amrc-20220930

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 September 30, 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)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of exchange on which registered
Class A Common Stock, par value $0.0001 per share	AMRC	New York Stock Exchange

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			Shares outstanding as of October 28, 2022
Class A Common Stock, $0.0001 par value per share			33,914,193
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 Septembe r 30, 2022 (Unaudited) and December 31, 2021						1
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2022 and 2021 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30 , 2022 and 2021 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three and nine m onths ended September 30 , 2022 and 2021 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the nine months ended Sep tember 30 , 2022 and 2021 (Unaudited)						7
Notes to Condensed Consolidated Financial Statements (Unaudited)						9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						28
Item 3. Quantitative and Qualitative Disclosures About Market Risk						37
Item 4. Controls and Procedures						38

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						39
Item 1A. Risk Factors						39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						39

Item 6. Exhibits						40
Signatures						41

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)


	September 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	122,537	$	50,450
Restricted cash (1)	24,403		24,267
Accounts receivable, net of allowance of $2,362 and $2,266, respectively (1)	219,817		161,970
Accounts receivable retainage, net	42,456		43,067
Costs and estimated earnings in excess of billings (1)	628,529		306,172
Inventory, net	13,095		8,807
Prepaid expenses and other current assets (1)	21,980		25,377
Income tax receivable	4,116		5,261
Project development costs, net	16,062		13,214
Total current assets (1)	1,092,995		638,585
Federal ESPC receivable	726,679		557,669
Property and equipment, net (1)	14,772		13,117
Energy assets, net (1)	1,032,809		856,531
Deferred income tax assets, net	3,357		3,703
Goodwill, net	70,118		71,157
Intangible assets, net	5,089		6,961
Operating lease assets (1)	37,952		41,982
Restricted cash, non-current portion (1)	16,618		12,337
Other assets (1)	37,654		22,779
Total assets (1)	$	3,038,043	$	2,224,821
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	301,247	$	78,934
Accounts payable (1)	411,371		308,963
Accrued expenses and other current liabilities (1)	95,268		43,311
Current portions of operating lease liabilities (1)	6,129		6,276
Billings in excess of cost and estimated earnings	43,173		35,918
Income taxes payable	3,072		822
Total current liabilities (1)	860,260		474,224
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	511,621		377,184
Federal ESPC liabilities	706,933		532,287
Deferred income tax liabilities, net	10,542		3,871
Deferred grant income	7,716		8,498
Long-term operating lease liabilities, net of current portion (1)	31,142		35,135
Other liabilities (1)	47,212		43,176
Commitments and contingencies (Note 9)
Redeemable non-controlling interests, net	48,077		46,182

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at September 30, 2022 and December 31, 2021 of $151,877 and $124,454, respectively. Includes non-recourse liabilities of consolidated VIEs at September 30, 2022 and December 31, 2021 of $33,413 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)


	September 30, 2022		December 31, 2021
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and December 31, 2021	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,015,988 shares issued and 33,914,193 shares outstanding at September 30, 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 September 30, 2022 and December 31, 2021	2		2
Additional paid-in capital	299,487		283,982
Retained earnings	515,642		438,732
Accumulated other comprehensive loss, net	(5,650)		(6,667)
Treasury stock, at cost, 2,101,795 shares at September 30, 2022 and December 31, 2021	(11,788)		(11,788)
Stockholders’ equity before non-controlling interest	797,696		704,264
Non-controlling interest	16,844		—
Total stockholders’ equity	814,540		704,264
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	3,038,043	$	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 September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	441,296	$	273,682	$	1,492,695	$	799,804
Cost of revenues	361,740		214,869		1,263,458		640,760
Gross profit	79,556		58,813		229,237		159,044
Selling, general and administrative expenses	40,618		35,168		118,559		95,651
Operating income	38,938		23,645		110,678		63,393
Other expenses, net	7,546		4,557		19,876		13,679
Income before income taxes	31,392		19,088		90,802		49,714
Income tax provision (benefit)	3,657		(1,192)		10,896		(883)
Net income	27,735		20,280		79,906		50,597
Net income attributable to redeemable non-controlling interests	(344)		(2,857)		(2,915)		(8,345)
Net income attributable to common shareholders	$	27,391	$	17,423	$	76,991	$	42,252

Net income per share attributable to common shareholders:
Basic	$	0.53	$	0.34	$	1.48	$	0.83
Diluted	$	0.51	$	0.33	$	1.44	$	0.81
Weighted average common shares outstanding:
Basic	51,869		51,464		51,810		50,599
Diluted	53,297		52,839		53,252		52,013

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 September 30,
	2022		2021
Net income	$	27,735	$	20,280
Other comprehensive income (loss):
Unrealized gain from interest rate hedges, net of tax effect of $602 and $131	1,757		436
Foreign currency translation adjustments	(3,053)		(1,118)
Total other comprehensive loss	(1,296)		(682)
Comprehensive income	26,439		19,598

Comprehensive income attributable to redeemable non-controlling interests	(344)		(2,857)
Comprehensive income attributable to common shareholders	$	26,095	$	16,741

	Nine Months Ended September 30,
	2022		2021
Net income	$	79,906	$	50,597
Other comprehensive income (loss):
Unrealized gain from interest rate hedges, net of tax effect of $2,050 and $662	6,033		2,081
Foreign currency translation adjustments	(5,016)		(227)
Total other comprehensive income	1,017		1,854
Comprehensive income	80,923		52,451

Comprehensive income attributable to redeemable non-controlling interests	(2,915)		(8,345)
Comprehensive income attributable to common shareholders	$	78,008	$	44,106

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 September 30, 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, June 30, 2021	$	46,003	33,382,331	$	3	18,000,000	$	2	$	270,955	$	393,157	$	(6,754)	2,101,795	$	(11,788)	$	—	$	645,575

