Q4 2021 Hannon Armstrong Sustainable Infrastructure Capital Inc Earnings Call
Greetings and welcome to the Hannon Armstrong fourth quarter and full year 2021 results conference call at.
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A question and answer session will follow the formal presentation.
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It is now my pleasure to introduce chat Reed Vice President of Investor Relations and ESG. Thank you you may begin.
Thank you operator, good afternoon, everyone and welcome earlier this afternoon Hannon Armstrong distributed a press release detailing our fourth quarter and full year 2021 results a copy of which is available on our website. This 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 statements within the meaning of section 27, a of the Securities Act of 1933 as amended and.
In section 21 E Securities and Exchange Act of 934 as amended.
The company claims the protections of the Safe Harbor for forward looking statements contained in such sections.
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 from those described during the call in.
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 revised expectations.
During this call we will primarily discuss non-GAAP financial measures, which we believe help investors gain a meaningful understanding of our core financial results and guidance.
A presentation of this 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 GAAP to non-GAAP financial measures is available on our posted earnings release and slide presentation.
Joining me on today's call are Jeff Eckel, the company's chairman and CEO , and Jeff Lipson, our CFO and CEO .
With that I'd like to turn the call over to Jeff who will begin on slide three Jeff.
Thank you Chad and good afternoon, everyone. Today, we are delighted to report another outstanding year here at Hannon Armstrong with distributable earnings up 21% to $1 88 per share net investment income up 52% to $134 million, our portfolio up 24% to $33 six bill.
And we've also increased our reported pipeline to more than 4 billion up a $1 billion from our last report and this comes after a closing $1 7 billion in 2021.
In addition, despite macroeconomic and industry headwinds, which will discuss we have the confidence in our business to increase guidance for annual growth in distributable EPS to 10% to 13% and extend that guidance one additional year to 'twenty 'twenty four.
We're also guiding to 5% to 8% annual growth in our dividend through 2024.
And consistent with that declaring a dividend today of 37, and a half cents, which represents a 7% increase over our dividend last quarter.
Yeah.
On this page we also highlight the carbon count of one transaction in order to generate more understanding of this important climate reporting metric. Our feature transaction is a 452 megawatt grid connected solar project in Texas being developed by clear way and is incremental to the $660 million a framework agreement with them we.
Announced in late 2020.
This particular project has an above average carbon count of 1.3, because the power generated by this project largely offsets natural gas power generation in Texas.
Well every investment we make improves our climate's future not every investment is equally efficient in doing so we believe measuring and reporting with this level of rigor is where the market needs to go.
Turning to slide four we'll give more color on the increase and extension of our distributable EPS guidance.
As you May recall, we gave 7% to 10% growth guidance. This time last year through 2023 given.
Given the strength, we see in the climate solutions market is reflected in our pipeline it is appropriate to increase guidance.
Chart on this page reflects an extrapolation of the high and low ranges of our increased guidance actual results in any one year, maybe outside this band of course, but we are confident in the overall trend through 2024.
Also updating our dividend growth guidance as I said, two 5% to 8% annually from the prior 3% to 5% range.
Turning to slide five wed like to address the key industry challenges that are top of mind for investors and the impacts on both the industry and happy.
First while rising interest rates and higher cost as a reversal of a long period of declining cost enjoyed by the clean energy industry. The industry is adapting to this new reality.
There's really only one way to address rising cost in a capital intensive industry like clean energy raised the PPA price and our clients are doing just that with industry reports of a 5% increase in Q4, PPA prices and anecdotal evidence of prices continuing to increase in 2020.
Most indications are that corporate PPA buyers understand that they are the ones to bear that price risk and generally accepted in order to meet their corporate sustainability goals.
That doesn't mean these are easier fast negotiations for our clients, but they are happening in the end result is the clean energy industry will make the adjustment it needs to absorb higher costs.
On the flipside those same PPA counterparties are seeing higher natural gas and electricity prices from conventional energy suppliers, making higher clean energy PPA prices more palatable.
Importantly, the hassey portfolios largely unaffected as most capital budgets and operating costs are fixed and since new investments were made after factoring in any higher costs. There is minimal impact on our returns on future investments.
Next the pandemic another industry specific challenges have resulted in a very real supply chain delay for our clients and serves as a reminder of how hard our clients work to develop these projects.
Fortunately there are signs of improvement in some markets, but of course challenges remain.
These supply chain delays have had only a minimal impact on our business, we estimate transactions in our pipeline pushed out only one to two months on average through 2021 and into 2022 .
