Ameresco, Inc. (NYSE:AMRC) Q1 2025 Earnings Call Transcript

Ameresco, Inc. (NYSE:AMRC) Q1 2025 Earnings Call Transcript May 5, 2025

Ameresco, Inc. beats earnings expectations. Reported EPS is $-0.11, expectations were $-0.26.

Operator: Thank you for standing by. My name is Dustin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ameresco, Inc. First Quarter 2025 Earnings Conference Call [Operator Instructions]. I would now like to turn the conference over to Leila Dillon, Senior Vice President of Marketing and Communications. Please go ahead.

Leila Dillon: Thank you, Dustin. And good afternoon, everyone. We appreciate you joining us for today’s call. Our speakers on the call today will be George Sakellaris, Ameresco’s Chairman and Chief Executive Officer; and Mark Chiplock, Chief Financial Officer. In addition, our Chief Investment Officer, Josh Baribeau, will be available during Q&A to help answer questions. 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 and additional information in our supplemental slides that were posted to our Web site. Please note that all comparisons that will be discussed today are on a year-over-year basis unless otherwise noted. I will now turn the call over to George. George?

George Sakellaris: Thank you, Leila. And good afternoon, everyone. First, I would like to thank the entire Amaresco team as we celebrate the company’s 25th year anniversary. It’s been an amazing journey, establishing Amaresco as a leader in our industry and delivering over $16 billion in customer solutions dedicated to reducing energy consumption, enhancing energy infrastructure and resiliency and developing proven pathways to decarbonization. While the current environment remains challenging, the drivers of our business remain strong. Global power demand grows, electricity costs continue to rise and grid reliability is deteriorating as we saw in Europe a few days ago. All of this will increase the demand for distributed, diversified, resilient energy solutions.

The team’s outstanding execution led to a strong start to the year with results exceeding our expectations. First quarter revenue and adjusted EBITDA grew 18% and 32% respectively. These results also highlighted the strength of our diversified business model as we experienced material growth in both our projects and energy asset business, including strong performance in Europe and Canada. We also increased our total project backlog to almost $5 billion, bringing our total revenue visibility across our businesses to almost $10 billion. This was another quarter of significant contract execution conversion success, resulting in a contracted project backlog of $2.6 billion, representing a growth rate of almost 80% year-over-year. And these positive business trends have continued into the second quarter.

I also wanted to comment on some of the well known challenges facing our industry and provide some insights into how the Ameresco team is working to overcome them. First, let me cover our work with the federal government. This business accounts for approximately 30% of our current total project backlog, with military related customers accounting for approximately two thirds and GSA or civilian agency related project work of approximately one third. We have provided a breakdown of our backlog by end market in our supplemental slides. Because these federal contracts have multiyear execution cycles, they are expected to account for less than 20% of our 2025 project revenue. We noted in our last conference call that we had encountered one cancellation on a project contracted earlier in January and a pause on two other contracts.

We are pleased to report that the project that had been canceled has now been rescoped and the other two contracts have now been unpaused. Also, we have not encountered any additional cancellations or delays in our federal contracts. So while it is too early to say that there will be no additional future disruptions, we are cautiously optimistic. And as the current administration’s priorities come into focus, we believe our broad and deep technical expertise and our agnostic and budget neutral approach will help us promote our offerings. Interestingly, we are now seeing a significant number of recently issued federal RFPs focused on our core competencies of resiliency and increasing the power supply through new energy infrastructure. The government’s recent release of a quest for information about the possible use of DOE land to support growing demand for data centers.

Following that, the DOE has identified 16 potential sites uniquely positioned for rapid data center construction, including in place energy infrastructure with the ability to fast track permitting for new energy generation. For example, we are seeing more opportunities to leverage federal lands for critical energy infrastructure projects. The Kūpono 44 megawatt solar and 44 megawatt battery project is a perfect example of how this can work. We leveraged and enhanced use lease with the Navy at Pearl Harbor to build its critical energy infrastructure that supports not only the base but also the Hawaiian Electric grid. We are also developing a 99 megawatt firm power plant, an advanced microgrid project on the same base. We are utilizing similar structures, including enhanced use leases to develop data center energy infrastructure projects with the Department of Defense.

