Q4 2023 Ameresco Inc Earnings Call
Okay.
Unknown Executive: Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Ameresco Incorporated fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode.
Good day, ladies and gentlemen, and thank you for standing by welcome to the <unk> incorporated fourth quarter 2023 earnings call.
At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question on the session you will need to press star one on your telephone.
Unknown Executive: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message appear on your hand. To withdraw your question, press star 11 again.
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Unknown Executive: Please be advised that today's conference is being recorded. I would now like to turn the conference over to your host, Ms. Leila Dillon, Senior Vice President, Marketing and Communications. Ms. Dillon, you may begin.
Please be advised that today's conference is being recorded.
I'd now like to turn the conference over to your host Mr. Lilly Dillon Senior Vice President marketing and communications. Mr. Long you may begin.
Leila Dillon: Thank you, Lisa. And good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George Sakellaris, Ameresco's Chairman, President, and Chief Executive Officer; Dorian Hole, Executive Vice President and Chief Financial Officer; and Mark Chiplock, Senior 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. Today's earnings materials contain forward-looking statements, including statements regarding our expectations. All forward-looking statements are subject to risks and uncertainties. Please refer to today's earnings materials, the Safe Harbor language on slide 2 of our supplemental information, and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward-looking statements. In addition, we use several non-GAAP measures when presenting our financial results. We have included reconciliations to these measures in our supplemental information. I will now turn the call over to George. Okay?
Thank you Lisa and good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George Sacco, Larry <unk>, Chairman, President and Chief Executive Officer Doran hole.
Executive Vice President and Chief Financial Officer, and Chip Clark Senior 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 today's earnings materials contain forward looking statements, including statements regarding our expectations. All forward looking statements are subject to risks and uncertainties. Please refer to today's earnings materials the states.
Language on slide two of our supplemental information and our SEC filings for a discussion of the major risk factors that could cause our actual results to differ from those in our forward looking statements.
In addition, we use several non-GAAP measures when presenting our financial results. We have included the reconciliations to these measures in our supplemental information I will now turn the call over to George George Thank you Leila and good afternoon, everyone.
George P. Sakellaris: Thank you, Leila, and good afternoon, everyone. Fourth quarter results marked a strong finish to a challenging year for the renewable industry and for Ameresco. We not only achieved very positive revenue, adjusted EBITDA, and net income growth, but our business development execution remained very strong. We exited 2023 with a record backlog and as a development method. These metrics, together with our intense focus on execution, point to 2024 being a year of sustainable growth. Demand for energy efficiency and renewable solutions remains robust, and Ameresco's ability to effectively compete and win new business demonstrates how well aligned our capabilities and offerings are with our clients' priorities. At the same time, we are also growing our essence in development at a strong pace, which, together with our project backlog, gives us excellent multi-year visibility.
Fourth quarter results marked a strong finish to a challenging year for the renewable industry and for MRV optical.
We not only achieved very positive revenue adjusted EBITDA and net income growth.
Also our business development execution remains very strong.
We exited Q3 with record backlog and asset development metrics.
These metrics together with our intense focus on execution point to total 34 being in a year.
Uh huh.
Yeah.
We're seeing growth.
Demand for energy efficiency, and renewable solutions remains robust and.
And then my Asquith stability.
Actively compete and win new business demonstrates how well aligned our capabilities and offerings are with our clients priorities.
Same time, we are.
We're also growing our assets in development at a strong pace.
Together with our project backlog give us excellent multiyear visibility.
George P. Sakellaris: He supports our 2024 midpoint guidance for revenue and adjusted EBITDA growth of 20% and 38%, respectively, and provides us with over $7 billion in multi-year visibility and of possible revenue. Ameresco Total Project Backlog was a record, $3.9 billion at the end of 2023, up approximately 50% versus 2022 with new awards for the year of $2.2 billion, and Proposal Activity remains at a record level. During the year, we also placed 118 megawatts of assets into operation, bringing our operating energy assets to over 500 megawatts.
This supports our 'twenty 'twenty four midpoint guidance for revenue and adjusted EBITDA growth of 20% and 38% respectively.
And provides us with over $7 billion in multiyear visibility of profitable revenue.
Total project backlog was a record.
$3 $9 million at the end of 2023.
Up approximately 50% versus 2022.
With New awards for the year of $2 $2 billion.
And proposal activity remains at record levels.
Do you hear anything here, we also placed 118 megawatts of assets into operation.
Regan.
Our operating energy assets to over 500 megawatts.
George P. Sakellaris: We also added 198 megawatts of assets in development in 2023, ending the year with 669 MW of Ameresco on assets in development and construction. Now I would like to make some comments on the industry environment and what Ameresco is doing to address current challenges. First and foremost, as I stated before, industry demand remains very healthy. Elevated power prices, greater demand for electricity, and green resiliency, combined with attractive incentives, have created a very favorable demand backdrop for renewable energy and energy efficiency solutions.
We also added other 98 megawatts of assets in development target toxicity.
And in the year with 669 megawatts.
For all of the assets in development and construction.
Now I would like to make some comments on the industry environment and what <unk> is doing to address current challenges.
First and foremost.
As I stated before.
Demand remains very healthy.
Elevated power prices greater demand for electricity grid resiliency combined with attractive incentives have created a very favorable demand backdrop for renewable energy and energy efficiency solutions.
George P. Sakellaris: This robust industry demand, though, has also strained some parts of the system. The industry continues to experience lengthening award conversions, interconnection and permitting delays, supply chain disruptions, and shortages of critical equipment and skilled labor. With a focus on execution and cost efficiencies, Ameresco continues to take steps to adapt to this new environment. We are optimizing our operational structure to bring more uniformity and scalability across all of our geographies and business units. They've taken a more conservative approach to our construction schedules, promoted knowledge sharing and increased best practices across our teams, and focused our business development efforts on larger opportunities in our core markets and areas of expertise. We also remain very focused on our work on capital levels and liquidity.
This robust industry demand, though he is also strained some parts of the system.
Industrial continues to experience lengthening award conversions interconnection and permitting delays supply chain disruption and shortages of critical equipment and skilled labor.
With a focus on execution and cost efficiencies and <unk> continues to take steps to adapt to this new environment.
We are optimizing our operational structure to bring more uniformity and scalability across all geographies and business units.
Dave taking a more conservative approach.
Construction schedules.
Promoting knowledge.
The increase in best practices across our teams.
And focusing our business development efforts on larger opportunities in our core markets and areas of expertise.
We also remain very focused on our working capital levels and liquidity.
George P. Sakellaris: As part of this, we are prioritizing the timely conversion and execution of our tremendous project backlog. These actions are already yielding results. For example, our 40% project revenue growth in the fourth quarter was bolstered by the conversion of awards to contracts that had been previously delayed.
As part of it is we are prioritizing the timely conversion and execution of our tremendous project backlog.
These actions are already yielding results.
Our 40% project revenue growth in the fourth quarter was shocked by the conversion of awards to contracts that had been previously delayed.
George P. Sakellaris: Our focus on perversion also helped drive a 32% year-over-year increase in our contracted backlog, which ended the year at $1.3 billion, giving us good visibility into our 2024 revenue. Demand for our services remains very strong, and Ameresco is well positioned for 2024 and beyond. As I mentioned before, there are a number of very favorable macro factors driving the strong demand. One of these is the IRA legislation.
Our focus on provision also helped drive.
82% of year over year increase in our contracted backlog, which ended the year at one $3 billion.
Giving us good visibility into our revenue.
Demand for our services remains very strong and <unk> is well positioned for 'twenty 'twenty four and beyond.
As I mentioned before.
<unk>, a very favorable macro factors driving the strong demand.
One of this is the <unk> legislation.
George P. Sakellaris: Looking at Ameresco's history, one can say that we have performed quite well, regardless of the party in office. The main reason for this is the diversity of our business model and the fact that our solutions are driven by economic returns and cost savings for our customers, many without additional government incentives, especially in our project business.
Looking at them our experts here so.
One can see that we have performed quite well.
Regardless of the party in office and the main reason for this.
The diversity of our business model and the fact that our.
Our solutions are driven by economic returns and cost savings to our customers many without additional government incentives, especially in our project business.
George P. Sakellaris: We also see tremendous support for our resiliency solutions from utility, government, and military customers, again, regardless of the administration. Therefore, we continue to see Strong Demand and Great Opportunities Ahead. I will now turn the call over to Dora to comment on our financial performance and outlook. Dora?
We also see tremendous support for our resiliency solutions.
Utility government and military customers again, regardless of the administration therefore.
Therefore, we continue to see strong demand and great opportunities ahead, I will now turn the call over to Dora to comment on our financial performance and outlook Dora.
Spencer Doran Hole: Thank you, George, and good afternoon, everyone. For additional financial information, please refer to the press release and especially our supplemental information that was posted to our website after the market closed today and which contains some new financial content that I will describe in more detail. We ended the year on a high note, with total revenue for the quarter of $441 million, up 33% from the previous year. Additionally, each of our four business lines experienced double-digit revenue growth. Our projects business had a particularly strong quarter as the company executed on a number of large contract conversions, some that had slipped from the previous quarter and benefited from increased overall activity. We also saw a benefit of approximately $40 million from faster implementation of active contracts. We continue to make great strides in growing our European footprint.
Thank you George and good afternoon, everyone.
For additional financial information, please refer to the press release, and especially our supplemental information that was posted to our website. After the market closed today and which contains some new financial content that I will describe in more detail.
We ended the year on a high note with total revenue for the quarter of $441 million up 33% from the previous year.
