Ameresco, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Income Taxes (Tables)

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2023

The following table sets forth components of income before income taxes:


	Year Ended December 31,
	2023		2022		2021
Domestic	$	30,211	$	98,004	$	74,256
Foreign	8,058		7,715		3,888
Income before income taxes	$	38,269	$	105,719	$	78,144

Income Tax Provision (Benefit)

The components of the provision (benefit) for income taxes were as follows:


	Year Ended December 31,
	2023		2022		2021
Current income tax provision (benefit):
Federal	$	34	$	(722)	$	(779)
State	372		733		1,779
Foreign	1,255		1,202		844
Total current	1,661		1,213		1,844

Deferred income tax (benefit) provision:
Federal	(22,677)		2,528		(8,025)
State	(5,657)		2,300		3,561
Foreign	1,038		1,129		573
Total deferred	(27,296)		5,957		(3,891)
Total income tax (benefit) provision	$	(25,635)	$	7,170	$	(2,047)

Deferred Income Tax Assets and Liabilities

Deferred tax assets and liabilities consisted of the following:


	December 31,
	2023		2022
Deferred income tax assets:
Compensation accruals	$	4,137	$	3,306
Reserves	5,906		4,111
Sale-leasebacks and other accruals	49,300		32,945
Net operating losses	28,565		18,395
Interest limitation	8,273		—

Energy efficiency	82,827		71,433
Deferred revenue	2,114		2,132
Gross deferred income tax assets	181,122		132,322
Valuation allowance	(3,704)		(3,621)
Total deferred income tax assets	$	177,418	$	128,701
Deferred income tax liabilities:
Depreciation	$	(137,966)	$	(122,762)
Deferred effect of derivative liability	(2,166)		(1,640)
Canadian capital cost, allowance and amortization	(5,738)		(3,098)
Italy intangibles	(1,324)		—
United Kingdom goodwill amortization	(852)		(952)
Outside basis difference	(6,599)		(5,038)
Interest rate swaps	(841)		(1,347)
Total deferred income tax liabilities	(155,486)		(134,837)
Deferred income tax assets (liabilities), net	$	21,932	$	(6,136)

Summary of Valuation Allowance

Our valuation allowance related to the following items:


	December 31,
	2023		2022
Interest rate swaps (1)	$	—	$	49
Foreign net operating loss (2)	3,702		3,555
State net operating loss at one of our subsidiaries (3)	2		17
Total valuation allowance	$	3,704	$	3,621

(1) The deferred tax asset represents a future capital loss which can only be recognized for income tax purposes to the extent of capital gain income. Although we anticipate sufficient future taxable income, it is more likely than not that it will not be the appropriate character to allow for the recognition of the future capital loss.
(2) It is more likely than not that we will not generate sufficient taxable income at the foreign subsidiary level to utilize the net operating loss.
(3) It is more likely than not that we will not generate sufficient taxable income at the subsidiary level to utilize the net operating loss.

Summary of Operating Loss Carryforwards

As of December 31, 2023, we had the following tax loss and credit carryforwards to offset taxable income in prior and future years:


	Amount		Expiration Period
Federal net operating loss carryforwards	$	69,130	Indefinite
State net operating loss carryforwards	91,411		Various
Canadian net operating loss carryforwards	32,527		2028 through 2043
Ireland net operating loss carryforwards	324		Indefinite

Spain net operating loss carryforwards	2,302		Indefinite
Total tax loss carryforwards	$	195,694

Federal Energy Investment and Production tax credit carryforward	$	82,768	2030 through 2043

Summary of Tax Credit Carryforwards

As of December 31, 2023, we had the following tax loss and credit carryforwards to offset taxable income in prior and future years:


	Amount		Expiration Period
Federal net operating loss carryforwards	$	69,130	Indefinite
State net operating loss carryforwards	91,411		Various
Canadian net operating loss carryforwards	32,527		2028 through 2043
Ireland net operating loss carryforwards	324		Indefinite

Spain net operating loss carryforwards	2,302		Indefinite
Total tax loss carryforwards	$	195,694

Federal Energy Investment and Production tax credit carryforward	$	82,768	2030 through 2043

Reconciliation of Effective Tax Rates

The following is a reconciliation of the effective tax rates:


	Year Ended December 31,
	2023			2022			2021
Income before (benefit) provision for income taxes	$	38,269		$	105,719		$	78,144
Federal statutory tax expense	$	8,036		$	22,201		$	16,410
State income taxes, net of federal benefit	(774)			3,844			2,648
Net state impact of deferred rate change	(3,213)			(575)			(502)
Nondeductible expenses	667			2,198			2,572
Impact of reserve for uncertain tax positions	(200)			59			286
Stock-based compensation expense	4			353			(4,618)
Energy efficiency preferences	(30,359)			(21,410)			(17,639)
Foreign items and rate differential	458			37			4
Adjustment State Taxes	(66)			—			—
Redeemable non-controlling interests	(227)			(411)			(2,546)
Valuation allowance	81			(159)			337
Miscellaneous	(42)			1,033			1,001
Total income tax (benefit) provision	$	(25,635)		$	7,170		$	(2,047)
Effective tax rate:
Federal statutory rate expense	21.0		%	21.0		%	21.0		%
State income taxes, net of federal benefit	(2.0)		%	3.6		%	3.4		%
Net state impact of deferred rate change	(8.4)		%	(0.5)		%	(0.6)		%
Nondeductible expenses	1.7		%	2.1		%	3.3		%
Impact of reserve for uncertain tax positions	(0.5)		%	0.1		%	0.4		%
Stock-based compensation expense	—		%	0.3		%	(5.9)		%
Energy efficiency preferences	(79.3)		%	(20.3)		%	(23.2)		%
Foreign items and rate differential	1.2		%	—		%	—		%
Adjustment State Taxes	(0.2)		%	—		%	—		%
Redeemable non-controlling interests	(0.6)		%	(0.4)		%	(3.3)		%
Valuation allowance	0.2		%	(0.2)		%	0.4		%
Miscellaneous	(0.1)		%	1.1		%	1.9		%
Effective tax rate	(67.0)		%	6.8		%	(2.6)		%

Unrecognized Tax Benefits

The following table provides a reconciliation of gross unrecognized tax benefits which are included in other liabilities within the consolidated balance sheets:


	Year Ended December 31,
	2023		2022
Balance, beginning of year	$	900	$	900
Additions for current year tax positions	100		—


Reductions of prior year tax positions	(200)		—
Balance, end of year	$	800	$	900