Ameresco, Inc.

1. DESCRIPTION OF BUSINESS

Ameresco, Inc. (including its subsidiaries, the “Company,” “Ameresco”, “we,” “our,” or “us”) was organized as a Delaware corporation on April 25, 2000. We are a leading energy infrastructure solutions provider dedicated to helping customers reduce costs, enhance resilience, and decarbonize to net zero in the global energy transition. Our comprehensive portfolio includes implementing smart energy efficiency solutions, upgrading aging infrastructure, and developing, constructing, and operating distributed energy resources. We provide solutions, both services and products, and also sell certain solar photovoltaic (“solar PV”) equipment and have completed projects that reduce energy use and deliver diversified generation solutions to Federal, state and local governments, utilities, educational and healthcare institutions, housing authorities, and commercial and industrial customers. Headquartered in Framingham, MA, we have approximately 1,600 employees providing local expertise in North America and Europe.

We are compensated through a variety of methods, including: 1) direct payments based on fee-for-services contracts (utilizing lump-sum or cost-plus pricing methodologies), 2) the sale of energy from our energy assets, and 3) direct payment for solar PV equipment and systems.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Ameresco, our subsidiaries, certain contracts in which we have a controlling financial interest and one investment fund formed to fund the purchase and operation of solar energy systems, which are consolidated with Ameresco as variable interest entities (“VIEs”). We use a qualitative approach in assessing the consolidation requirement for VIEs. This approach focuses on determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether we have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. For all periods presented, we have determined that we are the primary beneficiary in a majority of our operational VIEs. When we have determined we are the primary beneficiary, we evaluate our relationships with the VIEs on an ongoing basis to ensure that we continue to be the primary beneficiary. All significant intercompany accounts and transactions have been eliminated. Gains and losses from the translation of all foreign currency financial statements are recorded in accumulated other comprehensive loss, net, within stockholders’ equity. We prepare our consolidated financial statements in conformity with the accounting principles generally accepted in the United States of America (“GAAP”).

Reclassification and Rounding

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

Use of Estimates

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Changes in circumstances could cause actual results to differ materially from those estimates. The estimates and assumptions used in these consolidated financial statements relate to management’s estimates of final construction contract profit in accordance with accounting for long-term contracts, allowance for credit losses, realization of project development costs, leases, fair value of derivative financial instruments, accounting for business acquisitions, stock-based awards, impairment of goodwill and long-lived assets, income taxes, and potential liability in conjunction with contingent consideration.

Self-insured Health Insurance

We are self-insured for employee health insurance and the maximum exposure in fiscal year 2025 under the plan was $200 per covered participant, after which reinsurance takes effect. The liability for unpaid claims and associated expenses, including incurred but not reported claims, is determined by management and reflected in our consolidated balance sheets in accrued expenses and other current liabilities. The liability is calculated based on historical data, which considers both the frequency and settlement amount of claims. Our estimated accrual for this liability could be different than our ultimate obligation if variables such as the frequency or amount of future claims differ significantly from management’s assumptions.

Significant Risks and Uncertainties

Global factors have continued to result in global supply chain disruptions.

We have considered the impact of general global economic conditions on the assumptions and estimates used, which may change in response to this evolving situation. Results of future operations and liquidity could be adversely impacted by a number of factors including supply chain disruptions, varying levels of inflation, payments of outstanding receivable amounts beyond normal payment terms, workforce disruptions, and uncertain demand. As of the date of issuance of these consolidated financial statements, we cannot reasonably estimate the extent to which macroeconomic conditions may impact our financial condition, liquidity, or results of operations in the foreseeable future. The ultimate impact of the general global economic conditions on our business is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of time.

Cash and Cash Equivalents

Cash and cash equivalents include cash on deposit, overnight repurchase agreements and amounts invested in highly liquid money market funds. Cash equivalents consist of short-term investments with original maturities of three months or less. We maintain our accounts with financial institutions and the balances in such accounts, at times, exceed federally insured limits. This credit risk is divided among a number of financial institutions that management believes to be of high quality. The carrying amount of cash and cash equivalents approximates its fair value measured using level 1 inputs per the fair value hierarchy as defined in Note 18.

Restricted Cash

Restricted cash consists of cash and cash equivalents held in escrow accounts in association with operations and maintenance (“O&M”) reserve accounts, cash collateralized letters of credit, as well as cash required under term loans to be maintained in reserve accounts until all obligations have been indefeasibly paid in full for energy assets. The carrying amount of the cash and cash equivalents in these accounts approximates its fair value measured using level 1 inputs per the fair value hierarchy as defined in Note 18. Restricted cash also includes funds held for clients, which represent assets that, based upon our intent, are restricted for use solely for the purposes of satisfying the obligations to remit funds to third parties, primarily utility service providers, relating to our enterprise energy management services.

Accounts Receivable, Net

Accounts receivable, net are stated at the amount management expects to collect from outstanding balances. Our 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, anticipated recoveries and our forecasts. Due to the short-term nature of our receivables, the estimate of credit losses is primarily based on aged accounts receivable balances and the financial condition of our 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 our assessment, we also considered the current and expected future economic and market conditions due to global factors and determined that the estimate of credit losses was not significantly impacted as of December 31, 2025 and 2024.

Changes in the allowance for credit losses was as follows:

Accounts Receivable Retainage

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. We classify retainages that are expected to be billed in the next twelve months as current assets. As of December 31, 2025 and 2024, no amounts were determined to be uncollectible.

Inventory

Inventories, which consist primarily of PV solar panels, batteries and related accessories, are stated at the lower of cost (“first-in, first-out” method) or net realizable value (determined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation). Provisions have been made to reduce the carrying value of inventory to the net realizable value.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist primarily of other receivables, deferred project costs, and other short-term prepaid expenditures that will be expensed within one year.

Prepaid expenses and other current assets comprised of the following:

Other Receivables

Ameresco’s wholly-owned subsidiary in Italy entered into agreements to sell certain receivables to unrelated third-party financial institutions for a discount on a non-recourse basis. These transactions are accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 860, Transfers and Servicing, and result in a reduction in accounts receivable because the agreements transfer effective control over the receivables, and related risk, to the buyers. Our Italian subsidiary does not retain any interest in the underlying accounts receivable once sold. Trade accounts receivables balances sold are removed from the consolidated balance sheets, and cash received is reflected in operating activities in the consolidated statements of cash flows. Other receivables sold without recourse total $25,246 and $3,994 at December 31, 2025 and 2024, respectively, and are included in other receivables in the table above. Bank discount fees during the twelve months ended December 31, 2025 and 2024 were $5,167 and $1,471, respectively, and are included in other expense, net in the consolidated statements of income. See Note 17 Other (Income) Expenses, Net.

Deferred Project Costs

Deferred project costs include costs incurred on active projects which will be reclassified to energy assets or project revenues once a change order or new contract is finalized which is expected within one year.

Federal ESPC Receivable

Federal ESPC receivable represents the amount to be paid by various federal government agencies for work performed and earned by Ameresco under specific ESPCs. We assign certain of our rights to receive those payments to third-parties that provide construction and permanent financing for such contracts. Upon completion and acceptance of the project by the government, typically within 24 to 36 months of construction commencement, the assigned ESPC receivable from the government and corresponding ESPC liability are eliminated from our consolidated financial statements.

Project Development Costs

We capitalize 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. We classify project development efforts that are expected to proceed to construction activity in the next twelve months as a current asset. We periodically review these balances and write off any amounts where the realization of the related revenue is no longer probable.

Property and Equipment

Property and equipment consist primarily of office and computer equipment and is recorded at cost. Major additions and improvements are capitalized as additions to the property and equipment accounts, while replacements, maintenance, and repairs that do not improve or extend the life of the respective assets, are expensed as incurred. Depreciation and amortization of property and equipment are computed on a straight-line basis over the following estimated useful lives:

Gains or losses on disposal of property and equipment are reflected in selling, general, and administrative expenses in the consolidated statements of income.

Energy Assets

Energy assets consist of costs of materials, direct labor, interest costs, outside contract services, deposits, asset retirement obligations (“AROs”), and project development costs incurred in connection with the construction of small-scale renewable energy plants that we own. These amounts are capitalized and amortized to cost of revenues in our consolidated statements of income on a straight-line basis over the lives of the related assets or the terms of the related contracts.

Routine maintenance costs are expensed as incurred in our consolidated statements of income to the extent that they do not extend the life of the asset. Major maintenance includes upgrades and the refurbishment or replacing of components that are integral to the energy assets operating. In these instances, the costs associated with major maintenance are capitalized and are depreciated over the shorter of the remaining life of the asset or the period up to the next required major maintenance.

Financing lease assets and accumulated depreciation of financing lease assets are included in energy assets. For additional information see the Sale-Leaseback section below and Notes 7, 8, and 9.

Capitalized Interest

We capitalize interest costs relating to construction financing during the period of construction on energy assets we own. Capitalized interest is included in energy assets, net, in our consolidated balance sheets. Capitalized interest is amortized to cost of revenues in our consolidated statements of income on a straight-line basis over the useful life of the associated energy asset.

Long-lived Asset Impairment

We evaluate our long-lived assets, including operating lease right-of-use 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.

We evaluate recoverability of long-lived assets to be held and used by estimating the undiscounted future cash flows before interest associated with the expected uses and eventual disposition of those assets. When these comparisons indicate that the carrying value of those assets is greater than the undiscounted cash flows, we recognize an impairment loss for the amount that the carrying value exceeds the fair value of the asset group. Impairment losses are reflected in selling, general, and administrative expenses in the consolidated statements of income. See Note 7 for disclosure on our long-lived asset impairment during the years ended December 31, 2025 and 2024.

Government Grants

From time to time, we have applied for and received cash grant awards from the U.S. Treasury Department (the “Treasury”) under Section 1603 of the American Recovery and Reinvestment Act of 2009 (the “Act”). The Act authorized the Treasury to make payments to eligible persons who place in service qualifying renewable energy projects. The grants are paid in lieu of ITCs. All of the cash proceeds from the grants were used and recorded as a reduction in the cost basis of the applicable energy assets. For tax purposes, the Section 1603 payments are not included in federal and certain state taxable income and the basis of the property is reduced by 50% of the payment received.

We last received a Section 1603 grant during the year ended December 31, 2014. No further Section 1603 grant payments are expected to be received as the program has expired and no repayments will be required.

We received grant proceeds from the Canadian government in connection with the construction of our energy assets in Canada during the years ended December 31, 2019 and 2020. We have a contribution agreement in place with Natural Resources Canada to fund 50% of the construction costs on a specific pilot project in Ontario. Cash proceeds are recorded as a deferred grant liability. Following commercial operation, the grant is subject to repayment to the government for a five-year period which concluded at December 31, 2025.

Deferred grant income of $5,385 and $6,436 in the accompanying consolidated balance sheets as of December 31, 2025 and 2024, respectively, represents the benefit of the basis difference to be amortized to depreciation expense over the life of the related property.

Non-refundable Transferable Credits Policy Elections

We elect to apply government grant accounting, outside of income taxes, to the portion of the transferable ITC that we intend to sell. We have an existing policy to account for government grants by analogy to International Accounting Standard (“IAS”) 20 and shall present the credit as a reduction in the cost of the related energy asset and shall measure the grant of the nonmonetary asset at fair value. Based on these policy elections, the benefit of the grant will be recognized in profit or loss as a reduction to depreciation expense over the life of the energy asset. The amount of credits recorded as a reduction in the cost of the related energy assets and the amount of cash collected from the sale of ITC’s were $132,373 and $47,534 at December 31, 2025 and 2024, respectively.

We elect to account for credits we intend to use to offset our tax liability under Topic 740. We recognize a deferred tax asset for allowable carryforwards as we benefit in the year the credit was generated. Possible limitations on the carryforward were considered and it was determined that no valuation allowance was required. We also utilized the flow-through method regarding the presentation in the consolidated statements of income, which resulted in a reduction in the income tax provision.

Section 45Z Tax Credit Recognition

The U.S. federal government introduced tax incentives to promote the production of low-carbon fuels and reduce greenhouse gas emissions, enhance energy security, and support the rural agricultural economy. Effective January 1, 2025, the Inflation Reduction Act of 2022 (“IRA”) replaces Section 6426 with Section 45Z of the Internal Revenue Code, providing a clean fuel production credit for the years 2025 through 2027. This was further updated and extended on July 4, 2025, under the One Big Beautiful Bill Act, extending the credit through 2029. Producers of liquid transportation fuels, including sustainable aviation fuel, are eligible to qualify for up to $1 per gallon, while producers of renewable natural gas (“RNG”) could claim an amount exceeding $1 per gallon for significant carbon intensity reductions, with the credit amount indexed annually for inflation.

