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What changed in Ameresco, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Ameresco, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+257 added−239 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-28)

Top changes in Ameresco, Inc.'s 2023 10-K

257 paragraphs added · 239 removed · 190 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

34 edited+3 added−6 removed75 unchanged
Biggest changeThe career path discussions identified specific training programs, mentorship opportunities, continued degree programs and certification programs – all of which will provide the tools necessary to assist our employees in their career development. When it comes to the innovative solutions that we deliver to our customers, it is critical for the Ameresco team to be at the forefront.
Biggest changeWhen it comes to the innovative solutions that we deliver to our customers, it is critical for the Ameresco team to be at the forefront. Every month our Corporate Marketing Team hosts a Center of Excellence in Advance Technology training session available to all employees.
Federal and Canada segments offer energy efficiency products and services which include the design, engineering, and installation of equipment and other measures to improve the efficiency and control the operation of a facility’s energy infrastructure, renewable energy solutions, and services and the development and construction of small-scale plants that we own or develop for customers that produce electricity, gas, heat, or cooling from renewable sources of energy and O&M services.
Federal, Canada, and Europe segments offer energy efficiency products and services which include the design, engineering, and installation of equipment and other measures to improve the efficiency and control the operation of a facility’s energy infrastructure, renewable energy solutions, and services and the development and construction of small-scale plants that we own or develop for customers that produce electricity, gas, heat, or cooling from renewable sources of energy and O&M services.
In EaaS, our competitors include Engie, Enel X, Schneider Electric SE, and Redaptive, Inc. We compete for renewable energy projects primarily on the basis of our experience, reputation, and ability to identify and complete high quality and cost-effective projects. • O&M Services: EMCOR Energy Services, Comfort Systems USA, Honeywell, Johnson Controls, and Veolia.
In EaaS, our competitors include Engie SA, Enel X, Schneider Electric SE, and Redaptive, Inc. We compete for renewable energy projects primarily on the basis of our experience, reputation, and ability to identify and complete high quality and cost-effective projects. • O&M Services: EMCOR Energy Services, Comfort Systems USA, Honeywell, Johnson Controls, and Veolia.
We are also subject to local regulations in the international jurisdictions where we operate, including Canada, the United Kingdom, and Greece. Our projects must conform to all applicable electric reliability, building and safety, and environmental regulations and codes, which vary from place to place and time to time.
We are also subject to local regulations in the international jurisdictions where we operate, including Canada, Italy, the United Kingdom, and Greece. Our projects must conform to all applicable electric reliability, building and safety, and environmental regulations and codes, which vary from place to place and time to time.
Depending on the customer’s preference, we will either retain ownership of the completed plant or build it for the customer. Most of our small-scale renewable energy plants to date consist of solar PV installations and plants constructed adjacent to landfills, that use landfill gas (“LFG”) to generate energy.
Depending on the customer’s preference, we will either retain ownership of the completed plant or build it for the customer. Most of our small-scale renewable energy plants to date consist of solar PV installations and plants constructed adjacent to landfills, which use landfill gas (“LFG”) to generate energy.
Our Business Segments Our company is primarily organized by region, where each region may perform our key services under our various lines of business. Our reportable business segments largely follow our regional segmentation. For the year ended December 31, 2022 our reportable business segments were as follows: • U.S. Regions • U.S.
Our Business Segments Our company is primarily organized by region, where each region may perform our key services under our various lines of business. Our reportable business segments largely follow our regional segmentation. For the year ended December 31, 2023, our reportable business segments were as follows: • U.S. Regions • U.S.
From energy conservation through a variety of measures to the generation of green, renewable power, our customers and their communities reap the benefits of reducing energy consumption, costs, and associated carbon emissions. In 2022, we served customers throughout the United States, Canada, and Europe.
From energy conservation through a variety of measures to the generation of green, renewable power, our customers and their communities reap the benefits of reducing energy consumption, costs, and associated carbon emissions. In 2023, we served customers throughout the United States, Canada, and Europe.
Approximately 46.0% of our revenues were derived from federal, state, provincial, or local government entities, including public housing authorities, public universities, and municipal utilities. Our federal customers include various divisions of the U.S. federal government. The U.S. federal government is considered a single customer and segment for reporting purposes (see table above under “Our Business Segments”).
Approximately 71.8% of our revenues were derived from federal, state, provincial, or local government entities, including public housing authorities, public universities, and municipal utilities. Our federal customers include various divisions of the U.S. federal government. The U.S. federal government is considered a single customer and segment for reporting purposes (see table above under “Our Business Segments”).
States regulate the retail sale and distribution of natural gas to end-users, although regulatory exemptions from regulation are available in some states for limited gas delivery activities, such as sales only to a single customer.
States regulate the retail sale and distribution of natural gas to end-users, although regulatory exemptions from regulation are available in some states for limited gas delivery activities, such as sales only to a s ingle customer.
Our direct sales force develops and follows up on customer leads. As of December 31, 2022, we had 180 employees in direct sales. In preparation for a proposal, our team typically conducts a preliminary audit of the customer’s needs and requirements and identifies areas to enhance efficiencies and reduce costs.
Our direct sales force develops and follows up on customer leads. As of December 31, 2023, we had 168 employees in direct sales. In preparation for a proposal, our team typically conducts a preliminary audit of the customer’s needs and requirements and identifies areas to enhance efficiencies and reduce costs.
Federal 21.5 % 32.3 % 36.6 % Canada 3.2 % 4.1 % 4.6 % Alternative Fuels 6.3 % 9.1 % 8.1 % All Other 7.4 % 9.2 % 9.7 % Total revenues 100.0 % 100.0 % 100.0 % (1) See Note 3 “Revenue from Contracts with Customers” for our disaggregated revenue and Note 20 “Business Segment Information” for additional information.
Federal 29.3 % 21.5 % 32.3 % Canada 5.1 % 3.2 % 4.1 % Alternative Fuels 8.5 % 6.3 % 9.1 % Europe 11.1 % 3.4 % 3.8 % All Other 5.5 % 4.0 % 5.4 % Total revenues 100.0 % 100.0 % 100.0 % (1) See Note 3 “Revenue from Contracts with Customers” for our disaggregated revenue and Note 20 “Business Segment Information” for additional information.
During the year ended December 31, 2022, our global workforce is made up of 22% female, 77% male, and 1% not declared. In addition, 33% of our executive management team are female and 21% of our managers are female. Benefits with a Purpose The health, safety, and well-being of our employees continues to be a top priority at Ameresco.
During the year ended December 31, 2023, our global workforce is made up of 23% female and 77% male. In addition, 33% of our executive management team are female and 21% of our managers are female. Benefits with a Purpose The health, safety, and well-being of our employees continues to be a top priority at Ameresco.
Competition While we face significant competition from a large number of companies, we believe that few offer the objective technical expertise and full range of services we do. Our principal competitors include: • Smart Energy Solutions : Constellation Energy Group, Inc.
Competition While we face significant competition from a large number of companies, we believe that few offer the objective technical expertise and full range of services we do. Our principal competitors include: • Smart Energy Solutions : McKinstry, CM3 Building Solutions, CMTA, Inc.
The table below shows the type and number of plants we owned and operated as of December 31, 2022: Plants Owned and Operated Quantity Biogas: RNG 4 Biogas: non-RNG 22 Solar and battery assets 132 Other 4 Total plants owned and operated 162 3 Table of Contents Other Our other lines of business include photovoltaic solar energy products and systems (“integrated-PV”), consulting, and enterprise energy management services.
The table below shows the type and number of plants we owned and operated as of December 31, 2023: Plants Owned and Operated Quantity Biogas: RNG 5 Biogas: non-RNG 22 Solar and battery assets 151 Other 7 Total plants owned and operated 185 3 Table of Contents Other Our other lines of business include photovoltaic solar energy products and systems (“integrated-PV”), consulting, and enterprise energy management services.
While employee healthcare costs and access to a wide variety of doctors have always been at the top of our criteria list, we also continued to focus our 2022 benefit offerings on our mental health and well-being offerings.
While employee healthcare costs and access to a wide variety of medical providers have always been at the top of our criteria list, we also continued to focus our 2023 benefit offerings on choice and specifically our mental health and well-being offerings.
As of December 31, 2022, we owned and operated 162 small-scale renewable energy plants including solar PV installations which generate electricity or deliver renewable gas fuel with a combined capacity of approximately 389 megawatt equivalents (“MWe”) and have energy assets in development and construction with a combined capacity of approximately 530 MWe, which includes 60 MWe attributable to a non-controlling interest.
As of December 31, 2023, we owned and operated 185 small-scale renewable energy plants including solar PV installations which generate electricity or deliver renewable gas fuel with a combined capacity of approximately 508 megawatt equivalents (“MWe”) and have energy assets in development and construction with a combined capacity of approximately 717 MWe, which includes 48 MWe attributable to a non-controlling interest.
The table below shows the percentage of revenues by segment for the last three years: 2022 2021 2020 % of Revenues by Segment (1) U.S. Regions 61.6 % 45.3 % 41.0 % U.S.
The table below shows the percentage of revenues by segment for the last three years: 2023 2022 2021 % of Revenues by Segment (1) U.S. Regions 40.5 % 61.6 % 45.3 % U.S.
To best serve our expansive customer base, we have approximately 60 regional offices located throughout North America and the United Kingdom and more than 1,300 dedicated energy and business professionals with years of proven experience and a strong commitment to customer satisfaction.
To best serve our expansive customer base, as of December 31, 2023, we have approximately 60 offices located throughout North America, and Europe and more than 1,500 dedicated energy and business professionals with years of proven experience and a strong commitment to customer satisfaction.
(an Exelon company), Energy Systems Group, Honeywell, Johnson Controls, NORESCO (a unit of Carrier Global Corporation), Schneider Electric, Siemens Building Technologies, and Trane Technologies (an Ingersoll-Rand company).
(a Legence company), SitelogIQ, ABM Industries, Inc., Southland Industries, Energy Systems Group, LLC, Honeywell, Johnson Controls, NORESCO (a unit of Carrier Global Corporation), Schneider Electric, Siemens Building Technologies, and Trane Technologies (an Ingersoll-Rand company).
To educate, support, and promote the culture of diversity, equity, inclusion and justice at Ameresco, diversity in the workplace is discussed at all levels in the organization. Annual diversity in the workplace training is rolled out to all Ameresco employees.
We are proud to be an equal opportunity workplace and an Affirmative Action employer. To educate, support, and promote the culture of diversity, equity, inclusion and justice at Ameresco, diversity in the workplace is discussed at all levels in the organization. Annual diversity in the workplace training is rolled out to all Ameresco employees.
We focus on team-based employee philanthropy, wellness-focused employee benefits, and donating our time to our local communities through education and training. 7 Table of Contents As of December 31, 2022, we had a total of 1,363 employees based in 46 U.S. states, including the District of Columbia, six Canadian provinces, and four office locations throughout the United Kingdom Philanthropic Activities We actively participate in philanthropic activities that support our local communities and provide an opportunity for dynamic team building.
We focus on team-based employee philanthropy, wellness-focused employee benefits, and donating our time to our local communities through education and training. 7 Table of Contents As of December 31, 2023, we had a total of 1,503 employees based in 46 U.S. states, including the District of Columbia, eight Canadian provinces, seven office locations throughout the United Kingdom, and one office in Italy.
For the year ended December 31, 2022, our largest 20 customers accounted for approximately 73.4% of our total revenues. Other than the U.S. federal government, one customer represented 39.6% of our revenues during this period.
For the year ended December 31, 2023, our largest 20 customers accounted for approximately 56.4% of our total revenues. Other than the U.S. federal government, no customers represented 10% or more of our revenues during this period.
Drawing from decades of experience, we develop these tailored energy projects for federal, state, and local governments, educational and healthcare institutions, airports, public housing authorities, commercial/industrial customers, transportation and infrastructure, and utilities across the United States, Canada, the United Kingdom, and Europe.
Drawing from decades of experience, we develop these tailored energy projects for federal, state, and local governments, educational and healthcare institutions, airports, public housing authorities, commercial/industrial customers, transportation and infrastructure, and utilities across the United States, Canada, and Europe. We have sourced and raised approximately $5.5 billion in project financing while delivering $14.4 billion in energy solutions since our inception.
In the Solar PV and Battery Storage market our principal competitors include Borrego Solar Systems, BlueWave Solar, Citizens Energy Group, Nexamp Inc., SunPower Corp., Solect Energy, and Syncarpha Capital. We may also compete with many large independent power producers and utilities, as well as a large number of smaller developers of renewable energy projects.
In the Solar PV and Battery Storage market our principal competitors include NextEra Energy, Inc., Engie SA, Invenergy, EDF Renewables, and Clearway Energy Group LLC. We may also compete with many large independent power producers and utilities, as well as a large number of smaller developers of renewable energy projects.
Seasonality See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect on our operating results” in Item 1A, Risk Factors and “Overview — Effects of Seasonality” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of seasonality in our business.
For more information on our initiatives noted above, please see our 2023 Environmental, Social and Governance Report to be published in 2024 which will be available at www.ameresco.com. 8 Table of Contents Seasonality See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect on our operating results” in Item 1A, Risk Factors and “Overview — Effects of Seasonality” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of seasonality in our business.
We have sourced and raised approximately $4.5 billion in project financing while delivering $13.0 billion in energy solutions since our inception. Our growth is driven by staying ahead of the curve and at the leading edge of innovation taking place in the energy sector, offering new products and services to new and existing customers.
Our growth is driven by staying ahead of the curve and at the leading edge of innovation taking place in the energy sector, offering new products and services to new and existing customers.