As we captured on another new slide on our supplemental deck detailing our project backlog by technology, Ameresco is very well diversified in our expertise with efficiency, resiliency and power production solutions. Approximately 50% of our total project backlog includes energy infrastructure projects using generation technologies, such as gas turbines, engines, solar, hydroelectric and rigidity technologies such as large scale battery storage and microgrids. We believe our solutions are a good match for the evolving energy landscape, which is demanding ever increasing amounts of electricity and higher levels of resiliency. We are very excited about the opportunities ahead for our work with not only the federal government but with all of our customers across our core markets, including utilities, data centers, coops and large C&I.

I also wanted to discuss the dynamics tariff landscape that we, like every other company in our industry, are facing. First, I would like to point out that much of the equipment for current ongoing projects and energy assets in development has already been purchased and is in the country or already on the worksites, which we believe shields us from near term price increases. Longer term, we will work to mitigate price increases during contract negotiations and reprice where possible. It’s important to note that the majority of our solar and battery projects are international and therefore not subject to US tariffs. As many of our shareholders know, this is not the first time Ameresco has faced tariffs or inflation and we have experienced overcoming similar difficult pricing dynamics.

We have strong relationships with domestic and global vendors and a healthy backlog of projects, giving us a position of strength with our [various] partners. I will now turn the call over to Mark to comment on our financial performance and 2025 outlook. Mark?

Mark Chiplock: Thank you, George. And good afternoon, everyone. We delivered strong first quarter results with total revenue growing 18% and adjusted EBITDA growing 32%. Our projects business revenue grew 23%, reflecting outstanding execution and our laser focus on the conversion of our backlog. Also as George mentioned, we did not encounter any additional delays or cancellations with the federal government and those contracts that we highlighted during our fourth quarter call, which have now been unpaused or rescoped. Beyond our federal project work, we also had a strong quarter in Europe, Canada and several US regions. This performance speaks to the diversity of our customers, geographies and types of solutions that is a hallmark of the Ameresco business model.

Energy asset revenue grew 31%, driven largely by the growth of assets in operation compared to last year with our base of operating assets now standing at 740 megawatts. We have also taken steps to mitigate lower RIN prices for the year through our dynamic hedging strategy with our remaining 2025 anticipated RIN exposure at only 20%. The revenue decline in our other line of business is attributed directly to the divestiture of our AEG business at the end of 2024. Gross margin of 14.7% was largely in line with our expectations, reflecting a greater mix of revenue from large European EPC contracts. As a reminder, while these design build projects have a lower gross margin profile, they help to diversify our business as well as create strong operating leverage as they require very little incremental operating expense for the gross profit dollars they contribute.

Net income attributable to common shareholders was a loss of $5.5 million or $0.10 per share. Adjusted EBITDA of $40.6 million increased 32%, reflecting our strong revenue growth, tight cost controls and the power of our lean scalable business model. We continue to see substantial growth in our total project backlog, which grew 22% to $4.9 billion. Importantly, we converted $330 million of awards to contracts during the quarter, driving our contracted project backlog up 80% to $2.6 billion. Our project teams continue to deliver on contract conversion and execution to increase revenue and cash flow generation. We also added $367 million of new project awards to our awarded backlog during the quarter. Turning to our balance sheet and cash flows.

We ended the quarter in a solid cash position with approximately $72 million in cash and total corporate debt of $270 million. During the first quarter, we successfully executed approximately $334 million in financing commitments, which included extending and upsizing our senior secured credit facility to help fund our growth. With our strong first quarter results and forward visibility, we are pleased to reaffirm our guidance ranges for 2025 revenue and adjusted EBITDA of $1.9 million and $235 million at the midpoints. Our team’s outstanding execution drove faster implementation during the first quarter of approximately $30 million of project revenue. To assist with shaping for the remainder of the year, we are maintaining our expectation for the cadence of revenue in the second half of 2025 to represent approximately 60% of our total revenue.

Accounting for our strong Q1 results, we anticipate Q2 revenue will be in the range of approximately $400 million to $425 million. Now I’d like to turn the call back to George for closing comments.

George Sakellaris: Thank you, Mark. As you have heard, we had a very solid start to the year and we have seen this momentum continue into the second quarter. For over 25 years, we have built an organization with unmanaged expertise in developing, structuring and delivering energy projects. Our business model is resilient with a majority of our adjusted EBITDA coming from our long term recurring revenue businesses, as well as from the strong multiyear visibility inherent in our project backlog. Furthermore, we believe our project business will continue to grow as we expect to capture more of the emerging infrastructure and resiliency build out. We are also a global business, diversified by end customer, technology and geography, which would allow us to continually support change in policy in any geography will maximize our growth and earnings.

