AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited) | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Cash flows from operating activities: | | | |
Net income | $ | 19,298 | | | $ | 12,431 | |
Adjustments to reconcile net income to cash flows from operating activities: | | | |
Depreciation of energy assets, net | 11,806 | | | 9,686 | |
Depreciation of property and equipment | 734 | | | 833 | |
Gain on contingent consideration | (320) | | | — | |
Accretion of ARO liabilities | 36 | | | 24 | |
Amortization of debt discount and debt issuance costs | 852 | | | 747 | |
Amortization of intangible assets | 578 | | | 80 | |
Provision for bad debts | 237 | | | 3 | |
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Equity in (earnings) loss of unconsolidated entity | (637) | | | 62 | |
Net loss (gain) from derivatives | 1,622 | | | (377) | |
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Stock-based compensation expense | 3,531 | | | 766 | |
Deferred income taxes, net | 1,284 | | | 1,410 | |
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Unrealized foreign exchange loss | 132 | | | 19 | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (40,859) | | | 15,535 | |
Accounts receivable retainage | 2,582 | | | (1,844) | |
Federal ESPC receivable | (46,300) | | | (65,973) | |
Inventory, net | (914) | | | 48 | |
Costs and estimated earnings in excess of billings | (154,325) | | | 6,544 | |
Prepaid expenses and other current assets | 2,813 | | | (726) | |
Project development costs | 1,260 | | | 1,259 | |
Other assets | 105 | | | (600) | |
Accounts payable, accrued expenses and other current liabilities | (77,163) | | | (19,333) | |
Billings in excess of cost and estimated earnings | (4,309) | | | (3,973) | |
Other liabilities | (33) | | | (226) | |
Income taxes receivable, net | 1,868 | | | 4,881 | |
Cash flows from operating activities | (276,122) | | | (38,724) | |
Cash flows from investing activities: | | | |
Purchases of property and equipment | (889) | | | (656) | |
Capital investment in energy assets | (56,844) | | | (55,823) | |
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Cash flows from investing activities | (57,733) | | | (56,479) | |
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See notes to condensed consolidated financial statements. |
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AMERESCO, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In thousands) (Unaudited) (Continued) |
|
| Three Months Ended March 31, |
| 2022 | | 2021 |
Cash flows from financing activities: | | | |
Proceeds from equity offering, net of offering costs | $ | — | | | $ | 120,216 | |
Payments of debt discount and debt issuance costs | (2,570) | | | (850) | |
Proceeds from exercises of options and ESPP | 1,708 | | | 1,386 | |
| | | |
Proceeds from (payments on) senior secured revolving credit facility, net | 76,000 | | | (53,073) | |
Proceeds from long-term debt financings | 286,744 | | | 30,811 | |
Proceeds from Federal ESPC projects | 64,788 | | | 33,520 | |
Proceeds for (payments on) energy assets from Federal ESPC | 1,925 | | | (59) | |
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Contributions from non-controlling interest | 4,594 | | | — | |
Distributions to redeemable non-controlling interests, net | (357) | | | (495) | |
Payments on long-term debt and financing leases | (77,432) | | | (19,073) | |
Cash flows from financing activities | 355,400 | | | 112,383 | |
Effect of exchange rate changes on cash | (196) | | | 330 | |
Net increase in cash, cash equivalents, and restricted cash | 21,349 | | | 17,510 | |
Cash, cash equivalents, and restricted cash, beginning of period | 87,054 | | | 98,837 | |
Cash, cash equivalents, and restricted cash, end of period | $ | 108,403 | | | $ | 116,347 | |
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Supplemental disclosures of cash flow information: | | | |
Cash paid for interest | $ | 4,488 | | | $ | 4,235 | |
Cash paid for income taxes | $ | 78 | | | $ | 271 | |
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Accrued purchases of energy assets | $ | 40,683 | | | $ | 33,065 | |
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See notes to condensed consolidated financial statements.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Ameresco, Inc. (including its subsidiaries, the “Company,” “Ameresco,” “we,” “our,” or “us”) are unaudited, according to certain rules and regulations of the Securities and Exchange Commission, and include, in our opinion, normal recurring adjustments necessary for a fair presentation in conformity with accounting principles generally accepted in the United States (“GAAP”) of the results for the periods indicated.
The results of operations for the three months ended March 31, 2022 are not necessarily indicative of results which may be expected for the full year. The December 31, 2021 consolidated balance sheet data was derived from audited financial statements, but certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended December 31, 2021, included in our annual report on Form 10-K (“2021 Annual Report” or “2021 Form 10-K”) for the year ended December 31, 2021 filed with the Securities and Exchange Commission on March 1, 2022. Reclassification
Certain prior period amounts were reclassified to conform to the presentation in the current period.
Significant Risks and Uncertainties
The COVID-19 pandemic has continued to result in global supply chain disruptions and the resurgence of COVID-19 and its variants has caused some governments to extend travel and other restrictions.
We have considered the impact of COVID-19 on the assumptions and estimates used, which may change in response to this evolving situation. Results of future operations and liquidity could be adversely impacted by a number of factors associated with the COVID-19 pandemic including payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions, potential loss of employees due to vaccine mandates, and uncertain demand. As of the date of issuance of these condensed consolidated financial statements, we cannot reasonably estimate the extent to which the COVID-19 pandemic may impact our financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the pandemic on us is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time, even after the pandemic subsides.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Our accounting policies are set forth in Note 2 to the consolidated financial statements contained in our 2021 Form 10-K. We have included certain updates to those policies below. Accounts Receivable and Allowance for Credit Losses
Changes in the allowance for credit losses are as follows: | | | | | | | | | | | | | |
| March 31, 2022 | | March 31, 2021 | | |
Allowance for credit losses, beginning of period | $ | 2,263 | | | $ | 2,266 | | | |
Provision for bad debts | 237 | | | 3 | | | |
Account write-offs and other | (235) | | | 41 | | | |
Allowance for credit losses, end of period | $ | 2,265 | | | $ | 2,310 | | | |
Recent Accounting Pronouncements
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04, which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. Companies can apply the ASU immediately, however, the guidance will only be available until December 31, 2022. We are currently evaluating the impact
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
that adopting this new accounting standard would have on our condensed consolidated financial statements and related disclosures.