Each of our four business lines experienced double digit revenue growth.
Our projects business had a particularly strong quarter as the company executed on a number of large contract conversions. Some that had slipped from the previous quarter and benefited from increased overall activity. We also saw a benefit of approximately $40 million from faster implementation of active contracts.
We continue to make great strides in growing our European footprint.
Spencer Doran Hole: You will notice in our upcoming 10k that our European revenue now accounts for over 10% of our total revenue and is therefore now separately disclosed going forward. We experienced strong revenue growth of over 150% this year with solid organic growth and a significant contribution from our very successful intercoast acquisition. We believe the European market remains highly fragmented and very economically attractive to Ameresco.
You will notice in our upcoming 10-K that our European revenue now accounts for over 10% of our total revenue and is therefore now separately disclosed going forward.
We experienced strong revenue growth of over 150% this year with solid organic growth and a significant contribution from our very successful <unk> acquisition.
We believe the European market remains highly fragmented and very economically attractive to MRO scope.
Spencer Doran Hole: Energy asset revenue grew 12%, largely due to the greater number of operating assets compared to last year, as well as higher room prices experienced during the quarter. We continue to bring assets into operation, growing this important recurring revenue stream. Our O&M business and other lines of business grew 13% and 12%, respectively. Gross margin of 17% dipped during the quarter as project mix impacted this quarter's results.
Energy asset revenue grew 12% largely due to the greater number of operating assets compared to last year as well as higher RIN prices experienced during the quarter.
We continue to bring assets into operation growing this important recurring revenue stream.
Our O&M business and other lines of business grew 13% and 12% respectively.
Gross margin of 17% dip during the quarter as project mix impacted this quarter's results.
Spencer Doran Hole: Like in other quarters, our gross margins can be impacted by the mix of projects we are executing during the quarter, ranging from higher margin performance contracts to lower margin design build revenue. While gross margin can vary from quarter to quarter and year to year, we are not seeing any fundamental changes in the margins of our projects. As always, we remain focused on driving incremental gross margin dollars and operating leverage over gross margin percentage. Adjusted EBITDA grew 33% to $54.9 million in the quarter, with non-GAAP EPS almost doubling last year's results, a key driver of tax benefits.
Like in other quarters, our gross margins can be impacted by the mix of projects. We are executing during the quarter ranging from higher margin performance contracts to lower margin design build revenue.
While gross margin can vary from quarter to quarter and year to year, we're not seeing any fundamental changes in the margins of our projects.
As always we remain focused on driving incremental gross margin dollars and operating leverage over gross margin percentages.
Adjusted EBITDA grew 33% to $54 $9 million in the quarter with non-GAAP EPS almost doubling last year's results with key a key driver of tax benefits.
Spencer Doran Hole: We expect to continue to take advantage of a number of tax incentives, which we've accounted for in our 2024 guidance. Q4 was not only an excellent quarter for execution but also for business development, with over $500 million of new project awards in the quarter. Our project backlog represents a very well balanced mix of performance contracts and design-build work with particular strength from the federal government sector. During the quarter, we also placed 63 megawatts of energy assets into operation and added 198 megawatts to assets in development and construction with a diversified mix of solar, battery, R&G, and biofuel assets, supported by our recent awards in Hawaii. Turning to our balance sheet and liquidity, I'll draw your attention to some additional metrics we are providing in our press release and supplemental information, both available on our website. But first, let me spend a few minutes on our debt. As many of you are already aware, Ameresco carries two distinct types of debt: corporate debt and energy asset debt.
We expect to continue to take advantage of a number of tax incentives, which we've accounted for in our 2020 for guidance.
Q4 was not only an excellent quarter for execution.
But also for business development with other over $500 million of New project awards in the quarter.
Our project backlog represents a very well balanced mix of performance contracts and design build work with particular strength from the federal government sector.
During the quarter. We also placed 63 megawatts of energy assets into operation and added 198 megawatts to assets in development and construction with a diversified mix of solar battery RMG and biofuel assets supported by our recent awards in Hawaii.
Turning to our balance sheet and liquidity I'll draw your attention to some additional metrics, we are providing in our press release and supplemental information both available on our website.
First let me spend a few minutes on our debt.
As many of you are already aware <unk> two distinct types of debt corporate debt and energy asset debt.
Spencer Doran Hole: The vast majority of our debt is energy asset debt supported by our large and growing portfolio of profitable energy assets. As most of our assets are backed by multi-year offtake agreements, banks are willing to lend a large portion of the cost of these assets at competitive rates, given the long-term nature of the contracted cash flows they are expected to generate. As of year end, our energy asset debt represents only 72% of the book value of the related energy assets, a fairly conservative level.
The vast majority of our debt is energy asset that supported by our large and growing portfolio of profitable energy assets.
As most of our assets are backed by multi year offtake agreements.
Are willing to lend a high portion of the cost of these assets at competitive rates given the long term nature of contracted cash flows they are expected to generate.
As of year end.
Our energy asset that represents only 72% of the book value of the related energy assets are fairly conservative level.
Spencer Doran Hole: It is also important to note that the majority of our energy asset debt for our operating assets is fully amortizing over the 15 to 20 year term of the OPTIC contracts, matching our debt with our contracted revenue flows for these assets, and for a significant portion of our assets in construction and development. We have already lined up long-term debt financing through our existing SAIL Leaseback, RNG, and other portfolio financing facilities. In addition, given the strength of our asset development efforts, we're continuing to pursue a develop and sell business model for a portion of our assets in development. This allows us to convert assets that would otherwise require cash equity into EPC and O&M contracts, which instead generate project revenue and more immediate positive operating cash flow.
It is also important to note that the majority of our energy asset that for our operating assets is fully amortizing over the 15 to 20 year term of the optic contracts matching our debt with our contracted revenue flows for these assets.
And for a significant portion of our assets in construction and development we.
We've already lined up long term debt financing through our existing sale leaseback RMG and other portfolio financings yourselves.
In addition, <unk>.
Given the strength of our asset development efforts, we are continuing to pursue a develop and sell business model for a portion of our assets in development.
This allows us to convert assets that would otherwise require cash equity into EPC, and O&M contracts, which instead generate project revenue and more immediate positive operating cash flow.
Spencer Doran Hole: Even with these develop and sell transactions, we will continue to target long-term operating energy asset portfolio growth of 20% plus. Lenders and investors have continued to fund these attractive assets at competitive rates, allowing us to minimize the use of the company's own equity. Our corporate debt, which includes our term loans and revolving line of credit, is a minority of our total debt.
Even with these develop and sell transactions, we will continue to target long term operating energy asset portfolio growth of 20% plus.
Lenders and investors have continued to fund these attractive assets, a competitive race, allowing us to minimize the use of the company's own equity.
Our corporate debt, which includes our term loans and revolving line of credit is the minority of our total debt at.
Spencer Doran Hole: [inaudible] It is important to note that our corporate debt covenants do not include energy asset debt as part of the leverage ratio calculation. In the end, the vast majority of our debt is covered by our strong and profitable energy asset business backed by multi-year contracted revenue streams. And our corporate debt should decline as we build and collect on the SoCalEd project. Another consistent topic of discussion with investors and analysts is our cash flow generation. Our quarterly cash flows can be quite volatile given the variations in the timing of collections and outlays on our contracts. Because of this, we're providing a quarterly moving average of adjusted cash flow from operations over an eight-quarter period, which is broadly representative of our implementation cycle.
At year end, our corporate debt was $280 million with a leverage ratio of three three times below our bank covenant level of 375 times.
It is important to note that our corporate debt covenants do not include energy asset debt as part of the leverage ratio calculation.
In the end the vast majority of our debt is covered by our strong and profitable energy asset business backed by multi year contracted revenue streams.
In our corporate debt should decline as we bill and collect on the Socal Ed projects.
Another consistent topic of discussion with investors and analysts as our cash flow generation.
Our quarterly cash flows can be quite volatile given the variations in the timing of collections and outlays on our contracts.
Because of this we.
We're providing a quarterly moving average of adjusted cash flow from operations over an eight quarter period, which is broadly representative of our implementation cycle.
Spencer Doran Hole: In our supplemental information, we have provided a longer-term chart of this metric over the past several years, which clearly shows the temporary impact of the working capital we needed for the SoCalEd contract. We expect this metric to improve back towards its historical positive trend as we bill and collect from SoCalEd. Now turning to 2024, we are guiding to revenue and adjusted EBITDA growth of 20% and 38% at the midpoints of our ranges, respectively. Also, included in our non-GAAP EPS guidance is the anticipation of a likely net tax benefit. Our ranges are slightly wider than prior years, given the operating environment. We believe the primary variables that can impact our results this year will include the timing of converting project awards.
In our supplemental information we've provided a longer term chart of this metric over the past several years, which clearly shows the temporary impact of the working capital we needed for the Socal Ed contract.
We expect this metric to improve back towards its historical positive trend as we bill and collect from the Socal Ed.
Now turning to 2024, we are guiding to revenue and adjusted EBITDA growth of 20% and 38% at the midpoint of our ranges respectively.
Included in our non-GAAP EPS guidance is the anticipation of the likely net tax benefit.
Our ranges are slightly wider than prior years, given the operating environment. We believe the primary variables that can impact our results. This year will include the timing of converting project awards there.
Spencer Doran Hole: The execution of develop and sell transactions, as well as the pace of implementation of our contracted project backlog. Other important variables include the timing of bringing our new energy assets into operation, realized RIN prices, and tax benefits. We anticipate placing approximately 200 megawatts of energy assets in service during 2024, including our large Kapono asset and United Power battery asset.
