Quarterly report pursuant to Section 13 or 15(d)

Revenue from Contracts with Customers

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Revenue from Contracts with Customers
 3 Months Ended
Mar. 31, 2020
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following table provides information about disaggregated revenue by line of business, reportable segments, and geographical region for the three months ended March 31, 2020 and 2019.
US Regions U.S. Federal Canada Non-Solar DG All Other Total
Line of Business
Three Months Ended March 31, 2020
Project revenue $ 71,493    $ 56,114    $ 8,864    $ 2,371    $ 5,587    $ 144,429   
O&M revenue 4,352    11,626    9    2,015    60    18,062   
Energy assets 8,554    719    663    17,986    300    28,222   
Other 328    286    1,856    352    18,878    21,700   
Total revenues $ 84,727    $ 68,745    $ 11,392    $ 22,724    $ 24,825    $ 212,413   
Three Months Ended March 31, 2019
Project revenue $ 45,704    $ 32,353    $ 5,234    $ 1,074    $ 3,067    $ 87,432   
O&M revenue 3,318    9,858    —    2,035    —    15,211   
Energy assets 6,021    643    320    17,699    302    24,985   
Other 554    203    1,594    422    19,711    22,484   
Total revenues $ 55,597    $ 43,057    $ 7,148    $ 21,230    $ 23,080    $ 150,112   
US Regions U.S. Federal Canada Non-Solar DG All Other Total
Geographical Regions
Three Months Ended March 31, 2020
United States $ 84,727    $ 68,745    $ 896    $ 22,724    $ 18,847    $ 195,939   
Canada —    —    10,496    —    57    10,553   
Other —    —    —    —    5,921    5,921   
         Total revenues $ 84,727    $ 68,745    $ 11,392    $ 22,724    $ 24,825    $ 212,413   
Three Months Ended March 31, 2019
United States $ 55,597    $ 43,057    $ 702    $ 21,230    $ 18,647    $ 139,233   
Canada —    —    6,446    —    65    6,511   
Other —    —    —    —    4,368    4,368   
         Total revenues $ 55,597    $ 43,057    $ 7,148    $ 21,230    $ 23,080    $ 150,112   
For the three months ended March 31, 2020 and 2019, approximately 91% and 89%, respectively, of revenue is recognized over time, and the remainder is for products and services transferred at a point in time.
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:
  March 31, 2020 December 31, 2019
Accounts receivable, net $ 110,742    $ 95,863   
Accounts receivable retainage, net 21,265    16,976   
Contract Assets:
Costs and estimated earnings in excess of billings 189,566    202,243   
Contract Liabilities:
Billings in excess of cost and estimated earnings 30,670    32,178   

March 31, 2019 December 31, 2018
Accounts receivable, net $ 81,896    $ 85,985   
Accounts receivable retainage, net 14,762    13,516   
Contract Assets:
Costs and estimated earnings in excess of billings 92,264    86,842   
Contract Liabilities:
Billings in excess of cost and estimated earnings 31,483    30,706   