We recognize tax credits associated with the U.S. federal clean fuel production incentives under Section 45Z of the Internal Revenue Code in accordance with IAS 20 - Accounting for Government Grants and Disclosure of Government Assistance. In accordance with IAS 20, the tax incentive is recognized when it is probable that we will comply with the provisions of the incentive and that the incentive will be earned. These credits are recognized in prepaid expense and other current assets in our consolidated balance sheets and as a reduction to cost of revenues in the consolidated statements of income, reflecting their role in offsetting the production costs of low-carbon fuels.

Our RNG production facilities are eligible for these federal tax credits, which became probable of being earned during the year ended December 31, 2025, and we recognized $12,160 on Section 45Z tax credits, which were recorded as a reduction to cost of revenues and a nonmonetary asset recorded within other receivables which is included in prepaid expenses and other current assets. We intend to monetize these tax credits through sale of such credits to third parties. This amount is included in the consolidated statements of cash flows as a non-cash adjustment to reconcile net income to net cash flows from operating activities.

Acquisitions

For acquisitions that meet the definition of a business combination, we apply the acquisition method of accounting in accordance with ASC 805, Business Combinations, where assets acquired, and liabilities assumed are recorded at fair value at the date of each acquisition. Any excess of the consideration we transferred over the amounts recognized for assets acquired and liabilities assumed is recorded as goodwill. Intangible assets, if identified, are also recorded.

Determining the fair value of certain assets and liabilities assumed is judgmental in nature, often involves the use of significant estimates and assumptions, and is calculated using level 3 inputs per the fair value hierarchy as defined in Note 18. We continue to evaluate acquisitions for a period not to exceed one year after the acquisition date of each transaction to determine whether any additional adjustments are needed to the allocation of the purchase price. The results of the acquired companies are included in our consolidated statements of income, comprehensive income, and cash flows from the date of the respective acquisition.

The consideration for our acquisitions often includes future payments that are contingent upon the occurrence of a particular event. We record a contingent consideration obligation for such contingent consideration payments at fair value on the acquisition date. We estimate the fair value of contingent consideration obligations through valuation models that incorporate probability adjusted assumptions related to the achievement of the milestones and the likelihood of making related payments. Each reporting period we revalue the contingent consideration obligations associated with our acquisitions to fair value and record changes in the fair value within the selling, general, and administrative expenses in our consolidated statements of income. Increases or decreases in the fair value of the contingent consideration obligations can result from changes in assumed discount periods and rates, changes in the assumed timing and amount of revenue and expense estimates and changes in assumed probability with respect to the attainment of certain financial and operational metrics, among others. Significant judgment is employed in determining these assumptions as of the acquisition date and for each subsequent period. Accordingly, future business and economic conditions, as well as changes in any of the assumptions described above, can materially impact the fair value of contingent consideration recorded at each reporting period. Deferred consideration related to certain holdbacks and completion payments are considered short-term in nature. These amounts are recorded at full value and are only revalued if one of those underlying assumptions changes. See Note 4 for additional information about our acquisitions.

In accordance with ASC 805, Business Combinations, our solar project acquisitions do not constitute a business as the assets acquired in each case could be considered a single asset or group of similar assets that made up substantially all of the fair market value of the acquisitions. See Note 7 for information on solar projects we have purchased or are under definitive agreement to purchase.

Goodwill

As noted in the Acquisitions section above, our goodwill is derived when we acquire another business. Goodwill is not amortized, but the potential impairment of goodwill is assessed at least annually during the fourth quarter and on an interim basis whenever events or changes in circumstances indicate that the carrying value may not be fully recoverable. Our assessment date is October 31st.

We estimate the fair value of our reporting units and compare it with the carrying value of the reporting unit, including goodwill. If the fair value is greater than the carrying value of the reporting unit, no impairment is recorded. Fair value is determined using both an income approach and a market approach. If the fair value is less than the carrying value, an impairment loss is recognized for the amount that the carrying amount of a reporting unit, including goodwill, exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. The impairment charge would be recorded to earnings in the consolidated statements of income. Judgment is required in determining whether an event has occurred that may impair the value of goodwill or identifiable intangible assets. See Note 5 for discussion about our goodwill assessments.

We had no goodwill impairment for the years ended December 31, 2025 and 2024 and reporting units with goodwill had estimated fair values that exceeded their carrying values by at least 63% and 49%. respectively. During the year ended December 31, 2023, one reporting unit had a fair value that was 2% less than the carrying value and we recorded a $1,644 goodwill impairment, which was $2,222 net of tax and was primarily driven by a decline in projected cash flows, including revenues and profitability. One reporting unit with goodwill had an estimated fair value that exceeded its carrying value by 16%. All other reporting units with goodwill had estimated fair values that exceeded their carrying values by at least 65% as of December 31, 2023.

Intangible Assets

Acquired intangible assets, other than goodwill, that are subject to amortization include customer contracts, customer relationships, technology, trade names, and non-compete agreements. The intangible assets are amortized over periods ranging from one to fifteen years from their respective acquisition dates. Intangible assets also include purchased subsurface land easements for underground rights to facilitate the construction of RNG pipelines. The subsurface land easements shall be amortized over the twenty-year life of the pipelines. We evaluate our intangible assets for impairment consistent with, and part of, our long-lived asset evaluation, as discussed in Energy Assets above. See Notes 5 and 7 for additional disclosures.

Leases

Operating lease right-of-use (“ROU”) assets represent our right to use an underlying asset during the reasonably certain lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities for significant lease arrangements are recognized at commencement based on the present value of lease payments over the lease term. We use our incremental borrowing rate, which is updated annually or when a significant event occurs that would indicate a significant change in rates, to calculate the present value of lease payments. The operating lease ROU asset also includes any lease payments related to initial direct cost and prepayments and excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term which may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Our ROU assets are evaluated for impairment using the same method as described above under the Long-lived Asset Impairment section.

We do not record ROU assets and corresponding lease liabilities for leases with an initial term of 12 months or less (“short-term leases”) as we recognize lease expense for these leases as incurred over the lease term.

We elected the package of practical expedients and did not reassess lease classifications of existing contracts or leases at adoption or the initial direct costs associated with existing leases. Accordingly, our sale-leaseback arrangements entered into as of December 31, 2018 remain under the previous guidance. See the Sale-leasebacks and Financing Leases section below and Note 8 for additional information on these sale-leasebacks.

We have historical leases under ASC 840, Leases, which may have lease and non-lease components. Upon adoption of Topic 842, we elected to continue to account for these historical leases as a single component, as it relates to all prospective leases, we allocate consideration to lease and non-lease components based on pricing information in the respective lease agreement, or, if this information is not available, we make a good faith estimate based on the available pricing information at the time of the lease agreement. See Note 8 for additional information about our leases.

Other Assets

Other assets consist primarily of notes and contracts receivable due to Ameresco from various customers, the fair value of derivatives determined to be assets, investments in unconsolidated joint ventures, the non-current portions of project development costs, accounts receivable retainages, sale-leaseback deferred loss, deferred contract costs, and assets held for sale.

Other assets also include $26,683 in deposits paid to Powin LLC, one of our battery energy storage system suppliers, who filed for Chapter 11 bankruptcy protection on June 10, 2025. See Note 15 Commitments and Contingencies for additional information.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities includes use and other taxes payable, accrued payroll and payroll related expenses, sales tax payable, current portion of contingent consideration, and other accrued operating expenses.

Asset Retirement Obligations

We recognize a liability for the fair value of required AROs on a discounted basis when these obligations are incurred and can be reasonably estimated, which is typically at the time the assets are in development, installed or operating. Over time, the liabilities increase due to the change in present value, and initial capitalized costs are depreciated over the useful life of the related assets. Upon satisfaction of the ARO conditions, any difference between the recorded ARO liability and the actual retirement cost incurred is recognized as an operating gain or loss in the consolidated statements of income. See Note 7 for additional disclosures on our AROs.

Federal ESPC Liabilities

Federal ESPC liabilities, for both projects and energy assets, represent the advances received from third-parties under agreements to finance certain ESPC projects with various federal government agencies. For projects related to the construction or installation of certain energy savings equipment or facilities developed for the government customer, the ESPC receivable from the government and corresponding ESPC liability is eliminated from our consolidated balance sheets upon completion and acceptance of the project by the government, typically within 24 to 36 months of construction commencement. We remain the primary obligor for financing received until recourse to us ceases for the ESPC receivables transferred to the investor upon final acceptance of the work by the government customer.

For small-scale energy assets developed for a government customer that we own and operate, we remain the primary obligor for financing received until the liability is eliminated from our consolidated balance sheets as contract payments assigned by the customer are transferred to the investor upon final acceptance of the work by the government customer.

Sale-leasebacks and Financing Leases

We entered into sale-leaseback arrangements that provided for the sale of solar PV energy assets to third-party investors and the simultaneous leaseback of the energy assets, which we then operate and maintain, recognizing revenue through the sale of the electricity and solar renewable energy credits generated by these energy assets.

In sale-leaseback arrangements, we first determine whether the solar PV energy asset under the sale-leaseback arrangement is “integral equipment”. A solar PV energy asset is determined to be integral equipment when the cost to remove the energy asset from its existing location, including the shipping and reinstallation costs of the solar PV energy asset at the new site, and any diminution in fair value, exceeds 10% of the fair value of the solar PV energy asset at the time of its original installation. When the leaseback arrangement expires, we have the option to purchase the solar PV energy asset for the then fair market value or, in certain circumstances, renew the lease for an extended term. We have determined that none of the solar PV energy assets sold to date under the sale-leaseback program have been considered integral equipment as the cost to remove the energy asset from its existing location would not exceed 10% of its original fair value.

In accordance with our adoption of Topic 842, sale-leaseback transactions are accounted for as financing liabilities on a prospective basis as we retain control of the underlying assets. As these transactions meet the criteria of a failed sale, the proceeds received in prospective transactions are accounted for as long-term financing liabilities with interest rates based upon the underlying details of each specific transaction.

We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance. We recorded a financing lease asset and financing lease obligation in our consolidated balance sheets equal to the lower of the present value of our future minimum leaseback payments or the fair value of the solar PV energy asset. We deferred any gain or loss, which represents the excess or shortfall of cash received from the investor compared to the net book value of the asset, at the time of the sale. We recorded the long-term portion of any deferred gain in other liabilities or deferred loss in other assets and the current portion in accrued expenses and other current liabilities or prepaid expenses and other current assets in our consolidated balance sheets. The deferred amounts are amortized over the lease term and are included in cost of revenues in our consolidated statements of income.

See Notes 8 and 9 for details of our sales-leaseback and financing lease transactions.

Debt Issuance Costs

Debt issuance costs include external costs incurred to obtain financing. Debt issuance costs are amortized over the respective term of the financing using the effective interest method, with the exception of our revolving credit facility and construction loans, as discussed in Note 9, which are amortized on a straight-line basis over the term of the agreement. Debt issuance costs are presented on the consolidated balance sheets along with unamortized debt discounts as a reduction to long-term debt and financing lease liabilities.

Other Liabilities

Other liabilities consist primarily of the long-term portion of deferred revenue related to multi-year operations and maintenance (“O&M”) contracts which expire at various dates through 2052. Other liabilities also include the fair value of derivatives, the long-term portions of sale-leaseback deferred gains, and liabilities recognized in association with customer energy assets for obligations to the customer for performance of the asset. See Note 19 for additional derivative disclosures and Note 7 for additional energy asset disclosures.

Revenue Recognition

We are a provider of comprehensive energy services, including energy efficiency, infrastructure upgrades, energy security and resilience, asset sustainability, and renewable energy solutions for businesses and organizations. Our sustainability services include capital and operational upgrades to a facility's energy infrastructure and the development, construction, ownership, and operation of renewable energy plants. Our revenue is generated from the primary lines of business described below and is recognized in accordance with Revenue from Contracts with Customers (Topic 606).

Projects

Our Projects service relates to energy efficiency projects, which include the design, engineering, and installation of an array of innovative technologies and techniques to improve energy efficiency and control the operation of a building’s energy- and water-consuming systems. Renewable energy products and services include, but are not limited to, the design and construction of a central plant or cogeneration system providing power, heat and/or cooling to a building, or a small-scale plant that produces electricity, gas, heat or cooling from renewable sources of energy.

