Q1 2020 Earnings Call
[music].
Im sorry.
And welcome to the another incorporated first quarter earnings call.
At this time, all participants are going to listen.
So we will conduct a question answer session and instructions will follow that.
As a reminder, this call is being recorded.
No wants to turn the conference over to your becomes less and slow Dillon.
Yesterday marketing and communications.
You may begin.
Thank you Robert and good afternoon, everyone. We appreciate you joining us for today's call joining me here, our George Sakellaris, Amerescos, Chairman, President and Chief Executive Officer.
We're in Hello, Senior Vice President and Chief Financial Officer, and Mark Chip Block, Vice President and Chief Accounting Officer.
Before I turn the call over to George I would like to make a brief statement regarding forward looking remarks.
This call contains forward looking information regarding future events and the future financial performance of the company.
We caution you that such statements are predictions based on management's current expectations or beliefs.
Actual results may differ materially as a result of risks and uncertainties that pertain to our business.
We refer you to the company's press release issued this afternoon and to our FCC filings.
These documents discuss important factors that could cause actual results could differ materially from those contained in the company's projections or forward looking statements.
We assume no obligation to revise any forward looking statements made on today's call.
In addition, we will be referring to non-GAAP financial measures during this call.
These non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles.
A GAAP to non-GAAP reconciliation as well as an explanation behind the use of non-GAAP financial measures is available in our press release and in the appendix on this slide which can be downloaded from our website.
I will now turn the call over to George George.
Thank you Leila and good afternoon, everyone.
2000, taunted mark not only the Fiftyth anniversary overstate, but also the thought to anniversary older found in November risk.
Since our inception in 2000, what you've seen tremendous technology advancements across our industry.
When we started this business went direct into an addressable ESCO market, well about $2 billion to $3 billion annually.
Which grew to $7 billion to $8 billion in recent years.
And with our investments in distributor generation energy infrastructure battery storage.
Micro grids and smart technologies, we have evolved our business and now participate in a combined market opportunity or 30, well talk to you to $30 billion annually.
We have witnessed a heightened awareness well the importance of energy savings and renewable.
Your this time, we have been consistently profitable.
We have built over $7 billion so project.
And our customers have been able to annually rely is approximately $1 billion of energy savings.
Yeah that past 10 years, how long would you have helped produce over 55 million metric tons of fuel to from the atmosphere.
We're very proud of the accomplishments and grateful to our customers in our employees.
Unfortunately, there's 20 year anniversary is also marked by one.
The largest health crisis, two phase the war in many years.
Much like the energy solutions, we provide and my school is that come as a company is resilient.
In the phase of covers 90 in pandemic.
We prioritize the health and welfare of our employees and their communities in which we operate.
The company, we established risk prevents your policy is consistent with guidance you just see guidelines and stayed Robyn and local health agencies.
These policies are being monitored and updated as new information becomes too light.
Our geographic footprint well over 70 offices allows us maximum flexibility in our operations more efficient execution on our project.
And greatly reduces the risk associated with having all employees in the single location.
Our employees transition to the work from home environment was accomplished seamlessly as we already had require technologies in place.
We are also use and this time and our technology platform to invest in our people with a number of employee training initiatives underway.
Oh, well work in the field continues.
With fewer disruptions and added protections that these site.
And my school Morass, good work qualifies as an essential service in most jurisdictions, where we operate which has enabled us to continue to execute on board project contract and the build out of our energy assets.
Early in the crisis, we worked closely with many allow customers to move ahead of schedule on some projects to avoid potential delays.
This is a good example, probably more ESCO he is working.
And then hand with L. customers to ensure that development design deployment and operation they have critical infrastructure.
We have also built a tremendous amount of resiliency into Myrisk was business model.
As many of you know we have purposely continued to build out our energy asset portfolio in operation and maintenance business, specifically thread, a greater level of visibility and predictability through higher margins recurrent revenues.
We also entered this year with record levels of contracted backlog in our project business provides in further his ability for this year and beyond.
2020 is off to an excellent start with strong first quarter results.
Well Doron will go into our first quarter financials in more detail.
I don't want to touch up on some key highlights to look order.