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in ASU 2021-01 provide optional expedients to the current guidance on contract modification and hedge accounting from the expected market transition from LIBOR and other interbank offered rates to alternative reference rates. The guidance generally can be applied to applicable contract modifications through December 31, 2022. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements and related disclosures.
Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires annual disclosures about certain types of government assistance received. ASU 2021-10 is effective for our fiscal year beginning after December 15, 2021. We adopted this guidance as of January 1, 2022 and the adoption did not have an impact on our consolidated financial statements.
Derivatives and Hedging
In March 2022, the FASB issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging—Portfolio Layer Method, which expands the current single-layer method to allow multiple hedged layers of a single closed portfolio to be hedged under the method. ASU 2022-01 is effective for our year ending beginning after December 15, 2022. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
Our reportable segments for the three months ended March 31, 2022 were U.S. Regions, U.S. Federal, Canada, Non-Solar Distributed Generation (“Non-Solar DG”) and 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. Regions segment now includes U.S. project revenue and associated costs previously included in our Non-Solar DG segment. As a result, previously reported amounts have been reclassified for comparative purposes.
The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended March 31, 2022:
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| U.S. Regions | | U.S. Federal | | Canada | | Non-Solar DG | | All Other | | Total |
Project revenue | $ | 298,632 | | | $ | 62,217 | | | $ | 13,951 | | | $ | — | | | $ | 18,604 | | | $ | 393,404 | |
O&M revenue | 5,080 | | | 12,297 | | | 11 | | | 2,774 | | | 91 | | | 20,253 | |
Energy assets | 10,018 | | | 1,090 | | | 761 | | | 26,487 | | | 72 | | | 38,428 | |
Integrated-PV | — | | | — | | | — | | | — | | | 11,356 | | | 11,356 | |
Other | 790 | | | 42 | | | 2,449 | | | — | | | 7,280 | | | 10,561 | |
Total revenues | $ | 314,520 | | | $ | 75,646 | | | $ | 17,172 | | | $ | 29,261 | | | $ | 37,403 | | | $ | 474,002 | |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended March 31, 2021: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Regions | | U.S. Federal | | Canada | | Non-Solar DG | | All Other | | Total |
Project revenue | $ | 75,812 | | | $ | 90,089 | | | $ | 9,001 | | | $ | — | | | $ | 5,791 | | | $ | 180,693 | |
O&M revenue | 4,415 | | | 11,440 | | | 26 | | | 2,532 | | | 71 | | | 18,484 | |
Energy assets | 8,802 | | | 664 | | | 747 | | | 22,939 | | | 135 | | | 33,287 | |
Integrated-PV | — | | | — | | | — | | | — | | | 9,154 | | | 9,154 | |
Other | 215 | | | 21 | | | 1,869 | | | 109 | | | 8,370 | | | 10,584 | |
Total revenues | $ | 89,244 | | | $ | 102,214 | | | $ | 11,643 | | | $ | 25,580 | | | $ | 23,521 | | | $ | 252,202 | |
The following table presents information related to our revenue recognized over time:
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| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Percentage of revenue recognized over time | 96% | | 94% | | | | |
The remainder of our revenue is for products and services transferred at a point in time, at which point revenue is recognized.
We attribute revenues to customers based on the location of the customer. The following table presents information related to our revenues by geographic area: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
United States | $ | 438,391 | | | $ | 234,009 | | | | | |
Canada | 15,988 | | | 10,853 | | | | | |
Other | 19,623 | | | 7,340 | | | | | |
Total revenues | $ | 474,002 | | | $ | 252,202 | | | | | |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
Contract Balances
The following tables provide information about receivables, contract assets and contract liabilities from contracts with customers: | | | | | | | | | | | | | | |
| | March 31, 2022 | | December 31, 2021 |
Accounts receivable, net | | $ | 204,082 | | | $ | 161,970 | |
Accounts receivable retainage, net | | $ | 40,555 | | | $ | 43,067 | |
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Contract Assets: | | | | |
Costs and estimated earnings in excess of billings | | $ | 460,240 | | | $ | 306,172 | |
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Contract Liabilities: | | | | |
Billings in excess of cost and estimated earnings | | $ | 31,729 | | | $ | 35,918 | |
Billings in excess of cost and estimated earnings, non-current (1) | | 6,322 | | | 6,481 | |
Total contract liabilities | | $ | 38,051 | | | $ | 42,399 | |
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| March 31, 2021 | | December 31, 2020 |
Accounts receivable, net | $ | 113,095 | | | $ | 125,010 | |
Accounts receivable retainage, net | $ | 32,071 | | | $ | 30,189 | |
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Contract Assets: | | | |
Costs and estimated earnings in excess of billings | $ | 179,474 | | | $ | 185,960 | |
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Contract Liabilities: | | | |
Billings in excess of cost and estimated earnings | $ | 30,211 | | | $ | 33,984 | |
Billings in excess of cost and estimated earnings, non-current (1) | 6,590 | | | 6,631 | |
Total contract liabilities | $ | 36,801 | | | $ | 40,615 | |
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(1) Performance obligations that are expected to be completed beyond the next twelve months and are included in other liabilities in the condensed consolidated balance sheets. |
The increase in contract assets for the three months ended March 31, 2022 was primarily due to revenue recognized of $381,949 offset by billings of $229,540. Contract assets also increased due to reclassifications, primarily from contract liabilities as a result of timing of customer payments. The decrease in contract liabilities was primarily driven by recognition of revenue as performance obligations were satisfied exceeding increases from the receipt of advance payment from customers, and related billings. For the three months ended March 31, 2022, we recognized revenue of $33,077 that was previously included in the beginning balance of contract liabilities and billed customers $23,723. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
The decrease in contract assets for the three months ended March 31, 2021 was primarily due to billings of approximately $144,539, partially offset by revenue recognized of $130,297. The decrease in contract liabilities was primarily driven by the receipt of advance payment from customers, and related billings, exceeding reductions from the recognition of revenue as performance obligations were satisfied. For the three months ended March 31, 2021, we recognized revenue of $45,483 that was previously included in the beginning balance of contract liabilities and billed customers $33,081. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
Performance Obligations
Our remaining performance obligations (“backlog”) represent the unrecognized revenue value of our contract commitments. At March 31, 2022, we had contracted backlog of $2,553,770 of which approximately 48% is anticipated to be recognized as revenue in the next twelve months. The remaining performance obligations primarily relate to the energy efficiency and renewable energy
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
construction projects, including long-term operations and maintenance (“O&M”) services related to these projects. The long-term services have varying initial contract terms, up to 25 years.
