HA Sustainable Infrastructure Capital, Inc.

Good afternoon, and welcome to Hannon Armstrong's conference call on its Q2 2020 financial results. Leadership will be utilizing a slide presentation for this call, which is available now for download on the company's investor relations page at investors.hannonarmstrong.com. Today's call is being recorded, and we have allocated 30 minutes for prepared remarks and Q&A. All participants will be in a listen-only mode. If you need any operator assistance, please press star then zero on your telephone keypad. At this time, I would like to turn the conference over to Chad Reed, Vice President, Investor Relations and ESG. Please go ahead.

Thank you, operator. Good afternoon, everyone, and welcome. Earlier this afternoon, Hannon Armstrong distributed a press release detailing our second quarter 2020 results, a copy of which is available on our website. This conference call is being webcast live on the Investor Relations page of our website, where a replay will be available later today. Before the call begins, I would like to remind you that some of the comments made in the course of this call are forward-looking statements and within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended. The company claims the protections of the safe harbor for forward-looking statements contained in such sections. The forward-looking statements made in this call are subject to the risks and uncertainties described in the risk factor section of the company's Form 10-K and other filings with the SEC. Actual results may differ materially from those described during the call. In addition, all forward-looking statements are made as of today, and the company does not undertake any responsibility to update any forward-looking statements based on new circumstances or revised expectations. Please note that certain non-GAAP financial measures will be discussed on this conference call. Presentation of this information is not intended to be considered in isolation. or as a substitute for the financial information presented in accordance with GAAP. A reconciliation of GAAP to non-GAAP financial measures is available on our posted earnings release and slide presentation. Joining me on today's call are Jeff Echol, the company's chairman and CEO, and Jeff Lipson, our CFO. With that, I'd like to turn the call over to Jeff, who will begin on slide three. Thank you, Chad, and good afternoon, everyone.

Today we are announcing another strong quarter with 33% year-on-year growth in core earnings of 40 cents per share and a 29% year-on-year increase of core net investment income for the first half of 2020 to $49 million total. Declaration of a dividend of 34 cents per share. And please note that from this call forward, earnings and dividend announcements will be combined. We announced after the quarter end another partnership with Engie where we will invest approximately $540 million over the next few quarters. I will speak more on this partnership in a bit, but it does certainly contribute to our confidence that we will once again exceed our annual target of investing $1 billion in climate change solutions, all of this despite COVID-19 disruptions. And finally, we're announcing that we've launched multiple diversity, equity, inclusion, and justice initiatives, which will shorthand as diversity for the purposes of this call. and including a multi-year plan for diversity impact. We understand that even as we continue to make progress in our mission to invest in climate change solutions, our nation is hurting. A deadly pandemic continues to threaten the health and safety of an increasing number of American families and has left millions jobless and many more far less financially secure. In our long and painful fight against systemic racism, and inequality has rightfully taken on renewed urgency in the aftermath of recent injustices. At Hannah Armstrong, our intense focus on the environmental aspects of ESG is at the core of our mission and value proposition. But the multiple crises affecting our nation have given even more urgency to expanding our focus on a durable social fabric, the S in ESG. This includes efforts toward a healthy, diverse, engaged, and fairly compensated staff, as well as proactive support and engagement with our local community. These were material factors in our financial success before these crises and will become even more so in the future. Turning to slide four, I want to share some thoughts on the continued resilience of our business. We've always said that we tend to perform well in periods of economic volatility. and this quarter is another example of that. I think it is important to reiterate the factors that enable the Hannon Armstrong business to prosper in this unprecedented environment. First, virtually all of our investments save the Albuquerque money. This is a profoundly important credit positive distinction that is often overlooked in more normal times. Second, our clients, the leading energy and infrastructure companies in the world, are large, responsible corporate citizens, who will survive and even prosper when we exit from this pandemic. Finally, the investment pipeline, which drives our growth, remains intact, not only because these investments save people money and are sponsored by high-quality clients, but because the underlying theme of investing in climate change solutions is proving a durable asset class, and one that we believe will come out of this crisis even stronger. For example, there's little doubt that distributed solar plus storage or enhanced HVAC solutions will be perceived as more valuable during and after this pandemic for reasons related to energy security and health. All of these things add up to a business model that has substantial protection from the general economy as we have shown in this crisis. Turning to slide five, we provide an update on our 12-month pipeline, which remains greater than $2.5 billion even after adjusting to the execution of the NG investment, which, to be clear, occurred in Q3. The behind-the-meter portion of our pipeline remains robust and is weighted toward energy efficiency opportunities. However, the BTM pipeline also includes a healthy balance of residential, CNI, and community solar projects, many with storage attached. Turning to slide six, we highlight our July partnership with NG. We've committed to invest approximately $540 million of equity with a preference on cash flows in a portfolio of 13 wind and solar projects totaling 2.3 gigawatts. The portfolio has a weighted average contract life of 13 years with large investment-grade corporate and utility counterparties, including Amazon, Ingersoll Rand, Microsoft, Target, Walmart, and Xcel Energy. Located across five states, the portfolio is 75% onshore wind and 25% utility-scale solar. The portfolio enjoys an expected carbon count of more than 2.0, which indicates our capital is being deployed relatively efficiently to reduce carbon. To put this into context, our equity investment will avoid an estimated 1.1 million metric tons of carbon dioxide equivalent in the first full year of operations, or approximately 150,000 rail cars filled with coal over the life of the assets. Partnership grows and diversifies our balance sheet portfolio, provides operating leverage for continued earnings growth, and provides additional programmatic opportunities with this large, ambitious partner focused on the North American market. On slide seven, we provide a comparison of our balance sheet portfolio as of the end of the second quarter with and without the NG investment, as if all of the funding occurred on June 30. We're doing this as a means to show the impacts of the NG partnership. On a pro forma basis with the investment, our balance sheet portfolio expands almost 25%, $2.6 billion, with an increase in the average life of our assets by four years. All other metrics, such as portfolio yield, number of investments, and the average investment size, are substantively unchanged. As the pie chart on the right also makes clear, the investment further diversifies our portfolio. We add another pie slice, utility-scale solar equity in the grid-connected market, and this, combined with an increase in onshore wind, reduces our concentration in any one market. Now I'll turn it over to Jeff to detail our financial performance.

