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Table of Contents

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 March 31, 2020
OR

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

For the transition period from ___________ to ___________.
Commission File Number: 001-34811
Ameresco, Inc.
(Exact name of registrant as specified in its charter)

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

(508) 661-2200
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer o | Accelerated Filer ☑ | Non-accelerated filer o | Smaller reporting company ☐
Emerging growth company ☐ |  | (Do not check if a smaller reporting 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 þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class | New York Stock Exchange Symbol | Shares outstanding as of May 1 , 2020
Class A Common Stock, $0.0001 par value per share | AMRC | 29,567,741
Class B Common Stock, $0.0001 par value per share |  | 18,000,000

AMERESCO, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED March 31, 2020
TABLE OF CONTENTS

|  | Page
PART I - FINANCIAL INFORMATION |  |
Item 1. Condensed Consolidated Financial Statements |  |
Condensed Consolidated Balance Sheets at March 31, 20 20 (Unaudited) and December 31, 201 9 |  | 1
Condensed Consolidated Statements of Income for the three months ended March 31, 2020 and 2019 (Unaudited) |  | 3
Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2020 and 2019 (Unaudited) |  | 4
Condensed Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity for the three months ended March 31, 2020 and 2019 (Unaudited) |  | 5
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (Unaudited) |  | 6
Notes to Condensed Consolidated Financial Statements (Unaudited) |  | 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations |  | 34
Item 3. Quantitative and Qualitative Disclosures About Market Risk |  | 42
Item 4. Controls and Procedures |  | 42
PART II - OTHER INFORMATION |  |
Item 1. Legal Proceedings |  | 43
Item 1A. Risk Factors |  | 43
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |  | 43
Item 5. Other Information |  | 43
Item 6. Exhibits |  | 48
Signatures |  | 49
Exhibit Index |  | 48

AMERESCO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

| March 31, |  | December 31,
| 2020 |  | 2019
| (Unaudited) |  |
ASSETS |  |  |
Current assets: |  |  |
Cash and cash equivalents (1) | $ | 40,351 |  |  | $ | 33,223 |
Restricted cash (1) | 15,012 |  |  | 20,006 |
Accounts receivable, net of allowance of $2,120 and $2,260 respectively (1) | 110,742 |  |  | 95,863 |
Accounts receivable retainage, net | 21,265 |  |  | 16,976 |
Costs and estimated earnings in excess of billings (1) | 189,566 |  |  | 202,243 |
Inventory, net | 9,229 |  |  | 9,236 |
Prepaid expenses and other current assets (1) | 28,052 |  |  | 29,424 |
Income tax receivable | 7,135 |  |  | 5,033 |
Project development costs | 16,740 |  |  | 13,188 |
Total current assets (1) | 438,092 |  |  | 425,192 |
Federal ESPC receivable | 239,156 |  |  | 230,616 |
Property and equipment, net (1) | 9,952 |  |  | 10,104 |
Energy assets, net (1) | 596,492 |  |  | 579,461 |
Deferred income taxes, net | 2,470 |  |  | — |
Goodwill | 57,741 |  |  | 58,414 |
Intangible assets, net | 1,408 |  |  | 1,614 |
Operating lease assets (1) | 32,444 |  |  | 32,791 |
Other assets (1) | 35,828 |  |  | 35,821 |
Total assets (1) | $ | 1,413,583 |  |  | $ | 1,374,013 |
LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY |  |  |
Current liabilities: |  |  |
Current portions of long-term debt and financing lease liabilities (1) | $ | 69,282 |  |  | $ | 69,969 |
Accounts payable (1) | 182,354 |  |  | 202,416 |
Accrued expenses and other current liabilities (1) | 32,528 |  |  | 31,356 |
Current portions of operating lease liabilities (1) | 5,360 |  |  | 5,802 |
Billings in excess of cost and estimated earnings | 25,350 |  |  | 26,618 |
Income taxes payable | 1,205 |  |  | 486 |
Total current liabilities (1) | 316,079 |  |  | 336,647 |
Long-term debt and financing lease liabilities, net of current portions and deferred financing fees (1) | 285,553 |  |  | 266,181 |
Federal ESPC liabilities | 276,177 |  |  | 245,037 |
Deferred income taxes, net | — |  |  | 115 |
Deferred grant income | 6,682 |  |  | 6,885 |
Long-term operating lease liabilities, net of current portion (1) | 29,104 |  |  | 29,101 |
Other liabilities (1) | 35,872 |  |  | 29,575 |
Commitments and contingencies (Note 9) |  |  |
Redeemable non-controlling interests | 31,939 |  |  | 31,616 |

(1) Includes restricted assets of consolidated variable interest entities (“VIEs”) at March 31, 2020 and December 31, 2019 of $163,019 and $158,912, respectively. Includes non-recourse liabilities of consolidated VIEs at March 31, 2020 and December 31, 2019 of $38,024 and $38,568, respectively. See Note 12.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1

AMERESCO, INC. |  |  |
CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued) |  |  |
(in thousands, except share amounts) |  |  |
| March 31, |  | December 31,
| 2020 |  | 2019
| (Unaudited) |  |
Stockholders’ equity: |  |  |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, no shares issued and outstanding at March 31, 2020 and December 31, 2019 | $ | — |  |  | $ | — |
Class A common stock, $0.0001 par value, 500,000,000 shares authorized, 31,611,956 shares issued and 29,510,161 shares outstanding at March 31, 2020, 31,331,345 shares issued and 29,230,005 shares outstanding at December 31, 2019 | 3 |  |  | 3 |
Class B common stock, $0.0001 par value, 144,000,000 shares authorized, 18,000,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 | 2 |  |  | 2 |
Additional paid-in capital | 136,591 |  |  | 133,688 |
Retained earnings | 320,660 |  |  | 314,459 |
Accumulated other comprehensive loss, net | (13,291) |  |  | (7,514) |
Treasury stock, at cost, 2,101,795 shares at March 31, 2020 and 2,101,340 shares at December 31, 2019 | (11,788) |  |  | (11,782) |
Total stockholders’ equity | 432,177 |  |  | 428,856 |
Total liabilities, redeemable non-controlling interests and stockholders’ equity | $ | 1,413,583 |  |  | $ | 1,374,013 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
2

AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
(Unaudited)

| Three Months Ended March 31, |  |  |  |  |  |
| 2020 |  | 2019 |  |  |  |
Revenues | $ | 212,413 |  |  | $ | 150,112 |  |  |  |  |
Cost of revenues | 173,967 |  |  | 117,480 |  |  |  |  |
Gross profit | 38,446 |  |  | 32,632 |  |  |  |  |
Selling, general and administrative expenses | 28,924 |  |  | 26,083 |  |  |  |  |
Operating income | 9,522 |  |  | 6,549 |  |  |  |  |
Other expenses, net | 5,389 |  |  | 3,421 |  |  |  |  |
Income before (benefit) provision for income taxes | 4,133 |  |  | 3,128 |  |  |  |  |
Income tax (benefit) provision | (2,503) |  |  | 257 |  |  |  |  |
Net income | 6,636 |  |  | 2,871 |  |  |  |  |
Net loss (income) attributable to redeemable non-controlling interests | (435) |  |  | 1,276 |  |  |  |  |
Net income attributable to common shareholders | $ | 6,201 |  |  | $ | 4,147 |  |  |  |  |
Net income per share attributable to common shareholders: |  |  |  |  |  |  |
Basic | $ | 0.13 |  |  | $ | 0.09 |  |  |  |  |
Diluted | $ | 0.13 |  |  | $ | 0.09 |  |  |  |  |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |
Basic | 47,384 |  |  | 46,293 |  |  |  |  |
Diluted | 48,497 |  |  | 47,654 |  |  |  |  |

The accompanying notes are an integral part of these condensed consolidated financial statements.
3

AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
(Unaudited)

| Three Months Ended March 31, |  |
| 2020 |  | 2019
Net income | $ | 6,636 |  |  | $ | 2,871 |
Other comprehensive income (loss): |  |  |
Unrealized loss from interest rate hedges, net of tax effect of $(1,187) and $(325), respectively | (3,465) |  |  | (1,142) |
Foreign currency translation adjustments | (2,312) |  |  | 606 |
Total other comprehensive loss | (5,777) |  |  | (536) |
Comprehensive income | 859 |  |  | 2,335 |
Comprehensive loss (income) attributable to redeemable non-controlling interests | (435) |  |  | 1,276 |
Comprehensive income attributable to common shareholders | $ | 424 |  |  | $ | 3,611 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
4

AMERESCO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN REDEEMABLE NON-CONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS ENDED March 31, 2020 AND 2019
(in thousands except share amounts)
(Unaudited)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |
|  | Redeemable |  |  |  |  |  |  |  |  |  | Additional |  |  |  | Other |  |  |  |  |  |  |  | Total
|  | Non-Controlling |  | Class A Common Stock |  |  |  | Class B Common Stock |  |  |  | Paid-in |  | Retained |  | Comprehensive |  | Treasury Stock |  |  |  |  |  | Stockholders’
|  | Interests |  | Shares |  | Amount |  | Shares |  | Amount |  | Capital |  | Earnings |  | Loss |  | Shares |  | Amount |  |  |  | Equity
Balance, December 31, 2018 |  | $ | 14,719 |  |  | 28,275,506 |  |  | $ | 3 |  |  | 18,000,000 |  |  | $ | 2 |  |  | $ | 124,651 |  |  | $ | 269,806 |  |  | $ | (5,949) |  |  | 2,091,040 |  |  | $ | (11,638) |  |  |  |  | $ | 376,875 |
Cumulative impact from the adoptions of ASU-No. 2018-02 (Note 2) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 217 |  |  | (217) |  |  | — |  |  | — |  |  |  |  | — |
Exercise of stock options |  | — |  |  | 61,920 |  |  | — |  |  | — |  |  | — |  |  | 649 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 649 |
Stock-based compensation expense |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 385 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 385 |
Unrealized loss from interest rate hedge, net |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (925) |  |  | — |  |  | — |  |  |  |  | (925) |
Foreign currency translation adjustment |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 606 |  |  | — |  |  | — |  |  |  |  | 606 |
Distributions to redeemable non-controlling interests |  | (102) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |
Net (loss) income |  | (1,276) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 4,147 |  |  | — |  |  | — |  |  | — |  |  |  |  | 4,147 |
Balance, March 31, 2019 |  | $ | 13,341 |  |  | 28,337,426 |  |  | $ | 3 |  |  | 18,000,000 |  |  | $ | 2 |  |  | $ | 125,685 |  |  | $ | 274,170 |  |  | $ | (6,485) |  |  | 2,091,040 |  |  | $ | (11,638) |  |  |  |  | $ | 381,737 |
Balance, December 31, 2019 |  | $ | 31,616 |  |  | 29,230,005 |  |  | $ | 3 |  |  | 18,000,000 |  |  | $ | 2 |  |  | $ | 133,688 |  |  | $ | 314,459 |  |  | $ | (7,514) |  |  | 2,101,340 |  |  | $ | (11,782) |  |  |  |  | $ | 428,856 |
Exercise of stock options |  | — |  |  | 280,611 |  |  | — |  |  | — |  |  | — |  |  | 2,474 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 2,474 |
Stock-based compensation expense |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 429 |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 429 |
Open market purchase of common shares |  | — |  |  | (455) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 455 |  |  | (6) |  |  |  |  | (6) |
Unrealized loss from interest rate hedge, net |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3,465) |  |  | — |  |  | — |  |  |  |  | (3,465) |
Foreign currency translation adjustment |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2,312) |  |  | — |  |  | — |  |  |  |  | (2,312) |
Distributions to redeemable non-controlling interests |  | (112) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | — |
Net income |  | 435 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 6,201 |  |  | — |  |  | — |  |  | — |  |  |  |  | 6,201 |
Balance, March 31, 2020 |  | $ | 31,939 |  |  | 29,510,161 |  |  | $ | 3 |  |  | 18,000,000 |  |  | $ | 2 |  |  | $ | 136,591 |  |  | $ | 320,660 |  |  | $ | (13,291) |  |  | 2,101,795 |  |  | $ | (11,788) |  |  |  |  | $ | 432,177 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
5

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

| Three Months Ended March 31, |  |
| 2020 |  | 2019
Cash flows from operating activities: |  |  |
Net income | $ | 6,636 |  |  | $ | 2,871 |
Adjustments to reconcile net income to cash flows from operating activities: |  |  |
Depreciation of energy assets | 9,299 |  |  | 8,407 |
Depreciation of property and equipment | 833 |  |  | 619 |
Amortization of debt discount and deferred financing fees | 660 |  |  | 693 |
Amortization of intangible assets | 179 |  |  | 213 |
Accretion of ARO and contingent consideration | 21 |  |  | 51 |
Provision for bad debts | 49 |  |  | 77 |
Gain on deconsolidation of VIE | — |  |  | (2,160) |
Net gain from derivatives | (223) |  |  | (723) |
Stock-based compensation expense | 429 |  |  | 385 |
Deferred income taxes | (1,217) |  |  | — |
Unrealized foreign exchange loss | 212 |  |  | (59) |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | (14,161) |  |  | 4,718 |
Accounts receivable retainage | (4,445) |  |  | (1,201) |
Federal ESPC receivable | (39,946) |  |  | (26,986) |
Inventory, net | 7 |  |  | (1,165) |
Costs and estimated earnings in excess of billings | 12,181 |  |  | (1,027) |
Prepaid expenses and other current assets | 1,233 |  |  | (2,939) |
Project development costs | (3,224) |  |  | (3,688) |
Other assets | 8 |  |  | 549 |
Accounts payable, accrued expenses and other current liabilities | (17,241) |  |  | (40,976) |
Billings in excess of cost and estimated earnings | (956) |  |  | 809 |
Other liabilities | (586) |  |  | (228) |
Income taxes payable, net | (1,388) |  |  | 3,666 |
Cash flows from operating activities | (51,640) |  |  | (58,094) |
Cash flows from investing activities: |  |  |
Purchases of property and equipment | (724) |  |  | (1,287) |
Purchases of energy assets | (28,497) |  |  | (23,334) |
Acquisitions, net of cash received | — |  |  | (1,279) |
Contributions to equity investment | (127) |  |  | (192) |
Cash flows from investing activities | (29,348) |  |  | (26,092) |
The accompanying notes are an integral part of these condensed consolidated financial statements. |  |  |