Our Alternative Fuels segment sells electricity and processed RNG derived from biomethane from small-scale plants that we own and operate, and provides O&M services for customer owned small-scale RNG plants.
Our Alternative Fuels segment sells electricity and processed RNG derived from biomethane from small-scale plants that we own and operate and provides O&M services for customer owned small-scale RNG plants. The “All Other” category offers consulting services and the sale of solar PV energy products and systems which we refer to as integrated-PV.
Diversity, Equity, Inclusion and Justice We welcome, support, and celebrate unique ways of thinking. We believe innovation demands diversity of thought, and Ameresco has done well by welcoming and celebrating employees from diverse backgrounds. We are proud to be an equal opportunity workplace and an Affirmative Action employer.
As a result, we experienced increased participation in both the utilization of our volunteer hours and activities. Diversity, Equity, Inclusion and Justice We welcome, support, and celebrate unique ways of thinking. We believe innovation demands diversity of thought, and Ameresco has done well by welcoming and celebrating employees from diverse backgrounds.
During 2022, our employees were encouraged to use paid community service days to donate time and creative energy to the organizations that touch them personally and to give back to the environment and their communities. As a result, we experienced increased participation in both volunteer activities and employee match charitable giving.
During 2023, we hosted eight volunteer initiatives sponsored by eight members of our executive management team, our employees were encouraged to use paid community service days to donate time and creative energy to these events as well as organizations that touch them personally and to give back to the environment and their communities.
Our talent team focuses on attracting and recruiting a diverse workforce by partnering with organizations such as the National Society of Women in Construction, Browning The Green Space, New England Women in Energy and the Environment, Hire Heroes USA, and Dolce Center for Advancement of Veterans and Service Members.
Our talent team focuses on attracting and recruiting a diverse workforce by partnering with organizations such as the STEM Like a Girl, New England Women in Energy and the Environment, Massachusetts Rehabilitation Commission, Recruit Military, Hiring Our Heroes, and the Society of Women Engineers (Portland, OR Chapter).
Every month our Corporate Marketing Team hosts a Center of Excellence in Advance Technology training session available to all employees. Each session features a different topic to cover various aspects of Ameresco’s solution portfolio and is presented by our internal subject matter experts.
Each session features a different topic to cover various aspects of Ameresco’s solution portfolio and is presented by our internal subject matter experts. All employees are encouraged to attend live and participate in the Q&A. We provide a tuition reimbursement program to support career development within our organization.
Career Advancement Ameresco strives to implement creative ways for our employees to support career advancement. To facilitate our employees’ career development with a focus on retention, we have improved on the frequency of career path discussions, training, and succession planning. To expand on the career training offered in 2021, we offered performance management training to employees and managers during 2022.
To facilitate our employees’ career development with a focus on retention, we have improved on the frequency of career path discussions, training, and succession planning. During 2023 we have improved upon our performance management process and rolled out a formal mentorship program pairing employees with mentors within our leadership team focusing on established goals and guidance with various skills.
And in support of some of the new applications and corporate programs, we rolled out memberships to Care.com, Gympass, and Headspace and Virgin Pulse mobile apps.
Through several options of applications of corporate programs, we continued our partnership and memberships to Care.com, Gympass, and Headspace and Virgin Pulse mobile apps. Career Advancement Ameresco strives to implement creative ways for our employees to support career advancement.
Regions segment now includes U.S. project revenue and associated costs previously included in our former Non-Solar DG segment. As a result, previously reported amounts have been reclassified for comparative purposes. Our U.S. Regions, U.S.
Federal • Canada • Alternative Fuels • Europe • All Other Europe was formerly included in “All Other”. As a result, previously reported amounts have been reclassified for comparative purposes due to the growth in the segment in 2023. Our U.S. Regions, U.S.
Removed
Federal • Canada • Alternative Fuels (formerly Non-Solar Distributed Generation) • All Other On January 1, 2022, we changed the structure of our internal organization and our “All Other” segment now includes our U.S.-based enterprise energy management services previously included in our U.S Regions segment and our U.S.
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Some of o ur renewable energy projects which are operating as exempt wholesale generators or operating under a special exemption from PUHCA are currently subject to rate regulation for wholesale power sales by the Federal Energy Regulatory Commission (“FERC”) under the FPA and must comply with certain FERC reporting requirements.
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The “All Other” category offers enterprise energy management services, consulting services, energy efficiency products and services outside of the U.S. and Canada, and the sale of solar PV energy products and systems which we refer to as integrated-PV.
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Philanthropic Activities We actively participate in philanthropic activities that support our local communities and provide an opportunity for dynamic team building.
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However, because all of the plants that we have constructed and operated to date are small power “qualifying facilities” under PURPA, they are subject to less regulation under the FPA, PUHCA and related state utility laws than traditional utilities.
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In addition, we support employee growth by investing in career advancing certification programs for our employees.
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Energy Outside the Office Whether it is through our philanthropic activities, our quest to provide an inclusive culture, or our focus on the well-being of our people, Ameresco benefits from the open communication seen between our employees. We encourage activities outside of our offices to enhance the employee experience.
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All employees are encouraged to attend live and participate in the Q&A. 8 Table of Contents In 2022, we continued to further integrate and invest in our Learning Management System (“LMS”) in our Workday Enterprise Management platform to centralize and have the capability to measure development metrics such as training hours per employee.
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We provide a tuition reimbursement program to support career development within our organization. In addition, we support employee growth by investing in career advancing certification programs for our employees. For more information on our initiatives noted above, please see our 2022 Environmental, Social and Governance Report which will be available at www.ameresco.com.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

74 edited+27 added−16 removed197 unchanged
Biggest changeIn addition, our project financing term loans and construction loans require us to comply with a variety of financial and operational covenants. Although we do not consider it likely that we will fail to comply with any material covenants for the next twelve months, we cannot assure that we will be able to do so.
Biggest changeEBITDA for purposes of the facilities excludes the results of certain renewable energy projects that we own and which we finance in separate subsidiaries through project financing and the results of our joint ventures. In addition, our project financing term loans and construction loans require us to comply with a variety of financial and operational covenants.
A whole 13 Table of Contents building-level commitment requires future measurement and verification of increased energy efficiency for a whole building, often based on readings of the utility meter where usage is measured.
A whole building-level commitment requires future measurement and verification of increased energy efficiency for a whole building, 13 Table of Contents often based on readings of the utility meter where usage is measured.
If our subsidiaries default on their obligations under their debt instruments, we may need to make payments to lenders to prevent foreclosure on the collateral securing the debt. We typically set up subsidiaries to own and finance our renewable energy projects. These subsidiaries incur various types of debt which can be used to finance one or more projects.
If our subsidiaries default on their obligations under their debt instruments, we may need to make payments to lenders or to prevent foreclosure on the collateral securing the debt. We typically set up subsidiaries to own and finance our renewable energy projects. These subsidiaries incur various types of debt which can be used to finance one or more projects.
Development, installation, and construction of our energy efficiency and renewable energy projects, and operation of our renewable energy projects, entails many risks, including: • failure or delays in receiving components and equipment that meet our requirements, • failure or delays in obtaining all necessary rights to land access and use, • failure or delays in receiving quality performance of contractors and other third-party service providers, • increases (including as a result of inflation) in the cost of labor, equipment, and commodities needed to construct or operate projects, • failure or delays in obtaining permitting and addressing other regulatory issues, license revocation, and changes in legal requirements, • failure or delays in obtaining other governmental support or approvals, or in overcoming objections from members of the public or adjoining land owners; • shortages of equipment or skilled labor, • unforeseen engineering problems, • failure of a customer to accept or pay for renewable energy that we supply, • weather interferences, catastrophic events including fires, explosions, earthquakes, droughts, and acts of terrorism; and accidents involving personal injury or the loss of life, • environmental, archaeological or geological conditions • health or similar issues, a pandemic, or epidemic, such as COVID-19, • labor disputes and work stoppages, • mishandling of hazardous substances and waste, and other events outside of our control.
Development, installation, and construction of our energy efficiency and renewable energy projects, and operation of our renewable energy projects, entails many risks, including: • failure or delays in receiving components and equipment that meet our requirements, • failure or delays in obtaining all necessary rights to land access and use, • failure or delays in receiving quality performance of contractors and other third-party service providers, • increases (including as a result of inflation) in the cost of labor, equipment, and commodities needed to construct or operate projects, • failure or delays in obtaining permitting and addressing other regulatory issues, license revocation, and changes in legal requirements, • failure or delays in obtaining other governmental support or approvals, or in overcoming objections from members of the public or adjoining landowners, • shortages of equipment or skilled labor, • unforeseen engineering problems, • failure of a customer to accept or pay for renewable energy that we supply, • weather interferences, catastrophic events including fires, explosions, earthquakes, droughts, and acts of terrorism; and accidents involving personal injury or the loss of life, • environmental, archaeological or geological conditions • health or similar issues, a pandemic, or epidemic, such as COVID-19, • labor disputes and work stoppages, • mishandling of hazardous substances and waste, and other events outside of our control.
Also, we may acquire interests in or develop generating projects that are not qualifying facilities. Non-qualifying facility projects would be fully subject to FERC corporate and rate regulation, and would be required to obtain FERC acceptance of their rate schedules for wholesale sales of energy, capacity, and ancillary services, which requires substantial disclosures to and discretionary approvals from FERC.
Also, we may acquire interests in or develop additional generating projects that are not qualifying facilities. Non-qualifying facility projects would be fully subject to FERC corporate and rate regulation and would be required to obtain FERC acceptance of their rate schedules for wholesale sales of energy, capacity, and ancillary services, which requires substantial disclosures to and discretionary approvals from FERC.
FERC regulations under the FPA confer upon these facilities key rights to interconnection with local utilities and can entitle qualifying facilities to enter into power purchase agreements with local utilities, from which the qualifying facilities benefit. Changes to these federal laws and regulations could increase our regulatory burdens and costs and could reduce our revenues.
FERC regulations under the FPA confer upon these facilities’ key rights to interconnection with local utilities and can entitle qualifying facilities to enter into power purchase agreements with local utilities, from which the qualifying facilities benefit. Changes to these federal laws and regulations could increase our regulatory burdens and costs and could reduce our revenues.
These conditions, combined with an increased demand for certain products needed for our business, such as lithium-ion battery cells and solar panels has created a shortfall of and increased costs for these products, which has caused challenges and delays in our projects and may impact the profitability of our projects.
These conditions, combined with an increased demand for certain products needed for our business, such as lithium-ion battery cells and solar panels has created a shortfall of and increased costs for these products and has caused challenges and delays in our projects and may impact the profitability of our projects.
We do not have control over or access to the IT infrastructure of these vendors. Our vendors have and may in the future experience network breaches and other cyberattacks. In such instances, we are not be able to fully investigate the incidents and may not be able to implement measures to defend such attacks.
We do not have control over or access to the IT infrastructure of these vendors. Our vendors have and may in the future experience network breaches and other cyberattacks. In such instances, we may not be able to fully investigate the incidents and may not be able to implement measures to defend such attacks.
These risks include a failure or degradation of our, our customers’ or utilities’ equipment; an inability to find suitable replacement equipment or parts; less than expected supply of the plant’s source of renewable energy, downtime to our plants based such as biogas or biomass ; or a faster than expected diminishment of such supply.
These risks include a failure or degradation of our, our customers’ or utilities’ equipment; an inability to find suitable replacement equipment or parts; less than expected supply of the plant’s source of renewable energy, downtime to our plants such as biogas or biomass; or a faster than expected diminishment of such supply.
Under PURPA, all of our current small-scale renewable energy projects are small power “qualifying facilities” (facilities meeting statutory size, fuel, and filing requirements) that are exempt from regulations under PUHCA, most provisions of the FPA and state rate and financial regulation.
Under PURPA, most of our current small-scale renewable energy projects are small power “qualifying facilities” (facilities meeting statutory size, fuel, and filing requirements) that are exempt from regulations under PUHCA, most provisions of the FPA and state rate and financial regulation.
We are at times required to spend significant sums for preliminary engineering, permitting, legal and other expenses before we can determine whether a projec t is feasible, economically attractive, or capable of being built.
We are at times required to spend significant sums for preliminary engineering, permitting, legal and other expenses before we can determine whether a projec t is feasible, economically attractive, or capable of being built or financed.
In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our acquisitions, pending acquisitions, project development costs, interest costs related to project financing and certain energy assets. In addition, we have considerable unamortized assets.
In accordance with generally accepted accounting principles in the United States, we capitalize certain expenditures and advances relating to our new acquisitions, pending acquisitions, project development costs, interest costs related to project financing and certain energy assets. In addition, we have considerable unamortized assets.
However, we are not obligated to acquire any shares of our Class A common stock, and holders of our Class A common stock should not rely on the share repurchase program to increase their liquidity.
We are not obligated to acquire any shares of our Class A common stock, and holders of our Class A common stock should not rely on the share repurchase program to increase their liquidity.
Although our subsidiary debt is typically non-recourse to Ameresco, if a subsidiary of ours defaults on such obligations, or if one project out of several financed by a particular subsidiary’s indebtedness encounters difficulties or is terminated, then we may from time to time determine to provide financial support to the subsidiary in order to maintain rights to the project or otherwise avoid the adverse consequences of a default.
Although our subsidiary debt is typically non-recourse to Ameresco, if a subsidiary of ours defaults on such obligations, or if one project financed by a particular subsidiary’s indebtedness encounters difficulties or is terminated, then we may from time to time determine to provide financial support to the subsidiary in order to maintain rights to the project or otherwise avoid the adverse consequences of a default.
In addition, some of the third parties we engage for our design, construction and operation projects operate internationally and our reliance on their products and services may be impacted by economic, political, and labor conditions in those regions as well as the uncertainty caused by the evolving relations between the United States and these regions, including China.
