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Table of Contents
<br />• Cost of Revenues and Gross Profit. the decrease in cost of revenues is primarily due to the decrease in project revenues described above, however, our gross profit as a
<br />percent of revenues increased due to the lower revenue contribution from our lower margin, design -build SCE battery storage project.
<br />• Selling, General and Administrative Expenses: the increase is primarily due to higher professional fees of $2.5 million, higher project development fees of $2.1 million,
<br />partially offset by lower net salaries and benefits of $4.6 million as a result of a decrease in non -cash stock -based compensation expense.
<br />• Asset Impairments: This year includes impairment charges of $1.6 million recorded in 2023 related to two of our landfill gas to energy assets, and a goodwill
<br />impairment charge of $2.2 million related to one of our reporting units.
<br />• Other Expenses, Net: Other expenses, net, includes gains and losses from derivatives transactions, foreign currency transactions, interest expense, interest income,
<br />amortization of financing costs and certain government incentives. Other expenses, net increased primarily due to higher interest expenses, net of interest income of $9.7
<br />million related to increased levels of project debt, a higher average balance on our senior secured debt facility, factoring fees in Italy of $5.8 million, and a decrease in
<br />government incentives received of $2.0 million.
<br />• Income before Income Taxes: the decrease is due to reasons described above.
<br />• Income Tax Expense (Benefit): the provision for income taxes is based on various rates set by federal, state, provincial, and local authorities and is affected by
<br />permanent and temporary differences between financial accounting and tax reporting requirements. The effective tax rate was lower in 2023 as compared to 2022
<br />primarily due to higher deductions under the Section 179D Energy Efficient Commercial Buildings Deduction for both 2023 under the IRA and for prior periods which
<br />were documented and claimed on amended tax returns during 2023, deferred state tax benefits resulting from reduced state tax rates in future periods. The tax benefit rate
<br />for 2022 was favorable, primarily due to increases in the benefits associated with energy efficiency tax incentives, including Section 48 Solar Investment Tax Credits,
<br />deductions associated with the Section 179D Commercial Buildings Energy Efficiency Tax Deduction, and compensation deductions resulting from employee stock
<br />option disqualifying dispositions.
<br />• Net Income and Earnings Per Share: Net income attributable to common shareholders decreased due to the reasons described above. Basic earnings per share for 2023
<br />was $1.20, a decrease of $0.63 per share compared to 2022. Diluted earnings per share for 2023 was $1.17, a decrease of $0.61 per share, compared to 2022.
<br />Business Segment Analysis
<br />Our reportable segments for the year ended December 31, 2023 were U.S. Regions, U.S. Federal, Canada, Alternative Fuels, and Europe. The remaining amounts are included in
<br />"All Other". Europe was formerly included in "All Other" but was disaggregated due to growth in the segment in 2023. As a result, previously reported amounts have been
<br />reclassified for comparative purposes. See Note 20 "Business Segment Information" for additional information about our segments.
<br />Revenues
<br />(In Thousands)
<br />U.S. Regions
<br />U.S. Federal
<br />Canada
<br />Alternative Fuels
<br />Europe
<br />All Other
<br />Total revenues
<br />Year Ended December 31,
<br />Year -Over -Year Change
<br />2023
<br />2022
<br />Dollar Change
<br />% Change
<br />$ 557,122 $
<br />1,123,343 $
<br />(566,221)
<br />(50.4)%
<br />402,884
<br />391,891
<br />10,993
<br />2.8
<br />70,110
<br />58,558
<br />11,552
<br />19.7
<br />117,075
<br />114,459
<br />2,616
<br />2.3
<br />152,842
<br />61,645
<br />91,197
<br />147.9
<br />74,600
<br />74,526
<br />74
<br />0.1
<br />$ 1,374,633 $
<br />1,824,422 $
<br />(449,789)
<br />(24.7)%
<br />• U.S. Regions: the decrease is primarily due to a $584.1 million, or 56%, decrease in project revenues attributable to the timing of revenue recognized based upon costs
<br />incurred to date relative to total expected costs on active projects, including our SCE battery storage project, versus the prior year partially offset by a $13.1 million, or
<br />28%, increase in revenue from the growth of our energy assets in operation.
<br />• U.S. Federal: the increase is primarily due to a $8.4 million, or 3%, increase in project revenue attributable to the timing of revenue recognized as a result of the phase of
<br />active projects compared to the prior year and a $1.6 million, or 3%, increase in O&M revenue.
<br />• Canada: the increase is primarily due to higher project revenues which were partially offset by unfavorable foreign exchange rates.
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