amrc-20210930

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, 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 October 29, 2021
Class A Common Stock, $0.0001 par value per share	AMRC	33,559,460
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 September 30, 2021 (Unaudited) and December 31, 2020						1
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2021 and 2020 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2021 and 2020 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 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						28
Item 3. Quantitative and Qualitative Disclosures About Market Risk						37
Item 4. Controls and Procedures						37

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						38
Item 1A. Risk Factors						38
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						38

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, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	57,115	$	66,422
Restricted cash (1)	25,075		22,063
Accounts receivable, net of allowance of $2,306 and $2,266, respectively (1)	112,893		125,010
Accounts receivable retainage, net	39,404		30,189
Costs and estimated earnings in excess of billings (1)	213,468		185,960
Inventory, net	8,329		8,575
Prepaid expenses and other current assets (1)	24,796		26,854
Income tax receivable	4,945		9,803
Project development costs	16,166		15,839
Total current assets (1)	502,191		490,715
Federal ESPC receivable	498,080		396,725
Property and equipment, net (1)	8,692		8,982
Energy assets, net (1)	828,678		729,378
Deferred income tax assets, net	3,873		3,864
Goodwill, net	58,629		58,714
Intangible assets, net	687		927
Operating lease assets (1)	40,355		39,151
Restricted cash, net of current portion (1)	11,588		10,352
Other assets (1)	15,405		15,307
Total assets (1)	$	1,968,178	$	1,754,115
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities (1)	$	74,901	$	69,362
Accounts payable (1)	196,480		230,916
Accrued expenses and other current liabilities (1)	41,960		41,748
Current portions of operating lease liabilities (1)	6,258		6,106
Billings in excess of cost and estimated earnings	28,018		33,984
Income taxes payable	1,299		981
Total current liabilities (1)	348,916		383,097
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	325,335		311,674
Federal ESPC liabilities	487,248		440,223
Deferred income tax liabilities, net	5,061		6,227
Deferred grant income	8,259		8,271
Long-term operating lease liabilities, net of current portion (1)	36,373		35,300
Other liabilities (1)	43,202		37,660
Commitments and contingencies (Note 9)
Redeemable non-controlling interests, net	44,948		38,850

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at September 30, 2021 and December 31, 2020 of $126,088 and $162,198, respectively. Includes non-recourse liabilities of consolidated VIEs at September 30, 2021 and December 31, 2020 of $31,224 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)


	September 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 September 30, 2021 and December 31, 2020	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 35,661,255 shares issued and 33,559,460 shares outstanding at September 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 September 30, 2021 and December 31, 2020	2		2
Additional paid-in capital	277,502		145,496
Retained earnings	410,553		368,390
Accumulated other comprehensive loss, net	(7,436)		(9,290)

Treasury stock, at cost, 2,101,795 shares at September 30, 2021 and December 31, 2020	(11,788)		(11,788)
Total stockholders’ equity	668,836		492,813
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	1,968,178	$	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 September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenues	$	273,682	$	282,507	$	799,804	$	717,956
Cost of revenues	214,869		231,133		640,760		588,628
Gross profit	58,813		51,374		159,044		129,328
Selling, general and administrative expenses	35,168		26,859		95,651		82,403
Operating income	23,645		24,515		63,393		46,925
Other expenses, net	4,557		3,726		13,679		13,167
Income before income taxes	19,088		20,789		49,714		33,758
Income tax (benefit) provision	(1,192)		3,100		(883)		597
Net income	20,280		17,689		50,597		33,161
Net (income) loss attributable to redeemable non-controlling interests	(2,857)		2,313		(8,345)		(2,593)
Net income attributable to common shareholders	$	17,423	$	20,002	$	42,252	$	30,568

Net income per share attributable to common shareholders:
Basic	$	0.34	$	0.42	$	0.83	$	0.64
Diluted	$	0.33	$	0.41	$	0.81	$	0.62
Weighted average common shares outstanding:
Basic	51,464		47,788		50,599		47,597
Diluted	52,839		49,101		52,013		48,785

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,
	2021		2020
Net income	$	20,280	$	17,689
Other comprehensive income (loss):
Unrealized gain from interest rate hedges, net of tax effect of $131 and $199	436		638
Foreign currency translation adjustments	(1,118)		861
Total other comprehensive (loss) income	(682)		1,499
Comprehensive income	19,598		19,188

Comprehensive (income) loss attributable to redeemable non-controlling interests	(2,857)		2,313
Comprehensive income attributable to common shareholders	$	16,741	$	21,501

	Nine Months Ended September 30,
	2021		2020
Net income	$	50,597	$	33,161
Other comprehensive income (loss):
Unrealized gain (loss) from interest rate hedges, net of tax effect of $662 and $(1,209)	2,081		(3,412)
Foreign currency translation adjustments	(227)		(769)
Total other comprehensive income (loss)	1,854		(4,181)
Comprehensive income	52,451		28,980

