Gregg Felton: Hey, it’s Gregg. Thank you for the question. And this is definitely the type of detail that we would like to get into with you and make sure that you have an appreciation for how we’re looking at the world. So, the first important point is, yes, we are reinvesting in the platform every year and the SG&A line has been growing. That takes the form of expanding our team in all areas, frankly, but we referenced some on this call. Every technical area of the firm is growing to support our capabilities and to build our business. I think, Dustin, we saw 25% type of growth numbers or more. And so, I think the year-over-year increase in SG&A is one source of the bridge. The other thing to specifically reference as it relates to your question is, not all megawatts are created equal as it relates to the revenue opportunity.
The revenue per system is very much a function of the market that we’re in. So, for example, in the Southeast, where we added the Basalt assets, the revenues associated with those assets are going to be on the margin lower than the revenue of a similarly sized portfolio in the Northeast might be, just because the price per kilowatt hour that we’re charging for every unit of energy that we’re producing is lower. So, we definitely have a desire to walk through that, and we have an intention for something of a math camp in our Investor Day, which is really intended to get into the model. But I’d say, Dustin, I think it is true that on average, the revenue per megawatt hour added or kilowatt hour added in 2023 was probably brought down our average price per kilowatt hour.
It doesn’t mean the returns were any less attractive, to be clear, because we paid less relative to lower revenue. It’s just the mix might change, and that’s going to continue to change, frankly, as we expand our geography across the country. We’re in 25 states and growing, and new markets might come with a different revenue profile depending on where we’re adding assets.
Vikram Bagri: Understood. And then on financing, it appears you clearly indicated no need for equity this year. But longer-term, can you frame how much room do you have to add more megawatts before needing any outside equity? Also, I was wondering if you can share how you look at leverage internally and where you stand on those metrics? Just trying to understand financing needs as we look beyond 2024.
Gregg Felton: Sure. Let me start with that. So, I think that we have been very focused. We are large shareholders of the company, and we are very focused on shareholder experience, and we’ve been pretty consistent in our messaging that we have no desire to issue equity at dilutive prices. So, our business plan has specifically been designed to limit our need for equity capital. We, of course, started 2024 with $219 million of cash on the balance sheet, supplemented by our Blackstone construction facility, which was undrawn at year-end as well as our access to attractively priced long-term financing facilities. So – and then finally, I should mention, because there’s a bit of disruption in the tax equity market, we can talk more about.
But we have excellent and ongoing access to tax equity, which we don’t think everyone else does in the market. So, we feel very good about our financing access. We’re going to be focused on not issuing equity, and we have clearly, we think, demonstrated some avenues to raise capital, specifically the Holdco financing would be the most recent one in 2023. But we have other non-dilutive sources of capital contemplated to allow us to continue to execute on our growth plan, certainly well into the future. That is our current operating plan.
Lars Norell: And perhaps, we should just say a word about the way our investors look at leverage as well. We have a page in the investor presentation that’s online that we should bring out again. And we, of course, like Gregg said, intend to walk through this stuff in math camp on May 14, the Investor Day. But basically, our debt is rated investment grade. We have a significant collateral balance of solar contracts that in many cases are 25 years, in some cases, longer than that. Some assets are brand new, others have been with us for some time, but that collateral balance is a well-diversified portfolio of other investment-grade contracts, which are our customer contracts spread across the country. When you look at our main debt, which is our funding facility with Blackstone, that debt really goes against that collateral balance of solar contracts with customers, and relative to the value of the collateral balance, the debt is sized fairly conservatively.
And so, when we look at the amount of debt service that comes due each year, when we consider leverage ratios, we and others, for example, Goldman Sachs and the Canadian Pension Plan, feel very comfortable about the room we have left in Altus and the cash that we’re generating. And we don’t think that we brought that particular viewpoint, which is to say, look at the main funding facility relative to our asset values. We haven’t brought that forth yet in a way that allows everyone to truly understand that. We’re going to do a better job with that.
Vikram Bagri: Thank you. And one last question, if I can squeeze in one more. Can you talk about what you’re targeting in terms of return for acquisitions? And how competitive is M&A versus organic growth? That’s all I have. Thank you.
Lars Norell: Yes. We think our customer contracts as being fairly similar, whether it’s an asset that we build from scratch or one of our channel partners’ builds having spent 6 or 9 months developing an asset before they come to us or if we’re looking at a portfolio that have a series of assets that have just been completed for a client. In each case, we look at the terms of the contract, is it a 25-year contract, is it a 25-year contract to deliver clean energy, we look at the system itself, has it been built to the specifications that we look for. And once we have done the due diligence and gone through investment committee, we feel relatively comfortable both looking at new build assets and assets in operation as being relatively similar to each other.