Project Development Costs
Project development costs of $4,209 and $1,985 were recognized in the condensed consolidated statements of income on projects that converted to customer contracts during the three months ended March 31, 2022 and 2021, respectively.
No impairment charges in connection with our project development costs were recorded during the three months ended March 31, 2022 and 2021.
4. GOODWILL AND INTANGIBLE ASSETS, NET
The changes in the carrying value of goodwill balances by reportable segment were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Regions | | U.S. Federal | | Canada | | Non-solar DG | | Other | | Total |
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Balance, December 31, 2021 | $ | 39,204 | | | $ | 3,981 | | | $ | 3,454 | | | $ | — | | | $ | 24,518 | | | $ | 71,157 | |
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Remeasurement adjustment | 309 | | | — | | | — | | | — | | | — | | | 309 | |
Currency effects | — | | | — | | | 53 | | | — | | | (185) | | | (132) | |
Balance, March 31, 2022 | $ | 39,513 | | | $ | 3,981 | | | $ | 3,507 | | | $ | — | | | $ | 24,333 | | | $ | 71,334 | |
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Definite-lived intangible assets, net consisted of the following: | | | | | | | | | | | |
| As of March 31, 2022 | | As of December 31, 2021 |
Gross carrying amount | $ | 32,939 | | | 33,526 | |
Less - accumulated amortization | (26,965) | | | (26,565) | |
Intangible assets, net | $ | 5,974 | | | $ | 6,961 | |
The table below sets forth amortization expense: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Three Months Ended March 31, | | |
Asset type | | Location | | 2022 | | 2021 | | | | |
Customer contracts | | Cost of revenues | | $ | 184 | | | $ | — | | | | | |
All other intangible assets | | Selling, general and administrative expenses | | 394 | | | 80 | | | | | |
Total amortization expense | | | | $ | 578 | | | $ | 80 | | | | | |
5. ENERGY ASSETS, NET
Energy assets, net consisted of the following: | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Energy assets (1) | $ | 1,184,314 | | | $ | 1,120,712 | |
Less - accumulated depreciation and amortization | (276,308) | | | (264,181) | |
Energy assets, net | $ | 908,006 | | | $ | 856,531 | |
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(1) Includes financing lease assets (see Note 6), capitalized interest and Asset retirement obligations (“ARO”) assets (see tables below). |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
Location | 2022 | | 2021 | | | | |
Cost of revenues (2) | $ | 11,806 | | | $ | 9,686 | | | | | |
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(2) Includes depreciation and amortization on financing lease assets (see Note 6). | | | | |
The following table presents the interest costs relating to construction financing during the period of construction, which were capitalized as part of energy assets, net: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Capitalized interest | $ | 1,312 | | | $ | 2,238 | | | | | |
The following tables sets forth information related to our ARO assets and ARO liabilities: | | | | | | | | | | | | | | |
| Location | March 31, 2022 | | December 31, 2021 |
ARO assets, net | Energy assets, net | $ | 2,473 | | | $ | 1,939 | |
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ARO liabilities, current | Accrued expenses and other current liabilities | $ | 9 | | | $ | 6 | |
ARO liabilities, non-current | Other liabilities | 2,947 | | | 2,342 | |
Total ARO liabilities | | $ | 2,956 | | | $ | 2,348 | |
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| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Depreciation expense of ARO assets | $ | 37 | | | $ | 23 | | | | | |
Accretion expense of ARO liabilities | $ | 36 | | | $ | 24 | | | | | |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
6. LEASES
The table below sets forth supplemental condensed consolidated balance sheet information related to our leases: | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Operating Leases: | | | |
Operating lease assets | $ | 39,485 | | | $ | 41,982 | |
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Current portions of operating lease liabilities | $ | 6,134 | | | $ | 6,276 | |
Long-term portions of operating lease liabilities | 32,854 | | | 35,135 | |
Total operating lease liabilities | $ | 38,988 | | | $ | 41,411 | |
Weighted-average remaining lease term | 12 years | | 12 years |
Weighted-average discount rate | 5.7 | % | | 5.7 | % |
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Financing Leases: | | | |
Energy assets | $ | 31,521 | | | $ | 31,876 | |
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Current portions of financing lease liabilities | $ | 3,226 | | | $ | 3,125 | |
Long-term financing lease liabilities, net of current portion, unamortized discount and debt issuance costs | 15,973 | | | 16,101 | |
Total financing lease liabilities | $ | 19,199 | | | $ | 19,226 | |
Weighted-average remaining lease term | 15 years | | 15 years |
Weighted-average discount rate | 12.1 | % | | 12.1 | % |
The costs related to our leases were as follows: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Operating Leases: | | | | | | | |
Operating lease costs | $ | 2,291 | | | $ | 2,153 | | | | | |
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Financing Leases: | | | | | | | |
