Q4 2019 Earnings Call
all participants
B and a listen-only mode. If you need any operator assistance, please press star then zero on your telephone keypad at this time. I would like to turn the conference call over to change read vice president of investor relations and ESG for the company, please go ahead.
Thank you operator. Good afternoon, everyone and welcome earlier this afternoon and and Armstrong distributed a press release detailing our fourth-quarter and full-year 2019 results a copy of which is available on our website. It's conference call is being webcast live on the investor relations page of our website where a replay will be available later today before the call begins. I would like to remind you that some of the comments made in the course of this call are forward-looking patience and within the meaning of section 27A of the Securities Act of 1933 as amended and section 21e of the Securities and Exchange Act of 1934 as amended the company claims the protections of Palm Harbor for forward-looking statements contained in such sections. The forward-looking statements made in this call are subject to the risks and uncertainties described in the risk factors section of the company's form 10-K and other filings with the SEC.
actual results May differ materially
And those described during the call in addition all forward-looking statements are made as of today and the company does not undertake any responsibility to update any forward-looking statements based on new circumstances or revise expectations. Please note certain non-gaap Financial measures will be discussed on this conference call a presentation does information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with gaap a Reconciliation of gas to non-gaap Financial Manager is available on our posted earnings release and slide presentation joining me on today's call are Jeff Michael the company's chairman and CEO and Jeff. Lifson our CFO with that I turn the call over to Jeff who will begin on slide three Jeff. Thank you Chad and good afternoon everyone. We're pleased to present our queue for an 2019 results today, which were strong both the quarter and the year that strength is driven by the growth in our markets and our client base our leadership and climate-change investing in ESG is finally being recognized and valued birth.
Those are debt and Equity investors.
Let's detail these themes starting on page three today. We are announcing a 65% gaap earnings growth year-over-year to a dollar twenty four and quarter earnings per share of a dollar forty off which is above the midpoint of our 2019 guidance of a dollar Thirty Cent balance sheet portfolio grew by 10% quarter-over-quarter to 2.1 billion, even as I'm still rotated a few more assets off as such we are raising our dividend 34 cents per share four Q 12020 which implies a $0.02 annual increase to $1,000.30 per share this continues our practice of raising our dividend annually, but it'll rates slower than we were growing earnings.
We are confirming our previous guidance for 2020 but expect annual earnings per share in 2020 will exceed the midpoint guidance of a dollar forty three. Thursday is the last year of our three-year guidance, which we believe has worked well to allow both the company and investors to focus on the long-term growth potential of the business. We intend to issue new guidance this time next year that we expect will at least track growth consistent with current guidance and we'll wrap up this slide to highlight the large positive impact. Our business is having on reducing CO2 age nearly four hundred thousand metric tons for carbon count 4.3 turning to slide for the Highlight the success of our investment thesis over the last five years down the road on the left shows total annual shareholder return 400 Armstrong at approximately 25% per year two times that of the S&P five hundred and twenty five times better than the fossil-fuel concentrate wage.
S&P energy
Similarly the yield on our corporate bonds compressed over a hundred and fifty basis points while the S&P energy index yield widened these two charts seem to demonstrate that investors are pricing climate risk and opportunities into their investment decisions and achieving Superior risk-adjusted returns from climate positive investing in an Armstrong.
Turning to slide v as we did in last year's fourth-quarter call. We would like to address some of the key macro themes that are top-of-mind for our investors and analysts first climate change is happening even accelerating and it is a driver of our business whether it is a mitigation investment to lessen the impact of severe weather or resiliency investment in solar Plus Storage due to a wildfire related power outages. It is clear that investing in climate change Solutions will continue to grow our client base is expanding and driving growth in our pipeline in 2915. We announced the emergence of several clients and asset classes including green real estate Community solar and Commercial Energy Efficiency all contributing to the growth and behind-the-meter Market wage. We Believe are excellent performance of the last few years in a persistently low interest rate environment shows the flexibility of our business model our ability to continue to find attractive wage.
Could just returns.
While reducing our cost of debt in this environment has allowed us to grow corn net investment income from our portfolio.
Our leadership rigor and commitment comprehensive and transparent ESG reporting since our launch is a public company is finally paying off as institutional investors see credible profitable Investments as climate change investing expand. We believe that leaders will be appropriately recognized and competitive advantages will widen.
