amrc-20220331

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 March 31, 2022


☐						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 ☑	Accelerated Filer o	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 April 29, 2022
Class A Common Stock, $0.0001 par value per share	AMRC	33,808,964
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 March 31, 2022 (Unau dited ) and Decem ber 31, 2 021						1
Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 20 21 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2022 and 202 1 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three months ended March 31, 2022 and 202 1 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 202 1 (Unaudited)						6
Notes to Condensed Consolidated Financial Statements (Unaudited)						8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						26
Item 3. Quantitative and Qualitative Disclosures About Market Risk						34
Item 4. Controls and Procedures						34

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						35
Item 1A. Risk Factors						35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						35

Item 6. Exhibits						37
Signatures						38

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Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements

AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	68,288	$	50,450
Restricted cash (1)	26,792		24,267
Accounts receivable, net of allowance of $2,265 and $2,266, respectively (1)	204,082		161,970
Accounts receivable retainage, net	40,555		43,067
Costs and estimated earnings in excess of billings (1)	460,240		306,172
Inventory, net	9,720		8,807
Prepaid expenses and other current assets (1)	19,025		25,377
Income tax receivable	4,337		5,261
Project development costs	12,162		13,214
Total current assets (1)	845,201		638,585
Federal ESPC receivable	605,871		557,669
Property and equipment, net (1)	13,063		13,117
Energy assets, net (1)	908,006		856,531
Deferred income tax assets, net	3,722		3,703
Goodwill, net	71,334		71,157
Intangible assets, net	5,974		6,961
Operating lease assets (1)	39,485		41,982
Restricted cash, net of current portion (1)	13,323		12,337
Other assets (1)	24,591		22,779
Total assets (1)	$	2,530,570	$	2,224,821
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	80,191	$	78,934
Accounts payable (1)	231,533		308,963
Accrued expenses and other current liabilities (1)	43,784		43,311
Current portions of operating lease liabilities (1)	6,134		6,276
Billings in excess of cost and estimated earnings	31,729		35,918
Income taxes payable	1,771		822
Total current liabilities (1)	395,142		474,224
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	659,695		377,184
Federal ESPC liabilities	600,507		532,287
Deferred income tax liabilities, net	6,063		3,871
Deferred grant income	8,379		8,498
Long-term operating lease liabilities, net of current portion (1)	32,854		35,135
Other liabilities (1)	44,282		43,176
Commitments and contingencies (Note 9)
Redeemable non-controlling interests, net	47,438		46,182

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at March 31, 2022 and December 31, 2021 of $136,315 and $124,454, respectively. Includes non-recourse liabilities of consolidated VIEs at March 31, 2022 and December 31, 2021 of $30,790 and $31,125, respectively. See Note 12.

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AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	March 31, 2022		December 31, 2021
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2022 and December 31, 2021	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 35,910,759 shares issued and 33,808,964 shares outstanding at March 31, 2022, 35,818,104 shares issued and 33,716,309 shares outstanding at December 31, 2021	3		3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at March 31, 2022 and December 31, 2021	2		2
Additional paid-in capital	289,459		283,982
Retained earnings	456,088		438,732
Accumulated other comprehensive loss, net	(3,889)		(6,667)
Treasury stock, at cost, 2,101,795 shares at March 31, 2022 and December 31, 2021	(11,788)		(11,788)
Stockholders’ equity before non-controlling interest	729,875		704,264
Non-controlling interest	6,335		—
Total stockholders’ equity	736,210		704,264
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	2,530,570	$	2,224,821

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

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


	Three Months Ended March 31,
	2022		2021
Revenues	$	474,002	$	252,202
Cost of revenues	405,624		205,293
Gross profit	68,378		46,909
Selling, general and administrative expenses	39,692		28,601
Operating income	28,686		18,308
Other expenses, net	7,081		3,672
Income before income taxes	21,605		14,636
Income tax provision	2,307		2,205
Net income	19,298		12,431
Net income attributable to redeemable non-controlling interests	(1,914)		(1,257)
Net income attributable to common shareholders	$	17,384	$	11,174

Net income per share attributable to common shareholders:
Basic	$	0.34	$	0.23
Diluted	$	0.32	$	0.22
Weighted average common shares outstanding:
Basic	51,744		48,975
Diluted	53,636		50,357

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 March 31,
	2022		2021
Net income	$	19,298	$	12,431
Other comprehensive income (loss):
Unrealized gain from interest rate hedges, net of tax effect of $917 and $719	2,711		2,118
Foreign currency translation adjustments	67		413
Total other comprehensive income	2,778		2,531
Comprehensive income	22,076		14,962

Comprehensive income attributable to redeemable non-controlling interests	(1,914)		(1,257)
Comprehensive income attributable to common shareholders	$	20,162	$	13,705

