Julian Nebreda: Today, I would say if you looked at our pipeline, the ones that have more than a 50% is mostly new projects. Retrofits and things of that sort are more in the leads part. So, there’s like mostly greenfield, if not essentially all today. However, we do see, as you can see, a lot of our customers are looking at talking to us at retrofits or replacing some coal facilities. So, there are some in our pipeline or in our contra backlog that are – they’re building it into a former coal facility, but generally they’re greenfield.
Andrew Crocco: Understood. Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Joseph Osha with Guggenheim Partners. Your line is now open.
Joseph Osha: Hello. Congratulations on the great outcome. I’ve got a couple of questions. First, looking – you’ve alluded to the gross margin, but as we look at that FY 2025 guide, I’m wondering how we might think about operating cost absorption and what that implies roughly for the ability of the enterprise to grow EBITDA. I have a couple of other questions, but I’ll start with that one.
Julian Nebreda: Joe, good morning. I’ll let Manu answer.
Manu Sial: So, look, I think consistent with what you said, as we think about 2025 EBITDA profile, gross margins are probably at the midpoint of the 10% to 15% range. And then we’ve been very disciplined around operating expense, and we expect to grow operating expense at little bit less than half of our topline growth. And you saw that in 2023, and you expect to see that in 2024 and 2025. Look, we are continuing to invest in the business on the backs of a growing market and $13 billion of pipeline.
Joseph Osha: Okay. Could we begin to see any material benefit from 45x credits in FY 2025, given how cell availability in the US is evolving?
Manu Sial: Yes. I mean, the short answer is yes, but I think – from a modeling perspective, I’d still stick within the lanes I just talked about.
Joseph Osha: Okay. But to be clear, that number you’ve put out there does not build in any 45xes. Is that correct?
Julian Nebreda: The way we have – our view on the 45x is that they will be within the range, so that we’ll see that the 45x will take us outside of the range of the 10% to 15%. That that’s the way we think on. Remember, we’re building a new line. We’re putting it together. We’re starting – this, it will require some taking it up to more – if we get – to a very – to get to scale and efficiency, it takes a little while. So, we believe that the 45x will help us pay for some of that learning curve.
Joseph Osha: Sure. I mean, it’s early days. I just wanted to clarify. So, it does sound like to the extent that those numbers do flow through the P&L in 2025, it would be additive to that range you’re discussing. Is that that kind of what you’re saying?
Julian Nebreda: Yes. Well, I mean, I’ll put it differently. As I said, I do not – today, where we are, I believe that the 45x will help us bringing our line into – it will cover the cost of the learning curve. That’s our view today. We might be able to do this much better than what we expect. But having gone through processes like this, they usually carry some risk and you need to be – so I don’t want to overpromise on this one.
Joseph Osha: Okay. And then just the last one from me on business mix, I’m wondering how you’re looking in terms of storage only freestanding products versus wind and solar coupled projects. Thanks. And that’s it for me. Thank you.
Julian Nebreda: Yes, we see – they’re seeing more and more coming into – in the – first, outside of the US, that’s the norm, just be clear. In the US, we’ll see them come more and more. We signed a few during the year. We see more coming into our lease and into our pipeline. And it will be – I cannot give you an exact number, because I don’t have it in the top of my head, but we do see that over time, that will take over – in the US, the US will start looking more like the rest of the world where battery storage are standalone processes, but it will take a little time. These projects they need to be – people were working on projects that were with renewal assets. It will take a little time until they actually got them permitted in the queue and all that process.
Joseph Osha: Okay. Thank you.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Dylan Nassano with Wolfe Research. Your line is now open.
Dylan Nassano: Good morning. Thanks for taking my questions. Welcome, Ahmed, and wishing you the best in your new role, Manu. Just wanted to touch on the domestic content offering. I mean, how are those conversations kind of going with the customers right now? How much volume, I guess, are you seeing it drive within the pipeline, just on the latest IRS rules that came out? Does that kind of give any kind of incremental certainty to move the needle at all?
Julian Nebreda: Like we said, I think there, our volume growth is based on our view of domestic content. We do – as we mentioned it also, there might be an opportunity for margin expansion. We said it in the past. It’s too early to say today, but we are working with our customers, and it is going well, but it’s too early to say whether we can expand margins based on it. That’s our view. But volumes, we already – what we are – the growth we’re offering essentially includes what our view on where we see our domestic content offering. And that’s generally our view on this. I think that potentially could be a margin expansion, like we said, and as soon as we have visibility, we’ll share that with the market to let you know if it changes.
Well, that might be a potential upside for our 2025 margins, just to be sure. I don’t think you will see any real significant revenue in 2024. It will be a 2025 revenue. So, we’ll let you know. As the year progresses and we start signing contracts, we’ll give you a view of what we can do. And the regulations were a step forward. I think, like all these regulations, they respond a set of questions and they open a new set of questions, but I think that in general, it was good to see more coming. They’re still – we’re still waiting for more clarifications, but it was good to see some clarification then. A lot of the issues that they were addressing were not related to our industry, but the ones that were related to our industry, to the battery storage were in line with what we expected, so.
Dylan Nassano: Got it. Thank you. And then just quick follow-up. Can you just talk a little bit about the geographic breakout of the current backlog and where in the pipeline are you maybe seeing incremental opportunities pop up? Thanks.
Julian Nebreda: Yes, I mean, yes, P&L, the same, the same as our revenue, two thirds, the US, one third of the rest. We see – in terms of markets, and I think we talked about this already, Canada has become now a new market where we’ve been very active and we’ve been doing very well. But besides that, I think that generally we see a lot of growth in Australia and Europe, as in Germany. And Germany, I guess is the other market where we have done the two transmission projects and we are continuing to see growth and movement. So, but very, very strong market all around and the US still leads the pack.
