amrc-20210630

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, 2021


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

(508) 661-2200

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class	New York Stock Exchange Symbol	Shares outstanding as of July 30, 2021
Class A Common Stock, $0.0001 par value per share	AMRC	33,388,508
Class B Common Stock, $0.0001 par value per share		18,000,000

TABLE OF CONTENTS


						Page
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at June 30, 2021 (Unaudited) and December 31, 2020						1
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2021 and 2020 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020 (Unaudited)						7
Notes to Condensed Consolidated Financial Statements (Unaudited)						9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						27
Item 3. Quantitative and Qualitative Disclosures About Market Risk						35
Item 4. Controls and Procedures						35

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						36
Item 1A. Risk Factors						36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						36

Item 6. Exhibits						38
Signatures						39

Table of Contents

Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements

AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	June 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	58,807	$	66,422
Restricted cash (1)	23,672		22,063
Accounts receivable, net of allowance of $2,311 and $2,266, respectively (1)	115,462		125,010
Accounts receivable retainage, net	36,485		30,189
Costs and estimated earnings in excess of billings (1)	195,027		185,960
Inventory, net	8,798		8,575
Prepaid expenses and other current assets (1)	25,389		26,854
Income tax receivable	5,688		9,803
Project development costs	14,508		15,839
Total current assets (1)	483,836		490,715
Federal ESPC receivable	512,737		396,725
Property and equipment, net (1)	8,826		8,982
Energy assets, net (1)	798,609		729,378
Deferred income tax assets, net	3,972		3,864
Goodwill, net	58,901		58,714
Intangible assets, net	769		927
Operating lease assets (1)	40,608		39,151
Restricted cash, non-current portion (1)	11,363		10,352
Other assets (1)	19,069		15,307
Total assets (1)	$	1,938,690	$	1,754,115
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	79,778	$	69,362
Accounts payable (1)	193,373		230,916
Accrued expenses and other current liabilities (1)	40,108		41,748
Current portions of operating lease liabilities (1)	5,995		6,106
Billings in excess of cost and estimated earnings	26,561		33,984
Income taxes payable	—		981
Total current liabilities (1)	345,815		383,097
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	305,351		311,674
Federal ESPC liabilities	506,680		440,223
Deferred income taxes, net	7,159		6,227
Deferred grant income	8,075		8,271
Long-term operating lease liabilities, net of current portion (1)	36,731		35,300
Other liabilities (1)	37,300		37,660
Commitments and contingencies (Note 9)
Redeemable non-controlling interests, net	46,003		38,850

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at June 30, 2021 and December 31, 2020 of $155,878 and $162,198, respectively. Includes non-recourse liabilities of consolidated VIEs at June 30, 2021 and December 31, 2020 of $32,318 and $33,335, respectively. See Note 12.

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AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts) (Continued)


	June 30, 2021		December 31, 2020
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at June 30, 2021 and December 31, 2020	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 35,484,126 shares issued and 33,382,331 shares outstanding at June 30, 2021, 32,326,449 shares issued and 30,224,654 shares outstanding at December 31, 2020	3		3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at June 30, 2021 and December 31, 2020	2		2
Additional paid-in capital	270,955		145,496
Retained earnings	393,158		368,390
Accumulated other comprehensive loss, net	(6,754)		(9,290)

Treasury stock, at cost, 2,101,795 shares at June 30, 2021 and December 31, 2020	(11,788)		(11,788)
Total stockholders’ equity	645,576		492,813
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	1,938,690	$	1,754,115

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share amounts) (Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Revenues	$	273,920	$	223,036	$	526,122	$	435,449
Cost of revenues	220,598		183,528		425,891		357,495
Gross profit	53,322		39,508		100,231		77,954
Selling, general and administrative expenses	31,882		26,620		60,483		55,544
Operating income	21,440		12,888		39,748		22,410
Other expenses, net	5,450		4,052		9,122		9,441
Income before income taxes	15,990		8,836		30,626		12,969
Income tax (benefit) provision	(1,896)		—		309		(2,503)
Net income	17,886		8,836		30,317		15,472
Net income attributable to redeemable non-controlling interests	(4,231)		(4,471)		(5,488)		(4,906)
Net income attributable to common shareholders	$	13,655	$	4,365	$	24,829	$	10,566

Net income per share attributable to common shareholders:
Basic	$	0.27	$	0.09	$	0.49	$	0.22
Diluted	$	0.26	$	0.09	$	0.48	$	0.22
Weighted average common shares outstanding:
Basic	51,315		47,488		50,158		47,500
Diluted	52,570		48,519		51,475		48,571