Thanks, Jeff. Second quarter results on slide eight recorded core earnings per share prior to any CECL provisions of 40 cents, an increase of 33% over the same period last year, as higher portfolio yield and gain on sale income were only partially offset by an increase in interest expense. Note that for the quarter, in accordance with CECL, we increased our allowance by approximately 3 million, primarily as a result of the potential impact of the COVID-19 pandemic on our commercial receivables. which brings our core earnings per share to $0.36. I'll also note that core net investment income for the first half of the year increased 29% year-over-year to $49 million. This increase was despite the fact we maintained an outsized, low-yielding cash balance during the second quarter. This cash balance was a result of the debt and equity raising we did in March and April that allowed us to remain liquid during the crisis and to pre-fund the entry transaction. Further, we recorded significant growth in income from gain on sale and fees in the second quarter of 18.5 million. The growth in both NII and gain on sale this quarter highlight the strength of our dual revenue model as we continue to generate strong results despite the pandemic and recession. As we turn to slide nine, I want to highlight the continued growth we've seen in core NII, and we expect this growth will continue as we fund several of our closed transactions and correspondingly increased the size of our portfolio. Portfolio yield of 7.7% in the first half of 2020 remains consistent with 2019. Therefore, growth in core NII, which over the past several quarters has been primarily due to an increase in portfolio yield, we expect over the next few quarters will be primarily the result of portfolio growth. Turning to slide 10, we can see that our balance sheet did expand in the second quarter to $2.8 billion as we maintained a more liquid profile in this period with over $500 million of cash. We expect to convert a significant portion of the cash into earning investments in the second half of the year. Towards that end, on July 1st, we funded $150 million of the approximately $540 million NG investment and expect to fund the majority of the remainder by the end of this year. The table on the bottom left of the page highlights that despite economic headwinds, and several gain on sale transactions, our portfolio remained at 2.1 billion at June 30th and is poised to achieve growth as we just discussed. This chart is also a good reminder that many of our transactions fund over time. For example, in the second quarter, we closed 178 million of transactions, but as reflected in the chart, 26 million funded in the quarter. As we turn to slide 11, we continue to confirm that our portfolio of high quality assets have performed within our expectations despite the adverse macroeconomic conditions that existed throughout the second quarter. This performance is driven in part by the credit quality of our counterparties and the structure of our investments. All of our government and the vast majority of our commercial obligors maintain investment grade ratings. In addition, the obligors of our residential solar assets include over 150,000 high credit quality consumers located across 22 states. And in our equity method investments, such as the recent University of Iowa and Engie grid-connected transactions, we are typically preferred in the structure. And as Jeff detailed earlier, our investments typically reduce costs for the obligor, creating a strong incentive to continue making payments. Turning to slide 12, I'll note that all of our funding sources remain open and accessible to us, and we expect to continue to raise capital to fund our pipelines. Our debt ratings were affirmed by the rating agencies in the second quarter, and our April debt issuance is trading at a substantial premium. We also have a well-laddered maturity profile and have no material recourse debt maturities until September 2022 when our convertible bonds mature. And given these may be settled in shares, this maturity does not necessarily reflect a cash need. And finally, we have limited interest rate risk as a vast majority of our assets and liabilities are fixed rate. In summary, during a quarter in which various macroeconomic metrics reflected unprecedented negative levels, our earnings, liquidity, and asset quality remained resilient. With that, I'll turn the call back over to Jeff.