Revenue of $212 million represents the highest first quarter revenue in the Companys 20 year history growing 42% compared to last years first quarter results.
We gained significant operating leverage from this increase revenue level growing our net income by 50% to $6.2 million adjusted EBITDA by 50% to talk to $1.2 million and non gap. If you asked the 15 cents from two cents for one year.
To go.
We continued to exit good smartly and safely to.
Minimize disruption from both our constructors project backlog and energy as is in development.
Our customers remain as committed as ever although many of them have had to shift near term focus resulting in a slower than normal pace of pipeline activity as they prioritize the club at 19 crisis.
We do however, expect the pace of new business activity to resume later in the third and fourth quarter.
We have also shifted our focus to executing on our existing work in progress on both projects and assets given our great existing project backlog and that's isn't development.
Given these dynamics, we expect Oh project backlog and that's just in developing metrics to remain relatively stable in the near term.
Before handing the call over to Doron I want to point out there, but that's real business opportunities, we anticipate boss covered 19.
Many companies it should you wish Johnson government entities will exit this crisis in a chalice financial position.
With their need to reduce their operating budgets.
At the same time many of these organizations our phase in decline in revenue opportunities and history.
Well the deferred spending on viable infrastructure.
In this environment, we believe that they're more escos guaranteed cost savings from energy efficiency and distributed energy assets will be in greater demand.
Isn't as demand increases, we're able to offer all customers flexible financial solutions that do not require any upfront capital.
Even before covered 19 and interest in far didn't model called public private partnership.
Or pastries has been fired <unk> increased increased interest across the industry.
Well blue private partnerships, our long term contractual arrangements between a public entity and a private partner not the lever and fun fun needed infrastructure services.
The higher education sector has demonstrated a considerable interest in that business model with a few high profile contract awards that will outsource their entire energy and water infrastructure.
And my school is aggressively pursuing such opportunities with strategic focus on small and medium size colleges and universities, where we have significant relationships and a competitive advantage.
We entered 2000 don't do with an outstanding backlog.
Multiple recurring revenue streams, and a great competitive position and platform, allowing us to achieve impressive results even in a challenging environment.
Well the covered and I didn't crisis presents near term challenges, we expect to look back on 2020 is yet another year of strong growth and important company milestones.
And as we look beyond the covered and they didn't crisis. We believe we will experience and even greater demand for energy savings contracts for why didn't critical infrastructure upgrades, well returning meaningful savings to our customers.
We are well prepared for this expanded market the vicuna this in front of us.
I will now turn the call over to door to review the financials Doron.
Thank you George and good afternoon, everyone.
Review, the company's first quarter 2020 financial highlights.
I ask that you please refer to our press release and supplemental slides for more complete financial information.
Our strategy of creating a more predictable and resilient business model paid off once again this quarter as we generated impressive results and have the visibility to maintain our guidance even in the face the covert 19 crisis.
Execution on our contracted project backlog along with the recurring revenue streams produced by our company owned assets and own EMD business.
Lets just financial results that are strong and well diversified from a geographic and client perspective.
First quarter revenue of $212 million increased 42% from the previous here.
Driven by much higher projects business in a quarter that is usually impacted by seasonality.
As noted the company along with our customers worked tirelessly to proactively deploy more resources on projects in anticipation of potential covert 19 related slowdown.
We estimate that we were able to pull forward approximately $20 million of revenue from these efforts.
With a large percentage of project revenues.
Gross margin of 18.1% was impacted by our mix during the quarter.
That said gross profit dollars exceeded our expectations for the quarter well controlled opex growth provided strong operating leverage for the company.
Also benefiting our bottom line during the quarter was a $2 million discrete tax benefit from the care that.
Our liquidity remains strong, giving us the ability to fund our growth strategy.
The company ended the quarter with $40 million the cash on the balance sheet and during the quarter. We also amended our senior credit facility to provide additional availability under our revolving credit line.
We have not seen a material change in the market for nonrecourse project financing.
And Furthermore, we believe that we continue to have the ability to monetize our asset pipeline and recycled the proceeds into additional opportunity.