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 March 31, 2022 and 2021

(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		Non-controlling Interest		Total Stockholders’ Equity
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, net of offering costs of $6,284			2,875,000						120,216											120,216
Exercise of stock options	—		166,271	—		—	—		1,386		—		—		—	—		—		1,386
Stock-based compensation expense	—		—	—		—	—		766		—		—		—	—		—		766


Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		2,118		—	—		—		2,118
Foreign currency translation adjustment	—		—	—		—	—		—		—		413		—	—		—		413
Tax equity financing fees	(17)		—	—		—	—		—		—		—		—	—		—		—
Distributions to redeemable non-controlling interests	(453)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	31		—	—		—	—		—		(31)		—		—	—		—		(31)
Net income	1,257		—	—		—	—		—		11,174		—		—	—		—		11,174
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

Balance, December 31, 2021	$	46,182	33,716,309	$	3	18,000,000	$	2	$	283,982	$	438,732	$	(6,667)	2,101,795	$	(11,788)	$	—	$	704,264
Equity offering cost adjustment	—		92,655	—		—	—		—		—		—		—	—		—		—
Exercise of stock options	—		—	—		—	—		1,708		—		—		—	—		—		1,708
Stock-based compensation expense	—		—	—		—	—		3,531		—		—		—	—		—		3,531


Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		2,711		—	—		—		2,711
Foreign currency translation adjustment	—		—	—		—	—		—				67		—	—		—		67

Distributions to redeemable non-controlling interests	(448)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	28		—	—		—	—		—		(28)		—		—	—		—		(28)
Investment fund call option exercise	(238)		—	—		—	—		238		—		—		—	—		—		238
Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		6,335		6,335
Net income	1,914		—	—		—	—		—		17,384		—		—	—		—		17,384
Balance, March 31, 2022	$	47,438	33,808,964	$	3	18,000,000	$	2	$	289,459	$	456,088	$	(3,889)	2,101,795	$	(11,788)	$	6,335	$	736,210

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	19,298	$	12,431
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation of energy assets, net	11,806		9,686
Depreciation of property and equipment	734		833
Gain on contingent consideration	(320)		—
Accretion of ARO liabilities	36		24
Amortization of debt discount and debt issuance costs	852		747
Amortization of intangible assets	578		80
Provision for bad debts	237		3

Equity in (earnings) loss of unconsolidated entity	(637)		62
Net loss (gain) from derivatives	1,622		(377)

Stock-based compensation expense	3,531		766
Deferred income taxes, net	1,284		1,410

Unrealized foreign exchange loss	132		19
Changes in operating assets and liabilities:
Accounts receivable	(40,859)		15,535
Accounts receivable retainage	2,582		(1,844)
Federal ESPC receivable	(46,300)		(65,973)
Inventory, net	(914)		48
Costs and estimated earnings in excess of billings	(154,325)		6,544
Prepaid expenses and other current assets	2,813		(726)
Project development costs	1,260		1,259
Other assets	105		(600)
Accounts payable, accrued expenses and other current liabilities	(77,163)		(19,333)
Billings in excess of cost and estimated earnings	(4,309)		(3,973)
Other liabilities	(33)		(226)
Income taxes receivable, net	1,868		4,881
Cash flows from operating activities	(276,122)		(38,724)
Cash flows from investing activities:
Purchases of property and equipment	(889)		(656)
Capital investment in energy assets	(56,844)		(55,823)




Cash flows from investing activities	(57,733)		(56,479)


See notes to condensed consolidated financial statements.

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

	Three Months Ended March 31,
	2022		2021
Cash flows from financing activities:
Proceeds from equity offering, net of offering costs	$	—	$	120,216
Payments of debt discount and debt issuance costs	(2,570)		(850)
Proceeds from exercises of options and ESPP	1,708		1,386

Proceeds from (payments on) senior secured revolving credit facility, net	76,000		(53,073)
Proceeds from long-term debt financings	286,744		30,811
Proceeds from Federal ESPC projects	64,788		33,520
Proceeds for (payments on) energy assets from Federal ESPC	1,925		(59)

Contributions from non-controlling interest	4,594		—
Distributions to redeemable non-controlling interests, net	(357)		(495)
Payments on long-term debt and financing leases	(77,432)		(19,073)
Cash flows from financing activities	355,400		112,383
Effect of exchange rate changes on cash	(196)		330
Net increase in cash, cash equivalents, and restricted cash	21,349		17,510
Cash, cash equivalents, and restricted cash, beginning of period	87,054		98,837
Cash, cash equivalents, and restricted cash, end of period	$	108,403	$	116,347

Supplemental disclosures of cash flow information:
Cash paid for interest	$	4,488	$	4,235
Cash paid for income taxes	$	78	$	271

Accrued purchases of energy assets	$	40,683	$	33,065

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited)

1. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements of Ameresco, Inc. (including its subsidiaries, the “Company,” “Ameresco,” “we,” “our,” or “us”) are unaudited, according to certain rules and regulations of the Securities and Exchange Commission, and include, in our opinion, normal recurring adjustments necessary for a fair presentation in conformity with accounting principles generally accepted in the United States (“GAAP”) of the results for the periods indicated.