6

AMERESCO, INC. |  |  |
CONSOLIDATED STATEMENTS OF CASH FLOWS — (Continued) |  |  |
(in thousands) |  |  |
(Unaudited) |  |  |
| Three Months Ended March 31, |  |
| 2020 |  | 2019
Cash flows from financing activities: |  |  |  |  |
Payments of financing fees | $ | (155) |  |  | $ | — |
Proceeds from exercises of options and ESPP | 2,473 |  |  | 649 |
Repurchase of common stock | (6) |  |  | — |
Proceeds from senior secured credit facility, net | 31,000 |  |  | 11,373 |
Proceeds from Federal ESPC projects | 61,198 |  |  | 39,598 |
Proceeds for energy assets from Federal ESPC | 1,541 |  |  | 1,732 |
Distributions to redeemable non-controlling interests, net | (103) |  |  | (103) |
Payments on long-term debt | (12,019) |  |  | (5,716) |
Cash flows from financing activities | 83,929 |  |  | 47,533 |
Effect of exchange rate changes on cash | (509) |  |  | 140 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | 2,432 |  |  | (36,513) |
Cash, cash equivalents, and restricted cash, beginning of period | 77,264 |  |  | 97,914 |
Cash, cash equivalents, and restricted cash, end of period | $ | 79,696 |  |  | $ | 61,401 |
Supplemental disclosures of cash flow information: |  |  |
Cash paid for interest | $ | 4,917 |  |  | $ | 3,391 |
Cash paid for income taxes | $ | 183 |  |  | $ | 197 |
Non-cash Federal ESPC settlement | $ | 29,297 |  |  | $ | 5,629 |
Accrued purchases of energy assets | $ | 34,308 |  |  | $ | 16,247 |

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets to the total of the same such amounts shown above:

﻿ |  | Three Months Ended March 31, |  |
﻿ |  | 2020 |  | 2019
Cash and cash equivalents |  | $ | 40,351 |  |  | $ | 25,487 |
Short-term restricted cash |  | 15,012 |  |  | 14,994 |
Long-term restricted cash included in other assets |  | 24,333 |  |  | 20,920 |
Total cash and cash equivalents, and restricted cash |  | $ | 79,696 |  |  | $ | 61,401 |

The accompanying notes are an integral part of these condensed consolidated financial statements.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(in thousands, except per share amounts)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Ameresco, Inc. (including its subsidiaries, the “Company”) are unaudited, pursuant to certain rules and regulations of the Securities and Exchange Commission, and include, in the opinion of the Company, 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, 2020 are not necessarily indicative of results which may be expected for the full year. The December 31, 2019 consolidated balance sheet data was derived from audited financial statements, but certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. The interim condensed consolidated financial statements, and notes thereto, should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019, and notes thereto, included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 4, 2020.
SIGNIFICANT RISKS AND UNCERTAINTIES
In March 2020, the World Health Organization categorized Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency.
The Company’s condensed consolidated financial statements reflect estimates and assumptions made by management that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting periods presented. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there were no material adverse impact on the Company’s first quarter 2020 results of operations.
The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's customers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, delays in obtaining signed customer contracts for awarded projects, supply chain disruptions and uncertain demand. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity, or results of operations is uncertain.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. The Company estimates the payment of approximately $5,000 of employer payroll taxes otherwise due in 2020 will be delayed with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022. The CARES Act permits net operating losses from the 2018, 2019, and 2020 tax years to be carried back to the previous five tax years (beginning with the earliest year first). The Company estimates the discrete benefit associated with the net operating loss provisions of the CARES Act to be approximately $2,000 and an estimated refund of taxes paid in prior years of approximately $1,300.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of the Company are set forth in Note 2 to the consolidated financial statements contained in the Company’s 2019 annual report on Form 10-K. The Company includes herein certain updates to those policies.
Accounts Receivable and allowance for Credit Losses
Accounts receivable are stated at the amount management expects to collect from outstanding balances. Effective January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13) prospectively. This ASU replaces the incurred loss impairment model with an expected credit loss impairment model for financial instruments, including trade receivables. The amendment requires entities to consider forward-looking information to estimate expected credit losses, resulting in earlier recognition of losses for receivables that are current or not yet due, which were not considered under the previous accounting guidance. The Company
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
performed an assessment of its allowance for credit losses based upon historical experience, management’s evaluation of outstanding accounts receivable, consideration of its customers’ financial conditions and current macroeconomic and market conditions and determined that no adjustment was required to retained earnings upon adoption.
The Company’s methodology to estimate the allowance for credit losses includes quarterly assessments of historical bad debt write off experience, current economic and market conditions, management’s evaluation of outstanding accounts receivable, and the Company’s forecasts. Due to the short-term nature of its receivables, the estimate of credit losses is primarily based on aged accounts receivable balances and the financial condition of customers. In addition, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. Bad debts are written off against the allowance when identified. As part of its assessment, the Company also considered the current and expected future economic and market conditions due to the COVID-19 pandemic and determined that the estimate of credit losses was not significantly impacted as of March 31, 2020.
Changes in the allowance for credit losses for the three months ended March 31, 2020 and 2019 are as follows:

| March 31, 2020 |  | March 31, 2019 |  |
Allowance for credit loss, beginning of period | $ | 2,260 |  |  | $ | 2,765 |  |  |
Charges to costs and expenses, net | 49 |  |  | 77 |  |  |
Account write-offs and other | (189) |  |  | (29) |  |  |
Allowance for credit loss, end of period | $ | 2,120 |  |  | $ | 2,813 |  |  |

Recent Accounting Pronouncements
Fair Value Measurement
In August 2018, the FASB issued ASU 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.
Consolidations
In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810), Targeted Improvements to Related Party Guidance for Variable Interest Entities, which aligns the evaluation of whether a decision maker's fee is a variable interest with the guidance in the primary beneficiary test by requiring the decision maker to consider an indirect interest in a VIE held by related party under common control on a proportionate basis. The new standard is effective interim and annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted this guidance as of January 1, 2020 and the adoption did not have an impact on the Company’s consolidated financial statements.
Credit Losses
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), and a subsequent amendment to the initial guidance, ASU 2018-19 Codification Improvements to Topic 326, Financial Instruments—Credit Losses (collectively, Topic 326). Topic 326 requires measurement and recognition of expected credit losses for financial assets held, which include, but are not limited to, trade and other receivables. The new standard is effective for fiscal years beginning after December 15, 2019, The Company adopted this guidance as of January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.
In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives, and Hedging, and Topic 825, Financial Instruments. The improvements to Topic 815, among other things, clarifies some areas around partial-term fair value hedges, interest rate risk, the amortization of fair value hedge basis adjustments and their disclosure, and some clarification of matters related to the transitioning to ASU. 2017-12, which was adopted by the Company during the year ended December 31, 2018. The improvements to Topic 326 clarifies certain
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
aspects surrounding accounting for credit losses in connection with the Company’s receivables. These include that the Company should include anticipated recoveries in its calculation of credit losses. For those that have already adopted ASU No. 2017-12, the new standard is effective the first annual period beginning after the issuance date of ASU No. 2019-04, or as of January 1, 2020 for the Company, with early adoption permitted. The Company adopted this guidance as of January 1, 2020 and the adoption did not have a material impact on the Company’s consolidated financial statements.
Income Taxes
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU 2019-12 is effective for the Company for the fiscal year beginning after December 15, 2020. The Company is currently evaluating the impacts of the provisions of ASU 2019-12 on its consolidated financial statements and disclosures.
Others
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 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. The Company is currently evaluating the impact that adopting this new accounting standard will have on its condensed consolidated financial statements and related disclosures.
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregation of Revenue
The following table provides information about disaggregated revenue by line of business, reportable segments, and geographical region for the three months ended March 31, 2020 and 2019.

| US Regions |  | U.S. Federal |  | Canada |  | Non-Solar DG |  | All Other |  | Total
Line of Business |  |  |  |  |  |  |  |  |  |  |
Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |
Project revenue | $ | 71,493 |  |  | $ | 56,114 |  |  | $ | 8,864 |  |  | $ | 2,371 |  |  | $ | 5,587 |  |  | $ | 144,429 |
O&M revenue | 4,352 |  |  | 11,626 |  |  | 9 |  |  | 2,015 |  |  | 60 |  |  | 18,062 |
Energy assets | 8,554 |  |  | 719 |  |  | 663 |  |  | 17,986 |  |  | 300 |  |  | 28,222 |
Other | 328 |  |  | 286 |  |  | 1,856 |  |  | 352 |  |  | 18,878 |  |  | 21,700 |
Total revenues | $ | 84,727 |  |  | $ | 68,745 |  |  | $ | 11,392 |  |  | $ | 22,724 |  |  | $ | 24,825 |  |  | $ | 212,413 |
Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |
Project revenue | $ | 45,704 |  |  | $ | 32,353 |  |  | $ | 5,234 |  |  | $ | 1,074 |  |  | $ | 3,067 |  |  | $ | 87,432 |
O&M revenue | 3,318 |  |  | 9,858 |  |  | — |  |  | 2,035 |  |  | — |  |  | 15,211 |
Energy assets | 6,021 |  |  | 643 |  |  | 320 |  |  | 17,699 |  |  | 302 |  |  | 24,985 |
Other | 554 |  |  | 203 |  |  | 1,594 |  |  | 422 |  |  | 19,711 |  |  | 22,484 |
Total revenues | $ | 55,597 |  |  | $ | 43,057 |  |  | $ | 7,148 |  |  | $ | 21,230 |  |  | $ | 23,080 |  |  | $ | 150,112 |

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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)

| US Regions |  | U.S. Federal |  | Canada |  | Non-Solar DG |  | All Other |  | Total
Geographical Regions |  |  |  |  |  |  |  |  |  |  |
Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |
United States | $ | 84,727 |  |  | $ | 68,745 |  |  | $ | 896 |  |  | $ | 22,724 |  |  | $ | 18,847 |  |  | $ | 195,939 |
Canada | — |  |  | — |  |  | 10,496 |  |  | — |  |  | 57 |  |  | 10,553 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 5,921 |  |  | 5,921 |
Total revenues | $ | 84,727 |  |  | $ | 68,745 |  |  | $ | 11,392 |  |  | $ | 22,724 |  |  | $ | 24,825 |  |  | $ | 212,413 |
Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |
United States | $ | 55,597 |  |  | $ | 43,057 |  |  | $ | 702 |  |  | $ | 21,230 |  |  | $ | 18,647 |  |  | $ | 139,233 |
Canada | — |  |  | — |  |  | 6,446 |  |  | — |  |  | 65 |  |  | 6,511 |
Other | — |  |  | — |  |  | — |  |  | — |  |  | 4,368 |  |  | 4,368 |
Total revenues | $ | 55,597 |  |  | $ | 43,057 |  |  | $ | 7,148 |  |  | $ | 21,230 |  |  | $ | 23,080 |  |  | $ | 150,112 |

For the three months ended March 31, 2020 and 2019, approximately 91% and 89%, respectively, of revenue is recognized over time, and the remainder is for products and services transferred at a point in time.
Contract Balances
The following table provides information about receivables, contract assets and contract liabilities from contracts with customers:

|  | March 31, 2020 |  | December 31, 2019
Accounts receivable, net |  | $ | 110,742 |  |  | $ | 95,863 |
Accounts receivable retainage, net |  | 21,265 |  |  | 16,976 |
Contract Assets: |  |  |  |
Costs and estimated earnings in excess of billings |  | 189,566 |  |  | 202,243 |
Contract Liabilities: |  |  |  |
Billings in excess of cost and estimated earnings |  | 30,670 |  |  | 32,178 |

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

Accounts receivable retainage represents amounts due from customers, but where payments are withheld contractually until certain construction milestones are met. Amounts retained typically range from 5% to 10% of the total invoice. The Company classifies as a current asset those retainages that are expected to be billed in the next twelve months. Unbilled revenue, presented as costs and estimated earnings in excess of billings, represent amounts earned and billable that were not invoiced at the end of the fiscal period.
Contract assets represent the Company’s rights to consideration in exchange for services transferred to a customer that have not been billed as of the reporting date. The Company’s rights to consideration are generally unconditional at the time its performance obligations are satisfied.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
At the inception of a contract, the Company expects the period between when it satisfies its performance obligations, and when the customer pays for the services, will be one year or less. As such, the Company has elected to apply the practical expedient which allows the Company to not adjust the promised amount of consideration for the effects of a significant financing component, when a financing component is present.
When the Company receives consideration, or such consideration is unconditionally due, from a customer prior to transferring goods or services to the customer under the terms of a sales contract, the Company records deferred revenue, which represents a contract liability. Such deferred revenue typically results from billings in excess of costs incurred and advanced payments received on project contracts. As of March 31, 2020 and December 31, 2019, the Company classified $5,320 and $5,560, respectively, as a non-current liability, included in other liabilities on the condensed consolidated balance sheets, for those performance obligations expected to be completed beyond the next twelve months.
The decrease in contract assets for the three months ended March 31, 2020 was primarily due to billings of $152,612, offset in part by revenue recognized of approximately $137,596. The decrease in contract liabilities was primarily driven by recognition of revenue as performance obligations were satisfied exceeding increases from the receipt of advance payments from customers and related billings. For the three months ended March 31, 2020, the Company recognized revenue of $19,552 that was previously included in the beginning balance of contract liabilities and billed customers $15,651. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
The increase in contract assets for the three months ended March 31, 2019 was primarily due to revenue recognized of $90,344, offset in part by billings of approximately $90,895. The increase in contract liabilities was primarily driven by the receipt of advance payment from customers, and related billings, exceeding reductions from recognition of revenue as performance obligations were satisfied. For the three months ended March 31, 2019, the Company recognized revenue of $24,095 that was previously included in the beginning balance of contract liabilities, and billed customers $18,929. Changes in contract liabilities are also driven by reclassifications to or from contract assets as a result of timing of customer payments.
Contracts are often modified for a change in scope or other requirements. The Company considers contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing performance obligations. The effect of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or decrease) on a cumulative catchup basis.
Performance Obligations
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. Performance obligations are satisfied as of a point in time or over time and are supported by contracts with customers. For most of the Company’s contracts, there are multiple promises of goods or services. Typically, the Company provides a significant service of integrating a complex set of tasks and components such as design, engineering, construction management, and equipment procurement for a project contract. The bundle of goods and services are provided to deliver one output for which the customer has contracted. In these cases, the Company considers the bundle of goods and services to be a single performance obligation. The Company may also promise to provide distinct goods or services within a contract, such as a project contract for installation of energy conservation measures and post-installation O&M services. In these cases the Company separates the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
Backlog - The Company’s remaining performance obligations (hereafter referred to as “backlog”) represent the unrecognized revenue value of the Company’s contract commitments. The Company’s backlog may vary significantly each reporting period based on the timing of major new contract commitments and the backlog may fluctuate with currency movements. In addition, our customers have the right, under some circumstances, to terminate contracts or defer the timing of the Company’s services and their payments to the Company. At March 31, 2020, the Company had backlog of approximately $2,181,643. Approximately 26% of our March 31, 2020 backlog is anticipated to be recognized as revenue in the next twelve months and the remaining, thereafter.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The Company has applied the practical expedient for certain revenue streams to exclude the value of remaining performance obligations for (i) contracts with an original expected term of one year or less or (ii) contracts for which the Company recognizes revenue in proportion to the amount it has the right to invoice for services performed.
Contract Acquisition Costs
The Company accounts for certain acquisition costs over the life of the contract, consisting primarily of commissions when paid. Commission costs are incurred commencing at contract signing. Commission costs are allocated across all performance obligations and deferred and amortized over the contract term on a progress toward completion basis.
As of March 31, 2020 and December 31, 2019, included in other assets in the accompanying condensed consolidated balance sheets, were $1,735 and $1,735, respectively, of capitalized commission costs related to contracts that were not completed. For contracts that have a duration of less than one year, the Company follows a practical expedient and expenses these costs when incurred. During the three months ended March 31, 2020 and 2019, the amortization of commission costs related to contracts was not material and has been included in the accompanying condensed consolidated statements of income.
The Company capitalizes costs incurred related to the development of projects prior to contract signing as it is partial fulfillment of its performance obligations. Capitalized project development costs include only those costs incurred in connection with the development of energy projects, primarily direct labor, interest costs, outside contractor services, consulting fees, legal fees and travel, if incurred after a point in time where the realization of related revenue becomes probable. Project development costs incurred prior to the probable realization of revenue are expensed as incurred. The Company classifies as a current asset those project development efforts that are expected to proceed to construction activity in the twelve months that follow. The Company periodically reviews these balances and writes off any amounts where the realization of the related revenue is no longer probable. Project development costs of $697 and $217 were included in other long-term assets as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020 and 2019, $1,635 and $2,777, respectively, of project development costs were recognized in the condensed consolidated statements of income on projects that converted to customer contracts.
No impairment charges in connection with the Company’s commission costs or project development costs were recorded during the three months ended March 31, 2020 and 2019.
4. BUSINESS ACQUISITIONS AND RELATED TRANSACTIONS
The Company accounts for acquisitions using the acquisition method in accordance with ASC 805, Business Combinations. The purchase price for each has been allocated to the net assets based on their estimated fair values at the date of each acquisition as set forth in the table below. The excess purchase price over the estimated fair value of the net assets, which are calculated using level 3 inputs per the fair value hierarchy as defined in Note 10, acquired has been recorded as goodwill. Intangible assets, if identified, have been recorded and are being amortized over periods ranging from one to fifteen years. See Note 5 for additional information.
Determining the fair value of certain assets and liabilities assumed is judgmental in nature and often involves the use of significant estimates and assumptions. Certain amounts below are provisional based on our best estimates using information available as of the reporting date. The Company is waiting for information to become available to finalize its valuation of certain elements of these transactions. Specifically, the assigned values for energy assets, intangibles, and goodwill are provisional in nature and subject to change upon the completion of the final valuation of such elements.
During the three months ended March 31, 2020, the Company did not complete any acquisitions.
The results of the acquired assets since the dates of the acquisitions have been included in the Company’s operations as presented in the accompanying condensed consolidated statements of income, condensed consolidated statements of comprehensive income and condensed consolidated statements of cash flows.
During the three months ended March 31, 2020, the Company had no additional measurement period adjustments from prior year acquisitions.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
5. GOODWILL AND INTANGIBLE ASSETS
The changes in the carrying value of goodwill attributable to each reportable segment are as follows:

