Opening of Proposals - WWTP Solar Guaranteed Energy Savings Contract Proj. No. 124-015 - Ameresco

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Table of Contents AMERESCO, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (In thousands, except per share amounts) 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, 2023 and 2022, 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 Deferred project costs Prepaid expenses Prepaid expenses and other current assets Other Receivables Year Ended December 31, 2023 2022 $ 74,454 $ 16,877 38,240 13,556 10,697 8,184 $ 123,391 $ 38,617 Ameresco's wholly -owned subsidiary in Italy entered into factoring agreements to sell certain receivables to unrelated third -party financial institutions on a non -recourse basis. These transactions are accounted for in accordance with 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 $39,923 at December 31, 2023 and are included in other receivables in the table above. Factoring fees during the twelve months ended December 31, 2023 were $5,844 and are included in other expense, net in the consolidated statements of income. See Note 17. Other Expenses, Net. Other receivables also include $20,970 which represents the fair value of the portion of investment tax credits that we are contractually required to transfer, which is related to the project we acquired on August 4, 2023. See the Government Grants paragraph below and Note 7. Energy Assets, Net for additional details. Deferred Project Costs Deferred project costs include costs incurred on active projects which will be reclassified to energy assets once a change order or other contract resolution is finalized. 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. 55