In addition, some of the third parties we engage for our design, construction and operation projects operate internationally and our reliance on their products and services may be impacted by economic, political, and labor conditions in those regions as well as the uncertainty caused by the evolving relations between the United States and these regions, including China and the Middle East.
We have for example in the past commenced, and may in the future commence, development of certain projects, such as battery and solar projects, prior to having entered into final binding contracts with the customer. We expect to invest a significant amount of capital to develop projects whether owned by us or by third parties.
We have for example in the past commenced, and may in the future commence, development of certain projects, such as battery and solar projects, prior to having entered into final binding contracts with the customer or financing party. We expect to invest a significant amount of capital to develop projects whether owned by us or by third parties.
International expansion is one of our growth strategies, and international operations will expose us to additional risks that we do not face in the United States, which could have an adverse effect on our operating results. We generate a portion of our revenues from operations outside of the United States, mainly in Canada and the United Kingdom.
International expansion is one of our growth strategies, and international operations will expose us to additional risks that we do not face in the United States, which could have an adverse effect on our operating results. We generate a portion of our revenues from operations outside of the United States, mainly in Canada and Europe.
If this were to occur, we would likely lose a significant portion of our investment in the project and could incur a loss as a result. Further, the continued operations of our projects require continuous compliance with permit conditions. This compliance may require capital improvements or result in reduced operations.
If this were to occur, we would likely lose a significant portion of our investment in the project and could incur a loss as a result. Further, the continued operations of our projects require continuous compliance with permit conditions. This compliance may require capital commitments or result in reduced operations.
This debt is typically structured as non-recourse debt, which means it is repayable solely from the revenues from the projects financed by the debt and is secured by such projects’ physical assets, major contracts and cash accounts and a pledge of our equity interests in the subsidiaries involved in the projects.
This debt is typically structured as non-recourse or limited recourse debt, which means it is repayable solely from the revenues from the projects financed by the debt and is secured by such projects’ physical assets, major contracts and cash accounts and a pledge of our equity interests in the subsidiaries involved in the projects.
These fees could increase the cost to our customers of taking advantage of our services and make them less desirable, thereby harming our business, financial condition, and operating results. Our current generating projects are all operated as qualifying facilities.
These fees could increase the cost to our customers of taking advantage of our services and make them less desirable, thereby harming our business, financial condition, and operating results. Many of our current generating projects are operated as qualifying facilities.
RECs are created through state law requirements for utilities to purchase a portion of their energy from renewable energy sources and changes in state laws or regulation relating to RECs may adversely affect the availability of RECs or other environmental attributes and the future prices for RECs or other environmental attributes, which could have an adverse effect on our business, financial condition, and results of operations.
RECs are created through state law requirements for utilities to purchase a portion of their energy from renewable energy sources and changes in state laws or regulation relating to 19 Table of Contents RECs may adversely affect the availability of RECs or other environmental attributes and the future prices for RECs or other environmental attributes, which could have an adverse effect on our business, financial condition, and results of operations.
Supply is driven by the amount of installations and demand is driven by state-specific laws relating to renewable portfolio standards. We also own and operate renewable natural gas plants that may deliver biofuels into to the nation’s natural gas pipeline grid.
Supply is driven by the number of installations and demand is driven by state-specific laws relating to renewable portfolio standards. We also own and operate renewable natural gas plants that may deliver biofuels into to the nation’s natural gas pipeline grid.
We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income and we may not be able to utilize the full value of tax credits and incentives 19 Table of Contents available under the IRA or may become subject to penalties if we fail to meet requirements for these credits and incentives.
We may have exposure to additional tax liabilities and our effective tax rate may increase or fluctuate, which could increase our income tax expense and reduce our net income and we may not be able to utilize the full value of tax credits and incentives available under the IRA or may become subject to penalties if we fail to meet requirements for these credits and incentives.
If we become subject to additional regulation under PUHCA, FPA, or other regulatory frameworks, if existing regulatory requirements become more onerous, or if other material changes to the regulation of the electric power markets take place, our business, financial condition, and operating results could be adversely affected. Changes in utility regulation and tariffs could adversely affect our business.
If we become subject to additional regulation under PUHCA, FPA, or other regulatory frameworks, if existing regulatory requirements become more onerous, or if other material changes to the regulation of the electric power markets take place, our business, financial condition, and operating results could be adversely affected. 21 Table of Contents Changes in utility regulation and tariffs could adversely affect our business.
As of December 31, 2022 and 2021, we had O&M backlog of approximately $1.2 billion and $1.1 billion, respectively. Our O&M backlog represents expected future revenues under signed multi-year customer contracts for the delivery of O&M services, primarily for energy efficiency and renewable energy construction projects completed by us for our customers.
As of December 31, 2023 and 2022, we had O&M backlog of approximately $1.2 billion. Our O&M backlog represents expected future revenues under signed, multi-year customer contracts for the delivery of O&M services, primarily for energy efficiency and renewable energy construction projects completed by us for our customers.
A significant decline in the fiscal health of these existing and potential customers may make it difficult for them to enter into contracts for our services or to obtain financing necessary to fund such contracts, or may 11 Table of Contents cause them to seek to renegotiate or terminate existing agreements with us.
A significant decline in the fiscal health of these existing and potential customers may make it difficult for them to enter into contracts for our services, to obtain financing necessary to fund such contracts, or may cause them to seek to renegotiate or terminate existing agreements with us.
We have, however, in a limited number of contracts assumed some level of risk and responsibility for certain factors — sometimes only to the extent that variations exceed specified thresholds — and may also do so under certain contracts in the future, particularly in our contracts for renewable energy projects.
We have, however, in a limited number of contracts assumed some level of risk and responsibility for certain factors — sometimes only to the extent that variations exceed specified thresholds — and may also do so under certain contracts in the future, particularly in our contracts for renewable energy proje cts.
Because the techniques used to obtain unauthorized access, to disable or degrade systems, and to generate cyber attacks change frequently, have become increasingly more sophisticated, and may be difficult to detect for periods of time, we may not anticipate these acts or respond adequately or timely.
Because the techniques used to obtain unauthorized access, to disable or degrade systems, and to generate cyberattacks change frequently, have become increasingly more sophisticated, and may be difficult to detect for periods of time, we may not anticipate these acts or respond adequately or timely.
If we are unable to complete the development of a project or enter into contracts with the customer, we may write-down or write-off some or all of 12 Table of Contents these capitalized investments, which would have an adverse impact on our net income in the period in which the loss is recognized and could have an adverse impact our ability to finance our operations.
If we are unable to complete the development of a project or enter into contracts with the customer, we may write-down or write-off some or all of these capitalized investments, which would have an adverse impact on our net income in the period in which the loss is recognized and could have an adverse impact our ability to finance our operations. 12 Table of Contents We are exposed to the credit risk of some of our customers.
In May 2016, we announced a stock repurchase program under which the Company is authorized to repurchase, in the aggregate, up to $17.6 million of our outstanding Class A common stock.
In 2016, we announced a stock repurchase program under which the Company is authorized to repurchase, in the aggregate, up to $17.6 million of our Class A common stock.
In addition, modifications to the pricing policies of utilities could require 21 Table of Contents renewable energy systems to charge lower prices in order to compete with the price of electricity from the electric grid and may reduce the economic attractiveness of certain energy efficiency measures.
In addition, modifications to the pricing policies of utilities could require renewable energy systems to charge lower prices in order to compete with the price of electricity from the electric grid and may reduce the economic attractiveness of certain energy efficiency measures.
In the case of a solar photovoltaic installation that ceases operations, the offtake agreement terms generally require that we remove the assets, including fixing or reimbursing the site owner for any damages caused by the assets or the removal of such assets.
In the 16 Table of Contents case of a solar photovoltaic installation that ceases operations, the offtake agreement terms generally require that we remove the assets, including fixing or reimbursing the site owner for any damages caused by the assets or the removal of such assets.
The reduction or elimination of our share repurchase program, particularly if we do not repurchase the full number of shares authorized under the program, could adversely affect the market price of our common stock. Item 1B. Unresolved Staff Comments None. 24 Table of Contents
The reduction or elimination of our share repurchase program, particularly if we do not repurchase the full number of shares authorized under the program, could adversely affect the market price of our common stock. Item 1B. Unresolved Staff Comments None.
We may also incur substantial expenses and costs in connection with maintaining compliance with such laws. Globally, laws such as the General Data Protection Regulation (“GDPR”) in Europe and new and emerging state laws in the United States on privacy, data, and related technologies, have created new compliance obligations and significantly increases fines for noncompliance.
We may also incur substantial expenses and costs in 22 Table of Contents connection with maintaining compliance with such laws. Globally, laws such as the General Data Protection Regulation (“GDPR”) in Europe and new and emerging state laws in the United States on privacy, data, and related technologies, have created new compliance obligations and significantly increases fines for noncompliance.
As of December 31, 2022 and 2021, we had backlog of approximately $1.0 billion and $1.5 billion, respectively, in expected future revenues under signed customer contracts for the installation or construction of projects, which we sometimes refer to as fully-contracted backlog; and we also had been awarded projects for which we do not yet have signed customer contracts with estimated total future revenues of an additional $1.6 billion and $1.5 billion, respectively.
As of December 31, 2023 and 2022, we had backlog of approximately $1.3 billion and $1.0 billion, respectively, in expected future revenues under signed customer contracts for the installation or construction of projects, which we sometimes refer to as fully-contracted backlog; and we also had been awarded projects for which we do not yet have signed customer contracts with estimated total future revenues of an additional $2.6 billion and $1.6 billion, respectively.
Alternatively, we may agree to sell the assets to the site owner, but the terms and conditions, including price, that we would 16 Table of Contents receive in any sale, and the sale price may not be sufficient to replace the revenue previously generated by the small-scale renewable energy plant.
Alternatively, we may agree to sell the assets to the site owner, but the terms and conditions, including price, that we would receive in any sale, and the sale price may not be sufficient to replace the revenue previously generated by the small-scale renewable energy plant.
Historically, including for the years ended December 31, 2022 and 2021, 46% and 67%, respectively, of our revenues have been derived from sales to federal, state, provincial, or local governmental entities, including public housing authorities, public universities, and municipal utilities.
Historically, including for the years ended December 31, 2023 and 2022, 72% and 46%, respectively, of our revenues have been derived from sales to federal, state, provincial, or local governmental entities, including public housing authorities, public universities, and municipal utilities.
Any stock repurchase would be through open market transactions or in privately negotiated transactions, in accordance with applicable securities laws and regulatory limitations. We may reduce or eliminate our share repurchase program in the future.
Any stock repurchase would be through open market transactions or in privately negotiated transactions, in 24 Table of Contents accordance with applicable securities laws and regulatory limitations. We may reduce or eliminate our share repurchase program in the future.
The trading price of our Class A common stock is volatile and could be subject to wide fluctuations, some of which are beyond our control. During the year ended December 31, 2022, our Class A common stock has traded at a low of $40.73 and a high of $86.73.
The trading price of our Class A common stock is volatile and could be subject to wide fluctuations, some of which are beyond our control. During the year ended December 31, 2023, our Class A common stock has traded at a low of $18.40 and a high of $65.86.
We are exposed to the credit risk of some of our customers. Most of our revenues are derived under multi-year or long-term contracts with our customers, and our revenues are therefore dependent to a large extent on the creditworthiness of our customers.
Most of our revenues are derived under multi-year or long-term contracts with our customers, and our revenues are therefore dependent to a large extent on the creditworthiness of our customers.
Our failure to comply with these covenants may result in the declaration of an event of default and cause us to be unable to borrow under our Senior Credit Facilities.
Our failure to comply with the covenants under our project financing debt or our Senior Credit Facilities may result in the declaration of an event of default and cause us to be unable to borrow under our Senior Credit Facilities.
These operations will be subject to a variety of risks that we do not face in the United States, and that we may face only to a limited degree in Canada and the United Kingdom, including: • building and managing a highly experienced foreign workforce and overseeing and ensuring the performance of foreign subcontractors, • increased travel, infrastructure and legal and compliance costs associated with multiple international locations, • additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment, • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those in the United States, • increased exposure to foreign currency exchange rate risk, • longer payment cycles for sales in some foreign countries and potential difficulties in enforcing contracts and collecting accounts receivable, • difficulties in repatriating overseas earnings, • international and regional economic, political and labor conditions in the countries in which we operate, including the uncertainty caused by the evolving relations between the United States and China, and other geopolitical tensions; and • political unrest, war, incidents of terrorism, pandemics, or responses to such events, including fluctuations in the severity and duration of the COVID-19 pandemic and resulting restrictions on business activity which may vary significantly by region.
These operations will be subject to a variety of risks that we do not face in the United States, and that we may face only to a limited degree in Canada and Europe, including: • building and managing a highly experienced foreign workforce and overseeing and ensuring the performance of foreign subcontractors, • increased travel, infrastructure and legal and compliance costs associated with multiple international locations, • additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment, • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those in the United States, • increased exposure to foreign currency exchange rate risk, • longer payment cycles for sales in some foreign countries and potential difficulties in enforcing contracts and collecting accounts receivable, • difficulties in repatriating overseas earnings, • international and regional economic, political and labor conditions in the countries in which we operate; and • political unrest, war, incidents of terrorism, pandemics, or responses to such events.
To the extent that any attacks, disruptions or security breach results in a loss or damage to our data, or an inappropriate disclosure of information, or adversely impact the assets we own or operate , it could cause significant damage to our reputation, affect our relationships with our customers and employees, lead to claims against us and ultimately harm our business and operating results. 15 Table of Contents If we cannot obtain surety bonds and letters of credit, our ability to operate may be restricted.