| U.S. Regions |  | U.S. Federal |  | Canada |  | Non-solar DG |  | Other |  | Total
Balance, December 31, 2019 | $ | 26,705 |  |  | $ | 3,981 |  |  | $ | 3,369 |  |  | $ | — |  |  | $ | 24,359 |  |  | $ | 58,414 |
Currency effects | — |  |  | — |  |  | (274) |  |  | — |  |  | (399) |  |  | (673) |
Balance, March 31, 2020 | $ | 26,705 |  |  | $ | 3,981 |  |  | $ | 3,095 |  |  | $ | — |  |  | $ | 23,960 |  |  | $ | 57,741 |
Accumulated Goodwill Impairment |  |  |  |  |  |  |  |  |  |  |
Balance, December 31, 2019 | $ | — |  |  | $ | — |  |  | $ | (1,016) |  |  | $ | — |  |  | $ | — |  |  | $ | (1,016) |
Balance, March 31, 2020 | $ | — |  |  | $ | — |  |  | $ | (1,016) |  |  | $ | — |  |  | $ | — |  |  | $ | (1,016) |

The Company performs its annual goodwill impairment testing in the fourth quarter of each year, or more frequently if an event occurs or circumstances change that would more-likely-than-not reduce the fair value of a reporting unit below its carrying amount. During the Company’s annual goodwill impairment testing in 2019, all reporting units had fair values that exceeded their carrying values by at least 15%. If the Company believes that one or more indicators of impairment have occurred, then the Company will perform an impairment test. The Company has the option to perform a qualitative assessment (commonly referred to as "step zero" test) to determine whether further quantitative analysis for impairment of goodwill and indefinite-lived intangible assets is necessary. The qualitative assessment includes a review of macroeconomic conditions, industry and market considerations, internal cost factors, and the Company’s own overall financial and share price performance, among other factors. If, after assessing the totality of events or circumstances the Company determines that it is not more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, the Company does not need to perform a quantitative analysis. Upon assessment, the Company concluded it was not more likely than not that the fair value of the reporting units were less than the carrying value of the reporting units as of March 31, 2020. The Company will monitor future results and will perform a test if indicators trigger an impairment review. At this time, the Company has not deemed the impact that the current macroeconomic environment surrounding the COVID-19 pandemic has or is expected to have on the business to be a triggering event for impairment purposes.
Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives. The Company annually assesses whether a change in the life over which the Company’s assets are amortized is necessary, or more frequently if events or circumstances warrant.
Acquired intangible assets other than goodwill that are subject to amortization include customer contracts, customer relationships, non-compete agreements, technology and trade names. Customer contracts are amortized ratably over the period of the acquired customer contracts ranging in periods from approximately one to five years. All other acquired intangible assets are amortized over periods ranging from approximately four to fifteen years, as determined by the nature of the respective intangible asset. The Company did not complete any acquisitions or acquire any intangible assets in the three months ended March 31, 2020.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The gross carrying amount and accumulated amortization of intangible assets are as follows:

| As of March 31, |  | As of December 31,
| 2020 |  | 2019
Gross Carrying Amount |  |  |
Customer contracts | $ | 7,749 |  |  | $ | 7,904 |
Customer relationships | 12,449 |  |  | 12,749 |
Non-compete agreements | 2,995 |  |  | 3,037 |
Technology | 2,691 |  |  | 2,732 |
Trade names | 539 |  |  | 544 |
| 26,423 |  |  | 26,966 |
Accumulated Amortization |  |  |
Customer contracts | 7,711 |  |  | 7,844 |
Customer relationships | 11,112 |  |  | 11,236 |
Non-compete agreements | 2,995 |  |  | 3,037 |
Technology | 2,669 |  |  | 2,704 |
Trade names | 528 |  |  | 531 |
| 25,015 |  |  | 25,352 |
Intangible assets, net | $ | 1,408 |  |  | $ | 1,614 |

Amortization expense related to customer contracts is included in cost of revenues in the condensed consolidated statements of income. Amortization expense related to all other acquired intangible assets is included in selling, general and administrative expenses in the condensed consolidated statements of income. Amortization expense for the three months ended March 31, 2020 and 2019 related to customer contracts was $22 and $23, respectively. Amortization expense for the three months ended March 31, 2020 and 2019 related to all other acquired intangible assets and was $154 and $201, respectively.
6. ENERGY ASSETS
Energy assets consist of the following:

| March 31, |  | December 31,
| 2020 |  | 2019
Energy assets | $ | 793,215 |  |  | $ | 767,331 |
Less - accumulated depreciation and amortization | (196,723) |  |  | (187,870) |
Energy assets, net | $ | 596,492 |  |  | $ | 579,461 |

Included in energy assets are financing lease assets and accumulated depreciation of financing lease assets. Financing lease assets consist of the following:

| March 31, |  | December 31,
| 2020 |  | 2019
Financing lease assets | $ | 42,402 |  |  | $ | 42,402 |
Less - accumulated depreciation and amortization | (6,800) |  |  | (6,268) |
Financing lease assets, net | $ | 35,602 |  |  | $ | 36,134 |

Depreciation and amortization expense on the above energy assets, net of deferred grant amortization, for the three months ended March 31, 2020 and 2019 was $9,299 and $8,407, respectively, and is included in cost of revenues in the accompanying condensed consolidated statements of income. Included in these depreciation and amortization expense totals are depreciation
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(in thousands, except per share amounts)
and amortization expense on financing lease assets of $532 and $532 for the three months ended March 31, 2020 and 2019, respectively.
The Company evaluates long-lived assets for impairment as events or changes in circumstances indicate the carrying value of these assets may not be fully recoverable. Examples of such triggering events applicable to our assets include a significant decrease in the market price of a long-lived asset or asset group or a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset or asset group.The Company performs its annual long-lived assets impairment testing in the fourth quarter of each year. In addition to the annua l impairment test, the Company regularly assesses whether a triggering event has occurred which would require interim impairment testing. The Company assessed the impact that the current macroeconomic environment surrounding the COVID-19 pandemic has or is expected to have on the business, and concluded that it was not a triggering event for impairment purposes and there was no indication of impairment of long-lived assets for the three months ended March 31, 2020.
The Company capitalizes interest costs relating to construction financing during the period of construction. Capitalized interest is included in energy assets, net in the Company’s condensed consolidated balance sheets. Capitalized interest is amortized to cost of revenues in the Company’s condensed consolidated statements of income on a straight line basis over the useful life of the associated energy asset. The Company capitalized $862 and $788 of interest during the three months ended March 31, 2020 and 2019, respectively.
As of March 31, 2020 and December 31, 2019, there are three ESPC asset projects which are included within energy assets, net on the Company’s condensed consolidated balance sheets. The Company controls and operates the assets as well as obtains financing during the construction period of the assets. As the Company has an obligation to the customer for performance of the asset, the Company records a liability associated with these energy assets, although, the customer is responsible for payments to the lender based on the energy asset’s production. As of March 31, 2020 and December 31, 2019, the liabilities recognized in association with these assets were $11,105 and $10,243, respectively, of which $217 and $827, respectively, has been classified as the current portion and is included in accrued expenses and other current liabilities. The remainder is included in other liabilities in the accompanying condensed consolidated balance sheets.
During the three months ended March 31, 2020, the Company did not acquire any projects. The Company has a definitive agreement from prior periods to purchase ten solar projects from developers for a total purchase price of $13,902, of which, the Company has paid $366 to the developers of the projects. As of March 31, 2020, the Company has remaining deferred purchase price consideration on previously closed projects of $6,693 that will be paid upon final completion of the respective projects and throughout 2020.
As of March 31, 2020, the Company had $1,431 in asset retirement obligations (“AROs”) assets recorded in project assets, net of accumulated depreciation, and $1,559 in ARO liabilities recorded in accrued expenses and other current liabilities and other liabilities. During the three months ended March 31, 2020 and 2019, the Company recorded $19 and $11, respectively, of depreciation expense related to the ARO asset. During the three months ended March 31, 2020 and 2019, the Company recorded $21 and $9, respectively, in accretion expense to the ARO liability, which is reflected in the accretion of ARO and contingent consideration on the condensed consolidated statements of cash flows. The Company’s current ARO liabilities relate to the removal of equipment and pipelines at certain renewable gas projects and obligations related to the decommissioning of certain solar facilities.
7. INCOME TAXES
The Company recorded a benefit for income taxes of $2,503 and provision for income tax of $257 for the three months ended March 31, 2020 and 2019, respectively. The estimated effective annualized tax rate impacted by the period discrete items is (60.6%) of benefit for the three months ended March 31, 2020, compared to a 8.2% of provision estimated effective annualized tax rate for the three months ended March 31, 2019.
The principal reason for the difference between the statutory rate and the estimated annual effective rate for 2020 were the effects of investment tax credits to which the Company is entitled from solar plants which have been placed into service or are forecasted to be placed into service during 2020. Tax deductions related to Section 179D deduction, tax basis adjustments on
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
certain partnership flip transactions and tax rate benefits associated with net operating loss carryback made possible by the passing of the COVID-19 CARES Act on March 27, 2020. The principal reason for the difference between the statutory rate and the estimated annual effective rate for 2019 were the effects of investment tax credits to which the Company is entitled from solar plants which have been placed into service or were forecasted to be placed into service during 2019.
The investment tax credits and production tax credits to which the Company may be entitled fluctuate from year to year based on the cost of the renewable energy plants the Company places or expects to place in service and production levels at company owned facilities in that year. As part of the Tax Extender and Disaster Relief Act of 2019, signed into law December 20, 2019, Section 179D was extended through December 31, 2020.
A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

| Gross Unrecognized Tax Benefits
Balance, December 31, 2019 | $ | 400 |
Additions for prior year tax positions | — |
Settlements with tax authorities | — |
Reductions of prior year tax positions | — |
Balance, March 31, 2020 | $ | 400 |

At March 31, 2020 and December 31, 2019, the Company had approximately $400 of total gross unrecognized tax benefits. At March 31, 2020 and December 31, 2019, the Company had approximately $80 and $80, respectively, of total gross unrecognized tax benefits (both net of the federal benefit on state amounts) representing the amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods.
The Company has presented all deferred tax assets and liabilities as noncurrent, net assets on its condensed consolidated balance sheets as of March 31, 2020. As of December 31, 2019, the Company presented all deferred tax assets and liabilities as noncurrent net liabilities.
8. LEASES
On January 1, 2019, the Company adopted ASU No. 2016-02, Leases (Topic 842), using the modified retrospective approach. The Company elected the package of practical expedients available in the standard and as a result, did not reassess the lease classification of existing contracts or leases or the initial direct costs associated with existing leases. The Company has also elected the practical expedient to not separate lease components and non-lease components and will account for the leases as a single lease component for all classes of leases.
As a result of the adoption of ASC 842, the Company recognized an increase in lease ROU assets of $31,639, current portions of operating lease ROU liabilities of $5,084 and an increase to long-term portions of operating lease liabilities of $28,480. There was no net impact to the condensed consolidated statements of income or retained earnings for the adoption of ASC 842. No impairment was recognized on the ROU asset upon adoption. These adjustments are detailed as follows:
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(in thousands, except per share amounts)

| As of January 1, 2019 |  |  |  |
| As Reported |  | 842 Adjustment |  | Adjusted Balances
Operating Leases: |  |  |  |  |
Operating lease assets | $ | — |  |  | $ | 31,639 |  |  | $ | 31,639 |
Current portions of operating lease liabilities | — |  |  | 5,084 |  |  | 5,084 |
Long-term portions of operating lease liabilities | — |  |  | 28,480 |  |  | 28,480 |
Total operating lease liabilities | $ | — |  |  | $ | 33,564 |  |  | $ | 33,564 |
Weighted-average remaining lease term |  |  |  |  | 10 years
Weighted-average discount rate |  |  |  |  | 6.0 | %
Financing Leases: |  |  |  |  |
Energy assets, net |  | $ | 38,263 |  |  | $ | — |  |  | $ | 38,263 |
Current portions of financing lease liabilities |  | 4,956 |  |  | — |  |  | 4,956 |
Long-term financing lease liabilities, net of current portions and of deferred financing fees |  | 28,407 |  |  | — |  |  | 28,407 |
Total financing lease liabilities | $ | 33,363 |  |  | $ | — |  |  | $ | 33,363 |
Weighted-average remaining lease term |  |  |  |  | 18 years
Weighted-average discount rate |  |  |  |  | 11.7 | %

