amrc-20230331

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, 2023


☐						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 April 28, 2023
Class A Common Stock, $0.0001 par value per share			34,121,362
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 , 202 3 (Unaudited) and December 31, 202 2						1
Condensed Consolidated Statements of Income for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31 , 20 23 and 20 22 (Unaudited)						6
Notes to Condensed Consolidated Financial Statements (Unaudited)						8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						25
Item 3. Quantitative and Qualitative Disclosures About Market Risk						33
Item 4. Controls and Procedures						33

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						34
Item 1A. Risk Factors						34
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						34

Item 6. Exhibits						35
Signatures						36

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)


	March 31, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	178,939	$	115,534
Restricted cash (1)	21,232		20,782
Accounts receivable, net of allowance of $971 and $911, respectively (1)	130,940		174,009
Accounts receivable retainage, net	35,625		38,057
Costs and estimated earnings in excess of billings (1)	497,762		576,363
Inventory, net	13,609		14,218
Prepaid expenses and other current assets (1)	56,311		38,617
Income tax receivable	7,626		7,746
Project development costs, net	15,930		16,025
Total current assets (1)	957,974		1,001,351
Federal ESPC receivable	539,820		509,507
Property and equipment, net (1)	16,865		15,707
Energy assets, net (1)	1,270,230		1,181,525
Deferred income tax assets, net	3,049		3,045
Goodwill, net	77,810		70,633
Intangible assets, net	8,666		4,693
Operating lease assets (1)	38,189		38,224
Restricted cash, non-current portion (1)	13,406		13,572
Other assets (1)	41,339		38,564
Total assets (1)	$	2,967,348	$	2,876,821
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	313,459	$	331,479
Accounts payable (1)	285,465		349,126
Accrued expenses and other current liabilities (1)	115,044		89,166
Current portions of operating lease liabilities (1)	5,868		5,829
Billings in excess of cost and estimated earnings	39,326		34,796
Income taxes payable	7,950		1,672
Total current liabilities (1)	767,112		812,068
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	631,676		568,635
Federal ESPC liabilities	520,816		478,497
Deferred income tax liabilities, net	2,869		9,181
Deferred grant income	7,424		7,590
Long-term operating lease liabilities, net of current portion (1)	31,779		31,703
Other liabilities (1)	64,200		49,493
Commitments and contingencies (Note 10)
Redeemable non-controlling interests, net	46,700		46,623

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at March 31, 2023 and December 31, 2022 of $238,666 and $213,913, respectively. Includes non-recourse liabilities of consolidated VIEs at March 31, 2023 and December 31, 2022 of $41,821 and $50,729, respectively. See Note 13.

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AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

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


	March 31, 2023		December 31, 2022
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2023 and December 31, 2022	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,132,157 shares issued and 34,030,362 shares outstanding at March 31, 2023, 36,050,157 shares issued and 33,948,362 shares outstanding at December 31, 2022	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, 2023 and December 31, 2022	2		2
Additional paid-in capital	310,726		306,314
Retained earnings	534,624		533,549
Accumulated other comprehensive loss, net	(4,645)		(4,051)
Treasury stock, at cost, 2,101,795 shares at March 31, 2023 and December 31, 2022	(11,788)		(11,788)
Stockholders’ equity before non-controlling interest	828,922		824,029
Non-controlling interests	65,850		49,002
Total stockholders’ equity	894,772		873,031
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	2,967,348	$	2,876,821

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,
	2023		2022
Revenues	$	271,042	$	474,002
Cost of revenues	221,094		405,624
Gross profit	49,948		68,378
Earnings from unconsolidated entities	450		637
Selling, general and administrative expenses	41,301		40,329
Operating income	9,097		28,686
Other expenses, net	8,043		7,081
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 non-controlling interests and redeemable non-controlling interests	(455)		(1,914)
Net income attributable to common shareholders	$	1,102	$	17,384

