Q2 2021 Ameresco Inc Earnings Call
Okay.
Good day, ladies and gentlemen, thank you for standing by.
Welcome to day I'm, a resto, Inc. Second quarter 2021 earnings call.
At this time, all participants on a listen only mode.
Later, we will conduct a question and answer session and instructions will follow at that time.
As a reminder, this conference is being recorded.
I would now like to turn the conference over to your house.
MS Leila Dillon, Vice President marketing and communications you may begin.
Yeah.
Thank you to Rhonda and good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George sack hilarious, MRI <unk>, Chairman, President and Chief Executive Officer, Doran Hole, Senior Vice President and Chief Financial Officer, and Mark Chipmunk 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 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 SEC filings.
These documents discuss important factors that could cause actual results to 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 the slides, which can be downloaded from our website.
I will now turn the call over to George George.
Thank you Linda.
Good afternoon, everyone.
The second quarter marked another excellent quarter for them on ethical with broad strength across all business lines, reflecting the benefits of our diversified business model.
We achieved 23% growth in revenues.
With Triple net income as compared to last year's second quarter.
And we grew adjusted EBITDA by 42%.
Our project business achieved another quarter of strong growth benefiting from our continued focus on project execution as well as the ongoing shift to more comprehensive and complex projects.
And we all we experienced a softening in our contracted backlog due to pandemic related timing issues that doron will discuss in a few minutes. We are very pleased to report that we have already converted $98 million of awarded backlog to contracted backlog since the <unk>.
And of the quota.
And also we are seeing the benefits of organizations returning to more of these.
Business as usual environment as such our current project activity.
Is at its highest level ever.
Demonstrating our customers are now very engaged in moving projects forward.
Its activity phase paves, the way for excellent future growth.
In the second quarter, we brought a record 33 megawatts of assets into operation.
On the Mccarty Road RMG facility.
Our war, plus biogas engineering expertise and long history of <unk>.
Land development and operations make similar at school that goes to part from that for our LNG opportunities.
And our RMG assets momentum is continuing and we anticipate commissioning 3 our energy plants. During 2022 and then other for in 2023.
Well R&D continues to see a significant amount of industry and investor interest.
It is just 1 of the many clean energy technologies on a temporary that's cool his significant expertise. The next day, good thing and operating.
This diversified clean technology expertise.
Allows us to win some of the largest and most complex projects in the industry.
Our recently awarded for Contura Legacy project highlights for this expertise.
At the heart of this.
Tony 1.6 million dollar project will be cool island mode, an autonomous micro grid with the ability to interconnect with existing and additional energy generation and storage system.
This project will go a long way towards helping disarm its revenue base reach its ambitious net zero use targets by 'twenty 2.
It is important.
It will also greatly increase net basis, resiliency, which has become an absolute necessity for the military.
And in fact rich.
The recently enacted army directives or acquire the prioritization of providing resilient energy and water supplies for facilities and infrastructure that support critical missions.
Similar directives and mandates continue to not only drive significant opportunities of growth our federal government client base, but they also are resonating with other institution clients in industries, which can be crippled by even on a temporary loss of power.
Elsewhere across our different diversified offering we were very pleased to be recently recognized as the number 1 energy as a service provider and the Guy's House insights Lisa Board is important.
We've continued to see significant customer interest in this important financially flexible and more ethical offering.
Especially in the higher education market.
As an example of our leadership in this space.
As an aside and energy as a service agreement with Northwestern University, where we will provide energy related infrastructure upgrades.
Well, that's will provide ongoing software related to energy management, and now losses and related operation and maintenance on.
And long term service agreement structure.
This agreement marks the beginning of a great long term partnership with a top educational institution.
The agreement look other bath, Maine that vessel and Chicago campuses, including more than on the 75 adult instant central plant.
The partnership will help northwestern University address related upgrades and deferred maintenance challenges with no upfront capital requirements from the airport.
All helping us to achieve its goal of reducing greenhouse gas emissions by 30% by 'twenty 3.