Project backlog saw small decrease sequentially as we executed on a significant amount of contracted backlog during the quarter.
Although award activity slightly slowed during the quarter.
Our total project backlog remains strong at $2.2 billion.
Representing growth of 7% from the same quarter last year.
We made a calculated shift to focus on our backlog.
Since we are considered to be an essential business, we've been able to deliver on most of our contracted projects.
While we may face minor delays with travel and logistical challenges we are confident in our ability to continue to execute throughout the remainder of the year.
Our Emirates go assets business faced similar dynamics during the quarter.
Operating energy assets ended the quarter 255 megawatts with 298 megawatts of assets in development and construction.
Similar to our projects business.
Our focus during the club in 19 crisis has been and we'll continue to be on execution of this strong backlog assets in development.
Given our strong first quarter results and visibility into the remainder of the year Emirates go is maintaining the guidance, we provided with our fourth quarter results.
Well, we normally do not provide quarterly guidance.
Given the unusual circumstances, we will provide some color on the second quarter.
We anticipate second quarter revenue to be down sequentially due to the proactive pull forward $20 million a project revenue contributed to our strong first quarter revenue results.
We also expect an additional $10 million revenue will be pushed out of the second quarter to the second half of the year as a result in project delays.
Combination of the revenue shifts along with incremental rig mobilization costs reduced second quarter operating income by approximately $6 million.
Full year 2020 results should be another year of solid revenue and earnings growth.
We are confirming our guidance from earlier in the year, specifically, what 2020 total revenue to be in the range of $910 million to $980 million.
Adjusted EBITDA to be between 102 and $112 million.
Non-GAAP EPS in the range of 86 to 96 it.
To provide some additional detail we anticipate gross margin to range from 18.5, 19.5%.
Well the interest and other expense at approximately $17 million to $19 million.
This guidance excludes the impact of any non controlling interest activity and any additional charges related to the company's restructuring activities as well as any related tax impact.
Our guidance is predicated on current club at 19 restrictions and disruption.
Not worsening.
And with a slow returned to a more normal operating environment starting by mid year.
Now I'd like to turn the call back over to George for closing comments.
Your doron.
To conclude the call I would like to leave you with three key takeaways.
First.
Despite this challenging time, our recurring revenue streams and grade contracted backlog give us stability and good visibility for 2000 certainty and beyond.
Second.
We have the cash and access to funding.
Allow us to execute on our strong asset development pipeline.
And third once the covered and they didn't crisis upside subsides we.
We believe that's customer needs will drive even greater energy savings and you see rigid JP energy generation opportunities.
Before we take your questions I would like to again, thank our employees, our customers and our partners for making them or ESCO at great success story and for their extra hard work during these challenging times.
The entire team hopes that you and your family stay safe well operator.
I'd now like to open the call two questions.
Thank you I never this time I would like to remind everyone in order to ask a question seems to be press star one on your telephone keypad. If your questions have been answered and you'd like to remove yourself from Turkey.
Yes the pounds.
Well My first question with the lineup no what King your line is now open.
Hi, good afternoon, thanks for taking the questions and first it's good to hear your voices and hope that you do your families and those are your employees.
Are all doing well.
So so.
And just convey that upfront.
[noise], maybe can you comment on the cadence of two Q so far on the project.
Side, you know just anticipating just $10 million revenue were delayed.
Really not much at all and we can change of lost revenue. So help us understand what you've seen so far to give you confidence there did delays.
Really present at the beginning of a it's a month and start to ease up overtime.
One of help us understand how you're getting to that $10 million expectation.
Ah, Yes first of the you know with $20 million, we pull it.
Forward, because we had more people more resources allocate them into the various job sites.
And that's helped a lot then we got to of course in order to change that schedule work with Oh are customers in order to be able to accelerate that construction and and worked out very well and what we have experienced in some of our jobs, where we called project delays is a particular job they might be shut down for a week or two and then we.
I have to secure the side and then coming back and Remobilize again Im gets going again and during the month of April there's various states that we're closing and most of the jobs, especially in hospitals. It happened in couple of situations couple of school systems, and so one and the other thing that's happened in some of the size of let's say well.