Thank you, Jeff, for your leadership in Q2. It was a terrific team effort. Turning to slide 13, we've received a number of inquiries as to the impact of the upcoming federal elections. I think there are three key takeaways in this question. First, the assets in which we invest, including renewables, are already cost-competitive with competing technologies as shown in the chart on the right in most of the markets in which we invest, so their continued expansion is expected. Second, while we support an extension of the tax credits, Hannon Armstrong is not a tax equity investor. Indeed, our customary piece of the capital stack remains sizable and attractively priced irrespective of what happens to the tax credits. Finally, we're continuing to engage in a bipartisan manner with legislators across the spectrum to drive acceptance and adoption of a national price on carbon, ideally one that is revenue neutral to the government and includes a dividend or cash back to citizens. This market-based approach will drive investment to the most efficient technologies and companies that reduce carbon emissions at the scale required to avoid the worst impacts of climate change. Any federal climate and energy bill will have to pass the U.S. Senate and will likely require the support of red state Democrats as well as blue and or purple state Republicans. We believe that this policy, in addition to being optimal from both a climate and economic perspective, is the one that could garner the bipartisan support required to be enacted into law. We'll finish up on slide 14. where I will highlight notable recent developments on the ESG front. In the second quarter, led by a significant number of our employees, we raised funds virtually to the Chesapeake Bay Foundation. We also increased our previously disclosed donations to local COVID-19 relief organizations who are addressing rising food insecurity and providing support for victims of domestic violence and the homeless. In addition, we've bolstered our efforts on diversity part of our multi-year plan. Among other actions, we're implementing efforts to further advance diversity in our hiring practices and expanded our employee charitable giving match for donations made to organizations addressing racial and economic justice. We believe our strong performance as a public company has demonstrated to our shareholders the importance of fully integrating ESG factors into the business. While we have a long way to go on our journey, I've been inspired by how our team has responded to the national spotlight on injustice and inequality and remain confident in the ability of our entire team, including the board, to build a more just, inclusive, and equitable company. Thank you for joining us today. Operator, please open the line for questions.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Noah Kay with Oppenheimer and Company. Please go ahead.

Good afternoon. Thanks so much for taking the questions. And appreciate all the incremental details on the ENGIE investment. This is the largest single investment in the company's history. And so the question I'm going to ask may be a little bit unfair following that, but, you know, can't help but notice that in its own press release, ENGIE talked about ambitions to commission nine gigawatts of renewable energy capacity by the end of next year. this 2 gigawatts is great progress towards that. But just wondering, you know, you typically don't comment on individual partners, whether additional opportunity beyond this portfolio is in the 16% of the pipeline, the 12-month pipeline that's grid-connected, or would that be incremental?

Well, generally it's going to be incremental. We've been pretty conservative, Noah, with the pipeline, and until we can actually identify a transaction and put a name on it and a number, it's generally not in there. So we would look at that as incremental.

Okay, great. And then just kind of for modeling purposes, I think you mentioned $150 million of the investment you funded in early July. Should we sort of err towards 3Q or 4Q for funding the remainder, and how do we think about layering in the, you know, the contribution from that to the financials this year?

So, you know, it'll fund as, you know, the projects come online. So, you know, we have a funding schedule, but that in and of itself is subject to change. You know, I think assuming the vast majority comes in in the third and fourth quarter with a little slippage into the first quarter is probably the best way to model it. And, you know, as we said, we're not disclosing our yield on the portfolio, but I think in Jeff's comments, you know, we reiterated it doesn't change the overall portfolio yield, so that gives you perhaps a bit of a range to speculate what the yield may be.