Amortization expense | 355 | | | 532 | | | | | |
Interest on lease liabilities | 559 | | | 658 | | | | | |
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Total lease costs | $ | 3,205 | | | $ | 3,343 | | | | | |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
Supplemental cash flow information related to our leases was as follows: | | | | | | | | | | | |
| Three Months Ended March 31, |
| 2022 | | 2021 |
Cash paid for amounts included in the measurement of operating lease liabilities | $ | 1,907 | | | $ | 2,423 | |
Right-of-use assets (“ROU”) obtained in exchange for new operating lease liabilities | $ | 367 | | | $ | 3,773 | |
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The table below sets forth our estimated minimum future lease obligations under our leases: | | | | | | | | | | | |
| Operating Leases | | Financing Leases |
Year ended December 31, | | | |
2022 | $ | 6,134 | | | $ | 5,124 | |
2023 | 7,176 | | | 3,676 | |
2024 | 5,943 | | | 2,565 | |
2025 | 4,725 | | | 2,213 | |
2026 | 2,880 | | | 2,054 | |
Thereafter | 28,615 | | | 19,813 | |
Total minimum lease payments | 55,473 | | | 35,445 | |
Less: interest | 16,485 | | | 16,246 | |
Present value of lease liabilities | $ | 38,988 | | | $ | 19,199 | |
Sale-leasebacks
In March 2022, we entered into an amendment to our August 2018 long-term financing facility which extended the end date of the agreement from March 31, 2022 to June 30, 2022. We sold and leased back two energy assets for $8,201 in cash proceeds under this agreement during the three months ended March 31, 2022. As of March 31, 2022, approximately $220,367 remained available under this lending commitment.
In March 2022, we entered into an amendment to our December 2020 long-term financing facility which extended the end date of the agreement from December 31, 2021 to July 15, 2022. We sold and leased back one energy asset for $4,423 in cash proceeds under this facility during three months ended March 31, 2022. As of March 31, 2022, approximately $11,515 remained available under this lending commitment.
These transactions are accounted for as failed sale leasebacks and are classified as long-term financing facilities. See Note 7 for additional information.
Net gains from amortization expense recognized in cost of revenues relating to deferred gains and losses in connection with our sale-leaseback agreements were $57 for each of the three months ended March 31, 2022 and 2021.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
7. DEBT AND FINANCING LEASE LIABILITIES
Our debt and financing lease liabilities comprised of the following: | | | | | | | | | | | |
| March 31, 2022 | | December 31, 2021 |
Senior secured revolving credit facility (1) | $ | 121,000 | | | $ | 45,000 | |
Senior secured term loans | 275,000 | | | 52,813 | |
Non-recourse construction revolvers | 31,910 | | | 31,698 | |
Non-recourse term loans (4) | 205,329 | | | 218,136 | |
Long-term financing facilities (2) | 104,417 | | | 104,615 | |
Financing lease liabilities (3) | 19,199 | | | 19,226 | |
Total debt and financing lease liabilities | 756,855 | | | 471,488 | |
Less: current maturities | 80,191 | | | 78,934 | |
Less: unamortized discount and debt issuance costs | 16,969 | | | 15,370 | |
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs | $ | 659,695 | | | $ | 377,184 | |
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(1) At March 31, 2022, funds of $47,341 were available for borrowing under this facility. |
(2) These facilities are sale-leaseback arrangements and are accounted for as failed sales. See Note 6 for additional disclosures. |
(3) Financing lease liabilities are sale-leaseback arrangements under previous guidance. See Note 6 for additional disclosures. |
(4) As of March 31, 2021, we were in default on one non-recourse term loan with a balance of $3,809 for failure to meet the debt service coverage ratio of 1 to 1, however, a waiver was received in April 2022. |
Senior Secured Credit Facility - Revolver and Term Loans
On March 4, 2022, we entered into the fifth amended and restated senior secured credit facility with five banks, which included the following amendments:
•increased the aggregate amount of total commitments from $245,000 to $495,000,
•increased the aggregate amount of the revolving commitments from $180,000 to $200,000,
•increased the existing term loan A from $65,000 to $75,000,
•extended the maturity date of the revolving commitment and term loan A from June 28, 2024 to March 4, 2025,
•added a delayed draw term loan A for up to $220,000 through a September 4, 2023 maturity date,
•increased the total funded debt to EBITDA covenant ratio from a maximum of 3.50 to 4.50 for the quarter ended March 31, 2022; 4.25 for the quarter ending June 30, 2022, 4.00 for the quarters ending September 30, 2022 and December 31, 2022; and 3.50 thereafter,
•specified the debt service coverage ratio (the ratio of (a) cash flow of the core Ameresco companies, to (b) debt service of the core Ameresco companies as of the end of each fiscal quarter to be less than 1.5, and
•increased our limit under an energy conversation project financing to $650,000, which provides us with flexibility to grow our federal business further.
The revolving credit facility may be increased by an amount up to an additional $100,000 in increments of at least $25,000 at the approval of the lenders, subject to certain conditions.