We recognize revenue from the installation or construction of projects over time using the cost-based input method. We use the total costs incurred on the project relative to the total expected costs to account for the satisfaction of the performance obligation. When the estimate on a contract indicates a loss, or reduces the likelihood of recoverability of such costs, we record the entire estimated loss in the period the loss becomes known. In addition, some contracts contain an element of variable consideration, including liquidated damages and/or penalties, which requires payment to the customer in the event that construction timelines or milestones are not met. We estimate the total consideration payable by the customer when the contracts contain variable consideration provisions, based on the most likely amount anticipated to be recognized for transferring the promised goods or services. As a result, we may constrain revenue to the extent that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.

Contracts are often modified for a change in scope or other requirements. Contract modifications exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our 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 catch-up basis.

O&M

After an energy efficiency or renewable energy project is completed, we often provide ongoing O&M services under a multi-year contract. These services include operating, maintaining and repairing facility energy systems such as boilers, chillers, and building controls, as well as central power and other small-scale plants. For larger projects, we frequently maintain staff on-site to perform these services.

Maintenance revenue is recognized using the input method. In most cases, O&M fees are fixed annual fees and we record the revenue on a straight-line basis because the on-site O&M services are typically a distinct series of promises and those services have the same pattern of transfer to the customer (i.e., evenly over time). Some O&M service contract fees are based on time expended and, in those cases, revenue is recorded based on the time expended in that month.

Energy Assets

Our service offerings include the sale of electricity, heat, cooling, processed biogas, and renewable biomethane fuel from the portfolio of assets that we own and operate. We have constructed and are currently designing and constructing a wide range of renewable energy plants using biogas, solar, biomass, other bio-derived fuels, wind, and hydro sources of energy. Most of our renewable energy projects to date have involved the generation of electricity from solar PV and the sale of electricity, thermal, renewable fuel, or biomethane using biogas as a feedstock. We purchase the biogas that otherwise would be combusted or vented, process it, and either sell it or use it in our energy plants. We have also designed and built, own, operate and maintain plants that take biogas generated in the anaerobic digesters of wastewater treatment plants and turn it into renewable natural gas that is either used to generate energy on-site or that can be sold through the nation’s natural gas pipeline grid. We typically enter into a long-term power purchase agreement (“PPA”) for the sale of the energy where we own and operate energy producing assets. Many of our energy assets also produce environmental attributes, including renewable energy credits and RINs. In most cases, we sell these attributes under separate agreements with parties other than the PPA customer.

In accordance with specific PPA contract terms, we recognize revenues from the sale and delivery of the energy output from renewable energy plants over time as produced and delivered to the customer. Environmental attributes revenue is recognized at a point in time when the environmental attributes are transferred to the customer in accordance with the transfer protocols of the environmental attributes market that we operate in. In the cases where environmental attributes are sold to the same customer as the energy output, we record revenue monthly for both the energy output and the environmental attribute output, as generated and delivered to the customer. We have determined that certain PPAs contained a lease component in accordance with ASC 840, Leases, prior to the adoption of Topic 842. We recognized $11,515, $12,160 and $10,687 of operating lease revenue under these agreements during the years ended December 31, 2025, 2024, and 2023, respectively.

Other

Our service and product offerings also include integrated-PV, engineering, consulting, and enterprise energy management services, which we recognize over time as the services are provided. We recognize revenue from the sale of solar materials at a point in time when we have transferred physical control of the asset to the customer upon shipment or delivery.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account. Performance obligations are satisfied as of a point in time or over time and are supported by contracts with customers. For most of our contracts, there are multiple promises of goods or services. Typically, we provide 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, we consider the bundle of goods and services to be a single performance obligation. We 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, we separate the contract into more than one performance obligation and allocate 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.

Contract Acquisition Costs

We are required to account for certain acquisition costs over the life of the contract, consisting primarily of commissions. Commission costs are incurred commencing at contract signing. Commission costs are allocated across all performance obligations and deferred and amortized consistent with the pattern of revenue recognition.

Contract Assets and Contract Liabilities

Contract assets represent our rights to consideration in exchange for services transferred to a customer that have not been billed as of the reporting date. Our rights to consideration are generally unconditional at the time our performance obligations are satisfied. Unbilled revenue represents amounts earned and billable that were not invoiced at the end of the fiscal period.

When we receive 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, we record deferred revenue, which represents a contract liability. Deferred revenue typically results from billings in excess of costs incurred and advance payments received on project contracts.

At the inception of a contract, we expect the period between when we satisfy our performance obligations, and when the customer pays for the services, will be one year or less. As such, we elected to apply the practical expedient which allows us not to adjust the promised amount of consideration for the effects of a significant financing component, when a financing component is present.

Cost of Revenues

Cost of revenues includes the cost of labor, materials, equipment, subcontracting and outside engineering that are required for the development and installation of projects, as well as preconstruction costs, sales incentives, associated travel, inventory obsolescence charges, amortization of intangible assets related to customer contracts, and, if applicable, costs of procuring financing. A majority of our contracts have fixed price terms, however, in some cases we negotiate protections, such as a cost-plus structure, to mitigate the risk of rising prices for materials, services, and equipment.

Cost of revenues also includes the costs of maintaining and operating the small-scale renewable energy plants that we own, including the cost of fuel (if any) and depreciation charges.

Income Taxes

We account for income taxes based on the liability method that requires the recognition of deferred income taxes based on expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities. We calculate deferred income taxes using the enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return.

We account for uncertain tax positions using a “more-likely-than-not” threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. We evaluate uncertain tax positions on a quarterly basis and adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more-likely-than-not” threshold or the liability becomes effectively settled through the examination process.

We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews; we have no plans to appeal or litigate any aspect of the tax position; and we believe that it is highly unlikely that the taxing authority would examine or re-examine the related tax position. We also accrue for potential interest and penalties related to unrecognized tax benefits as a component of income tax expense.

Under the guidance, we have recorded long term deferred tax assets and deferred tax liabilities based on the underlying jurisdiction in the consolidated balance sheets as of December 31, 2025 and 2024, respectively. See Note 10 for additional information on income taxes.

Foreign Currency

The local currency of our foreign operations is considered the functional currency of such operations. All assets and liabilities of these foreign operations are translated into U.S. dollars at year-end exchange rates. Income and expense items are translated at average exchange rates prevailing during the year. Translation adjustments are accumulated as a separate component of stockholders’ equity. Foreign currency translation gains and losses are reported in the consolidated statements of comprehensive income. Foreign currency transaction gains and losses are reported within other (income) expenses, net in the consolidated statements of income. See Note 17.

Fair Value Measurements

We follow the guidance related to fair value measurements for all of our non-financial assets and non-financial liabilities, except for those recognized at fair value in the financial statements at least annually. These assets include goodwill and long-lived assets measured at fair value for impairment assessments, and non-financial assets and liabilities initially measured at fair value in a business combination.

Financial instruments consist of cash and cash equivalents, restricted cash, accounts and notes receivable, accounts payable, accrued expenses and other current liabilities, financing lease assets and liabilities, contingent consideration, short- and long-term borrowings, make-whole provisions, and interest rate swaps. Because of their short maturity, the carrying amounts of cash and cash equivalents, restricted cash, accounts and notes receivable, accounts payable, accrued expenses and other current liabilities, and short-term borrowings approximate fair value.

The carrying value of long-term variable-rate debt approximates fair value. Fair value of our debt is based on quoted market prices or on rates available to us for debt with similar terms and maturities, which are level two inputs of the fair value hierarchy, as defined in Note 18.

Stock-based Compensation Expense

We measure and record stock-based compensation expense for all stock-based payment awards based on estimated fair value. We may provide stock-based awards of shares of restricted common stock and grants of stock options to employees, directors, outside consultants, and others through various equity plans including our Employee Stock Purchase Plan (the “ESPP”) for employees.

Stock-based compensation expense, net of actual forfeitures, is recognized based on the grant-date fair value on a straight-line basis over the requisite service period of the awards. Certain option grants have performance conditions that must be achieved prior to vesting and are expensed based on the expected achievement at each reporting period. We estimate the fair value of the stock-based awards, including stock options, using the Black-Scholes option-pricing model. Determining the fair value of stock-based awards requires the use of highly subjective assumptions, including the fair value of the common stock underlying the award, the expected term of the award and expected stock price volatility.

The assumptions used in determining the fair value of stock-based awards represent management’s estimates, which involve inherent uncertainties and the application of management judgment. The risk-free interest rates are based on the U.S. Treasury yield curve in effect at the time of grant, with maturities approximating the expected life of the stock options.

We have no history of paying dividends. Additionally, as of each of the grant dates, there was no expectation that we would pay dividends over the expected life of the options. The expected life of the awards is estimated based upon the period stock option holders will retain their vested options before exercising them. We use historical volatility as the expected volatility assumption required in the Black-Scholes model.

We recognize compensation expense for only the portion of options that are expected to vest. If there are any modifications or cancellations of the underlying invested securities or the terms of the stock option, it may be necessary to accelerate, increase, decrease, or cancel any remaining unamortized stock-based compensation expense.

Share Repurchase Program

In April 2016, our Board of Directors authorized our stock repurchase program (the “Repurchase Program”). Under the Repurchase Program, we are authorized to repurchase up to $17,533 of our Class A common stock. 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. As of December 31, 2025, there were shares having a dollar value of approximately $5,745 that may yet be purchased under the Repurchase Program.

Derivative Financial Instruments

In the normal course of business, we utilize derivatives contracts as part of our risk management strategy to manage exposure to market fluctuations in interest rates. These instruments are subject to various credit and market risks. Controls and monitoring procedures for these instruments have been established and are routinely reevaluated. Credit risk represents the potential loss that may occur because a party to a transaction fails to perform according to the terms of the contract. The measure of credit exposure is the replacement cost of contracts with a positive fair value. We seek to manage credit risk by entering into financial instrument transactions only through counterparties that we believe are creditworthy.

Market risk represents the potential loss due to the decrease in the value of a financial instrument caused primarily by changes in interest rates. We seek to manage market risk by establishing and monitoring limits on the types and degree of risk that may be undertaken. As a matter of policy, we do not use derivatives for speculative purposes and consider the use of derivatives with all financing transactions to mitigate risk.

We account for our interest rate swaps as derivative financial instruments in accordance with ASC Topic 815, Derivatives and Hedging. Under this guidance, derivatives are carried on our consolidated balance sheets at fair value which is determined based on observable market data in combination with expected cash flows for each instrument. Some of our debt agreements contain make-whole provisions which we account for as embedded derivatives in accordance with related guidance. Under this guidance, the derivative is bifurcated from its host contract and recorded on our consolidated balance sheets at fair value by either comparing it against the rates of similar debt instruments under similar terms without a make-whole provision obtained from various highly rated third-party pricing sources or evaluating the present value of the prepayment fee.

We recognize cash flows from derivative instruments not designated as hedges as operating activities in the consolidated statements of cash flows. We recognize all changes in fair value on interest rate swaps designated as effective cash flow hedges in our consolidated statements of comprehensive income. Changes in fair value on derivatives not designated as hedges are recognized in our consolidated statements of income. See Notes 18 and 19 for additional information on our derivative instruments.

Earnings Per Share

Basic earnings per share is calculated using our 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. See Note 13 for our computation of earnings per share.

Variable Interest Entities

Certain contracts are executed jointly through partnership and joint venture arrangements with unrelated third parties. The arrangements are often formed for the single business purpose of executing a specific project and allow us to share risks and/or secure specialty skills required for project execution.

We evaluate each partnership and joint venture at inception to determine if it qualifies as a VIE under ASC 810, Consolidation. A VIE is an entity used for business purposes that either (i) does not have equity investors with voting rights or (ii) has equity investors who are not required to provide sufficient financial resources for the entity to support its activities without additional subordinated financial support. Upon the occurrence of certain events outlined in ASC 810, we reassess our initial determination of whether the partnership or joint venture is a VIE.

We also evaluate whether we are the primary beneficiary of each VIE and consolidate the VIE if we have both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. We consider the contractual agreements that define the ownership structure, distribution of profits and losses, risks, responsibilities, indebtedness, voting rights and board representation of the respective parties in determining whether we qualify as the primary beneficiary. We also consider all parties that have direct or implicit variable interests when determining whether we are the primary beneficiary. As required by ASC 810, management's assessment of whether we are the primary beneficiary of a VIE is continuously performed.

We generally aggregate the disclosures of our VIEs based on certain qualitative and quantitative factors including the purpose and design of the underlying VIEs, the nature of the assets in the VIE, and the type of involvement we have with the VIE including our role and type of interest held in the VIE. As of December 31, 2025, the VIE that makes up our investment fund (tax equity partnership) is one group and our other consolidated VIEs are similar in purpose, design, and our involvement, and as such, are aggregated together. See Notes 11 and 12 for additional disclosures.