To the extent that any attacks, disruptions or security breach results in a loss or damage to our data, or an inappropriate disclosure of information, or adversely impact the 15 Table of Contents assets we own or operate, it could cause significant damage to our reputation, affect our relationships with our customers and employees, lead to claims against us and ultimately harm our business and operating results.
Federal and state laws require us to secure the performance of certain long-term obligations through surety bonds and letters of credit. In addition, we are occasionally required to provide bid bonds or performance bonds to secure our performance under energy efficiency contracts.
If we cannot obtain surety bonds and letters of credit, our ability to operate may be restricted. Federal and state laws require us to secure the performance of certain long-term obligations through surety bonds and letters of credit. In addition, we are occasionally required to provide bid bonds or performance bonds to secure our performance under energy efficiency contracts.
Sakellaris, our founder, principal stockholder, president, and chief executive officer, owns all of our Class B common stock, which, together with his Class A common stock, represents approximately 74% of the combined voting power of our outstanding Class A and Class B common stock.
Sakellaris, our founder, principal stockholder, president, and chief executive officer, and certain of his family members own all of our Class B common stock, which, together with their Class A common stock, represents approximately 74.5% of the combined voting power of our outstanding Class A and Class B common stock.
We and our subsidiaries and affiliates are currently party to an IDIQ agreement with the U.S. Department of Energy expiring in 2026. We are also party to similar agreements with other federal agencies, including the U.S. Army Corps of Engineers and the U.S. General Services Administration. If we are unable to maintain or renew our IDIQ qualification under the U.S.
We and our subsidiaries are currently party to an IDIQ agreement with the U.S. Department of Energy expiring in 2028. We are also party to similar agreements with other federal agencies, including the U.S. Army Corps of Engineers and the U.S. General Services Administration.
The IRA, which is effective for years after January 1, 2023, contains extended and expanded clean energy tax credits such as the Investment Tax Credit (“ITC”), the Production Tax Credit (“PTC”), and created other financial incentives designed to promote the development of certain domestic clean energy projects.
The IRA contains extended and expanded clean energy tax credits such as the Investment Tax Credit (“ITC”), the Production Tax Credit (“PTC”), and created other financial incentives designed to promote the development of certain domestic clean energy projects.
Furthermore, while the passage of the Inflation Reduction Act (“IRA”) may increase the demand for our service and project offerings, it may also increase demand and cost for labor, equipment and commodities needed for our projects.
Furthermore, while the passage of the IRA may increase the demand for our service and project offerings, it has also increased demand and cost for labor, equipment and commodities needed for our projects.
For example, under a contract for the construction and operation of a cogeneration facility at the U.S. Department of Energy Savannah River Site in South Carolina, a subsidiary of ours is exposed to the risk that the price of the biomass that will be used to fuel the cogeneration facility may rise during the 19-year performance period of the contract.
Department of Energy Savannah River Site in South Carolina, a subsidiary of ours is exposed to the risk that the price of the biomass that will be used to fuel the cogeneration facility may rise during the remainder of the 19-year performance period of the contract. S everal provisions in that contract mitigate the price risk.
We also rely on subcontractors to perform substantially all of the construction and installation work related to our projects; and we often need to engage subcontractors with whom we have no experience for our projects.
We also rely on subcontractors to perform substantially all of the construction and installation work related to our projects; and we often need to engage subcontractors with whom we have no experience for our projects. We, our subcontractors and other third parties have been impacted by the global supply chain delays and challenges.
As of December 31, 2022, the balance of our Senior Credit Facilities were $477.9 million. These Senior Credit Facilities may not be sufficient to meet our needs as our business grows, and we may be unable to extend or replace them on acceptable terms, or at all.
As of December 31, 2023, the balance of our Senior Credit Facilities was $279.9 million, $65.0 million of which was outstanding under the delayed draw term loan. These Senior Credit Facilities may not be sufficient to meet our needs as our business grows, and we may be unable to extend or replace them on acceptable terms, or at all.
The amount and timing of any share repurchases will depend upon a variety of factors, including the trading price of our Class A common stock, liquidity, securities laws restrictions, other regulatory restrictions, potential alternative uses of capital, and market and economic conditions.
Our utilization of the share repurchase program depends upon a variety of factors, including the trading price of our Class A common stock, liquidity, securities laws restrictions, tax and other regulatory restrictions, alternative uses of capital, and market and economic conditions.
We cannot predict the duration or direction of current global trends or their sustained impact or how the COVID-19 pandemic may evolve and impact our business. If we experience unfavorable global market conditions, our business, prospects, financial condition, and operating results may be harmed.
We cannot predict the duration of these global challenges or their impact on our business. If we experience unfavorable global market conditions, our business, prospects, financial condition, and operating results may be harmed.
We have experienced delays in developing our projects due to delays in obtaining permits and may experience delays in the future. If we were to commence construction in anticipation of obtaining the final, non-appealable permits needed for that project, we would be subject to the risk of being unable to complete the project if all the permits were not obtained.
If we were to commence construction in anticipation of obtaining the final, non-appealable permits needed for a project, we would be subject to the risk of being unable to complete the project if all the permits were not obtained.
A significant decline in the fiscal health of federal, state, provincial, and local governments could reduce demand for our energy efficiency and renewable energy projects.
This could have a material adverse effect on our reputation, business or results of operations. A significant decline in the fiscal health of federal, state, provincial, and local governments could reduce demand for our energy efficiency and renewable energy projects.
In addition, if there is a partial or full shutdown of any federal, state, provincial or local governing body this may adversely impact our financial performance. Provisions in our government contracts may harm our business, financial condition and operating results. A significant majority of our fully-contracted backlog and awarded projects is attributable to customers that are governmental entities.
In addition, if there is a partial or full shutdown of any federal, state, provincial or local governing body this may adversely impact our financial performance. 11 Table of Contents Provisions in our government contracts may harm our business, financial condition and operating results.
Furthermore, until the Treasury Department and IRS issues additional guidance on which types of projects are eligible for the tax credits and incentives and how projects can demonstrate compliance with the requirements, we may not receive full value of the tax credits and incentives, which could increase our income tax expense, reduce our net income and impact the profitability of our projects.
Uncertainty remains under the IRA on which types of projects are eligible for the tax credits and incentives and how projects can demonstrate compliance with the requirements, we may not receive full value of the tax credits and incentives, which could increase our income tax expense, reduce our net income and adversely impact the profitability of our projects or our ability to finance our projects.
Employee morale and productivity could also suffer and result in unintended employee attrition. Any restructuring would require substantial management time and attention and may divert management from other important work. Moreover, we could encounter delays in executing any restructuring plans, which could cause further disruption and additional unanticipated expense.
Employee morale and productivity could also suffer and result in unintended employee attrition. Any restructuring would require substantial management time and attention and may divert management from other important work.
If we are not able to utilize the ITC as expected this could have an adverse effect of our financial results. Our tax rate has historically been significantly impacted by the IRC Section 179D deduction. This deduction is related to energy efficient improvements we provide under government contracts.
If we experience unexpected delays in this timing, we may not be able to take advantage of the ITC as expected. If we are not able to utilize the ITC as expected this could have an adverse effect of our financial results. Our tax rate has historically been significantly impacted by the IRC Section 179D deduction.
In addition, like other companies, we may be subject to examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities; our U.S. federal tax returns for 2019 through 2022 are subject to audit by federal, state, and foreign tax authorities.
Internal Revenue Service and other tax authorities; our U.S. federal tax returns for 2020 through 2023 are subject to audit by federal, state, and foreign tax authorities.
If we fail to satisfy certain milestone obligations, fail to come to an agreement with SCE of appropriate extensions of these milestones and force majeure relief, or fail to meet the availability and capacity guarantees, we may be subject to liquidated damages and under certain circumstances SCE may have a right to terminate the agreement.The requirement to pay liquidated damages or the loss of business from SCE could have a material adverse effect on our reputation, business or results of operations.
If we fail to satisfy certain milestone obligations, fail come to an agreement with SCE or otherwise resolve matters related to substantial completion or related force majeure relief, or fail to meet the availability and capacity guarantees, we may be subject to liquidated damages and under certain circumstances SCE may have a right to terminate the agreement.
We have a $200 million revolving senior secured credit facility and $75 million term loan that mature March 2025 as well as a $220 million delayed draw term loan that matures September 4, 2023 (collectively, the “Senior Credit Facilities”), which are subject to the quarter end ratio covenant described below as well as certain other customary operational covenants.
We have a $200 million revolving senior secured credit facility and $75 million term loan that mature March 2025 as well as a $220 million delayed draw term loan that matures April 15, 2024 (collectively, the “Senior Credit Facilities”).
See also Note 2, “Summary of Significant Accounting Policies” and Note 5, “Goodwill and Intangible Assets, Net”, to our consolidated financial statements appearing in Item 8 of this Report. 17 Table of Contents Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our business, financial condition or operating results, and our use of joint ventures could expose us to additional risks and liabilities.
Any future acquisitions that we may make could disrupt our business, cause dilution to our stockholders and harm our business, financial condition or operating results, and our use of joint ventures could expose us to additional risks and liabilities.
There is also uncertainly if IRA incentives may be cut back in the future. In addition, the timing of when assets are placed in service has in the past and could in the future impact our tax rate. If we experience unexpected delays in this timing, we may not be able to take advantage of the ITC as expected.
There is also uncertainly if IRA incentives may be reduced or repealed in the future, especially following the 2024 elections. In addition, the timing of when assets are placed in service has in the past and could in the future impact our tax rate.
For example, the Commonwealth of Massachusetts and the states of Colorado and Washington pre-qualify energy service providers and provide contract documents 20 Table of Contents that serve as the starting point for negotiations with potential governmental clients.
For example, the Commonwealth of Massachusetts and the states of Colorado and Washington pre-qualify energy service providers and provide contract documents that serve as the starting point for negotiations with potential governmental clients. Most of the work that we perform for the federal government is performed under IDIQ agreements between a government agency and us or one of our subsidiaries.
If an event of default occurs, we may not be able to cure it within any applicable cure period, if at all. Certain of our debt agreements, including our Senior Credit Facilities, also contain subjective acceleration clauses based on a lender deeming that a “material adverse change” in our business has occurred.
Certain of our debt agreements, including our Senior Credit Facilities, also contain subjective acceleration clauses based on a lender deeming that a “material adverse change” in our business has occurred. If these clauses are implicated, and the lender declares that an event of default has occurred, the outstanding indebtedness would likely be immediately due and owing.
We have, for example, experienced disruptions in development, installation and construction as a result of supply chain and logistics challenges, COVID-19 and the related quarantines, facility closures, and we may continue to experience such disruptions.
Any of these factors could give rise to construction delays, costs in excess of our expectations or cause us not to meet commitments given to our customers. We have, for example, experienced disruptions in development, installation and construction as a result of continued supply chain and logistics challenges, facility closures, and we may continue to experience such disruptions.
Global trade conditions that originated during the COVID-19 pandemic continue to persist and have been exacerbated by the war in Ukraine. These conditions may also have long-lasting adverse impact on us and our industries independently of the progress of the pandemic.
Global trade challenges including supply chain delays continue to persist and have been exacerbated by global unrest and wars. These conditions may have long-lasting adverse impact on us and our industries.
A major breach of our network security and systems could have negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our services, and harm to our reputation and brand. 22 Table of Contents Risks Related to our Indebtedness Our senior credit facility, project financing term loans and construction loans contain financial and operating restrictions that may limit our business activities and our access to credit and they may not be sufficient to fund our capital needs and growth.
Risks Related to our Indebtedness Our senior credit facility, energy asset financing term loans and construction loans contain financial and operating restrictions that may limit our business activities and our access to credit, and they may not be sufficient to fund our capital needs and growth.
In addition, we cannot predict whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities and appeals. Delay in the review and permitting process for a project can impair or delay our ability to develop that project or increase the cost so substantially that the project is no longer attractive to us.
In addition, we cannot predict 20 Table of Contents whether the permits will attract significant opposition or whether the permitting process will be lengthened due to complexities and appeals.
The Consolidated Appropriations Act, 2021 made permanent the Section 179D Energy Efficient Commercial Building Deduction. That Act, along with the IRA, also made changes to the way the deduction is calculated. If those changes or clarifying guidance issued by the IRS result in lower levels of energy efficiency improvements, it could impact the deduction available and the tax rate.
This deduction is related to energy efficient improvements we provide under government contracts. The Consolidated Appropriations Act, 2021 made permanent the Section 179D Energy Efficient Commercial Building Deduction. That Act, along with the IRA, also made changes to the way the deduction is calculated.
None of our renewable energy projects are currently subject to rate regulation for wholesale power sales by the Federal Energy Regulatory Commission (“FERC”) under the FPA, but certain of our projects that are under construction or development could become subject to such regulation in the future.
Some of our renewable energy projects which are operating as exempt wholesale generators or operating under a special exemption from PUHCA are currently subject to rate regulation for wholesale power sales by the Federal Energy Regulatory Commission (“FERC”) under the FPA and must comply with certain FERC reporting requirements.
We, our subcontractors and other third parties have been impacted by the global supply chain delays as well as restrictions imposed because of the COVID-19 pandemic. This has resulted in and may continue to result in delays in our ability to provide our services and complete our projects in a timely manner.
This has resulted in and may continue to result in delays in our ability to provide our services and complete our projects in a timely manner.
Department of Energy program for ESPCs, or similar federal or state qualification regimes, our business could be materially harmed.
If we are unable to maintain or renew our IDIQ qualification or similar federal or state qualification regimes, our business could be materially harmed.