We accounted for this amendment as a modification and at closing we incurred $2,048 in lenders fees which were reflected as debt discount and $352 in third party fees which were reflected as debt issuance costs. The unamortized debt discount and issuance costs of the previous agreement are being amortized over the remaining term of the amended agreement, with the exception of $96 of costs relating to a previous syndicated lender which did not participate in this amendment. These costs were expensed in other expenses, net during the three months ended March 31, 2022.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
Construction Revolvers
Construction Revolver, 1.74%, due June 2022
In March 2022, we entered into a fourth amendment to the 1.74% construction revolver to extend this facility from March 2022 to June 2022. All remaining unpaid amounts outstanding under the facility are due at that time. As of March 31, 2022, $73,946 was available for borrowing under this facility.
On April 29, 2022, a wholly-owned subsidiary of ours executed a joinder agreement to the 1.74% construction revolver, which added it as an additional borrower under the master construction loan agreement. At closing, we borrowed $9,800 for a solar and storage project.
Construction Revolver, 1.99%, due July 2022
As of March 31, 2022, $24,145 was available for borrowing under the 1.74% construction revolver.
8. INCOME TAXES
We recorded a provision for income taxes of $2,307 and $2,205 for the three months ended March 31, 2022 and 2021, respectively. The estimated effective annualized tax rate impacted by the period discrete items is a provision of 10.7% for the three months ended March 31, 2022, compared to a provision of 15.1% of estimated effective annualized tax rate for the three months ended March 31, 2021.
The principal reasons for the difference between the statutory rate and the estimated annual effective rate for 2022 were the effects of investment tax credits which we are entitled from solar plants placed into service or are forecasted to be placed into service during 2022, state taxes, and the tax deductions related to the Section 179D deduction.
The principal reasons for the difference between the statutory rate and the estimated annual effective rate for 2021 were the effects of investment tax credits which we are entitled from solar plants placed into service or are forecasted placed into service during 2021, the tax deductions related to the Section 179D deduction, the deduction of compensation expense associated with certain employee stock options, and tax basis adjustments on certain partnership flip transactions.
Under GAAP accounting rules deferred taxes are shown on a net basis in the condensed consolidated financial statements based on taxing jurisdiction. Under the guidance, we have recorded long term deferred tax assets and deferred tax liabilities based on the underlying jurisdiction in the accompanying condensed consolidated balance sheets.
The following table sets forth the total amounts of gross unrecognized tax benefits: | | | | | |
| Gross Unrecognized Tax Benefits |
Balance, December 31, 2021 | $ | 900 | |
| |
| |
| |
Balance, March 31, 2022 | $ | 900 | |
The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods was $440 at March 31, 2022 and December 31, 2021 (net of the federal benefit on state amounts).
9. COMMITMENTS AND CONTINGENCIES
From time to time, we issue letters of credit and performance bonds with our third-party lenders, to provide collateral.
Legal Proceedings
On November 6, 2017, we were served with a complaint filed by a customer against nine contractors, including us, claiming both physical damages to the customer’s tangible property and damages caused by various alleged defects in the design of the project through negligent acts and/or omissions, breaches of contract and breaches of the “implied warranty of good and workmanlike manner.” During the three months ended March 31, 2022, we entered into a settlement agreement and adjusted our accrual for the actual net loss after taking into account our insurance proceeds, which is included in accrued expenses and other current liabilities in our condensed consolidated balance sheets as of March 31, 2022. In addition, we reversed the loss recovery from insurance proceeds.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
We are involved in a variety of other claims and other legal proceedings generally incidental to our normal business activities. While the outcome of any of these proceedings cannot be accurately predicted, we do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our financial condition or results of operations.
Commitment as a Result of an Acquisition
In August 2018, we completed an acquisition which provided for a revenue earn-out contingent upon the acquired business meeting certain cumulative revenue targets over 5 years from the acquisition date. The fair value decreased from $678 at December 31, 2021 to $358 at March 31, 2022 and is included in other liabilities on the condensed consolidated balance sheets. The contingent consideration will be paid annually in May, if any of the cumulative revenue targets are achieved. No payments have been made to date.
In December 2021, we completed our acquisition of Plug Smart which provided for an earn-out based on future EBITDA targets beginning with EBITDA performance for the month of December 2021 and each fiscal year thereafter, over a five-year period through December 31, 2026. The maximum cumulative earn-out is $5,000 and we evaluated financial forecasts of the acquired business and concluded that the fair value of this earn-out was approximately $2,160 upon acquisition and remained consistent as of December 31, 2021. At March 31, 2022, the fair value of the contingent consideration was $2,061 and is included in other liabilities on the consolidated balance sheets. No payments have been made to date.
See note 10 for additional information.
10. FAIR VALUE MEASUREMENT
We recognize our financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Three levels of inputs that may be used to measure fair value are as follows:
Level 1: Inputs are based on unadjusted quoted prices for identical instruments traded in active markets.
Level 2: Inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.
The following table presents the input level used to determine the fair values of our financial instruments measured at fair value on a recurring basis: | | | | | | | | | | | | | | | | | |
| | | Fair Value as of |
| Level | | March 31, 2022 | | December 31, 2021 |
Assets: | | | | | |
Interest rate swap instruments | 2 | | $ | 2,220 | | | $ | 919 | |
| | | | | |
Total assets | | | $ | 2,220 | | | $ | 919 | |
Liabilities: | | | | | |
Interest rate swap instruments | 2 | | $ | 2,726 | | | $ | 6,316 | |
Commodity swap instruments | 2 | | 4,568 | | | 1,962 | |
Make-whole provisions | 2 | | 5,085 | | | 4,800 | |
Contingent consideration | 3 | | 2,419 | | | 2,838 | |
Total liabilities | | | $ | 14,798 | | | $ | 15,916 | |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
The following table sets forth a summary of changes in the fair value of contingent consideration liability classified as level 3:
| | | | | | | | | | | |
| Year Ended December 31, |
| March 31, 2022 | | December 31, 2021 |
Contingent consideration liability balance at the beginning of period | $ | 2,838 | | | $ | 678 | |
Contingent consideration issued in connection with acquisition | — | | | 2,160 | |
Changes in fair value included in earnings | (320) | | | — | |
Remeasurement adjustment | (99) | | | — | |
Contingent consideration liability balance at the end of period | $ | 2,419 | | | $ | 2,838 | |
The following table sets forth the fair value and the carrying value of our long-term debt, excluding financing leases: | | | | | | | | | | | | | | | | | | | | | | | |
| As of March 31, 2022 | | As of December 31, 2021 |
| Fair Value | | Carrying Value | | Fair Value | | Carrying Value |
Long-term debt (Level 2) | $ | 726,649 | | | $ | 720,687 | | | $ | 442,429 | | | $ | 436,892 | |
The fair value of our long-term debt was estimated using discounted cash flows analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements which are considered to be level two inputs. There have been no transfers in or out of level two or three financial instruments for the three months ended March 31, 2022 and the year ended December 31, 2021.