Market forces continue to supersede federal policy headwinds as the increasing cost competitiveness of Renewables storage and Energy Efficiency and push the private sector and many state and local governments to accelerate their procurement and adoption. We believe these Technologies are already standing on their own and that their costs will continue to drop
turning to slide six. We provide more details on our diverse client Revenue pipeline of our more than two and half billion dollar pipeline nearly 80% is behind-the-meter. I mentioned on the prior announcements in Q3 and Q4 of new client relationships and markets, but it's also important to note the strength of our historic client base and their capabilities which are growing in sophistication and ambition off this combination of existing client growth. The addition of new clients is driving growth in our behind-the-meter pipeline.
Investments continue to face headwinds from low natural gas prices we intend to support our key clients in the grid-connected market when we can find a structure in economics that work for both parties filing the sustainable infrastructure Market continues to present a number of attractive opportunities opportunities in the Clean Water ecological restoration and resiliency Market.
Turning to slide seven. We highlight the Diversified and long-dated nature of the cash flows generated by the assets. We managed on balance sheet as of the end of 2019. We had over a hundred and eighty Investments with an average size of approximately eleven million dollars in an average weighted life of approximately fifteen years 60% of the portfolio is behind the meter with a forward-looking yield of 8% off the last half of 2019. We saw growth and cni green real estate and Community solar relative to residential solar 39% of our portfolio is good connected mobility of which is solar land and it's generating a forward-looking yield of 7% in some we believe our 2.1 billion balance sheet portfolio is Diversified long-dated assets remain poised to support a projected growth in 2020 and Beyond now, I'll turn it over to Jeff L to detail our financial performance.
Thanks, Jeff, and thank you.
To everyone for joining the call. I will focus my remarks on three topics number one our financial results number to a noteworthy accounting change and number three capital markets as we turn to slide a month. I want to reiterate Jeff's comments and emphasize you had an outstanding year and I had an excuse me had an outstanding fourth quarter and are very pleased with the full year results. We were equally pleased with how well the company is situated to take advantage of current trends, which we expect will result in further earnings growth summarizing page eight. We recorded gaap earnings per share of a dollar Twenty Four and Twenty nineteen. I'm an increase of 65% over 2018 quarter earnings per share increased to a dollar forty and twenty nineteen up from a dollars thirty-eight and 2018 and above the previously communicated 29th, midpoint and guidance of a dollar 37.
An increase in portfolio yield is a primary driver.
In addition coordinate investment income was 82 million and twenty nineteen twenty 2% increase over 2018 while gaining sale and fees were flat at approximately $39 million.
as you
And see on the slide our fourth quarter gaap earnings significantly, exceeded our fourth quarter quarter earnings, the transaction that causes difference is an excellent example of that validates our core earnings methodology box specifically in the fourth quarter. We sold a portfolio of wind projects that had flipped. So we had already collected the vast majority of our cash flows unless the purchase price was roughly equal to our core Book value. So we had no core gain or loss on the transaction. However, due to the Gap methodology that frequently delays earnings on Equity method Investments. Our Gap Book value was much lower wage resulted in the tap gain of approximately twenty-eight million dollars since the market price of this asset was equal to our core Book value. This is a strong indication that are core earnings recognition or Equity method Investments is the appropriate methodology for investors to evaluate our results.
Before continuing the slide deck. I would like to address one item that will impact future reporting of our results.
Beginning in 2020 all public companies are subject to a new accounting standard generally referred to as the current expected credit loss model, which is typically abbreviated as CCM or Cecil under this accounting standard. We will be implementing unexpected lost methodology for certain of our assets at the time. They are originated for example commercial receivables will wage Provisions. But Equity method investments will not for the relevant Investments. We will create an allowance for losses on the balance sheet and record a provision on the income statement. This provides an allowance. Accounting is similar to the method that many Financial companies have utilized for years. Although Cecil has resulted in a recalibration of required Provisions across the industry.
Three additional brief thoughts regarding Cecil number one utilizing provision and allowance does not change the cash flow or lifetime profitability of our investments, but it does reduce profitability in the the first year of the investment for example, a $10 commercial receivables transaction with a 50 basis-point allowance requirement results in a provision expense of $50,000 in the first choice. However, the $50,000 will eventually become earnings in a future year if the investment performs as expected.
number two
Cecil implementation does not reflect any change in our view of the actual credit quality of our investments and should not be interpreted as such it is simply an accounting methodology change bulb and number three the guidance. We are clarifying today for 2020 is based on a pre-provision EPS estimate for a transition. We expect to report our core earnings on both the same vision and post provision basis.