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.

Q&A Session

Operator: [Operator Instructions] And with our first question, this comes from the line of Noah Kaye from Oppenheimer.

Noah Kaye: So clearly from 4Q to now, a nice turn of events around the federal business. I wonder if you could take us a little bit into some of the transpirings that went on during the quarter to maybe kind of get the visibility and some of the contract situations into a better place. I think we start from the premise that these are energy saving and net positive for any assets that the projects are going into. But maybe talk a little bit about how it played out and maybe the nature of some of these new RFPs you’re seeing?

Mark Chiplock: Maybe I’ll just talk to the first part of that with respect to those federal contracts. I mean, again, I think we were fortunate that, again, the one contract that was canceled that has now been rescoped we think will come back under a future mod. And so that will ultimately remain pretty neutral to where it started, which we think is a great outcome. And then on the other two that were paused that are now unpaused, again — those will ultimately be rescoped. We feel that, the rescoping probably will result in a small haircut on those, but, again certainly not the worst case which we, you know, which we could have been with those being canceled. So I think generally speaking, it was a good outcome for the three contracts that we talked about in the beginning.

George Sakellaris: And the bottom line is the fact that these contracts, they are primarily energy efficiencies, they are budget neutral and all administrations, they like this particular project. And I think the fact that they would have signed in January probably had something to do with it. And that’s why they probably [indiscernible] and once they realized it’s good for the government and they plan to move ahead. And the one with the GSA, the one — the contract that was canceled, couple of the buildings, they will be sold. So they took that amount of work and they put it in other buildings. So that’s why we feel very good where we are with this administration. And I think we can work with them that they like the budget approach and they like to — resiliency and more power generation in federal facilities in order to have the resiliency required.

And the other thing and that’s why I tried to cover on my notes, how do they maximize the use and get more return from some of the land that’s in the federal base if it’s unused, that’s what happened in Pearl Harbor and so on.

Noah Kaye: Mark, I think last quarter, you gave us some direction on how to think about the shape not only of revenue but maybe even around sort of margins. Obviously, no things can move around a fair bit with project timing. But any color on sort of the shaping of margins either for 2Q or the balance of the year?

Mark Chiplock: I mean, we feel really good about our full year guide on the — especially on the gross margin range, which was 15.5% to 16%. Again, I think Q1 was a little bit lower than our expectation. But as I mentioned, we did see a heavier mix of European EPC contracts that do have a little bit lower margin profile. But I feel pretty good about the margin range for the rest of the year.

Noah Kaye: Maybe last one to sneak in. It’s always hard to resist the temptation to ask about recent events. And I think in this case, it’s quite appropriate, the blackouts in Southern Europe. I guess, we’re still figuring out what caused them, but it does go to a question around building infrastructure reliability on the grid. And I’m curious to think about how you see Ameresco’s opportunity set when you look at events like that and kind of the type of project flow and opportunity you’re seeing in Europe broadly?

George Sakellaris: And it happened not only in Spain and few days before that, it just happened partially in Greece. The fact that all these countries, they’re getting so much solar — renewable power and it’s intermittent, and you’re going to see that happening more and more in United States, which happened in Texas some time ago with the freeze and now — as we put more and more renewables on the system, unless we get battery storage or what I call 24 to 7 days 24 hours, 7 days a week power, otherwise firm renewable power, it’s going to happen. And what I think, I think the distributor generation is going to take much bigger piece of reaction than the large scale power plants and transmission lines, because I do not think that be able to build a transmission line necessary to improve the grid resiliency, because I remember when [indiscernible] the utility for one large transmission line from Massachusetts to Rhode Island, it took us 10 years to get the right of way.

So it’s very difficult. And the other thing that happens, once you build the submission lines, once you have one — an average and sometimes you lose two of them, you don’t have the spending reserve to back up what might happen and that’s how we have these outages. Back in the utility days when I used to do the long range planning, we just have 5% to 10% spending reserve, you don’t have it anymore.

Operator: Our next question comes from the line of George Gianarikas from Canaccord Genuity.

