Ameresco, Inc. [AMRC] Filings

10-Q 1 amrc-20230930.htm 10-Q amrc-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________.

Commission File Number: 001-34811

Ameresco, Inc.

(Exact name of registrant as specified in its charter)


Delaware						04-3512838
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
111 Speen Street, Suite 410 Framingham, Massachusetts						01701
(Address of Principal Executive Offices)						(Zip Code)

(508) 661-2200

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of exchange on which registered
Class A Common Stock, par value $0.0001 per share	AMRC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ☑	Accelerated Filer o	Non-accelerated filer o	Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class			Shares outstanding as of November 3, 2023
Class A Common Stock, $0.0001 par value per share			34,234,525
Class B Common Stock, $0.0001 par value per share			18,000,000

TABLE OF CONTENTS


						Page
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2023 (Unaudited) and December 31, 2022						1
Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2023 and 2022 (Unaudited)						3
Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022 (Unaudited)						4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022 (Unaudited)						5
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022 (Unaudited)						7
Notes to Condensed Consolidated Financial Statements (Unaudited)						9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						30
Item 3. Quantitative and Qualitative Disclosures About Market Risk						40
Item 4. Controls and Procedures						40

PART II - OTHER INFORMATION
Item 1. Legal Proceedings						41
Item 1A. Risk Factors						41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						41
Item 5. Other Information						41
Item 6. Exhibits						43
Signatures						44

Table of Contents

Part I - Financial Information

Item 1. Condensed Consolidated Financial Statements

AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)


	September 30, 2023		December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents (1)	$	107,776	$	115,534
Restricted cash (1)	56,909		20,782
Accounts receivable, net of allowance of $897 and $911, respectively (1)	133,070		174,009
Accounts receivable retainage, net	33,459		38,057
Costs and estimated earnings in excess of billings (1)	591,378		576,363
Inventory, net	13,648		14,218
Prepaid expenses and other current assets (1)	67,864		38,617
Income tax receivable	7,219		7,746
Project development costs, net	18,800		16,025
Total current assets (1)	1,030,123		1,001,351
Federal ESPC receivable	529,382		509,507
Property and equipment, net (1)	17,551		15,707
Energy assets, net (1)	1,656,585		1,181,525
Deferred income tax assets, net	9,439		3,045
Goodwill, net	77,343		70,633
Intangible assets, net	7,347		4,693
Operating lease assets (1)	52,857		38,224
Restricted cash, non-current portion (1)	11,010		13,572
Other assets (1)	69,356		38,564
Total assets (1)	$	3,460,993	$	2,876,821
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portions of long-term debt and financing lease liabilities, net (1)	$	409,906	$	331,479
Accounts payable (1)	328,155		349,126
Accrued expenses and other current liabilities (1)	93,584		89,166
Current portions of operating lease liabilities (1)	12,703		5,829
Billings in excess of cost and estimated earnings	36,880		34,796
Income taxes payable	1,114		1,672
Total current liabilities (1)	882,342		812,068
Long-term debt and financing lease liabilities, net of current portion, unamortized discount and debt issuance costs (1)	1,022,256		568,635
Federal ESPC liabilities	486,019		478,497
Deferred income tax liabilities, net	4,134		9,181
Deferred grant income	7,070		7,590
Long-term operating lease liabilities, net of current portion (1)	38,806		31,703
Other liabilities (1)	73,965		49,493
Commitments and contingencies (Note 10)
Redeemable non-controlling interests, net	47,275		46,623

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at September 30, 2023 and December 31, 2022 of $304,634 and $213,913, respectively. Includes non-recourse liabilities of consolidated VIEs at September 30, 2023 and December 31, 2022 of $180,085 and $50,729, respectively. See Note 13.

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AMERESCO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts) (Continued)


	September 30, 2023		December 31, 2022
	(Unaudited)
Stockholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at September 30, 2023 and December 31, 2022	$	—	$	—
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 36,336,341 shares issued and 34,234,546 shares outstanding at September 30, 2023, 36,050,157 shares issued and 33,948,362 shares outstanding at December 31, 2022	3		3
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at September 30, 2023 and December 31, 2022	2		2
Additional paid-in capital	321,821		306,314
Retained earnings	562,203		533,549
Accumulated other comprehensive loss, net	(3,735)		(4,051)
Treasury stock, at cost, 2,101,795 shares at September 30, 2023 and December 31, 2022	(11,788)		(11,788)
Stockholders’ equity before non-controlling interest	868,506		824,029
Non-controlling interests	30,620		49,002
Total stockholders’ equity	899,126		873,031
Total liabilities, redeemable non-controlling interests, and stockholders’ equity	$	3,460,993	$	2,876,821