The failure of Congress to pass build back better was disappointing to the industry or our industry does not rely on any single piece of legislation to prosper. So matter of fact, a little over a year ago. The industry expected, the ITC and PTC to ramp down and it is prepared for that still.
That said, we consider passage of some climate provisions like tax credit extension still viable and a tailwind to our already growing markets.
Lastly, California's initial net metering three point all proposal was not positive for residential solar of course, but many observer observers believed that the final rule will be more constructive for the industry.
Whatever the final rule the value proposition for residential solar plus storage remains strong gift.
Given the structural seniority has he enjoys in our residential solar investments.
Three point O has minimal impact on our existing portfolio are future investments we may make.
Moving to slide six we provide an update on our 12 month pipeline, which we are now reporting as I said greater than $4 billion up from the prior quarter of more than 3 billion.
We currently have more than 40 programmatic clients, who drive our pipeline in the behind the meter grid connected and sustainable infrastructure markets and we are adding new clients each year as the climate solutions market grows the bulk of our pipeline remains behind the meter and is weighted towards energy efficiency or the grid connected portion is weighted towards solar.
Lastly, we note that newer investment opportunities comprise an increasing portion of our sustainable infrastructure pipeline, which itself has become a more meaningful portion of our overall pipeline.
Slide seven highlights an underappreciated strength of our business model the diversity of our markets. When you compare the 2021 chart on the left with a 'twenty 'twenty chart on the right. It's clear that the success of each here was driven by different markets in 2021 public sector behind the meter carried the day and wind in 'twenty.
'twenty and each of these markets there are multiple generally uncorrelated asset classes in any given period. One of these asset classes may produce investment opportunities, while others may not.
That diversity in our origination platform and the breadth of our client base.
Abides assurances that despite one asset class facing challenges, we should continue to find attractive climate solutions investments, which leads to consistent growth of the business now.
Now I'll turn it over to Jeff L to detail our portfolio performance and financial results.
Thanks, Jeff summarizing our 2021 results on the top of slide eight we are reporting impressive growth in each of our key earnings metrics.
In the upper left we note distributable earnings per share growth was 21% driven.
Driven by a larger portfolio higher equity method investment income lower debt costs and increased gain on sale income.
In addition, as shown on the upper right distributable net investment income was $134 million in 2021.
Reflecting annual growth of 52% driven primarily by a larger portfolio and strong margins.
And gain on sale from securitized assets was $80 million in 2021, representing a 21% annual increase and demonstrating our continued successful longstanding partnerships with our private debt investors.
These substantial annual growth rates in distributable NII and gain on sale.
To demonstrate the success of our dual revenue model.
On the bottom of slide eight we displayed longer term trends we.
We have grown both our managed assets and balance sheet portfolio at a compound annual growth rate of greater than 15% over the last five years, while maintaining our portfolio yield and achieving a return on equity in the 10% to 11% range.
Turning to slide nine we detail our $3 6 billion balance sheet portfolio as of the end of 2021 which has grown 24% from 2.9 billion at year end 2020.
Our portfolio yield remained steady year over year at seven 5% and now includes over 280 investments.
The average investment size and a weighted average life of the portfolio remained unchanged in 2021.
With no asset class comprising more than 30% of the portfolio the diversity of our business remains a persistent strikes.
Finally, we highlight the structural seniority in each of our asset classes, which coupled with the credit quality of our Elba Gores leads to strong credit performance.
Currently 99% of our investments continue to perform within our expectations.
Turning to slide 10.
We detail our fourth quarter portfolio of reconciliation.
We funded over $400 million of investments with the resulting portfolio balance of nearly $3 6 billion, an increase of 12% from the end of the third quarter.
Funding expectations of previously closed transactions as shown on the right with over $700 million expected to fund over the next two years.
This amount is in addition to the portfolio growth, we expect from investments in our current pipeline.
We also note that the grid connected entry portfolio, which we announced in July 2020 is now fully funded and it is no longer reflected in this table.
On slide 11, we highlight that we extended and Upsized, our carbon count unsecured revolving credit facility.
Earlier in 2022, we increased our available capacity from 400 million to 600 million extended the tenor from one to three years and enhanced our carbon count pricing discount.
Recapping, our capital raising from 'twenty to 'twenty, one we had a very successful year.
Issuing debt at 3.3, 75% equity at over $61 per share and establishing two incremental unsecured funding sources.