Equity and Cost Method Investments

We have entered into a number of joint ventures and using the methodology described above for VIEs, we determined that we are not the primary beneficiary. We do not consolidate the operations of these joint ventures and treat the joint ventures as equity and cost method investments. See Note 11 for additional information on our equity and cost method investments.

Non-Controlling Interests and Redeemable Non-Controlling Interests

Non-controlling interests represent the portion of equity (net assets) in a VIE not attributable, directly or indirectly, to us. For some of our VIEs we perform the attribution of income or loss and comprehensive income or loss on the basis of our relative ownership interests and the non-controlling interests. These non-controlling interests which do not contain redemption features are classified within equity on our consolidated balance sheets.

During 2018 and 2019, we formed investment funds (tax equity partnerships) with different third-party investors which granted the applicable investor ownership interests in the net assets of certain of our renewable energy project subsidiaries. As of December 31, 2025, we had one such investment fund remaining.

We entered into these agreements in order to finance the costs of constructing energy assets which are under long-term customer contracts. We have determined that these entities qualify as VIEs and that we are the primary beneficiary in the operational partnerships for accounting purposes. Accordingly, we consolidate the assets and liabilities and operating results of the entities in our consolidated financial statements. We recognize the investors’ share of the net assets of the subsidiaries as redeemable non-controlling interests in our consolidated balance sheets.

We have determined that the provisions in the contractual arrangements represent substantive profit-sharing arrangements and that the appropriate methodology for attributing income and loss to the redeemable non-controlling interests each period is a balance sheet approach referred to as the hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, the amounts of income and loss attributed to the redeemable non-controlling interests in the consolidated statements of income reflect changes in the amounts the investors would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of this funding structure were liquidated at recorded amounts. The investors’ non-controlling interest in the results of operations of this funding structure is determined as the difference in the non-controlling interest’s claim under the HLBV method at the start and end of each reporting period, after taking into account any capital transactions, such as contributions or distributions, between our subsidiaries and the investors.

We classified the non-controlling interests with redemption features that are not solely within our control outside of permanent equity on our consolidated balance sheets. The redeemable non-controlling interests will be reported using the greater of their carrying value at each reporting date as determined by the HLBV method or the estimated redemption values in each reporting period. See Notes 11 and 12 for additional information.

Recent Accounting Pronouncements

Business Combinations— Joint Venture Formations

In August 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-05, Business Combinations— Joint Venture Formations (Subtopic 805-60) Recognition and Initial Measurement, which addresses the accounting for contributions made to a joint venture, upon formation, in a joint venture’s separate financial statements. ASU 2023-05 is effective prospectively for all joint venture formations with a formation date on or after January 1, 2025. We adopted this new accounting standard effective January 1, 2025 and the adoption did not have a material impact on our consolidated financial statements.

Income Taxes (Topic 740) - Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to enhance the income tax disclosures, including disaggregation of information in the rate reconciliation table and disaggregated information related to income taxes paid. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. The adoption of this guidance did not have a material impact on our consolidated financial statements, although it did result in expanded income tax disclosures. See Note 10.

Codification Improvements—Amendments to Remove References to the Concepts Statements

In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements, to remove references to various FASB Concepts Statements based on suggestions received from stakeholders on the Accounting Standards Codification and other incremental improvements to GAAP. ASU 2024-02 is effective for fiscal years beginning after December 15, 2024. We adopted this accounting standard as of January 1, 2025 and the adoption did not have a material impact on our consolidated financial statements.

Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, to improve the disclosures by requiring more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, SG&A, and research and development). ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), to modify the effective date previously stated in ASU 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact that adopting ASU 2024-03 would have on our consolidated financial statements and will adhere to the clarified effective date in ASU 2025-01 if implementation is necessary.

Business Combinations (Topic 805) and Consolidation (Topic 810) - Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810) - Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity to enhance the ability to compare business combinations that do and do not involve variable interest entities by identifying the accounting acquirer. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.

Derivatives and Hedging (Topic 815) - Hedge Accounting Improvements

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815) - Hedge Accounting Improvements to clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative. ASU 2025-09 is effective for fiscal years beginning after December 15, 2026. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.

Accounting for Government Grants Received by Business Entities

In December 2025, the FASB issued ASU 2025-10, Accounting for Government Grants Received by Business Entities to establish guidance on the recognition, measurement, and presentation of government grants received by business entities. ASU 2025-10 is effective for fiscal years beginning after December 15, 2028. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.

Codification Improvements

In December 2025, the FASB issued ASU 2025-12, Codification Improvements to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to GAAP. ASU 2025-12 is effective for fiscal years beginning after December 15, 2026. We are currently evaluating the impact that adopting this new accounting standard would have on our consolidated financial statements.

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue

Our reportable segments for the year ended December 31, 2025 were North America Regions, U.S. Federal, Europe, and Renewable Fuels (formerly Alternative Fuels). On January 1, 2024, we changed the structure of our internal organization, and our U.S. Regions and Canada are now included in North America Regions. Additionally on January 1, 2024, our Asset Sustainability Group was formerly included in Canada, but is now included in “All Other”. As a result, previously reported amounts have been reclassified for comparative purposes.

The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December 31, 2025:

The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December 31, 2024:

The following table presents our revenue disaggregated by line of business and reportable segment for the year ended December 31, 2023:

See Note 16 for our revenue disaggregated by geographical region.

The following table presents information related to our revenue recognized over time:

The remainder of our revenue is for products and services transferred at a point in time, at which point revenue is recognized.

Contract Balances

The following table provides information about receivables, contract assets, and contract liabilities from contracts with customers:

The increase in contract assets for the year ended December 31, 2025 was primarily due to revenue recognized of$1,299,713, as well as reclassifications primarily from contract liabilities as a result of timing of customer payments, offset by billings of$1,197,758. The decrease in contract liabilities was primarily driven by revenue recognized, offset by the receipt of advance payments from customers, and related billings, as well as reclassifications from contract assets as a result of timing of customer payments. The the recognition of revenue as performance obligations were satisfied exceeded advance payments and reclassifications. For the year ended December 31, 2025, we recognized revenue of$501,878 and billed $444,976 to customers that had balances which were included in contract liabilities at December 31, 2024.

The increase in contract assets for the year ended December 31, 2024 was primarily due to revenue recognized of $1,192,464, as well as reclassifications primarily from contract liabilities as a result of timing of customer payments, offset in part by billings of $1,213,716. The increase in contract liabilities was primarily driven by the receipt of advance payments from customers, and related billings, as well as reclassifications from contract assets as a result of timing of customer payments. The advance payments and reclassifications exceeded the recognition of revenue as performance obligations were satisfied. For the year ended December 31, 2024, we recognized revenue of $377,569 and billed $377,591 to customers that had balances which were included in contract liabilities at January 1, 2024.

Performance Obligations

Our remaining performance obligations (“fully-contracted backlog”) represent the unrecognized revenue value of our contract commitments. Our backlog may vary significantly each reporting period based on the timing of major new contract commitments and the fully-contracted backlog may fluctuate with currency movements. In addition, our customers have the right, under some circumstances, to terminate contracts or defer the timing of our services and their payments to us. At December 31, 2025, we had fully-contracted backlog of $3,945,078 and approximately 30% of our fully-contracted backlog is anticipated to be recognized as revenue in the next twelve months. The remaining performance obligations primarily relate to the energy efficiency and renewable energy construction projects, including long-term O&M services related to these projects. The long-term services have varying initial contract terms, up to 25 years.

We 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 we recognize revenue in proportion to the amount we have the right to invoice for services performed.

Project Development Costs

The following table presents information related to our project development costs recognized in the consolidated statements of income on projects that converted to customer contracts:

No impairment charges in connection with our project development costs were recorded during thetwelve months ended December 31, 2025 and 2024.

4. BUSINESS ACQUISITIONS AND DIVESTITURES

Business Acquisitions

ASA Controls, Inc.

On January 24, 2025, we entered into an asset purchase agreement to acquire ASA Controls, Inc., an Ohio-based energy services company that specializes as a regional controls contractor and systems integrator within the smart buildings sector. As of December 31, 2025, we paid $4,595 in cash. There is no contingent consideration related to this acquisition. We recorded goodwill and intangible assets in connection with this acquisition. See Note 5. The historical and pro-forma effects of this acquisition on our operations, contribution to revenue, and net income for the twelve months ended December 31, 2025 were not material.

Business Divestiture

On October 23, 2024, Ameresco’s board of directors approved the divestiture of a wholly-owned subsidiary (“the sub”). On December 31, 2024, we completed the sale of our entire interest in the sub to an unrelated party, for an estimated closing price of $60,400 in exchange for all of our shares. As a result of this transaction, the net assets of the sub were deconsolidated from our consolidated financial statements, we received net proceeds of $54,249, and recorded a gain of $38,007, net of transaction costs of $2,179, from this disposition. At closing we used the proceeds to prepay $57,000 towards our senior secured term loan.

The sub is an energy technology and advisory services company, was not considered core to our business, and the divestiture is not considered a strategic shift, therefore, the net gain was included in a separate line item within operating income in the consolidated statements of income during the year ended December 31, 2024. The sub was not a reportable segment and was included in “All Other”. As part of the deconsolidation we disposed of $8,529 in goodwill related to this reporting unit. See Note 5. Goodwill and Intangible Assets, Net.

5. GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill, Net

Our annual goodwill impairment review is performed during the fourth quarter each year-end using a quantitative approach. We tested goodwill for impairment at the reporting unit level utilizing the income approach which included a discounted cash flow method with a market approach, and we determined that there was no goodwill impairment for the years ended December 31, 2025 and 2024. All reporting units with goodwill had estimated fair values that exceeded their carrying values by at least 63% and 49% as of December 31, 2025 and 2024, respectively. During the year ended December 31, 2023, one reporting unit had a fair value that was 2% less than the carrying value and we recorded a $1,644 goodwill impairment, which was $2,222 net of tax and was primarily driven by a decline in projected cash flows, including revenues and profitability. One reporting unit with goodwill had an estimated fair value that exceeded its carrying value by 16%. All other reporting units with goodwill had estimated fair values that exceeded their carrying values by at least 65% as of December 31, 2023.

The changes in the goodwill balances by reportable segment are as follows:

Intangible Assets, Net

Definite-lived intangible assets, net consisted of the following:

Customer contracts are amortized ratably over the period of the acquired customer contracts ranging in periods from approximately one to eight years. All other intangible assets are amortized over periods ranging from approximately four to twenty years, as defined by the nature of the respective intangible asset.

Separable intangible assets that are not deemed to have indefinite lives are amortized over their useful lives. We annually assess whether a change in the useful life is necessary, or more frequently if events or circumstances warrant. During the year ended December 31, 2024, we added purchased subsurface land easements in intangible assets, which shall be amortized over the twenty-year life of the pipelines. No other changes to useful lives were made during the years ended December 31, 2025, 2024, and 2023.

The table below sets forth amortization expense:

Amortization expense for our definite-lived intangible assets for the next five years to be included in selling, general, and administrative expenses is as follows:

6. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of the following:

The following table sets forth our depreciation expense on property and equipment:

7. ENERGY ASSETS, NET

Energy assets, net consisted of the following:

Energy Asset Acquisitions

In order to expand our portfolio of energy assets, we have acquired energy projects, which did not constitute businesses under the guidance discussed in Note 2.

August 2023 Purchase and Sale Agreement

On August 4, 2023, we entered into a purchase and sale agreement to acquire an energy asset project and rights to acquire 100% of the stock of Bright Canyon Energy Corporation (“BCE”) in a two-phased transaction exclusive of each other. Phase 1, the purchase of the energy asset project, closed on August 4, 2023 and did not constitute a business in accordance with ASC 805-50, Business Combinations.

Phase 2 closed on January 12, 2024, and we acquired BCE, including its interest in a consolidated joint venture and its interests in project subsidiaries developing or with rights to develop solar, battery, and microgrid assets for an adjusted purchase price of $48,035, of which $9,839 was paid in cash and $32,500 was financed through a seller’s note. The remaining cash balance due of $5,696 and the seller’s note in the amount of $32,500 was paid during the year ended December 31, 2024. We also assumed four land leases for the energy asset projects. Phase 2, the purchase of the energy asset projects did not constitute a business in accordance with ASC 805-50, Business Combinations.

See Note 9 for additional information about the BCE-related loans, Note 8 for information on the leases and Note 15 for potential additional commitments.