It does. Thanks. Just to switch gears for a sec, can you expand a little bit on, you know, what factors regarding the commercial receivables, you know, drove you to take the credit provision? What are you looking at here that drove that? Any increases in past dues? Any assessment of macro factors? And I guess I would just lump in here, Jeff, I think you made a great point earlier about your agnosticism to policies around renewables. But as you look at your customer base, do you need any kind of stimulus to the economy to help support the portfolio performance? As you pointed out, there's millions of folks unemployed and hurting. Just wondering if you can kind of give us a little bit of insight here.

Maybe I'll take the first part of that question, Noah. So the allowance process includes many factors, some macroeconomic, some specific, of course, to the investment. And I think in my prepared remarks I alluded to that the increase in the quarter was primarily the result of the macroeconomic factors that are not specific to the investment, but do go into the allowance calculation.

And then, you know, do we need a – The stimulus bill, what would this be, number six? I think the country needs it. And at the risk of sounding Pollyannish, I don't actually think our avigors need it. But it's reckless to say it would not have any positive impact on us. Of course it would. But generally, and you've seen this from the residential solar earnings calls, portfolios are performing. People are really focused on having a reliable source of power on their house that they can control. That's why everybody's reporting more storage. You know, for a lot of reasons, residential solar, which is what we particularly worry about with credit, has performed quite well.

Yeah, it's good to see. Thank you very much. Thank you. Thanks, Len.

Our next question comes from Julian DeMolen-Smith with Bank of America. Please go ahead.

Hey, guys. This is Anya filling in for Julian here.

Hi, Anya.

Hi. Hey, how are you? So first question is on the ENGIE transaction. Just wanted to see if you could give some more color on the variance between net investment income and distribution. And basically what I'm referring to there is any sense of a step down in cash flows and then timing for that decline as well. Just the magnitude of the step down, if you're able to.

We haven't disclosed that yet, so it's actually, I'm not even sure what the question is when you say the step down.

Well, I guess just anything more on the variance between net investment income and distribution and how you expect that to trend.

You know, I don't think we necessarily envision any variance there. So we have a rate at which we'll accrue income on the investment based on our expectations, and that'll drive revenue, which in turn drives net investment income, which of course includes the interest expense component.

Okay. Okay, thanks. And then second, I just wanted to ask about looking forward to 2021, just how much you expect to expand in renewables and solar, and I know you've mentioned your pipeline is still over $2.5 billion. How much expansion do you see so far into behind-the-meter assets, and how could that translate to the EPS CAGR as you think about rolling that forward?

Let's see. There's a lot in there. Again, the pipeline is three-quarters behind the meter. So we definitely expect that to be – you would expect that to be the lion's share of 2021. And with respect to earnings, we haven't given guidance for 2021, so really can't comment on that. Anything else on the question, Jeff, I missed?

Okay. I think we're looking more in terms of the sense of how much of that pipeline do you see I guess how optimistic are you about the growth prospects as you see today in the pipeline in terms of renewables, maybe more of a focus on resi-solar even?

I think if we're talking about the durability of this asset class, I think we see all of our clients and virtually all of their markets being cautiously optimistic, whether it's renewables or efficiency. That's not to say there aren't challenges doing things in the built environment, in a COVID environment. But, you know, I don't know that you cover Amoresco, but they're talking about, you know, COVID, HVAC improvements in response to COVID, things that have to get done before buildings open up. So just like the resi solar industry, did such a phenomenal job of converting to virtual selling. I think every one of our clients is trying to figure out how to go faster and with less cost in this environment, whether it's wind, solar, utility scale, or distributed, and efficiency. Everybody is working hard to develop projects, and I think our clients will be very successful.

Okay, great. Thank you.

Thank you.

Our next question comes from Christopher Sauther with B. Reilly FBR. Please go ahead.

Hey, thanks for taking my question. On the uptick in gain of sale during the quarter, can you talk a little bit about what drove that? Were these opportunistic sales, you know, just basically what was driving that?

Let me take a shot at it. So, you know, the gain on sales transactions historically have been less profitable during really stable times and slightly more profitable in more volatile times. It happened in 2008 and 2009. And, you know, it tends to happen. I mean, we certainly see some of that phenomenon now. you know, the transactions that should be securitized get securitized. We weren't really so opportunistic as we were. You know, the transactions are just a bit more profitable.