George Gianarikas: I was just wondering if you could give us an update on any projects that are — whose economics are sensitive to changes in the Inflation Reduction Act. What does the world look like there? I mean, what — are those projects still moving forward, are you seeing maybe a little bit of a delay to see the dust settle? I’m just curious if you can share any commentary there.

Mark Chiplock: I mean, I think for the projects that are coming online this year, especially on the RNG, we safe harbored the ITC related to those projects. We feel pretty good about that. Even beyond that, for about three quarters of the projects in our asset development pipeline, we safe harbored the ITC on that as well. I think we mentioned that last quarter around $200 million of additional ITC. So the teams have done a great job to take the necessary steps to try and safe harbor that. I think for assets outside of the RNG, again, I think we’ve done a pretty good job of safe harboring most of that. So I don’t expect any short term impact if there were something to happen with the IRA.

George Gianarikas: Maybe as a follow-up, the changing dynamics and the landscape impacted your decision tree around projects versus willingness to own assets. I mean, how’s that — how’s your philosophy changed there over the last, call it, three to six months?

George Sakellaris: In the interest environment, it’s a little bit higher than what we would like it to be. And I think it goes without saying and that’s why you’re seeing the growth in the project business a little bit more. We put a little bit more emphasis on the project but of course, they generate very good cash flow, and we have a pretty good niche in the marketplace there. And now as the evolution happens with more resiliency and more power generation, we want to take a good piece of that action and it’s right up to our expertise. But on the other hand, I mean, we have over 600 megawatts of assets in development, which it can take care of for us for the next two, three years. So we are not taking our foot off the gas line there but on the — over the pedal. But we like the project business a lot and we actually [indiscernible] on those very well. So we are focusing on that a little bit more.

Operator: Our next question comes from the line of Kashy Harrison from Piper Sandler.

Kashy Harrison: Thanks for taking the questions and congrats on 25 years. So nice to hear that the projects that have paused have now resumed. I was just wondering, have you seen any negative impacts from the reduced federal workforce on your business or is the approval process, and just the day-to-day work of the federal government ongoing without any interruptions from less workers?

Mark Chiplock: To be honest, we haven’t seen anything yet. But we certainly could see a situation where the things that are happening, the personnel could have an impact on the timing of how awards can convert to contracts or just administrative challenges that, that could impact the timing of the progression of our projects. I think we’ve tried to build in some amount of conservatism into our guide and to the numbers through the year. But kind of near term, we haven’t seen anything as of yet.

George Sakellaris: On the long term though, because of the budget neutral associated with our projects, and if you recall, the previous Trump administration, we actually did more performance contracts under them than we did under the Biden administration, because they like this concept. So even though we might see, let’s say, the movements from awards to contracted backlog delayed a little bit but the number of contracts and proposals most likely will go up.

Kashy Harrison: Maybe just two more quick ones from me. George, I think you discussed that you’re in a good spot on storage and the exposure is not even that great or is not that high anyways to the US, it’s more international. And then you said demand, it sounds like demand hasn’t really been impacted by tariffs. But I’m just curious, are there any other implications to your business from tariffs that we need to be thinking about in any of the individual segments that maybe weren’t covered in the prepared remarks?

George Sakellaris: I mean, on the batteries, the projects we are doing this year and next year. On this year, they were all pre-purchased before any impact on the tariffs. On next year, I think half of them will be repurchased. The other half, what we’ve been able to do with some of our customers, dollar for dollar, it’s closing the contracts that the purchase power agreements that whatever the tariff is, it will be a pass through. We’ll recalculate, the rate will be a pass through. And the same thing is in the play with some of the panels. But what — and the other thing that we have been trying to buy in as much domestic as possible. But still if you get tariffs, so you can — the domestic price will go up as well. But so far, we have managed very, very well where we are.

Kashy Harrison: And then maybe just one final one for me. I was just curious whether you’ve observed any dislocations in valuations between private transactions or what your pieces of your portfolio may be able to get in the private market versus what you’re seeing in the public markets and whether there’s any appetite to show the public markets the value of your assets via transactions?

George Sakellaris: I think that’s up to Josh’s alley.

Josh Baribeau: So I think the answer is yes. We do believe that there are still robust private valuations for the types of projects and assets that we are implementing, nothing we can really share now. But I think that the public valuations in our whole sector have definitely been, we’ll call it, disproportionately impacted on maybe rational and irrational fears about changes in the government and news cycle, et cetera. But the fundamentals of our energy efficiency offerings, our RNG assets, our pipeline, our portfolio and our platform remain incredibly strong and people that have the ability to look at these things from a project financing perspective or some of our develop and sell, those equity investors, those private equity investors, still like what they see and we’re still able to monetize the value that we’re creating.