Removed
Any of these factors could give rise to construction delays, costs in excess of our expectations or cause us not to meet commitments given to our customers.
Added
As previously disclosed, due to supply chain delays, weather and other events, we were unable to complete the projects by the guaranteed completion date of August 1, 2022 and made force majeure claims related to such delays.
Removed
In 2022, SCE instructed us to adjust the project schedule into 2023. As previously disclosed, we made force majeure claims under the SCE Agreement as battery supply delays resulting from COVID-19 lockdowns in several regions around China, newly implemented Chinese transportation safety policies and related supply chain delays impacted our ability to achieve the August 1, 2022 completion date.
Added
We have been working with SCE to analyze the applicability of force majeure relief to the project delays and SCE has notified us that they intend to withhold liquidated damages for at least one of the three projects.
Removed
We are in ongoing discussions with SCE about the applicability of force majeure relief to the project delays.
Added
A significant majority of our fully-contracted backlog and awarded projects is attributable to customers that are governmental entities.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn addition, we lease space, typically of lesser size, for 50 field offices throughout North America and the United Kingdom We also own 160 small-scale renewable energy plants throughout North America and two in Ireland, which are located on sites we own or lease, or sites provided by customers.
Biggest changeWe also own 183 small-scale renewable energy plants throughout North America and two in Ireland, which are located on sites we own or lease, or sites provided by customers. We expect to add new facilities and expand existing facilities as we continue to add employees and expand our business into new geographic areas.
We occupy regional offices in Phoenix, Arizona; Oak Brook, Illinois; Portland, Maine; Columbia, Maryland; Charlotte, North Carolina; Knoxville, Tennessee; Renton, Washington, Richmond Hill, Ontario; and London, England, each less than 20,000 square feet, under lease agreements.
We occupy regional offices in Phoenix, Arizona; Oak Brook, Illinois; Portland, Maine; Columbia, Maryland; Charlotte, North Carolina; Knoxville, Tennessee; Renton, Washington, Richmond Hill, Ontario; London, England; and Milan, Italy each less than 20,000 square feet, under lease agreements. In addition, we lease space, typically of lesser size, for 49 field offices throughout North America and Europe.
Removed
We expect to add new facilities and expand existing facilities as we continue to add employees and expand our business into new geographic areas.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFor additional information about certain proceedings, please refer to Note 15, “Commitments and Contingencies”, to our consolidated financial statements included in this Report, which is incorporated into this item by reference. Item 4. Mine Safety Disclosures Not applicable. 25 Table of Contents PART II
Biggest changeFor additional information about certain proceedings, please refer to Note 15, “Commitments and Contingencies”, to our consolidated financial statements included in this Report, which is incorporated into this item by reference. Item 4. Mine Safety Disclosures Not applicable. PART II
Removed
As previously disclosed, the staff of the United States SEC requested information with respect to revenue recognition for our software-as-a-service businesses during the period beginning January 1, 2014 through September 30, 2020.
Removed
We cooperated with the SEC’s request and in August 2022 the SEC staff notified us that their review has been concluded, and that they do not intend to recommend any further action at this time.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 25 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 26 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 28 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 38 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 40
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 26 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 26 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 29 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 40 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 42

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph shows the value that each of these investments would have had at the end of each year. 26 Table of Contents 12/31/2017 12/31/2018 12/31/2019 12/30/2020 12/30/2021 12/31/2022 Ameresco, Inc. $100.00 $163.95 $203.49 $607.44 $946.98 $664.42 Russell 2000 Index $100.00 $88.99 $111.70 $134.00 $153.85 $122.41 NASDAQ Clean Edge Green Energy Index $100.00 $87.89 $125.39 $357.14 $347.70 $242.88 Shareholder returns over the indicated period should not be considered indicative of future shareholder returns.
Biggest changeThe graph shows the value that each of these investments would have had at the end of each year. 12/31/2018 12/31/2019 12/30/2020 12/30/2021 12/30/2022 12/31/2023 Ameresco, Inc. $100.00 $124.11 $370.50 $577.59 $405.25 $224.61 Russell 2000 Index $100.00 $125.52 $150.58 $172.90 $137.56 $160.85 NASDAQ Clean Edge Green Energy Index $100.00 $142.67 $406.35 $395.62 $276.35 $248.97 Shareholder returns over the indicated period should not be considered indicative of future shareholder returns.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our Class A common stock trades on the New York Stock Exchange under the symbol “AMRC”. As of February 24, 2023, and according to the records of our transfer agent, there were 11 shareholders of record of our Class A common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Our Class A common stock trades on the New York Stock Exchange under the symbol “AMRC”. As of February 23, 2024, and according to the records of our transfer agent, there were 11 shareholders of record of our Class A common stock.
The following graph compares the cumulative total return attained by our Class A common shareholders with the Russell 2000 index and the NASDAQ Clean Edge Green Energy index. The information presented assumes an investment of $100 on December 31, 2017 and that all dividends were reinvested.
The following graph compares the cumulative total return attained by our Class A common shareholders with the Russell 2000 index and the NASDAQ Clean Edge Green Energy index. The information presented assumes an investment of $100 on 26 Table of Contents December 31, 2018 and that all dividends were reinvested.
Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock under our stock repurchase program authorized by the Board of Directors on April 27, 2016 (the “Repurchase Program”) during the quarter ended December 31, 2022.
Issuer Purchases of Equity Securities We did not repurchase any shares of our common stock under our stock repurchase program authorized by the Board of Directors on April 27, 2016 (the “Repurchase Program”) during the year ended December 31, 2023.
As of December 31, 2022, there were shares having a dollar value of approximately $5.9 million that may yet be purchased under the Repurchase Program. Under the Repurchase Program, we are authorized to repurchase up to $17.6 million of our Class A common stock.
As of December 31, 2023, there were shares having a dollar value of approximately $5.9 million that may yet be purchased under the Repurchase Program. 27 Table of Contents Under the Repurchase Program, we are authorized to repurchase up to $17.6 million of our Class A common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeFederal: the decrease is primarily due to a $6.8 million, or 2%, decrease in project revenue attributable to the timing of revenue recognized as a result of the phase of active projects compared to the prior year, partially offset by an 32 Table of Contents increase of $4.8 million in O&M revenue and a $0.9 million, or 19%, increase in revenue from the growth of our energy assets in operation. • Canada: the increase is primarily due to higher project revenues which were partially offset by unfavorable foreign exchange rates. • Alternative Fuels: the increase is primarily due to a $2.3 million, or 2%, increase in energy asset revenues resulting from the continued growth of our operating portfolio and increased renewable gas production levels. • All Other: the increase is due to a $15.7 million increase in project revenues primarily in the United Kingdom related to an increase in volume and progression of certain active projects and a $8.5 million increase in integrated-PV revenues resulting from increased activity in the oil and gas market.
Biggest changeFederal: the increase is primarily due to a $8.4 million, or 3%, increase in project revenue attributable to the timing of revenue recognized as a result of the phase of active projects compared to the prior year and a $1.6 million, or 3%, increase in O&M revenue. • Canada: the increase is primarily due to higher project revenues which were partially offset by unfavorable foreign exchange rates. 33 Table of Contents • Alternative Fuels: the increase is primarily due to a $2.3 million, or 2%, increase in energy asset revenues resulting from the continued growth of our operating portfolio, increased production levels and more favorable pricing on renewable identification numbers (“RIN’s”) generated from our renewable natural gas facilities. • Europe: revenues increased year-over-year primarily due to higher project revenue of $85.1 million, or 158%, resulting from increased overall activity which included revenues of $52.2 million related to the acquisition of Enerqos earlier in 2023 and increased revenues in Greece of $28.3 million. • All Other: All other revenues is consistent with the prior year.
We provide solutions primarily throughout the U.S., Canada, the United Kingdom, and Europe, and our revenues are derived principally from energy efficiency projects, which entail the design, engineering, and installation of equipment and other measures that incorporate a range of innovative technology and techniques to improve the efficiency and control the operation of a facility’s energy infrastructure; this can include designing and constructing a central plant or cogeneration system for a customer providing power, heat and/or cooling to a building, or other small-scale plant that produces electricity, gas, heat or cooling from renewable sources of energy.
We provide solutions primarily throughout the U.S., Canada, and Europe, and our revenues are derived principally from energy efficiency projects, which entail the design, engineering, and installation of equipment and other measures that incorporate a range of innovative technology and techniques to improve the efficiency and control the operation of a facility’s energy infrastructure; this can include designing and constructing a central plant or cogeneration system for a customer providing power, heat and/or cooling to a building, or other small-scale plant that produces electricity, gas, heat or cooling from renewable sources of energy.
Non-recourse Sale-leasebacks and Financing Leases We have entered into sale-leaseback arrangements for solar PV energy assets with multiple investors and in accordance with Topic 842, Leases, all sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds received from the transactions were recorded as long-term financing facilities.
Sale-leasebacks and Financing Leases We have entered into sale-leaseback arrangements for solar PV energy assets with multiple investors and in accordance with Topic 842, Leases, all sale-leaseback transactions that occurred after December 31, 2018, were accounted for as failed sales and the proceeds received from the transactions were recorded as long-term financing facilities.
These audits can involve complex issues and may require an extended period of time to resolve. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
These audits can 39 Table of Contents involve complex issues and may require an extended period of time to resolve. We recognize tax benefits from uncertain tax positions only if we believe that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.
At this point, we also determine the subcontractor, what equipment will be used, and assist in arranging for third party financing, as applicable. Recently, awarded projects have been taking an average of 12 to 24 months to result in a signed contract and convert to fully-contracted backlog.
At this point, we also determine the subcontractor, what equipment will be used, and assist in arranging for third party financing, as applicable. Recently, awarded projects have been taking an average of 12 31 Table of Contents to 24 months to result in a signed contract and convert to fully-contracted backlog.
The tax benefit rate for 2021 was favorable, primarily due to increases in the benefits associated with energy efficiency tax incentives, including Section 48 Solar Investment Tax Credits, deductions associated with the Section 179D Commercial Buildings Energy Efficiency Tax Deduction, and compensation deductions resulting from employee stock option disqualifying dispositions. • Net Income and Earnings Per Share: Net income attributable to common shareholders increased due to the reasons described above.
The tax benefit rate for 2022 was favorable, primarily due to increases in the benefits associated with energy efficiency tax incentives, including Section 48 Solar Investment Tax Credits, deductions associated with the Section 179D Commercial Buildings Energy Efficiency Tax Deduction, and compensation deductions resulting from employee stock option disqualifying dispositions. • Net Income and Earnings Per Share: Net income attributable to common shareholders decreased due to the reasons described above.
Any increase or decrease in estimated costs to complete a performance obligation without a corresponding change to the contract price could impact the calculation of cumulative revenue to date and gross profit on the project.
Any increase or decrease in estimated costs to complete a performance obligation without a corresponding change to the contract price could impact the calculation of cumulative revenue to date and gross profit on the 38 Table of Contents project.
Impairment Assessments We evaluate our long-lived assets, including goodwill and intangible assets, for impairment as events or changes in circumstances indicate the carrying value of these assets may not be fully recoverable, and at least annually (December 31st) for goodwill and intangible assets that have indefinite lives.
Impairment Assessments We evaluate our long-lived assets, including goodwill and intangible assets, for impairment as events or changes in circumstances indicate the carrying value of these assets may not be fully recoverable, and at least annually (fourth quarter) for goodwill and intangible assets that have indefinite lives.
We currently plan additional financings of $250.0 million to $300.0 million in 2023 to fund the construction or acquisition of new renewable energy plants as discussed above. We may also, from time to time, finance our operations through issuance or offering of equity or debt securities.
We currently plan additional financings of $300.0 million to $350.0 million in 2024 to fund the construction or acquisition of new renewable energy plants as discussed above. We may also, from time to time, finance our operations through issuance or offering of equity or debt securities.
This may include limiting discretionary spending across the organization and re-prioritizing our capital projects amid times of political unrest, the evolution of the COVID-19 pandemic, the duration of supply challenges, and the rate and duration of the inflationary pressures. For example, increases in inflation and interest rates have impacted overall market returns on assets.
This may include limiting discretionary spending across the organization and re-prioritizing our capital projects amid times of political unrest, the duration of supply challenges, and the rate and duration of the inflationary pressures. For example, recent increases in inflation and interest rates have impacted overall market returns on assets.
The portion related to spending for EaaS assets was approximately $36.4 million and $70.0 million at December 31, 2022 and 2021, respectively. These are also important metrics because they help us gauge our future capacity to generate electricity or deliver renewable gas fuel which contributes to our recurring revenue stream.
The portion related to spending for EaaS assets was approximately $399.8 million and $36.4 million at December 31, 2023 and 2022, respectively. These are also important metrics because they help us gauge our future capacity to generate electricity or deliver renewable gas fuel which contributes to our recurring revenue stream.
The transfers of receivables under these agreements do not qualify for sales accounting until final customer acceptance of the work, so the advances from the investors are not classified as operating cash flows. Cash draws that we received under these ESPC agreements were $238.4 million during the year ended December 31, 2022 and are recorded as financing cash inflows.
The transfers of receivables under these agreements do not qualify for sales accounting until final customer acceptance of the work, so the advances from the investors are not classified as operating cash flows. Cash draws that we received under these ESPC agreements were $154.3 million during the year ended December 31, 2023 and are recorded as financing cash inflows.
Assets in Development Assets in development, which represents the potential design/build project value of small-scale renewable energy plants that have been awarded or for which we have secured development rights, were estimated at $1,625.7 million as of December 31, 2022, including $98.8 million attributable to a non-controlling interest, and $1,247.5 million as of December 31, 2021.