Potential customer interest in the energy as a service by National structure continues to build and we look forward to announcing additional agreements in the future.
I don't want to take a minute to share an exciting independent director appointment to our board.
They are huge Johnson joined our board on July 20th Force.
Along with our first perspective, she brings more than 2 decades of experience directing product product innovation successfully scaling business and go to market strategy for a range of technology industry need doors, Inc.
Florian boss glucose and strike.
We'll be sure to add tremendous value and additional diversity to our strategic bench or directors.
I will now turn the call over to Laura to provide some comments on our strong financial performance door.
Thank you George and good afternoon, everyone.
Please refer to our press release and the supplemental slides that have been posted to our website for additional financial information.
The second quarter, clearly demonstrated great momentum in our business with strong growth in revenue net income and adjusted EBITDA.
Revenue increased 23% year on year with solid growth across our 4 business lines led by the excellent performance of energy assets and projects businesses.
Several factors led to the impressive 28% revenue growth from our energy assets first we continue to execute on our long term strategy of growing our assets overtime and building our high margin recurring revenue base in.
In addition.
Our RMG production increased due to improved efficiencies at our plants.
Lastly, we also benefited from the continued strength in the market price of rents.
As a reminder, we contract a portion of our anticipated production to support healthy project financing and reduce volatility.
The remaining production is sold on a merchant basis, which allows us to take advantage of upside from positive price movements.
Our projects business continued its robust growth with strong execution across geographies and markets. We see an increase in the number of larger more complex projects as our customers look more holistically at their entire energy and water portfolios.
The growth of our recurring revenue business lines is also benefiting our earnings as these businesses carry higher margins during.
During the quarter, our gross margin hit $19.5 per cent, increasing 90 basis points sequentially and 180 basis points year over year.
Our revenue growth and margin expansion, along with lower income taxes drove an impressive quarter of earnings growth with GAAP EPS of <unk> 26 cents and non-GAAP EPS of <unk> 34 cents, an increase of 79%.
Despite an increase in operating expenses, primarily related to employee health insurance costs. Our adjusted EBITDA grew 42 per cent to $34.4 million.
As in previous quarters for non-GAAP results exclude the impact of Noncontrolling interest activities from tax equity partnerships.
Moving to our backlog.
We're pleased to have maintained a relatively flat total backlog given the tremendous conversions of awarded and contracted backlog to project revenue since the beginning of the pandemic.
As you May recall, we purposely shifted our efforts to project execution during the heart of the COVID-19 crisis as site access was a significant risk during that time.
Our customers were also dealing with the crisis themselves, causing delays in new Rfps and awards.
We expect a return to growth on our backlog as opportunities work their way through the process.
We added 33 megawatts to our operating asset portfolio during the quarter, including the $11.7 megawatt Mccarty Road RMG plant and for solar assets totaling 19 megawatts.
We also added another 23 megawatts to our assets in development.
Our 315 megawatts of operating assets have approximately $1 billion in long term contracted revenue and incentives.
Together with our $1.1 billion dollar O&M backlog.
We're continuing to grow our higher margin recurring revenue businesses, providing us with considerable long term visibility.
<unk> liquidity has never been stronger as we have ready access to the resources needed to execute our aggressive growth strategy.
We ended the quarter with available cash of $59 million and $141 million of capacity on our $180 million revolver.
The $65 million increase in our revolver was the result of an amendment to our senior facility that we signed in Q2.
Additionally, we have broad access to nonrecourse project financing and tax equity as well as the ability to monetize development assets.
A great example of this access comes from a recent 100 million dollar non recourse financing facility we closed in July.
Using this facility, we drew down approximately $45 million to finance over 10 solar projects nationwide across multiple customer classes.
Notably the senior tranche of this financing carries an interest rate of only 3 to 5 per cent and a 25 year amortization term.
<unk> continued its widespread focus on environmental social and governance initiatives this quarter.
We kicked off April with our first Green week.
Every employee received a tree seedlings with planning instructions launching a full week of green initiatives and educational content Inc.