Our liquidity platform is well positioned to continue to efficiently and successfully fund the expected growth in our portfolio.
We also continue to manage our market risk utilizing modest leverage and maintaining substantial standby liquidity.
Turning to slide 12, we address interest rate risk, which is certainly not unique to our business and we take this risk very seriously and our enterprise risk management processes.
Well I'm going to make four points regarding interest rates on our business model.
Number one we have an investment portfolio of over three and a half billion in fixed rate debt of approximately two and a half billion neither of which is impacted by subsequent changes in interest rates.
Number two while rising rates represent a real risk we have demonstrated the ability to actively manage our exposure successfully at.
Shown in the chart on the left.
Okay.
In fact since 2014, our first full year as a public company, we have delivered earnings growth at an 11% compound annual rate.
During a period in which 10 year treasuries were over 3% and well below 1%.
Neither the level of rates or the shape of the yield curve both of which are depicted on this graph on the left is meaningfully diminished our ability to grow earnings.
This is in part because we actively manage our margins to our targeted Roe.
Number three in the graph on the right we demonstrate how our margins have improved as we have maintained our portfolio yield despite a competitive investing environment, while decreasing our cost of funds.
Over the last four years, our interest expense as a percent of our average debt balance has dropped by 80 basis points to four 6% as we have optimized our debt platform and taken advantage of tightening in corporate debt spreads and the strong bid for credible green bonds.
We remain confident over the long term our margins will be strong and relatively stable given the combination of our diverse investment strategy and attractive debt platform, even in periods of increasing investment volumes.
We also expect these margins will facilitate continued strong growth in net investment income.
And finally number four I'd note our securitization strategy has functioned well during our 40 year history, including a much higher interest rate environments.
So we remain confident we can continue to utilize this source of capital as part of our funding and market risk strategies.
In conclusion, our increase and extension of earnings guidance and our dividend increase reflect our confidence in the business model and a variety of interest rate environments and with that I'll turn the call back over to Jeff.
Thanks, Jeff Great report.
Turning to slide 13, we note a number of ESG accomplishments not the least of which is embedded in our vision to make only investments that improve our climate future.
This vision is still two rare among mainstream financial institutions.
We declared our second annual social dividend to the Hannon Armstrong Foundation in its climate scholars program and other climate Justice initiatives.
These include partnerships to help nonprofits investing in energy efficiency upgrades. Some in concert with our client support the development of Brazilians hubs in low income neighborhoods.
And to fund climate Corp, Fellows have historically black colleges and universities.
We continue to ensure our governance documents and disclosures are aligned with best in class ESG practices that we and our investors expect of our company.
We'll conclude here on slide 14.
I'll highlight why we continue to presents such a compelling value proposition for investors.
We've demonstrated track record of results, including growing earnings 21% in 2020 , one second our markets and pipeline are large growing and diverse.
Third our funding platform drive stable margins and gives us the confidence to increase and extend guidance through 2020 for.
Last but not least we integrate our ESG activities into the entire business, including carbon count strong employee participation in our foundation's activities. It is the deep integration of ESG into our mission and allows us to attract and retain the best people in the industry and I. Thank them for all they do.
With that I'll ask the operator to open the line for questions.
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My mom had please while we poll for your questions.
Our first questions come from the line of Nate Crossett with Bahrenburg. Please proceed with your questions.
Hey, good evening, guys and congrats on that the results for the year Naveed yesterday, a question on the new guidance and I was curious if you could maybe unpack some of the puts and takes them.
What are the yields that you guys are kind of assuming for this year.
Obviously, you've been very consistent the last three years and.
It sounds like you had the ability to kind of underwrite them in conjunction with interest rate moves, but I'm. Just curious should we kind of be expecting kind of that mid 7% range.
And then just in terms of the timing of the pipeline.
Could give us any color on when kind of the deal flow is waiting for this year.
I'm not sure we've ever gotten that question of one of the where the pipeline is weighted it's generally been a pretty well spread out and our ability to predict which quarter a given transaction.
Closes then is not considered all that great. That's why we have a really large pipeline and we don't control the timing of closing, but it should be pretty well.
There's a spread out over the year in terms of.
Yields.
Thank you know you have some of the large grid connected assets that are going to have.
Probably declining yields and youre going to have other asset classes and some of them will have higher yields that hopefully will blend out to to wear.
Where we are right now.
There is another.
Factor. We're interested in is is having some shorter term investment opportunities given inflation and.
Rising interest rates. So some of these opportunities may be a shorter duration than what.
