Operator: Our next question or comment comes from the line of Pavel Molchanov from Raymond James.
Pavel Molchanov : A lot of commentary about the core domestic business. I’ll ask 2 questions about Europe. First of all, are any of the permitting issues and supply chain complications affecting any of your work on the other side of the Atlantic?
Doran Hole: So first coat that I will tell you because I was there last week visiting one of the sites, one of the large sites. The — there’s been a little bit but not to the tune that we’ve seen here in the United States with respect to labor availability and materials. I think that we — especially on that 100-megawatt Delphine project that we’ve got in Greece, that is still kind of cruising along on top. And we’ve only had slight variations associated with the time line there. So — and I think that what we’re projecting on many of the new wins in the awarded category, some of which was there in Europe on the EPC side. Expectations still remain strong on availability of materials and labors in those jurisdictions where we’re winning projects for them.
George Sakellaris: And that goes even in U.K. The only exception was the Bristol City contract that we have. And we wish the numbers by good margin there, not because we didn’t have the projects, but — and this is a lesson for us. getting the projects approved through the city council and everybody else that has to approve those particular projects, it take considerably longer than we thought. Now we have incorporated monthly maintenance will emit the word and identify what projects are going to be doing them and have them are pretty much approved by the end of this year what we’re going to build the next year. So that one, we missed the boat as far as what we thought it was possible and what actually happened. Again, it’s administrative, not because they don’t want to do or anything else, but —
Doran Hole: Yes. Administrative and that’s about the cycle of just conversion of awards. So I guess not anything about actual construction activity and furthermore, is a push to the right. It’s not a change in any of the scope of the awards that we give…
Pavel Molchanov : Okay. Clear. Staying on the European theme, you — for this year, I have to imagine that with some of the macro issues, multiples on prospective M&A have come down. In that context, are you seeing more opportunities to bulk up your business there via M&A?
Doran Hole: Yes. We don’t have anything specific to talk about today, but we would agree with your comment. And we are seeing — again, we’re very opportunistic. We’re still sticking to our knitting in terms of what we’re looking for management fit, financial valuation and so on and so forth. But yes, the number of opportunities that look interesting has increased.
Operator: Our next question comment comes from the line of Davis Sunderland from Baird.
Davis Sunderland : Most of my questions have already been asked. I just wanted to ask, is there any possibility of recovery expenses associated with some of these projects in the contracted stage that have been drawn out? Similar to SoCal or other deals that you’ve done in the past? And my follow-up is, given the lack of visibility in the labor and component shortages, how are you thinking about these variables and contracts now going forward?
Doran Hole: Yes. Sure. So sorry, David, your line is a little bit fuzzy, but I think I got the question. So the first point is when something actually is created by a force majeure situation. Yes, of course, we can claim back costs for certain delays, and that’s always contractual I don’t have any particular anecdotes for you or numbers on that. But yes, in general, the contracts — generally looking for force mature, not necessarily a general slowdown or availability of labor, though. With respect to looking through the remainder of the year and in talking about — thinking about 250 number next year, we’ve effectively taken into account what is happening in considering the cadence of construction going forward. As we talked about, we don’t typically lose business at the awarded backlog or contracted backlog, certainly not out of the contracted backlog.
However, if there are slowdowns, things just kind of push out to the right. So we’ve adjusted expectations with respect to cadence, and we’ve presented numbers on that basis to you all today.
Operator: Our next question or comment comes from the line of Greg Wasikowski from Webber Research and Advisory.
Greg Wasikowski : Just one for me. I just wanted to ask a little bit more about the prospect of selling off some assets in development because I just feel like I might not be grasping it or maybe I misheard it. It seems like that would allow you to stay in front of customers and maintain business within projects in O&M, which is great. But if you’re trading energy assets business for projects and L&M business, isn’t that like trading a high EBITDA margin business for a low one. So in a sense, it wouldn’t be as much pushing it out to the right as much as it would be kind of more like margin erosion for the sake of continuity. Is that a fair way of looking at it? Or am I off base there?
Doran Hole: Yes. So I’ll just kind of guide you to the way we think about these things. A couple of important metrics for us when we’re evaluating assets that go away from EBITDA generation and levered equity IRR or cash generation and net income. And as it turns out, some of these assets, when we look at anything that might have a merchant tail on it, others were the unlevered IRR is relatively tight versus the funding costs. We then turn our attention to, well, from an overall cash flow generation perspective, we’re probably better served when we look at where the market is pricing some of those assets to perform the EPC and grab the O&M contract to generate additional cash flow and recycle that into something that’s actually going to look better for us from a cash flow and net income perspective over the long-term. That’s the only kind of modification I might throw there.
Operator: Thank you. Ladies and gentlemen, this concludes the Q&A session. And this concludes today’s conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.