We are also required to periodically measure certain other assets at fair value on a nonrecurring basis, including long-lived assets, goodwill and other intangible assets. We calculated the fair value used in our annual goodwill impairment analysis utilizing a discounted cash flow analysis and determined that the inputs used were level 3 inputs. There were no assets recorded at fair value on a non-recurring basis as of March 31, 2022 or December 31, 2021.
11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
The following table presents information about the fair value amounts of our cash flow derivative instruments: | | | | | | | | | | | | | | | | | |
| | | Derivatives as of |
| | | March 31, 2022 | | December 31, 2021 |
| Balance Sheet Location | | Fair Value | | Fair Value |
Derivatives Designated as Hedging Instruments: | | | | | |
Interest rate swap contracts | Other assets | | $ | 39 | | | $ | — | |
Interest rate swap contracts | Other liabilities | | $ | 2,726 | | | $ | 6,316 | |
Derivatives Not Designated as Hedging Instruments: | | | | | |
Interest rate swap contracts | Other assets | | $ | 2,181 | | | $ | 919 | |
| | | | | |
| | | | | |
Commodity swap contracts | Other liabilities | | $ | 4,568 | | | $ | 1,962 | |
Make-whole provisions | Other liabilities | | $ | 5,085 | | | $ | 4,800 | |
As of March 31, 2022 and December 31, 2021, all but four of our freestanding derivatives were designated as hedging instruments.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
The following table presents information about the effects of our derivative instruments on our condensed consolidated statements of income and condensed consolidated statements of comprehensive income: | | | | | | | | | | | | | | | | | | | | | |
| | | Amount of Loss (Gain) Recognized in Net Income |
| Location of Loss (Gain) Recognized in Net Income | | Three Months Ended March 31, | | |
| | 2022 | | 2021 | | | | |
Derivatives Designated as Hedging Instruments: | | | | | | | | |
Interest rate swap contracts | Other expenses, net | | $ | 481 | | | $ | 523 | | | | | |
Derivatives Not Designated as Hedging Instruments: | | | | | | | | |
Interest rate swap contracts | Other expenses, net | | $ | (1,262) | | | $ | (1,323) | | | | | |
Commodity swap contracts | Other expenses, net | | $ | 2,606 | | | $ | 248 | | | | | |
Make-whole provisions | Other expenses, net | | $ | 278 | | | $ | 697 | | | | | |
| | | | | | | | | |
| | | | | | | | | |
The following table presents the changes in Accumulated Other Comprehensive Income (“AOCI”), net of taxes, from our hedging instruments: | | | | | | | |
| Three Months Ended March 31, 2022 | | |
Derivatives Designated as Hedging Instruments: | | | |
Accumulated loss in AOCI at the beginning of the period | $ | (4,733) | | | |
| | | |
Unrealized gain recognized in AOCI | 2,230 | | | |
Loss reclassified from AOCI to other expenses, net | 481 | | | |
Net gain on derivatives | 2,711 | | | |
Accumulated loss in AOCI at the end of the period | $ | (2,022) | | | |
The following tables present all of our active derivative instruments as of March 31, 2022: | | | | | | | | | | | | | | | | | | | | | | | | | | |
Active Interest Rate Swaps | | Effective Date | | Expiration Date | | Initial Notional Amount ($) | | Status |
11-Year, 5.77% Fixed | | October 2018 | | October 2029 | | $ | 9,200 | | | Designated |
15-Year, 5.24% Fixed | | June 2018 | | June 2033 | | $ | 10,000 | | | Designated |
10-Year, 4.74% Fixed | | June 2017 | | December 2027 | | $ | 14,100 | | | Designated |
15-Year, 3.26% Fixed | | February 2023 | | December 2038 | | $ | 14,084 | | | Designated |
7-Year, 2.19% Fixed | | February 2016 | | February 2023 | | $ | 20,746 | | | Designated |
8-Year, 3.70% Fixed | | March 2020 | | June 2028 | | $ | 14,643 | | | Designated |
8-Year, 3.70% Fixed | | March 2020 | | June 2028 | | $ | 10,734 | | | Designated |
13-Year, 0.93% Fixed | | May 2020 | | March 2033 | | $ | 9,505 | | | Not Designated |
13-Year, 0.93% Fixed | | May 2020 | | March 2033 | | $ | 6,968 | | | Not Designated |
| | | | | | | | |
15.5-Year, 5.40% Fixed | | September 2008 | | March 2024 | | $ | 13,081 | | | Designated |
2.75-Year, 0.41% Fixed | | December 2020 | | September 2023 | | $ | 26,250 | | | Not Designated |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Active Commodity Swaps | | Effective Date | | Expiration Date | | Initial Notional Amount (Volume) | | Commodity Measurement | | Status |
| | | | | | | | | | |
3.5-Year, $2.65 MMBtu Fixed | | December 2020 | | June 2024 | | 3,296,160 | | | MMBtus | | Not Designated |
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Other Derivatives | | Classification | | Effective Date | | Expiration Date | | Fair Value ($) |