Operator: Our next question comes from the line of Eric Stine from Craig Hallum.

Eric Stine: Maybe just sticking with the tariffs, and I guess I’m — great news on how things are set up for ’25 and for part of next year. But just thinking about this, if this period of uncertainty were to last for longer than that, just want to dig in a little bit on kind of the structure of the contracts. Is it pretty common to have that pass through language? I guess, what I’m getting at is, I mean, is this kind of a painstaking contract by contract renegotiation or is this something that’s pretty standard, it’s in the contracts and it’s pretty much accepted by your customers?

George Sakellaris: Well, pretty much like I’ve told our people that new contracts, we have the language that we are protected against tariffs. And sometimes if we — too much equipment is coming from a broad foreign exchange for creations as well, that’s just become right now the mark. But it goes from customer to customer. And for example, this particular customer, it’s a large contract, it’s a battery storage project and they had a certain deadline that they want to have the project up and running. And we had to put money down for the transformer in order to save up property ITC and so on, and we said that’s fine. But if the tariffs come and the prices goes up, you have to be on the hook for it as well for the transformer and so on.

And they stepped up to the plate. And we’ve seen more and more — some of the largest industrial customers looking for resiliency, better restorers and so on. So I think at the end of the day, they’re willing to do where it’s necessary to protect their operations.

Mark Chiplock: Look, I think beyond even the contracts, we continue to diversify the supply chain, right, I think we were taking quite a few learnings that we came out of COVID. And so we’ve been focused on bringing materials in faster on our projects, diversifying the supply chain, looking at domestic sources. So I think the combination of building those protections into the contracts as well as kind of maintaining that diversification is going to help us to mitigate most of the exposure to tariffs moving forward.

Eric Stine: And then maybe just back on the federal government work, and this is just a question that was just asked, but just wanted to clarify. In terms of the reduced work force, I mean, it sounds like you are viewing this more as a delay, potential delays rather than just cancellations. And I know what you’ve seen to this point is you had the one which will be rescoped, you’ve got the two that have kind of come back. But — I mean, so is it more from an approval process and timing just to get through everything that’s necessary to move forward rather than seeing a bigger risk that fewer buildings, housing that smaller workforce and changing the overall scope?

George Sakellaris: I mean, I wouldn’t say that we have potential delays. I mean, it would be immaterial because that’s what I’m trying to point out because of the power of the venue proposition of our offerings is so strong and administration wanted it so bad, they need this kind of work. Because at the end of the day they get the infrastructure upgrade and they don’t have to use their budget in order to do it, they don’t require the capital so there will be more push to save money. So even if they have fewer people, at the end of the day, I would expect that we will see more contracts signed with these guys.

Josh Baribeau: But I think generally speaking, if there is risk, we look at it being more administrative and just potentially slowing down the process around award conversions or contracting. So — and yes we haven’t seen anything yet.

Operator: [Operator Instructions] And our next question comes from the line of Craig Irwin from Roth Capital Partners.

Craig Irwin: So George, Mark, everyone, thank you for the data point on your RIN hedging position. I’m sure you’re well aware of some of the controversial forecasts that have been out there from different analysts about RINs possibly being cut in half, not something that you would expect one of the big oil desks to say. But can you just remind us what the process as you go through to evaluate the potential profitability on your assets before you go and deploy capital, how you structure these agreements as far as sharing of the RINs and other incentives? And how you sort of stress test these projects before you ever spend any money, breaking ground to build, to ensure profitability across the cycle?

Josh Baribeau: So we have a pretty thorough process of vetting the RNG projects throughout their development, including multiple steps with our investment committee. And we of course have some pretty well entrenched financing partners as well. And we run a lot of the projects through them early on to make sure that their expectations for the RIN curve match ours or match something that’s reasonable in the market. And we layer in the financing assumptions in terms of the amount of debt, the cost of debt, the tenor, et cetera, in conjunction with what our models are showing us and what the development team is producing. And in a base case scenario and in a stress case scenario, if they meet our hurdle rates, which you’ve talked about as sort of a levered teens IRR on a risk adjusted basis then we proceed throughout those next steps, those gates throughout development.