What we've typically done in the past.
Okay. That's that's helpful and you know clearly, having a pretty large spread over our cost of capital I'm. Just curious have you guys seen.
Any real changes in competition over the last three months or would you even say that maybe the macro backdrop is making it harder for competitors are.
Well look at Esa on those issues.
A great question I.
Can't say there's a.
A market uptick or downtick in competition as I've said we.
Always have competition on virtually every deal.
But given the programmatic relationships, we tend to win more than we lose I would highlight the Texas Solar project with Clearway is as an incremental piece of business with clear way in what is clearly a very competitive and attractive asset class.
Okay I'll leave it there thank you.
Thank you.
Thank you. Our next question is come from the line of Sophie Karp with Keybanc. Please proceed with your questions.
Hello, This is brendan on for Sophie.
Thank you for taking my question and congratulations on the strong quarter and solid guidance here, maybe if you could just give us some color on your confidence level with respect to hitting the upper or lower end of the 10% to 13% growth range given all the policy and macro uncertainties, you're seeing or in other words, what kind of macro and policy outcomes I E.
Contemplating that could put you towards the bottom of the top half of this range.
Well I think the the nature of guidance is that we expect to be in the range and there are a variety of factors that could push us towards the higher or lower end of the range policy items are just one of several I don't think we've.
Point to any specific policy items or policy proposals that would have such a direct impact that we say Oh. This is passed we'll be at the high end of the range or anything quite that specific but it's one of a number of factors that could lead us to ending up in the higher the lower end of the range.
Yeah.
Okay, and then obviously a constructive growth outlook and we were wondering if there was a particular asset class that you expect to outperform the rest of your portfolio and be the main driver of this growth or perhaps an asset class that you are seeing more heavily represented in your potential pipeline.
Well some of the sustainable infrastructure.
Investments, we could make an and.
They're typically in.
Environmental restoration markets, but they can also be in AG and transport.
Not quite industry yet.
And some of those should be potentially higher yielding but theres still nascent markets with.
The volume is still the billed AR and when they become.
You know.
Significant and.
Big components will probably give them their own pie face, but at this point it's unsustainable.
Got it thank you.
Thank you. Our next question is come from the line of Chris Souther with B. Riley. Please proceed with your question.
Hey, guys. Thanks for taking my question here.
Where did you see the guidance raised could you talk a little bit about some of the moving pieces for 2022 between gain on sale versus a net investment income.
Middle of last year, you had kind of provided some.
Some ranges for those I just wanted to get a sense of where we're tracking relative to that was obviously.
The guidance implies a positive across the board here, but I just wanted to get a sense of how we're thinking about kind of a mix in growth for 2022 and beyond if you don't mind.
Yeah.
Sure Chris So we did not as you noticed put out the component parts.
Of the EPS is as part of our guidance and as you mentioned in the second quarter of last year, we put some at least ranges around those I would say for 'twenty 'twenty. Two you should expect both the distributable net investment income and the gain on sale to rice this growth trajectory.
That we're.
Guiding towards today is not.
Overly based on either one of those that portfolio will grow.
We said the margins should remain relatively constant so it will have some of the high growth and we think we can get scale to broker gain on sale this year as well.
Okay nice to see incremental deal with clear way in Texas.
Can you talk a little bit about some of the changes in the funding schedule of close transaction.
It looked like both 2022 and 'twenty 'twenty three went up.
By similar amounts.
Yeah, when you kind of back out the stuff that got funded in the fourth quarter. So.
Sounded like it was just one deal in.
One project in Texas, So that would be kind of funded more than one shot so any color on that would be helpful.
Well I think that funding schedule is the aggregate of several transactions and several ins and outs as you can see on this schedule next to it in the quarter. We funded 341 million from investments that had closed in prior quarters. So that was essentially came out of that table.
And then in.
Thereby assume that many new transactions went into that table. So it's a more.
Consistent pattern for us now to be losing deals that have a funding set occur a little bit into the future and again that creates good visibility on loan growth. So there wasn't just sort of one big story.
In the table, it's it's several ins and outs, including as I mentioned in the prepared remarks, the completion of the engie portfolio fully coming out of that table.
Okay got it.
And just last one the pipeline bumps seen seems really broad based here, maybe you could just provide a bit more color on behind the meter.
Kind of the mix between public sector already.
Anything that you can kind of provide there I think would be it would be great.
Chris I think they're all growing.
It's really hard to highlight one versus the other Uh huh.
I will say I'm always surprised when.