Make-whole provisions | | Liability | | June/August 2018 | | December 2038 | | $ | 583 | |
Make-whole provisions | | Liability | | August 2016 | | April 2031 | | $ | 77 | |
Make-whole provisions | | Liability | | April 2017 | | February 2034 | | $ | 72 | |
Make-whole provisions | | Liability | | November 2020 | | December 2027 | | $ | 56 | |
Make-whole provisions | | Liability | | October 2011 | | May 2028 | | $ | 12 | |
Make-whole provisions | | Liability | | May 2021 | | April 2045 | | $ | 319 | |
Make-whole provisions | | Liability | | July 2021 | | March 2046 | | $ | 3,966 | |
12. VARIABLE INTEREST ENTITIES AND EQUITY METHOD INVESTMENTS
Variable Interest Entities
The table below presents a summary of amounts related to our consolidated investment funds and joint venture, which we determined meet the definition of a variable interest entity (“VIE”), as of: | | | | | | | | | | | | | | | | | | | | | |
| March 31, | | December 31, | | | | | | | | | | |
| 2022 (1) | | 2021 (1) | | | | | | |
Cash and cash equivalents | $ | 5,434 | | | $ | 4,915 | | | | | | | | | | | |
Restricted cash | 776 | | | 822 | | | | | | | | | | | |
Accounts receivable, net | 790 | | | 656 | | | | | | | | | | | |
Costs and estimated earnings in excess of billings | 1,884 | | | 1,421 | | | | | | | | | | | |
Prepaid expenses and other current assets | 159 | | | 151 | | | | | | | | | | | |
Total VIE current assets | 9,043 | | | 7,965 | | | | | | | | | | | |
Property and equipment, net | 1,266 | | | 1,266 | | | | | | | | | | | |
Energy assets, net | 119,310 | | | 108,498 | | | | | | | | | | | |
Operating lease assets | 6,225 | | | 6,271 | | | | | | | | | | | |
Restricted cash, net of current portion | 435 | | | 418 | | | | | | | | | | | |
Other assets | 36 | | | 36 | | | | | | | | | | | |
Total VIE assets | $ | 136,315 | | | $ | 124,454 | | | | | | | | | | | |
Current portions of long-term debt and financing lease liabilities | $ | 2,196 | | | $ | 2,210 | | | | | | | | | | | |
Accounts payable | 94 | | | 47 | | | | | | | | | | | |
Accrued expenses and other current liabilities | 548 | | | 643 | | | | | | | | | | | |
Current portions of operating lease liabilities | 147 | | | 142 | | | | | | | | | | | |
Total VIE current liabilities | 2,985 | | | 3,042 | | | | | | | | | | | |
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs | 20,499 | | | 20,952 | | | | | | | | | | | |
Long-term operating lease liabilities, net of current portion | 6,630 | | | 6,558 | | | | | | | | | | | |
Other liabilities | 676 | | | 573 | | | | | | | | | | | |
Total VIE liabilities | $ | 30,790 | | | $ | 31,125 | | | | | | | | | | | |
| | | | | | | | | | | | | |
(1) The amounts in the above table are reflected in Note 1 on our condensed consolidated balance sheets. |
See Note 13 for additional information on the call and put options related to our investment funds.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
Non-controlling Interest
Non-controlling interest represents the equity owned by the other joint venture member of a consolidated joint venture. During the three months ended March 31, 2022, the other joint venture member contributed $6,335 to this joint venture which was formed for a specific project. The project did not generate any earnings or losses during the three months ended March 31, 2022.
Equity Method Investments
Unconsolidated joint ventures are accounted for under the equity method. For these unconsolidated joint ventures, our investment balances are included in other assets on the condensed consolidated balance sheets and our pro rata share of net income or loss is included in operating income.
The following table provides information about our equity method investments in joint ventures: | | | | | | | | | | | | | | | | | |
| | | | | As of |
| | | | | March 31, 2022 | | December 31, 2021 |
Equity method investments | | | | | $ | 9,839 | | | $ | 9,206 | |
| | | | | | | |
| | | Three Months Ended March 31, |
| | | | | March 31, 2022 | | March 31, 2021 |
Earnings (loss) recognized | | | | | $ | 637 | | | $ | (62) | |
13. REDEEMABLE NON-CONTROLLING INTERESTS
Our subsidiaries with membership interests in the investment funds we formed have the right to elect to require the non-controlling interest holder to sell all of its membership units to our subsidiaries, a call option. Our investment funds also include rights for the non-controlling interest holder to elect to require our subsidiaries to purchase all of the non-controlling membership interests in the fund, a put option.
The call options are exercisable beginning on the date that specified conditions are met for each respective fund. The put options for the investment funds are exercisable beginning on the date that specified conditions are met for each respective fund.