The Company enters into a variety of operating lease agreements through the normal course of its business including certain administrative offices. The leases are long-term, non-concealable real estate lease agreements, expiring at various dates through fiscal 2028. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance and repairs. The Company also leases certain land parcels related to our energy projects, expiring at various dates through fiscal 2045. The office and land leases make up a significant portion of the Company’s operating lease activity. Many of these leases have one or more renewal options that allow the Company, at its discretion, to renew the lease for six months to seven years. Only renewal options that the Company believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that increase when the related project becomes operational. In these cases, the commercial operation date was estimated by the Company and used to calculate the estimated minimum lease payments.
The Company also enters into leases for IT equipment and service agreements, automobiles, and other leases related to our construction projects such as equipment, mobile trailers and other temporary structures. The Company utilizes the portfolio approach for this class of lease. These leases are either short-term in nature or immaterial.
A portion of the Company’s real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). The Company utilized each lease’s minimum lease payments to calculate the lease balances upon transition. The subsequent increases in rent based on changes in CPI were excluded and will be excluded for future leases from the calculation of the lease balances, but will be recorded to the condensed consolidated statements of income as part of our operating lease costs.
The Company has elected the practical expedient to not separate lease and non-lease components for existing leases for real estate and land leases. The Company has historical leases under ASC 840, Leases, which may have lease and non-lease components. Upon adoption of Topic 842, the Company has elected to continue to account for these historical leases as a single component, as permitted by Topic 842. As of January 1, 2019, as it relates to all prospective leases, the Company will allocate consideration to lease and non-lease components based on pricing information in the respective lease agreement, or, if this information is not available, the Company will make a good faith estimate based on the available pricing information at the time of the lease agreement.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The discount rate was calculated using an incremental borrowing rate based on financing rates on secured comparable notes with comparable terms and a synthetic credit rating calculated by a third party. The Company elected to apply the discount rate using the remaining lease term at the date of adoption.
The Company has a number of leases that are classified as financing leases, which relate to transactions that are considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on the Company’s financing leases.
Supplemental balance sheet information related to leases at March 31, 2020 and December 31, 2019 is as follows:

| March 31, 2020 |  | December 31, 2019
Operating Leases: |  |  |
Operating lease assets | $ | 32,444 |  |  | $ | 32,791 |
Current operating lease liabilities | 5,360 |  |  | 5,802 |
Long-term portions of operating lease liabilities | 29,104 |  |  | 29,101 |
Total operating lease liabilities | $ | 34,464 |  |  | $ | 34,903 |
Weighted-average remaining lease term | 11 years |  | 11 years
Weighted-average discount rate | 6.4 | % |  | 6.3 | %
Financing Leases: |  |  |
Energy assets, net |  | $ | 35,602 |  |  | $ | 36,134 |
Current portions of financing lease liabilities | 4,906 |  |  | 4,997 |
Long-term financing lease liabilities, less current portions and net of deferred financing fees |  | 23,472 |  |  | 23,500 |
Total financing lease liabilities | $ | 28,378 |  |  | $ | 28,497 |
Weighted-average remaining lease term | 17 years |  | 17 years
Weighted-average discount rate | 11.8 | % |  | 11.8 | %

The costs related to our leases are as follows:

|  |  | Three Months Ended March 31, 2020 |  | Three Months Ended March 31, 2019
Operating Lease: |  |  |  |  |
Operating lease costs |  |  | $ | 1,826 |  |  | $ | 1,838 |
Financing Lease: |  |  |  |  |
Amortization expense |  |  | 532 |  |  | 532 |
Interest on lease liabilities |  |  | 801 |  |  | 949 |
Total lease costs |  |  | $ | 3,159 |  |  | $ | 3,319 |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The Company’s estimated minimum future lease obligations under our leases are as follows:

| Operating Leases |  | Financing Leases
Year ended December 31, |  |  |
2020 | $ | 5,816 |  |  | $ | 7,852 |
2021 | 6,506 |  |  | 6,792 |
2022 | 5,895 |  |  | 5,178 |
2023 | 4,607 |  |  | 3,676 |
2024 | 3,791 |  |  | 2,565 |
Thereafter | 22,723 |  |  | 24,080 |
Total minimum lease payments | $ | 49,338 |  |  | $ | 50,143 |
Less: interest | 14,874 |  |  | 21,765 |
Present value of lease liabilities | $ | 34,464 |  |  | $ | 28,378 |

The Company has determined that certain power purchase agreements (“PPAs”) contain a lease component in accordance with ASC 840, Leases. The Company recognized $2,245 and $2,224 of operating lease revenue under these agreements during the three months ended March 31, 2020 and 2019, respectively, which was reflected in revenues on the condensed consolidated statements of income.
Sale-Leaseback
For solar photovoltaic (“solar PV”) projects that the Company has determined not to be integral equipment, the Company then determines if the leaseback should be classified as a financing lease or an operating lease. All solar PV projects sold to date under the sale-leaseback program have been determined by the Company to be financing leases. For leasebacks classified as financing leases, the Company initially records a financing lease asset and financing lease obligation in its condensed consolidated balance sheets equal to the lower of the present value of the Company’s future minimum leaseback payments or the fair value of the solar PV project. For financing leasebacks, the Company defers any gain or loss, representing the excess or shortfall of cash received from the investor compared to the net book value of the asset in the Company’s condensed consolidated balance sheets at the time of the sale. The Company records the long term portion of any deferred gain or loss in other liabilities and other assets, respectively, and the current portion of any deferred gain and loss in accrued expenses and other current liabilities and prepaid expenses and other current assets, respectively, in its condensed consolidated balance sheets and amortizes the deferred amounts over the lease term in cost of revenues in its condensed consolidated statements of income. Net amortization expense in cost of revenues related to deferred gains and losses was $55 and $38 of net gains for the three months ended March 31, 2020 and 2019, respectively.
During the third quarter of 2018, the Company entered into an agreement with an investor which gives us the option to sell and contemporaneously lease back solar PV projects through August 2019 up to a maximum funding amount of $100.0 million. In January 2020, the Company amended the August 2018 agreement with the investor to extend the end date of the agreement to November 24, 2020 and increase the maximum funding amount up to $150.0 million. During the three months ended March 31, 2020, the Company did not complete any acquisitions of solar PV projects and $131.0 million remained available under the lending commitment.
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
A summary of amounts related to sale leasebacks in the Company’s condensed consolidated balance sheets is as follows:

| March 31, |  | December 31, |  |  |  |  |  |  |  |  |  |
| 2020 |  | 2019 |  |  |  |  |  |  |  |  |  |
Financing lease assets, net | $ | 35,602 |  |  | $ | 36,134 |  |  |  |  |  |  |  |  |  |  |
Deferred loss, short-term, net | 115 |  |  | 115 |  |  |  |  |  |  |  |  |  |  |
Deferred loss, long-term, net | 1,773 |  |  | 1,801 |  |  |  |  |  |  |  |  |  |  |
Total deferred loss | $ | 1,888 |  |  | $ | 1,916 |  |  |  |  |  |  |  |  |  |  |
Financing lease liabilities, short-term | 4,906 |  |  | 4,997 |  |  |  |  |  |  |  |  |  |  |
Financing lease liabilities, long-term | 23,472 |  |  | 23,500 |  |  |  |  |  |  |  |  |  |  |
Total financing lease liabilities | $ | 28,378 |  |  | $ | 28,497 |  |  |  |  |  |  |  |  |  |  |
Deferred gain, short-term, net | 345 |  |  | 345 |  |  |  |  |  |  |  |  |  |  |
Deferred gain, long-term, net | 5,379 |  |  | 5,463 |  |  |  |  |  |  |  |  |  |  |
Total deferred gain | $ | 5,724 |  |  | $ | 5,808 |  |  |  |  |  |  |  |  |  |  |

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
9. COMMITMENTS AND CONTINGENCIES
The Company from time to time issues letters of credit and performance bonds, with their third-party lenders, to provide collateral. The Company has future lease commitments which do not yet meet the criteria of a ROU asset or ROU liability as of March 31, 2020, for certain business offices. These commitments total $721 as of March 31, 2020 and relate to payments through 2026.
Legal Proceedings
The Company is involved in a variety of claims and other legal proceedings generally incidental to its normal business activities. While the outcome of any of these proceedings cannot be accurately predicted, the Company does not believe the ultimate resolution of any of these existing matters would have a material adverse effect on its financial condition or results of operations.
Commitments as a Result of Acquisitions
In August 2018, the Company completed an acquisition which provided for a revenue earn-out contingent upon the acquired business meeting certain cumulative revenue targets over five years from the acquisition date. The Company evaluated financial forecasts of the acquired business and concluded that the fair value of this earn-out was approximately $555, which was subsequently increased to $678 as of December 31, 2019 which remained consistent at March 31, 2020, and is recorded in the other liabilities on the condensed consolidated balance sheets. The contingent consideration will be paid annually, commencing in 2020, if any of the cumulative revenue targets are achieved. The fair value of the earn-out will be re-evaluated at each reporting period and adjustments will be recorded as needed. See Note 10 for additional information.
In November 2018, the Company completed an acquisition of certain lease options, which provided for an earn-out if the lease option is exercised and if certain financial metrics are achieved. The Company evaluated the acquired lease options and concluded that the fair-value of this contingent liability was approximately $363, which was subsequently increased to $378 at December 31, 2019 which remained consistent at March 31, 2020, and is recorded in accrued expenses and other current liabilities and other liabilities on the condensed consolidated balance sheets. Payments will be made when milestones are achieved. The contingent liability will be re-evaluated at each reporting period and adjustments will be recorded as needed.
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(in thousands, except per share amounts)
10. FAIR VALUE MEASUREMENT
The Company recognizes certain financial assets and liabilities at fair value on a recurring basis (at least annually). 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 upon unadjusted quoted prices for identical instruments traded in active markets.
Level 2: Inputs are based upon 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 the Company’s financial instruments measured at fair value on a recurring basis:

|  |  | Fair Value as of |  |
|  |  | March 31, |  | December 31,
| Level |  | 2020 |  | 2019
Assets: |  |  |  |  |
Interest rate swap instruments | 2 |  | $ | — |  |  | $ | 15 |
Commodity swap instruments | 2 |  | 246 |  |  | 198 |
Total assets |  |  | $ | 246 |  |  | $ | 213 |
Liabilities: |  |  |  |  |
Interest rate swap instruments | 2 |  | $ | 10,882 |  |  | $ | 6,236 |
Interest make-whole provisions | 2 |  | 733 |  |  | 918 |
Contingent consideration | 3 |  | 678 |  |  | 678 |
Total liabilities |  |  | $ | 12,293 |  |  | $ | 7,832 |

The fair value of the Company’s interest rate swaps was determined using cash flow analysis on the expected cash flow of the contract in combination with observable market-based inputs, including interest rate curves and implied volatilities. As part of this valuation, the Company considered the credit ratings of the counterparties to the interest rate swaps to determine if a credit risk adjustment was required.
The fair value of the Company’s commodity swaps was determined using a cash flow analysis on the expected cash flow of the contract in combination with observable forward price inputs obtained from a third-party pricing source. As part of this valuation, the Company considered the credit ratings of the counterparties to the commodity swaps to determine if a credit risk adjustment was required.
The fair value of the Company’s make-whole provisions were determined by comparing them against the rates of similar debt instruments under similar terms without a make-whole provision obtained from various highly rated third-party pricing sources.
The fair value of the Company’s contingent consideration liabilities were determined by evaluating the acquired asset’s future financial forecasts and evaluating which, if any, of the cumulative revenue targets, financial metrics and/or milestones are likely to be met. The Company has classified contingent consideration related to certain acquisitions within level 3 of the fair value hierarchy because the fair value is derived using significant unobservable inputs, which include discount rates and probability-weighted cash flows. The Company determined the fair value of its contingent consideration obligations based on a probability-weighted income approach derived from financial performance estimates and probability assessments of the
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
attainment of certain targets. The Company establishes discount rates to be utilized in its valuation models based on the cost to borrow that would be required by a market participant for similar instruments.
The key assumptions as of March 31, 2020, related to the contingent consideration from the acquisition of certain assets of Chelsea Group Limited, used in the model include a discount rate of 18% for purposes of discounting the low and base case scenarios associated with achievement of the financial based earn-out. The probabilities assigned to these scenarios were 50% for both the low and base case scenarios. An increase or decrease in the probability of achievement of any scenario could result in a significant increase or decrease to the estimated fair value of the contingent consideration liability.
The following table sets forth a summary of changes in fair value of contingent liabilities classified as Level 3 for the three months ended March 31, 2020 and March 31, 2019:

| Three Months Ended | Three Months Ended
| March 31, 2020 | March 31, 2019
Contingent consideration liabilities balance at December 31, 2019 and 2018 | $ | 678 |  | $ | 600 |
Changes in the fair value of contingent consideration obligation | — |  | 25 |
Contingent consideration liabilities balance at March 31, 2020 and 2019 | $ | 678 |  | $ | 625 |

The fair value of financial instruments is determined by reference to observable market data and other valuation techniques, as appropriate. The only category of financial instruments where the difference between fair value and recorded book value is notable is long-term debt. At March 31, 2020 and December 31, 2019 the fair value of the Company’s long-term debt was estimated using discounted cash flows analysis, based on the Company’s 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 level three financial instruments for the three months ended March 31, 2020 and the year ended December 31, 2019.
Based on the analysis performed, the fair value and the carrying value of the Company’s long-term debt, excluding financing leases, are as follows:

| As of March 31, 2020 |  |  |  | As of December 31, 2019 |  |
| Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
Long-term debt (Level 2) | $ | 332,683 |  |  | $ | 326,459 |  |  | $ | 309,377 |  |  | $ | 307,508 |

The Company is also required periodically to measure certain other assets at fair value on a nonrecurring basis, including long-lived assets, goodwill and other intangible assets. There were no assets recorded at fair value on a non-recurring basis at March 31, 2020 or December 31, 2019.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
At March 31, 2020 and December 31, 2019, the following table presents information about the fair value amounts of the Company’s derivative instruments are as follows:

| Derivatives as of |  |  |  |  |  |
| March 31, 2020 |  |  |  | December 31, 2019 |  |
| Balance Sheet Location |  | Fair Value |  | Balance Sheet Location |  | Fair Value
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |
Interest rate swap contracts | Other assets |  | $ | — |  |  | Other assets |  | $ | 15 |
Interest rate swap contracts | Other liabilities |  | 10,846 |  |  | Other liabilities |  | 6,210 |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |
Interest rate swap contracts | Other liabilities |  | $ | 36 |  |  | Other liabilities |  | $ | 26 |
Commodity swap contracts | Other assets |  | 246 |  |  | Other assets |  | 198 |
Commodity swap contracts | Other liabilities |  | — |  |  | Other liabilities |  | — |
Interest make-whole provisions | Other liabilities |  | 733 |  |  | Other liabilities |  | 918 |