Employees actively participated in a photo challenge capturing their treat planning projects and other green activities.
Many of these photos can be found in the ESG section of our website.
In addition, as we continue to invest in our cyber security expertise, we expanded our companywide training program to educate employees on the importance of our comprehensive cyber security protocols.
And finally, our ESG team worked collectively across the regions to identified numerous community volunteer opportunities available during the summer months, we look forward to reporting back on this next quarter.
In closing as outlined in the press release, we are reaffirming our 2021 financial guidance, given our great visibility and business momentum.
Now I'd like to turn the call back over to George for closing comments. Thank you Doron in closing I want to again take a moment to thank our employees for their dedication and outstanding execution and.
In Hartsville. Thanks also go on to our partners and our customers for their continued commitment and cooperation.
We see tremendous opportunities in front of us.
Favorable policy momentum and our customers' increased focus lower their carbon footprint has changed the dynamics in the marketplace.
This coupled with their needs for infrastructure upgrades.
Our savings resiliency and the deep carbonization over their electric and gas suppliers puts <unk> in a leading position to continue to try it.
Operator, I would now like to open the call to questions.
Thank you, ladies and gentlemen, as a reminder to ask a question you will need to press Star then 1 on your telephone to withdraw your question press the pound key.
Again, that's all I wanted to ask the question.
Ladies and gentlemen, we ask that you limit yourself to 1 question and 1 follow up thank you.
Yeah.
Our first question comes from the line of Noah Kaye with Oppenheimer. Your line is open.
Well good morning, everyone, a rather good afternoon. Good morning between [laughter]. So you're familiar calls in the morning, you know [laughter] yeah.
[laughter] you know I just wanted to start with the project side.
I think you mentioned in the prepared remarks, you are now seeing.
Activity at record levels and that project business I Wonder if you could go into a bit more detail possible bite by vertical and talk about the trends across muni.
Schools for some other regions and then and then the government Oh, we have seen just a ton of COVID-19.
Stimulus money come into the education system, 1 would think you'd be well positioned to benefit from that but just give us a sense of.
You know where the momentum is and what you think is going on potentially translate into some some nice bookings for you.
Okay.
I will give it a stab and then they've been door on again at some more color to it but it's across the board.
I would say schools colleges universities, and a considerable amount of hospitals.
And what's happening with our schools at some of the municipalities they've got from COVID-19 money and they leverage on that so we see a good activity in that sector.
In the C&I market.
It's beginning to pick up that's why you want on my comments I said debt.
Uh huh.
Because on the carbon footprint reduction that they wanted to achieve we see more activity in that particular sector, but generally it's across the board and the other things that have been made but we have a list that pent up demand because the second and third quarters of last year pretty much we had.
Very minor activity in Rfps, and so on but now it's more than double on the activity that we have seen before.
It's picking up but it's going to take 6 months to a year when they turned to awards and then of course to actual contracts and on the federal government. The projects are getting larger and larger because of resiliency.
And that's becoming a big issue of growth.
All of our <unk>.
Market segments.
Yeah, I guess the on.
During the wondering for that I'll just wanted to clarify George you said the RFP activity is more than double the activity. You said before is that kind of relative to this time last year or are we really talking about relative to like a pre pandemic normal.
Even the pre pandemic level is substantial as a potential higher.
And then the other thing that we don't mention it a lot you know the assets in development activity.
Yes.
So modestly higher than what it used to be before.
On the energy as a service you know congrats on the northwestern agreement.
Help us understand the appetite for that in the C&I space I mean part part of the value proposition I would think here is you know you're generating tremendous insight you know from from data for measuring.
On the performance of all these assets on an ongoing basis and so you don't even really become potentially a from a partner to some of the customers and of course, the no upfront capital as part of the value proposition as well.
So so how is that trending and end and when you talk about the C&I market picking up you.
How much of that is kind of the traditional model versus this energy as a service.
Oh, so yes, so no 1 store and I don't think I'll really go into the proportions from your last question, but I would say that the energy as a service model is something that is and will be attractive on the corporate and industrial side.