Net income per share attributable to common shareholders:
Basic	$	0.02	$	0.34
Diluted	$	0.02	$	0.32
Weighted average common shares outstanding:
Basic	51,963		51,744
Diluted	53,261		53,636

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,
	2023		2022
Net income	$	1,557	$	19,298
Other comprehensive (loss) income:
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 non-controlling interests and redeemable non-controlling interests:
Net income	(455)		(1,914)
Foreign currency translation adjustments	(8)		—
Comprehensive income attributable to non-controlling interests and redeemable non-controlling interests	(463)		(1,914)
Comprehensive income attributable to common shareholders	$	508	$	20,162

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, 2023 and 2022

(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 Interests		Total Stockholders’ Equity
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	—		92,655	—		—	—		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

Balance, December 31, 2022	$	46,623	33,948,362	$	3	18,000,000	$	2	$	306,314	$	533,549	$	(4,051)	2,101,795	$	(11,788)	$	49,002	$	873,031

Exercise of stock options	—		82,000	—		—	—		571		—		—		—	—		—		571
Stock-based compensation expense	—		—	—		—	—		4,037		—		—		—	—		—		4,037


Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(868)		—	—		—		(868)
Foreign currency translation adjustment	—		—	—		—	—						274		—	—		8		282

Distributions to redeemable non-controlling interests	(178)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	27		—	—		—	—		—		(27)		—		—	—		—		(27)
Investment fund call option exercise	196		—	—		—	—		(196)		—		—		—	—		—		(196)
Contributions from non-controlling interests	—		—	—		—	—		—		—		—		—	—		16,417		16,417
Net income	32		—	—		—	—		—		1,102		—		—	—		423		1,525
Balance, March 31, 2023	$	46,700	34,030,362	$	3	18,000,000	$	2	$	310,726	$	534,624	$	(4,645)	2,101,795	$	(11,788)	$	65,850	$	894,772

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,
	2023		2022
Cash flows from operating activities:
Net income	$	1,557	$	19,298
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation of energy assets, net	13,341		11,806
Depreciation of property and equipment	644		734
Increase (decrease) in contingent consideration	121		(320)
Accretion of ARO liabilities	66		36
Amortization of debt discount and debt issuance costs	790		852
Amortization of intangible assets	302		578
Provision for bad debts	93		237
Loss on write-off of long-lived assets	18		—
Earnings from unconsolidated entities	(450)		(637)
Net loss from derivatives	163		1,622

Stock-based compensation expense	4,037		3,531
Deferred income taxes, net	(7,142)		1,284

Unrealized foreign exchange (gain) loss	(29)		132
Changes in operating assets and liabilities:
Accounts receivable	58,954		(40,859)
Accounts receivable retainage	2,439		2,582
Federal ESPC receivable	(33,736)		(46,300)
Inventory, net	608		(914)
Costs and estimated earnings in excess of billings	85,748		(154,325)
Prepaid expenses and other current assets	929		2,813
Project development costs	(1,812)		1,260
Other assets	(1,903)		105
Accounts payable, accrued expenses and other current liabilities	(82,266)		(77,163)
Billings in excess of cost and estimated earnings	9,398		(4,309)
Other liabilities	522		(33)
Income taxes receivable, net	6,380		1,868
Cash flows from operating activities	58,772		(276,122)
Cash flows from investing activities:
Purchases of property and equipment	(1,657)		(889)
Capital investment in energy assets	(89,787)		(55,489)
Capital investment in major maintenance of energy assets	(589)		(1,355)

Acquisitions, net of cash received	(9,182)		—
Loans to joint venture investments	(38)		—
Cash flows from investing activities	(101,253)		(57,733)


See notes to condensed consolidated financial statements.


