As of March 31, 2020 and December 31, 2019 all but three of the Company’s freestanding derivatives were designated as hedging instruments.
The following tables present information about the effects of the Company’s derivative instruments on the condensed consolidated statements of income and condensed consolidated statements of comprehensive income:

| Location of (Gain) Loss Recognized in Net Income |  | Amount of (Gain) Loss Recognized in Net Income |  |  |  |  |  |  |
|  |  | Three Months Ended March 31, |  |  |  |  |  |  |
|  |  | 2020 |  | 2019 |  |  |  |  |
Derivatives Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |
Interest rate swap contracts | Other expenses, net |  | $ | 99 |  |  | $ | (49) |  |  |  |  |  |
Derivatives Not Designated as Hedging Instruments: |  |  |  |  |  |  |  |  |  |
Interest rate swap contracts | Other expenses, net |  | $ | 10 |  |  | $ | — |  |  |  |  |  |
Commodity swap contracts | Other expenses, net |  | (48) |  |  | — |  |  |  |  |  |
Interest make-whole provision | Other expenses, net |  | (185) |  |  | (723) |  |  |  |  |  |

| Three Months Ended |  |
| March 31, 2020 |  |
Derivatives Designated as Hedging Instruments: |  |  |
Accumulated loss in AOCI at the beginning of the period | $ | (4,742) |  |  |
Unrealized loss recognized in AOCI | (3,564) |  |  |
Loss reclassified from AOCI to other expenses, net | 99 |  |  |
Accumulated loss in AOCI at the end of the period | $ | (8,207) |  |  |

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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The following tables present a listing of all the Company’s active derivative instruments as of March 31, 2020:

Active Interest Rate Swap | 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
3-Year, 2.46% Fixed | March 2018 | December 2020 | 17,100 |  | Not 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
15-Year, 5.30% Fixed | February 2006 | February 2021 | 3,256 |  | Designated
15.5-Year, 5.40% Fixed | September 2008 | March 2024 | 13,081 |  | Designated

Active Commodity Swap | Effective Date | Expiration Date | Initial Notional Amount (Volume) | Commodity Measurement | Status
1-Year, $2.68 MMBtu Fixed | May 2019 | April 2020 | 437,004 |  | MMBtus | Not Designated
1-Year, $2.70 MMBtu Fixed | May 2020 | April 2021 | 435,810 |  | MMBtus | Not Designated

Other Derivatives | Classification | Effective Date | Expiration Date | Fair Value ($)
Interest make-whole provisions | Liability | June/August 2018 | December 2038 | $ | 733 |

12. INVESTMENT FUNDS AND OTHER VARIABLE INTEREST ENTITIES
Investment Funds
In each of September 2015, June 2017, June 2018, October 2018, and December 2019, the Company formed an investment fund with a different third-party investor which granted the applicable investor ownership interests in the net assets of certain of the Company’s renewable energy project subsidiaries. The Company currently has five such investment funds each with a different third-party investor.
The Company consolidates the investment funds, and all inter-company balances and transactions between the Company and the investment funds are eliminated in its condensed consolidated financial statements. The Company determined that the investment funds meet the definition of a variable interest entity (“VIE”). The Company uses a qualitative approach in assessing the consolidation requirement for VIEs that focuses on determining whether the Company has the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether the Company has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.
The Company has considered the provisions within the contractual arrangements that grant it power to manage and make decisions that affect the operation of these VIEs, including determining the solar energy systems and associated long term customer contracts to be sold or contributed to the VIEs, and installation, operation and maintenance of the solar energy systems. The Company considers that the rights granted to the other investors under the contractual arrangements are more protective in nature rather than participating rights. As such, the Company has determined it is the primary beneficiary of the
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
VIEs for all periods presented. The Company evaluates its relationships with VIEs on an ongoing basis to ensure that it continues to be the primary beneficiary.
Under the related agreements, cash distributions of income and other receipts by the funds, net of agreed-upon expenses and estimated expenses, tax benefits and detriments of income and loss, and tax benefits of tax credits, are assigned to the funds’ investor and Company’s subsidiaries as specified in contractual arrangements. Certain of these arrangements have call and put options to acquire the investor’s equity interest as specified in the contractual agreements. See Note 13 for additional information on the call and put options.
A summary of amounts related to the investment funds in the Company’s condensed consolidated balance sheets is as follows:

| March 31, |  | December 31, |  |  |  |  |  |  |  |  |  |
| 2020(1) |  | 2019(1) |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 5,789 |  |  | $ | 4,666 |  |  |  |  |  |  |  |  |  |  |
Restricted cash | 586 |  |  | 586 |  |  |  |  |  |  |  |  |  |  |
Accounts receivable, net | 462 |  |  | 532 |  |  |  |  |  |  |  |  |  |  |
Costs and estimated earnings in excess of billings | 1,355 |  |  | 1,125 |  |  |  |  |  |  |  |  |  |  |
Prepaid expenses and other current assets | 80 |  |  | 108 |  |  |  |  |  |  |  |  |  |  |
Total VIE current assets | 8,272 |  |  | 7,017 |  |  |  |  |  |  |  |  |  |  |
Property and equipment, net | 1,266 |  |  | 1,266 |  |  |  |  |  |  |  |  |  |  |
Energy assets, net | 145,410 |  |  | 142,456 |  |  |  |  |  |  |  |  |  |  |
Operating lease assets | 6,411 |  |  | 6,511 |  |  |  |  |  |  |  |  |  |  |
Other assets | 1,660 |  |  | 1,662 |  |  |  |  |  |  |  |  |  |  |
Total VIE assets | $ | 163,019 |  |  | $ | 158,912 |  |  |  |  |  |  |  |  |  |  |
Current portions of long-term debt and financing lease liabilities | $ | 2,234 |  |  | $ | 2,252 |  |  |  |  |  |  |  |  |  |  |
Accounts payable | 2,670 |  |  | 2,006 |  |  |  |  |  |  |  |  |  |  |
Accrued expenses and other current liabilities |  | 1,623 |  |  | 2,203 |  |  |  |  |  |  |  |  |  |  |
Current portions of operating lease liabilities | 106 |  |  | 102 |  |  |  |  |  |  |  |  |  |  |
Total VIE current liabilities | 6,633 |  |  | 6,563 |  |  |  |  |  |  |  |  |  |  |
Long-term debt and financing lease liabilities, less current portions and net of deferred financing fees | 24,214 |  |  | 24,654 |  |  |  |  |  |  |  |  |  |  |
Long-term portions of operating lease liabilities | 6,173 |  |  | 6,180 |  |  |  |  |  |  |  |  |  |  |
Other liabilities | 1,004 |  |  | 1,171 |  |  |  |  |  |  |  |  |  |  |
Total VIE liabilities | $ | 38,024 |  |  | $ | 38,568 |  |  |  |  |  |  |  |  |  |  |

(1) The amounts in the above table are reflected in Note 1 on the Company’s condensed consolidated balance sheets. See the Company’s condensed consolidated balance sheets for additional information.
Other Variable Interest Entities
The Company follows guidance on the consolidation of VIEs that requires companies to utilize a qualitative approach to determine whether it is the primary beneficiary of a VIE. The process for identifying the primary beneficiary of a VIE requires consideration of the factors that indicate a party has the power to direct the activities that most significantly impact the joint ventures economic performance, including powers granted to the joint ventures program manager, powers contained in the joint venture governing board and, to a certain extent, a company's economic interest in the joint venture. The Company analyzes its joint ventures and classifies them as either:
•a VIE that must be consolidated because the Company is the primary beneficiary or the joint venture is not a VIE and the Company holds the majority voting interest with no significant participative rights available to the other partners; or
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
•a VIE that does not require consolidation and is treated as an equity method investment because the Company is not the primary beneficiary or the joint venture is not a VIE and the Company does not hold the majority voting interest.
Many of the joint ventures are deemed to be VIEs because they lack sufficient equity to finance the activities of the joint venture.
Unconsolidated joint ventures are accounted for under the equity method. For those joint ventures, the Company's investment balances for the joint venture are included in other assets on the condensed consolidated balance sheets and the Company’s pro rata share of net income or loss is included in operating income. The Company’s investments in equity method joint ventures on the condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019 was a net asset of $1,448 and $1,292, respectively. During the three months ended March 31, 2020 and 2019, the Company recognized expense of $53 and $0, respectively, from equity method joint ventures.
13. NON-CONTROLLING INTERESTS AND EQUITY
Redeemable Non-controlling Interests
The Company’s wholly owned subsidiary with a membership interest in the investment fund formed in the third quarter of 2015 has the right, beginning on the fifth anniversary of the final funding of the variable rate construction and term loans due 2023 and extending for six months, to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary, a call option. The Company’s investment fund, which was formed in the third quarter of 2015, also includes a right, beginning on the sixth anniversary of the final funding and extending for one year, for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund, a put option.
The Company’s wholly owned subsidiary with a membership interest in the investment fund formed in the second quarter of 2017 has the right, beginning on the fifth anniversary of the final funding of the non-controlling interest holder and extending for six months, to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary, a call option. The Company’s investment fund formed in the second quarter of 2017 also includes a right, beginning on the sixth anniversary of the final funding and extending for one year, for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund, a put option.
The Company’s wholly owned subsidiary with a membership interest in the investment fund formed in the second quarter of 2018 has the right, beginning on the fifth anniversary of the investment fund’s final project being placed into service and extending for six months, to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary, a call option. The Company’s investment fund formed in the second quarter of 2018 also includes a right, upon the expiration of the call option and extending for six months, for the non-controlling interest holder to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund, a put option.
The Company’s wholly owned subsidiary with a membership interest in the investment fund formed in the fourth quarter of 2018 has the right, beginning on the fifth anniversary on the last projects placed in-service date and extending for six months, to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary, a call option. The Company’s investment fund formed in the fourth quarter of 2018 also includes a right, upon the expiration of the call option and extending for six months, for the non-controlling interest partner to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund, a put option.
The Company’s wholly owned subsidiary with a membership interest in the investment fund formed in the fourth quarter of 2019 has the right, beginning on the fifth anniversary on the last projects placed in-service date and extending for six months, to elect to require the non-controlling interest holder to sell all of its membership units to the Company’s wholly owned subsidiary, a call option. The Company’s investment fund formed in the fourth quarter of 2019 also includes a right, beginning six months after the fifth anniversary of the final funding and extending for one year, for the non-controlling interest partner to elect to require the Company’s wholly owned subsidiary to purchase all of its membership interests in the fund, a put option.
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
The purchase price for two of the investment funds investors’ interests under the call options is equal to the fair market value of such interest at the time the option is exercised. The purchase price for two of the investment funds investor’s interests under the call options is equal to the greater of (i) the fair market value of such interests at the time the option is exercised or (ii) 7% of the investors’ contributed capital balance at the time the option is exercisable. The purchase price for the remaining investment fund investor’s interests under the call options is equal to the greater of (i) the fair market value of such interests at the time the option is exercised or (ii) 5% of the investors’ contributed capital balance at the time the option is exercisable.The call options are exercisable beginning on the date that specified conditions are met for each respective fund. None of the call options are expected to become exercisable prior to 2021.
The purchase price for two of the funds investors’ interests in the investment funds under the put options is the lessor of fair market value at the time the option is exercised and a specified amount, ranging from $659 - $917. The purchase price for the two remaining funds investors’ interest in the investment funds under the put options is the sum of (i) the fair market value at the time the option is exercised, and (ii) the closing costs incurred by the investor in connection with the exercise of the put option. The purchase price for the remaining fund investors’ interest in the investment funds under the put options is the lessor of fair market value at the time the option is exercised and the sum of (i) 5% of the investors’ contributed capital balance at the time the option is exercisable, and (ii) the fair market value of any unpaid tax law change losses incurred by the investor in connection with the exercise of the put option. The put options for the investment funds are exercisable beginning on the date that specified conditions are met for each respective fund. The put options are not expected to become exercisable prior to 2022.
Because the put options represents redemption features that are not solely within the control of the Company, the non-controlling interests in these funds are presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value at each reporting date (which is impacted by attribution under the hypothetical liquidation at book value method) or their estimated redemption value in each reporting period. At both March 31, 2020 and December 31, 2019 redeemable non-controlling interests were reported at their carrying value totaling $31,939 and $31,616, respectively, as the carrying value at each reporting period was greater than the estimated redemption value.
14. EARNINGS PER SHARE AND OTHER EQUITY RELATED INFORMATION
Earnings Per Share
Basic earnings per share is calculated using the Company’s weighted-average outstanding common shares, including vested restricted shares. When the effects are not anti-dilutive, diluted earnings per share is calculated using the weighted-average outstanding common shares; the dilutive effect of convertible preferred stock, under the “if converted” method; and the treasury stock method with regard to warrants and stock options; all as determined under the treasury stock method.

| Three Months Ended March 31, |  |  |  |  |  |  |
| 2020 |  | 2019 |  |  |  |  |
Net income attributable to common shareholders | $ | 6,201 |  |  | $ | 4,147 |  |  |  |  |  |
Basic weighted-average shares outstanding | 47,384 |  |  | 46,293 |  |  |  |  |  |
Effect of dilutive securities: |  |  |  |  |  |  |  |
Stock options | 1,113 |  |  | 1,361 |  |  |  |  |  |
Diluted weighted-average shares outstanding | 48,497 |  |  | 47,654 |  |  |  |  |  |

For the three months ended March 31, 2020 and 2019, the total number of shares of common stock related to stock options excluded from the calculation of dilutive shares, as the effect would be anti-dilutive, were 431 and 293, respectively.
Stock-Based Compensation Expense
For the three months ended March 31, 2020 and 2019, the Company recorded stock-based compensation expense, including expense related to the Employee Stock Purchase Plan (“ESPP”), of $429 and $385, respectively, in connection with the stock-based payment awards. The compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income. As of March 31, 2020, there was $10,757 of unrecognized
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
compensation expense related to non-vested stock option awards that is expected to be recognized over a weighted-average period of 3.0 years.
No awards to individuals who were not either an employee or director of the Company occurred during the three months ended March 31, 2020 or during the year ended December 31, 2019.
Stock Option Grants
During the three months ended March 31, 2020, the Company granted 196 common stock options to certain employees and directors under its 2010 Stock Incentive Plan, which have a contractual life of ten years and vest over a five-year period.
Share Repurchase Program
In April 2016, the Company’s Board of Directors authorized the repurchase of up to $10,000 of the Company’s Class A common stock from time to time on the open market in privately negotiated transactions. The Company’s Board of Directors authorized an increase in the Company’s share repurchase authorization to $15,000 of the Company's Class A common stock in February 2017 and to $17,553 of the Company's Class A common stock in August 2019, in each case, from time to time on the open market or in privately negotiated transactions. The timing and amount of any shares repurchased will be determined by the Company's management based on its evaluation of market conditions and other factors. Any repurchased shares will be available for use in connection with its stock plans and for other corporate purposes. The repurchase program has and will be funded using the Company's working capital and borrowings under its revolving line of credit. The Company accounts for share repurchases using the cost method. Under this method, the cost of the share repurchase is recorded entirely in treasury stock, a contra equity account. During the three months ended March 31, 2020, the Company repurchased an immaterial amount of shares of common stock. During the three months ended March 31, 2019, the Company did not repurchase any shares of common stock.
15. BUSINESS SEGMENT INFORMATION
The Company reports results under ASC 280, Segment Reporting. The Company’s reportable segments are U.S. Regions, U.S. Federal, Canada and Non-Solar Distributed Generation (“DG”). The Company’s 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, which include the construction of small-scale plants that the company owns or develops for customers that produce electricity, gas, heat or cooling from renewable sources of energy and O&M services. The Company’s 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 the Company owns and O&M services for customer owned small-scale plants. The “All Other” category offers enterprise energy management services, consulting services 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 reports of the Company’s chief operating decision maker do not include assets at the operating segment level. The accounting policies are the same as those described in the summary of significant accounting policies in Note 2 included in the Company’s annual report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 4, 2020.
An analysis of the Company’s business segment information and reconciliation to the condensed consolidated financial statements is as follows:
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)

| U.S. Regions |  | U.S. Federal |  | Canada |  | Non-Solar DG |  | All Other |  | Total Consolidated
Three Months Ended March 31, 2020 |  |  |  |  |  |  |  |  |  |  |
Revenues | $ | 84,727 |  |  | $ | 68,745 |  |  | $ | 11,392 |  |  | $ | 22,724 |  |  | $ | 24,825 |  |  | $ | 212,413 |
Interest income | 36 |  |  | 40 |  |  | — |  |  | 14 |  |  | — |  |  | 90 |
Interest expense | 1,481 |  |  | 746 |  |  | 172 |  |  | 1,045 |  |  | 15 |  |  | 3,459 |
Depreciation and amortization of intangible assets | 2,763 |  |  | 1,017 |  |  | 391 |  |  | 5,287 |  |  | 376 |  |  | 9,834 |
Unallocated corporate activity | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (10,346) |
Income before taxes, excluding unallocated corporate activity | 3,723 |  |  | 7,094 |  |  | (221) |  |  | 1,669 |  |  | 2,212 |  |  | 14,477 |
Three Months Ended March 31, 2019 |  |  |  |  |  |  |  |  |  |  |
Revenues | $ | 55,597 |  |  | $ | 43,057 |  |  | $ | 7,148 |  |  | $ | 21,230 |  |  | $ | 23,080 |  |  | $ | 150,112 |
Interest income | 63 |  |  | 49 |  |  | — |  |  | 21 |  |  | — |  |  | 133 |
Interest expense | 857 |  |  | 210 |  |  | 164 |  |  | 1,577 |  |  | — |  |  | 2,808 |
Depreciation and amortization of intangible assets | 2,182 |  |  | 817 |  |  | 275 |  |  | 5,216 |  |  | 348 |  |  | 8,838 |
Unallocated corporate activity | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (8,008) |
Income before taxes, excluding unallocated corporate activity | (278) |  |  | 5,621 |  |  | (289) |  |  | 1,381 |  |  | 4,701 |  |  | 11,136 |