We initially record our redeemable non-controlling interests at fair value on the date of acquisition and subsequently adjust to redemption value. At both March 31, 2022 and December 31, 2021 redeemable non-controlling interests were reported at their carrying values, as the carrying value at each reporting period was greater than the estimated redemption value.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
14. EARNINGS PER SHARE
Earnings Per Share
The following is a reconciliation of the numerator and denominator for the computation of basic and diluted earnings per share: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
(In thousands, except per share data) | 2022 | | 2021 | | | | |
Numerator: | | | | | | | |
Net income attributable to common shareholders | $ | 17,384 | | | $ | 11,174 | | | | | |
Adjustment for accretion of tax equity financing fees | (28) | | | (31) | | | | | |
Income attributable to common shareholders | $ | 17,356 | | | $ | 11,143 | | | | | |
Denominator: | | | | | | | |
Basic weighted-average shares outstanding | 51,744 | | | 48,975 | | | | | |
Effect of dilutive securities: | | | | | | | |
Stock options | 1,892 | | | 1,382 | | | | | |
Diluted weighted-average shares outstanding | 53,636 | | | 50,357 | | | | | |
Net income per share attributable to common shareholders: | | | | | | | |
Basic | $ | 0.34 | | | $ | 0.23 | | | | | |
Diluted | $ | 0.32 | | | $ | 0.22 | | | | | |
| | | | | | | |
Potentially dilutive shares (1) | 783 | | | 1,157 | | | | | |
| | | | | | | |
(1) Potentially dilutive shares attributable to stock options were excluded from the computation of diluted earnings per share as the effect would have been anti-dilutive. |
15. STOCK-BASED COMPENSATION
We recorded stock-based compensation expense, including expense related to our employee stock purchase plan, as follows: | | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Stock-based compensation expense | $ | 3,531 | | | $ | 766 | | | | | |
Our stock-based compensation expense is included in selling, general and administrative expenses in the condensed consolidated statements of income. As of March 31, 2022, there was $46,295 of unrecognized compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 4.0 years.
Stock Option Grants
During the three months ended March 31, 2022, we granted 313 common stock options to certain employees under our 2020 Stock Incentive Plan, which have a contractual life of ten years and vest over a five-year period. We did not grant awards to individuals who were not either an employee or director of ours during the three months ended March 31, 2022 and 2021.
16. BUSINESS SEGMENT INFORMATION
Our reportable segments for the three months ended March 31, 2022 were U.S. Regions, U.S. Federal, Canada, Non-Solar DG and 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. Regions segment now includes U.S. project revenue and associated costs previously included in our Non-Solar DG segment. As a result, previously reported amounts have been reclassified for comparative purposes.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
Our U.S. Regions, U.S. 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 Ameresco owns or develops for customers that produce electricity, gas, heat or cooling from renewable sources of energy and O&M services.
Our Non-Solar DG segment sells electricity, processed renewable gas fuel, heat or cooling, produced from renewable sources of energy, other than solar, and generated by small-scale plants that we own and O&M services for customer-owned small-scale plants.
The “All Other” category includes enterprise energy management services, other than the U.S.-based portion; 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.
These segments do not include results of other activities, such as corporate operating expenses not specifically allocated to the segments. Certain reportable segments are an aggregation of operating segments.
The tables below present our business segment information recast for the prior-year period and a reconciliation to the condensed consolidated financial statements:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| U.S. Regions | | U.S. Federal | | Canada | | Non-Solar DG | | All Other | | Total Consolidated |
Three Months Ended March 31, 2022 | | | | | | | | | | | |
Revenues | $ | 314,520 | | | $ | 75,646 | | | $ | 17,172 | | | $ | 29,261 | | | $ | 37,403 | | | $ | 474,002 | |
Loss on derivatives | 227 | | | 51 | | | — | | | 1,344 | | | — | | | 1,622 | |
Interest expense, net of interest income | 1,642 | | | 306 | | | 222 | | | 1,790 | | | (7) | | | 3,953 | |
Depreciation and amortization of intangible assets | 5,278 | | | 1,245 | | | 447 | | | 5,416 | | | 271 | | | 12,657 | |
Unallocated corporate activity | — | | | — | | | — | | | — | | | — | | | (15,909) | |
Income before taxes, excluding unallocated corporate activity | 18,218 | | | 8,886 | | | 279 | | | 7,422 | | | 2,709 | | | 37,514 | |
| | | | | | | | | | | |
Three Months Ended March 31, 2021 | | | | | | | | | | | |
Revenues | $ | 89,244 | | | $ | 102,214 | | | $ | 11,643 | | | $ | 25,580 | | | $ | 23,521 | | | $ | 252,202 | |
Loss (gain) on derivatives | 532 | | | — | | | 179 | | | (1,074) | | | — | | | (363) | |
Interest expense, net of interest income | 1,443 | | | 321 | | | 207 | | | 610 | | | 159 | | | 2,740 | |
Depreciation and amortization of intangible assets | 3,486 | | | 1,010 | | | 415 | | | 4,862 | | | 377 | | | 10,150 | |
Unallocated corporate activity | — | | | — | | | — | | | — | | | — | | | (10,965) | |
Income before taxes, excluding unallocated corporate activity | 3,239 | | | 12,030 | | | (85) | | | 8,772 | | | 1,645 | | | 25,601 | |
| | | | | | | | | | | |
|
See Note 3 for additional information about our revenues by product line.
AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands) (Unaudited) (Continued)
17. OTHER EXPENSES, NET
The following table presents the components of other expenses, net:
| | | | | | | | | | | | | | | |
| Three Months Ended March 31, | | |
| 2022 | | 2021 | | | | |
Loss (gain) on derivatives | $ | 1,622 | | | $ | (377) | | | | | |
Interest expense, net of interest income | 4,489 | | | 2,805 | | | | | |
Amortization of debt discount and debt issuance costs | 852 | | | 747 | | | | | |
Foreign currency transaction loss | 116 | | | 495 | | | | | |
Government incentives | 2 | | | 2 | | | | | |
Other expenses, net | $ | 7,081 | | | $ | 3,672 | | | | | |
18. SUBSEQUENT EVENT
In April 2022, we entered into a binding Framework Agreement Term Sheet with a battery manufacturer for the purchase and sale of battery energy storage (“BESS”) equipment for our BESS projects at committed amounts and agreed upon delivery dates for a period of several years. The purchase and sale commitment covers BESS equipment to be used for our BESS projects. In connection with entering into the term sheet, we agreed to pay a $10,000 deposit, which will be credited against our future equipment purchases.