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results which may be expected for the full year. The December 31, 2021 consolidated balance sheet data was derived from audited financial statements, but certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021, included in our annual report on Form 10-K (“2021 Annual Report” or “2021 Form 10-K”) for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 1, 2022.

Reclassification

Certain prior period amounts were reclassified to conform to the presentation in the current period.

Significant Risks and Uncertainties

The COVID-19 pandemic has continued to result in global supply chain disruptions and the resurgence of COVID-19 and its variants has caused some governments to extend travel and other restrictions.

We have considered the impact of COVID-19 on the assumptions and estimates used, which may change in response to this evolving situation. Results of future operations and liquidity could be adversely impacted by a number of factors associated with the COVID-19 pandemic including payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, potential loss of employees due to vaccine mandates, and uncertain demand. As of the date of issuance of these condensed consolidated financial statements, we cannot reasonably estimate the extent to which the COVID-19 pandemic may impact our financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the pandemic on us is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time, even after the pandemic subsides.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our accounting policies are set forth in Note 2 to the consolidated financial statements contained in our 2021 Form 10-K. We have included certain updates to those policies below.

Accounts Receivable and Allowance for Credit Losses

Changes in the allowance for credit losses are as follows:


	March 31, 2022		March 31, 2021
Allowance for credit losses, beginning of period	$	2,263	$	2,266
Provision for bad debts	237		3
Account write-offs and other	(235)		41
Allowance for credit losses, end of period	$	2,265	$	2,310

Recent Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Companies can apply the ASU immediately, however, the guidance will only be available until December 31, 2022. We are currently evaluating the impact

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AMERESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

that adopting this new accounting standard would have on our condensed consolidated financial statements and related disclosures.

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in ASU 2021-01 provide optional expedients to the current guidance on contract modification and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements and related disclosures.

Government Assistance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires annual disclosures about certain types of government assistance received. ASU 2021-10 is effective for our fiscal year beginning after December 15, 2021. We adopted this guidance as of January 1, 2022 and the adoption did not have an 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 year ending beginning after December 15, 2022. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

Our reportable segments for the three months ended March 31, 2022 were U.S. Regions, U.S. Federal, Canada, Non-Solar Distributed Generation (“Non-Solar DG”) and All Other. On January 1, 2022, we changed the structure of our internal organization and our “All Other” segment now includes our U.S.-based enterprise energy management services previously included in our U.S Regions segment and our U.S. Regions segment now includes U.S. project revenue and associated costs previously included in our Non-Solar DG segment. As a result, previously reported amounts have been reclassified for comparative purposes.

The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended March 31, 2022:


	U.S. Regions		U.S. Federal		Canada		Non-Solar DG		All Other		Total
Project revenue	$	298,632	$	62,217	$	13,951	$	—	$	18,604	$	393,404
O&M revenue	5,080		12,297		11		2,774		91		20,253
Energy assets	10,018		1,090		761		26,487		72		38,428
Integrated-PV	—		—		—		—		11,356		11,356
Other	790		42		2,449		—		7,280		10,561
Total revenues	$	314,520	$	75,646	$	17,172	$	29,261	$	37,403	$	474,002

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AMERESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended March 31, 2021:


	U.S. Regions		U.S. Federal		Canada		Non-Solar DG		All Other		Total
Project revenue	$	75,812	$	90,089	$	9,001	$	—	$	5,791	$	180,693
O&M revenue	4,415		11,440		26		2,532		71		18,484
Energy assets	8,802		664		747		22,939		135		33,287
Integrated-PV	—		—		—		—		9,154		9,154
Other	215		21		1,869		109		8,370		10,584
Total revenues	$	89,244	$	102,214	$	11,643	$	25,580	$	23,521	$	252,202

The following table presents information related to our revenue recognized over time:


	Three Months Ended March 31,
	2022	2021
Percentage of revenue recognized over time	96%	94%

The remainder of our revenue is for products and services transferred at a point in time, at which point revenue is recognized.