The amount of inquiry is certainly picking up substantially we have.
Multiple parts of our business that can help.
These companies kind of track and measure their carbon reduction.
That really helps them when they talk about where they are publicly disclosing what their ESG net zero goals might.
It might be your ESG slash net debt zero.
So it's.
It's not exclusive to <unk>.
Corporates or industrials, certainly we see this in the higher Ed and the schools, but the.
The other corporates are certainly interested yet.
Great. Thanks, I'll turn it over.
Thank you. Thank you. Thank you.
Our next question comes from the line of Julien Dumoulin with Bank of America. Your line is open.
Hey, this is on your on stepping on for Julian.
Got it.
Hey, So I think first off maybe turning to the LNG market here.
Does your guidance fully reflect a D..3 when pricing artist itself I mean for my concern for that.
But it remains somewhat conservative on yet.
I mean, we don't want to.
We know that those market prices move around we tried to tried to stick with consistency and being conservative there.
Okay. That's fair and then on the R&D growth, maybe if I can really say you guys have historically talked about I've got to wait for a project cadence coming up over the next few years any reason to think that this could scale higher just given the amount of <unk>.
Well with that.
Getting dean discussed lately.
Yeah.
It sounds right now this is what we have provided the guidance for the plans for the next couple of years, although the other hand, I think we did disclosed before that we have in plans.
We have in development exclusive rights and so on but it takes time to permit them to zone. So we feel very good with the projects on which are announced.
On the scheduled for 3 of them before.
But on the other hand, we have great visibility for the guidance beyond that.
Okay, great. Thanks, and then just finally on could you talk maybe a little bit about cost inflation.
And on that again for that and just any updates on that subject.
Sure I'll address is the best I can I think it's a topic that's widely talked about both internally and externally of course, so on the project businesses, we've probably talked about before.
We do quite a bit of work to derisk those projects before contracts get signed so in other words, we do our best to.
So lock in our contractors lock in our procurement for.
4 we signed customer contracts. So we can protect our margins secondly, when it comes to energy assets that go on the balance sheet, whether it's the you know the traditional assets or the energy as a service assets, what whatever it might be.
Because of the fact that we have a very very long term investment horizon Theres, a certain amount of this inflation that we're able to absorb without materially impacting our returns.
And as a result.
We feel like it's a it's been manageable.
Okay, great. Thank you I'll step back on again.
Okay. Thank you.
Our next question comes from the line of Eric Stine.
With Craig Hallum. Your line is open.
Hi, everyone.
Hi, Eric.
And then just.
Maybe on the equipment side and you mentioned that.
For projects you often.
We'll buy ahead or credit secure.
Equipment in advance, but just.
Curious on the current environment I mean are you seeing any shortages.
Assume it helps you given that youre kind of equipment agnostic, but anything you're seeing or steps that you're taking.
Protect against that going forward.
I mean, I think the only way to answer that is to just.
Kind of remind us.
Folks that we have a very diversified business. We don't have any substantial concentrated equipment types that we have to buy on a regular regular basis that have a substantial impact on our overall.
Overall project execution and for that reason, we're not really running into substantial issues as it relates to that.
Shortages slash delays on.
Are things that we can anticipate through our some of our centralized procurement.
And we ensure that the project.
Managers and execution teams out in the field are equipped to communicate timing with their customers. So that expectations are met.
That's great good news there.
Maybe for my last 1 just to follow up on the previous for such.
Question just on the R&D side can you just remind me as far as the pipeline or in fact.
Free that Youre planning for 'twenty, 2 and for for 2023.
Is there any day.
In any other of those buckets.
No no no but on the other hand, you should know that.
We are looking at some of them on down the road, we'll probably make some announcements along those lines.
We have some very good activity in that sector as well, but nothing to announce yet.
Okay.
Thank you Wally.
Yeah.
Thank you.
Our next question comes from the line of Ben Taylor with Bayer.
Sir your line is open.
Hey, good afternoon congratulations.
Thanks Pat.
Yeah.