Got it. Okay. Around the – you put a table in there that showed kind of the cash funding versus, you know, the $178 million in originations. Is the initial NG $150 million included in the $178 for the quarter. I was just kind of curious on why there was, like, a larger difference, I think, than usual of funding versus, you know, the origination volumes.

So, Angie was not in the headline number for the quarter because it closed in July. And when you say there's a larger difference than normal, there was no way for the outside investor to know that historically, which is part of the reason we added the table.

Okay.

As we engage in more transactions that tend to have delayed funding, we thought the enhanced disclosure would be helpful that the headline number we announce, which is an important number related to commitments and activity of the business and one that everyone's used to, would be supplemented with how much funded. So that's why we went to the new disclosure.

And, Chris, when we talk about programmatic investments, we close a transaction and it's got X number of, investments to be made. Not all of them get made on day one. This table's meant to give a little bit more of that granularity that the deals we close will fund over time and provide more continuous investments.

Understood. That's all I had. I'll hop back in the queue. Thanks. Thanks, Chris. Thank you.

Again, if you'd like to ask a question, please press star then 1. Our next question comes from Philip Chang with Roth Capital. Please go ahead.

Hey, guys. Thanks for taking the questions. First one is on tax equity. Hey, guys. Can you hear me okay?

Yes.

Great. Thanks for taking the questions. The first one is on tax equity. Tax equity is starting to sound like it's getting much more scarce for 21. And I just wanted to see if you think that might impact your business in any way. I know you have a diversity of end markets that you can pivot and shift to, but any impact you see to your potential originations either later this year or even in 21 you think could happen from the constraints around tax equity?

You know, I don't think there's any doubt that when you have banks like Wells Fargo going unprofitable that that affects their 2020 and 2021 tax bill and thus our appetite for tax equity. Again, one of the strengths of our business is working with the top tier clients. To the extent there is a scarcity in tax equity, it's going to get allocated to those top tier clients. And it's still early days in figuring it out, but I think it's, we do not see an impact now. That doesn't mean there won't be. And certainly smaller companies I'm sure will be, if not already, struggling to get tax equity.

Thanks, Jeff. Staying with Resi Solar for just a bit, last quarter I think you guys gave a lot of nice detail on how the asset class has been performing. I've been bouncing between earnings calls, so apologies if you guys have already talked about it or perhaps it was in the deck already. But I was wondering if you could give an update on what you're seeing. Has it remained in the same levels or similar levels as what you guys showed last time? And what do you expect ahead for the class?

So, Phil, we have really nothing new to disclose there. Still no significant elevation in delinquencies or deferral requests or defaults. And I think that's consistent with the residential solar sponsors who've, you know, done their earnings call already as well. So really nothing new incremental to what we said last quarter. And, you know, we continue to watch it closely and are increasingly confident as days go by that the original thesis that this was a priority payment, you know, become more and more confident in that thesis with each passing month's data.

Fantastic. So with that, I can imagine, you know, you guys might be ever more close to the potential for an investment grade rating. So I was wondering if you might be able to talk through it all, you know, since you have been, you know, meaningfully tested as every company has been through COVID, but you guys have performed quite well. And so I was wondering if you might be able to share any thoughts on what the timing of what that could look like and if things have potentially accelerated a bit at all. I know it's tough to talk about these things, but so far as you can provide some color, that would be great.

Sure. So our ratings were affirmed in the second quarter, and they do get affirmed every time we do a debt issuance. And You know, the agencies both recently published as part of that affirmation, you know, a report on Hannon Armstrong, which is public and I encourage people to read. There's no timetable that'll probably ever exist on being upgraded. It's just a continuous process of their review and our advocacy. You know, as we talked about and was part of your question, performing well in a downturn could be a catalyst there, but it'd be Impossible for me to put any timing on that.

Okay. Thanks, Jeff. I'll pass it on.

Thank you.

Our next question comes from Ben Calo with Baird. Please go ahead.

Hey, guys. Thank you for the questions. Maybe just following on Phil there. Just on the leverage ratio and how that wraps in, how do you think about your target leverage ratio? And also, you know, moving up to investment grade, because that was one of my questions that he stole from me.

You know, it's certainly a factor. And, you know, in those reports that I alluded to a moment ago, the rating agencies, you know, do mention leverage as one of their primary metrics. I think in our – You know, earnings PowerPoint on page nine, you can see over the last three years, leverage has been very flat. I don't think there's, you know, meaningful expectation. It'll deviate much, you know, from that one and a half-ish range here in the intermediate term. As we've discussed, we have a policy of not going above two and a half, but I think the current range is much more likely to be relatively consistent over the intermediate term here.