Assets in Development Assets in development, which represents the potential design/build project value of small-scale renewable energy plants that have been awarded or for which we have secured development rights, were estimated at $2,445.9 million as of December 31, 2023, including $89.8 million attributable to a non-controlling interest, and $1,625.7 million as of December 31, 2022.
In addition, our unrecognized stock-based compensation expense increased from $41.1 million at December 31, 2021 to $46.7 million at December 31, 2022, and is expected to be recognized over a weighted-average period of three years. See Note 14 “Stock-based Compensation and Other Employee Benefits” for additional information.
In addition, our unrecognized stock-based compensation expense decreased from $46.7 million at December 31, 2022 to $30.1 million at December 31, 2023, and is expected to be recognized over a weighted-average period of two years. See Note 14 “Stock-based Compensation and Other Employee Benefits” for additional information.
This negatively impacted our results of operations during the year ended December 31, 2022. We expect the trends of supply chain challenges and inflationary pressures to continue beyond this year. We continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate to address the challenges presented from these conditions.
This negatively impacted our results of operations during the year ended December 31, 2023. We expect the trends of supply chain challenges to continue beyond this year. We continue to monitor macroeconomic conditions to remain flexible and to optimize and evolve our business as appropriate to address the challenges presented from these conditions. In August 2023, the U.S.
Our results of operations for the year-ended December 31, 2022 reflect year-over-year growth in terms of revenues, operating income, and net income attributable to common shareholders.
Our results of operations for the year-ended December 31, 2023 reflect a year-over-year decline in terms of revenues, operating income, and net income attributable to common shareholders.
The use of the cash received under these arrangements is to pay project costs classified as operating cash flows and totaled $259.5 million during the year ended December 31, 2022.
The use of the cash received under these arrangements is to pay project costs classified as operating cash flows and totaled $260.4 million during the year ended December 31, 2023.
We currently plan to invest approximately $325.0 million to $375.0 million in capital investments in 2023, principally for the construction or acquisition of new renewable energy plants.
We currently plan to invest approximately $350.0 million to $400.0 million in capital investments in 2024, principally for the construction or acquisition of new renewable energy plants.
We continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate and that we can meet our capital requirements during these uncertain times.
We continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate and that we can meet our capital and debt service requirements.
Awarded backlog is created when a potential customer awards a project to Ameresco following a request for proposal. Once a project is awarded but not yet contracted, we typically conduct a detailed energy audit to determine the scope of the project as well as identify the savings that may be expected to be generated from upgrading the customer’s energy infrastructure.
Once a project is awarded but not yet contracted, we typically conduct a detailed energy audit to determine the scope of the project as well as identify the savings that may be expected to be generated from upgrading the customer’s energy infrastructure.
We use the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation. When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, we record the entire estimated loss in the period the loss becomes known.
When the estimate on a contract indicates a loss or claims against costs incurred reduce the likelihood of recoverability of such costs, we record the entire estimated loss in the period the loss becomes known.
Other expenses, net increased primarily due to higher interest expenses, net of interest income of $12.1 million related to a higher average balance on our senior secured debt facility, partially offset by an increase in government incentives of $1.6 million. • Income before Income Taxes: the increase is due to reasons described above. • Income Tax Expense (Benefit): the provision for income taxes is based on various rates set by federal, state, provincial, and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements.
Other expenses, net increased primarily due to higher interest expenses, net of interest income of $9.7 million related to increased levels of project debt, a higher average balance on our senior secured debt facility, factoring fees in Italy of $5.8 million, and a decrease in government incentives received of $2.0 million. • Income before Income Taxes: the decrease is due to reasons described above. • Income Tax Expense (Benefit): the provision for income taxes is based on various rates set by federal, state, provincial, and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements.
Regions: the increase is primarily due to a $561.0 million, or 115%, increase in project revenues attributable to the timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects, including our SCE battery storage project, versus the prior year and a $7.9 million, or 20%, increase in revenue from the growth of our energy assets in operation. • U.S.
Regions: the decrease is primarily due to a $584.1 million, or 56%, decrease in project revenues attributable to the timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects, including our SCE battery storage project, versus the prior year partially offset by a $13.1 million, or 28%, increase in revenue from the growth of our energy assets in operation. • U.S.
These financings totaled $478.5 million in principal amounts as of December 31, 2022 and $532.3 million as of December 31, 2021.
These financings totaled $533.1 million in principal amounts as of December 31, 2023 and $478.5 million as of December 31, 2022.
In addition to organic growth, strategic acquisitions of complementary businesses and assets, and joint venture arrangements have been an important part of our growth enabling us to broaden our service offerings and expand our geographical reach.
In addition to organic growth, strategic acquisitions of complementary businesses and assets, and joint venture arrangements have been an important part of our growth enabling us to broaden our service offerings and expand our geographical reach. During 2022, we entered into joint venture arrangements in Greece and California and acquired an operating wind farm in Ireland.
Income before Income Taxes and Unallocated Corporate Activity Year Ended December 31, Year-Over-Year Change (In Thousands) 2022 2021 Dollar Change % Change U.S. Regions $ 88,531 $ 38,285 $ 50,246 131.2 % U.S.
Income before Income Taxes and Unallocated Corporate Activity Year Ended December 31, Year-Over-Year Change (In Thousands) 2023 2022 Dollar Change % Change U.S. Regions $ 38,746 $ 88,531 $ (49,785) (56.2) % U.S.
Cash Flows from Investing Activities During 2022, we made capital investments of $304.6 million in new energy assets and $18.0 million in major maintenance of energy assets, compared to $170.3 million and $8.6 million, respectively, in 2021. Last year we paid $14.9 million, net of cash received, for an acquisition and also contributed $9.0 million to an equity investment.
Cash Flows from Investing Activities During 2023, we made capital investments of $538.4 million in new energy assets and $7.6 million in major maintenance of energy assets, compared to $304.6 million and $18.0 million, respectively, in 2022. This year we paid $9.2 million, net of cash received, for an acquisition and also contributed $6.0 million to joint venture investments.
If we fail to come to an agreement with SCE about extensions to the Guaranteed Completion Date and the applicability of force majeure relief, we may be required to pay liquidated damages up to an aggregate maximum of $89 million and may not be able to recover costs associated with schedule changes, and under certain circumstances SCE may have a right to terminate the agreement.
If we fail to come to an agreement with SCE about the applicability and scope of force majeure relief and liquidated damages, we may be required to pay liquidated damages up to an aggregate maximum of $89 million and may not be able to recover costs associated with the force majeure events.
Selected Measures of Liquidity and Capital Resources December 31, (In Thousands) 2022 2021 Cash and cash equivalents $ 115,534 $ 50,450 Working capital $ 189,283 $ 164,361 Availability under revolving credit facility $ 345 $ 121,176 35 Table of Contents Cash Flows The following table summarizes our changes in cash and cash equivalents: Year Ended December 31, (In Thousands) 2022 2021 Cash flows used in operating activities $ (338,288) $ (172,296) Cash flows used in investing activities (328,358) (205,257) Cash flows provided by financing activities 730,227 365,461 Effect of exchange rate changes on cash (747) 309 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 62,834 $ (11,783) Our service offering also includes the development, construction, and operation of small-scale renewable energy plants.
Selected Measures of Liquidity and Capital Resources December 31, (In Thousands) 2023 2022 Cash and cash equivalents $ 79,271 $ 115,534 Working capital $ 227,000 $ 189,283 Availability under revolving credit facility $ 37,489 $ 345 Cash Flows The following table summarizes our changes in cash, cash equivalents, and restricted cash: Year Ended December 31, (In Thousands) 2023 2022 Cash flows used in operating activities $ (69,991) $ (338,288) Cash flows used in investing activities (566,943) (328,358) Cash flows provided by financing activities 640,803 730,227 Effect of exchange rate changes on cash (81) (747) Net increase (decrease) in cash, cash equivalents, and restricted cash $ 3,788 $ 62,834 Our service offering also includes the development, construction, and operation of small-scale renewable energy plants.
All financial result comparisons are against the prior year period. 31 Table of Contents Our strong operating results are due to the following: • Revenue: total revenues increased primarily due to a $577.3 million, or 64%, increase in our project revenue attributed to the timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects, including our SCE battery storage project. • Cost of Revenues and Gross Profit: the increase in cost of revenues is primarily due to the increase in project revenues described above, however, our gross profit as a percent of revenues decreased due to the higher revenue contribution from our lower margin, design-build SCE battery storage project. • Selling, General and Administrative Expenses: the increase is primarily due to higher net salaries and benefits of $13.4 million as a result of increased headcount and an increase in non-cash stock-based compensation expense and higher insurance costs related to the continued growth of the business. • Other Expenses, Net: Other expenses, net, includes gains and losses from derivatives transactions, foreign currency transactions, interest expense, interest income, amortization of financing costs and certain government incentives.
All financial result comparisons are against the prior year period. • Revenue: total revenues decreased primarily due to a $480.0 million, or 32%, decrease in our project revenue attributed to the timing of revenue recognized based upon costs incurred to date relative to total expected costs on active projects, including our SCE battery storage project. 32 Table of Contents • Cost of Revenues and Gross Profit: the decrease in cost of revenues is primarily due to the decrease in project revenues described above, however, our gross profit as a percent of revenues increased due to the lower revenue contribution from our lower margin, design-build SCE battery storage project. • Selling, General and Administrative Expenses: the increase is primarily due to higher professional fees of $2.5 million, higher project development fees of $2.1 million, partially offset by lower net salaries and benefits of $4.6 million as a result of a decrease in non-cash stock-based compensation expense. • Asset Impairments: This year includes impairment charges of $1.6 million recorded in 2023 related to two of our landfill gas to energy assets, and a goodwill impairment charge of $2.2 million related to one of our reporting units. • Other Expenses, Net: Other expenses, net, includes gains and losses from derivatives transactions, foreign currency transactions, interest expense, interest income, amortization of financing costs and certain government incentives.
We believe that cash and cash equivalents, working capital and availability under our revolving senior secured credit facility, combined with our right (subject to lender consent) to increase our revolving credit facility by $100.0 million, and our general access to credit and equity markets, will be sufficient to fund our operations for twelve months from filing this Report and thereafter.
We believe that cash and cash equivalents, working capital and availability under our revolving senior secured credit facility, combined with our right (subject to lender consent) to increase our revolving credit facility by $100.0 million, plus develop and sell transactions, tax equity transfers, and our general access to credit and equity markets, will be sufficient to fund our operations through at least February 2025.
Cash Flows from Financing Activities Our primary sources of financing during 2022 were proceeds of $468.5 million from long-term debt financings and construction revolvers, $252.7 million from advances on Federal ESPC projects and energy assets, and net proceeds from our senior secured revolving credit facility of $137.9 million, partially offset by repayments of long-term debt totaling $161.9 million.
Cash Flows from Financing Activities Our primary sources of financing during 2023 were proceeds of $843.5 million from long-term debt financings and construction revolvers, $168.9 million from advances on Federal ESPC projects and energy assets, partially offset by repayments of long-term debt totaling $303.1 million, net payments on our senior secured revolving credit facility of $43.0 million, and distributions to non-controlling interests of $21.8 million.
However, any resulting duties or other trade restrictions imposed may disrupt the solar panel supply chain, increase the cost for solar cells and panels, and ultimately impact the demand for clean energy solutions. We are closely monitoring the investigation and any regulations issued in connection with it.
Similarly, other changes in trade regulations and the enforcement of the Uyghur Forced Labor Prevention Act, could disrupt the solar panel supply chain, increase the cost for solar cells and panels, and ultimately impact the demand for clean energy solutions. We are closely monitoring the investigation and any regulations issued in connection with it.
Working capital may also be affected by seasonality, growth rate of revenue, long lead-time equipment purchase patterns, advances from Federal ESPC projects, and payment terms for payables relative to customer receivables. 33 Table of Contents We expect to incur additional expenditures in connection with the following activities: • equity investments, energy asset acquisitions and business acquisitions that we may fund from time to time • capital investment in current and future energy assets • material, equipment, and other expenditures for large projects We regularly monitor and assess our ability to meet funding requirements.
We expect to incur additional expenditures in connection with the following activities: • equity investments, energy project asset acquisitions and business acquisitions that we may fund from time to time 34 Table of Contents • capital investment in current and future energy assets • material, equipment, and other expenditures for large projects We regularly monitor and assess our ability to meet funding requirements.
Any failure to comply with the financial or other covenants of our project financings would result in inability to distribute funds from the wholly-owned subsidiary to Ameresco, Inc. or constitute an event of default in which the lenders may have the ability to accelerate the amounts outstanding, including all accrued interest and unpaid fees. 34 Table of Contents Material non-recourse construction revolvers and term loan financing during the year ended December 31, 2022 was our Non-recourse Fixed Rate Note, 6.50%, due October 2037.
Any failure to comply with the financial or other covenants of our project financings would result in inability to distribute funds from the wholly-owned subsidiary to Ameresco, Inc. or constitute an event of default in which the lenders may have the ability to accelerate the amounts outstanding, including all accrued interest and unpaid fees.
During 2021, we received net proceeds of $186.0 million from long-term debt financings, $161.2 million from advances on Federal ESPC projects and energy assets, and net proceeds of $120.1 million from our equity offering, partially offset by repayments of long-term debt totaling $98.2 million.
During 2022, we received net proceeds of $468.5 million from long-term debt financings, $252.7 million from advances on Federal ESPC projects and energy assets, partially offset by repayments of long-term debt totaling $161.9 million.
Supply Chain Disruptions and Other Global Factors We continue to monitor the impact of global economic conditions on our operations, financial results, and liquidity, including the result of supply chain challenges, development of the COVID-19 pandemic, war in Ukraine, evolving relations between the U.S. and China, and other geopolitical tensions.