The subcontractors.
Test positive then we have to stop construction Glyn decide and then probably take another week so be remobilize the sources.
The resources for that particular site, but a and then in addition to that we pretty much on the construction site, we shut down in Ontario, and UK, but we continue to work there to do design and development work and so on and we anticipate that they will come back by June 5th.
Since and ER and that's all indications right now so that's why I know, it's a small number but.
The thing that you're going to hurt us little bit doing so the margin to for the quarter. Because every time you close down that particular side and then you're starting to gain a its course, you little bit more money and the other thing that's happened in let's say you have elected Coke subcontractors you have mechanical subcontractors would have to control.
The number of people on that particular sides. So we we have to follow the rules and regulations as they might become.
Brett the safety otherwise for whether it's already in place or the.
This up consensus employ some be cognizant of that and this is the estimates that we have from the various units.
We had the mid income week ago, or so and.
Another looks reasonable lets say, even if its little bit more we feel very confident though it has just been shifted to do them then the next quarters.
Well I understand.
And the same there and this and this is what we have seen more delays is what I will call in the delays in going out with new water fees as well as a move in contracts from the awarded to the executed.
Contracts and that's why I made the statement the customers, though they may remain committed and engaged and our people. We make sure that we stayed in close contact with them and they say to US a you guys weight once we get over this crisis, we will be with you.
And that's why again, we feel very comfortable that we will see the pickup but later on a on the awards as well as well the contracts from the awarded to the executed.
Yeah, we're in a very but Uh huh.
So go ahead.
That makes sense you know so I understand the first part, but he said.
Screening have you had to put in place or you implementing broadly too.
Make sure that you know your contractor when you're subcontractors.
Our current falling all appropriate health protocols.
The in place plan.
You're talking about the I don't know if I understood. The question right, Yeah, sorry, no okay.
Yeah. Yeah can you can you just talk about what kind of testing in screening requirements you put in place do a monitor for Colgate amongst the Oh Labor force on these jobs and to minimize the risk that you're going to have these types of shutdown yeah, well all the since you guys why hasn't been fall.
Well in them and the.
Pretty much all our employees that we are actually didn't know when we start up in the office, we bought the infrared or some woman's bidders that anybody before they come into the office, where you will take the temperature everybody has to wear to mask when the particular sites in the maintains the distance and so on so we've been following all.
Those guidelines.
Okay. That's very helpful. And then just quickly on the energy assets you know any change in expectations on the timeline for deploying say 50 megawatts of renewable assets. This year and are you still comfortable that Mccarty road will come online by year end.
Yes, yes. This schedule. This schedule is that like I rode will come online by the end of the here and I think its schedule something like a.
Late November beginning of December.
And then Oh, we have the thought the only thing when the last call. We've mentioned 50 megawatts of thought on capacity installed by the end of the year and we still maintain that the I'd like to point, though there are couple of projects will not says it's pretty good size and if by any reason they utilities delay the interconnection.
That might be is.
Slip into early next year, but as far as a us delivering on the.
Construction.
No we don't encounter any problems.
Understood well, thank you and good luck in good health you all.
Thank you very much.
Thank you.
And our next question will be coming from the line, it's Chris One where your line is now open.
Good afternoon, Thanks for taking my call and congrats on the solid execution in the quarter.
Thanks, Chris It's Chris.
So just want to talk about the puts and takes on your adjusted EBITDA guidance. You know it is some of that do you know from mix is some of that from cost controls is any one of those weighted more to more than than the other.
Yeah actually Mark excellent did the actual calculation or I, let him answer that yeah, I missed that Chris I think as you know it's a function of all that I mean, you know, it's certainly going to be impacted by mix and we've got some good visibility there in terms of the projects that will drive.
Revenue for the remainder of year, you know for that the revenue that we're expecting a for the next time onto a about 80% of that is going to come.
From contract or contracted backlog because on the project revenue side.
We've got another 16% that we expect to come from awards that will convert to ER to contract and then just a little bit of book and burn Yeah. We're certainly going to expect it to maintain some discipline with ER with opex, but yeah, we feel pretty comfortable with the with the EBITDA ranges are.