And then, thank you, Jeff. And then, Jeff, maybe as you think about, you know, you call out Engie as a partner, obviously, because of the big deal there. How do we think about that partnership, you know, evolving? Like, should we start following Engie and everything they do? And you're the number one partner because, you know, you guys came to that without, you know, a bake-off. Or how should we think about that?

Well, I like to think that we are following all of our clients and trying to be responsive to their needs. You know, we've talked a lot about our partnership, SunStrong, with SunPower, and at the risk of excluding some great clients. It's a good relationship. We're very compatible companies, and... With their announcements in their quarterly earnings call, I think it just reaffirms their interest in the North American market. It's not like they give this investment away for free, but it's a good partnership. So we are committed to doing everything we can to be a good partner and help these projects really, really perform. And I think if we do that, we're going to get our fair share of the business from Engie.

My last two questions, thank you, Jeff. My last two questions, just on the REIT status, is that anything that you guys evaluate right now? Should that change, or is there a better way to do that, is number one. And then I guess on number two, just like your long-term guidance, you know, how you guys are very conservative. You had this big deal there that seems very accretive. When do we see you guys, you know, kind of revisit your guidance with big, chunky deals like that?

Thanks. So, on the retests and the read status, there's really nothing new to report. You know, there's no current plan to change status, and clearly we're in compliance with all the with all the retests. In terms of guidance, you should expect us in the fourth quarter call that would likely occur in February, or perhaps March of 21, that we will update the guidance on that call. All right, great.

Thanks, guys. Congrats.

Our next question comes from Jeff Osborne with Cohen and Company. Please go ahead.

Yeah, good afternoon, guys. Most of them have been asked, but I had two. One is on, you mentioned HVAC a few times, but, you know, in putting UVC lights in an HVAC unit, how do you structure an energy performance guarantee in just replacing existing units for the health benefit? Is that something that you could finance for Johnson Controls or other partners if you're angling after health as opposed to energy?

Yeah, I think, Jeff, if you look at it as you want to increase airflow and you're going to do something, whether it's UV lights or there's other technologies, you may be using more energy to do that. But the way the energy service companies, I'm sure, will think of it is, well, that's just the new baseline. That's now like what you have to have. So I think you would adjust the baseline for the fact that you need more airflow and more lighting in the ductwork. And you can structure it. And again, I'm making this up based on your question, but I'm pretty sure knowing ESCOs and how they work, that's the right way to think of it, is the energy baseline went up because of the new requirement.

Got it. I hadn't thought of that angle. My last question for you, Jeff, is just philosophically, A lot of focus in America and around the world on green hydrogen and with the California law around electric trucking, you'll start seeing corporate fleets having to transform. So I was just curious what your thoughts were on funding if a UPS or a FedEx came to you about funding depots with solar on the roof and EV charging. Is that something that you would be interested in?

Absolutely. Absolutely.

Are you seeing anything in your backlog in that nature yet or no?

You know, we don't talk about the backlog that specifically, but, you know, it's just the amount of activity on green hydrogen has been fascinating to me. And I certainly think there will be terrific opportunities to make a dent in carbon in the transport sector because of green hydrogen.

Got it. That's all I have. Thank you.

Thank you, Jeff.

Our next question comes from Greg Lewis with BTIG. Please go ahead.

Yes, and thank you, and good afternoon, everybody. Yeah, I just had a quick one in following up on kind of the hydrogen and different ways. As you guys look out in the marketplace right now, one of the things that's been gaining a little bit of momentum has been, you know, renewable natural gas. You know, just kind of curious, is there opportunities at this point for you guys to kind of get involved in that market or just kind of trying to understand, you know, how you view renewable natural gas just, you know, as it is still kind of, you know, it's from a hydrocarbon?

Yeah. You know, I think we're definitely looking at it. The area where we get a little concerned are the state subsidies that can fluctuate, the RINs. And that's sort of like early days for SRECs until you know how they actually work. You know, we really want to understand the parallel market for RINs. But otherwise, I mean, renewable natural gas should – should definitely be increasing, and it's certainly a very good carbon story if you're repurposing methane that's otherwise leaking.

Okay, perfect. That's all for me. Thank you very much. Thank you. Thanks, Rick.

This concludes our question and answer session, and the conference has also now concluded. Thank you for attending today's presentation. You may now disconnect.