The execution of develop and sell transactions as well as ace of implementation of our contracted project backlog.
Other important variables include the timing of bringing a new energy assets into operation.
The realized rent pricing and tax benefits.
We anticipate placing approximately 200 megawatts of energy assets in service during 2024, including our large copano assets and United Power battery assets.
Spencer Doran Hole: Our 2024 asset guidance also includes placing three RNG plants in operation, one of which went COD already in January. Our expected CapEx for 2024 is $350 to $400 million. The majority of which we expect to fund with energy asset debt and tax equity. As we look to the first quarter, we estimate revenue and adjusted EBITDA to be in the range of $225 to $275 million and $20 to $30 million, respectively, with negative non-GAAP EPS.
Our 2024 asset guidance also includes placing three RMG plants in operation one of which <unk> already in January.
Our expected Capex for 2024 is $350 million to $400 million.
The majority of which we expect to fund with energy asset debt and tax equity.
As we look to the first quarter, we estimate revenue and adjusted EBITDA to be in the range of $225 million to $275 million and $20 million to $30 million, respectively with negative non-GAAP EPS as.
George P. Sakellaris: As we noted, we saw approximately $40 million of project revenues from faster implementation of active contracts in the fourth quarter, impacting our Q1 guidance. We expect the remainder of the year to follow a more normal quarterly seasonal cadence. Now, I'd like to turn the call back over to George for closing comments. Thank you, Doran.
As we noted.
We saw approximately $40 million of project revenues from faster implementation of active contracts in the fourth quarter impacting our Q1 guidance. We expect the remainder of the year to follow a more normal quarterly seasonal cadence.
Now I would like to turn the call back over to George for closing comments. Thank you Dara. We ended the year on a high note even in light of the difficult industry environment.
Unknown Executive: We ended the year on a high note, even in light of a difficult industry environment, and that positive momentum has continued into the new year. Ameresco's outlook for 2024 reflects the strong visibility from our backlog, recurring energy assets, and O&M revenue stream. Our top focus for 2024 is the execution of our tremendous project backlog and assets in development, as well as the generation of cash flow. In closing, I would like to once again thank our employees, customers, and stockholders for their continued support. Operator, we would like to open the call to questions now. As a reminder, if you would like to ask a question, please press star 11 on your remote control. Wait for your name to be announced before proceeding with your question.
And that positive momentum has continued into the new year and management's outlook for 2024.
<unk>, a strong visibility from our backlog recurring energy assets and O&M revenue streams.
Our top focus for 'twenty 'twenty four is the execution allow us tremendous project backlog and assets in development and the generation of cash flow.
I would like to once again, thank our employees customers and stockholders for their continued support.
Operator, we would like to open the call to questions now.
Thank you.
A reminder, if you would like to ask a question. Please press star one on your telephone.
Wafer name to be announced before proceeding with your question.
Unknown Executive: [inaudible] Please wait while we compile the Q&A. Our first question today will be coming from Noah Kaye of Alpenhaar & Co. Your line is: Good afternoon. Thanks for taking the questions. Let me talk about the energy asset portfolio planning for 2024. You indicated expectations for 200 megawatts placed in service. So Doron, picking up on the comments in your prepared remarks around, you know, developing portfolio growth but also doing develop and sell, how much of the 200 megawatts do you kind of envision retaining? And then the 350 to 400 million capex? I mean, how much of that do we sort of see an immediate kind of turnaround on in terms of monetization? And Seattle Sebastian.
We have we will ask that you limit yourself to one question and one follow up.
Please wait while we compile the Q&A roster.
One moment.
Our first question today will be coming from Noah Kaye of Oppenheimer <unk> Company. Your line is open.
Good afternoon, and thanks for taking the questions.
Let me talk about the energy asset portfolio planning for 2024, you indicated expectations for 200 megawatts placed in service.
So darn picking up on the comments.
In your prepared remarks around.
Developing portfolio growth, but also doing develop himself as to how much of the 200 megawatts you kind of envision retaining and then the 350 400 million Capex.
How much of that do we sort of see an immediate kind of turnaround on in terms of monetization.
Unknown Executive: Yeah, so Noah, the short answer to that is the entire 200 is what we're retaining on the balance sheet. The CapEx figures are what we're retaining on the balance sheet. So the develop and sell is, is, you know, we fold that develop and sell into our financial plan under the project business because it becomes EPC. But we do not include it in those asset metrics. All right. All right, very helpful.
And sales of assets.
Yes, so no the short answer to that is the entire 200 is what we are retaining on balance sheet. The capex figures are what we're retaining on balance sheet.
So the develop and sell as is.
We fold that develop and sell into our.
Financial plan under the project business, because it becomes EPC.
But we do not included in those asset metrics.
Alright.
Alright very helpful.
Unknown Executive: It's a very substantial, you know, growth versus what's in operation today. So I guess talk to us a little bit about your guideposts for developing and selling versus retaining on the balance sheet, how much of it is sort of, you know, unique to the assets and the nature of the off takes versus kind of an overall sort of philosophy of, you know, managing diversification of resources in the portfolio. Yeah, I think we all know the primary feature is based on returns, right? Obviously, customer relationships will feed into that sometimes when we're making those decisions. But that's, that's essentially it.
Yes.
So a very substantial growth versus what's in operations today, So I guess talk to us a little bit about.
Youre guideposts for develop and sell versus.
Retaining on balance sheet, how much of it is sort of.
Unique to the assets and the nature of the optics.
Versus.
Kind of an overall sort of philosophy.
Managing diversification of resources in the portfolio.
Yes, I think.
The primary feature is based on returns Brian.
Obviously customer relationships will feed into that sometimes when we're making those decisions.
But that's essentially it and we've just got.
Unknown Executive: And we've just got, you know, a tremendous backlog of development going on. We want to grow the portfolio by 20% plus, that gives us a lot of room to convert those into projects. Great.
A tremendous backlog of development going on.
We want to grow the portfolio, 20% plus.
That gives us a lot of a lot of room to convert those into projects.
George P. Sakellaris: If I could sneak one more in just on the project side of the business, you know, really strong awards and backlog to close out the year here. Give us a sense of what's happening with the conversion cycle from awarded to firm contracted and, you know, how that's sort of flowing in. Is it, is it? Have you noticed a material improvement?
Great if I could sneak one more in just on the.
On the project side of the business.
Really strong awards and backlog to close out the year here give us a sense of what's happening with the conversion cycle.
In and around awarded too.
Two firm contracted and how that sort of flowing in as it is it.
<unk> noticed a material improvement I guess I would ask.
George P. Sakellaris: I guess I would ask, in terms of the pace of conversion, and if so, what is driving it. Going from the awards, the awarded contracts to execute it, the conversion has not changed. What we used before, the 12 to 18 months, it's still there.
In terms of the pace of conversion and if so what's driving that.
Going from the awards awarded contracts to execute it at.
The conversion has not changed what we used before the 12 to 18 months is steel and sometimes for example, like now we're talking about.
George P. Sakellaris: And sometimes, for example, like now they're talking about the government shutdown, then you have delays, and all of a sudden, from 18 months, you go to 24 months. But the ones that the timing has changed a little bit are the design-build, the EPC work that we are doing, and that's helping. Another thing I wanted to give a little bit of perspective on the column, on the backlog, that the bread and butter, what I call the performance contracts, we have actually seen a very healthy increase. All right, excellent. I'll turn it over to you.
The government shutdown then you have delays in all of US from 18 months ago 24 months.
But.
There was that the time it has changed a little bit.
Design built.
<unk> work that we're doing.
And that is helping another thing I wanted to give me a bit of perspective on the call over to backhaul.
Net.
The breadth and via what I call. The procurement contracts, we have actually seen a very healthy increase.
All right excellent I'll turn it over thank you.
Unknown Executive: Thank you. Thank you. One moment for our next question, and our next question will be coming from George Gianarikas of Conicor. Your line is open. Hi, good afternoon, everyone.
Thanks. Thank you one moment our next question.
And our next question will be coming from George Gms costs.
Of Canaccord your line is open.
Hi, Good evening good afternoon, everyone. Thank you for taking my questions.
Unknown Executive: Thank you for taking my questions. I'd like to ask about the 2024 EBITDA guide. I know you just gave an initial look last quarter that was a little bit higher than what you're talking about now.
Right.
I'd like to ask about.
2020 for EBITDA guidance, which.
I know you just gave an initial look last quarter that was a little bit higher than what you are talking about now could you just maybe discuss anything impacting Europe.
Spencer Doran Hole: Can you just maybe discuss anything impacting your profitability for 2024? Yeah, I'll just start with the fact that we're building a little more conservatism into the forecast, you know, to what we were guiding. And in addition, you know, as I talked about in my comment, my prepared remarks that, you know, we had some revenue, 40 million bucks worth of revenue pulled into Q4. So I think the combination of those two things really put us where we are in despite the wider ranges. You know, this is a set of figures that we feel very good about. Great. And maybe just to clear any confusion, can you just remind us what the, you know, quote unquote, normal quarterly cadence of your business is throughout the year? So for Model, Sure, this is Mark.
Year end profitability for 2024, thank you.
Yeah, I'll just start with the fact that we were building a little more conservatism in.
To the to the forecast.
What we are guiding and.
In addition, as I talked about in my in my comment in my prepared remarks that we had some some revenue 40 million Bucks worth of revenue pull into Q4. So.
The combination of those two things really.