Holding steady for the rest of the year.
Okay got it and then you know when I think about your backlog you know do what do I. You know do you use to kind of this the sales mix that you provided on slide five is kind of a template <unk> backlog might look like what is backlog going to shift more towards that recurring and less project work any clarity there.
[noise] I mean Q1 is generally heavier price heavier recurring just because of seasonality wise you might find it can be for a bit lower that should start to even itself out.
At the heavier mix Oh.
Other projects at the back ended the year, so from our project backlog.
It's progressing progression, we'd expect that you know to pick up by the end of the year in and we start to see the percentage from assets and recurring start to level out a little bit.
Okay got it and then just last one for me you know, there's a lot of chatter around municipal and government budgets and the pressure that they're seeing.
We're hearing that the cost savings and the value add that some of the projects you do.
Are you know those projects are going to be maintained if not kind of attitude at help kind of weather. The storm is that a is that a fair assessment is that what you're seeing in the marketplace.
Yes.
That's why I say, because there will be in a budgetary constraints or they will need a to do many of these upgrades and save money.
One of their budgets and it.
And that's why we think that the business will pick up at the other under the covers 19 and if you do you know our business model is that a it's a third party financing. So we but they don't have to come up with the upfront capital. So we help them reduce their operating expenditures. So its budget neutral you might say the the offering that we have.
And that's why the federal government loved it till huh.
Got it makes sense well. Thank you so much for the time and stay safe everyone.
Yeah. The sanctioned good thank you.
And our next question will be coming from the line Uh Huh.
<unk> Your line is now open.
Thanks, Congratulations on a solid quarter.
Thank you very.
I was wondering if you could just comment on.
Debt markets.
And specifically.
Well I recognize one of the benefits to your business model is the fact that you're not taking on the direct risk your customers you're still reliant on.
A liquid.
And sound.
Lending market and what we're seeing.
Aside from the injection of liquidity from the fed.
It's somewhat concerning so I'm just wondering you know how do you think about sort of an optimistic rebound post co bid and juxtapose that against what you're seeing in the in the debt markets.
Yeah, I will let doron haynesville handle that but.
My overall a lot a limit.
I would say that we see an opportunity, but that will adore unexplained.
Yes, sure. So I think there I've just got to kind of split this into two pieces. One is the market for the lenders who participated in the energy financing on the energy efficiency side, which is the project side of our business and we certainly haven't seen a pull back on that side again. This is.
Companies, who are financing the guaranteed savings from the energy savings contracts.
When we move into the kind of Emirates go asset side of things, we have not seen a slowdown in the project financing we are.
Engage in a number of a number of.
Lending relationships and you know our our indications thus far has been that that each and every one of those institutions is still willing to step up and make new loans.
You know do refinancings, whatever whatever it might be and spread activity.
While rumored to be pretty heavy I don't think were necessarily seeing it when the rubber hit the road and at the end today when we negotiate when we negotiate terms. So we haven't really seen the impact of that and I think that you know Furthermore, what you've probably seen is the you.
I think post coated you know really don't that comes down to as well with a broader capital markets be there and be available and again that you've seen the bond markets start to open up a little bit again, obviously the spreads are not.
Not back anywhere where we'd be interested in pursuing things, but I think you know we're not seeing we're not seeing the pullback thus far.
That's helpful. Thanks, then I have bomb.
A two part a follow up if you would.
And one is kind of internally as well as external I guess for the internal.
Question.
You know the work from home environment. His provided with many of the other companies that did I cover data points that are suggested that productivity is actually increasing from some of the salesforce that forcing function of.
Zoom meetings.
Being ER or virtual meeting so not limited to zoom are.
Being.
Acceptable.
His allowed for sales folks to to increase the closing rate.
Closing ratio or the number of sales calls. So one you know are you seeing any of that kind of play out and then I guess the flip side to that would be.
You know that potential contagion into seeing I start, which you know obviously, if you're seeing virtualization is a benefit.
That may have negative implications on on starts and I'm wondering you know what your thoughts are both of those thanks yeah.
Yeah.
Sure first you know.