Accounts receivable retainage represents amounts due from customers, but where payments are withheld contractually until certain construction milestones are met. Amounts retained typically range from 5% to 10% of the total invoice. The Company classifies as a current asset those retainages that are expected to be billed in the next twelve months. Unbilled revenue, presented as costs and estimated earnings in excess of billings, represent amounts earned and billable that were not invoiced at the end of the fiscal period.
Contract assets represent the Company’s rights to consideration in exchange for services transferred to a customer that have not been billed as of the reporting date. The Company’s rights to consideration are generally unconditional at the time its performance obligations are satisfied.
At the inception of a contract, the Company expects the period between when it satisfies its performance obligations, and when the customer pays for the services, will be one year or less. As such, the Company has elected to apply the practical expedient which allows the Company to not adjust the promised amount of consideration for the effects of a significant financing component, when a financing component is present.
When the Company receives consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, the Company records deferred revenue, which represents a contract liability. Such deferred revenue typically results from billings in excess of costs incurred and advanced payments received on project contracts. As of March 31, 2020 and December 31, 2019, the Company classified $5,320 and $5,560, respectively, as a non-current liability, included in other liabilities on the condensed consolidated balance sheets, for those performance obligations expected to be completed beyond the next twelve months.
The decrease in contract assets for the three months ended March 31, 2020 was primarily due to billings of $152,612, offset in part by revenue recognized of approximately $137,596. The decrease in contract liabilities was primarily driven by recognition of revenue as performance obligations were satisfied exceeding increases from the receipt of advance payments from customers and related billings. For the three months ended March 31, 2020, the Company recognized revenue of $19,552 that was previously included in the beginning balance of contract liabilities and billed customers $15,651. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
The increase in contract assets for the three months ended March 31, 2019 was primarily due to revenue recognized of $90,344, offset in part by billings of approximately $90,895. The increase in contract liabilities was primarily driven by the receipt of advance payment from customers, and related billings, exceeding reductions from recognition of revenue as performance obligations were satisfied. For the three months ended March 31, 2019, the Company recognized revenue of $24,095 that was previously included in the beginning balance of contract liabilities, and billed customers $18,929. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
Contracts are often modified for a change in scope or other requirements. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing performance obligations.  The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catchup basis.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Performance obligations are satisfied as of a point in time or over time and are supported by contracts with customers. For most of the Company’s contracts, there are multiple promises of goods or services. Typically, the Company provides a significant service of integrating a complex set of tasks and components such as design, engineering, construction management, and equipment procurement for a project contract. The bundle of goods and services are provided to deliver one output for which the customer has contracted. In these cases, the Company considers the bundle of goods and services to be a single performance obligation. The Company may also promise to provide distinct goods or services within a contract, such as a project contract for installation of energy conservation measures and post-installation O&M services. In these cases the Company separates the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
Backlog - The Company’s remaining performance obligations (hereafter referred to as “backlog”) represent the unrecognized revenue value of the Company’s contract commitments. The Company’s backlog may vary significantly each reporting period based on the timing of major new contract commitments and the backlog may fluctuate with currency movements. In addition, our customers have the right, under some circumstances, to terminate contracts or defer the timing of the Company’s services and their payments to the Company. At March 31, 2020, the Company had backlog of approximately $2,181,643. Approximately 26% of our March 31, 2020 backlog is anticipated to be recognized as revenue in the next twelve months and the remaining, thereafter.
The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.
Contract Acquisition Costs
The Company accounts for certain acquisition costs over the life of the contract, consisting primarily of commissions when paid. Commission costs are incurred commencing at contract signing. Commission costs are allocated across all performance obligations and deferred and amortized over the contract term on a progress toward completion basis.
As of March 31, 2020 and December 31, 2019, included in other assets in the accompanying condensed consolidated balance sheets, were $1,735 and $1,735, respectively, of capitalized commission costs related to contracts that were not completed. For contracts that have a duration of less than one year, the Company follows a practical expedient and expenses these costs when incurred. During the three months ended March 31, 2020 and 2019, the amortization of commission costs related to contracts was not material and has been included in the accompanying condensed consolidated statements of income.
The Company capitalizes costs incurred related to the development of projects prior to contract signing as it is partial fulfillment of its performance obligations.  Capitalized project development costs include only those costs incurred in connection with the development of energy projects, primarily direct labor, interest costs, outside contractor services, consulting fees, legal fees and travel, if incurred after a point in time where the realization of related revenue becomes probable. Project development costs incurred prior to the probable realization of revenue are expensed as incurred. The Company classifies as a current asset those project development efforts that are expected to proceed to construction activity in the twelve months that follow. The Company periodically reviews these balances and writes off any amounts where the realization of the related revenue is no longer probable. Project development costs of $697 and $217 were included in other long-term assets as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020 and 2019, $1,635 and $2,777, respectively, of project development costs were recognized in the condensed consolidated statements of income on projects that converted to customer contracts.
No impairment charges in connection with the Company’s commission costs or project development costs were recorded during the three months ended March 31, 2020 and 2019.