Turning to slide 9 we highlight the 20 the 23% compound annual increase in core net investment income over the last five years. This growth has been driven by two thousand actors number one rotating lower-yielding assets off the balance sheet and replacing them with higher-yielding assets, which is driven our portfolio yield F-150 basis points over the last two years and to lower leverage, which is falling from above two times debt-to-equity in 2017 to 1.5 times in 2019 resulting in reduced interest expense.
We are extremely.
He's with the significant increase in core net investment income as it enhances the predictability of our core EPs and further stabilizes the business given the long duration of our assets.
Turning to slide ten. We highlight are flexible business model by growing are managed asset base and the subset of assets. We keep on balance sheet while also opportunistically executing on gain on a transactions. We've been able to consistently achieve an attractive and stable return on Equity. Despite Global spread compression.
Turning to slide 11 the credit quality of our portfolio remains strong as depicted in the pie chart on the upper, right all of our government and the vast majority of our cars table Gore's enjoy investment-grade ratings. In addition. The obligor has of our residential solar assets include over 145,000 High credit quality consumers located across 22 States and in our Equity method Investments, which by their nature do not lend themselves to simple obligor credit analysis. We are typically senior or preferred in the investment structure.
as we turn to slide 12
I want to emphasize our continued access to debt and Equity Capital markets and historically attractive levels with our strong recent stock performance and our debt trading at a yield below 4% off. We feel very confident about our ability to raise capital and continue to grow our business in 2019. We raised five hundred million dollars of corporate unsecured debt 138 million dollars of Ecuador and completed several private secured finances following the following of our 10-K. We intend to refresh our at-the-market Equity issuance shelf registration up to two thousand and fifty million dollars as we continue to identify a creative Investments. We expect to utilize the full arsenal of our funding Alternatives including the ATM overnight or marketed Ecuador offerings unsecured debt secured debt syndications and off-balance-sheet securitizations.
Note that we have no material recourse debt maturities until 2022 when our convertible bonds mature and given our convertible notes may be settled in shares. This maturity does not necessarily reflect a cash need this maturity profile combined with the fact that the non-recourse debt largely amortize has within the contracted terms of the underlying assets long demonstrates that we are largely inoculated against near term refinance risk and interest rate movements.
We have also changed.
For the target range of our ratio of fixed rate debt to total debt from a range of $60 85% to arrange of seventy-five to one hundred percent to reflect our current and expected profile limited floating-rate debt at 12:31. The fixed rate debt percentage was 98% I will now turn the call back over to Jeff.
Terrific Jeff thanks turning to slide. Thirteen. I will highlight notable developments on the ESG front that continue to demonstrate our leadership with a proprietary carbon count methodology off the positive environmental impact of the firm is unquestionably embedded in our DNA and Hannon Armstrong an emphasis on a durable social fabric including a diverse engaged in Fairly compensated staff is a material factor in our financial success with the appointment of Teresa Brenner as our lead independent director in 2019. We are now one of the few US public companies young woman as lead independent director and lastly was one of the first US public companies to implement tcfd in our financial filings. We can assure our shareholders that our team will stay on track and deliver results in some we are proud to remain a leader in performance and Reporting turning to slide fourteen. We close with a brief summary of the key strength to strength of birth.
Armstrong with the program
Like origination platform a diversified portfolio a durable capital structure industry-leading ESG and strong competitive positioning. We have demonstrated we can thrive in challenging straight the policy environment for us climate positive. Investing is not a fad or a newly adopted strategy. It is the reason we exist we welcome others who have recently announced are focusing on climate change and believe that our competitive Advantage will continue to serve all of our stakeholders. Well, thank you for joining us today operator. Please open the line for questions.
We will now begin the question-and-answer session to ask a question. You may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.
And our first question comes from Julian dumoulin-smith of Bank of America, please go ahead.
Hey guys, this is Anya filling in for Jillian today on you. Hey, how are you? So first off about asked could you talk about your long-term strategies exposure to distributed generation solar? What's the reason the limit to assume is descended the overall portfolio and then in line with that, can you talk about opportunities you're seeing dead relative to wins over the next year or so?