The IRA may increase the competition in our industry and as such increase the demand and cost for labor, equipment and commodities needed for our projects. 29 Table of Contents Supply Chain Disruptions and Other Global Factors We continue to monitor the impact of global economic conditions on our operations, financial results, and liquidity, including the result of supply chain challenges, war in Ukraine and the Middle East, evolving relations between the U.S. and China, and other geopolitical tensions.
As of December 31, 2022, our total construction and term loans outstanding was $300.8 million. See Note 9 “Debt and Financing Lease Liabilities” for additional information about these loans.
During 2023, we drew down a total of $276.7 million under this facility. As of December 31, 2023, our total construction and term loans outstanding was $1.0 billion. See Note 9 “Debt and Financing Lease Liabilities” for additional information about these loans.
We believe that our policies and estimates that require our most significant judgments are considered our critical accounting policies and are discussed below.
We believe that our policies and estimates that require our most significant judgments are considered our critical accounting policies and are discussed below. In addition, refer to Note 2 “Summary of Significant Accounting Policies” for further details.
Basic earnings per share for 2022 was $1.83 an increase of $0.45 per share compared to 2021. Diluted earnings per share for 2022 was $1.78, an increase of $0.43 per share, compared to 2021. Business Segment Analysis Our reportable segments for the year ended December 31, 2022 were U.S. Regions, U.S.
Basic earnings per share for 2023 was $1.20, a decrease of $0.63 per share compared to 2022. Diluted earnings per share for 2023 was $1.17, a decrease of $0.61 per share, compared to 2022. Business Segment Analysis Our reportable segments for the year ended December 31, 2023 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and Europe.
See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect on our operating results” in Item 1A, Risk Factors. 29 Table of Contents The SCE Agreement In October 2021, we entered into a contract with SCE to design and build three grid scale BESS at three sites near existing substation parcels throughout SCE’s service territory in California with an aggregate capacity of 537.5 MW (“the SCE Agreement”).
The Southern California Edison (“SCE”) Agreement In October 2021, we entered into a contract with SCE to design and build three grid scale BESS at three sites near existing substation parcels throughout SCE’s service territory in California with an aggregate capacity of 537.5 MW (“the SCE Agreement”).
Total project backlog represents energy efficiency projects that are active within our sales cycle. Our sales cycle begins with the initial contact with the customer and ends, when successful, with a signed contract, also referred to as fully-contracted backlog. 30 Table of Contents Our sales cycle recently has been averaging 18 to 42 months.
Our sales cycle begins with the initial contact with the customer and ends, when successful, with a signed contract, also referred to as fully-contracted backlog. Our sales cycle recently has been averaging 18 to 42 months. Awarded backlog is created when a potential customer awards a project to Ameresco following a request for proposal.
Federal: the decrease is due primarily to the decrease in revenues described above, partially offset by a decrease in operating expenses attributed to an increase in earnings recognized from an unconsolidated equity investment. • Canada: the increase is primarily due to the increase in project revenues described above. • Alternative Fuels: the decrease is primarily due to higher direct costs related to unplanned downtime, higher depreciation expense related to the timing of assets placed in operations, and higher interest expense, partially offset by lower mark to market losses on our unhedged commodity gas swaps, and lower other expenses which included an impairment charge in the prior year. • All Other: the increase is primarily due to higher revenues noted above. • Unallocated corporate activity includes all corporate level selling, general and administrative expenses and other expenses not allocated to the reportable segments.
Federal: the decrease is due primarily to higher interest expense. • Canada: the increase is primarily due to the increase in project revenues described above partially offset by higher project development costs. • Alternative Fuels: the decrease is primarily due to higher direct costs related to unplanned downtime, higher interest expense, higher depreciation expense related to the timing of assets placed in operations and impairment charges recorded in 2023 related to two of our landfill gas to energy assets. • Europe: the decrease is primarily due to factoring fees of $5.8 million, increased salaries and benefits, net, and depreciation and amortization as a result of the acquisition of Enerqos, partially offset by the increased revenues noted above. • All Other: the decrease is primarily due to increased salaries and benefits, net. • Unallocated corporate activity includes all corporate level selling, general and administrative expenses and other expenses not allocated to the reportable segments.
The impact to our future operations and results of operations as a result of these global trends remains uncertain and the challenges we face, including challenges and increases in costs for logistics and supply chains, such as increased port congestion, and intermittent supplier delays as well as shortage of certain components needed for our business, such as lithium-ion battery cells, semiconductors, and other components required for our clean energy solutions may continue or become more pronounced. 28 Table of Contents During the year ended December 31, 2022, we were impacted by supply chain disruptions and varying levels of inflation, as a result of COVID-19 and macroeconomic conditions, causing delays in the timely delivery of material to customer sites and delays and disruptions in the completion of certain projects, including those pursuant to the SCE Agreement, and increased shipping and transportation costs, as well as increased component and labor costs.
The impact to our future operations and results of operations as a result of these global trends remains uncertain and the challenges we face, including increases in costs for logistics and supply chains, intermittent supplier delays, and shortages of certain components needed for our business, such as lithium-ion battery cells, semiconductors, and other components required for our clean energy solutions may continue or become more pronounced.
Results of Operations The following table sets forth certain financial data from the consolidated statements of income for the periods indicated (1) : Year Ended December 31, 2022 2021 Year-Over-Year Change (In Thousands) Dollar Amount % of Revenues Dollar Amount % of Revenues Dollar Change % Change Revenues $ 1,824,422 100.0 % $ 1,215,697 100.0 % $ 608,725 50.1 % Cost of revenues 1,533,589 84.1 % 985,340 81.1 % 548,249 55.6 % Gross profit 290,833 15.9 % 230,357 18.9 % 60,476 26.3 % Selling, general and administrative expenses 157,841 8.7 % 134,923 11.1 % 22,918 17.0 % Operating income 132,992 7.3 % 95,434 7.9 % 37,558 39.4 % Other expenses, net 27,273 1.5 % 17,290 1.4 % 9,983 57.7 % Income before income taxes 105,719 5.8 % 78,144 6.4 % 27,575 35.3 % Income tax expense (benefit) 7,170 0.4 % (2,047) (0.2) % 9,217 (450.3) % Net income $ 98,549 5.4 % $ 80,191 6.6 % $ 18,358 22.9 % Net income attributable to non-controlling interest and redeemable non-controlling interest $ (3,623) (0.2) % $ (9,733) (0.8) % $ (6,110) (62.8) % Net income attributable to common shareholders $ 94,926 5.2 % $ 70,458 5.8 % $ 24,468 34.7 % (1) A comparison of our 2021 and 2020 results can be found in Item 7 of our 202 1 Form 10-K filed with the SEC.
Results of Operations The following table sets forth certain financial data from the consolidated statements of income for the periods indicated (1) : Year Ended December 31, 2023 2022 Year-Over-Year Change (In Thousands) Dollar Amount % of Revenues Dollar Amount % of Revenues Dollar Change % Change Revenues $ 1,374,633 100.0 % $ 1,824,422 100.0 % $ (449,789) (24.7) % Cost of revenues 1,128,204 82.1 % 1,533,589 84.1 % (405,385) (26.4) % Gross profit 246,429 17.9 % 290,833 15.9 % (44,404) (15.3) % Earnings from unconsolidated entities 1,758 0.1 % 1,647 0.1 % 111 6.7 % Selling, general and administrative expenses 162,138 11.8 % 159,488 8.7 % 2,650 1.7 % Asset impairments 3,831 0.3 % — — % 3,831 100.0 % Operating income 82,218 6.0 % 132,992 7.3 % (50,774) (38.2) % Other expenses, net 43,949 3.2 % 27,273 1.5 % 16,676 61.1 % Income before income taxes 38,269 2.8 % 105,719 5.8 % (67,450) (63.8) % Income tax (benefit) provision (25,635) (1.9) % 7,170 0.4 % (32,805) 457.5 % Net income $ 63,904 4.6 % $ 98,549 5.4 % $ (34,645) (35.2) % Net income attributable to non-controlling interest and redeemable non-controlling interest $ (1,434) (0.1) % $ (3,623) (0.2) % $ (2,189) (60.4) % Net income attributable to common shareholders $ 62,470 4.5 % $ 94,926 5.2 % $ (32,456) (34.2) % (1) A comparison of our 2022 and 2021 results can be found in Item 7 of our 2022 Form 10-K filed with the SEC.
Cash Flows from Operating Activities Our cash flow from operating activities in 2022 decreased over 2021 primarily due to a $159.4 million increase in unbilled revenue (costs and estimated earnings in excess of billings) due to the timing of when certain projects are invoiced, including our SCE battery storage project, a decrease of $47.3 million in accounts payable, accrued expenses and other current liabilities, and an increase of $9.8 million in Federal ESPC receivables, partially offset by an increase of $18.4 million in net income.
Expenditures related to projects that we build for customers are recorded as cash outflows from operating activities as cost of revenues. 37 Table of Contents Cash Flows from Operating Activities Our cash flow from operating activities in 2023 improved over 2022 primarily due to a $259.4 million and $49.2 million increase in cash flows from unbilled revenue (costs and estimated earnings in excess of billings) and accounts receivable, respectively, due to the timing of when certain projects are invoiced, including our SCE battery storage project, partially offset by a decrease of $34.6 million in net income.
We do not allocate any indirect expenses to the segments. Corporate activity increased primarily due to higher salaries and benefit costs of $9.8 million, which includes a $6.3 million increase in non-cash stock-based compensation expense due to increased option grants with a higher grant date fair value, and increased insurance costs and interest expenses described above.
We do not allocate any indirect expenses to the segments. Corporate activity improved primarily due to lower net salaries and benefit costs of $4.7 million, related to a decrease in non-cash stock-based compensation expense, and higher interest income partially offset by higher interest expense of $3.2 million.
In addition, refer to Note 2 “Summary of Significant Accounting Policies” for further details. 36 Table of Contents Revenue Recognition As described in Note 2, we recognize revenue from the installation or construction of projects over time using the cost-based input method.
Revenue Recognition As described in Note 2, we recognize revenue from the installation or construction of projects over time using the cost-based input method. We use the total costs incurred on the project relative to the total expected costs to satisfy the performance obligation.
Working capital requirements can be susceptible to fluctuations during the year due to timing differences between costs incurred, the timing of milestone-based customer invoices and actual cash collections.
Working capital requirements can be susceptible to fluctuations during the year due to timing differences between costs incurred, the timing of milestone-based customer invoices and actual cash collections. Working capital may also be affected by seasonality, growth rate of revenue, long lead-time equipment purchase patterns, advances from Federal ESPC projects, and payment terms for payables relative to customer receivables.
We view the enactment of the IRA as favorable for the overall business climate for the renewable energy industry, however, we are continuing to evaluate the overall impact and applicability of the IRA to our current and planned projects, and we may experience a delay in our sales cycles and new award activity as our customers consider the applicability of the IRA.
We may also continue to experience a delay in our sales cycles and new award activity as our customers consider the applicability of the IRA and as financing projects may take longer as result of this uncertainty.
As of December 31, 2022, our total sale-leasebacks classified as long-term financing facilities outstanding was $120.9 million. As of December 31, 2022, our total financing leases outstanding was $16.1 million. These are our sale-leaseback arrangements entered into as of December 31, 2018 which remain under the previous guidance.
As of December 31, 2023, our total sale-leasebacks classified as long-term financing facilities outstanding was $185.7 million. As of December 31, 2023, our total financing leases outstanding was $13.9 million.
While we are required under generally accepted accounting principles (“GAAP”) to reflect these loans as liabilities on our consolidated balance sheets, they are generally non-recourse and not direct obligations of Ameresco, Inc. Our project financing facilities contain various financial and other covenant requirements which include debt service coverage ratios and total funded debt to EBITDA, as defined.
Our project financing facilities contain various financial and other covenant requirements which include debt service coverage ratios and total funded debt to EBITDA, as defined.
Regions: the increase is primarily due to the higher revenues described above, partially offset by higher salaries and benefit costs, and other expenses which included a non-cash adjustment to recognize additional contingent consideration related to one of our acquisitions. • U.S.
Regions: the decrease is primarily due to the lower revenues described above, partially offset by lower salaries and benefit costs and lower project development costs. • U.S.
See Notes 8 “Leases” and 9 “Debt and Financing Lease Liabilities” for additional information on these financing facilities.
These are our sale-leaseback arrangements entered into as of December 31, 2018 which remain under the previous guidance. 36 Table of Contents See Notes 8 “Leases” and 9 “Debt and Financing Lease Liabilities” for additional information on these financing facilities.
However, a majority of our revenues under this contract were recognized in 2022 based upon costs incurred in 2022 relative to total expected costs on this project. Stock-based Compensation During the year ended December 31, 2022, we granted 1,605,000 common stock options to certain employees and 12,978 restricted stock units to our non-employee Directors’ under our 2020 Stock Incentive Plan.
A majority of our revenues under this contract were recognized in 2022 based upon costs incurred in 2022 relative to total expected costs on this project.
The following table presents our backlog: As of December 31, (In Thousands) 2022 2021 Project Backlog Fully-contracted backlog $ 1,001,325 $ 1,509,300 Awarded, not yet signed customer contracts 1,638,640 1,542,760 Total project backlog $ 2,639,965 $ 3,052,060 12-month project backlog $ 595,020 $ 1,296,410 O&M Backlog Fully-contracted backlog $ 1,231,120 $ 1,131,660 12-month O&M backlog $ 89,520 $ 70,306 Our $892 million SCE Agreement was entered into in October 2021 and increased our fully-contracted backlog at December 31, 2021 compared to December 31, 2022, and the majority of our revenues under this contract were recognized in 2022.