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share amounts) (Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenues	$	335,149	$	441,296	$	933,265	$	1,492,695
Cost of revenues	271,493		361,740		761,012		1,263,458
Gross profit	63,656		79,556		172,253		229,237
Earnings from unconsolidated entities	526		488		1,356		1,477
Selling, general and administrative expenses	42,752		41,106		125,466		120,036
Operating income	21,430		38,938		48,143		110,678
Other expenses, net	10,642		7,546		27,883		19,876
Income before income taxes	10,788		31,392		20,260		90,802
Income tax (benefit) provision	(10,054)		3,657		(10,552)		10,896
Net income	20,842		27,735		30,812		79,906
Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests	423		(344)		(2,077)		(2,915)
Net income attributable to common shareholders	$	21,265	$	27,391	$	28,735	$	76,991

Net income per share attributable to common shareholders:
Basic	$	0.41	$	0.53	$	0.55	$	1.48
Diluted	$	0.40	$	0.51	$	0.54	$	1.44
Weighted average common shares outstanding:
Basic	52,209		51,869		52,104		51,810
Diluted	53,300		53,297		53,259		53,252

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)


	Three Months Ended September 30,
	2023		2022
Net income	$	20,842	$	27,735
Other comprehensive income (loss):
Unrealized gain from interest rate hedges, net of tax	764		1,757
Foreign currency translation adjustments	(1,651)		(3,053)
Total other comprehensive loss	(887)		(1,296)
Comprehensive income	19,955		26,439
Comprehensive income attributable to non-controlling interests and redeemable non-controlling interests:
Net loss (income)	423		(344)
Foreign currency translation adjustments	36		—
Comprehensive loss (income) attributable to non-controlling interests and redeemable non-controlling interests	459		(344)
Comprehensive income attributable to common shareholders	$	20,414	$	26,095

	Nine Months Ended September 30,
	2023		2022
Net income	30,812		79,906
Other comprehensive income:
Unrealized gain from interest rate hedges, net of tax	716		6,033
Foreign currency translation adjustments	(425)		(5,016)
Total other comprehensive income	291		1,017
Comprehensive income	31,103		80,923
Comprehensive income attributable to non-controlling interests and redeemable non-controlling interests:
Net income	(2,077)		(2,915)
Foreign currency translation adjustments	26		—
Comprehensive income attributable to non-controlling interests and redeemable non-controlling interests	(2,051)		(2,915)
Comprehensive income attributable to common shareholders	$	29,052	$	78,008

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

For the Three Months Ended September 30, 2023 and 2022

(In thousands, except share amounts) (Unaudited)


	Redeemable Non-controlling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interests		Total Stockholders’ Equity
			Shares	Amount		Shares	Amount				Retained Earnings				Shares	Amount
Balance, June 30, 2022	$	47,918	33,833,893	$	3	18,000,000	$	2	$	294,240	$	488,278	$	(4,354)	2,101,795	$	(11,788)	$	15,186	$	781,567


Exercise of stock options	—		80,300	—		—	—		1,616		—		—		—	—		—		1,616
Stock-based compensation expense	—		—	—		—	—		3,631		—		—		—	—		—		3,631


Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		1,757		—	—		—		1,757
Foreign currency translation adjustment	—		—	—		—	—		—		—		(3,053)		—	—		—		(3,053)

Distributions to redeemable non-controlling interests	(212)		—	—		—	—		—		—		—		—	—		—		—

Accretion of tax equity financing fees	27		—	—		—	—		—		(27)		—		—	—		—		(27)

Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		1,658		1,658
Net income	344		—	—		—	—		—		27,391		—		—	—		—		27,391
Balance, September 30, 2022	$	48,077	33,914,193	$	3	18,000,000	$	2	$	299,487	$	515,642	$	(5,650)	2,101,795	$	(11,788)	$	16,844	$	814,540

Balance, June 30, 2023	$	47,994	34,200,610	$	3	18,000,000	$	2	$	317,228	$	540,964	$	(2,884)	2,101,795	$	(11,788)	$	30,458	$	873,983

Exercise of stock options	—		22,150	—		—	—		274		—		—		—	—		—		274
Stock-based compensation expense	—		—	—		—	—		4,319		—		—		—	—		—		4,319