Number 2 your assets in your portfolio I was going back through all the press releases.
It's jumped.
Our reported that.
I know last call you talked about $55.75 additional megawatts from 1 reported that's a good chunk of that so.
Are you still comfortable with the hours would be thinking about the upper end of that and then maybe is it just goes back for about the activity globally talked about before.
I mean, the activity level I'll address first remember that thats in the proposal world and we're seeing a lot of activity in terms of new.
New assets that can be developed we only include assets in development. When we are sitting with probably a 90% likelihood of placing those assets into operation.
That being said sort of moving over to your other question I think we're still comfortable with the range as you know with.
Placing solar assets into service, there's always puts and takes utility timing things that are out of your control.
So we'd like to keep the range.
A little bit wider so.
I can't can't really sharpen the.
Sharpen the guidance there at all.
On the energy as a service product.
What has caused the market to change I know, there's some other folks out there trying to do this but it's where you'll get for customers are willing to.
Go on this model and then could you just talk you guys, bringing on financing partner or how does the work on what are the different parties that are part of the deal. Thank you.
Okay.
So.
The the financing side of it first and foremost I think our strategy is to.
Kind of take careful consideration as to whether we need to bring financing parties to the table on day, 1 in some circumstances for larger projects, we will and other circumstances, we may not and we may.
Simply hold hold everything on balance sheet and finance portfolios later on down the road, especially with the smaller projects I think the popularity of the idea comes from a couple of places 1 is simplicity, which is that we.
We simply.
By the equipment installed the equipment and negotiated payment stream with customer.
Where the customer doesn't have to get involved at all into the financing.
The second is that many of these customers are in a position where they would prefer to pursue a strategy like this as opposed to doing any fund raising that would impact their own credit.
We have a strong balance sheet and there is no shortage of financial partners.
Many people have approached us but at this point in time, we think that if you have control of the project. We are in a better position to get better terms for ourselves as well as for the customer.
Great. Thank you.
Thank you.
As a reminder, ladies and gentlemen that star 1 to ask the question.
Our next question comes from Atlanta.
Channel.
With Raymond James Your line is open.
Okay.
Taking the question 3 of your most recent.
Project announcements have been from Europe, the UK and Greek.
Should we look at that.
Signal that you are.
Placing more emphasis.
On the opportunity across the Atlantic Historically, you know very small part of the business.
Finally, we were getting some pretty good traction on.
In Europe.
Recall, we started we bought a little company out in the UK and we will plan to use that as a platform to expand our gross Europe.
And with new management that we put in.
Britta mercantile share, but 3 years ago.
No question on borrowers, we're getting great traction.
And we will be looking for expanded in Europe more than what we have done in the past because again the environment it's great.
We are looking at.
Strategizing.
We're going to grow that part in that part of the world.
It's great to see it right now we have raised the number 3 in the UK.
As a net as a services company, which to me is a great milestone.
As we got to that level that we will capitalize.
On that.
And in that context, you referenced.
The acquisition in the past I think the last acquisition made by <unk> correct me, if I'm wrong why Maxim on solar and this is now more than 2 and a half years ago. How are you looking at.
In organic growth opportunities through M&A generally these days.
We continue to look for what we will have great day.
Acquisitions that would make good economic sense and in Europe, especially when will you go into an international market.
With additional price to see us do something in that regard and after we raised the capital for.
ESCO will look.
A little bit more I would say aggressive in the marketplace.
Not wanted to focusing on organic growth, which we're doing very very well, but if the opportunity comes up.
We will execute on the acquisitions.
But they have to be aggressive.
We are disciplined in our approach right.
Brian.
Yes. Thank you.
Okay.
Thank you very much.
Thank you.
Sure. Our next question comes from the line of Tim Mulrooney, William Blair. Your line is open.
Good afternoon.
Good afternoon.
Hey, Darren housekeeping question for your 114 megawatt equivalents of RMG that are in development and construction.
Is that the 3 R&D plans from 'twenty 2 and for in 2023 years. This also include other RMG assets in development beyond 2023 as well.