Transfer of Investment Tax Credits

During the year ended December 31, 2025, we sold ITC on five energy assets to third parties at a total fair value of $132,373 which was received as of December 31, 2025.

During the year ended December 31, 2024, we sold ITC on eight energy assets to a third party at a fair value of $47,534 which was received as of December 31, 2024.

The benefit from the sales of the ITC are recognized in profit or loss as a reduction to depreciation expense over the life of the energy assets.

Depreciation and Amortization

The following table sets forth our depreciation and amortization expense on energy assets, net of deferred grant amortization:

Capitalized Interest

The following table presents the interest costs relating to construction financing during the period of construction, which were capitalized as part of energy assets, net:

Long-lived Asset Impairment

During the three months ended December 31, 2025, there were triggering events which caused us to perform an impairment analysis on certain energy asset groups. The triggering events were primarily related to equipment failures. As a result, we recorded impairment charges of $3,748 during the year ended December 31, 2025, which partially impaired a majority of these asset groups.

During December 2024, there was a triggering event which caused us to perform an impairment analysis on an energy asset group. The triggering event was related to a landfill which ceased accepting waste material as of January 1, 2025, where we planned to build a RNG plant. As the landfill was no longer operational, we are no longer able to build the plant at the location. As a result, we recorded an impairment charge of $8,715, which fully impaired this asset group. Additionally, during December 2024, we recorded impairment charges of $3,669, for multiple energy asset projects which we no longer believe are viable and have been terminated, which partially impaired these asset groups.

During December 2023, there was a triggering event which caused us to perform an impairment analysis on an energy asset group. The triggering event was related to the requirement to shut down the plant and replace transmission lines due to transfer trip issues. We determined that the cost to overhaul the transfer trip line would be cost prohibitive, therefore, we made a decision to shut the plant down. As a result, we recorded an impairment charge of $1,298, which fully impaired this asset group. During December 2023, there was an additional energy asset group that had successive years of losses, the PPA expired in November 2024, and we expected losses to continue in 2024, therefore, we recorded an impairment charge of $311, which fully impaired this asset group.

The impairment charges are included in asset impairments within the consolidated statements of income for the years ended December 31, 2025, 2024 and 2023.

Customer Energy Asset Projects

We include certain customer energy asset projects in our energy assets, as we control and operate the assets as well as obtain financing during the construction and operating periods of the assets. We also carry a liability associated with these energy assets as we have an obligation to the customer for performance of the asset. Provided that performance criteria are met, the customer is responsible for repayment of the liability to the financing party. As of December 31, 2025 and 2024, there were four and six, respectively, energy asset projects which were included in energy assets.

The liabilities recognized in association with these customer energy assets were as follows:

ARO Assets and ARO Liabilities

Our ARO assets and 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.

The following tables sets forth information related to our ARO assets and ARO liabilities:

8. LEASES

We enter into a variety of operating lease agreements through the normal course of business including certain administrative offices. The leases are long-term, non-cancelable real estate lease agreements, expiring at various dates through fiscal 2032. The agreements generally provide for fixed minimum rental payments and the payment of utilities, real estate taxes, insurance, and repairs. We also lease vehicles, IT equipment and certain land parcels related to our energy projects, expiring at various dates through fiscal 2061. The office and land leases make up a significant portion of our operating lease activity. Many of these leases have one or more renewal options that allow us, at our discretion, to renew the lease for six months to seven years. Only renewal options that we believed were likely to be exercised were included in our lease calculations. Many land leases include minimum lease payments that commence or increase when the related project becomes operational. In these cases, we estimated the commercial operation date used to calculate the ROU asset and minimum lease payments.

A portion of our real estate leases are generally subject to annual changes in the Consumer Price Index (“CPI”). We 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 consolidated statements of income as part of our operating lease costs.

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. We elected to apply the discount rate using the remaining lease term at the date of adoption.

We also enter into leases for service agreements and other leases related to our construction projects such as equipment, mobile trailers, and other temporary structures. We utilize the portfolio approach for this class of lease, which are either short-term leases or are not material.

Rent and related expenses were as follows:

We have a number of leases that are classified as financing leases, which related to transactions that were considered sale-leasebacks under ASC 840. See the sale-leaseback section below for additional information on our financing leases.

The table below sets forth supplemental balance sheet information related to leases:

The costs related to our leases were as follows:

Supplemental cash flow information related to our leases was as follows:

The table below sets forth our estimated minimum future lease obligations under our leases:

Non-monetary Lease Transactions

In January 2024, we acquired four energy asset projects and assumed the related 35 to 37-year land leases agreements with the Navy, which expire between 2053 and 2056. We are working to complete In-Kind Consideration Projects (“IKCPs”), which the Navy will credit as consideration towards our lease obligation upon the Navy’s final acceptance of the IKCP.

At December 31, 2025, we had six lease liabilities consisting of payment obligations that will be settled with non-monetary consideration. The lease liabilities relating to non-monetary consideration were recorded during the period of commencement based on the fair market value of the project services or back up power expected to be provided, as noted below.

We have a future lease commitment for a project lease with the United States Navy (“Navy”) which has not yet met the criteria for recording an ROU asset or ROU liability. The estimated net present value of this commitment totals $40,335 as of December 31, 2025. We will provide IKCPs, over a thirty-six-year period, which the Navy will credit as consideration towards our lease obligation upon the Navy’s final acceptance of the IKCPs. This lease is undergoing evaluation and could be amended, so the totals may change. Once the lease commences, the ROU asset and liability will be recorded, which is estimated to be in 2026.

See Note 7 Energy Assets, Net for additional information on the energy asset projects acquired.

Office Leases

We have a future lease commitment for a new office and warehouse in Mesa, AZ. The estimated net present value of this commitment totals $1,136 as of December 31, 2025. This new lease agreement was executed September 23, 2025 and the lease will commence March 1, 2026 and continue for sixty-five months.

Financing Leases

We entered into sale-leaseback arrangements for solar PV energy assets prior to January 1, 2019, which remain under the previous guidance.

The following table presents a summary of amounts related to these sale-leasebacks included in our consolidated balance sheets:

Net gains from amortization expense in cost of revenues related to deferred gains and losses were $230, $230 and $230 for the years ended December 31, 2025, 2024, and 2023, respectively.

Sale-leasebacks

Sale-leasebacks entered into after January 1, 2019 are accounted for as failed sales and are classified as long-term financing facilities. See Note 9 for additional information on these other financing facilities.

9. DEBT AND FINANCING LEASE LIABILITIES

Debt was comprised of the following:

The following table presents the aggregate maturities of long-term debt and financing leases as of December 31, 2025:

Senior Secured Corporate Credit Facility

On January 23, 2025, we refinanced our term loan and revolving credit facility by entering into a sixth amended and restated senior secured credit agreement (“Restated Credit Agreement”) with the group of lenders thereto. The interest rate for borrowings is based on, at our option, either the Base Rate plus a margin of 0.75% to 1.75%, depending on our core leverage ratio; or the Term SOFR plus a margin of 1.75% to 2.75%, depending on our core leverage ratio. A commitment fee of between 0.25% and 0.375%, depending on our core leverage ratio, is payable quarterly on the undrawn portion of the revolver. At closing we paid$2,345 in lenders fees and debt issuance costs. Proceeds from this agreement in the amount of $180,000 and $13,000 were used to pay the balance of our revolving credit facility and the outstanding portion of the senior secured term loan, respectively, at closing.

The restated credit amendment replaces and extends Ameresco's existing credit agreement dated March 4, 2022, and subsequently amended (the “Original Credit Agreement”). The Restated Credit Agreement refinance the credit facilities under the Original Credit Agreement and replaced it with the following facilities:

•a $225,000 revolving credit facility, maturing on December 28, 2028, and

•a $100,000 term loan A, maturing on December 28, 2028.

The revolver may be increased by up to an additional$100,000 at Ameresco's option if lenders are willing to provide such increased commitments, subject to certain conditions.

Additional terms of the Restated Credit Agreement are as follows:

•the term loan requires quarterly principal payments of $1,250 starting March 31, 2025, with the balance due at maturity

•the revolving credit facility requires payment at maturity

•a debt service coverage ratio (as defined in the agreement) of at least 1.5 to 1.0

•a total funded debt to EBITDA of less than 3.5 to 1.0

The table below sets forth amounts outstanding under the senior secured credit facility:

As of December 31, 2025, funds of $45,064 were available for borrowing under the revolving credit facility and we had $29,936 in letters of credit outstanding, with an additional $75,424 in letters of credit outstanding outside the facility. We expect to use the remaining funds available under the credit facility for general corporate purposes, including permitted acquisitions, refinancing of existing indebtedness and working capital.

The interest rate for borrowings under the credit facility is based on (i) each term loan shall bear interest at the term SOFR for such interest period plus the applicable rate for such facility; (ii) each base rate loan shall bear interest at a rate per annum equal to the base rate plus the applicable rate; (iii) each alternative currency daily rate loan shall bear at a rate per annum equal to the alternative currency daily rate plus the applicable rate; (iv) each alternative currency term rate loan shall bear interest at a rate per annum equal to the alternative currency term rate for such interest period plus the applicable rate; and (v) each swingline loan shall bear interest at a rate per annum equal to the base rate plus the applicable rate.

All borrowings may be paid before maturity in whole or in part at our option without penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.

The credit facility limits Ameresco’s and our subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; merge, liquidate or dispose of assets; make acquisitions or other investments; enter into hedging agreements; pay dividends and make other distributions and engage in transactions with affiliates, except in the ordinary course of business on an arms’ length basis.

Under the credit facility, Ameresco and our core domestic subsidiaries may not invest cash or property in, or loan to, our non-core subsidiaries in aggregate amounts exceeding 49% of our consolidated stockholders’ equity. In addition, we and our core subsidiaries must maintain a ratio of total funded debt to EBITDA and a debt service coverage ratio as noted above.

Any failure to comply with the financial or other covenants of the credit facility would not only prevent us from being able to borrow additional funds, but would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility, to terminate the credit facility, and enforce liens against the collateral.

The credit facility also includes several other customary events of default, including a change in control of Ameresco, permitting the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.

For purposes of our senior secured facility, EBITDA, as defined, excludes the results of certain renewable energy projects that we own and for which financing from others remains outstanding; total funded debt, as defined, includes amounts outstanding under both the term loan and revolver portions of the senior secured credit facility plus other indebtedness, but excludes limited recourse indebtedness of project company subsidiaries; and debt service, as defined, includes principal and interest payments on the indebtedness included in total funded debt other than principal payments on the revolver portion of the facility.

Prior to the January 2025 amendment and restatement, we were operating under a fifth and restated senior secured credit facility. During 2024, the Company amended this credit facility multiple times. The amendments extended the DDTLA maturity to August 15, 2024, adjusted certain financial covenants, and increased the applicable interest rate margins by 0.25%. As of December 31, 2024, the facility provided for total commitments of $495,000, consisting primarily of a $200,000 revolving credit facility, a $220,000 delayed draw term loan A (“DDTLA”), and a $75,000 term loan A. The facility also included customary covenants, including a minimum debt service coverage ratio and a maximum total funded debt to EBITDA ratio.

The Company was the sole borrower under the credit facility, which was guaranteed by certain wholly owned domestic subsidiaries and are secured by substantially all of the Company’s and such guarantors’ assets, subject to customary exclusions. In

June 2024, the Company further amended the facility to permit entry into a second lien credit agreement, and the remaining $15,000 outstanding balance under the DDTLA was repaid using proceeds from that financing.

Second Lien Term Loan, 9.89%, due June 2029

On June 28, 2024, we entered into a second lien credit agreement which provided a term loan in a principal amount of $100,000 with a maturity date of June 28, 2029. The term loan bears an interest rate of SOFR (4.011% at December 31, 2025), plus an applicable margin of 5.875% per annum. Interest is payable quarterly and unpaid interest and principal is due in the aggregate on June 28, 2029. At closing, we incurred $5,124 in lenders fees and debt issuance costs. Proceeds from this term loan in the amount of $82,105 and $15,000 were used to pay towards our revolving credit facility and the outstanding portion of the DDTLA, respectively, under our senior secured credit facility at closing.

Energy Asset Construction Facilities

June 2020 Construction Revolver, 5.40%, due March 2026

In June 2020, we entered into a revolving construction loan agreement with a bank, with an aggregate borrowing capacity of $100,000 for use in financing the construction cost of our owned projects.

During the year ended December 31, 2025, we entered into an amendment to extend this revolver and the current maturity date is March 31, 2026.