AMERESCO, INC.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited) (Continued)

	Three Months Ended March 31,
	2023		2022
Cash flows from financing activities:

Payments of debt discount and debt issuance costs	$	(366)	$	(2,570)
Proceeds from exercises of options and ESPP	571		1,708

Proceeds from senior secured revolving credit facility, net	—		76,000
Proceeds from long-term debt financings	58,188		286,744
Proceeds from Federal ESPC projects	42,309		64,788
Net proceeds from energy asset receivable financing arrangements	4,438		1,925

Contributions from non-controlling interests	16,308		4,594
Distributions to redeemable non-controlling interests, net	(161)		(357)
Payments on long-term debt and financing leases	(15,159)		(77,432)
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, beginning of period	149,888		87,054
Cash, cash equivalents, and restricted cash, end of period	$	213,577	$	108,403

Supplemental disclosures of cash flow information:
Cash paid for interest	$	13,135	$	4,488
Cash paid for income taxes	$	323	$	78

Accrued purchases of energy assets	$	97,542	$	40,683
Non-cash contributions from non-controlling interest	$	109	$	—

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, 2023 are not necessarily indicative of results which may be expected for the full year. The December 31, 2022 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, 2022, included in our annual report on Form 10-K (“2022 Form 10-K”) filed with the Securities and Exchange Commission on February 28, 2023.

Reclassification

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

Significant Risks and Uncertainties

Global factors have continued to result in global supply chain disruptions, certain governmental travel and other restrictions, and inflationary pressures.

We have considered the impact of general global economic conditions on the assumptions and estimates used, which may change in response to this evolving situation. Results of future operations and liquidity could be adversely impacted by a number of factors including supply chain disruptions, varying levels of inflation, payments of outstanding receivable amounts beyond normal payment terms, workforce disruptions, and uncertain demand. As of the date of issuance of these condensed consolidated financial statements, we cannot reasonably estimate the extent to which macroeconomic conditions may impact our financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the pandemic and general global economic conditions on our business is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time, 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 2022 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:


	Three Months Ended March 31,
	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

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, as amended by ASU 2021-01 in January 2021, directly addressing the effects of reference rate reform on financial reporting as a results of the cessation of the publication of certain London interbank offered rate (“LIBOR”) rates beginning December 31, 2021, with complete elimination of the publication of the LIBOR rates by June 30,

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AMERESCO, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

2023. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020, and then amended by ASU 2022-06 in December 2022, extending the adoption date to no later than December 31, 2024, with early adoption permitted. We adopted this guidance upon entering amendments to credit agreements which introduced the secured overnight financing rate as administrated by the Federal Reserve Bank of New York to replace LIBOR as the benchmark. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements.

Derivatives and Hedging

In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio to be hedged under the method. ASU 2022-01 is effective for our fiscal year ending beginning after December 15, 2022. We adopted this accounting standard as of January 1, 2023 and the adoption did not have an impact on our condensed consolidated financial statements.

Fair Value Measurement

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the measurement criteria for equity securities and refines the disclosure requirements for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for our fiscal year ending beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements.

Investments - Equity Method and Joint Ventures

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which defines consistent accounting for equity investments for the purpose of receiving income tax credits and other income tax benefits. ASU 2023-02 is effective for our fiscal year ending beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

Our reportable segments for the three months ended March 31, 2023 and 2022 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels and All Other.

The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended March 31, 2023:


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		All Other		Total
Project revenue	$	104,320	$	45,549	$	14,911	$	—	$	18,450	$	183,230
O&M revenue	5,529		12,700		10		3,686		333		22,258
Energy assets	13,651		1,076		762		24,653		630		40,772
Integrated-PV	—		—		—		—		11,944		11,944
Other	869		231		2,728		—		9,010		12,838
Total revenues	$	124,369	$	59,556	$	18,411	$	28,339	$	40,367	$	271,042

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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, 2022:


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		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

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


	Three Months Ended March 31,
	2023	2022
Percentage of revenue recognized over time	93%	96%

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,
	2023		2022
United States	$	233,084	$	438,391
Canada	17,234		15,988
Other	20,724		19,623
Total revenues	$	271,042	$	474,002

