Taxes and Unallocated Corporate Activity by Segment (Q1 2023 vs. Q1 2022, in thousands) | Segment | 2023 | 2022 | Dollar Change | % Change | | :--- | :--- | :--- | :--- | :--- | | U.S. Regions | $7,956 | $18,218 | $(10,262) | (56.3)% | | U.S. Federal | $5,212 | $8,886 | $(3,674) | (41.3)% | | Canada | $732 | $279 | $453 | 162.4% | | Alternative Fuels | $3,515 | $7,422 | $(3,907) | (52.6)% | | All Other | $2,482 | $2,709 | $(227) | (8.4)% | | Unallocated corporate activity | $(18,843) | $(15,909) | $(2,934) | (18.4)% | | **Income before taxes** | **$1,054** | **$21,605** | **$(20,551)** | **(95.1)%** | - U.S. Regions revenue decrease primarily due to timing of revenue recognition on active projects, including SCE battery storage projects[167](index=167&type=chunk) - Canada revenue increase due to higher project revenues from early material deliveries[167](index=167&type=chunk) - Alternative Fuels revenue decrease attributed to lower renewable gas production levels and higher direct costs from unplanned maintenance[167](index=167&type=chunk)[170](index=170&type=chunk) - All Other revenues increased due to higher utility SaaS, consulting, and integrated-PV revenue from increased demand in the oil and gas market[167](index=167&type=chunk) [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Ameresco funds operations through cash flow, debt, and equity, with sufficient liquidity expected through May 2024, and increased operating cash flows in Q1 2023 - Operations are funded primarily through cash flow from operations, advances from Federal ESPC projects, senior secured credit facility, other debt, and equity offerings[171](index=171&type=chunk) - Believes cash, working capital, and available credit facilities (including a **$100.0 million** increase right) will be sufficient to fund operations through at least May 2024[171](index=171&type=chunk) - Amended senior secured credit facility on March 17, 2023, increasing the total funded debt to EBITDA covenant ratio from **3.50 to 4.00** for Q1 and Q2 2023[173](index=173&type=chunk) - Net proceeds from non-recourse construction revolvers and term loans totaled **$53.7 million** in Q1 2023; a new **CAD$100.0 million** construction facility was entered into, with no funds drawn[175](index=175&type=chunk) - Federal ESPC financings totaled **$520.8 million** at March 31, 2023; cash draws were **$42.3 million**, used to pay project costs of **$33.7 million** in Q1 2023[176](index=176&type=chunk)[177](index=177&type=chunk) Cash Flows Summary (Q1 2023 vs. Q1 2022, in thousands) | Cash Flow Type | 2023 | 2022 | $ Change | | :--- | :--- | :--- | :--- | | Cash flows from operating activities | $58,772 | $(276,122) | $334,894 | | Cash flows from investing activities | $(101,253) | $(57,733) | $(43,520) | | Cash flows from financing activities | $106,128 | $355,400 | $(249,272) | | Effect of exchange rate changes on cash | $42 | $(196) | $238 | | **Total net cash flows** | **$63,689** | **$21,349** | **$42,340** | - Operating cash flows increased due to a **$240.1 million** decrease in unbilled revenue and a **$99.8 million** decrease in accounts receivable, partially offset by lower net income and accounts payable[179](index=179&type=chunk)[180](index=180&type=chunk) - Investing activities included **$89.8 million** in new energy assets, **$0.6 million** in major maintenance, and **$9.2 million** for the Enerqos acquisition in Q1 2023[180](index=180&type=chunk) - Plans to invest **$235 million to $285 million** in additional capital expenditures for new renewable energy plants and **$175 million to $225 million** in project financings for the remainder of 2023[181](index=181&type=chunk)[182](index=182&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of March 31, 2023, there have been no significant changes in market risk exposures compared to those disclosed in the 2022 Form 10-K - No significant changes in market risk exposures as of March 31, 2023, compared to the 2022 Form 10-K[185](index=185&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2023, with internal control updates for a new ERP system not expected to have a material adverse effect - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2023[187](index=187&type=chunk) - Internal control over financial reporting was updated due to a new ERP system implementation, with no material adverse effect expected[188](index=188&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, but their ultimate resolution is not expected to materially adversely affect financial condition or operations - Involved in periodic lawsuits, investigations, and claims incidental to normal business activities[189](index=189&type=chunk) - Does not believe the ultimate resolution of existing matters would have a material adverse effect on financial condition or results of operations[189](index=189&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The business faces numerous risks, including those in the 2022 Form 10-K, and unforeseen risks may also adversely affect future results - Business is subject to numerous risks, including those described in the 2022 Form 10-K, which could materially affect business, financial condition, and future results[190](index=190&type=chunk) - Risks not currently known or deemed immaterial may also adversely affect the business[190](index=190&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased under the stock repurchase program during Q1 2023, with approximately **$5.9 million** remaining authorized - No shares repurchased under the stock repurchase program during Q1 2023[191](index=191&type=chunk) - Approximately **$5.9 million** remains authorized for repurchase under the program as of March 31, 2023[191](index=191&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including various agreements, certifications, and interactive data files in Inline XBRL format - Includes Form of 2023 Executive/Employee RSU Award Agreement, Amended and Restated Credit Agreement, and certifications by principal executive and financial officers[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk) - Condensed consolidated financial statements for Q1 2023 are formatted in Inline XBRL (Extensible Business Reporting Language) as Exhibit 101[199](index=199&type=chunk) [Signatures](index=41&type=section&id=Signatures) The report was signed by Spencer Doran Hole, Executive Vice President and Chief Financial Officer, on May 2, 2023, for submission under the Securities Exchange Act - Report signed by Spencer Doran Hole, Executive Vice President and Chief Financial Officer, on May 2, 2023[201](index=201&type=chunk)

Ameresco, Inc. (NYSE:AMRC) Q4 2022 Earnings Conference Call February 27, 2023 4:30 PM ET Company Participants Leila Dillon - SVP, Marketing and Communications George Sakellaris - Chairman, President and CEO Doran Hole - EVP and CFO Mark Chiplock - SVP and CAO Conference Call Participants Noah Kaye - Oppenheimer & Co. Stephen Gengaro - Stifel Greg Wasikowski - Webber Research George Gianarikas - Canaccord Genuity Eric Stine - Craig-Hallum Christopher Souther - B Riley Tim Mulrooney - William Blair Kashy Harr ...