It includes others beyond 2023 I believe.
The other 13 plants debt.
Debt you have identified sites on gas rights to on that kind of thing as well or are some of those I guess.
That's right I mean, you can kind of see the list of 3 in 2022 for 2023 and then.
The remainder filling out that 13.
Okay. Okay. Thank you and then.
George.
Earlier during the Q&A.
You said that projects are getting larger and larger due to the issue of resiliency, which is becoming a bigger issue, particularly on the federal side can you just talk a little bit more about that I guess my question is why now and is it primarily folks waking up from the California fires on the Texas Freezer has just really been gaining steam in the background.
For many years and now it's just kind of percolating to the top.
Well no, it's just percolated to the top and.
Basically the economics.
Another driver of the because of the all other technological improvements on the innovations in the last few years like the micro grids. They were very expensive sometime back but now.
They are getting much cheaper battery storage again, the costs to come down solar.
He is in power.
So for example, take the Paris Island project. When we started out that's supposed to be 48 million on the project and then when they said you know what we are very prone to storm zone here, we need resiliency. So we went back with a combined heat and power plant with a battery storage with micro grids with solar.
Now.
They can isolate themselves on the project became the $98 million and the beauty.
All of that Scott.
Savings.
For a few years back you wouldn't be able to do that.
So the and the other thing people, they're talking about cyber security and so on and now with the storms or other weather related contingency that we have.
They do realize that <unk> is a key part of the <unk>.
Solution as we go into more and more green, whether it's solar or whether the win or whatever the case might be but seemingly van that's weather related we'll take all those out.
That's that gives made the project is much larger and now its beginning to spillover colleges and universities that they asking for more resiliency, both George and.
Coupled with reduction, but backup generation and the economics again.
They can become.
They make good economic sense for the customer.
Got it that's great color thanks for taking my questions.
Thank you.
Yes.
Thank you.
Our next question comes from John Stephens, Inc.
Stifel. Your line is open.
Thanks, and good afternoon gentlemen.
Alright. Thanks.
2 things from me.
And I'm on.
Might be looking at this low all along but when I look at your your Capex expectations for the rest of the year for energy assets and the amount being employed 22 to <unk> 42 megawatts. It looks it looks funky sort of dollars per megawatt versus what you've done.
This is a timing issue where the projects is there a mix issue here I'm just trying to understand.
The capex relative to whats getting commissioned.
Okay.
Chris.
Steve 111 second let me take a quick look at those dollar figures.
Okay.
So there are maybe where are you looking at that the other.
Just the follow up was just around around margins and I know someone had asked about RIN pricing.
And the impact of that on margins.
In your in your model, but is there is there anything we should be thinking about sort of the critical drivers in the back half for the year, because it looks like back half.
Sort of full year margin guidance is a little bit above where the first half for us just to understand.
The margin.
The margin step up in second half versus first half for 'twenty 1.
Yeah, I'm going to let mark tackle that margin question on well I can talk to that just briefly I mean I think we're.
We're certainly seeing some of the benefit of the of the improved RIN pricing.
But it's also a function of improved production on the assets as well. So I think as we look to the second half of the year part of the puts and takes of our margin will be what's happening with the asset but it will also be a function of what's happening with the mix of projects as well.
Which we have some decent visibility too so I think we'd expect our margins to still be within the range that we've provided.
And then obviously if things happen differently with RIN pricing, we may see the benefit of that they go the other way then I think we still have.
Maintaining some conservatism in our in our estimates.
On the O&M side, there is some seasonality too I think right.
Not a lot of seasonality to O&M I think some of the things that might impact O&M quarter to quarter really come down to some unplanned maintenance.
Various adjustments on certain projects, but not a whole lot of seasonality on the O&M side, great. Thank you for.
Steve just to go back on the Capex thing I think the.
The math is a little bit skewed in the sense that when you look at the Capex numbers that Capex will include capex toward megawatts that don't actually get placed in service until next year.
And so there is little bit of a mismatch there in terms of it's not you know when we talk about those dollars of Capex. That's not the dollars of Capex related only to assets being placed in service. This year, it's related to all assets that were <unk>.