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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
16. DEBT
As of March 31, 2020 and December 31, 2019, the Company’s debt comprised the following:

| Commencement Date | Maturity Date | Acceleration Clause(2) | Rate as of |  |  |
|  |  |  | March 31, 2020 | March 31, 2020 |  | December 31, 2019
Senior secured credit facility, interest at varying rates monthly in arrears | June 2015 |  | June 2024 |  | NA | 4.36 | % | $ | 142,022 |  |  | $ | 112,216 |
Variable rate term loan payable in semi-annual installments | January 2006 |  | February 2021 |  | Yes | 3.70 | % | 625 |  |  | 625 |
Variable rate term loan payable in semi-annual installments | January 2006 |  | June 2024 |  | Yes | 3.45 | % | 6,609 |  |  | 6,609 |
Term loan payable in quarterly installments | March 2011 |  | March 2021 |  | Yes | 7.25 | % | 666 |  |  | 831 |
Term loan payable in monthly installments | October 2011 |  | June 2028 |  | NA | 6.11 | % | 3,314 |  |  | 3,649 |
Variable rate term loan payable in quarterly installments | October 2012 |  | May 2020 |  | NA | 4.95 | % | 27,617 |  |  | 28,217 |
Variable rate term loan payable in quarterly installments | September 2015 |  | March 2023 |  | NA | 4.20 | % | 15,995 |  |  | 15,976 |
Term loan payable in quarterly installments | August 2016 |  | July 2031 |  | NA | 4.95 | % | 3,392 |  |  | 3,769 |
Term loan payable in quarterly installments | March 2017 |  | March 2028 |  | NA | 5.00 | % | 3,416 |  |  | 3,521 |
Term loan payable in monthly installments | April 2017 |  | April 2027 |  | NA | 4.50 | % | 21,823 |  |  | 22,553 |
Term loan payable in quarterly installments | April 2017 |  | February 2034 |  | NA | 5.61 | % | 2,487 |  |  | 2,706 |
Variable rate term loan payable in quarterly installments | June 2017 |  | December 2027 |  | NA | 3.90 | % | 11,740 |  |  | 11,740 |
Variable rate term loan payable in quarterly installments | February 2018 |  | August 2022 |  | Yes | 8.95 | % | 12,436 |  |  | 15,645 |
Term loan payable in quarterly installments | June 2018 |  | December 2038 |  | Yes | 5.15 | % | 28,073 |  |  | 28,583 |
Variable rate term loan payable in semi-annual installments | June 2018 |  | June 2033 |  | Yes | 3.50 | % | 9,003 |  |  | 9,003 |
Variable rate term loan payable in monthly/quarterly installments | October 2018 |  | October 2029 |  | Yes | 3.94 | % | 8,923 |  |  | 9,092 |
Long term finance liability in semi-annual installments(3) | July 2019 |  | July 2039 |  | NA | 0.28 | % | 3,785 |  |  | 3,841 |
Long term finance liability in semi-annual installments(3) | November 2019 |  | November 2039 |  | NA | — | % | 6,970 |  |  | 8,794 |
Term loan payable in quarterly installments | December 2019 |  | December 2021 |  | Yes | 6.500 | % | 24,167 |  |  | 27,226 |
Financing leases(1) |  |  |  |  | 28,378 |  |  | 28,497 |
|  |  |  |  | $ | 361,441 |  |  | $ | 343,093 |
Less - current maturities |  |  |  |  | 69,282 |  |  | 69,969 |
Less - deferred financing fees |  |  |  |  | 6,606 |  |  | 6,943 |
Long term debt and financing lease liabilities |  |  |  |  | $ | 285,553 |  |  | $ | 266,181 |

(1) Financing leases do not include approximately $21,765 in future interest payments
(2) These agreements have acceleration causes that, in the event of default, as defined, the payee has the option to accelerate payment terms and make due the remaining principal and the required interest balance according to the agreement
(3) These agreements are sale-leaseback arrangements that provides for the sale of solar PV projects to a third party investor and the simultaneous leaseback of the projects. In accordance with Topic 842, Leases, these transactions are accounted for as a
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AMERESCO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - (Continued)
(in thousands, except per share amounts)
failed sale as the Company retains control of the underlying assets and as such, are classified as financing liabilities. The low interest rates are the results of tax credits which were transferred to the counterparty.
Senior Secured Credit Facility - Revolver and Term Loan
As of March 31, 2020, the Company amended the Company’s senior secured credit facility which increased the total funded debt to EBITDA covenant ratio to a maximum of 3.75 from 3.25 for the year ended December 31, 2020. The amendment also increased the Eurocurrency Rate floor to 1% from 0%. The total commitment under the amended credit facility (revolving credit, term loan and swing line) remains unchanged, which is $185,000.
At March 31, 2020, funds of $20,736 are available for borrowing under the revolving credit facility.
Variable Rate Term Loan
In December 2019, the Company amended the variable rate term loan, revised certain debt service reserve requirements and certain distribution conditions under the loan agreement. During March 2020, the Company also amended the agreement to extend the date of the final principal payment to the maturity date of the loan, May 31, 2020. This amendment also revised certain distribution conditions under the loan agreement.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Y ou should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and the related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2019 included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed on March 4, 2020 with the U.S. Securities and Exchange Commission (“SEC”). This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward looking statements include statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans, objectives of management, expected market growth and other characterizations of future events or circumstances. All statements, other than statements of historical fact, including statements that refer to our expectations as to the future growth of our business and associated expenses; our expectations as to revenue generation; the future availability of borrowings under our revolving credit facility; the expected future growth of the market for energy efficiency and renewable energy solutions; our backlog, awarded projects and recurring revenue and the timing of such matters; our expectations as to acquisition activity; the impact of any restructuring; the uses of future earnings; our intention to repurchase shares of our Class A common stock; the expected energy and cost savings of our projects; and the expected energy production capacity of our renewable energy plants; and other characterizations of future events or circumstances are forward-looking statements. Currently, one of the most significant factors, however, is the potential adverse effect of the current pandemic of the novel coronavirus, or COVID-19, on our financial condition, results of operations, cash flows and performance and the global economy and financial markets. The extent to which COVID-19 impacts us, suppliers, customers, employees and supply chains will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, you should interpret many of the risks identified in this report, as well as the risks set forth below, as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Forward looking statements are often, but not exclusively, identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “estimate,” “target,” “project,” “predict” or “continue,” and similar expressions or variations. These forward-looking statements are based on current expectations and assumptions that are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially and adversely from future results expressed or implied by such forward-looking statements. Risks, uncertainties and factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors,” set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2019 and elsewhere in this Quarterly Report on Form 10-Q. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Subsequent events and developments may cause our views to change. However, while we may elect to update these forward looking statements at some point in the future, we have no current intention of doing so and undertake no obligation to do so except to the extent required by applicable law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.
Overview
Ameresco is a leading provider of energy efficiency solutions for facilities throughout North America and Europe. We provide solutions that enable customers to reduce their energy consumption, lower their operating and maintenance costs and realize environmental benefits. Our comprehensive set of services includes upgrades to a facility’s energy infrastructure and the construction and operation of small-scale renewable energy plants.
In addition to organic growth, strategic acquisitions of complementary businesses and assets have been an important part of our historical development. Since inception, we have completed numerous acquisitions, which have enabled us to broaden our service offerings and expand our geographical reach.
COVID-19 Update
In March 2020, the World Health Organization categorized Coronavirus Disease 2019 (“COVID-19”) as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. We are closely monitoring the impact of the COVID-19 pandemic on all aspects of our business, including how it will impact our suppliers, customers, employees and supply chains. While we did not incur significant disruptions during the three months ended March 31, 2020 from the COVID-19 pandemic, we are unable to predict the impact that the COVID-19 pandemic will have on our financial condition, results of operations and cash flows due to numerous uncertainties. These uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact and the direct and indirect economic effects of the pandemic and containment measures, among others.
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Further, the overall impact of COVID-19 on our condensed consolidated results of operations for the three months ended March 31, 2020 was not material. However, the impact that COVID-19 will have on our consolidated results of operations throughout 2020 remains uncertain. We expect to experience delays in our project award conversions and potential construction slowdowns as a result of known shelter-in-place restrictions. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.
Effects of Seasonality
We are subject to seasonal fluctuations and construction cycles, particularly in climates that experience colder weather during the winter months, such as the northern United States and Canada, or at educational institutions, where large projects are typically carried out during summer months when their facilities are unoccupied. In addition, government customers, many of which have fiscal years that do not coincide with ours, typically follow annual procurement cycles and appropriate funds on a fiscal-year basis even though contract performance may take more than one year. Further, government contracting cycles can be affected by the timing of, and delays in, the legislative process related to government programs and incentives that help drive demand for energy efficiency and renewable energy projects. As a result, our revenues and operating income in the third and fourth quarter are typically higher, and our revenues and operating income in the first quarter are typically lower, than in other quarters of the year. As a result of such fluctuations, we may occasionally experience declines in revenues or earnings as compared to the immediately preceding quarter, and comparisons of our operating results on a period-to-period basis may not be meaningful.
Our annual and quarterly financial results are also subject to significant fluctuations as a result of other factors, many of which are outside our control. 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 of our Annual Report on Form 10-K for the year ended December 31, 2019 (“Annual Report”), and the risks described in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.
Backlog and Awarded Projects
Total construction backlog represents projects that are active within our ESPC 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. Our sales cycle recently has been averaging 18 to 54 months. 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. At this point, we also determine the sub-contractor, 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. It may take longer, however, depending upon the size and complexity of the project. Historically, approximately 90% of our awarded backlog projects have resulted in a signed contract. After the customer and Ameresco agree to the terms of the contract and the contract becomes executed, the project moves to fully-contracted backlog. The contracts reflected in our fully-contracted backlog typically have a construction period of 12 to 36 months and we typically expect to recognize revenue for such contracts over the same period. Fully-contracted backlog begins converting into revenues generated from backlog over time using cost based input methods once construction has commenced. See “We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts” and “In order to secure contracts for new projects, we typically face a long and variable selling cycle that requires significant resource commitments and requires a long lead time before we realize revenues” in Item 1A, Risk Factors in our Annual Report, and the risks described in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.
The overall impact of COVID-19 on our condensed consolidated results of operations for the three months ended March 31, 2020 was not material. However, the impact that COVID-19 will have on our consolidated results of operations throughout 2020 remains uncertain. We expect to experience delays in our project award conversions and potential construction slowdowns as a result of known shelter-in-place restrictions. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources. See “We may not recognize all revenues from our backlog or receive all payments anticipated under awarded projects and customer contracts” and “In order to secure contracts for new projects, we typically face a long and variable selling cycle that requires significant resource commitments and requires a long lead time before we realize revenues” in Item 1A, Risk Factors in our Annual Report, and the risks described in Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.
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As of March 31, 2020, we had fully-contracted backlog of approximately $1,049.9 million in expected future revenues under signed customer contracts for the installation or construction of projects; and we also had been awarded projects for which we had not yet signed customer contracts with estimated total future revenues of an additional $1,130.3 million. As of March 31, 2019, we had fully-contracted backlog of approximately $753.6 million in expected future revenues under signed customer contracts for the installation or construction of projects; and we also had been awarded projects for which we had not yet signed customer contracts with estimated total future revenues of an additional $1,283.0 million.
We define our 12-month backlog as the estimated amount of revenues that we expect to recognize in the next twelve months from our fully-contracted backlog. As of March 31, 2020 and 2019, our 12-month backlog was $514.4 million and $389.3 million, respectively.
As of March 31, 2020, we had O&M backlog of approximately $1,131.7 million in expected future revenues under signed multi-year customer contracts for the delivery of O&M services. As of March 31, 2019, we had O&M backlog of approximately $917.9 million in expected future revenues under signed multi-year customer contracts for the delivery of O&M services.
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 $658.6 million and $549.3 million as of March 31, 2020 and 2019, respectively.
Critical Accounting Policies and Estimates
This discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expense and related disclosures. The most significant estimates with regard to these condensed consolidated financial statements relate to our estimates of final construction contract profit in accordance with accounting for long-term contracts under the revenue recognition requirements of contracts with our customers, allowance for credit losses, inventory reserves, realization of project development costs, leases, fair value of derivative financial instruments, accounting for business acquisitions, stock-based awards, impairment of long-lived assets and goodwill, income taxes, self insurance reserves and potential liability in conjunction with certain commitments and contingencies. Actual results could differ from those estimates.
Such estimates and assumptions are based on historical experience and on various other factors that management believes to be reasonable under the circumstances. Estimates and assumptions are made on an ongoing basis, and accordingly, the actual results may differ from these estimates under different assumptions or conditions.
The following are certain critical accounting policies that, among others, affect our more significant judgments and estimates used in the preparation of our condensed consolidated financial statements:
•Revenue Recognition;
•Energy Assets;
•Leases;
•Goodwill and Intangible Assets;
•Derivative Financial Instruments; and
•Variable Interest Entities.
Further details regarding our critical accounting policies and estimates can be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report. In addition, please refer to Note 2, “Summary of Significant Accounting Policies,” of our Notes to the audited consolidated financial statements for the year ended December 31, 2019, and notes thereto, included in the Company’s Annual Report. The Company has determined that no material changes concerning our critical accounting policies have occurred since December 31, 2019.
Recent Accounting Pronouncements
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See Note 2, Summary of Significant Accounting Policies, of Notes to Condensed Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Results of Operations
The following tables set forth certain financial data from the condensed consolidated statements of income expressed as a percentage of revenues for the periods presented (in thousands):

| Three Months Ended March 31, |  |  |  |  |  |
| 2020 |  |  |  | 2019 |  |
| Dollar |  | % of |  | Dollar |  | % of
| Amount |  | Revenues |  | Amount |  | Revenues
Revenues | $ | 212,413 |  |  | 100.0 | % |  | $ | 150,112 |  |  | 100.0 | %
Cost of revenues | 173,967 |  |  | 81.9 | % |  | 117,480 |  |  | 78.3 | %
Gross profit | 38,446 |  |  | 18.1 | % |  | 32,632 |  |  | 21.7 | %
Selling, general and administrative expenses | 28,924 |  |  | 13.6 | % |  | 26,083 |  |  | 17.4 | %
Operating income | 9,522 |  |  | 4.5 | % |  | 6,549 |  |  | 4.4 | %
Other expenses, net | 5,389 |  |  | 2.5 | % |  | 3,421 |  |  | 2.3 | %
Income before provision from income taxes | 4,133 |  |  | 1.9 | % |  | 3,128 |  |  | 2.1 | %
Income tax provision (benefit) | (2,503) |  |  | (1.2) | % |  | 257 |  |  | 0.2 | %
Net income | 6,636 |  |  | 3.1 | % |  | 2,871 |  |  | 1.9 | %
Net loss (income) attributable to redeemable non-controlling interest | (435) |  |  | (0.2) | % |  | 1,276 |  |  | 0.9 | %
Net income attributable to common shareholders | $ | 6,201 |  |  | 2.9 | % |  | $ | 4,147 |  |  | 2.8 | %