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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, 2023		December 31, 2022
Accounts receivable, net	$	130,940	$	174,009
Accounts receivable retainage, net	$	35,625	$	38,057
Contract Assets:
Costs and estimated earnings in excess of billings	$	497,762	$	576,363
Contract Liabilities:
Billings in excess of cost and estimated earnings	$	39,326	$	34,796
Billings in excess of cost and estimated earnings, non-current (1)	12,510		7,617
Total contract liabilities	$	51,836	$	42,413


	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

(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 decrease in contract assets for the three months ended March 31, 2023 was primarily due to billings of $286,203 offset by revenue recognized of $190,415. Contract assets also decreased due to reclassifications, primarily from contract liabilities as a result of timing of customer payments. The increase in contract liabilities was primarily driven by the receipt of advance payments from customers, and related billings, as well as reclassifications from contract assets as a result of timing of customer payments. The advance payments and reclassifications exceeded the recognition of revenue as performance obligations were satisfied. For the three months ended March 31, 2023, we recognized revenue of $34,715 and billed $39,082 to customers that had balances which were included in contract liabilities at December 31, 2022.

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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

Performance Obligations

Our remaining performance obligations (“backlog”) represent the unrecognized revenue value of our contract commitments. At March 31, 2023, we had contracted backlog of $2,222,460 of which approximately 33% is anticipated to be recognized as revenue in the next twelve months. The remaining performance obligations primarily relate to the energy efficiency and renewable energy construction projects, including long-term 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 $2,612 and $4,209 were recognized in the condensed consolidated statements of income on projects that converted to customer contracts during the three months ended March 31, 2023 and 2022, respectively.

No impairment charges in connection with our project development costs were recorded during the three months ended March 31, 2023 and 2022.

4. BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS

We account for acquisitions using the acquisition method in accordance with ASC 805, Business Combinations. The purchase price for each acquisition is allocated to the assets based on their estimated fair values at the date of acquisition. The excess purchase price over the estimated fair value of the net assets acquired, which is calculated using level 3 inputs per the fair value hierarchy as defined in Note 11, is recorded as goodwill. Intangible assets, if identified, are also recorded. See Note 5 for additional information.

On February 24, 2023, we signed a definitive purchase and sale agreement to acquire Enerqos Energy Solutions S.r.l. (“Enerqos”), a renewable energy and energy efficiency company headquartered in Milan, Italy. The acquisition closed on March 30, 2023 and the total purchase consideration was $13,584, of which $9,535 has been paid to date. There is no contingent consideration related to this acquisition. Cash acquired was $353, debt assumed was $3,951, and a deferred tax liability, net of $1,114 was recorded. The transaction costs, pro-forma effects of this acquisition on our operations, and contribution to revenue and net income the three months ended March 31, 2023 were not material.

The estimated goodwill of $6,996 from the Enerqos acquisition consists largely of expected benefits, including the combined entities experience and the acquired workforce. This goodwill is not deductible for income tax purposes. The estimated fair value of tangible and intangible assets acquired and liabilities assumed are based on management's estimates and assumptions that are preliminary and subject to adjustments. Any measurement period adjustments made within one year from acquisition date, are recorded as adjustments to goodwill. Any adjustments made beyond the measurement period will be included in our consolidated statements of income.

The results of the acquisition since the date of the acquisition have been included in our operations as presented in the accompanying condensed consolidated statements of income, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows. We did not complete any acquisitions during the year ended December 31, 2022.

5. 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		Alternative Fuels		Other		Total
Carrying Value of Goodwill
Balance, December 31, 2022	$	39,593	$	3,981	$	3,236	$	—	$	23,823	$	70,633
Goodwill acquired during the year			—		—		—		6,996		6,996

Currency effects	—		—		4		—		177		181
Balance, March 31, 2023	$	39,593	$	3,981	$	3,240	$	—	$	30,996	$	77,810

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

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


	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

The table below sets forth amortization expense:


		Three Months Ended March 31,
Asset type	Location	2023		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

Energy assets, net consisted of the following:


	March 31, 2023	December 31, 2022
Energy assets (1)	$