As of December 31, 2025, $19,794 was outstanding and $80,206 was available for borrowing.

April 2023 Construction Credit Facility, 5.26%, due July 2024

We acquired the remaining interest in this JV in January 2024 when we closed on the acquisition of BCE. On July 31, 2024, we executed an extension on this facility updating the maturity date from July 31, 2024 to August 16, 2024. In connection with the August 2024 Sale-leaseback, as disclosed below, the loan was repaid in the amount of $140,844 when the energy asset project achieved provisional acceptance.

August 2023 Construction Credit Facility, 7.79%, due December 2027

On August 18, 2023, we entered into a construction and development loan agreement which provides a loan in a principal amount of up to $300,000. At the closing, we drew down $200,000 under this facility, of which approximately $187,000 was used to reimburse Ameresco for development and construction costs.

Prior to the amendment described below, the loan bore interest at a rate of 4.00% plus the greater of (i) Term SOFR for a one-month tenor and (ii) the 10-year United States treasury rate and a fee equal to 0.250% of any unused committed principal amount. The loan matured on August 31, 2026, with a one-year extension option that could be exercised if certain circumstances are met, including payment of a $3,000 extension fee.

On December 18, 2024, we amended the 2023 construction and development loan agreement to increase the principal amount from $300,000 up to $400,000, extend the maturity date to December 15, 2027, and set a minimum rate of interest at 6.00% and a Term SOFR Floor of 2.00%. Additionally, an accordion option was added that would increase the principal amount to $500,000, for which we paid a $250 accordion option fee. The accordion option can be exercised no later than eighteen months following the amendment date and only if certain circumstances are met. At closing, we incurred $3,168 in lenders fees and debt issuance costs.

During the year ended December 31, 2025, we drew down $234,881 and made payments of $240,041 under this facility. As of December 31, 2025, $307,218 was outstanding, net of unamortized debt discount and issuance costs of $6,447.

The obligations under the loan are guaranteed by all the related subsidiaries and are secured by the subsidiaries’ assets as well as our equity interest in the borrower entity and in the case of default under the facility, a default under our Senior Secured Credit Facility or a change in control of Ameresco, Inc., we are required to make capital contributions to the borrower entity who then would be required to use the proceeds from the capital contributions to repay the construction and development loan.

Greece Construction Facilities

During 2024 and 2025, we entered into three energy asset construction facilities which provide loans in an aggregate principal amount of $118,051. The loans bear interest at annual rates ranging from 2.50% to 3.80% plus Euribor equal to 2.03%.

As of December 31, 2025, $25,572 was outstanding in the aggregate.

Romania Construction Facilities

During 2025, we entered into one energy asset construction facility which provides a loan in a principal amount of $71,235.

As of December 31, 2025, there was no balance outstanding.

Energy Asset Operating Facilities

October 2022 Financing Facility, 8.75%, due September 2040

We entered into amendments to this October 2022 loan agreement and the September 2023 amendment and restatement contained the following amended terms:

•The maximum commitment was increased from $215,000 to $500,000.

•The loan bears interest at a rate of 6.70% with a residual percentage of distributable cash flows payable after the maturity date of the loan, until the earlier of the lender achieving an 8.51% internal rate of return (“IRR”) on funds borrowed under the facility, or the facility discharge date which was extended to August 31, 2049.

•The loan maturity date was changed from May 31, 2038 to August 31, 2039

•All borrowings may be paid before maturity in whole or in part at RNG Holdings’ option after August 30, 2027 provided that the lender’s IRR is achieved, and against a prepayment of 102% of par for prepayments between August 31, 2027 and August 31, 2029 and 101% of par for prepayments between September 1, 2029 and August 30, 2031. No call premium applies for payments after August 30, 2031.

On May 27, 2025 we entered into an omnibus amendment as part of a tax credit transfer agreement for investment tax credits. The amendment required a $7,000 principal payment, which was made during the year ended December 31, 2025.

On September 26, 2025 we entered into an amendment to modify the May 27, 2025 omnibus amendment. This amendment included advances of $25,500 related to an expansion project and $15,653 related to a true-up payment in connection to the removal of an IRR residual income requirement. The interest rate is now fixed at 8.75% and the maturity date changed from August 31, 2039 to September 26, 2040.

At December 31, 2025, $341,759 was outstanding, net of unamortized debt discount and issuance costs of $1,180.

On February 3, 2026, a joinder agreement was executed with reference to the construction and development loan agreement, dated August 18, 2023, and two projects were moved under this October 2022 Financing Facility. At closing, we used proceeds of $97,759 from the joinder to pay off the projects under the construction loan.

April 2024 Term Shelf Notes 6.20% and 8.00%, due June 30, 2042 under July 2021 Financing Facility

On April 5, 2024, an omnibus amendment and reaffirmation agreement was executed with reference to the note purchase and private shelf agreement, dated as of July 27, 2021, and two new series B notes (first lien and second lien) were authorized in the amounts of $92,512 and $12,657, with a maturity date of June 30, 2042. Gross proceeds from the initial issuance on April 5, 2024 were $83,282 and $12,292 with the remainder of $9,595 issued on August 8, 2024 upon achieving certain permitting-related and other administrative conditions. The notes bear interest at fixed rates of 6.20% and 8.00%, respectively, per annum and the interest is payable quarterly and commenced September 30, 2024. At closing, we incurred $1,359 in lenders fees and debt issuance costs. Proceeds from the initial closing in the amount of $86,462 were used to pay a portion of the August 2023 construction credit facility. In connection with these notes, we recorded two derivative instruments for make-whole provisions with initial values of $8,733 and $647, respectively, which were recorded as debt discount.

April 2025 Senior Secured Notes, 6.72%, due September 30, 2045, December 2025 Senior Secured Notes, Series B, 6.55%, due September 30, 2045 and Series C, 6.38%, due December 31, 2046, and Term Shelf Note

On April 30, 2025 we entered into a note purchase agreement and private shelf agreement which includes committed proceeds under series A notes of $78,000 to finance a battery energy storage asset in development, with a maturity date of September 30,

2045, and a fixed interest rate of 6.72% per annum. Gross proceeds from the initial issuance on April 30, 2025 were $67,708 with the remaining $10,291 issued on June 27, 2025. At closing, we incurred $3,126 in lenders fees and debt issuance costs. In connection with this note, we recorded one derivative instrument for make-whole provisions with an initial value of $3,040 which was recorded as debt discount. The agreement also includes a twenty-year term $300,000 private shelf facility, as well as the ability to issue series B notes with a maturity date of September 30, 2045 on or before December 31, 2025. As part of this transaction, we signed a tax credit transfer agreement for the investment tax credits associated with the BESS asset. Upon the asset achieving commercial operations during the year ended December 31, 2025, we received proceeds from the ITC transfer of $38,371 and made a $30,000 prepayment on the note purchase agreement.

On December 18, 2025, joinder agreements were executed with reference to the note purchase and private shelf agreement, dated April 30, 2025, and two new notes (Series B and C) were issued with proceeds of $21,305 and $38,794, net of original issue discounts, with maturity dates of September 30, 2045 and December 31, 2046, respectively. The notes bear interest at fixed rates of 6.55% and 6.38%, respectively, per annum and the interest is payable quarterly and commenced December 18, 2025. At closing, we received proceeds from an ITC transfer of $23,213, and we used $62,054 of the total proceeds to pay towards the August 2023 Construction Credit Facility. We also incurred $1,946 in lender fees and debt issuance costs. In connection with these notes, we recorded two derivative instruments for make-whole provisions with initial values of $1,292 and $979, respectively, which were recorded as debt discount.

May 2025, Term Loan, 6.62%, due December 31, 2037 and October 2012, Term Loan, 6.87%, due June 30, 2025

On May 27, 2025, we entered into a term loan agreement which provided a term loan in a principal amount of $12,221 with a maturity date of December 31, 2037. The term loan bears a fixed interest rate of 6.62%. Interest is payable quarterly. At closing, we incurred $402 in lenders fees and debt issuance costs. Proceeds from this term loan in the amount of $8,273 were used to pay a portion of the October 2012 term loan (see below). In connection with this term loan, we recorded one derivative instrument for a make-whole provision with an initial value of $347 which was recorded as debt discount.

See Note 19 for additional information about the derivative instruments.

October 2012, Term Loan, 6.87%, due June 2025

On May 27, 2025, we paid off the term loan with a balance of $31,086, partially with $8,273 from the May 2025 term loan proceeds and the remainder with working capital cash. With this debt termination, we also terminated four interest rate swap contracts that were not previously designated as hedged instruments.

October 2025 Loan, 4.75%, due October 15, 2026

On October 14, 2025, we entered into an omnibus assignment and assumption agreement which provided a loan in a principal amount of $8,481 with a maturity date of October 15, 2026. The loan bears an interest rate of 4.75% until January 30, 2026 and 9.00% from February 1, 2026 until paid in full. The agreement assumes that proceeds of ITC sales associated with this project would be applied towards payment of the loan. At closing, we sold ITC of $4,270 and applied $3,213 towards the principal of the loan. The remaining non-cash proceeds were applied towards related fees. The principal balance and accrued interest, if any, on the loan are payable on the maturity date. Upon assignment of the loan, we incurred $197 in lender fees and debt issuance costs.

October 2025 Senior Secured First Lien Term Notes, 5.71%, due December 31, 2043, Second Lien Term Notes, 7.40%, due September 30, 2040 and Term Shelf Note

On October 31, 2025 we entered into a note purchase agreement and private shelf agreement which includes committed proceeds under series A notes and second lien notes of $34,356 and $15,129, with maturity dates of December 31, 2043 and September 30, 2040, and fixed interest rates of 5.71% and 7.40% per annum, respectively. At closing, we incurred $763 in lenders fees and debt issuance costs. We used$46,068 to pay towards the April 2023 Construction Credit Facility. The agreement also includes a twenty-year term $80,000 private shelf facility. In connection with these series A notes and second lien notes, we recorded derivative instruments for make-whole provisions with initial values of $2,647 and $839, respectively, which were recorded as debt discount.

Debt Instruments - Energy Project Asset Acquisitions

August 2023 Construction Revolver,6.85%, due February 2024 and Seller’s Promissory Note, 5.00%, due January 2024

In connection with the acquisition of an energy asset on August 4, 2023 as discussed in Note 7, $46,694 was financed through a seller’s note and we assumed a construction loan in the amount of $36,270. The seller’s note in the amount of $29,441 was paid off in January 2024. On February 26, 2024, the construction loan in the amount of $36,270 was converted into the term loan described below.

January 2024, Seller’s Promissory Note, 5.0%, due November 2024

For phase 2 of the BCE acquisition on January 12, 2024, we entered into a seller’s note for $32,500 accruing interest of 5.0% with a maturity date of August 4, 2024. The note was amended on August 2, 2024 to provide that it be paid in four installments through December 16, 2024 and bore interest at a rate of 5.0% per annum through August 2, 2024 and a rate of 9% per annum thereafter. The note was also amended on September 17, 2024 to provide that it be paid in three installments through November 1, 2024. During the year ended December 31, 2024, we paid off the seller’s note in the amount of $32,500.

February 2024 Variable Rate Term Loan, 6.33%, due April 2030

On February 26, 2024 we converted the $36,270 construction loan into a term loan that bears a base SOFR interest rate of 6.33% at December 31, 2024, and an applicable margin of 1.635% per annum for four years after the term conversion date and 1.76% per annum for the following two years. The interest and principal are paid quarterly and commenced on March 31, 2024.

Other Financing Facilities

These facilities are accounted for as failed sale-leasebacks and are classified as long-term financing facilities.

August 2018 Master Sale-leaseback

We enter into amendments to our August 2018 master lease and participation agreement from time to time, which may extend the maturity date, increase the availability, or modify other covenants. During the year ended December 31, 2025, we entered into an amended and restated participation agreement which extended the participation date from December 31, 2025 to March 31, 2026. During the year ended December 31, 2025, we were in default of certain lien provisions of this agreement. On December 31, 2025, we received a waiver of this default which is valid until March 31, 2026.

During the year ended December 31, 2025, we discovered a defect in a Battery Energy Storage System (“BESS”) that we installed for a customer under a long-term power purchase agreement for a project financed under the August 2018 master sale-leaseback agreement. As a result, the BESS had to be removed. Our financing partner has agreed to temporarily waive any events of default and refrain from pursuing remedies available under the master sale-leaseback associated with the BESS failure until March 31, 2026 to allow remediation of the issue (subject to certain conditions). We have fully funded lease payments due under the master lease agreement through March 31, 2026 into a reserve account from which lease payments will be made.