Speaking for myself I've been very pleasantly surprised to the wave has with working from home you'd he has worked I and what do you have to start thinking about many rethink about how we're doing some things in how we may be ultimately, we will actually probably reduce operating costs in the company because we learned a different things.
As far as doing a virtual Mrs with a particular customers when it comes to the initial meetings in the contact I will say, yes, but the thing that we have run into a delays when you need the board to meet.
And have a virtual mid didn't ones aboard presentation in order to approve the projects or a school commit limits in order to college courses. This is what I can see we've seen some delays and I wouldn't say this much though that the villa last week.
Dual doesn't meet this I'm going to happen then we would have been bugging them, telling them to have a virtual and ER Dave's, there's still a new one of them. They went ahead and do it so.
So.
I I don't know, what's gonna have been but it's a way of doing business and some of the the board has its recipes and so on the in this and this capital commitment is maybe they will get to that point.
Yeah, it's a much more efficient way rather than have to travel to that particular locations. We will save a lot of dominant expenses just.
Great and show it if you see that play out you know any thoughts on a scene I start because that would be the.
The consequence of or sort of <unk>.
And actually we have seem quite a bit of see a nice start and I just want to last call. We did say it I mean.
Substantial amounts were worth as we do want to design build is from the cnine customers, because sometimes we approached them and say look we want to develop the solar plan for your facilities and they say, yes, great and said we want to own as they say great and then and you go down the road little beds and they have a lower cost of capital than we do they say thank you very.
My should we view designed to do the deleverage as I had built in for US and we will pay you and we've seen that caught a bad and that's part of the business is picking up and we are making more.
More of an effort in that space and I think I didn't mention it last time that they see a night they are getting into it because especially was distributed generation. It's pencils out otherwise its economy is more economic for them and of course, it here as environmental benefits attributes associated with it.
So and maybe this Uh huh.
Virtual maintenance would probably accelerate that business, we'd paying attention to as Greg.
Great well, thank you very much.
Thank you.
And again, if you'd like to ask your question. Please press star one on your Thomas Kim next.
Next question comes from line as Craig Irwin Your line is now open.
Good evening, I hope, you're all well and thanks for taking my questions.
First thing I wanted to ask is your your EBITDA on this quarter, which was really impressive.
Can you maybe.
Clarify for us whether or not there were any individual project closeouts or onetime items second chip contributed.
Just strengths there or is this sort of that new stare.
At the at the bottom of the annual less steps that we're looking at as a as Emirates goes building. This is really impressive assets business.
Well I can take that real quick Craig. This is mark there really where you know with wasn't much at all from a close out perspective in Q1, very very minimum we had some some minor impact but it was it was very small so you're not a whole lot I was really just the contribution from the projects themselves and you know that's generally just based on timing settling.
No. We don't we don't normally plan for those anyway, but Q1 I can tell you that maybe just really had no impact at all.
So was can you give us a little bit more detailed maybe doron on the mix contribution on the asset size.
Was there anything that outperformed specifically.
You know have the rainy shoes, maybe left to behind at this point are you seeing seasonality help you a little bit with TV was there anything particular that we can call out for the strength or is this is this really that new annual beginning as as we do climate stairs.
[noise] that's okay, Yeah look I'll I'll jump in a couple of things one is that.
As we talk about acceleration as some of the pull forward of revenue you know some of that isn't design build where we've got a lot of incremental gross profit not a whole lot of additional incremental opex going on to that and I think that you know that's that's a mix issue with respect to enter.
The assets.
We did see performance.
Especially on the on the solar side look really good.
I think you know on a on a whether you know the weather adjusted and when you.
When you look at our <unk>, you know our projections and they don't really know forecast for that kind of good weather. So solar certainly did well within the portfolio. So that's why you kinda style that saw that going up.
I can't I can't say that this is you know.
[music].
You know a paradigm shift I wouldn't I wouldn't describe it that way though.
Okay understood understood shouldn't Big picture question right.
Stimulus, particularly infrastructure is on a lot of People's minds.
You know looking down the runway.
A lot of people are thinking maybe this is something that goes more to municipal and state governments, then you know roads and bridges.