Constructing on.
Understood. Okay. Thank you for clarifying.
Absolutely.
Thank you.
Our next question comes from the line of Pearce Hammond with Piper Sandler Your line is open.
Yes, good afternoon, and thanks for taking my question just 1 question today for me on.
Last quarter, you had highlighted the construction started the Norfolk Naval Shipyard project $173 million project and have noted had a battery energy storage system on a micro grid.
Just curious are you getting a lot more interest from customers for battery energy storage and micro grids basically what's the appetite right now for that is it growing as we're seeing more problems with power resiliency and reliability. Thank you no no question about it we're seeing more.
And more requests from customers.
And in some cases, we have installed solar installation for some C&I customers as well as other institutional accounts, they coming back and they say, hey, but some better battery storage micro grid associated with it.
No question about it I mean again, what we have in development or on the batteries as several magnet tutors.
We have exiting installed to date so that gives you.
On a level an idea of what the level of interest is.
Thank you George.
Okay.
Thank you.
Our next question question comes from the line of credit Southern with B Riley. Your line is open.
Hey, guys. Thanks for taking my question here.
So I understand a little bit about the <unk>.
Uptick under buy it and then the FCC market I imagine some of the Rfps or are you going to take some time to work into the backlog, but maybe you could just.
Discuss the timing of when when we could start to see that there's higher activity that you've been talking about.
Sorry to reflect really in that new awards in that back half of the year thing or a lot of these more likely kind of early next year that we'd be looking at.
I think it will be early.
Second half of next year, and I think you're going to see more and more projects.
What's going on with the infrastructure build if it makes it through Congress.
Some of the areas.
The various areas actually it's quite a few of them that will help us get more and larger projects down the road.
So but the momentum.
The sentiment in the marketplace.
<unk> picked up already and he can't spilled over to other institutions outside of the federal government.
Especially on the ESG front to the C&I market.
Yeah.
Got it that's very helpful.
You've called out kind of stronger LNG production and as well as the RIN pricing.
During the quarter, maybe you could frame what the impact was there versus what your expectations heading into the quarter and on the efficiency side are there additional efficiency improvements that you guys are evaluating within kind of the existing portfolio or have you made some of the conversions that would.
<unk>.
Yeah. Good question, so I want to Echo. The later, 1 and then door on May can take the other part but on the low.
Optimizing the operation of the plants, it's an ongoing process.
We instituted some incentives for the various plants manages about a year ago. So on based on the improvements.
On the operation and it's working.
So we have excellent team operate.
So it's an excellent management team that's why we felt very good.
Not all in development.
Built in but operating the assets.
That's a great value proposition on doesn't have within this company.
And.
Now as far as the impact on the RIN prices and so on I don't know how much without getting too, yes, I think we.
Given the fact that there was such a mix of adding assets in the production impact on the RIN prices I don't think we're we're at the point, where we're talking about.
Relative contributions of each of those.
Okay.
And maybe just kind of last 1 here when I'm looking at kind of a solar development pipeline is it fair to say that a lot of that.
Eventually could end up in the energy as a service pipeline just.
Kind of the way that the discussion just kind of.
End up going where you could add additional services to some of those people coming in with solar.
Just wanted to kind of frame.
Or do you think the energy and serves are going to be kind of a separate discussions that will kind of increase separately from the solar piece.
The energy.
Or is it does get some solar into it but the better part is development.
We'll call it 25 to.
234 megawatts.
Sales sites, that's what we're working on whether it's a landfill site all along the highways or.
Actual green land development.
Okay. Thanks, Thanks, guys.
1 other things that we have done there in the last couple of years and it is helping us the development a lot.
We increased the capability, we're now on a solid development group, where they can develop what we call Green site development.
Yes, again, beginning to bear some good growth.
Thank you.
I'm not sure on any further questions in the queue.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
Sure.
Yes.
[music].
Yes.
Okay.
Yes.
Okay.
Okay.
Right.