Industrial energy efficiency projects happen in there, they're starting to happen because.
I've have failed in my career to be successful with those but they're starting to be successful and I think the the solar business continues to do a great job and has a great value proposition. So I can't give you a whole lot more detail other than to say there they seem to all be growing.
Okay. Thanks, guys.
Thank you Chris.
Thank you. Our next question is come from the line of Philip Shen with Roth Capital Partners. Please proceed with your questions.
Hey, guys. Thanks for taking my question. So I'm juggling a couple calls today. So sorry, if you addressed some of this but I'm. Just was wondering if you might be able to talk through by end markets are what the asset yields looked like I think on the last call.
It sounded like some of the solar.
And markets were having some compression in the yield.
Are you continuing to see that you know with a you know it seems like PPA prices are going higher so perhaps there's been a bit of a reversal and then on the flip side on the funding side.
Can you talk about now with base rates going higher.
Spreads also going higher with.
The overall macro risk from Ukraine, and so forth.
How do you expect your cost of funding to train as well thanks.
Why don't I take the first part Jeff you take the second.
Ah and Ah Hi, Phil Nice to hear your voice again.
Not surprisingly the large grid connected solar projects.
Well first of all every project probably needs a higher PPA price just to.
Recover the development fee or a portion of the development fee and to preserve returns.
With the inflation and higher cost of capital.
So I wouldn't equate higher PPA prices with Aro is going up because you need that to just cover the cost.
You would expect the large grid connected solar projects to be the most competitive and bid up.
Yields on distributed solar continue because it's relatively smaller to be more interesting for us.
And on the cost of funds Phil are clearly the base rates are higher.
As you mentioned, there's some volatility in the debt markets.
So clearly we're at a place today for instance, where.
Our debt.
Debt that we issued last year would be would be trading at a discount.
And our cost of funds would be a little bit higher but.
I Wouldnt to part of your question forecasts, where they go from here I think that'd be a challenging thing to do.
But I would say as I said in my prepared remarks, we're hyper focused on margins. So we'll continue to invest at a margin to that cost of funds whatever it may be and we'll remain focused on the targeted ROI for the business.
Okay. Thanks for the color.
As it relates to the green bonds. It looks like there are trading below par right now based on my Quebec.
Just what's your outlook for <unk>.
A new issuance of Green bonds would you think that you know we.
We might not need to wait a bit before your next issuance there or do you think we could see something around the corner.
Yeah.
Well I won't answer that specifically in terms of guiding to when we might issue debt, but I would just say that we're a business that is in a growth mode and will be you should expect us to be issuing debt you should expect us to be issuing equity you should be expecting us to use our $600 million credit facility that we've put in place.
And we're not in a in a sort of a wait and see mode.
Let's see where spreads go from here and then maybe we'll invest maybe we'll issue that.
I think we're a company that's going to ride the curve up and down we have cash flow coming back all the time as well from the existing portfolio and we're going to actively invest in and actively issued debt.
Okay, great. Thanks for taking the questions and.
Nice report here thanks.
Thanks, Bob.
Thank you. Our next question is coming from the line of Julien Dumoulin Smith. Please proceed with your question.
Hey, guys. This is anya filling in for Julien.
So my first question is.
Okay.
Is there potential to do further deals with them.
Sure or maybe more broadly.
How do you see the pipe.
Arctic opportunity ahead with any of your other partners for instance, a sunrun you'd had the best Intel a deal that you just signed last quarter.
Hi, Anya this is Jeff eckel.
I would say, we see the programmatic opportunity with N G clear way Sunrun sunpower and not to exclude 36 other clients that we.
Enjoy programmatic relationship with as strong it.
It's a mutually beneficial relationship and there will be periods, where we don't.
Necessarily.
Meet with our clients on an individual transactions, but generally once we acquire a client.
And have a relationship and work with them through some of the problems that are inevitable through all the asset management challenges.
We tend to win more than we lose on the incremental business.
So that's a very broad statement that we we look forward to doing more business with all of those companies.
Was there a second part of the question I missed okay.
No exactly.
Thanks, and then second I was just wondering if you could provide an update on the energy efficiency opportunity.
Just ongoing RFP activity.
And how that's progressing.
I'm.
Good question I think it's.
A variety of responses, depending on the east coast. It certainly has been a little bit slower.
Then the east coast like.
And.
So yeah, it's not been great there hasn't been an executive order, there's been an executive order, but not setting a specific goal.
And really the.