The following table presents our backlog: As of December 31, (In Thousands) 2023 2022 Project Backlog (1) Fully-contracted backlog $ 1,323,742 $ 1,001,325 Awarded, not yet signed customer contracts 2,555,197 1,638,640 Total project backlog $ 3,878,939 $ 2,639,965 12-month project backlog $ 718,577 $ 595,020 (1) Project backlog net of minority interests O&M Backlog Fully-contracted backlog $ 1,221,661 $ 1,231,120 12-month O&M backlog $ 88,930 $ 89,520 Total project backlog represents energy efficiency projects that are active within our sales cycle.
Unforeseen events and changes in circumstances or market conditions could adversely affect these estimates, which could result in an impairment charge. Based on our goodwill impairment assessment, all of our reporting units with goodwill had estimated fair values that exceeded their carrying values by at lea st 20% as of December 31, 2022 and 61% as of December 31, 2021.
Unforeseen events and changes in circumstances or market conditions could adversely affect these estimates, which could result in an impairment charge.
Regions segment now includes U.S. project revenue and associated costs previously included in our former Non-Solar DG segment. As a result, previously reported amounts have been reclassified for comparative purposes. See Note 20 “Business Segment Information” for additional information about our segments. Revenues Year Ended December 31, Year-Over-Year Change (In Thousands) 2022 2021 Dollar Change % Change U.S.
The remaining amounts are included in “All Other”. Europe was formerly included in “All Other” but was disaggregated due to growth in the segment in 2023. As a result, previously reported amounts have been reclassified for comparative purposes. See Note 20 “Business Segment Information” for additional information about our segments.
Federal 50,866 52,388 (1,522) (2.9) Canada 2,554 1,581 973 61.5 Alternative Fuels 22,989 27,774 (4,785) (17.2) All Other 11,959 5,477 6,482 118.3 Unallocated corporate activity (71,180) (47,361) (23,819) 50.3 Income before income taxes $ 105,719 $ 78,144 $ 27,575 35.3 % • U.S.
Federal 49,237 50,866 (1,629) (3.2) Canada 3,813 2,554 1,259 49.3 Alternative Fuels 6,215 22,989 (16,774) (73.0) Europe 4,188 5,589 (1,401) (25.1) All Other 4,442 6,370 (1,928) (30.3) Unallocated corporate activity (68,372) (71,180) 2,808 3.9 Income before income taxes $ 38,269 $ 105,719 $ (67,450) (63.8) % • U.S.
As of December 31, 2022, the maximum indebtedness incurred under an energy conservation project financing reverted back to $650,000. Project Financing Non-recourse Construction Revolvers and Term Loans We have entered into a number of construction and term loan agreements for the purpose of constructing and owning certain renewable energy plants.
The debt raise, if successful, would be used to repay outstanding amounts on the senior secured credit facility. 35 Table of Contents Energy Asset Financing Energy Asset Construction Facilities, Financing Facilities, and Term Loans We have entered into a number of construction and term loan agreements for the purpose of constructing and owning certain renewable energy plants.
We are working with SCE to analyze and estimate these costs as well as the applicability and scope of force majeure relief based on our force majeure claims.
Under the SCE Agreement, a failure to reach the Guaranteed Completion Date could, under certain circumstances, result in liquidated damages up to a maximum amount of $89 million being applied. We have been working with SCE to analyze the applicability and scope of force majeure relief based on our force majeure claims.
Senior Secured Credit Facility — Revolver and Term Loans On March 4, 2022, we entered into the fifth amended and restated senior secured credit facility, which increased the aggregate amount of total commitments from $245.0 million to $495.0 million.
Senior Secured Credit Facility — Revolver and Term Loans During the year ended December 31, 2023, we entered into three amendments to our fifth amended and restated senior secured credit facility, which extended the maturity date of our delayed draw term loan A, resulted in $155.0 million paid for the year ended December 31, 2023, $10.0 million due and paid on January 31, 2024 and February 14, 2024, and $10.0 million due on March 31, 2024.
In 2022, SCE also instructed us to adjust the project schedule into 2023 and in early 2023 we made further weather-related force majeure claims. Under the terms of the SCE Agreement, we are entitled to recover costs associated with schedule changes requested by SCE.
As previously disclosed, due to 30 Table of Contents supply chain delays, weather and other events, we were unable to complete the projects by August 1, 2022 (the “Guaranteed Completion Date”) and made related force majeure claims. In late 2022, SCE also instructed us to adjust the completion of the sites into 2023.
Removed
In December 2021, we completed the acquisition of Plug Smart, an Ohio-based energy services company that specializes in the development and implementation of budget neutral capital improvement projects including building controls and building automation systems, which is included in our U.S. Regions segment.
Added
During 2023, we acquired Enerqos Energy Solutions S.r.l. (“Enerqos”) a renewable energy and energy efficiency company headquartered in Milan, Italy and entered into a joint venture agreement with Bristol City, U.K. to transform the way the city generates, distributes, stores and uses energy.
Removed
The pro forma effects of this acquisition were not material to our operations for the fiscal years presented. During 2022, we entered into joint venture arrangements in Greece and California and acquired an operating wind farm in Ireland. Key Factors and Trends The Inflation Reduction Act The IRA was signed into law by President Biden on August 16, 2022.
Added
On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and the ability to acquire 100% of the stock of Bright Canyon Energy Corporation (“BCE”) in a two-phased transaction, exclusive of each other. Phase 1, the purchase of the energy asset project, closed on August 4, 2023.
Removed
The IRA may increase the competition in our industry and as such increase the demand and cost for labor, equipment and commodities needed for our projects.
Added
In the second phase, which closed on January 12, 2024, we acquired BCE, including its interest in one of our consolidated joint ventures and its interests in project subsidiaries developing or with rights to develop solar, battery, and microgrid assets. Key Factors and Trends The Inflation Reduction Act The IRA was signed into law on August 16, 2022.
Removed
On April 1, 2022, the U.S. Department of Commerce initiated an investigation to determine whether imports of crystalline silicon photovoltaic cells and modules which are manufactured in Cambodia, Thailand, Vietnam, or Malaysia using components from China are circumventing existing anti-dumping (“ADD”) and countervailing duties (“CVD”) on solar cells and modules from China.
Added
We view the enactment of the IRA as favorable for the overall business climate for the renewable energy industry.
Removed
The full investigation is estimated to take 365 days. In June 2022 President Biden announced an executive action which guaranteed that any duties that could be levied as a result of this investigation, will not be imposed on imports by U.S importers between June 2022 and June 2024.
Added
However, there is uncertainty related to the applicability of the IRA to our current and planned projects and the scope of the IRA and its interpretations may change if there is a change in the U.S. administration or if government agencies’ authority to interpret federal law is restricted as a result of the Supreme Court’s review of the Chevron doctrine under which federal government agencies have been awarded board authority to interpret broad or ambiguous legislation.
Removed
While the Biden executive action will prevent new duties stemming from this investigation from being applied during this period, the Commerce Department investigation continues. In December 2022, the Department issued a preliminary determination which found that certain solar products from these four countries were, in fact, circumventing existing Chinese tariffs.
Added
During the year ended December 31, 2023, we were impacted by supply chain disruptions and varying levels of inflation, as a result macroeconomic conditions, causing delays in the timely delivery of material to customer sites and delays and disruptions in the completion of certain projects, including those pursuant to the SCE Agreement, and increased shipping and transportation costs, as well as increased component and labor costs.
Removed
The final results of the investigation are expected to be issued by May 1, 2023. If the Department upholds it preliminary ruling, new tariffs could be applied beginning June 2024. Additionally, legislation has been introduced in both the U.S. Senate and U.S. House of Representatives seeking to overturn President Biden’s executive action that suspended solar import duties.
Added
Department of Commerce issued a final ruling in the Auxin Solar trade case related to solar tariff imports that will lead to higher tariffs on certain imported solar products from Malaysia, Vietnam, Thailand, and Cambodia beginning in June 2024.
Removed
Given that the Biden policy remains in place and that we have an existing inventory of solar panels from a large purchase several years ago, we do not expect that this investigation will have a material impact on our business in the near term.
Added
See “Our business is affected by seasonal trends and construction cycles, and these trends and cycles could have an adverse effect on our operating results” and “Extreme weather events and other natural disasters, particularly those exacerbated by climate change, could materially affect our ability to complete our projects and develop our assets” in Item 1A, Risk Factors.
Removed
The SCE Agreement required substantial completion of all facilities, subject to extension for specified force majeure events and customer-caused delays, to be completed no later than August 1, 2022 (the “Guaranteed Completion Date”) and provided for availability and capacity guarantees.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

10 edited+0 added−0 removed9 unchanged
Biggest changeAlso, a significant number of employees are located in Canada and the United Kingdom, and our subsidiaries in those countries transact business in those respective currencies. As a result, we have designated the Canadian dollar as the functional currency for Canadian operations.
Biggest changeAlso, a significant number of employees are located in Canada and Europe, and our subsidiaries in those countries transact business in those respective currencies. As a result, we have designated the Canadian dollar as the functional currency for Canadian operations. Similarly, the GBP has been designated as the functional currency for our operations in the United Kingdom.
In some instances, the conditions of our renewable energy project term loans require us to enter into interest rate swap agreements in order to mitigate our exposure to adverse movements in market interest rates. All but two of the interest rate swaps that we have entered into qualify and have been designated as cash flow hedges.
In some instances, the conditions of our renewable energy project term loans require us to enter into interest rate swap agreements in order to mitigate our exposure to adverse movements in market interest rates. All but three of the interest rate swaps that we have entered into qualify and have been designated as cash flow hedges.
We translate the revenues, expenses, gains, and losses from our Canadian and United Kingdom subsidiaries into U.S. dollars using a weighted average exchange rate for the applicable fiscal period. We translate the assets and liabilities of our Canadian and United Kingdom subsidiaries into U.S. dollars at the exchange rate in effect at the applicable balance sheet date.
We translate the revenues, expenses, gains, and losses from our Canadian, United Kingdom, and European subsidiaries into U.S. dollars using a weighted average exchange rate for the applicable fiscal period. We translate the assets and liabilities of these subsidiaries into U.S. dollars at the exchange rate in effect at the applicable balance sheet date.
The fair value of these make-whole provisions was determined based on available market data and a with and without model. Our exposure to market interest rate risk is not hedged in a manner that completely eliminates the effects of changing market conditions on earnings or cash flow.
The fair value of these make-whole provisions was determined based on available market data and a with and without model. 40 Table of Contents Our exposure to market interest rate risk is not hedged in a manner that completely eliminates the effects of changing market conditions on earnings or cash flow.
Certain of the term loans that we use to finance our 38 Table of Contents renewable energy projects bear variable interest rates that are indexed to short-term market rates. We have entered into interest rate swaps in connection with these term loans in order to seek to hedge our exposure to adverse changes in the applicable short-term market rate.
Certain of the term loans that we use to finance our renewable energy projects bear variable interest rates that are indexed to short-term market rates. We have entered into interest rate swaps in connection with these term loans in order to seek to hedge our exposure to adverse changes in the applicable short-term market rate.
Changes in these rates may have an impact on future cash flows and earnings. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Interest Rate Risk We had cash and cash equivalents totaling $115.5 million as of December 31, 2022 and $50.5 million as of December 31, 2021.
Changes in these rates may have an impact on future cash flows and earnings. We manage these risks through normal operating and financing activities and, when deemed appropriate, through the use of derivative financial instruments. Interest Rate Risk We had cash and cash equivalents totaling $79.3 million as of December 31, 2023 and $115.5 million as of December 31, 2022.
See Notes 2 “Summary of Significant Accounting Policies”, 18 “Fair Value Measurement”, and 19 “Derivative Instruments and Hedging Activities” included in Item 8 of this Report for additional information about our derivative instruments. Foreign Currency Risk We have revenues, expenses, assets, and liabilities that are denominated in foreign currencies, principally the Canadian dollar and British pound sterling (“GBP”).
See Notes 2 “Summary of Significant Accounting Policies”, 18 “Fair Value Measurement”, and 19 “Derivative Instruments and Hedging Activities” included in Item 8 of this Report for additional information about our derivative instruments. Foreign Currency Risk We have revenues, expenses, assets, and liabilities that are denominated in foreign currencies, principally the Canadian dollar, GBP, and Euro.
We do not hedge our exposure to foreign currency exchange risk. 39 Table of Contents
We do not hedge our exposure to foreign currency exchange risk. 41 Table of Contents
Similarly, the GBP has been designated as the functional currency for our operations in the United Kingdom When we consolidate the operations of these foreign subsidiaries into our financial results, because we report our results in U.S. dollars, we are required to translate the financial results and position of our foreign subsidiaries from their respective functional currencies into U.S. dollars.
The Euro has been designated as the functional currency for our operations in Europe. When we consolidate the operations of these foreign subsidiaries into our financial results, because we report our results in U.S. dollars, we are required to translate the financial results and position of our foreign subsidiaries from their respective functional currencies into U.S. dollars.
For the year ended December 31, 2022, due to the weakening of the Canadian dollar and GBP versus the U.S. dollar, our foreign currency translation resulted in a loss of $3.4 million which we recorded as a decrease in accumulated other comprehensive loss, compared to $0.2 million for the year ended December 31, 2021.
For the year ended December 31, 2023, due to the weakening of the Canadian dollar and GBP versus the U.S. dollar, our foreign currency translation resulted in a gain of $1.6 million which we recorded as an increase in accumulated other comprehensive income, compared to a loss of $3.4 million for the year ended December 31, 2022.

Other AMRC 10-K year-over-year comparisons