We attribute revenues to customers based on the location of the customer. The following table presents information related to our revenues by geographic area:


	Three Months Ended March 31,
	2022		2021
United States	$	438,391	$	234,009
Canada	15,988		10,853
Other	19,623		7,340
Total revenues	$	474,002	$	252,202

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AMERESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

Contract Balances

The following tables provide information about receivables, contract assets and contract liabilities from contracts with customers:


	March 31, 2022		December 31, 2021
Accounts receivable, net	$	204,082	$	161,970
Accounts receivable retainage, net	$	40,555	$	43,067

Contract Assets:
Costs and estimated earnings in excess of billings	$	460,240	$	306,172

Contract Liabilities:
Billings in excess of cost and estimated earnings	$	31,729	$	35,918
Billings in excess of cost and estimated earnings, non-current (1)	6,322		6,481
Total contract liabilities	$	38,051	$	42,399


	March 31, 2021		December 31, 2020
Accounts receivable, net	$	113,095	$	125,010
Accounts receivable retainage, net	$	32,071	$	30,189

Contract Assets:
Costs and estimated earnings in excess of billings	$	179,474	$	185,960

Contract Liabilities:
Billings in excess of cost and estimated earnings	$	30,211	$	33,984
Billings in excess of cost and estimated earnings, non-current (1)	6,590		6,631
Total contract liabilities	$	36,801	$	40,615

(1) Performance obligations that are expected to be completed beyond the next twelve months and are included in other liabilities in the condensed consolidated balance sheets.

The increase in contract assets for the three months ended March 31, 2022 was primarily due to revenue recognized of $381,949 offset by billings of $229,540. Contract assets also increased due to reclassifications, primarily from contract liabilities as a result of timing of customer payments. The decrease in contract liabilities was primarily driven by recognition of revenue as performance obligations were satisfied exceeding increases from the receipt of advance payment from customers, and related billings. For the three months ended March 31, 2022, we recognized revenue of $33,077 that was previously included in the beginning balance of contract liabilities and billed customers $23,723. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.

The decrease in contract assets for the three months ended March 31, 2021 was primarily due to billings of approximately $144,539, partially offset by revenue recognized of $130,297. The decrease in contract liabilities was primarily driven by the receipt of advance payment from customers, and related billings, exceeding reductions from the recognition of revenue as performance obligations were satisfied. For the three months ended March 31, 2021, we recognized revenue of $45,483 that was previously included in the beginning balance of contract liabilities and billed customers $33,081. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.

Performance Obligations

Our remaining performance obligations (“backlog”) represent the unrecognized revenue value of our contract commitments. At March 31, 2022, we had contracted backlog of $2,553,770 of which approximately 48% 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

construction projects, including long-term operations and maintenance (“O&M”) services related to these projects. The long-term services have varying initial contract terms, up to 25 years.

Project Development Costs

Project development costs of $4,209 and $1,985 were recognized in the condensed consolidated statements of income on projects that converted to customer contracts during the three months ended March 31, 2022 and 2021, respectively.

No impairment charges in connection with our project development costs were recorded during the three months ended March 31, 2022 and 2021.

4. GOODWILL AND INTANGIBLE ASSETS, NET

The changes in the carrying value of goodwill balances by reportable segment were as follows:


	U.S. Regions		U.S. Federal		Canada		Non-solar DG		Other		Total

Balance, December 31, 2021	$	39,204	$	3,981	$	3,454	$	—	$	24,518	$	71,157

Remeasurement adjustment	309		—		—		—		—		309
Currency effects	—		—		53		—		(185)		(132)
Balance, March 31, 2022	$	39,513	$	3,981	$	3,507	$	—	$	24,333	$	71,334

Definite-lived intangible assets, net consisted of the following:


	As of March 31, 2022		As of December 31, 2021
Gross carrying amount	$	32,939	33,526
Less - accumulated amortization	(26,965)		(26,565)
Intangible assets, net	$	5,974	$	6,961

The table below sets forth amortization expense:


		Three Months Ended March 31,
Asset type	Location	2022		2021
Customer contracts	Cost of revenues	$	184	$	—
All other intangible assets	Selling, general and administrative expenses	394		80
Total amortization expense		$	578	$	80

5. ENERGY ASSETS, NET

Energy assets, net consisted of the following:


	March 31, 2022		December 31, 2021
Energy assets (1)	$	1,184,314	$	1,120,712
Less - accumulated depreciation and amortization	(276,308)		(264,181)
Energy assets, net	$	908,006	$	856,531

(1) Includes financing lease assets (see Note 6), capitalized interest and Asset retirement obligations (“ARO”) assets (see tables below).

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(In thousands) (Unaudited) (Continued)

The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization:


	Three Months Ended March 31,
Location	2022		2021
Cost of revenues (2)	$	11,806	$	9,686

(2) Includes depreciation and amortization on financing lease assets (see Note 6).

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:


	Three Months Ended March 31,
	2022		2021
Capitalized interest	$	1,312	$	2,238

The following tables sets forth information related to our ARO assets and ARO liabilities:

Location

March 31, 2022

December 31, 2021