Revenues
The following tables set forth a comparison of our revenues for the periods presented (in thousands):

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 212,413 |  |  | $ | 150,112 |  |  | $ | 62,301 |  |  | 41.5 | %

Revenues increased $62.3 million, or 41.5%, to $212.4 million for the three months ended March 31, 2020 compared to the same period of 2019 primarily due to a $29.1 million increase in our U.S. Regions segment, a $25.7 million increase in our U.S. Federal segment, a $4.2 million increase in our Canada segment, a $1.7 million increase in our All Other segment and a $1.5 million increase in our Non-Solar DG segment.
Cost of Revenues and Gross Profit
The following tables set forth a comparison of our cost of revenues and gross profit for the periods presented (in thousands):

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Cost of revenues | $ | 173,967 |  |  | $ | 117,480 |  |  | $ | 56,487 |  |  | 48.1 | %
Gross margin | 18.1 | % |  | 21.7 | % |  |  |  |

Cost of revenues increased $56.5 million, or 48.1%, to $174.0 million and gross margin percentage decreased to 18.1%, from 21.7%, for the three months ended March 31, 2020 compared to the same period of 2019. The increase in cost of revenues is primarily due to the increase in project revenues from our U.S. Regions and U.S. Federal segment. The decrease in gross
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margin is primarily due to a mix of lower margin projects in our U.S. Regions and U.S. Federal segment and lower margin energy and incentive revenue in our Non-Solar DG segment.
Selling, General and Administrative Expenses
The following tables set forth a comparison of our selling, general and administrative expenses for the periods presented (in thousands):

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Selling, general and administrative expenses | $ | 28,924 |  |  | $ | 26,083 |  |  | $ | 2,841 |  |  | 10.9 | %

Selling, general and administrative expenses increased $2.8 million, or 10.9%, to $28.9 million for the three months ended March 31, 2020, compared to the same period of 2019, primarily due to a gain of $2.2 million recognized on the deconsolidation of a variable interest entity during the first quarter of 2019.
Amortization expense of intangible assets related to customer relationships, non-compete agreements, technology and trade names is included in selling, general and administrative expenses in the condensed consolidated statements of income. For the three months ended March 31, 2020 and 2019, we recorded amortization expense related to these intangible assets of $0.2 million.
Other Expenses, Net
Other expenses, net, includes gains and losses from derivatives and foreign currency transactions, interest income and expenses and amortization of deferred financing costs. Other expenses, net increased $2.0 million to $5.4 million for the three months ended March 31, 2020 compared to the same period of 2019, primarily due to higher interest expenses and unfavorable foreign exchange rate fluctuations realized.
Income Before Taxes
Income before taxes increased $1.0 million, or 32.1%, to $4.1 million for the three months ended March 31, 2020 compared to the same period of 2019, due to the reasons described above.
Provision from Income Taxes
The benefit for income taxes was $2.5 million for the three months ended March 31, 2020, compared to a provision of $0.3 million for the three months ended March 31, 2019. The estimated effective annualized tax rate impacted by period discrete items applied for the three months ended March 31, 2020 was (60.6%) of benefit compared to 8.2% of provision for the three months ended March 31, 2019.
The principal reason for the difference between the statutory rate and the estimated annual effective rate for 2020 were the effects of investment tax credits to which the Company is entitled from solar plants which have been placed into service or are forecasted to be placed into service during 2020, tax deductions related to Section 179D deduction, tax basis adjustments on certain partnership flip transactions and tax rate benefits associated with net operating loss carrybacks made possible by the passing of CARES Act on March 27, 2020. The principal reason for the difference between the statutory rate and the estimated annual effective rate for 2019 were the effects of investment tax credits to which the Company is entitled from solar plants which were placed into service or were forecasted to be placed into service during 2019.
The investment tax credits and production tax credits to which the Company may be entitled fluctuate from year to year based on the cost of the renewable energy plants the Company places or expects to place in service and production levels at Company owned facilities in the respective year. As part of the Tax Extender and Disaster Relief Act of 2019, signed into law December 20, 2019 Section 179D was extended through December 31, 2020.
Net Income and Earnings Per Share
Net income increased $3.8 million, or 131.1%, to $6.6 million for the three months ended March 31, 2020 compared to $2.9 million for the same period of 2019.
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Basic earnings per share for the three months ended March 31, 2020 was $0.13, an increase of $0.04 per share compared to the same period of 2019. Diluted earnings per share for the three months ended March 31, 2020 was $0.13, an increase of $0.04 per share, compared to the same period of 2019.
Business Segment Analysis
We report results under ASC 280, Segment Reporting. Our reportable segments for the three months ended March 31, 2020 are U.S. Regions, U.S. Federal, Canada and Non-Solar Distributed Generation (“DG”). 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, which include the 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. 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 offers enterprise energy management services, consulting services and integrated-PV. These segments do not include results of other activities, such as corporate operating expenses not specifically allocated to the segments.
U.S. Regions

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 84,727 |  |  | $ | 55,597 |  |  | $ | 29,130 |  |  | 52.4 | %
Income before taxes | $ | 3,723 |  |  | $ | (278) |  |  | $ | 4,001 |  |  | 1,439.2 | %

Revenues for our U.S. Regions segment increased $29.1 million, or 52.4%, to $84.7 million for the three months ended March 31, 2020 compared to the same period of 2019 primarily due to an increase in project revenues attributable to timing of revenue recognized as a result of the phase of active projects versus the prior year.
Income before taxes for our U.S. Regions segment increased $4.0 million, or 1,439.2%, from ($0.3 million) to $3.7 million for the three months ended March 31, 2020 and 2019, respectively, primarily due to an increase in revenues described above.
U.S. Federal

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 68,745 |  |  | $ | 43,057 |  |  | $ | 25,688 |  |  | 59.7 | %
Income before taxes | $ | 7,094 |  |  | $ | 5,621 |  |  | $ | 1,473 |  |  | 26.2 | %

Revenues for our U.S. Federal segment increased $25.7 million, or 59.7%, to $68.7 million for the three months ended March 31, 2020 compared to the same period of 2019. The increase in revenues was due primarily to an increase in project revenue attributable to timing of revenue recognized as a result of the phase of active projects versus prior year.
Income before taxes for our U.S. Federal segment increased $1.5 million, or 26.2%, to $7.1 million for three months ended March 31, 2020 compared to $5.6 million for the same period of 2019, primarily due to the increase in revenues described above.
Canada

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 11,392 |  |  | $ | 7,148 |  |  | $ | 4,244 |  |  | 59.4 | %
Income before taxes | $ | (221) |  |  | $ | (289) |  |  | $ | 68 |  |  | 23.5 | %

Revenues for our Canada segment increased to $11.4 million for the three months ended March 31, 2020 compared to $7.1 million the same period of 2019, primarily due to an increase in project revenues related to the progression of certain active projects.
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Loss before taxes for our Canada segment improved $0.1 million for the three months ended March 31, 2020 to $0.2 million of loss compared to a $0.3 million for the same period of 2019. The increase is due primarily to the increase in revenues described above partially offset by unfavorable exchange rate fluctuations versus the prior year.
Non-Solar DG

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 22,724 |  |  | $ | 21,230 |  |  | $ | 1,494 |  |  | 7.0 | %
Income before taxes | $ | 1,669 |  |  | $ | 1,381 |  |  | $ | 288 |  |  | 20.9 | %

Revenues for our Non-Solar DG segment increased $1.5 million, or 7.0%, to $22.7 million for the three months ended March 31, 2020 compared to the same period of 2019, primarily due to an increase in project revenues related to the progression of certain active projects and higher energy and incentive revenue.
Income before taxes for our Non-Solar DG segment increased $0.3 million, or 20.9%, to $1.7 million for the three months ended March 31, 2020 compared to the same period of 2019 primarily due to lower interest expenses partially offset by lower profit margins project revenues.
All Other & Unallocated Corporate Activity

| Three Months Ended March 31, |  |  |  | Dollar |  | Percentage
| 2020 |  | 2019 |  | Change |  | Change
Revenues | $ | 24,825 |  |  | $ | 23,080 |  |  | $ | 1,745 |  |  | 7.6 | %
Income before taxes | $ | 2,212 |  |  | $ | 4,701 |  |  | $ | (2,489) |  |  | (52.9) | %
Unallocated corporate activity | $ | (10,346) |  |  | $ | (8,008) |  |  | $ | (2,338) |  |  | (29.2) | %