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)


	Three Months Ended June 30,
	2021		2020
Net income	$	17,886	$	8,836
Other comprehensive income (loss):
Unrealized loss from interest rate hedges, net of tax effect of $(188) and $(221)	(472)		(585)
Foreign currency translation adjustments	477		682
Total other comprehensive income	5		97
Comprehensive income	17,891		8,933

Comprehensive income attributable to redeemable non-controlling interests	(4,231)		(4,471)
Comprehensive income attributable to common shareholders	$	13,660	$	4,462

	Six Months Ended June 30,
	2021		2020
Net income	$	30,317	$	15,472
Other comprehensive income (loss):
Unrealized gain (loss) from interest rate hedges, net of tax effect of $531 and $(1,408)	1,645		(4,050)
Foreign currency translation adjustments	891		(1,630)
Total other comprehensive income (loss)	2,536		(5,680)
Comprehensive income	32,853		9,792

Comprehensive income attributable to redeemable non-controlling interests	(5,488)		(4,906)
Comprehensive income attributable to common shareholders	$	27,365	$	4,886

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

For the Three Months Ended June 30, 2021 and 2020

(In thousands, except share amounts) (Unaudited)


			Class A Common Stock			Class B Common Stock									Treasury Stock
	Redeemable Non-controlling Interests		Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	Amount		Total Stockholders’ Equity
Balance, March 31, 2020	$	31,939	29,510,161	$	3	18,000,000	$	2	$	136,591	$	320,660	$	(13,291)	2,101,795	$	(11,788)	$	432,177


Exercise of stock options	—		179,639	—		—	—		2,164		—		—		—	—		2,164
Stock-based compensation expense	—		—	—		—	—		430		—		—		—	—		430
Employee stock purchase plan	—		28,302	—		—	—		440		—		—		—	—		440

Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(585)		—	—		(585)
Foreign currency translation adjustment	—		—	—		—	—		—		—		682		—	—		682
Contributions from redeemable non-controlling interests	488		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(595)		—	—		—	—		—		—		—		—	—		—
Net income	4,471		—	—		—	—		—		4,365		—		—	—		4,365
Balance, June 30, 2020	$	36,303	29,718,102	$	3	18,000,000	$	2	$	139,625	$	325,025	$	(13,194)	2,101,795	$	(11,788)	$	439,673

Balance, March 31, 2021	$	39,668	33,265,925	$	3	18,000,000	$	2	$	267,864	$	379,533	$	(6,759)	2,101,795	$	(11,788)	$	628,855
Equity offering costs	—		—	—		—	—		(135)		—		—		—	—		(135)
Exercise of stock options	—		101,109	—		—	—		1,225		—		—		—	—		1,225
Stock-based compensation expense	—		—	—		—	—		1,349		—		—		—	—		1,349
Employee stock purchase plan	—		15,297	—		—	—		652		—		—		—	—		652

Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(472)		—	—		(472)
Foreign currency translation adjustment	—		—	—		—	—		—		—		477		—	—		477
Contributions from redeemable non-controlling interests, net of tax equity financing fees	2,269		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(195)		—	—		—	—		—		—		—		—	—		—
Accretion of tax equity financing fees	30		—	—		—	—		—		(30)		—		—	—		(30)
Net income	4,231		—	—		—	—		—		13,655		—		—	—		13,655
Balance, June 30, 2021	$	46,003	33,382,331	$	3	18,000,000	$	2	$	270,955	$	393,158	$	(6,754)	2,101,795	$	(11,788)	$	645,576

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

For the Six Months Ended June 30, 2021 and 2020

(In thousands, except share amounts) (Unaudited)


			Class A Common Stock			Class B Common Stock									Treasury Stock
	Redeemable Non-controlling Interests		Shares	Amount		Shares	Amount		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Shares	Amount		Total Stockholders’ Equity
Balance, December 31, 2019	$	31,616	29,230,005	$	3	18,000,000	$	2	$	133,688	$	314,459	$	(7,514)	2,101,340	$	(11,782)	$	428,856


Exercise of stock options	—		460,250	—		—	—		4,638		—		—		—	—		4,638
Stock-based compensation expense	—		—	—		—	—		859		—		—		—	—		859
Employee stock purchase plan	—		28,302	—		—	—		440		—		—		—	—		440
Open market purchase of common shares	—		(455)	—		—	—		—		—		—		455	(6)		(6)
Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(4,050)		—	—		(4,050)
Foreign currency translation adjustment	—		—	—		—	—		—		—		(1,630)		—	—		(1,630)
Contributions from redeemable non-controlling interests	488		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(707)		—	—		—	—		—		—		—		—	—		—
Net income	4,906		—	—		—	—		—		10,566		—		—	—		10,566
Balance, June 30, 2020	$	36,303	29,718,102	$	3	18,000,000	$	2	$	139,625	$	325,025	$	(13,194)	2,101,795	$	(11,788)	$	439,673