Put us put us where.
Where we are and despite the wider ranges.
As a set of figures that we feel very good about.
Great and maybe just.
Clear any confusion.
Can you just remind us what the quote unquote normal quarterly cadence of your businesses throughout the year. So for modeling purposes. Thank you.
Sure. This is mark Yeah, I think what we consider the normal quarterly cadence that we've talked about Q1 is seasonally our lowest quarter and then it tends to be a steady ramp gen.
Mark A. Chiplock: Yeah, I think we consider the normal quarterly cadence we've talked about. Q1 is seasonally our lowest quarter, and then it tends to be a steady ramp, generally with Q3 and Q4 being our heavier quarters. So it will definitely, the shape will definitely have a heavier, you know, back half.
Generally with Q3, and Q4 being our heavier quarter. So it will definitely the shape will definitely have a heavier back half and Q1 is always our unless something unusual.
Mark A. Chiplock: And Q1 is always our, unless something unusual, you know, comes into the mix. It's, it's generally our lowest seasonal quarter. Well, the other note that we might add to that comment, thanks, Mark, that it's not just heavily weighted as it was 23 to the last quarter. Thank you. One moment for our next question. Our next question will be coming from Eric Stine of Craig Helium. Your line is open.
Yes comes into the mix.
It is generally our lowest seasonal quarter.
Thank you well the ethanol that we might add on that comment thanks Mark.
It's not.
Heavily weighted towards 20 threes in the last quarter.
Thank you George.
Thank you.
One moment for our next question.
Our next question will be coming from Eric Steen.
Unknown Executive: Hi everyone, thanks for taking the question. Um, maybe we could just start with Europe. I mean, obviously, a pretty great story there, the growth that you have seen, seems like it's a pretty wide open opportunity, you know, maybe just talk about how you see it playing out going forward. I mean, do you see that acquisition, or organic combination of both partnering with people? You know, just maybe your thoughts on that part of the business going forward? I mean, I think in the near term, you're going to see a lot more organic. The thing about this acquisition is that it's a relatively small company that we bought. They've overperformed based on our own expectations.
Craig helium your line is open.
Hi, everyone. Thanks for taking the questions.
Yes.
Maybe we could just start on Europe, I mean, obviously a pretty.
Great.
Our story there the growth that you have seen it seems like it's a pretty wide open opportunity, maybe just talk about how you see it playing out going forward.
I mean do you see that.
Acquisition.
Organic combination of bolus partnering with people.
Maybe your thoughts on that part of the business going forward.
I mean, I think in the near term you're going to see a lot more organic.
The thing about this acquisition.
It's a relatively small company that we bought they have over performed based on our own expectations and we expect to use that platform that local content to actually help them grow organically and actually help us grow organically throughout the continent. So I think that's that's one thing the other thing is that a lot of the.
Unknown Executive: And we expect to use that platform, that local content, to actually help them grow organically and actually help us grow organically throughout the continent. So I think that's one thing. The other thing is that a lot of the new technologies, battery, EV charging systems, you name it, those things are starting to really come into play in the UK. And so I think we're expecting some really good organic growth there from some of the new technologies. So it's kind of, you know, it is across the major jurisdictions, you know, Greece, Italy, and the UK, where we're focusing the most.
New technology is battery EV charging systems you name. It those those things are starting to really come into play in the U K.
So I think we're expecting some really good organic growth there from some of the new technology. So it's kind of.
It is across the major jurisdictions, Greece, Italy, and the UK, where we are we're focusing the most but theres other opportunities in other markets, where we haven't been yet that we see coming as well so it's actually really exciting.
Unknown Executive: But there are other opportunities in other markets where we haven't been yet that we see coming as well. So it's actually really exciting. Thanks for that.
George P. Sakellaris: And then maybe just to follow up on the Bristol opportunity, can you just talk about where things stand with that? I mean, I would assume that that is some of the growth, but you know, that also is just starting. So, you know, maybe maybe how that plays into it. And do you see other projects out there opportunities out there like that? Well, it's a great, great question, actually, about the beginning of the year. I spent a couple of weeks in Europe and Bristol, Syria.
Thanks for that and then maybe just a follow up.
The Bristol opportunity can you just talk about where things stand with that I mean, I would assume that that is some of the growth but that also is just starting so.
Maybe maybe how that plays into it and do you see other projects out there are opportunities out there like that.
Great Great question actually about.
The beginning of the year I spend a couple of weeks in Europe.
Bristol CRE I spent some time and we had the board meeting.
Beginning to.
George P. Sakellaris: I spent some time, and we had a board meeting. It's beginning to have traction right now. Otherwise, we are in the implementation phase, and we're getting to do more projects than we did in the last year. So, in addition to that, we are working with the mayor of Bristol, and we're going to have a conference very soon that we invite a few other cities that are thinking of going down this particular route. So it's a great opportunity for us, and that's and it's right up our toolbox because the reason they picked us is because we provided comprehensive services across the full spectrum of green tech technology. So it's a great project, and I think we'll see more coming down the pipe.
Traction right now.
We are in the implementation phase and.
We're getting to do more projects than we did in the last year. So in addition to that we.
We are working with the mayor of Bristol and we're going to have a conference.
As soon as we invite quite a few other serious.
Our thinking of going down this particular service.
It's a great opportunity for us.
It's right up to our toolbox because originally they picked us because we provide a comprehensive services across the full spectrum.
Yes.
Robert.
It's a great project.
You'll see more coming down the pike.
The thing I would just say organically.
Organically growth, though we are growing a lot in Europe with European market is fragmented.
George P. Sakellaris: And the other thing I want to say, you know, organic growth. We're growing a lot in Europe, but the European market is fragmented. And don't be surprised that you will see some small but good tech acquisitions in the near future. But we're not counting on that right now in our forecast for that, but we will be aggressively looking for it. Okay, thank you. Thank you. One moment for the next question will be coming from William Grippin, of UBS. Your line is open. Great, thanks very much. Just wanted to ask first about the debt raise pursuant to your creditor requirements.
And don't be surprised that you will see some small.
Vaccine acquisition, we've seen that in the near future, but we're not commenting right now.
Yes.
We will be aggressively looking for them.
Okay. Thank you.
Thank you.
Thank you.
One moment for the next question.
Our next question will be coming from William Goodman.
Of UBS your line is open.
Great. Thanks, very much just wanted to ask first about the debt raise pursuant to your credit or requirements.
The plan and timing there and then.
Unknown Executive: And what is the plan and timing there? And then, following completion of the SCE project in accordance with their requirements? What would the inflows and outflows of cash look like there?
Following completion of the SCE project.
In accordance with what their requirements what would the.
Inflows and outflows of cash look like there.
Spencer Doran Hole: So, you know, we outlined a bit of this in the press release. There's not much more we can say beyond what we put in the press release. The process is underway. We've got, you know, strong interests. You know, we'll, you know, we'll obviously be talking about that deal as it comes to fruition, but I think, you know, we kind of have to stick with the info that we put in the press release. You know, the timing of that deal, the, you know, the overall parameters are not really directly linked to when we expect to collect cash from SoCal, to be honest. Fair enough. And then on tax credits, maybe a bit of a technical question here, but what is the main process you intend to use for realizing the benefit of the tax incentives? Are you doing ITC transfers here? And how much are you embedding in the guide?
So we outlined a bit of this in the press release, there is not much more we can say beyond what we've quoted in the press release. The process is underway, we've got strong interest.
Will.
We'll obviously be talking about that deal.
As it comes to fruition, but.
I think we kind of have to stick with that.
Info that we put in the press release.
The timing of that deal.
The overall parameters not really directly linked to when we expect to collect cash from socal not to be honest.
Fair enough and then on.
On tax credits, maybe a bit of a technical question here, but what is the main process or do you intend to use for.
Realizing the benefit of the tax incentives are you doing ITC.
Transfers here and how much are you embedding in the guide.
Okay.
Spencer Doran Hole: So I don't have a figure to give you how much we're embedding in the guide, but we have a combination of strategies. So we've got ITCs that we take directly that benefit our tax line. We have 179D deductions that we take directly that impact our tax line. We have, and we will employ the sale of tax credits in tax credit transfer transactions. Those, in fact, don't go on the tax line
So well have a figure to give you how much we're embedding in the guide, but we've got a combination of strategies. So we've got <unk> that we take directly that benefit our tax line. We have 170, <unk> deductions that we take directly that impact our tax line.
We.
And we will employ the sale of tax credits.
In tax credit transfer transactions those in fact don't go on the tax line.
Spencer Doran Hole: It may be the subject of a future Professor Doran commentary, but we actually reduce the book basis of the assets when we sell those credits. And then we will continue to do traditional tax equity financing as well for the solar and battery assets. We have not included anything related to investment tax credits on the RNG plants in our guidance.
Maybe a subject of a future professor Doron commentary.
We we we actually reduced the book basis of the assets when we sell those credits.
And then we will continue to do traditional tax equity financing as.
As well for the solar and battery battery assets.
We have not included anything related to investment tax credits on the RMG plants and our guidance.
Spencer Doran Hole: So to the extent that that changes based on the recent hearings and some of the recent guidance changes, that would be outside for us. Okay, so just to put a final point on that, what I'm hearing is that you don't need IRA. Sorry, it's IRS clarity on any points of the IRA to sort of hit the guide with respect to whatever's embedded for tax incentives. That's correct. Yeah, that's correct. We I mean, the stuff is still outstanding impacts what might be an upside to our figures. We've been working very hard to make sure we get... Yes, you get the clarification in order to be able to use it down the road.
So to the extent that that material changes based on the recent hearings and some of the recent guidance changes.
That would be that would be upside for us.
Okay. So just to just to put a final point on that what I'm hearing is you don't need IRA.
Sorry.
Rs clarity on any points of the IRA too.
Just sort of hit the guide with respect to whatever is embedded for taxes.
That's correct, yes, that's correct.
The stuff that's still outstanding.
Impacts.
Might be upside to our figures.
Understood Thanks very much.
To make sure we get.
Yes, sure get the clarification in order to be able to use it down a little.
Spencer Doran Hole: Great, thank you. Thank you. One moment for the next question. Our next question is coming from Christopher Souther of B Riley. Your line is open.
Great. Thank you.
Thank you one moment for the next question.
Okay.
Our next question is coming from Christopher <unk>.
B Riley your line is open.
Unknown Executive: Hey guys, thanks for taking my questions here. Um, yeah, just any clarity you can provide on the expected timing around those first two SoCalEd projects. Amen. Any color you can ride, there you'd expect a cash flow.
Hey, guys.
Mike Great questions here.
Yes.
Any clarity you can provide on the.
Expected timing around those first two socal Ed projects.
And then.
And any color you can provide on expectations around.
Unknown Executive: So look, I mean, I don't think we're going to put specific timeframes out there. We're continuously, constantly, daily, hourly working on, you know, getting these substantial checks, substantial completion checklists completed with SoCalEd. And, you know, obviously, there will be announcements when the time comes.
How long after completion.
You would expect the cash flow and from that I think will be helpful.
So look I mean, I don't think we're going to put specific timeframes out there.
Continuously constantly daily hourly working on.
Getting these substantial check substantial completion checklist completed.
With Socal Ed.
Obviously, there will be announcements when when the time comes.
Unknown Executive: Terms of the contract remain 60-day payment terms after we have substantial completion kind of fully declared and agreed by SoCalEd as it relates to the timing of the cash flow. And then just on the development, so yeah, what would be the timing in the development cycle where you'd be looking to sell? Yeah, I'm just kind of curious, how much working capital or project debt we'd be expecting close to that? Or is it kind of earlier before you start?
The.
Terms of the contract.
Main 60 day payment terms after we.
We have substantial completion kind of fully declared an agreed by Socal Ed.
It relates to the timing of the cash flows.
Okay, Great and then just on the development Paul.
What would be the timing and the development telco, where you'd be looking to sell it.
Kind of curious.
How much working capital or project that.
We'd be expecting to commence.
Through to that or is it kind of earlier before you start.
Unknown Executive: Spending on a project that you'd be looking to start. How much, I guess, of that is baked into your EBITDA? Yeah, we're not I mean, we're not breaking out how much of the EBITDA guidance comes from the develop and sell business model. But the strategy, of course, is to get those assets identified and transacted before we start construction. I wouldn't say that that happens 100% of the time; it's certainly our circumstances where we may transact after we've started construction, or maybe you ordered some long-lead time equipment.
Substantial kind of spending.
On a project that you'd be looking histologist.
How much I guess.
Take into your EBITDA guidance for next year, if there's kind of a market.
Continued effort towards towards that space.
Yes, I mean, we're not breaking out how much of the EBITDA guidance comes from the develop and sell business model, but the strategy.
Of course is to get those assets identified and transacted before we start construction.
I wouldn't say that that happens 100% of the time, it's certainly our circumstances, where we may transact. After we've started construction or maybe you ordered some long lead time equipment. As you guys know, we've talked about switch gear and Transformers and since this is pretty much just battery and solar assets.
Unknown Executive: As you guys know, we've talked about switchgear and transformers, and since this is pretty much just battery and solar assets. Yeah, those types of CapEx are particularly relevant here. But beyond that, that's really it, you know, and, as we've disclosed in the past, we've got a solid construction and development financing facility that we use for those assets as we go through the process of executing those development self transactions. Okay, so it would probably be, you know, maybe a little bit of CapEx. Backlog, Yeah. Thank you. Thank you. One moment for the next question. The next question is coming from Kashi Harrison of Piper Samble. Your line is open.
Those those types of Capex are particularly relevant here, but.
But beyond that.
That's really it.
And.
As we've disclosed in the past, we've got a solid construction and development financing facility that we used for those assets.
As we.
Go through the process of executing those develop and sell transactions.
Got it okay. So it would probably be maybe a little bit of capex related to that.
It kind of mostly just through <unk>.
Log on your project side, and how we kind of watch that space.
Yes.
Alright, thanks, guys.
Thank you one moment to the next question. Please.
The next question is coming from Kashi Harrison.
Of Piper Sandler Your line is open.
Unknown Executive: Hey, good afternoon, and thanks for taking my question. So, you know, the first one, I guess, just around the guidance, if we look at Q1 revenues, it's about 15% of the full year. And if we think back to 2023, the original Q1 guidance was also 15%, you know, before you guys were forced to walk that back due to project delays. And so I guess my question is, you know, what's the difference between 2024 and 2023? What gives you the confidence that, you know, you can actually meet expectations this time, just given the similarity and, you know, the really low Q1 as a percentage of the full year? And I have a follow-up question. Yeah. Hey, Kash. This is Mark.
Hey, good afternoon, and thanks for taking my questions.
So the first one I guess just around the guidance if we if we look at Q1.
Revenues, it's about 15% of the full year and if we if we think back.
For 2023. The original Q1 guidance was also 15% before you guys were forced to walk that back due to project delays and so.
My question is what what what's the difference between 2024 and 2023, what gives you the confidence that you can actually.
Meet expectations at this time, just given the similarity in.
The really low Q1, as a percentage of the full year and I have a follow up.
Mark A. Chiplock: I'll just take that. Again, I think the simple answer there is just visibility. You know, I think, you know, what we see in terms of, you know, Q1 and what's available, what's coming out of our, which is pretty much all contracted backlog, it's, you know, it's just really our confidence in our ability to execute on that contracted backlog during Q1. So, there's, we're not expecting much of anything from, you know, the conversion of awards that we would then need to Yeah, what I might add there, too, is that last year, at this particular time, we were counting more projects to move from the awarded to the contracted category.
Yes.
This is mark I'll, just take that again I think the simple answer there is just visibility.
Yes, I think what we see in terms of Q1, and what's available and what's coming out of our which is pretty much all contracted backlog.
It's just really our confidence in our ability to execute on that contracted backlog during Q warrants others, but we're not expecting much of anything from the conversion of awards that we would then need to execute on the implementation. So.
We feel pretty good about.
Although it is slower than normal.
Visibility gives us the confidence thank you Robert.
Yes, I might add there too is that last year.
This particular time, we were counting more projects to move from the awarded to the contracted category.
Mark A. Chiplock: And this year, about 75% of our total revenue is already contracted. That's why it's important to execute on the contracted backlog that we have. And the other one, don't forget that we took off $40 million from this quarter to last year for the acceleration. Once we started focusing on accelerating the construction of some projects, things began to happen, and that helped the last quarter, and I think it's going to help as we go through this year. But the most important thing is we do not have, we don't count for as many contracts to go from the award category to contract it in order to make Got it. I'd appreciate the caller there. And then my follow-up question is surrounding the FD project. I imagine you guys are frustrated that it's taken so long, but it is now, I think, 18 months delayed just based on the potential summer COD versus, I want to say, the original late 2022 COD.
And this year, but sitting over 75% of our total revenue is already contracted and Thats why it was important to execute.
When the contract.
Contracted backlog.
And the other one don't forget that we did.
Jake.
$40 million from this quarter to last year for the acceleration once we started focusing in accelerating the construction of some projects things began to Catherine.
And Thats helped last quarter and I think it's going to help and as we go through this year, but the most important thing is we do not have but we don't count for as many contracts will go from the awarded category to construct it and in order to make our plan this year.
Got it got it I appreciate the color there and then my follow up question.
Surrounding the FTE project.
And you guys are frustrated that it's taking so long, but it is now I think 18 months now delayed just based on the potential summer COPD versus I want to say the original a late 2022 CRB and so similar question.
Unknown Executive: And so, you know, a similar question of, you know, you know, what gives you the confidence that, you know, it is a summer date, in fact, and we won't see additional delays. You know, I would only jump in with because I'm kind of personally involved in all of the calls that are taking place. So we've got a lot of heavy attention being paid to the day in, day out commissioning efforts going on at the site. Not only is it the team on the ground from Ameresco and our major subcontractors, but also at the executive level of each of those subcontractors, as well as at the executive level of SoCalEd, there's a tremendous amount of momentum on getting those two projects through the testing, through the, you know And the visibility is definitely there.
What gives you the confidence that it is a summer date in fact, and we won't see.
Additional.
<unk>.
I would only I would only jump in with because I kind of personally involved in all of the cost.
Were taking place so we've got.
A lot of heavy attention being paid to the day in day out commissioning.
Going on the site.
That not only is it the team on the ground from <unk> and our major subcontractors, but also at the executive level of each of those subcontractors as well as the executive level of Socal, Ed There's a <unk>.
Tremendous amount of momentum on getting those two projects through the testing through the through the open items on the checklist for substantial completion.
As the visibility is definitely there.
Spencer Doran Hole: And, you know, I think we do feel comfortable that those are really close to being completed and being completed safely. Appreciate it. [inaudible] And our next question is coming from Julien. Dulum, Bank of America, your line is open. Hey, good afternoon, team.
I mean, I think we feel we do feel comfortable but that those are those are really close to being completed.
And being completed safely.
I appreciate it.
Yes.
Thank you.
Question.
And our next question is coming from Julien.
Do them.
Bank of America. Your line is open.
Unknown Executive: Thank you guys very much for your time. I appreciate it. I hope that you guys can hear me.
Hey, good afternoon. Thank you guys very much for the time I appreciate it.
Unknown Executive: You're very welcome. Hey, hey. Thank you, George. How are you doing?
You guys can you hear me.
Yes, hi.
George P. Sakellaris: Look, I just want to talk about the debt, right? You mentioned in the prepared remarks that you were roughly three times below the covenant of 375. You also talked about effectively deleveraging through the course of receiving some of these SoCal payments here. How do you think about the cadence of that leverage through the course of the year? How do you think about where you want to end the year?
Thank you George Thank you Doron.
I just talk about the debt you mentioned in the prepared remarks talking about there being roughly at three times below the covenant of 375, you also talked about effectively deleveraging through the course of receiving some of the socal payments here, how do you think about the cadence of that leverage.
The course of the year, how do you think about where do you want to end the year.
Spencer Doran Hole: And then related, how do you think about the force majeure related to SCE? Do you think you can offer up any comments about that 90 million dynamic? I mean, again, I appreciate that this might be a little tricky, but really focusing on that deleveraging commentary. Yeah, sure. I mean, I think the deleveraging, so we've all kind of circled around the amount of unbilled that's stored is still sitting there. We've got to get these projects to substantial completion, collect the amounts after 60 days, and see those go to pay down that corporate leverage, especially our revolver. The third project finishing later in the year, obviously, you'll see that substantial completion payment, and the final acceptance payments coming in. You know, I don't think I'm putting a particular time period on it.
And then related how do you think about the force majeure related to SCE did he says that you can offer up any comments about that $90 million dynamic I mean again I appreciate that this might be a little tricky, but really focusing on that deleveraging commentary.
Yes, sure I mean, I think the deleveraging. So we are all kind of.
Circled around the amount of Unbilled that Stuart is still sitting there we've got to get these projects to substantial completion collect the amounts after 60 days and see those go to pay down that corporate leverage, especially our revolver.
The.
The third project, finishing later in the year, obviously, you'll see that substantial completion payment the final acceptance payments coming in.
I don't think im putting a particular.
Spencer Doran Hole: I'm not going to say it's going to happen in Q2 or Q3 or Q4. I think it's going to kind of spread itself across the rest of the year as we delever over the course of the year. That's, that's the way that I would answer that. And then, you know, Frankly, on the liquidated damages and the force majeure claims, there's, there's, there's not really any new information. You know, we're continuing to exchange information with SoCalEd, and that's what we've been doing, and we're continuing to do it. And the, and the hard yards on that will probably come after we finish, you know, after we finish the projects. Yeah. I got it.
Time period on it I'm not going to say, it's going to happen in Q2, or Q3 or Q4, I think it's going to kind of spread itself across the rest of the year as we de lever over the course of the year.
That's the way that I would answer that and then frankly.
Frankly on the liquidated damages in the force Majeure claims.
There's not really any new information, we've continuing to exchange information with Socal, Ed and that's what we've been doing and we're continuing to do it in the hard yards and that will probably come after we finish after we finish the projects.
Got it alright, so right. So we really don't expect any updates until after the summer or something like that on the force majeure.
Liquidity at birth payments here, and then on the specifics of where you're targeting leverage to be just.
So there are a bunch of puts and takes here by the end of the year any specific metric that you would offer up relative to three today at three X today that you would kind of aspire to be.
Spencer Doran Hole: All right. So right. So really don't expect any updates until after the summer or something like that on the force majeure liquidity or, you know, payments here. And then on the specifics of where you're targeting leverage to be just, you know, there's a bunch of puts and takes here by the end of the year. Any specific metric that you would offer up relative to three today at 3x today, that you would kind of aspire to be. So the short And the primary reason is that George talked about being opportunistic in Europe.
So is it a short answer Julian is no I, probably won't put that metric out there and the primary reason is because George talked about being opportunistic in Europe, if something pops up.
And we wanted to make a small acquisition in Europe or something else happens then.
We want to be able to use the corporate.
Resources to actually go after.
Transactions and ideas that will help us grow the business. So I don't I don't think it's appropriate for us to kind of put a target out there.
Spencer Doran Hole: Right. If something pops up and we want to and we want to go make a small acquisition in Europe or something else happens, then, you know, we want to be able to use the corporate resources to actually go after transactions and ideas that will help us grow the business. So I don't, I don't think it's appropriate for us to kind of put a target out there.
Sure.
The numbers are pretty clear as far as the way that the socal will reduce that leverage.
If there is anything that we do that will increase the leverage it's going to be something we'd be talking about right, whether it's asset opportunities or M&A opportunities or something along those lines, but no particular target Julian.
Spencer Doran Hole: You know, we've, the numbers are pretty clear as far as the way that SoCal will reduce that leverage. If there's anything that we do that will increase the leverage, it's going to be something we'd be talking about, right, whether it's asset opportunities or M&A opportunities or something along those lines. But no particular target, Julie.
Thank you and one moment to the next question.
Our next question is coming from Craig Irwin of raw.
Rob Kain.
Please go ahead.
Thanks for taking my question.
George looking backwards at the times of Covid.
Desperately hope forward execution enables a large part of the.
Significant appreciation in your stock.
Right.
Back to that time a lot of this.
What is your ability to move your resources.
Unknown Executive: Thank you. And one moment for the next question. Our next question is coming from Craig Irwin of Rothkamp. Go ahead. Thanks for taking my question. George, looking back to the times of COVID, when you were very,...
From prioritizing.
Backlog contracted backlog.
<unk>.
Houston.
<unk>.
Can you maybe explain for us whether or not.
George P. Sakellaris: Looking back to that time, a lot of moving your resources away from prior, Backlog, and Contracted Backlog. Can you maybe explain for us whether or not this was a factor in your fourth quarter upside? Howard Porter, [inaudible] or, like we've seen over the last great questions, Craig, but this year, to the management team and to the board, I told them, look, guys. The development, we're developing business at a pretty good clip. We have to execute, execute, and execute. And when we reorganize the company a little bit in order to take advantage of the people that we have around the company, we reduce it by a couple of units, so we have more interaction between the management teams right now.
Here in Europe.
Our upside.
Howard your employees positions in the current quarter.
Sure.
Their historic mode are you leaning in a little bit maybe.
Some upside over the course of this year.
Given that the pipeline and backlog and everything is incredibly healthy there.
Or is this sort of more of an even distribution.
Over the last 10 years.
Yes.
Great questions.
Greg but.
This year the management team and the board I told them look guys.
The development redevelopment business at pretty good clip, we have to actually execute.
<unk> executed and when.
When we reorganized the company nail beds in order to take advantage of.
<unk>.
The people that we have around it and I know the company, we reduce it by a couple of units. So we have more interaction between the management teams right now.
George P. Sakellaris: Taking advantage of some of the expertise we have around the company, by having fewer units, we can transfer that knowledge from one group to another, have more purchasing being done through the headquarters. So we're saving money on the purchase of equipment. And the other thing, sometimes a lot of people focus on smaller projects, and maybe they are not in our wheelhouse, within our wheelhouse.
Thank you in advance.
Vintage of some of the expertise we have around the company by having less units, we can transfer that knowledge from one group to another.
I have more.
Sure just in being done through the headquarter, so we save them money in the purchase.
And the other thing sometimes people when they focus on smaller projects and maybe they are not in our wheelhouse within our wheelhouse. So I'd say, we've got a focus in larger project and two the ones that we have a competitive advantage.
George P. Sakellaris: So I'd say we got to focus on larger projects, and on the ones that we have a competitive advantage on. And those are the ones that are within our expertise. And that's why, in particular, I mentioned the federal government.
And those are they want us.
Our expertise and Thats why I, particularly.
You mentioned.
George P. Sakellaris: We have over a billion-dollar backlog just on that one alone. And for institutional accounts, again, the backlog is very good. So the bread and butter business or the protracted backlog, which is energy efficiency, which is our core business, we have the organization refocused a lot on that. Because what happens once you pivot into some of these new strategies, new technologies, everybody is rushing to that. So we want to take it back and say, hey, guys, this is what brought us here, and I want you to start focusing on this particular project. It has an impact already.
The federal government.
Over $1 billion backlog just on that alone and they each addition is.
Accounts again, the backlog is very good.
<unk> backlog, which is the energy efficiency with our core business.
The organization refocus a lot all of that because what happens once you pivot and some of these new strategies, new technologist everybody's rushing into that so we wanted to have taken it back and say hey, guys. This is what brought us here and I want you to start focusing.
Yes.
On this particular project.
George P. Sakellaris: We started that process, I would say, late last summer, and we've seen some good results coming out of it. Yeah. I would only add, Craig, I think that the comparison to COVID is an interesting one. It's probably not quite as drastic in terms of the reallocation of resources as what we saw in COVID because of the fact that the business development world hasn't kind of come to a halt like it did early in COVID.
It has an impact already we started that process I would say late last summer and.
We've seen some.
Good results coming out of it.
I would only add Craig is I think that the comparison to covert it is an interesting one it's probably not quite as.
Drastic in terms of the reallocation of resources of what we saw on Covid because of the fact that the business development.
World Hasnt kind of come to a halt like it did early in Covid.
Spencer Doran Hole: And for that reason, what we're focusing on is making the business development process much more efficient. And then the operational efficiency of getting proposals into awards, high-hit rate projects, and then converting awards to contracts. Certainly, you'll see some more resources going into execution because we've got the management team focused on execution and reducing off X and so on and so forth. But it's a good comparison.
And for that reason, what we're focusing on is making the business development process much more efficient and then the operational efficiency of care.
Proposals into awards high hit rate projects, and then and then converting awards to contracts.
Youll see some more resources being going.
Going into execution, because we've got the management team focused on execution, and reducing opex and so on and so forth, but it's.
It's a good comparison is not quite as extreme.
Unknown Executive: It's not quite as extreme. Thank you. So my second question is about margin and www.youtube.com.uk. Your growth in contracted backlog is really impressive. Unknown Speaker, Unknown Speaker, [inaudible] So can you maybe help us understand if we are seeing compression from the increased size of the large..., may be lower Mars.
Thank you. So my second question is about margin in backlog, particularly contracted backlog.
So your growth in contracted backlog is really impressive.
EBIDTA guidance lagging versus this growth.
Can you maybe help us understand if we are seeing.
Aggression from the increased size of large projects and increased contribution from large projects and maybe lower margins on energy storage projects.
Spencer Doran Hole: The profitability of that backlog... or Transcribed by https://otter.ai, I'll answer that, Craig. So I think that if you look at the awarded backlog and the contracted backlog conversions during the year, the entirety of the year of 2023, there will be no fundamental changes in the margins. I think Q4 certainly has some larger awards in it, where the margins on some of the solar EPC, especially in Europe, are a little tighter than what we normally would go after.
The profitability of that.
Backlog and pipeline.
Or.
Is this something Thats really just a short term item that will pass.
Ill answer that Craig So I think that.
If you look at the awarded backlog and the contracted backlog conversions during the year.
Tire entity of the year of 2023.
No fundamental changes in the margins.
I think Q4, certainly had some larger awards in there where the.
The margins on some of the solar EPC, especially in Europe are a little tighter than what we normally would go after again very very good operating leverage for that because it doesn't require a huge amount of resources from us because we have a JV partner that manages the execution, but.
Spencer Doran Hole: Again, very, very good operating leverage for that because it doesn't require a huge amount of resources from us because we have a JV partner that manages the execution. But that, to me, actually feels like the latter part of your question sort of, you know, maybe a temporary jump into that because we did sign a couple of, you know, a few pretty sizable projects in Europe in the fourth quarter that probably would have had that impact. But I don't see that necessarily impacting the long term.
That to me.
Actually feels like the latter part of your question sort of.
Maybe a temporary jump in that because we did we did sign a couple of them.
A few pretty sizeable projects in Europe in the fourth quarter.
That probably would have had that impact, but I don't see that necessarily impacting long term and in fact.
Spencer Doran Hole: And in fact, since signing those contracts, George and I have been back to that team on the origination and, you know, preaching the same thing we're preaching in the US: you need to go with the higher margin, higher hit rate projects. We've got a lot of great stuff in the backlog, but let's focus on the really high quality stuff going forward. Great. Well, if I can say congratulations on that success in Europe, George, the 15 plus years I've known you, trying to figure it out. Unknown Attendee, Ameresco, figure out that formula.
Post signing those contracts George and I had been.
Back to that team on the origination and.
Preaching the same thing we're preaching in the U S. You need to go with the higher margin higher hit rate.
<unk>, we've got a lot of great stuff in the backlog, but let's focus on the really high quality stuff going forward.
Okay, great well, if I can say congratulations for that success in Europe.
The 15 plus years I've known you.
<unk> been trying to figure out how to get a business, there and growing and it's nice to see.
<unk>.
Figure out that formula.
Craig Edward Irwin: Real success, you know driving. Thanks, Craig. We are in a good place, I would say. Thank you. One moment for the next.
Real success.
<unk> revenue and profits over there so congrats.
Thanks, Greg Thank you Greg.
We are agreed to pay a good place I would say.
Thank you.
Thank you one moment for the next question.
Unknown Executive: Our next question is coming from Tim Mulrooney of William Blair. Your line is open. Yeah, thank you. I just have a couple industry questions as it relates to energy storage. We recently read an article about Duke Energy decommissioning cattle battery systems at Camp Lejeune military base. We know you do work for military bases. Do you think we'll see more of this type of action across the government space?
Okay.
Our next question is coming from Tim Mulrooney of William Blair. Your line is open.
Yes. Thank you I just have a couple industry related questions as it relates to energy storage.
We recently.
Read an article about Duke energy decommissioning cattle battery systems at Camp Lejeune Military base, we know you didn't work for military bases.
Do you think we'll see more of this type of action across the government space.
Unknown Executive: You know, how do you think that might impact your business, if at all? So, um, I'd say that there probably will be more, um, you know, action similar to that as the, uh, national security concerns start to rise, no different than the, uh, you know, 5G network stuff that was going on, right, uh, a couple of years ago. That being said, you know, the primary concern doesn't really have to do with, you know, the CATL battery containers or the, uh, quality of their systems. They're still one of the largest manufacturers of those in the world.
How do you think that might impact your business if at all.
<unk>.
So.
I would say that there probably will be more.
Action similar to that as the National security concerns start to raise no different than the <unk> network stuff that was going on right. A couple of years ago that being said the primary concern doesn't really have to do with.
The <unk> battery containers or the quality of their systems. There is still one of the largest.
Manufacturers of those in the World and in fact, most battery manufacturers used ourselves, it's really about the software and the battery management system, the BMS systems right and.
Unknown Executive: And in fact, most battery manufacturers use their cells. It's really about the software in the, uh, battery management system, the BMS systems. And, um, I think that, you know, CATL is going to need to respond and figure out a way to, uh, ensure that they can get the federal government comfortable with what the BMS systems are.
I think that you know.
<unk> is going to need to respond and figure out a way to to ensure that they can get the federal government comfortable with what the BMS systems are and so I think theres more to come on that space importantly from our perspective.
Unknown Executive: And so I think there's more to come in that space. Uh, importantly, from our perspective. We are agnostic to suppliers. CETL is not the only game in town.
We are agnostic to suppliers.
<unk> is not the only game in town, we're deploying batteries from numerous other manufacturers in our projects and things that are in our backlog, we're bidding other manufacturers into the into the.
Unknown Executive: We're deploying batteries from numerous other manufacturers in our projects and things that are in our backlog. We're bidding other manufacturers into these projects, and those just don't. They simply don't carry the same concerns.
These projects in.
Those are those just don't they simply don't carry the same concerns.
Unknown Executive: Yeah, great. And what I might add, once this came to reality, I went back, and I checked with Nicole, who runs the federal group, whether we have any of the catalog batteries on the military bases. We have none.
Great and what I might add once this game too.
Reality, I went back and I check with Nicole that runs the federal group, whether we have any.
Capital batteries with the military basis, we have none.
George P. Sakellaris: That's interesting. I appreciate all that clarification. That's really helpful. Sticking on batteries, you know, we've heard lithium ion phosphate batteries come down quite a bit.
That's interesting I appreciate all that clarification that that's really helpful.
Taking on batteries.
Heard lithium ion phosphate batteries come down quite a bit.
Unknown Executive: Even since you're the prices, that is, since your last earnings call. I guess my question is, are you seeing that as well? And can you talk about what kind of impact a greater availability of batteries for energy storage or lower costs for these batteries might have on the project economics? Yeah, certainly positive moves in the economic benefits, you know, whether it ends up, I mean, you know, ultimately all this ends up benefiting the rate payers in the utility districts where these utilities are putting the batteries, right? And, you know, the utilities are basing their rates on either a long-term capacity contract that they have with us when we own the batteries, or it's just the EPC price and the cost of the batteries. Okay, so, so [inaudible] Okay, so, so. I mean, it certainly gives a little bit more room. Yeah, it allows us to sharpen our pencils on contingencies that we have to include, right? That's, you know, that's, that's most certainly the case. Okay, okay. Thanks so much. And our next question is coming from Pavel Molchanov.
Even since you are the prices that is even since your last earnings call.
I guess my question is are you seeing that as well and can you talk about what kind of impact.
Greater availability of batteries for energy storage or lower cost for these batteries might have on the project economics for you and your customer.
Yes, yes, certainly positive positive moves in the.
The economic benefits, whether it ends up I mean ultimately.
Similarly, all this ends up benefiting the ratepayers and the utility districts, where these utilities are putting the batteries Brian.
The utilities are re basing either long term capacity contracts they have with us when we own the batteries or it's just the EPC pricing in the cost of the batteries.
If it's coming down those rates come down.
And.
It really helps helps them pass those savings onto their ratepayers.
Okay. So so so input prices here doesn't really impact project economics for you it's more about the end customer.
Alright, guys.
It certainly gives us a little bit more room, yes, it allows us to.
To sharpen our pencils on contingencies that we have to include right.
<unk>.
No.
Most certainly the case.
Okay. Okay. Thanks, so much.
Yes.
Thank you one moment for my question.
Yeah.
And our next question is coming from Cornell.
Unknown Executive: Raymond James, your line is open. Thanks for taking the question. You have a lot of interesting businesses in Europe, except one. I don't believe you've ever operated an RNG plant in Europe. Would you be interested in either developing or acquiring R&G assets in Europe? Actually, we are looking at some. You're right, though.
Mark Savant.
Raymond James Your line is open.
Thanks for taking the question.
You have a lot of interesting businesses in Europe.
One I don't believe you've ever operated and RMG plant in Europe would you be interested in either developing or acquiring.
R&D assets in Europe.
Okay.
Actually we are looking at some you're right, though we haven't done one of them, although there again, but.
George P. Sakellaris: We haven't done one of them over there yet, but we have hired a business developer to go after R&G facilities in Europe. And don't be surprised; we might have some partners. But rather than, we're not a bank to just buy or operate in assets unless we believe we can add some value to them and get a good return. But we are looking, no question about it.
We have hired.
Business developer to go after R&D facilities in Europe.
And don't be surprised that we might have some partners but.
Rather than we're not a bank to operate to.
Just by operating assets are less.
We believe we can add some value to it and get a good return.
We are looking no question about it.
George P. Sakellaris: Actually, two days ago, I approved a particular proposal that we are making in Europe for a loanless business. Kind of a big, big picture question about the economics of energy efficiency, you know, we've talked about through the past two years. Constant escalation in power prices and the Incentive for Building Owners to Invest in Energy Efficiency.
Excellent.
Two days ago, I approved particularly.
Particularly because of that we are making in Europe, along those business.
Okay.
Big Big picture question about.
The economics of energy efficiency, we've talked about.
Through the past two years.
<unk> escalation in power prices and the incentive for building owners to invest in energy efficiency is that economic rationale.
George P. Sakellaris: Is that the economic rationale: the best it's ever been right now? I would say so, because energy prices are going up, even though inflation is going up, there's still a value proposition, and that's why in my commentary, in my script, I said energy efficiency doesn't need any government incentives whatsoever, but with 179, it helps, and that's why I've been preaching to the world that 30% of energy can be saved economically, and it pencils out. So it's And the other thing that's happening, the technological advances that we have, they're bringing the cost down. So it's, It's great, and it's getting greater, I would say. Okay, thanks very much.
Is the best it's ever been right now.
I will say, so because energy prices are going up even though inflation has gone up but theyre still in the value proposition and that's why on my commentary my script I said.
Energy efficiency than any government incentives whatsoever, but once they are in denial. It helps.
It helps.
And.
That's why I've been preaching to the world.
30% of the energy can be saved economically and it pencils out.
And what the other thing thats happening in the technological advancements that we have in bringing the cost down so it's.
Yes.
It's great and it's getting greater I would say.
Okay. Thanks very much.
Unknown Executive: Thank you. One moment for the next question. Our next question will be coming from Craig Shere of Tucci Brothers. Your line is open. Good afternoon. Thanks for fitting me in. A couple quick ones. First, last quarter, you mentioned similar supply chain and project execution issues but noted that Europe had been largely exempt from those. Is that still the case?
Thank you one moment for the next question.
Our next question will be coming from Craig Shere Tuohy Brothers. Your line is open.
Good afternoon, and thanks for fitting me in.
A couple of critical ones for first loss.
Last quarter.
You all mentioned similar supply chain and project execution issues with noted that Europe had been largely exempt from that.
Is that still the case.
Unknown Executive: It is. Yeah, Europe has still had really good availability of solar modules. We, you know, of course, we were all kind of spooked by the Red Sea, but it ended up kind of not being much at all. And we have a supply management consulting business in the UK as well, and I talk to the head of that business quite often about what's going on with the natural gas and power supply markets and and what happened with the Red Sea supply chain. And yeah, not impacting our business a whole lot. It's been, it's been good.
It is yes, Europe has still been really good availability of solar modules.
Of course, we're all kind of spooked by the Red Sea, but it ended up kind of not being much at all and we have a supply management consulting business in the UK as well and I've talked to the head of that business quite often about what's going on with.
Natural gas and power supply markets.
And what happened with the Red Sea on supply chain, yes.
A whole lot impacting our business it's been.
George P. Sakellaris: Right. And staying on Europe a little, George, as you talked about more internal communication, centralized purchasing, increasing project sizing, how do you see those kind of internal, you know, initiatives playing into your European strategy? Yeah, I mean, the short answer to that is me, because George has me, you know, kind of directly involving myself in the execution of the operational aspects of a lot of what's going on in Europe.
It's been good.
And staying on Europe, a little.
George as we talked about more internal communication.
Centralized purchasing increasing project sizing how do you see those kind of internal initiatives playing into your European strategy.
Go ahead Doug.
The short answer to that is.
Because George has me.
Kind of directly involving my second and the execution of the operational aspects of a lot of what's going on in Europe, and those some of that many of those centralized functions or things that <unk> been developing over the last couple of years on the procurement side enterprise risk management et cetera risk Review committee so.
Spencer Doran Hole: And some of those centralized functions are things that, you know, I've been developing over the last couple of years on the procurement side, enterprise risk management, etc., risk review committees. So we have, we, you know, we have mechanisms in place to ensure that, you know, these large projects go through risk reviews that involve the folks in the US who have been involved in the large projects. And also that we can kind of capitalize on these efficiency measures, you know, these operational efficiency measures that we're implementing here. We're still a very flat organization. You know, we've got a lot of direct involvement directly with the gentleman who runs our Italian business, Intercoast, directly with the JV partner, directly with the guy who runs our UK business. We're in constant conversation. Thank you. One moment for the next question.
We have we have mechanisms in place to ensure that these large projects go through risk reviews that involve the folks in the U S who have been involved in the large projects and also that we can capitalize on these efficiency measures. These these operational efficiency measures that we're implementing.
Here, we're still a very flat organization.
Got a lot of direct involvement directly with the.
The gentleman, who runs our Italian business Center coast, the directly with the JV partner directly with the Guy who runs our U K business.
We're in constant conversation.
Okay.
Thank you one moment for the next question.
Unknown Executive: And our next question is coming from Benjamin Kallo of Beard. Your line is open. Hi, thank you. Good evening.
And our next question is coming from Benjamin Palo of Baird. Your line is open.
Alright, Thank you good evening.
Unknown Executive: If possible, could you just kind of give us a kind of back of the envelope or any kind of color on the assets you're adding to the balance sheet this year? What kind of EBITDA do you project to layer on for next year when they're all complete? So, I don't think I've got a really good guide.
If possible could you just tell us.
Great.
The envelope, where he could cover on the assets to the balance sheet. This year.
EBITDAR.
Your project to layer on for next year, we were all completed.
So I don't think I've got a really good guide we can probably reiterate some of the guidance. We've provided in the past as far as EBITDA per megawatt with respect to solar and battery right. We're talking about couple of hundred thousand dollars per megawatt mostly solar.
Spencer Doran Hole: We can probably reiterate some of the guidance we've provided in the past as far as, you know, EBITDA per megawatt with respect to solar and batteries, right? We're talking about a couple of hundred thousand dollars per megawatt, mostly solar. I think the range for renewable natural gas still kind of remains valid there on the EBITDA side, 750,000 to call them that, a million and a half if RIN prices are doing great. You know, but those, you know, based on those particular cadences, I think that should give you some idea of the breakdown. And you probably have the megawatt numbers that we're looking at, you know, the three RNG plants. I think we have a total of, is it about 20, 20 megawatts of the new megawatts going in this year are RNG.
I think the range for the renewable natural gas still kind of remains valid there on the EBITDA side 750000 to call them.
And I have with RIN prices are doing great.
But but those based on those.
Those those particular cadence as I think that.
Should give you some idea.
The breakdown.
You probably have the megawatt numbers that we're looking at the three RMG plants.
I think we have a total of about.
2020 megawatts of the new megawatts going in this year is RMG, yes, the rest of it is.
Spencer Doran Hole: Yep. The rest of it is kind of solar and battery, with that 200k number being a good, good back of the envelope number, like you said, Ben. And, thank you. Have you guys changed any way that you contract or think about... doing energy storage or batteries, developed either on the balance sheet or for customers because of SoCalism?
Solar and battery with that 200, K number being a good.
Good back of the envelope like you said Ben.
Thank you have you guys.
Any way that you contract.
No.
Energy storage or batteries.
Develop either.
Our balance sheet or corporate customers because look so colors. Thank.
Spencer Doran Hole: Thank you. Actually, I think the contracting framework as it relates to the things that we think about, you know, if it's an EPC project, obviously, we're being very, very tight with working capital. Now, we've got a lot of guidelines out to the business units to minimize the amount of working capital that is associated with any project where we do EPC. And then, secondly, from an execution perspective, you know, clearly a lot of heavier focus up front on the commissioning process. And that feeds into supplier selection. But as far as, you know, markets where we're developing the types of assets that we're developing, we're still kind of pulling things in from multiple jurisdictions. And economics and risk will determine whether we end up putting those in kind of a develop and sell category or put them on the balance sheet.
Thank you.
Actually no I think the.
Contracting framework as it relates to that the things that we think about if it's an EPC project, obviously, we're being very very tight with working capital now we've got a lot of.
A lot of guidelines out to the business units to minimize the amount of working capital that is associated with any project, where we're doing EPC.
And then secondly from an execution perspective, clearly a lot of heavier focus upfront about the commissioning process and.
And that feeds into supplier selection.
But as far as markets, where we're developing types of assets that we're developing we're still kind of pulling things in from multiple jurisdictions and economics and risk will determine whether we end up putting those in kind of a develop and sell category or put them on the balance sheet. So that's probably the best.
Spencer Doran Hole: So that's probably the best description I can give you, Ben. Great. Thank you, guys. Thank you. This does conclude today's conference call. You may all disconnect. Thanks for watching!
Description I can give you.
Great. Thank you guys.
Thank you.
This does conclude today's conference call you may all disconnect.
Okay.
[music].
Okay.
[music].
Okay.