So there’s a lot in there. But we definitely aren’t taking kind of historical RIN rates or even current RIN rates. It really is kind of a downward sloping curve based on forecasts that we have from all sorts of market parties as well as our own proprietary analysis of supply and demand from the RVO, et cetera.

Craig Irwin: So my next question is about the operating expenses. You had more than $50 million in revenue growth, but you were down over the last couple of years from the first quarter for your operating expenses. Are you allocating personnel maybe to project execution from development activities? Is there anything sort of going on as far as one time expenses or re-budgeting on the operating expense line? And if there was maybe the move of personnel to execution, could you maybe quantify for us what that might have been on a margin basis?

Josh Baribeau: I mean, I think that from an allocation, we are seeing probably slightly better utilization, I think, as you look at OpEx, the trend. Remember also, last year we had the additional OpEx from our AEG business, which was divested. So we’re seeing a direct reduction from those costs no longer being in the P&L. But I think, generally speaking, the cost controls around OpEx are really what is helping to keep OpEx steady or even down as we’re managing the timing of when we’re bringing in new employees and only adding as we need to. We still have pretty strong operating leverage with a lot of the larger projects that were being brought on.

Operator: Our next question comes from the line of Joseph Osha from Guggenheim.

Joseph Osha: Two questions. First, I mean, George, you alluded to non-US exposure in your — in particular, your solar and energy storage backlog. I’m just wondering if you can maybe put some rough numbers around that. Obviously, you’ve got 63% of your energy asset backlog in those two sectors. It’s harder to tell what the number is for the project backlog. But help us understand how that might roughly break into US and non-US business? And then I have one other question.

George Sakellaris: Most of the European and Canada work, so that’s probably 1.5 gigawatts, but primarily though, EPC, I think it’s only a very small portion that we will hold and that’s up in Canada. In Europe, all the projects that we have, but with exception of small one, maybe 10 megawatts, it’s EPC contract.

Joseph Osha: I guess I’m not understanding, you’ve got 618 megawatts of energy assets in construction, 63% of which are solar or battery. I’m trying to understand what portion of those is US versus non-US?

Josh Baribeau: It’s almost all exclusively US — Joe, we were answering a question on the project backlog. I didn’t realize you were answering it on the outlook…

Joseph Osha: That’s quite helpful. So the project backlog is more geographically diverse but the energy asset backlog is more US?

Josh Baribeau: That’s correct.

Joseph Osha: And next question, I heard some comments about diversifying procurement, which is great and there’s — you got a few options on the solar module side. There’s not a lot of LFP production in the United States right now and most of it is spoken for. When you look at your storage business, are there options for buying in the US? Are you going to buy nickel based cells or have you found a factory nobody knows about or — I’m curious what your procurement strategy is for sales? And I assume you’re using mostly LFP.

Josh Baribeau: We’re volleying back and forth over who gets this one. The short answer is it is mostly traditional lithium ion. And unfortunately, we don’t have any brand new factories that nobody knows about to announce on the call tonight. We are sourcing from the same kind of major global players that a lot of people are, especially as it pertains to bankability and performance, because as I think you know and we’ve tried different solutions, it hasn’t been quite as successful. That being said, I think the key here is that the stuff we have at assets in development have for this year, as George mentioned, have been safe harbored, and/or already delivered on-site for the most part. We have one big project that that’ll be kind of midyear COD, which makes up the bulk of the assets and operations that we guided to last time.

And then new projects, so less about procurement and more about contract structure. The new projects, we’re inserting change in law provisions, as George mentioned, kind of a dollar for dollar adjustment to tariff or IRA type of changes. So it’s less about procurement and more about working with our customers to get a fair deal in this uncertain environment.

Joseph Osha: And just as a last follow on to that, other people in this business have alluded to those pass throughs but also indicated that there are brackets around that limiting exposure. So let us suppose that we are paying 130% LFP tariffs a year from now. Is it your intention and your belief that you can pass all of that along to customers or will you bear some of it?

George Sakellaris: We’ll try to pass it on to our customers. Unless the project margin is such that we could absorb some, then we will look at economics very, very hard before we take on that kind of risk or cost. At the end of the day, the economics are the price you will see.

Operator: Thank you. There are no further questions. This now concludes the question-and-answer session. This also concludes the conference call. Thank you all for joining. You may now disconnect.