Restricted stock units released	—		11,786	—		—	—		—		—		—		—	—		—		—
Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		764		—	—		—		764
Foreign currency translation adjustment	—		—	—		—	—		—		—		(1,615)		—	—		(36)		(1,651)

Distributions to redeemable non-controlling interests	(159)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	26		—	—		—	—		—		(26)		—		—	—		—		(26)

Contributions from non-controlling interests	—		—	—		—	—		—		—		—		—	—		35		35

Net (loss) income	(586)		—	—		—	—		—		21,265		—		—	—		163		21,428
Balance, September 30, 2023	$	47,275	34,234,546	$	3	18,000,000	$	2	$	321,821	$	562,203	$	(3,735)	2,101,795	$	(11,788)	$	30,620	$	899,126

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

For the Nine Months Ended September 30, 2023 and 2022

(In thousands, except share amounts) (Unaudited)


	Redeemable Non-controlling Interests		Class A Common Stock			Class B Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock			Non-controlling Interests		Total Stockholders’ Equity
			Shares	Amount		Shares	Amount								Shares	Amount
Balance, December 31, 2021	$	46,182	33,716,309	$	3	18,000,000	$	2	$	283,982	$	438,732	$	(6,667)	2,101,795	$	(11,788)	$	—	$	704,264



Exercise of stock options	—		180,888	—		—	—		3,482		—		—		—	—		—		3,482
Stock-based compensation expense	—		—	—		—	—		10,837		—		—		—	—		—		10,837
Employee stock purchase plan	—		16,996	—		—	—		948		—		—		—	—		—		948

Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		6,033		—	—		—		6,033
Foreign currency translation adjustment	—		—	—		—	—		—		—		(5,016)		—	—		—		(5,016)

Distributions to redeemable non-controlling interests	(863)		—	—		—	—		—				—		—	—		—		—

Accretion of tax equity financing fees	81		—	—		—	—				(81)		—		—	—		—		(81)
Investment fund call option exercise	(238)		—	—		—	—		238		—		—		—	—		—		238
Contributions from non-controlling interest	—		—	—		—	—		—		—		—		—	—		16,844		16,844
Net income	2,915		—	—		—	—		—		76,991		—		—	—		—		76,991
Balance, September 30, 2022	$	48,077	33,914,193	$	3	18,000,000	$	2	$	299,487	$	515,642	$	(5,650)	2,101,795	$	(11,788)	$	16,844	$	814,540

Balance, December 31, 2022	$	46,623	33,948,362	$	3	18,000,000	$	2	$	306,314	$	533,549	$	(4,051)	2,101,795	$	(11,788)	$	49,002	$	873,031

Exercise of stock options	—		238,750	—		—	—		2,367		—		—		—	—		—		2,367
Stock-based compensation expense	—		—	—		—	—		12,318		—		—		—	—		—		12,318
Employee stock purchase plan	—		24,833	—		—	—		1,017		—		—		—	—		—		1,017
Restricted stock units released	—		22,601	—		—	—		—		—		—		—	—		—		—
Unrealized gain from interest rate hedges, net	—		—	—		—	—		—		—		716		—	—		—		716
Foreign currency translation adjustment	—		—	—		—	—		—		—		(400)		—	—		(25)		(425)

Distributions to redeemable non-controlling interests	(494)		—	—		—	—		—		—		—		—	—		—		—
Accretion of tax equity financing fees	81		—	—		—	—		—		(81)		—		—	—		—		(81)
Investment fund call option exercise	195		—	—		—	—		(195)		—		—		—	—		—		(195)
Contributions from non-controlling interests	—		—	—		—	—		—		—		—		—	—		957		957
Distributions to non-controlling interest	—		—	—		—	—		—		—		—		—	—		(20,521)		(20,521)
Net income	870		—	—		—	—		—		28,735		—		—	—		1,207		29,942
Balance, September 30, 2023	$	47,275	34,234,546	$	3	18,000,000	$	2	$	321,821	$	562,203	$	(3,735)	2,101,795	$	(11,788)	$	30,620	$	899,126

See notes to condensed consolidated financial statements.