Balance, December 31, 2020	$	38,850	30,224,654	$	3	18,000,000	$	2	$	145,496	$	368,390	$	(9,290)	2,101,795	$	(11,788)	$	492,813
Equity offering of common stock, net of offering costs of $6,419	—		2,875,000	—		—	—		120,081		—		—		—	—		120,081
Exercise of stock options	—		267,380	—		—	—		2,611		—		—		—	—		2,611
Stock-based compensation expense	—		—	—		—	—		2,115		—		—		—	—		2,115
Employee stock purchase plan	—		15,297	—		—	—		652		—		—		—	—		652

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		1,645		—	—		1,645
Foreign currency translation adjustment	—		—	—		—	—		—		—		891		—	—		891
Contributions from redeemable non-controlling interests, net of tax equity financing fees	2,252		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(648)		—	—		—	—		—		—		—		—	—		—
Accretion of tax equity financing fees	61		—	—		—	—		—		(61)		—		—	—		(61)
Net income	5,488		—	—		—	—		—		24,829		—		—	—		24,829
Balance, June 30, 2021	$	46,003	33,382,331	$	3	18,000,000	$	2	$	270,955	$	393,158	$	(6,754)	2,101,795	$	(11,788)	$	645,576

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	30,317	$	15,472
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation of energy assets, net	20,136		18,949
Depreciation of property and equipment	1,637		1,659
Accretion of ARO liabilities	57		43
Amortization of debt discount and debt issuance costs	1,477		1,176
Amortization of intangible assets	161		356
Provision for (recoveries of) bad debts	6		(80)

Net loss from derivatives	1,225		517

Stock-based compensation expense	2,115		859
Deferred income taxes	335		4,619

Unrealized foreign exchange (gain) loss	(32)		201
Changes in operating assets and liabilities:
Accounts receivable	15,230		12,125
Accounts receivable retainage	(6,211)		(2,222)
Federal ESPC receivable	(125,146)		(89,761)
Inventory, net	(224)		235
Costs and estimated earnings in excess of billings	(8,893)		6,410
Prepaid expenses and other current assets	2,445		1,857
Project development costs	760		(2,758)
Other assets	(3,691)		516
Accounts payable, accrued expenses and other current liabilities	(22,941)		(45,256)
Billings in excess of cost and estimated earnings	(8,174)		8,569
Other liabilities	(207)		316
Income taxes payable	3,135		(7,396)
Cash flows from operating activities	(96,483)		(73,594)
Cash flows from investing activities:
Purchases of property and equipment	(1,484)		(1,355)
Capital investment in energy assets	(104,267)		(77,218)



Contributions to equity investment	—		(127)
Cash flows from investing activities	(105,751)		(78,700)

See notes to condensed consolidated financial statements.

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AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited) (Continued)

	Six Months Ended June 30,
	2021		2020
Cash flows from financing activities:
Proceeds from equity offering, net of offering costs	$	120,081	$	—
Payments of financing fees	(1,162)		(2,198)
Proceeds from exercises of options and ESPP	3,263		5,078
Repurchase of common stock	—		(6)
(Payments on) proceeds from senior secured credit facility, net	(28,073)		16,000
Proceeds from long-term debt financings	64,854		14,232
Proceeds from Federal ESPC projects	70,159		133,598
(Payments on) proceeds for energy assets from Federal ESPC	(117)		1,488


Proceeds from redeemable non-controlling interests, net	1,583		74
Payments on long-term debt	(33,664)		(25,860)
Cash flows from financing activities	196,924		142,406
Effect of exchange rate changes on cash	315		(457)
Net decrease in cash, cash equivalents, and restricted cash	(4,995)		(10,345)
Cash, cash equivalents, and restricted cash, beginning of period	98,837		77,264
Cash, cash equivalents, and restricted cash, end of period	$	93,842	$	66,919

Supplemental disclosures of cash flow information:
Cash paid for interest	$	9,097	$	10,499
Cash paid for income taxes	$	1,213	$	382
Non-cash Federal ESPC settlement	$	4,027	$	43,368
Accrued purchases of energy assets	$	28,070	$	35,705

See notes to condensed consolidated financial statements.