We sold and leased back nine energy assets for $31,283 in cash proceeds under this facility during the year ended December 31, 2025. During the year ended December 31, 2024, we sold and leased back six energy assets for $61,996. The agreements have interest rates ranging from 0% to 1.86%, as a result of tax credits which were transferred to the counterparty.

December 2020 Master Sale-leaseback

We enter into amendments to our December 2020 master lease and participation agreement from time to time, which may extend the maturity date, increase the availability, or modify other covenants. As of December 31, 2025, no further funding was available under this lending commitment.

August 2024 Master Sale-leaseback

On April 18, 2023 we entered into lease agreements with two investors for one energy asset and on August 14, 2024 we sold and leased back the energy asset for $234,788, of which 50% was allocated to each investor under these agreements. One lease has an expiration date of August 14, 2034 with an option to extend to August 14, 2044 while the other has an expiration date of August 14, 2044. At closing, we incurred $2,833 in lender fees and debt issuance costs. In August 2024, we used $140,844 of the proceeds to pay off the April 2023 construction credit facility and made rent prepayments of $60.1 million. As of December 31, 2025, we have no available funds remaining under this lending commitment.

Surety-Backed Letters of Credit

We also have surety-backed letters of credit with termination dates through 2026 and par value of $1,188.

10. INCOME TAXES

The following table sets forth components of income before income taxes:

The components of the provision (benefit) for income taxes were as follows:

Our deferred tax assets and liabilities result primarily from temporary differences between financial reporting and tax recognition of depreciation, energy efficiency, sale-leasebacks and other accruals, and net operating loss carryforwards.

Deferred tax assets and liabilities consisted of the following:

Our valuation allowance related to the following items:

As of December 31, 2025, we had the following tax loss and credit carryforwards to offset taxable income in prior and future years:

The provision for income taxes is based on the various rates set by federal and local authorities and is affected by permanent and temporary differences between financial accounting and tax reporting requirements.

The principle reason for the difference between the statutory rate and the estimated annual effective rate for 2025 were the effects of tax deductions related to the Section 179D Commercial Buildings Energy-Efficiency deduction and ITCs we are entitled from solar plants and renewable natural gas projects which have been placed into service during 2025. The Section 179D deduction available for 2025 was substantially lower compared to prior years due to timing of project completions. We also incurred additional tax expense from the deferred effect of an increase in our future effective state tax rates resulting from apportionment changes.

The principle reason for the difference between the statutory rate and the estimated annual effective rate for 2024 were the effects of tax deductions related to the Section 179D Commercial Buildings Energy-Efficiency deduction and ITCs we are entitled from solar plants and renewable natural gas projects which have been placed into service during 2024. The Section 179D deduction available for 2024 was substantially lower compared to prior years due to timing of project completions. We also incurred additional tax expense from the deferred effect of an increase in our future effective state tax rates resulting from apportionment changes.

The ITCs and production tax credits we may be entitled to fluctuate from year to year based on the cost of the renewable energy plants we place in service and production levels at facilities we own in that year.

The following is a reconciliation of the effective tax rates:

(a) State taxes in California, Delaware, Illinois, Massachusetts and Virginia made up the majority (greater than 50 percent) of the tax effect in this category.

The following is a reconciliation of the effective tax rates:

Our tax payments (refunds) consisted of the following for the year ended:

The following table provides a reconciliation of gross unrecognized tax benefits which are included in other liabilities within the consolidated balance sheets:

The amount of unrecognized tax benefits that, if recognized, would favorably affect the effective income tax rate in any future periods was $904 as of December 31, 2025 and 2024 (both net of the federal benefit on state amounts).

We do not accrue U.S. tax for foreign earnings that we consider to be permanently reinvested outside the United States. Consequently, we have not provided any withholding tax on the unremitted earnings of our foreign subsidiaries. As of December 31, 2025 and 2024, we estimated that there were no earnings for which repatriation tax has not been provided.

The tax years 2022 through 2025 remain open to examination by major taxing jurisdictions. We recognize interest and penalties related to uncertain tax positions as components of our income tax provision (benefit) in our consolidated statements of income. We increased income tax expense for these items by $30 in 2025, $29 in 2024, and $22 in 2023.

11. VARIABLE INTEREST ENTITIES AND EQUITY METHOD INVESTMENTS

Investment Funds

Over a period of five years (2015 through 2019), we formed five investment funds (tax equity partnerships) with third party investors which granted the applicable investor ownership interests in the net assets of certain of our renewable energy project subsidiaries. At December 31, 2025, we had one such investment funds each with a different third-party investor.

We consolidate the investment funds, and all inter-company balances and transactions between Ameresco and the investment funds are eliminated in our consolidated financial statements. We determined that the investment funds meet the definition of a VIE. We use a qualitative approach in assessing the consolidation requirement for VIEs that focuses on determining whether we have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance and whether we have the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

We have considered the provisions within the contractual arrangements that grant us 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. We considered the rights granted to the other investors under the contractual arrangements to be more protective in nature rather than participating rights. As such, we determined that we are the primary beneficiary of the VIEs for all periods presented. We evaluate our relationships with VIEs on an ongoing basis to ensure that we continue 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 our 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 12 for additional information about these investment funds and the call and put options.

Other Variable Interest Entities

We execute certain contracts jointly with third parties through various forms of joint ventures. Although the joint ventures own and hold the contracts with the clients, the services required by the contracts are typically performed by us and our joint venture partners, or by other subcontractors under subcontracting agreements with the joint ventures. Many of these joint ventures are formed for a specific project. The assets of these joint ventures generally consist almost entirely of cash and land, and the liabilities of our joint ventures generally consist almost entirely of amounts due to the joint venture partners.

We follow 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. We analyze our joint ventures and classify them as either:

•a VIE that must be consolidated because we are the primary beneficiary or the joint venture is not a VIE and we hold the majority voting interest with no significant participative rights available to the other partners, or

•a VIE that does not require consolidation and is treated as an equity or cost method investment because we are not the primary beneficiary, or the joint venture is not a VIE and we do not hold the majority voting interest.

Many of our joint ventures are deemed to be VIEs because they lack sufficient equity to finance the activities of the joint venture.

The table below presents a summary of amounts related to our VIEs reflected in Note 1 on our consolidated balance sheets:

Non-controlling Interests

Non-controlling interests represents the equity owned by the other joint venture members of consolidated joint ventures. On February 9, 2024, we entered into an agreement to sell a 40% interest in an energy asset, thus forming a joint venture, and we received $28,864 in cash. During the years ended December 31, 2025 and 2024, we also received additional contributions totaling $4,723 and $6,543, respectively.

During the year ended December 31, 2024, we acquired the remaining interest in one joint venture when we closed on the phase 2 acquisition of BCE as discussed in Note 7.

Equity and Cost Method Investments

Unconsolidated VIEs/joint ventures are accounted for under the equity or cost method. As of the years ended December 31, 2025 and 2024, we had fifteen and seven unconsolidated VIEs/joint ventures, respectively.

During the year ended December 31, 2024, one of our equity method investments was sold to another company. We received distributions and net proceeds totaling $13,091 and recognized a gain on the sale in the amount of $224, which is included in earnings from unconsolidated entities in the consolidated statements of income. During the year ended December 31, 2025 none of our equity method investments were sold.

Our investment balances for these equity and cost method investments are included in other assets on the consolidated balance sheets and our pro rata share of net income or loss is included in operating income in the consolidated statements of income.

The following table sets forth the carrying value of our equity and cost method investments in joint ventures:

We are not aware of any situations where the maximum exposure to loss significantly exceeds the carrying value show above.

12. REDEEMABLE NON-CONTROLLING INTERESTS

Our subsidiaries with membership interests in the investment funds we formed have the right to elect to require the non-controlling interest holder to sell all of its membership units to our subsidiaries, a call option. Our investment funds also include rights for the non-controlling interest holder to elect to require our subsidiaries to purchase all of the non-controlling membership interests in the fund, a put option.

In December 2024 we finalized our purchase of the investor’s membership interests of two investment funds for $3,186 in cash and reclassified the remaining redeemable non-controlling interest balance of $37,269 to paid-in capital to reflect the additional contribution from us to our wholly-owned subsidiaries.

Therefore, we have one investment fund remaining and the following table sets forth information about the call and put options for our investment fund outstanding as of December 31, 2025:

The call options are exercisable beginning on the date that specified conditions are met for the fund.

Because the put options represent redemption features that are not solely within our control, the non-controlling interest in this fund is presented outside of permanent equity. Redeemable non-controlling interests are reported using the greater of their carrying value (which is impacted by attribution under the HLBV method) or their estimated redemption value at each reporting period. At both December 31, 2025 and 2024, redeemable non-controlling interests were reported in the accompanying consolidated balance sheets at their carrying values, as the carrying value at each reporting period was greater than the estimated redemption value.

13. EQUITY AND EARNINGS PER SHARE

Common and Preferred Stock

The rights of the holders of our Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of our Class A common stock is entitled to one vote per share and is not convertible into any other shares of our capital stock. Each share of our Class B common stock is entitled to five votes per share, is convertible at any time into one share of Class A common stock at the option of the holder of such share and will automatically convert into one share of Class A common stock upon the occurrence of certain specified events, including a transfer of such shares (other than to such holder’s family members, descendants or certain affiliated persons or entities). Our Board of Directors is authorized to fix the rights and terms for any series of preferred stock without additional shareholder approval.

Earnings Per Share

The following is a reconciliation of the numerator and denominator for the computation of basic and diluted earnings per share:

14. STOCK-BASED COMPENSATION AND OTHER EMPLOYEE BENEFITS

Our 2020 Stock Incentive Plan (the “2020 Plan”), was adopted by our Board of Directors in February 2020 and approved by our stockholders in May 2020. The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, RSUs, and other stock-based awards. As of December 31, 2025, there were 777 shares available for grant under the 2020 Plan.

Stock Options

We did not grant awards to individuals who were not either an employee or director of ours during the years ended December 31, 2025, 2024, and 2023.

The following table summarizes the collective activity under the plan:

We recorded stock-based compensation expense, including expenses related to the estimated achievement of the performance metrics of performance-based stock options (“PSOs”) granted during the year ended December 31, 2025, and our employee stock purchase plan.

The following table sets forth additional disclosures about our plan:

Under the terms of our 2020 Plan, all options expire if not exercised within ten years after the grant date. We typically award options that vest over a five-year period on an annual ratable basis. From time to time, we award options providing for vesting over three years, with one-third vesting on each of the first three anniversaries of the grant date. If the employee ceases to be employed by us for any reason before vested options have been exercised, the employee has 90 days to exercise options that have vested as of the date of such employee’s termination, or they are forfeited.

We use the Black-Scholes option pricing model to determine the weighted-average fair value of options granted. We recognize the compensation cost of stock-based awards on a straight-line basis over the requisite service period of the award.

The determination of the fair value of stock-based payment awards utilizing the Black-Scholes model is affected by the stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rate and expected dividends.

The following table sets forth the significant assumptions used in the model:

We will continue to use judgment in evaluating the expected term and volatility related to stock-based compensation on a prospective basis and incorporate these factors into the Black-Scholes pricing model. We record forfeitures as they occur. Higher volatility and longer expected lives result in an increase to stock-based compensation expense determined at the date of grant.

As of December 31, 2025, there was approximately $24,774 of unrecognized compensation expense related to non-vested stock option awards and RSUs that is expected to be recognized over a weighted-average period of 2.3 years. This includes $7,352 of unrecognized compensation expense related to PSOs based on our current assessment of probability. There is an additional $14,421 of unrecognized compensation expense if the PSOs were to achieve 100% probability.

Restricted Stock Units

During the year ended December 31, 2025, we granted awards of RSUs to our employees and non-employee directors under our 2020 Plan. These RSUs represent a promise to deliver shares to participants at a future date after certain vesting conditions are met. RSUs do not have the voting rights of common stock and the shares underlying RSUs are not considered issued and outstanding upon grant. The fair value of RSUs is based on the closing stock price of our common stock on the grant-date and expensed over the requisite service period of the award.

The following table summarizes the activity under the plan:

Total stock-based compensation expense for the year ended December 31, 2025 related to RSUs was $2,340.

As of December 31, 2025, 101 of the RSUs were vested and there was $997 of unrecognized compensation expense related to RSUs that is expected to be recognized over a period of approximately one year.

Employee Stock Purchase Plan

Our 2017 Employee Stock Purchase Plan permits eligible employees to purchase up to an aggregate of 350 shares of the Company’s Class A common stock. In August 2024, we amended our ESPP, which permits eligible employees to purchase up to an aggregate of 575 shares of our Class A common stock. The ESPP allows participants to purchase shares of common stock at a 5% discount from the fair market value of the stock as determined on specific dates at six-month intervals.