Let's take that in into parts. I'll do it in reverse order so solar for wind you have to split it between grid-connected and and behind-the-meter. We generally have not found found attractive economics and uh the common Equity of wind projects. Um, and so that has led us to do more relatively more solar land which is where I leave see the best value behind-the-meter we can continue to see solar expand in residential as you as us but also community and see me and it's really getting combined with storage plus energy-efficiency projects. So the technology distinction is blurring a little bit. There is a limit on how much exposure will take to anything that class.
but actually what we would hope you take
Away is as the portfolio grows those limits tend to to grow as well. We're as we've demonstrated very cautious on credit and the ability to sell down is something we always have in the back of our minds. So I'm not not going to give you a hard number but Q4 demonstrates that we were able to add assets that were raised solar assets and that just increases our capacity to grow all the asset classes.
Okay. Thanks. And then separately can you talk about the the growth Trends you're seeing in our local government markets just lately. How are you expecting that to look going forward relative to other markets?
Well clearly that's been the Legacy business for Hannon Armstrong for more than 20 years. And I think the economics are doing but getting better when you have technology that is getting cheaper is getting more capable and you have interest costs that are so low, we expect to see continued adoption was state and local and federal governments. I think there are lots of ways for for that market to grow what we've never actually seen it do though is like double or triple. So it wouldn't expect that. It's nice steady growth. These are complicated transactions to do and that complication tends to limit their the increase in wage and in their adoption, but it's a good steady Market.
Okay. Thanks. And the last question on the guidance, I guess the guidance raised that you guys have put out. Could you add some carbs and what exactly is anything more specific on what's driving that increase above the midpoint and that seems to be before the accounting office change, right?
Yes, that's without regard to any provisions. We we might take this year. And so what's driving it, you know, the growth in nii name is reassuring that we become less reliant on fees and able to hit higher end of the the target the excellent progress. We made on a corporate unsecured debt has given us a lot more flexibility to increase that nii. So that is really why we're
focusing
Bullseye to the north side of the midpoint rather than a fairly wide range.
Okay. Thanks a lot. I'll jump back. Thank you.
Our next question comes from Chris Van Horn of the Riley FBR, please go ahead.
Good afternoon. Thanks for taking my call. You know the it seems like there's a big acceleration in transactions in the fourth quarter relative to your commentary from the third call. She was that just a matter of timing and was it a similar mix in terms of your end markets that that you violated for the year.
Haven't really disclosed the the mix in Q4, but to 4 is typically a a busy quarter obviously people want to book business at the end of the year. We did have some Safe Harbor facilities which are important to get close at the end of the year. Those are drivers would not say there's any one overarching theme that would make you smarter about the timing of when business hits as we've always said we don't control that are large client base wage controls that but yeah two for which should be a busier time for us just given the end of the year and the implications on particularly solar tax credit.
Okay, got it. And then on the range of your EPS guidance is you know, is there a timing component to the lower end versus the higher end and and is is gained the sales team a big driving force there any additional color would be helpful.
So gain on sale is important. It just becomes less important to achieving our results when were able to add a creative transactions to the balance sheet. So we're definitely took that that that seems to be the way things are going for us now with respected timing. You mean quarter-to-quarter timing, correct? Yep.
You know, we give annual guys for a reason anyone quarters is always difficult to predict. So but again shifted away from home a greater Reliance on gain-on-sale will mitigate order the quarter variations, but it certainly doesn't eliminate them. Okay? Okay. I got it. Thanks. And then last for me home early 2019 had a had a number of international disasters that you highlighted in in your kind of macro trends. When does that what's the typical? I know it's probably hard to quantify depends on the the region and and the application but is there a timing around an increase in in you know kind of your pipeline and your activity around those and and have you seen anything kind of come come down from from what we saw in 2019 around those disasters?
There's nothing we can you know, specifically Thai One disaster to a a communities decision to go do something around resilience.
What is fairly obvious to us is all around the country. People are feeling different impacts from climate change. It's different in Louisiana than it is in Florida versus Chesapeake Bay Area and but every not everyone but it just seems to be a much more topical conversation as we meet with our clients that they're seeing the need and the communities starting to come to the recognition that whether they want to call it climate change or just weird whether something is different and they're going to have to make some Investments that all takes time for us sadly the trend seems to be absolutely certain so good for business but not necessarily good for the communities where these impacts bring felt.