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AMERESCO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income	$	30,812	$	79,906
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation of energy assets, net	42,847		36,911
Depreciation of property and equipment	2,849		2,057
Increase in contingent consideration	705		814
Accretion of ARO liabilities	194		108
Amortization of debt discount and debt issuance costs	3,407		2,869
Amortization of intangible assets	1,681		1,462
Provision for bad debts	637		363
Loss on write-off of long-lived assets	18		888
Earnings from unconsolidated entities	(1,356)		(1,477)
Net gain from derivatives	(3,306)		(225)

Stock-based compensation expense	12,318		10,837
Deferred income taxes, net	(13,089)		4,927

Unrealized foreign exchange loss	1,148		466
Changes in operating assets and liabilities:
Accounts receivable	58,135		(47,257)
Accounts receivable retainage	4,589		225
Federal ESPC receivable	(143,647)		(180,249)
Inventory, net	570		(4,287)
Costs and estimated earnings in excess of billings	5,260		(325,057)
Prepaid expenses and other current assets	(10,925)		864
Project development costs	(4,638)		(823)
Other assets	(2,080)		(10,254)
Accounts payable, accrued expenses and other current liabilities	(38,444)		143,026
Billings in excess of cost and estimated earnings	10,104		7,802
Other liabilities	1,200		(436)
Income taxes receivable, net	590		3,371
Cash flows from operating activities	(40,421)		(273,169)
Cash flows from investing activities:
Purchases of property and equipment	(4,597)		(3,981)
Capital investment in energy assets	(445,540)		(182,119)
Capital investment in major maintenance of energy assets	(8,024)		(16,106)
Asset acquisition, net of cash acquired	6,206		—
Contributions to equity investments	(3,489)		—
Acquisitions, net of cash received	(9,183)		—
Loans to joint venture investments	(566)		(458)
Cash flows from investing activities	(465,193)		(202,664)


See notes to condensed consolidated financial statements.

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

	Nine Months Ended September 30,
	2023		2022
Cash flows from financing activities:

Payments of debt discount and debt issuance costs	$	(8,635)	$	(2,885)
Proceeds from exercises of options and ESPP	3,384		4,430

(Payments on) proceeds from senior secured revolving credit facility, net	(115,000)		139,000
Proceeds from long-term debt financings	728,600		331,086
Proceeds from Federal ESPC projects	107,303		173,865
Net proceeds from energy asset receivable financing arrangements	12,514		7,675

Contributions from non-controlling interests	499		13,148
Distributions to non-controlling interest	(20,521)		—
Distributions to redeemable non-controlling interests, net	(494)		(784)
Payment on seller's promissory note	(12,500)		—
Payments on long-term debt and financing leases	(162,749)		(111,341)
Cash flows from financing activities	532,401		554,194
Effect of exchange rate changes on cash	(980)		(1,857)
Net increase in cash, cash equivalents, and restricted cash	25,807		76,504
Cash, cash equivalents, and restricted cash, beginning of period	149,888		87,054
Cash, cash equivalents, and restricted cash, end of period	$	175,695	$	163,558

Supplemental disclosures of cash flow information:
Cash paid for interest	$	51,180	$	23,658
Cash paid for income taxes	$	2,719	$	3,728
Non-cash Federal ESPC settlement	$	99,164	$	395
Accrued purchases of energy assets	$	89,820	$	52,744
Non-cash contributions from non-controlling interest	$	458	$	3,696
Non-cash financing for energy asset project acquisition	$	82,964	$	—

See notes to condensed consolidated financial statements.

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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 and nine months ended September 30, 2023 are not necessarily indicative of results which may be expected for the full year. The December 31, 2022 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, 2022, included in our annual report on Form 10-K (“2022 Form 10-K”) filed with the Securities and Exchange Commission on February 28, 2023.

Reclassification and Rounding

Certain prior period amounts were reclassified to conform to the presentation in the current period. We round amounts in the condensed consolidated financial statements to thousands and calculate all percentages and per-share data from the underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding.

Significant Risks and Uncertainties

Global factors have continued to result in global supply chain disruptions, certain governmental travel and other restrictions, and inflationary pressures.

We have considered the impact of general global economic conditions 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 including supply chain disruptions, varying levels of inflation, payments of outstanding receivable amounts beyond normal payment terms, workforce disruptions, and uncertain demand. As of the date of issuance of these condensed consolidated financial statements, we cannot reasonably estimate the extent to which macroeconomic conditions may impact our financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the pandemic and general global economic conditions on our business 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 2022 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:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Allowance for credit losses, beginning of period	$	903	$	2,262	$	911	$	2,263
Provision for bad debts	58		119		637		363
Account write-offs and other	(64)		(19)		(651)		(264)
Allowance for credit losses, end of period	$	897	$	2,362	$	897	$	2,362