But either way, it's something that could be out it was an incremental.
Can you maybe describe for us what you're hearing on on the infrastructure side and you know everybody knows trumps jumps to build a right. He comes from construction and he didn't scrap the performance contracting program. When it came in this presidency like his predecessor.
Can you maybe ill describe for us what gives you confidence that he's not going to do something stupid like.
Obama did when he introduced the competing funding for performance contracting and.
Can you maybe shed a little bit of light on your discussions with DC.
Yes, I mean, one of the things that Uh huh.
[noise] M or asked what has done very very well built in out of projects. So we had great.
Execution of various projects and most of the work that we do is infrastructure based because we are addressing.
Oil plan kill Atlanta.
Combined heat and power, which is a cogeneration or that there was river.
The Savannah River plant that we built the which was with would a 200 million dollar project. So we do large infrastructure projects and the government.
And actually that's why last year, the federal government has the largest execution or energy savings for bonus contract.
Cause basically they get the infrastructure upgrades with Houston third third party money no if they come up with the stimulus package, where you to address it more infrastructure upgrades. We can leverage is us dollars to do more upgrades because it's just stayed facility it whether its a.
Municipality or the federal government or whatever the case, maybe I don't think you'll see us going into building bridges and roas, but on the other hand the infrastructure in many other various even if it's it away from the performance contract is just design build because if we get pivot the company to be able to do design build work.
Because that his benefit the company, especially it.
On the gross margin margins they are lower gross margin, but they had gross margin dollars.
Once you move a lot and that's how we're able to leverage.
The company and many of those from a except what I can use from the RFP process to actually executed in the contract one of the largest contracts that we signed last year design build.
It was six weeks and some other ones, it's even less time than that so we we love that's kind of business and we hear favored the company to be able to do more and more design build work.
So we will take advantage that's the bottom line, we will take advantage of the problem and I think you will be a contributor if it comes to pass.
Great. Thank you for that.
Another another big picture question right. So californias low carbon fuel standard, there's obviously, a big bend, a big bend a benefit to the.
The green gas market cellulose, you've got some green gas in general something like a 180 projects shop most of them tiny.
But in process, there and I know you guys are going to participate.
Counter doesn't summer is going to be filing its.
[noise] clean fuels.
Ram in the the kinetic is that which.
We'll be the the point that starts the clock for people to actually be able to start construction.
Our new facilities can you talk to us a little bit about your a project development in Canada. Historically have you seen the Canadian market historically as an attractive market, how well prepared our you to maybe.
Go in and ensure the Canadian Green gas opportunity.
Yeah, we see this heat up the way it has in California.
Yeah, we we're talking to quite a few people up in Canada to develop some green.
Uh Huh Green gas sites in Canada, and as you probably know who we have a great presence up in Canada. They went there we have a five offices with the center located in Toronto, Canada, and ER with our group down here, we leverage you know.
Okay, and trying to develop some sites up and again when I say since we have couple of right now that we are talking to deal with very early stages, but what do you have happened in Canada, which probably more interested in some of the utility they're looking for green gas and we are talking to couple of them they billing for long term contract.
Shipping some of the green gas from don't from the United States to Canada.
So I think I imagine, it's less time and I will mention is again, we'll get a great pipeline right now of green gas plants.
We did say that we have one.
<unk> up and running by the end of this year, we have to come in up and running at the end of next year. We anticipate that we will have probably three the year. After that so we had a very good pipeline of green gas plants, but we're always looking for more and so we think that mark.
It is developing and and for the better I did mention is less time does we are looking to get some long term contracts.
And we continue in negotiating those contracts you just slow down little bit because of the covered night 19 crisis, but if for the long term.
We think that's going to be a great great opportunity for this company it's.
It would be a great Scott catalyst for us.
Excellent that's great to hear stay well, everyone and thanks for taking my questions.
You're welcome thank you.
And we don't have any further questions Chris Anderson. Please continue.
[laughter].
So I.
I guess, none so thank you very much all and looking forward to own Mexico.
Thanks.
And this concludes todays conference call. Thank you everyone for your participation and you may now disconnect.
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