Okay. Got it. Thanks again.
And for the time, thank you.
Our next question comes from Mark Strauss of JPMorgan, please go ahead. Yeah. Good afternoon. Thank you very much for taking our questions. Jeff E M. I know you you give kind of long-term targets of annual transactions of of around a billion or so, but for the last couple of years you've been a bit north of that. I know it's hard to predict especially this time of year. But I mean, is there any obvious reason why it would slow back down to that that 1 billion Mark or it should we be assuming kind of similar to what it's been last couple of years.
You know, I think we've used a billion dollar Target almost for ease of math for some of the business model questions, but I think this is our third year over a billion. It's not you know, I don't think we're looking at a hockey stick necessarily, but you know, hopefully the tone of the month
The thing we just did is pretty positive. There's growth in in all of these markets. Do they hit in 2020 or do they hit in 2021 that's really tough for us to say but like the you know, the general trend is very positive in terms of origination. So I don't see anything that's going to take it back down. Hopefully we'll continue to see growth in the creative transactions with pricing and structures. We we like
Okay, thank you. And and then Jeff L. Can you this is probably hard to predict as well. But how should we think about the the potential impact of Cecil package to UPS this year?
Well, one of the reasons we're yeah, one of the reasons we're doing the guidance on app reprovision basis is we're still working through exactly what Provisions will be in certain categories of assets. I would I would ground you in the notion that for example Equity method investments will not have any Cecil required Provisions. So to the extent that dead ends up being a large part of our volume see so it would be a non-event by the same token commercial receivables, you know will have required provisions. And so if the business migrates need directions, it'll be a little bit more of an impact. So as Jeff said the transaction volume itself is difficult enough to predict the types of transactions and the timing of when they close become that much more difficult to predict which in turn makes the Cecil post provision EPS challenging to predict and that's why we don't want to get too specific about that just yet. We want to suck.
Through a couple of quarters and uh see where we come out before we provide too much guidance on a post provision basis.
Yeah, fair enough. Okay, and then just one more quick one. So looking at your 2020 guidance you do it assume this would be the at least two years in a row now where you get your dividend growth is a bit slower than your EPS growth. Um, can you just provide your latest thoughts around and a long-term Target payout ratios?
What we've said Mark is, you know, we started out paying a hundred percent and as people got to know the story a little bit better off I need for growing that dividend at the same Pace as earnings was less. So we're pretty conservative bunch and having some gap between earnings and dividends is is we think helpful. We don't have a Target payout ratio. This is not related to any rules or anything like that off of reasons. I don't want to get into now, but you know for the next next while we we'd like to see that Gap grow.
Make sense. Thank you very much.
Our next question comes from Jeff Osborne of please go ahead.
A great a lot of good questions for a so far but maybe for 4:19. Just going back to the Cecil. Can you talk about what the the equity method Investments were as a percentage relative to commercial receivables. Is there a way to frame what the exposure would have been if if 20/20 were to be a mirror of nineteen in terms of mix?
Good question. Yeah, good question. I would say commercial receivables were significant. I don't have that in front of me, but we're significant percentage of the balance sheet growth in 2015. And we talked about categories like Community solar would have been Community solar is is a commercial receiving a safe harbor land land resy solar. So but we don't have today for you guys is exactly with the allowance factor, meaning the percent of the asset that would be required to go through provision. So even if I tell u x hundred million of 2019 growth was commercial receivables. I'm not prepared to say Thursday yet exactly what that would have meant in terms of actual levels of provision. So keep that in mind that that something will
Be disclosing.
Is the quarters progressed throughout 2020?
Got it. Okay, and then maybe around the the fourth quarter itself. Can you give us a sense of of what percentage of transactions were securitized and how we should think about that? Same metric is a relates to the existence for the year.
Well in the fourth quarter it was it was roughly fifty-fifty. I would sort of point to that metric being less helpful as we go forward as it back in the past. So for example, uh r c paste business was on balance sheets quite a while and then we securitized in the fourth quarter. So this notion that what was originated in the quarter is exactly what was securitized in the quarter is sometimes not the case, so I'd be a little
I I would give you some caution about using that number in your in your models. Okay, any sense about secures securitization percentage for 2020 or what the size of sheet? We should use for modeling purposes.