Efficiency bureaucracy in the federal government really responds well to go so you know we'd like to see it go.
Specific dollar go be.
<unk> raised and that would really help I mean deals are still getting done just it's not off the charts like you might've expected with a Biogen administration versus a Trump administration.
Okay, great I'll jump back in queue now.
Thank you. Our next question is coming from the line of Noah Kaye with Oppenheimer. Please proceed with your questions.
Hey, good afternoon, thanks for taking the questions we'd start with the sustainable infrastructure asset class again.
The rep.
Representation of that asset class and the pipeline is really striking you know it was not a major part of funding obviously the last couple of years. So what in your view maybe breaks the logjam or is there anything in particular that really starts to open up that asset class for you. This year anything that you would point to in terms of.
On the ground and developments policy changes at all.
I know thanks for the question.
So a couple of things I'd point to the.
The.
State legislation around pay for success environmental outcome projects.
We've been very active in the state of Maryland, which is the principal.
States surrounding the Chesapeake Bay to accelerate using an E. S. P. C. Like structure I believe that will be law in Maryland, It's it's governor Hogan.
Number one legislative priority and.
<unk> enjoys a really strong bipartisan support so that's the kind of thing that if it passes and our clients start to do more projects I think we'll get to see quite a bit more business.
There's been a lot of activity in the AG business from.
Yeah sustainable farming to renewable natural gas that looks to be interesting and and is growing quite well. So those would be a couple.
A couple.
A couple of anecdotes.
Great. Thanks, and you know the disclosure around the 40 programmatic partners.
If it's possible to provide comparison to past that that'd be helpful. But I think the broader question is really about how you're growing an organization to serve those clients and perhaps also how you're expanding the ways in which you serve them I'd be curious.
To get some color on that because obviously, there's the support of the transaction itself, but then there's an ongoing relationship around those assets. So can you talk a little bit about kind of the expansion of your capabilities in the services, you're providing and then how the number of partners may have grown over time.
Thank you for that question no because I was just kicking myself that we didn't include a slide on that.
I think we're where we bound over 100 people and I think pre pandemic, Jeff we were below.
Well 66, so we've added quite a quite a bit of talent and I think the people were were seeing are terrific and and and it's hard to hire people. So we've done a very good job in building out our specialty skills that we need we've also done a fantastic job and I gave Jeff Phelan has his.
<unk> credit on our technology build out one of the things that makes our platform more scalable as using data and our team is doing a great job, there's a tremendous amount still to.
To do to build out our technology platform, but.
It is definitely happening here and.
I'm always always surprised at how much our team is.
It's using data and in new and novel ways.
I think the single most important thing, we do to expand clients and expand relationships with clients as to zipper.
Our organization from a C E O two.
I head up a business unit two.
<unk> teams.
The two legal and portfolio management, we have a very rigorous way to track that.
We.
Make sure everybody's got a counterparty at the other side and we get a lot of information that way.
And a lot of it is very supportive I enjoy the calls I have with the the Ceos of our clients and we commiserate about industry issues, but they.
They know a couple of things about us we understand their business. We appreciate how hard it is and we will never ever compete with them and most financial services companies can't say that finally, we did make an organizational change and it's a portfolio got bigger and the complexity of our asset classes.
We created an internal matrix organization. So there's somebody in charge of let's say readily solar on the investment team and portfolio management and illegal.
So that we start to get economies of scale in and doing transactions. We have feedback loops are for.
Additional investments for how things are actually performing.
And it is definitely a as the organization scales in the portfolio and scale, we need a lot more business leaders and I'm Super excited about that that rollout of that matrix has gone very well.
We made a good shepherd.
Yeah.
But there's always next quarter, but I appreciate the color.
To ask one more clarifying question.
Keep in mind, it's really around your commentary on how duration of some of the investments are maybe shifting so I just wanna.
I mean, if you take.
See I energy efficiency, it's shorter duration right. So yeah. Please go ahead.
Thanks.
Okay.
And and and and in if you can give me a call at that its mix of say more industrial energy efficiency is it.
Yeah, industrial energy efficiency projects might be 10 years, where federal efficiency project is almost always 25.
Right.
Some of the.
Storm water remediation projects are five to seven year type projects.
Okay excellent.
Excellent. Thank you.
Thank you Noah.
Thank you there are no further questions at this time and with that ladies and gentlemen. Thank you for your participation. This does conclude today's teleconference. You may disconnect your lines at this time.
Have a good day.
Yeah.
Yeah.