Nipul Patel: Well, the projects — the size of the projects, right, will depend how long they go out, right? But — it’s the way to think about it Jeff.
Kevin Hostetler: We would — I guess the clarity we want to make is that our backlog — so when we compare our backlog to others in the industry that have recently discussed their backlog, they’ve included these long-term megawatt commitments that they may have with the customer, we have not included that in our backlog. So, our backlog is more easily translated to a future revenue stream that’s more predictable than maybe theirs. If we were to include those, we would have a much higher number that we’d be talking about. But we like that clarity and line of sight of our backlog and conversion to a particular revenue within a particular set period of time.
Jeff Osborne: Got it. Thank you. Appreciate it.
Operator: Our next question comes from Joseph Osha with Guggenheim Partners. Please state your question.
Joseph Osha: All right. I made it. Thank you and hello everyone.
Kevin Hostetler: Hi, Joseph.
Joseph Osha: Hi. I wanted to return to some of the comments that you were making about domestic content and how that reflects as pricing with your customers? I want to understand the logistics of this. If you have an order in hand and you’re unclear yet about whether your customers are going to be able to claim the domestic content credit or not. Is there something written into the contract that allows you to reopen the conversation depending on the outcome of IRS guidance or what? I just want to make sure I understand exactly how this works.
Kevin Hostetler: So, to be clear, the orders that we have in our backlog have no — I would say, largely have no specific domestic content requirement, right, which means we could satisfy them with our — for lack of a better word, standard bill of material today at 70% to 75% or we can add more domestic content. What will come — what I foresee is in the future as the domestic content requirements become clearer and those sites now can start doing the formulaic math of what they need to get to their 40% and then they’re increasing 45% to up to the 55% in a few years. When they have that clear to be able to do their math, they’ll come back to us and say, hey, Array, on this 125-megawatt project, we need as much domestic content as you can give us. What’s the premium to go from that 75% up to that 95%, right? And again, that would open a change order likely in the contract. But today, we’re not specifying any of that enhanced domestic content for us that way.
Joseph Osha: Okay. So, all right. So, again, so basically the way it’s written now, it leaves you the option basically to say, hey, this is a change order. If somebody comes back and hits you with a specific request?
Kevin Hostetler: That’s correct.
Joseph Osha: Okay. All right. I got it. Thanks very much. That was my only question.
Kevin Hostetler: You’re welcome.
Operator: Our next question comes from Jordan Levy with Truist Securities. Please state your question. Jordan Levy, your line is open, please go ahead. Okay. We’ll move on to the next question. Our next question comes from Vikram Bagri with Citi. Please state your question.
Vikram Bagri: Hey, guys. I wanted to ask follow-up on the uncertainty caused by the IRA and unavailability of modules. Is it a way to quantify what kind of impact it will have; one, on the backlog, it seems like there is — there are orders on the sideline, which are not included in the backlog, which will quickly materialize into backlog once the clarity is provided, one? And then two, how much of the decline — the sequential decline in one — first quarter that you talked about, 20% is caused by seasonality versus lack of clarity on IRA versus module availability? And have you seen any slippage in timing of any of the projects because of lack of clarity on IRA front and/or the module availability issues?
Nipul Patel: Hey Vikram, this is Nipul, I’ll start. So, on your second question first, of the first quarter 20% down sequentially as mentioned in the prepared remarks, part of that is just normal seasonality, Q1 and we mostly have a North American business. So, that’s typically — depending on weather conditions at sites, we typically have lower deliveries in that first quarter. In addition, we’ve been stating all along for the last couple of quarters here that the UFLPA and the module availability has slowed down some of the conversion — your conversion and we expected that in Q1. So, a combination of those two items is the reason why we’re down sequentially 20%. As far as quantifying the impact of the IRA, I just — at this point, we don’t feel comfortable because there’s a lot of unknowns, right, in that.
And once — as Kevin said earlier, once we get that clarity, we made the commitment to have that transparency and come out to the market on how that impacts. The bottom-line is it should be upside once we get clarity, but we just don’t have that at this point.