Revenues for our All Other segment increased $1.7 million, or 7.6%, to $24.8 million for the three months ended March 31, 2020 compared to the same period of 2019 primarily due to an increase in project revenues attributable to timing of revenue recognized as a result of the phase of active projects versus the prior year.
Income before taxes for our All Other segment decreased $2.5 million, or 52.9%, to $2.2 million for the three months ended March 31, 2020 compared to the same period of 2019 due to a gain of $2.2 million recognized on the deconsolidation of a variable interest entity during the first quarter of 2019.
Unallocated corporate activity includes all corporate level selling, general and administrative expenses and other expenses not allocated to the segments. We do not allocate any indirect expenses to the segments.
Liquidity and Capital Resources
Sources of liquidity. Since inception, we have funded operations primarily through cash flow from operations, advances from Federal ESPC projects and various forms of debt. We believe that the cash and cash equivalents and availability under our revolving senior secured credit facility, combined with our access to credit markets, will be sufficient to fund our operations through the next twelve months and thereafter. See Note 2 of the audited consolidated financial statements for the year ended December 31, 2019, and notes thereto, included in the Company’s Annual Report.
We believe we have sufficient liquidity to satisfy our cash needs, however, we continue to evaluate and take action, as necessary, to preserve adequate liquidity and ensure that our business can continue to operate during these uncertain times. This includes limiting discretionary spending across the organization and re-prioritizing our capital projects amid the COVID-19 pandemic.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) which includes modifications to the limitation on business interest expense and net operating loss provisions, and provides a payment delay of employer payroll taxes during 2020 after the date of enactment. We estimate the payment of approximately $5.0 million of employer payroll taxes otherwise due in 2020 will be delayed with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022.
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Proceeds from our Federal ESPC projects are generally received through agreements to sell the ESPC receivables related to certain ESPC contracts to third-party investors. We use the advances from the investors under these agreements to finance the projects. Until recourse to us ceases for the ESPC receivables transferred to the investor, upon final acceptance of the work by the government customer, we are the primary obligor for financing received. 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 receive under these ESPC agreements are recorded as financing cash inflows. The use of the cash received under these arrangements to pay project costs is classified as operating cash flows. Due to the manner in which the ESPC contracts with the third-party investors are structured, our reported operating cash flows are materially impacted by the fact that operating cash flows only reflect the ESPC contract expenditure outflows and do not reflect any inflows from the corresponding contract revenues. Upon acceptance of the project by the federal customer the ESPC receivable and corresponding ESPC liability are removed from our condensed consolidated balance sheet as a non-cash settlement.
Our service offering also includes the development, construction and operation of small-scale renewable energy plants. Small-scale renewable energy projects, or energy assets, can either be developed for the portfolio of assets that we own and operate or designed and built for customers. Expenditures related to projects that we own are recorded as cash outflows from investing activities. Expenditures related to projects that we build for customers are recorded as cash outflows from operating activities as cost of revenues.
The amount of interest capitalized relating to construction financing during the period of construction for the three months ended March 31, 2020 and 2019 was $0.9 million and $0.8 million, respectively.
Cash flows from operating activities. Operating activities used $51.6 million of net cash during the three months ended March 31, 2020. During that period, we had net income of $6.6 million, which is net of non-cash compensation, depreciation, amortization, accretion, contingent consideration, deferred income taxes, net gain on derivatives, unrealized foreign exchange loss and other non-cash items totaling $10.2 million. Increases in accounts receivable including retainage, project development costs, and decreases in accounts payable, accrued expenses and other current liabilities, billings in excess of cost and estimated earnings, and other liabilities income taxes payable used $42.0 million in cash. These were offset by inventory, costs and estimated earnings in excess of billings, prepaid expenses and other current assets and other assets, which provided for $13.4 million in cash. Increases in Federal ESPC receivables used an additional $39.9 million. As described above, Federal ESPC operating cash flows only reflect the ESPC expenditure outflows and do not reflect any inflows from the corresponding contract revenues, which are recorded as cash inflows from financing activities due to the timing of the receipt of cash related to the assignment of the ESPC receivables to the third-party investors.
Operating activities used $58.1 million of net cash during the three months ended March 31, 2019. During that period, we had net income of $2.9 million, which is net of non-cash compensation, depreciation, amortization, accretion, contingent consideration, deferred income taxes, gain on deconsolidation of a VIE, unrealized foreign exchange loss and other non-cash items totaling $7.5 million. Increase in accounts receivable retainage, inventory, costs and estimated earnings in excess of billings, prepaids, and project development cost, and decreases in accounts payable and accrued expenses, and other liabilities used $51.2 million in cash. These were offset by decreases in accounts receivable, other assets, and increases in billings in excess of costs and estimated earnings, and income tax payable, provided for $9.7 million in cash. Increases in Federal ESPC receivables used an additional $27.0 million.
Cash flows from investing activities. Cash flows from investing activities during the three months ended March 31, 2020 used $29.3 million. We invested $28.5 million on purchases of energy assets during the three months ended March 31, 2020. In addition, we invested $0.7 million in purchases of other property and equipment, and made contributions of $0.1 million in an equity investment. We currently plan to invest approximately $160.0 million to $210.0 million in additional capital expenditures for the remainer of 2020, principally for the construction or acquisition of new renewable energy plants.
Cash flows from investing activities during the three months ended March 31, 2019 used $26.1 million. We invested $23.3 million on purchases of energy assets during the three months ended March 31, 2019. In addition, we invested $1.3 million in purchases of other property and equipment, $1.3 million related to acquisitions of businesses and made contribution of $0.2 million in an equity investment.
Cash flows from financing activities. Cash flows from financing activities during the three months ended March 31, 2020 provided $83.9 million. This was primarily due to proceeds received from Federal ESPC projects and energy assets of $62.7
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million, proceeds from exercises of stock options and ESPP of $2.5 million, and net proceeds from our senior secured credit facility of $31.0 million. This was partially offset by payments on long-term debt of $12.0 million, payments of financing fees of $0.2 million and net distribution to redeemable non-controlling interests of $0.1 millions.
Cash flows from financing activities during the three months ended March 31, 2019 provided $47.5 million. This was primarily due to proceeds received from Federal ESPC projects and energy assets of $41.3 million, proceeds from exercises of stock options and ESPP of $0.6 million and net draws on our revolving credit facility of $11.4 million. This was partially offset by payments on long-term debt of $5.7 million, and net distributions to redeemable non-controlling interests of $0.1 million.
We currently plan additional project financings of approximately $150.0 million to $200.0 million for the remainder of 2020 to fund the construction or acquisition of new renewable energy plants discussed above.
On March 31, 2020, the Company executed an amendment to its fourth amended and restated bank credit facility. The amendment increased the total funded debt to EBITDA covenant ratio from a maximum of 3.25 to 3.75 for the fiscal quarters ending March 31, 2020 through December 31, 2020. The amendment also increased the Eurocurrency Rate floor to 1% from 0% previously. The total commitment under the amended credit facility (revolving credit, term loan and swing line) remains unchanged, which is $185,000, and the amendment did not result in any restructured payments.
See Note 16, Debt, of Notes to Condensed Consolidated Financial Statements for additional discussion of items impacting the Company’s liquidity.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, such as relationships with unconsolidated entities or financial partnerships, which are often referred to as structured finance or special purpose entities, established for the purpose of facilitating financing transactions that are not required to be reflected on our balance sheet.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2020, there have been no significant changes in market risk exposures that materially affected the quantitative and qualitative disclosures as described in Item 7A to our Annual Report.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this quarterly report, or the evaluation date. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, after evaluating the effectiveness of our disclosure controls and procedures as of the evaluation date, concluded that as of the evaluation date, our disclosure controls and procedures were effective at a reasonable level of assurance.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary conduct of our business we are subject to periodic lawsuits, investigations and claims. Although we cannot predict with certainty the ultimate resolution of such lawsuits, investigations and claims against us, we do not believe that any currently pending or threatened legal proceedings to which we are a party will have a material adverse effect on our business, results of operations or financial condition.
For additional information about certain proceedings, please refer to Note 9, Commitments and Contingencies, to our Condensed Consolidated Financial Statements included under Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated into this item by reference.
Item 1A. Risk Factors
Our business is subject to numerous risks, a number of which are described below and under “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2019 (“Annual Report”). We caution you that the following important factors, among others, could cause our actual results to differ materially from those expressed in forward-looking statements made by us or on our behalf in filings with the SEC, press releases, communications with investors and oral statements. Any or all of our forward-looking statements in this Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Many factors mentioned in the discussion below and in our Annual Report will be important in determining future results. Consequently, no forward-looking statement can be guaranteed. Actual future results may differ materially from those anticipated in forward-looking statements. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law. You should, however, consult any further disclosure we make in our reports filed with the SEC.
Public health threats or outbreaks of communicable diseases could have a material adverse effect on our operations and financial results.
We may face risks related to public health threats or outbreaks of communicable diseases. A widespread healthcare crisis, such as an outbreak of a communicable disease could adversely affect the global economy our ability to conduct business for an indefinite period of time. For example, the ongoing global Coronavirus Disease 2019 (COVID-19) pandemic, has negatively impacted global economy, disrupted financial markets and international trade, resulted in increased unemployment levels and significantly impacted global supply chains. In addition, Federal, state, and local governments have implemented various mitigation measures, including travel restrictions, border closings, restrictions on public gatherings, shelter-in-place restrictions and limitations on business. Although we are considered an essential business, some of these actions have adversely impacted the ability of our employees, contractors, suppliers, customers, and other business partners to conduct business activities, and could ultimately do so for an indefinite period of time. The COVID-19 impacts described above could have a material adverse effect on our results of operations, financial condition, and liquidity. In particular, the continued spread of COVID-19 and efforts to contain the virus could:
•impact the length of our sales cycle;
•cause us to experience an increase in delayed payments from customers and uncollectable accounts;
•cause delays and disruptions in the completion of certain projects;
•impact availability of qualified personnel; and
•cause other unpredictable events.
The situation surrounding COVID-19 remains fluid and the potential for a material impact on our results of operations, financial condition, and liquidity increases the longer the virus impacts activity levels in the United States and globally. For this reason, we cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on our results of operations, financial position, and liquidity. The extent to which the COVID-19 pandemic may impact our business, operating results, financial condition, or liquidity will depend on future developments, including the duration of the outbreak, travel restrictions, business and workforce disruptions, and the effectiveness of actions taken to contain and treat the disease.
Due to the COVID-19 pandemic, we have experienced a lengthening of our selling cycle and, if this slowdown continues, the timeline for realizing revenue on new projects may be further delayed.
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Historically, the sales, design and construction process for energy efficiency and renewable energy projects recently has been taking from 18 to 54 months on average, with sales to federal government and housing authority customers tending to require the longest sales processes. We have been experiencing a lengthening of our sales cycle as a result of the impacts of the COVID-19 pandemic, as customers move to adjust operations and conserve cash. We cannot predict the timeline of the COVID-19 pandemic and, therefore, cannot predict the timeline for our selling cycle in the current conditions. Our sales process continues to require the dedication of significant time by our sales and management personnel and our use of significant financial resources, with no certainty of success or recovery of our related expenses. A potential customer may go through the entire sales process and not accept our proposal. All of these factors can contribute to fluctuations in our quarterly financial performance and increase the likelihood that our operating results in a particular quarter will fall below investor expectations. These factors could also adversely affect our business, financial condition and operating results due to increased spending by us that is not offset by increased revenues.
We may be unable to complete or operate our projects on a profitable basis or as we have committed to our customers.
Development, installation and construction of our energy efficiency and renewable energy projects, and operation of our renewable energy projects, entails many risks, including:
•failure to receive critical components and equipment that meet our design specifications and can be delivered on schedule;
•failure to obtain all necessary rights to land access and use;
•failure to receive quality and timely performance of third-party services;
•increases in the cost of labor, equipment and commodities needed to construct or operate projects;
•permitting and other regulatory issues, license revocation and changes in legal requirements;
•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;
•health or similar issues, such as a pandemic or epidemic, such as the novel coronavirus (COVID-19);
•labor disputes and work stoppages;
•mishandling of hazardous substances and waste; and
•other events outside of our control.
Any of these factors could give rise to construction delays and construction and other costs in excess of our expectations. This could prevent us from completing construction of our projects, cause defaults under our financing agreements or under contracts that require completion of project construction by a certain time, cause projects to be unprofitable for us, or otherwise impair our business, financial condition and operating results.
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.
Our provision for income taxes is subject to volatility and could be adversely affected by changes in tax laws or regulations, particularly changes in tax incentives in support of energy efficiency. For example, certain deductions relating to energy efficiency have expiration dates which could significantly alter the existing tax code, including the removal of these credits prior to their scheduled expiration. The 30% investment tax credit (“ITC”) relating to the installation of solar power expired on December 31, 2019, after which it will fall to 26 percent in 2020, 22 percent in 2021, and 10 percent in 2022 and future years. If these or other deductions and credits expire without being extended, or otherwise are reduced or eliminated, our effective tax rate would increase, which could increase our income tax expense and reduce our net income.
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. Section 179D was extended through December 31, 2020 as part of the Tax Extender and Disaster Relief Act of 2019 which became law on December 20, 2019. There is no
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assurance that Section 179D will continue to be extended retroactively or otherwise and were the deduction not available it would significantly affect our tax rate.
More recently, on March 18, 2020, the Families First Coronavirus Response Act (“FFCR Act”), and on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) were each enacted in response to the COVID-19 pandemic. The FFCR Act and the CARES Act contain numerous income tax provisions, such as relaxing limitations on the deductibility of interest and the use of net operating losses arising in taxable years beginning after December 31, 2017. We are currently evaluating the impact of this legislation on our consolidated financial position, results of operations, and cash flows. Future regulatory guidance under the FFCR Act and the CARES Act remains forthcoming, and such guidance could ultimately increase or lessen their impact on our business and financial condition. It is also highly possible that Congress will enact additional legislation in connection with the COVID-19 pandemic, some of which could have an impact on us.
The determination of the benefit from (or provision for) income taxes requires complex estimations and significant judgments concerning the applicable tax laws. If in the future any element of tax legislation changes the related accounting guidance for income tax, it could affect our income tax position and we may need to adjust the benefit from (or provision for) income taxes accordingly.
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 2015 through 2018 are subject to audit by federal, state and foreign tax authorities. Though we regularly assess the likelihood of adverse outcomes from such examinations and the adequacy of our provision for income taxes, there can be no assurance that such provision is sufficient and that a determination by a tax authority will not have an adverse effect on our net income.
A substantial portion of our earnings are derived from the sale of renewable energy certificates (“RECs”) and other environmental attributes, and our failure to be able to sell such attributes could materially adversely affect our business, financial condition and results of operation.
A substantial portion of our earnings are attributable to our sale of renewable energy certificates (“RECs”) and other environmental attributes generated by our energy assets. These attributes are used as compliance purposes for state-specific or U.S. federal policy.
We own and operate solar PV installations which derive a significant portion of their revenues from the sale of solar renewable energy certificates (“SRECs”), which are produced as a result of generating electricity. The value of these SRECs is determined by the supply and demand of SRECs in the states in which the solar PV installations are installed. 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. Such biofuel may qualify for certain environmental attribute mechanisms, such as renewable identification numbers (“RINs”) which are used for compliance purposes under the Renewable Fuel Standard (“RFS”) program. The RFS is a U.S. federal policy that requires transportation fuel to contain a minimum volume of renewable fuel. The U.S. Environmental Protection Agency (“EPA”) administers the RFS program and may periodically undertake regulatory action involving the RFS, including annual volume standards for renewable fuel.
We sometimes seek to sell forward a portion of our SRECs and other environmental attributes under contracts to fix the revenues from those attributes for financing purposes or hedge against future declines in prices of such environmental attributes. If our renewable energy facilities do not generate the amount of renewable energy attributes sold under such forward contracts or if for any reason the renewable energy we generate does not produce SRECs or other environmental attributes for a particular state, we may be required to make up the shortfall of SRECs or other environmental attributes under such forward contracts through purchases on the open market or make payments of liquidated damages.
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.
The market price for renewable energy attributes fluctuates based on a variety of factors including, but not limited to, governmental and regulatory action, perceptions concerning the prospect for changes in the renewable fuels standards or renewable portfolio standards, the future supply of tradable environmental attributes, and other market dynamics. In particular, during the current COVID-19 pandemic, as restrictions on travel continue and there has been lower electricity and fuel
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consumption, we have observed increased volatility in the market prices for these renewable energy attributes, as well as price reductions in certain markets. As a result, we may not be able to sell our renewable energy attributes at a price that is favorable to us. Any significant or sustained decline in the market price of renewable energy attributes could have a material adverse effect on our business, financial condition and results of operations.
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Item 2. Unregistered Sales of Equity and Use of Proceeds
Stock Repurchase Program
The following table provides information as of and for the quarter ended March 31, 2020 regarding shares of our Class A common stock that were repurchased under our stock repurchase program authorized by the Board of Directors on April 27, 2016, as increased from time to time (the “Repurchase Program”):

Period | Total Number of Shares Purchased |  | Average Price Paid per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
Jan 1, 2020 - Jan 31, 2020 | — |  |  | — |  |  | — |  |  | $ | 5,903,540 |
Feb 1, 2020 - Feb 29, 2020 | — |  |  | — |  |  | — |  |  | $ | 5,903,540 |
March 1, 2020 - March 31, 2020 | 455 |  |  | 13.87 |  |  | 455 |  |  | $ | 5,897,229 |
Total | 455 |  |  | $ | 13.87 |  |  | 455 |  |  | $ | 5,897,229 |

Under the Repurchase Program, we are authorized to repurchase up to $17.6 million of our Class A common stock. Stock repurchases may be made from time to time through the open market and privately negotiated transactions. 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. The Repurchase Program may be suspended or terminated at any time without prior notice, and has no expiration date.
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Item 6. Exhibits
The exhibits listed in the Exhibit Index immediately preceding the exhibits are filed (other than exhibit 32.1) as part of this Quarterly Report on Form 10-Q and such Exhibit Index is incorporated herein by reference.
Exhibit Index

Exhibit Number | Description
10.1.1 | Fourth Amended and Restated Credit and Security Agreement dated as of June 28, 2019 among Ameresco, Inc., certain guarantors party thereto, certain lenders party thereto from time to time and Bank of America, N.A. as Administrative Agent. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on July 1, 2019 (file no. 001-34811) and incorporated herein by reference.
10.1.2* | Amendment No. 1 to Fourth Amended and Restated Credit and Security Agreement dated March 31, 2020 among Ameresco, Inc., certain guarantors party thereto, certain lenders party thereto from time to time and Bank of America, N.A. as Administrative Agent.
10.2+ | Ameresco, Inc. Executive Management Team Additional Annual Incentive Performance Program. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2019 and filed with the Commission on August 8, 2019 (file no. 001-34811) and incorporated herein by reference.
10.3+ | Stock Ownership Guidelines. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on April 24, 2019 (file no. 001-34811) and incorporated herein by reference.
10.4+ | Offer Letter between the Company and Doran Hole dated June 26, 2019. Filed as Exhibit 10.1 to our Current Report on Form 8-k filed with the Commission on July 1, 2019 (file no. 001-34811) and incorporated herein by reference.
31.1* | Principal Executive Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2* | Principal Financial Officer Certification required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1** | Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101* | The following condensed consolidated financial statements from Ameresco, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income, (iv) Condensed Consolidated Statement of Changes in Redeemable Non-Controlling Interests and Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
| *Filed herewith.
| + Identifies a management contract or compensatory plan or arrangement in which an executive officer or director of Ameresco participates.
| **Furnished herewith.

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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| AMERESCO, INC. |  |  |
Date: May 5, 2020 | By: | /s/ Spencer Doran Hole |  |
|  | Spencer Doran Hole |  |
|  | Senior Vice President and Chief Financial Officer (duly authorized and principal financial officer) |  |

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