Comprehensive income attributable to redeemable non-controlling interests	(8,345)		(2,593)
Comprehensive income attributable to common shareholders	$	44,106	$	26,387

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, 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, 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


Exercise of stock options	—		147,813	—		—	—		1,450		—		—		—	—		1,450
Stock-based compensation expense	—		—	—		—	—		522		—		—		—	—		522
Employee stock purchase plan	—		160	—		—	—		2		—		—		—	—		2

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		638		—	—		638
Foreign currency translation adjustment	—		—	—		—	—		—		—		861		—	—		861
Contributions from redeemable non-controlling interests, net of tax equity financing fees of $635	2,865		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(525)		—	—		—	—		—		—		—		—	—		—
Accretion of tax equity financing fees	91		—	—		—	—		—		(91)		—		—	—		(91)
Net (loss) income	(2,313)		—	—		—	—		—		20,002		—		—	—		20,002
Balance, September 30, 2020	$	36,421	29,866,075	$	3	18,000,000	$	2	$	141,599	$	344,936	$	(11,695)	2,101,795	$	(11,788)	$	463,057

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

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, 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	—		608,063	—		—	—		6,088		—		—		—	—		6,088
Stock-based compensation expense	—		—	—		—	—		1,380		—		—		—	—		1,380
Employee stock purchase plan	—		28,462	—		—	—		443		—		—		—	—		443
Open market purchase of common shares	—		(455)	—		—	—		—		—		—		455	(6)		(6)
Unrealized loss from interest rate hedges, net	—		—	—		—	—		—		—		(3,412)		—	—		(3,412)
Foreign currency translation adjustment	—		—	—		—	—		—		—		(769)		—	—		(769)
Contributions from redeemable non-controlling interests, net of tax equity financing fees of $635	3,353		—	—		—	—		—		—		—		—	—		—
Distributions to redeemable non-controlling interests	(1,232)		—	—		—	—		—		—		—		—	—		—
Accretion of tax equity financing fees	91		—	—		—	—		—		(91)		—		—	—		(91)
Net income	2,593		—	—		—	—		—		30,568		—		—	—		30,568
Balance, September 30, 2020	$	36,421	29,866,075	$	3	18,000,000	$	2	$	141,599	$	344,936	$	(11,695)	2,101,795	$	(11,788)	$	463,057

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

See notes to condensed consolidated financial statements.

Table of Contents

AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Nine Months Ended September 30,
	2021		2020
Cash flows from operating activities:
Net income	$	50,597	$	33,161
Adjustments to reconcile net income to cash flows from operating activities:
Depreciation of energy assets, net	31,449		28,496
Depreciation of property and equipment	2,397		2,492
Accretion of ARO liabilities	90		64
Amortization of debt discount and debt issuance costs	2,085		1,849
Amortization of intangible assets	241		528
Provision for (recoveries of) bad debts	29		(1,089)
Loss on disposal / impairment of long-lived assets	1,901		2,146
Net loss from derivatives	1,892		971

Stock-based compensation expense	4,280		1,380
Deferred income taxes, net	(1,834)		5,146

Unrealized foreign exchange loss (gain)	124		(43)
Changes in operating assets and liabilities:
Accounts receivable	27,721		(21,178)
Accounts receivable retainage	(9,214)		(7,422)
Federal ESPC receivable	(187,984)		(160,231)
Inventory, net	246		155
Costs and estimated earnings in excess of billings	(22,166)		24,824
Prepaid expenses and other current assets	3,771		3,916
Project development costs	15		(2,557)
Other assets	(3,595)		1,050
Accounts payable, accrued expenses and other current liabilities	(17,677)		(2,942)
Billings in excess of cost and estimated earnings	(5,856)		9,019
Other liabilities	(155)		1,972
Income taxes payable, net	5,299		(5,496)
Cash flows from operating activities	(116,344)		(83,789)
Cash flows from investing activities:
Purchases of property and equipment	(2,133)		(1,968)
Capital investment in energy assets	(147,967)		(125,504)



Contributions to equity investment	—		(130)
Cash flows from investing activities	(150,100)		(127,602)

See notes to condensed consolidated financial statements.

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

	Nine Months Ended September 30,
	2021		2020
Cash flows from financing activities:
Proceeds from equity offering, net of offering costs	$	120,084	$	—
Payments of financing fees	(2,650)		(3,955)
Proceeds from exercises of options and ESPP	4,883		6,531
Repurchase of common stock	—		(6)
(Payments on) proceeds from senior secured credit facility, net	(38,073)		6,000
Proceeds from long-term debt financings	118,160		40,604
Proceeds from Federal ESPC projects	114,185		194,586
(Payments on) proceeds for energy assets from Federal ESPC	(174)		1,435
Investment fund call option exercise	(