Accounts Receivable Factoring

Ameresco’s wholly-owned subsidiary in Italy entered into factoring agreements to sell certain receivables to unrelated third-party financial institutions on a non-recourse basis. These transactions are accounted for in accordance with ASC Topic 860, Transfers and Servicing and result in a reduction in accounts receivable because the agreements transfer effective control over the

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands) (Unaudited) (Continued)

receivables, and related risk, to the buyers. Our Italian subsidiary does not retain any interest in the underlying accounts receivable once sold. Trade accounts receivables balances sold are removed from the condensed consolidated balance sheets, and cash received is reflected in operating activities in the condensed consolidated statements of cash flows. Factoring fees during the three and nine months ended September 30, 2023 were $2,075 and $3,326, respectively, and are included in other expense, net in the condensed consolidated statements of income. See Note 18. Other Expenses, Net.

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, as amended by ASU 2021-01 in January 2021, directly addressing the effects of reference rate reform on financial reporting as a result of the cessation of the publication of certain London interbank offered rate (“LIBOR”) rates beginning December 31, 2021, with complete elimination of the publication of the LIBOR rates by June 30, 2023. The guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform by virtue of referencing LIBOR or another reference rate expected to be discontinued. This guidance became effective on March 12, 2020, and then amended by ASU 2022-06 in December 2022, extending the adoption date to no later than December 31, 2024, with early adoption permitted. We adopted this guidance beginning January 1, 2023 upon entering amendments to credit agreements which introduced the secured overnight financing rate as administrated by the Federal Reserve Bank of New York to replace LIBOR as the benchmark. The adoption of this guidance did not have a material impact on our condensed 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 fiscal year ending beginning after December 15, 2022. We adopted this accounting standard as of January 1, 2023 and the adoption did not have an impact on our condensed consolidated financial statements.

Fair Value Measurement

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which clarifies the measurement criteria for equity securities and refines the disclosure requirements for equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for our fiscal year ending beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements.

Investments - Equity Method and Joint Ventures

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, which defines consistent accounting for equity investments for the purpose of receiving income tax credits and other income tax benefits. ASU 2023-02 is effective for our fiscal year ending beginning after December 15, 2023. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements.

Business Combinations— Joint Venture Formations

In August 2023, the FASB issued ASU 2023-05, Business Combinations— Joint Venture Formations (Subtopic 805-60) Recognition and Initial Measurement, which addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. ASU 2023-05 is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. We are currently evaluating the impact that adopting this new accounting standard would have on our condensed consolidated financial statements.

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3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

Our reportable segments for the three and nine months ended September 30, 2023 and 2022 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels and All Other.

The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended September 30, 2023:


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		All Other		Total
Project revenue	$	120,297	$	71,779	$	12,872	$	—	$	37,736	$	242,684
O&M revenue	6,353		13,838		17		2,073		492		22,773
Energy assets	15,911		1,495		1,274		25,227		352		44,259
Integrated-PV	4		—		—		—		11,611		11,615
Other	674		229		3,371		19		9,525		13,818
Total revenues	$	143,239	$	87,341	$	17,534	$	27,319	$	59,716	$	335,149

The following table presents our revenue disaggregated by line of business and reportable segment for the three months ended September 30, 2022:


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		All Other		Total
Project revenue	$	251,338	$	83,878	$	8,788	$	—	$	7,527	$	351,531
O&M revenue	5,936		13,524		10		2,251		133		21,854
Energy assets	11,892		1,570		1,264		26,956		—		41,682
Integrated-PV	—		—		—		—		13,616		13,616
Other	2,040		152		2,304		214		7,903		12,613
Total revenues	$	271,206	$	99,124	$	12,366	$	29,421	$	29,179	$	441,296

The following table presents our revenue disaggregated by line of business and reportable segment for the nine months ended September 30, 2023:


	U.S. Regions		U.S. Federal		Canada		Alternative Fuels		All Other		Total
Project revenue	$	338,119	$	181,232	$	38,865	$	—	$	96,585	$	654,801
O&M revenue	18,191		40,439		80		8,054		1,285		68,049
Energy assets	47,619		4,735		3,370		77,901		1,412		135,037
Integrated-PV	4		—		—		—		35,041		35,045
Other	2,660		510		8,825		19		28,319		40,333
Total revenues	$	406,593	$	226,916	$	51,140	$	85,974	$	162,642	$	933,265

The following table presents our revenue disaggregated by line of business and reportable segment for the nine months ended September 30, 2022: