This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: Good day and thank you for standing by. Welcome to the first quarter of 2024 Amerisco Earnings Conference Call. At this time, all participants are in listen-only mode. After this presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference will be recorded. I would now like to hand the conference over to your first speaker today, Lilla Dalyne, Senior Vice President Marketing. Please go ahead.
spk06: Thank you and good afternoon, everyone. We appreciate you joining us for today's call. Joining me here are George Sackolaris, Amerisco's Chairman, President, and Chief Executive Officer, Doran Holt, Executive Vice President and Chief Financial Officer, and Mark DiPlost, 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 the reconciliations to these measures in our supplemental information. I will now turn the call over to George. George?
spk13: Thank you, Lila, and good afternoon, everyone. We are pleased with our first quarter performance as the team's focus on execution growth across our four business lines, as well as significant results in our business development activities. The actions we have taken to optimize our organization are already driving a positive impact across our company and positioning Amoresco to capture the substantial opportunities in front of us. First quarter revenue exceeded our guidance, led by strong execution for our projects group, and complemented by growth in our other business lines. Additionally, the momentum of business development has continued to show strength, with new project wins and energy asset development activity laying the foundation for good, profitable growth. Our focus in cash generation is also yielding positive results, as Dorian will discuss later in this call. The current market demand for energy efficiency and renewable energy solutions remains robust across our technologies, geographies, and customer base. But this demand is continuing to stretch industry supply chains, create tight labor markets, and generally lengthen overall timetables. I am pleased to say that these industry issues seem to be leveling out. And we remain cautiously optimistic. And as we discussed last quarter, Amoresco is adapting to the new industry environment and a tremendous growth opportunities in front of us. We continue to refine our approach to drive increased win rates, expand project margins, and accelerate the speed of implementation. We have reorganized our corporate structure to bring more uniformity and scalability across all of our geography and business units. We have also focused our business development efforts on larger contracts in our core areas of expertise and our traditional customer base. This is already helping us to increase our project win rates. And we are seeing early signs of improving gross margins in our total project backlog. We have, however, anticipated the continuation of these industry challenges in our approach to forecasting and guidance. And with our solid start to the year plus the visibility from our contracted backlog and our energy asset and O&M revenue streams, we are pleased to reaffirm our full year guidance. I will now turn the call over to Doran to comment on our financial performance and outlook. Doran?
spk12: Thank you, George, and good afternoon, everyone. For additional financial information, please refer to the press release and supplemental information that was posted to our website after the market closed today. We are off to a good start this year with total revenues growing 10% to $298 million and with each of our four business units, business lines experiencing growth. Our projects business grew .5% reflecting our focus on faster implementation and conversion of our backlog. While market challenges remain, we continue to take steps to succeed in today's operating environment. Energy asset revenue grew 6% largely due to the greater number of operating assets compared to last year, improved production, as well as higher-ridden prices. We brought an additional 13 megawatts of assets into operation in the first quarter, adding to our large and growing operating base of 518 megawatts, which we expect to provide decades of profitable revenue to the company. Our O&M business had a very strong quarter, growing 14% due to favorable timing on some of our long-term contracts. Our other line of business grew 3% as strong consulting revenues offset continued softness in our integrated PV business. Gross margin of approximately 16% dipped as -than-normal project cost adjustments during the quarter outweighed higher margins in the O&M business. Enhancing gross margins is a key priority for us, and as George mentioned, we are seeing early signs of improved gross margins in our project backlog. That said, we continue to emphasize driving incremental gross profit dollars and controlling operating expenses, in other words, using our operating leverage to maximize EBITDA. We've been laser-focused on increasing the efficiency of our business development process, a key controllable component of operating expenses. In the first quarter, our revenue growth, as well as cost savings and operating leverage, drove adjusted EBITDA growth of 13% to $30.8 million. As George noted, our business development activity on both the project and asset side was very healthy during the first quarter. The company's total project backlog exceeded $4 billion for the first time in our history, growing 36% -on-year and 4% sequentially. This growth was led by our contracted backlog, which reached almost $1.5 billion and grew 45% -on-year and 10% sequentially. Our energy asset business also had a successful quarter of new development activity, ending the quarter with over 750 megawatts in net assets and development. We added over 50 megawatts during the quarter, including the 40 megawatt biofuel facility in Maui mentioned in the press release. This asset represents our fourth award with HECO and is one of many projects and assets we are executing in the state of Hawaii. Turning to our balance sheet and cash flows, we ended the quarter with approximately $80 million in cash and corporate debt of approximately $280 million. Our debt to EBITDA leverage ratio under our senior secured credit facility was 3.0 times and remains below our bank covenant level of 3.5 times. Our energy asset debt advance rate, which you will remember is our total energy asset debt divided by our energy asset book value, remains at a very conservative level in the low 70% range. Importantly, our access to energy asset capital remains excellent with many financing options available. An example of our collaborative approach to financing was our partner Republic Services investment in our under construction Roxana RNG plant, allowing them to take a strategic minority interest in addition to providing site access and gas supply. Our energy assets remain highly attractive to many financing parties interested in teaming with MRSCO given our proven capabilities. In addition, we continue to pursue our develop and sell business model for a portion of our energy assets in development. Under this model, once a transaction is executed, we would convert the assets into project and O&M revenue streams without the need for MRSCO to provide the permanent capital investment or to raise additional asset debt. Our cash flows continue to be strong with positive adjusted cash flow from operations of over $40 million during the quarter. Our eight quarter rolling average, which best represents our implementation cycle, reached almost $30 million. In our supplemental slides, we highlight the increased momentum we've seen in the rolling cash flows, and we expect both cash flow metrics to continue to improve, especially as we bill and collect on the SoCal Ed battery projects. Speaking of SoCal Ed, we've completed performance testing and are working on the final checklist for substantial completion for two of the three projects. The third project, which was more significantly impacted by the 2023 rainfall, is still expected to reach substantial completion this summer. A solid start to our year, together with our visibility from our project backlog and energy asset revenues, supports our confidence that 2024 will be a year of strong growth for MRSCO. As George mentioned, we are reaffirming our full year guidance, which anticipates revenue and adjusted EBITDA growth of 20% and 38% at the midpoints of our ranges, respectively. We continue to expect to place approximately 200 megawatts of energy assets in service during 2024, including our large Capono asset, United Power battery assets, and three RNG plants, one of which went COD already in January. You can find more details on our 2024 guidance in our press release. Now I'd like to turn the call back over to George for closing comments.
spk13: Thank you, Doran. MRSCO is off to a solid start with a commitment to profitable execution and growth. The company remains extremely well positioned to take advantage of the tremendous opportunities on the horizon in both our domestic markets and in Europe. Our top priority for 2024 remains execution and cash flow generation. 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.
spk04: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please leave yourself to one question and one follow-up. Please stand by while we compile the Q&A roster.
spk05: Our first
spk04: question comes from the line of Noah Kay of Oppenheimer & Co. Inc. The line is now open.
spk08: Hey, good afternoon. Thanks for taking the questions. I'll just try to do a couple quick ones here. First, talk about the improvement in conversion over to contracted. You know, just the dynamics that you're seeing in the market to support that, where you saw the best pickup in conversion, and the related questions to talk about the margin profile of what's going into backlog now. I think you mentioned you're prepared for margin visibility to just a better margin profile, but would love any dimensions around that.
spk13: Yes. The conversion, you know, from the awarded contracts to the executed contracts, it's across the board, but we had a couple good wins, I would say, conversions from the federal sector, which is basically our bread and butter, as well as a couple of street lights, a couple of school systems, and so on. So it's a couple of better storage, smaller projects, but it's across the board, the conversion. And I think the fact that we reorganized the company and we focused more on converting moving projects from the awarded category to the executed, so we can build them out, it just helps. I think anytime you focus an organization on a particular task, things happen, and I think that's helped a lot. With the margin side, you know, one of the goals this year, A, we choose or we target which projects we go after. Like I said, they are around our core capabilities and the customer that we know best. And we have seen a little pickup on the contracted backlog of about 30 to 50 basis points. And that has been consistent now for the last couple of quarters, and that's where we started talking about it.
spk08: That's really helpful. Sorry, I don't know if Dory wanted to add any more to that. If not, I'll move to my next question.
spk12: The last thing I'll add is just simply that within the different business units, one thing that we've consistently seen is that when we do focus on business selection and the high probability wins, you actually tend to find that the margins are a little bit better in the projects. So there's a little bit of a connectivity there to business selection and margins that adds to the benefit.
spk08: It makes sense. Just a quick question on the asset side. I think you called out the investments by Republic in the Roxanne R&G plant. When we think about outside sources of capital for development as well as the development sell model, how do we think about the types of assets that would go into development sell versus potentially attracting minority investments? Maybe you can kind of regiment how you're thinking about the asset profile.
spk13: I can start on the solar side. I think because the market is so fluid and liquid, it's a better strategy to develop and sell because our return on capital, the ones we want to keep, is a little bit higher than what the street would expect. Then on the R&G side, though, we have started looking to develop more partnerships where we will be a majority partner or there will be a minority. Otherwise, we explore in various situations. In this particular case with Republic, in Roxanne, they have the right. We have quite a few sides with them. They have the right to invest in any assets that they want. They pick this particular one that they wanted to invest. We welcome it and we hope they continue to invest in many more. I
spk12: really think George's comment on the liquidity of the market in the solar space as well as the battery space, to be honest, those are the two categories of assets that really fill our develop and sell portfolio. Then we, of course, will opportunistically look at these potential partnerships, whether they be in the R&G or in the other asset classes, provided we feel like they're creative to our shareholders versus what we might be able to accomplish on our own.
spk08: Thanks for all the color. Nice quarter. Thank
spk04: you.
spk05: Thanks.
spk04: Thank you. One moment for our next question.
spk05: Our next question comes
spk04: from the line of Moses Suntin of BNB. Your line is now open.
spk14: Hi. Thanks for taking my question and congrats on great execution here. First, on SoCal, I want to thank you for your time. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. I think you've been very helpful in this conversation. It's true from months ago. Just curious on anything more specific from either.
spk12: I'll start with the last question. No major shifts in the timeline of the third one? On the first two, the big difference is performance testing. That's the big hurdle that we got through. I think that really gives us a lot more confidence on how close we are to the finish line. Moses.
spk14: Excellent. Excellent. Thanks. And then any updated thoughts on the storage energy assets that you are going to potentially, some of them not build on balance sheet, if they don't hit your hurdle, you might sell them mid-stage, and then timelines on any of that.
spk12: So we're kind of regularly running sales processes. We do those internally, I think as far as categories are concerned. We like to keep the ones that have really solid economics with long-term capacity contracts. We're not big merchant battery players, but we do know how to develop those assets. So anything that we throw into the asset development metric that looks like that is likely to fall into the development cell. And we've effectively built in our expectations for the timing of these transactions into our guidance. So that's kind of how we look at the way this converts into project business and O&M business for us.
spk14: Excellent. Thanks again.
spk12: Thank you, Moses. Thank you.
spk04: Thank you. One moment for our next question.
spk05: Our next question comes from
spk04: the line of Eric Stein of Craig Holland. Your line is now open.
spk11: Hi, everyone. Thanks for taking the questions. Eric, hi. Hey, just wondering if I could clarify. So talking about the award conversion sluggishness that has started to pick up, you know, just unclear. It sounds like you believe that's more based on steps that you are taking rather than the market improving. Maybe, you know, thoughts on that, whether that's the correct read and, you know, how much more is there to go if, in fact, the market really hasn't improved all that much?
spk12: Hey, Darren. I mean, it's a combination of both, to be honest with you. I don't see that it's necessarily... Certainly, we're taking steps, right? We're trying to be more aggressive in terms of getting our conversions across the line, but the market has also been a little bit more cooperative, you know, in terms of supply chain delivery timelines on the execution of the implementation cycle. We haven't seen those... Well, we've seen them be a little bit more predictable now, and I think that's been helpful to us. I don't know that much more to add.
spk13: They haven't been extended, you know? For example, the transformers, they were about 18 months. They're 18 months, and you can get them now. Where before, they would say 18 months, and they turned out to be longer, and you couldn't get them. Because I know sourcing various pieces of equipment, lately, we can do it. They tell you a certain schedule, and it seems to be holding. But as far as shortening any of the timelines, and that's what we meant by adopting to the new environment, we have not done that, and we have not taken into forecasting or the guidance any improvement. That's the availability, and sticking to the schedule that we have seen so far. And the switch here, we had a hard time finding switches and so on. Lately, we've been finding them, so... But the diamond, they haven't been shortened yet.
spk12: As George said in the prepared comments, cautiously optimistic. Continuing to forecast that we're gonna, you know, keep seeing these pressures. We're not gonna get too excited yet.
spk11: Got it, and then maybe just on the gross margins, you mentioned the project cost adjustments. I mean, can you provide a little more clarity there? I mean, it sounds like that's just kind of normal course, but I'm wondering if you had any questions or were there any items that were one time that we should consider as we think about that?
spk09: I mean... Yeah, Eric, this is Mark, and I think you said it. It's part of normal course, because we review these projects all the time. This just happened to be an unusual quarter where we had four projects that as part of that normal course review, you know, we identified some additional costs where we made some adjustments to the cost budgets. You know, in any particular quarter, these adjustments, which can go both ways, aren't really material to the results. They're standing out a little bit more because we had some larger than normal adjustments. And these events, some legacy projects that have been around for a while that are getting relatively close to completion. But we saw some true ups, some write-offs, some that were impacted by, you know, one that was impacted by delays and just some unforeseen events that in the timing of these projects and those adjustments all just happened to be in the quarter. So it's part of the normal course, but it was unusual in that they were larger than normal. Okay, thank you.
spk05: Thank you.
spk04: Thank you. Thank you, one more for our next question.
spk05: Our next question comes from Lana Joseph
spk04: Osha of Google Amp. The line is now open.
spk02: Hi there, guys. Thanks for taking my question. Can you hear me? I don't. Yes, sorry. Can't work my phone. And I apologize if you touched on this. I may have missed it on slide six of your deck, you know, with the, thanks for putting those advanced rates in. It's really interesting. Is the implication that as these assets go from development to operating, that you know, you think you can probably take them to kind of 80, 85% advanced rate? And I had one other question, but I'm curious about that.
spk12: I think that's right, Joe. I think that, you know, certainly as we've talked about in the past, some categories of the assets can carry higher advanced rates than others. So depending on the mix of what's in that pool of energy assets and development and construction, the advanced rate may move around a bit. But once you get up to the operating on average, I think we are at that kind of 80 to 85. And it is a little bit of a jump from where the construction lines and the construction lenders will advance. Yeah,
spk13: and especially if they have long-term contracts or a shortage and so on. That's right.
spk02: Right, and that makes sense. And just on the back of that, I mean, given what's kind of been happening in bank world, I'm curious, I mean, have you guys ever thought about trying to securitize some of this stuff, or are you happy with the options that you have?
spk12: We're always looking for new options, Joe, as far as, you know, decreasing spread. But when I take a look at spreads on the securitization market, I think that the granularity and diversity of the portfolio probably isn't there in the similar asset type with the standardized documentation in order to really fit the securitization criteria that would draw the kind of spreads that you see in the market from some of the other, some of the other companies that are in the market. And then we have some of the other companies that are asset-focused that use securitization as a tool. Our, you know, the assets just get a little bit too lumpy. So what we have is a number of financing facilities. When you go through our debt footnote, you can kind of see all of those. Many of them are dedicated to certain types of solar or battery assets. You know, some are the sale lease-back facilities, which are usually done one at a time. And then we have a very, very, very, extremely efficient financing vehicle for us. And others are used when we're going to use the tax credit ourselves or sell it. And I think we do feel good about where our spreads have been versus the market. And so we're pretty happy with what we're looking at. We think through competitive processes, when we go to borrow funds against assets, we are seeing kind of the best of what's out there.
spk02: Okay, thanks. And then you actually just raised an interesting point. I wasn't going to ask, but since you raised it, I'm going to ask, how much of the credit volume that you guys are creating, are you retaining versus placing either in regular tax equity or are you guys out there actually transacting? I'm curious what you're doing.
spk12: Well, we haven't disclosed the proportions if you just break down entering into a tax equity transaction like a sale lease-back versus taking the credit ourselves for our own effective tax rate versus selling credits. We do all three. We haven't come out and provided guidance with respect to any. We've executed one tax credit transfer this year. So far, we've got another one underway. I expect that we will have more. It all depends on the volume and what we expect our tax liability to look like as well. As you dig into our effective tax rate, you see the impact of ITC and 179D. And given the transferability provisions, we love the flexibility of that tool. So, yeah, for sure. All
spk02: right, thank you. Certainly.
spk04: Thank you, one moment for our next question. Our
spk05: next question comes
spk04: from the line of Leigh Ann Hayden of Kennecoran Genie Radio. Your line is now open.
spk07: Evening, everyone. Thanks so much for taking my question and congrats on the progress made throughout the quarter. Just a few questions from me. Star, could you please educate us on how you plan to capitalize on the emerging data center opportunity?
spk13: Yes, actually, we are working on that. We're working on several of them and it's gonna be a great, great market, no question about it. And we have several that we are working on. And actually, as you probably know, we have several bases, the United States government, where we have what we call the enhanced use lists and we have some of the major data center people or companies that they would like to team up with us and execute on them. So, as you probably, everybody knows, it's a huge market. And with AI and so on, the energy needs and the resiliency that they will need on the energy, it's a perfect fit for what we have been doing. Basically, for the federal government on every base right now here's the resiliency. That's why they have better storage combined, heat and power, solar, and then of course, the microbeats associated with it. So, each data center basically has the same needs. And I think you get the nail on the head, it's a market that we want to focus and expand further than what we have been doing so far.
spk12: I would just add back to the comments that we made about being selective in our business development. We've got a real stronghold in the federal government market when it comes to winning those enhanced use leases. We're gonna take advantage of that as our way to really enter this market. We're not gonna go shotgun blast, try to capture every data center in the world. We're gonna be smart about where we're going and pick the profitable projects and projects where our expertise is strong. And in addition to that, ensuring that we've got a real comfortable view of our counterparty, the developer, have the credit worthiness, who's on the other side of these contracts because we're cognizant of the fact that there are a lot of players in this space and a lot of new ones in this space and we're being smart and selective about it. Great, great growth opportunity.
spk07: Right, okay, yeah, that all makes sense. And just tangentially to that, do you have any interest in nuclear power?
spk12: We haven't moved into any of the implementation phase of that. I think within the same group that kind of looks after the federal government and some of our large projects, we do occasionally get involved with NREL and others on certain pilot projects and things. And I think we've got our eyes on a few ideas, but nothing major to talk about yet, not yet.
spk07: Got it, got it. Thanks so much. I'll jump back in queue.
spk04: Thank you. Thank you, one moment for our next question. Okay. Our
spk05: next question comes
spk04: from the line of Pavel Malkanov of Raymond James Associates, airline is now open.
spk01: Thanks for taking the question. It's been a year since you acquired Enarcos in Italy. Can we get an update on the European opportunity and how that business is tracking?
spk13: Actually, they are doing excellent, much better than we get forecasted. It's a great group. And I think with our help, it's growing. And I don't know if you know, but we have teamed up with a great, great contractor of solar projects in Greece. It was very small. And right now, I think we have over one gigawatt of potential of solar projects are gonna be building together. The market is very good. Don't be surprised that we might have some more tacking acquisitions in Europe. The market over there is exploding. But on the other hand, we gotta be careful how we go about it. But the Enarcos acquisition has worked out excellent for us. Actually, the board of directors, one of the people that probably gave me the hardest time to buy that company, he said, he loves Italy now.
spk12: Yeah, Pavel, I think the joint venture methodology with the Solar EPC is really, really good leverage for us. We're able to leverage off that organization, not just in Greece, the company is based in Greece, but we're also building projects in Italy and the UK through that joint venture. And that's a very good way for us to add incremental business and help them grow and in fact, help Enarcos grow because we're building projects in their home turf. So it's a pretty exciting jurisdiction, to be honest. I think the UK is continuing to grow and continuing to show strength. So we'll be continuing to
spk05: invest our time there.
spk01: Let me follow up by asking about situation with section 45Z. I know a lot of R&G developers have been surprised that the treasury has not unveiled the carbon intensity kind of calculation yet. What is your understanding of when that's going to come out?
spk12: Well, look, given the state of play in Washington currently, I think that irrespective of what you might hear from Washington, I think they're being very careful about what they decide to put out in terms of guidance because you're really inching up to that congressional review act date. And I think that we've got to be quite careful about trying to estimate timing. So I think that it's, because these projects are critically important to the administration, I don't think that means the guidance isn't coming. The guidance is going to come. However, given where we are with the CRA, my suspicion is you're getting second and third and fourth looks at the regs before they go out. They're going to be very thoughtful about them because I think the last thing they want to do is have the same thing happen with this as what happened with the renewable natural gas when they had to kind of turn around and reverse course on one of the provisions with the cleaning and conditioning equipment, if you remember. So that's kind of my thoughts.
spk05: Thanks very much. Thank you, Pavel. Thank you, Wilmore, for our next question. Our next question
spk04: comes from the line of Ben Callow of Bayer. Your line is now open.
spk03: Hey, guys, congrats on the quarter. Just quickly, just the approach to the R&G credit, the RINs, I know in the past you guys maybe hedged them or sold forward some. Is this your approach now that I follow up?
spk12: So with respect to the RIN side of things, we've been pretty happy with where those have been trading in the levels. As you know, it's an illiquid kind of over the counter market, but we've been relatively steady with going into the market and hedging a lot of our RIN exposure for 2024. At this point, we're over 70% hedged for 2024. So I think we're feeling good about where those prices have been. We obviously always try to keep a little bit in our back pocket for production, but nevertheless, we're kind of continuing to watch that market. I think, so we feel good about that. The ITC on renewable natural gas, we're still waiting for the guidance to come out to really affirm where that's gonna come through for 2024 projects that we're placing in service. And the truth of the matter is we've been underwriting those projects without it, and we're continuing to underwrite our project.
spk03: I don't wanna put the cart before the horse, but just as we think about kind of 25, 26, and what you've established with the recurring revenue, any kind of color on how you think, because it was kind of lumpy in 22 and 23, but how we should think about going forward.
spk12: Well, we continue to invest in the asset portfolio, right? I mean, there's not a fundamental change in the way we're thinking about the R&G offtake, with the exception of the fact that we're seeing prices in the non-transportation market go up. So we're starting to look really closely. We've kind of come close to hitting a couple of those contracts that might be longer term, certainly not related to the transportation market. And I think that we probably will see that increase as we bring more of these projects online for the next couple of years. The rest of the business, we're, we look at the growth rates for 2024 over 23 and beyond. I think that we're still feeling like it's a steady growth. We've got the CAGR chart in our supplemental slides, 10% revenue, 20% on the EBITDA, and we think that that's likely to be the direction that we go. Good stuff.
spk03: And just going back to the data center question, technologies that you guys would use, batteries or fuel cells, or what are you guys? I
spk12: would say we're gonna continue to take an agnostic approach. Of course, we're gonna be focusing on the carbon reducing technologies, right? So renewable generation, battery storage, the micro grid, et cetera, that's gonna be the key focus.
spk13: And some fuel cells here and there. Yeah,
spk12: fuel cells are not off the table, right? And backup power is important. So we're gonna have to think about what the customer's looking for, to be honest.
spk05: All right,
spk03: thank you guys, I
spk05: appreciate it. Thanks. Thank you.
spk04: Thank you, one moment for our next question.
spk05: Our next question comes from
spk04: a line of Luke Tilkins of Piper Sandler, your line is now open.
spk15: Hey, thanks for taking the question. Most of ours are math, so just one for me. Looks like you brought on about 10 megawatts of projects in the quarter. Can you talk about your confidence on the 200 megawatts for the year? Thanks.
spk13: Very confident.
spk12: I did provide a little bit of a laundry list in the comments, you know, we've got Capone, that's a big one, we've got all these United Power Battery Assets, those are, you know, those are looking very good as far as completion here, in the, you know, kind of in the coming weeks and months. Yep. And then, you know, the other R and G plants, and kind of by the time you get through all of that, you're pretty much there. And then, you know, in addition to that, of course, we've got our typical granular kind of solar assets scattered around the country that we're doing for customers. So we
spk05: feel pretty good about that. Thank you, one moment for our next question.
spk04: Again, as a reminder to ask the question, you will need to press star one one on your telephone.
spk05: Our next question comes from the line of Craig
spk04: Shear of Toolee Brothers, your line is now open.
spk10: Hi, good afternoon, and thanks for taking questions. Here, Craig. Ben's question, did I hear correctly that you're looking at the discretionary institutional offtake market for R and G, and if that's correct, are you looking at upwards of 10-year terms and maybe in the ballpark of $20 an end? Could you provide any color if that's the case?
spk12: So probably because all of the negotiations are private, we can't really give you any color on where the prices are ending up. I would say that there was a long time when levels like you described were, with the way that we were looking at our returns, what we were getting from using the 50-50 strategy, those weren't horribly attractive. I think that we've seen the rates come up, that a lot of these parties, the voluntary parties, are looking to pay, and there are some that are really still in the five-year, but non-transportation, there's a number that are in the 10 or even 20-year range, so there's, I think that market's still trying to find itself, and we're trying to find it, and as long as we feel comfortable with the credit of the counterparty and the actual risks in the contract, I wouldn't be surprised if we go ahead and hit something, because the prices are definitely looking better.
spk10: Great, that's very helpful. And the awarded project backlog was kind of flattish sequentially, but as you mentioned, the actual contracted backlog rose a proportion of firm. So going forward, given your focus, should we anticipate maybe a focus on both quality and margin and converting the contracts, should we anticipate maybe a slower awarded growth, but steady to improving conversion rates?
spk12: I wouldn't say necessarily. I would say that one of the things that drives those differences are probably a little bit circumstantial and potentially related to larger projects that might be awarded and contracted in the quarter, intra-quarter, some of the design-build stuff that kind of goes through the design phase more quickly. So that's kind of how I would think about it. I wouldn't necessarily view that as a particular trend. I think, again, conversion is important, right? Yeah, conversion is important. The pace of conversion is very important, but as far as the long-term kind of view of the company, the way I look at it, it's total, total backlog.
spk13: Correct. And don't forget, there is some lumpiness. The one that we can control more is getting the awarded to the executed contract. That's, it depends on the customer, of course, and as well as the awards, many times it's lumpy. And don't be surprised that you see that picking up later on during the year, primarily at third quarter, second quarter. Great, thank you.
spk04: Thank you. This concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Disclaimer