I I think we would say that we would expect most of the origination since 2020 to remain on balance sheet without putting out a specific number. It's mostly the energy-efficiency transactions and and see pasted that we would look to securitize and most everything else. We would expect to put on balance sheet. Okay, I think in the past you talked about 30% of a billion and transactions was sort of the rule of thumb. I didn't know if that's changed meaningfully actually in 2019. We had had said it's going to be closer to fifty fifty thousand and I think fellow saying, you know, probably maybe flip or 2:30 seventy and
From the 55th and again directional. Yeah not to be repetitive. But I would I would need Link in many ways your analysis of our company in terms of originations and securitizations occurring simultaneously Page look just indicate for example assets that have been on the balance sheet for for a while. And so that would create a difference in the way you're looking at it if you are always dying origination to secure foundations in the same quarter.
Got it.
Said two other quick ones one just given a topical with all the debates going on. Can you remind us what you've seen over the past around elections and and what not as that impacts the the federal government business and home or is there any slow down or or speeding up into the election and any material impact post the election that was question one? And then question too I had was just around, you know, rebalancing you've had some in the package. Was there any in the quarter itself in Q4 just wasn't sure you know as the the yields have gone up and leverages calmed down how you're thinking about rebalancing in general. And if you can give us the amount for fourth-quarter would be helpful.
In terms of the election question. The good news is our civil service is largely a political and money is not that sensitive to the the election. So we don't expect that the presidential election to have any impact on which which business are generated at the federal government's and on your other question. You know, we have been talking for a few quarters about this rotation of lower-yielding assets off the balance sheet. I would say directionally were coming to the end of that. Obviously. We only had a finite amount of lower-yielding assets on the balance sheet and we did a fair amount that an excess of a hundred million. I think in the fourth quarter will get you the exact number, but I would I would guide you towards what we're sort of coming to the end of that rotation.
Excellent. That's all. Thank you.
Our next question comes from Noah K of Oppenheimer, please. Go ahead.
Thanks. Good afternoon. Thanks for taking my questions. You know, how are you the the growth and the portfolio large part of that sequentially was from the commercial ninth grade receivables fair to assume a significant point of that was the Freddie Mac be peace. Is that correct?
Some of it was but oh that's Equity method actually because we own those through. Yeah, I'm sorry. We own those through the joint venture so they come up as Equity method.
Okay, so what would have been the other kind of key drivers of the commercial non, investment-grade not actually in sales. What were the key drivers commercial? No investment. Great growth. Was it a community solar or what kind of key assets? Yeah, the residue solar Jeff talked about the Safe Harbor and there's some see a nice older in there as well, you know.
Just kind of given the success of of you know, the series any visibility to you know, further deal potential with Freddy or with Fannie wage. How do you think about a pipeline of opportunity there?
But would say that's you know in some ways obviously dependent on Freddy's program for these type of green transactions. Number one number two as we've disclosed our partner. There is is a company called Morgan properties so their ability and willingness availability to be selected to purchase on what's typically a rotating basis. These ready Securities will also be a driver of our volumes there. So we feel good that that uh, Freddy will continue to issue and that Morgan will continue to be part of the rotation but dependent on those two things in terms of we achieving our volumes and can you talk about the pipe line for for some of your other newer offerings like energy as a service and also if I could get one more in was was this the first time you securitized see Pace, you know, if if if not, can you remind us when that started and if so, can you talk us a little bit about dead?
how that pencil. In terms of
your expectations and loan-to-value
Yeah, we can take the second one first, which is yes. It's the first time we secured I see pace and we were quite pleased with both where the rating agencies came out the advisor on the transaction and and the pricing on the transaction was all I would say at or above our expectations in terms of what we expected as we originated in the business.
And no on energy as a service. I mean we announced the number of transactions they are relatively smaller companies, but I think life and so I wouldn't to be clear. I wouldn't see I don't see a lot in the pipeline that we haven't already announced. These are programmatic relationships with that still those programs need to be filled. So I think what we've announced is is pretty close to what's in the pipeline that said energy as the service is I need offering and as we've gained comfort with it. We're we're starting to see new new potential clients and you know, there's some in in the pipeline. It's it's very a very exciting Market.
but again, like all of our
New markets, they're relatively slow to develop.
That's very helpful. Thanks for taking the questions. Thanks. No.
This concludes our question-and-answer session. The conference has now also concluded. Thank you for attending today's presentation. You may now disconnect.
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