During the years ended December 31, 2025 and 2024, we issued 120 and 64 shares, respectively, under the ESPP. As of December 31, 2025 and 2024, the amount that had been withheld from employees for future purchases under the ESPP was $151 and $99, respectively.

Other Employee Benefits

We maintain a qualified 401(k) plan covering eligible U.S. employees who have completed the minimum service requirement, as defined by the plans. The plans require us to contribute 100% of the first six percent of base compensation that a participant contributes to the plans.

In 2016, we established a Group Personal Pension Plan for employees in the United Kingdom, for eligible employees who may contribute a portion of their compensation, subject to their age and other limitations established by HM Revenue & Customs. The plan requires us to contribute 100% of the first six percent of base compensation that a participant contributes to the plans.

We also have a Registered Retirement Savings Plan for employees in Canada, for eligible employees who may contribute a portion of their compensation. The plan requires us to contribute 100% of the first six percent of base compensation that a participant contributes to the plans.

The following table sets forth our matching contributions under the plans:

15. COMMITMENTS AND CONTINGENCIES

From time to time, we issue letters of credit and performance bonds with our third-party lenders, to provide collateral.

We are involved in a variety of other claims and other legal proceedings generally incidental to our normal business activities. When we conclude that it is probable that a liability has been incurred and the amount of the liability can be reasonably estimated, it is accrued through a charge to earnings and, if material, disclosed below. When only a range of amounts is reasonably estimable and no amount within the range is more likely than another, the low end of the range is recorded. While the ultimate amount of liability incurred in any of these matters is dependent on future developments, in our opinion, the recorded liability is adequate to cover the future payment of such liability and claims. However, the final outcome of any of these claims and legal proceedings cannot be predicted with certainty, and unfavorable or unexpected outcomes could result in additional accruals that could be significant to results of operations in a particular year or quarter. Any adjustments to the recorded liability will be reflected in earnings in the periods in which such adjustments become known. For any other claims where a loss may be reasonably possible, but not probable, or is probable but not reasonably estimable, no accrual is established, but the matter, if potentially material, is disclosed below. We routinely review relevant information with respect to our matters and update our accruals, disclosures and estimates of reasonably possible loss based on such reviews. While the outcome of any of these matters cannot be accurately predicted, we do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our financial condition or results of operations.

In October 2021, we entered into a contract with Southern California Edison (“SCE”) to design and build three grid scale BESS at three sites near existing substation parcels throughout SCE’s service territory in California with an aggregate capacity of 537.5 MW (“the SCE Agreement”). As previously disclosed, due to supply chain delays, weather and other events, we were unable to complete the projects by August 1, 2022 (the “Guaranteed Completion Date”) and made related force majeure claims. In late 2022, SCE also instructed us to adjust the completion of the sites into 2023. Under the SCE Agreement, a failure to reach the Guaranteed Completion Date could, under certain circumstances, result in liquidated damages up to a maximum amount of $89 million being applied. On August 30 2024, we reached an agreement with SCE on the substantial completion of two out of three battery energy storage system projects. We received approximately $110 million on September 5, 2024 as milestone payments, reflecting an offset of liquidated damages for these two projects. The agreement confirmed that the final resolution related to our obligation to pay the liquidated damages withheld and the applicability and scope of any force majeure relief as well as any cost recovery we may be entitled to remain subject to dispute. We are continuing discussions with SCE on these matters and our view continues to be that liquidated damages should not be applied. It is at least reasonably possible we may incur an obligation to pay liquidated damages up to the maximum amount.

Commitments as a Result of Acquisitions

In December 2021, we completed an acquisition of Plug Smart which provided for an earn-out based on future EBITDA targets beginning with EBITDA performance for the month of December 2021 and each fiscal year thereafter, over a five-year period through December 31, 2026. The maximum cumulative earn-out is $5,000 and we evaluated financial forecasts of the acquired business and concluded that the fair value of this earn-out was approximately $2,160 upon acquisition. The fair value of the contingent consideration increased by $71 and 149 during the years ended December 31, 2025 and 2024, respectively. The change in the fair value was included in selling, general and administrative expenses in our consolidated statements of income. During the year ended December 31, 2025, the total earn-out reached the maximum value of $5,000 and a final payment of $1,685 was made.

The August 4, 2023 purchase and sale agreement with BCE includes a potential earn-out that could be earned if the projects achieve specified value thresholds in certain phase 2 projects, each of which is very early in development, or if milestones are achieved on other future projects that are not yet started. The total earn-out is limited to $40,000 over a seven-year period beginning on January 12, 2024. We will record a liability for the phase 2 earn-out payments when the amounts are probable and estimable. As of December 31, 2025, none of the earn-out amounts are considered probable and estimable and no payments have been made to date.

See Notes 4 and 18 for additional information.

Powin LLC

On June 10, 2025, Powin LLC (“Powin”), one of our BESS suppliers, voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court. As of the date of this report, Ameresco paid Powin $26,683 in deposits for transactions that never materialized and are recorded within other assets in the accompanying consolidated balance sheets. We are actively monitoring the proceedings, and the range of loss is between $0 and $26,683 Since it is early in the bankruptcy proceedings a loss cannot be reasonably estimated, therefore, no loss has been accrued at this time.

16. GEOGRAPHIC INFORMATION

The following table presents our long-lived assets related to our operations by geographic area:

We attribute revenues to customers based on the location of the customer. The following table presents revenues by geographic region:

17. OTHER (INCOME) EXPENSES, NET

The following table presents the components of other (income) expenses, net:

Estimated amortization expense for existing debt discount and debt issuance costs for the next five succeeding fiscal years is as follows:

18. FAIR VALUE MEASUREMENT

We recognize 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 on unadjusted quoted prices for identical instruments traded in active markets.

Level 2: Inputs are based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

The following table presents the input level used to determine the fair values of our financial instruments measured at fair value on a recurring basis:

The fair value of our 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 volatility. As part of this valuation, we 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 our make-whole provisions was 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 our contingent consideration liabilities was 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. We 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, probability-weighted cash flows, and volatility. We determined the fair value of our contingent consideration obligations based on a probability-weighted income approach derived from financial performance estimates and probability assessments of the attainment of certain targets for some acquisitions. For other acquisitions, we derived the fair value of contingent consideration using a Monte Carlo simulation in an option pricing framework. We established discount rates utilized in our valuation models based on the cost to borrow that would be required by a market participant for similar instruments. In determining the probability of attaining certain technical, financial and operational targets, we utilized data regarding similar milestone events from our own experience, while considering the inherent difficulties and uncertainties in developing a product. On a quarterly basis, we reassess the probability factors associated with the financial, operational, and technical targets for our contingent consideration obligations. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

We derived an initial fair value of the contingent consideration of $2,160 from the acquisition of Plug Smart in December 2021 using a Monte Carlo simulated model. The key assumptions used in the model include two scenarios of EBITDA projections, a base case and a higher case, a risk-adjusted discount rate of 16.9%, and estimated EBITDA volatility of 70.0%.

The balances and subsequent key assumptions used in the model were as follows:

The following table sets forth a summary of changes in the fair value of contingent consideration liabilities classified as level 3:

The fair value of financial instruments is determined by reference to observable market data and other valuation techniques, as appropriate. Long-term debt is the only category of financial instruments where the difference between fair value and recorded book value is notable. At December 31, 2025 and 2024, the fair value of our long-term debt was estimated using discounted cash flows analysis, based on our current incremental borrowing rates for similar types of borrowing arrangements which are considered to be level two inputs. There have been no transfers in or out of level two or three for the years ended December 31, 2025 and 2024.

The following table sets forth the fair value and the carrying value of our long-term debt, excluding financing leases:

We are also required to periodically measure certain other assets at fair value on a nonrecurring basis, including long-lived assets, goodwill, and other intangible assets. We calculated the fair value used in our annual goodwill impairment analysis utilizing a discounted cash flow analysis and determined that the inputs used were level 3 inputs. Other than intangible assets acquired from the Enerqos acquisition, as noted in Note 4, there were no other assets recorded at fair value on a non-recurring basis as of December 31, 2025 or 2024.

19. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

During the twelve months ended December 31, 2025, in connection with the payment in full of the October 2012 Term Loan, we terminated the related interest rate swap contracts that were not designated as hedging instruments and received $2,808 in proceeds upon settlement. We also added six embedded derivatives for make-whole provisions with an initial fair value totaling $9,144 during the twelve months ended December 31, 2025. See Note 9 for additional information about the financings.

The following table presents information about the fair value amounts of our derivative instruments:

As of December 31, 2025 and 2024, all but one of our freestanding derivatives were designated as hedging instruments.

The following tables present information about the effects of our derivative instruments on the consolidated statements of income and consolidated statements of comprehensive income:

The following table presents the changes in AOCI, net of taxes, from our hedging instruments:

The following tables present all of our active derivative instruments as of December 31, 2025:

20. BUSINESS SEGMENT INFORMATION

Our reportable segments for the year ended December 31, 2025 were North America Regions, U.S. Federal, Europe, and Renewable Fuels (formerly Alternative Fuels). On January 1, 2024, we changed the structure of our internal organization, and our U.S. Regions and Canada are now included in North America Regions. Additionally on January 1, 2024, our Asset Sustainability Group was formerly included in Canada, but is now included in “All Other”. As a result, previously reported amounts have been reclassified for comparative purposes.

Our North America Regions, U.S. Federal, and Europe segments offer energy efficiency products and services which include the design, engineering, and installation of equipment and other measures to improve the efficiency and control the operation of a facility’s energy infrastructure, renewable energy solutions, and services which include the construction of small-scale plants that Ameresco owns or develops for customers that produce electricity, gas, heat, or cooling from renewable sources of energy and O&M services.

Our Renewable Fuels 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. Our North America Regions segment also includes certain small-scale solar grid-tie plants developed for customers. The “All Other” category offers 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.

Our Chief Executive Officer and President is our chief operating decision maker (“CODM”). The CODM is responsible for making operating decisions, allocating resources, and assessing performance of the business segments. The CODM uses the segments’ income before income taxes as the profitability measure in making these decisions.

For the years ended December 31, 2025, 2024, and 2023, 61.0%, 67.3%, and 71.8%, respectively, of our revenues have been derived from federal, state, provincial, or local government entities, including public housing authorities, public universities and municipal utilities. The U.S. federal government, which is considered a single customer for reporting purposes, constituted 15.1%, 21.0%, and 29.3% of our consolidated revenues for the years ended December 31, 2025, 2024, and 2023, respectively. Revenues from the U.S. federal government are included in our U.S. Federal segment.

The reports of our CODM do not include assets at the operating segment level.

The table below presents our business segment information and reconciliation to our consolidated financial statements for the years ending December 31:

See Note 3 for additional information about our revenues by product line.

21. ASSETS HELD FOR SALE

During the year ended December 31, 2025, we identified one asset that previously met the criteria to be classified as held for sale, but we no longer have the intent to sell the assets. As of December 31, 2024, the carrying value of these assets was $7,971 with liabilities associated with assets classified as held for sale of $771. As a result of the change in circumstances, the balances for these assets were reclassified to held and used and the reclassification did not have a material impact to current period results.

As of December 31, 2025, we determined that there were two energy asset projects under construction that were considered to be assets held for sale, since these assets were being marketed for sale and all the criteria to be classified as held for sale under ASC 360, Property, Plant and Equipment—Impairment or Disposal of Long-Lived Assets, had been met. Assets held for sale are measured at the lower of their carrying value or the fair value less cost to sell. The carrying value of these assets was $401, with no liabilities directly associated with assets classified as held for sale as of December 31, 2025.

During the year ended December 31, 2024, we entered into fifteen membership interest purchase agreements in which we sold energy assets designated as held for sale during 2024. We continued to build the energy assets and recognized project revenues under their respective engineering, procurement, and construction (“EPC”) contracts. These assets had a carrying value of $69,806 at the time of the sale and during the year ended December 31, 2024, we recognized revenue of $87,465 and gross profit of $15,545 in the consolidated statements of income under the EPC contracts. As of December 31, 2024, we determined that there were three energy asset projects under construction that were considered to be assets held for sale, since these assets were being marketed for sale and all the criteria to be classified as held for sale had been met. The carrying value of these assets was $8,372, with liabilities directly associated with assets classified as held for sale of $771 as of December 31, 2024.

Assets held for sale are measured at the lower of their carrying value or the fair value less cost to sell.