Equity offering cost adjustment			—						3											3
Exercise of stock options	—		177,129	—		—	—		1,619		—		—		—	—		—		1,619
Stock-based compensation expense	—		—	—		—	—		2,166		—		—		—	—		—		2,166

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		436		—	—		—		436
Foreign currency translation adjustment	—		—	—		—	—		—		—		(1,118)		—	—		—		(1,118)

Distributions to redeemable non-controlling interests	(180)		—	—		—	—		—		—		—		—	—		—		—

Accretion of tax equity financing fees	27		—	—		—	—		—		(27)		—		—	—		—		(27)
Investment fund call option exercise	(3,759)		—	—		—	—		2,759		—		—		—	—		—		2,759
Net income	2,857		—	—		—	—		—		17,423		—		—	—		—		17,423
Balance, September 30, 2021	$	44,948	33,559,460	$	3	18,000,000	$	2	$	277,502	$	410,553	$	(7,436)	2,101,795	$	(11,788)	$	—	$	668,836

Balance, June 30, 2022	$	47,918	33,833,893	$	3	18,000,000	$	2	$	294,240	$	488,278	$	(4,354)	2,101,795	$	(11,788)	$	15,186	$	781,567

Exercise of stock options	—		80,300	—		—	—		1,616		—		—		—	—		—		1,616
Stock-based compensation expense	—		—	—		—	—		3,631		—		—		—	—		—		3,631


Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		1,757		—	—		—		1,757
Foreign currency translation adjustment	—		—	—		—	—		—		—		(3,053)		—	—		—		(3,053)

Distributions to redeemable non-controlling interests	(212)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	27		—	—		—	—		—		(27)		—		—	—		—		(27)

Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		1,658		1,658
Net income	344		—	—		—	—		—		27,391		—		—	—		—		27,391
Balance, September 30, 2022	$	48,077	33,914,193	$	3	18,000,000	$	2	$	299,487	$	515,642	$	(5,650)	2,101,795	$	(11,788)	$	16,844	$	814,540

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 Nine Months Ended September 30, 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 of common stock, net of offering costs of $6,416	—		2,875,000	—		—	—		120,084		—		—		—	—		—		120,084

Exercise of stock options	—		444,509	—		—	—		4,230		—		—		—	—		—		4,230
Stock-based compensation expense	—		—	—		—	—		4,280		—		—		—	—		—		4,280
Employee stock purchase plan	—		15,297	—		—	—		653		—		—		—	—		—		653

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		2,081		—	—		—		2,081
Foreign currency translation adjustment	—		—	—		—	—		—		—		(227)		—	—		—		(227)
Contributions from redeemable non-controlling interests, net of tax equity financing fees of $65	2,251		—	—		—	—		—		—		—		—	—		—		—
Distributions to redeemable non-controlling interests	(828)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	89		—	—		—	—		—		(89)		—		—	—		—		(89)
Investment fund call option exercise	(3,759)		—	—		—	—		2,759		—		—		—	—		—		2,759
Net income	8,345		—	—		—	—		—		42,252		—		—	—		—		42,252
Balance, September 30, 2021	$	44,948	33,559,460	$	3	18,000,000	$	2	$	277,502	$	410,553	$	(7,436)	2,101,795	$	(11,788)	$	—	$	668,836

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

Exercise of stock options	—		180,888	—		—	—		3,482		—		—		—	—		—		3,482
Stock-based compensation expense	—		—	—		—	—		10,837		—		—		—	—		—		10,837
Employee stock purchase plan	—		16,996	—		—	—		948		—		—		—	—		—		948

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		6,033		—	—		—		6,033
Foreign currency translation adjustment	—		—	—		—	—		—				(5,016)		—	—		—		(5,016)

Distributions to redeemable non-controlling interests	(863)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	81		—	—		—	—		—		(81)		—		—	—		—		(81)
Investment fund call option exercise	(238)		—	—		—	—		238		—		—		—	—		—		238
Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		16,844		16,844
Net income	2,915		—	—		—	—		—		76,991		—		—	—		—		76,991
Balance, September 30, 2022	$	48,077	33,914,193	$	3	18,000,000	$	2	$	299,487	$	515,642	$	(5,650)	2,101,795	$	(11,788)	$	16,844	$	814,540

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net income	$	79,906	$	50,597
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation of energy assets, net	36,911		31,449
Depreciation of property and equipment	2,057		2,397
Net increase in fair value of contingent consideration	814		—
Accretion of ARO liabilities	108		90
Amortization of debt discount and debt issuance costs	2,869		2,085
Amortization of intangible assets	1,462		241
Provision for bad debts	363		29
Loss on disposal / impairment of long-lived assets	888		1,901
Equity in earnings of unconsolidated entity	(1,477)		(128)
Net (gain) loss from derivatives	(225)		1,892

Stock-based compensation expense	10,837		4,280
Deferred income taxes, net	4,927		(1,834)

Unrealized foreign exchange loss	466		124
Changes in operating assets and liabilities:
Accounts receivable	(47,257)		27,721
Accounts receivable retainage	225		(9,214)
Federal ESPC receivable	(180,249)		(187,984)
Inventory, net	(4,287)		246
Costs and estimated earnings in excess of billings	(325,057)		(22,166)
Prepaid expenses and other current assets	864		3,771
Project development costs	(823)		15
Other assets	(10,254)		(3,467)
Accounts payable, accrued expenses and other current liabilities	143,026		(17,677)
Billings in excess of cost and estimated earnings	7,802		(5,856)
Other liabilities	(436)		(155)
Income taxes receivable, net	3,371		5,299
Cash flows from operating activities