Santiago Seage: It is. Having started, having us do that review, we thought that we would need to wait for that to be over before sharing midterm guidance.
Angie Storozynski: Okay. And then last one, what FX — what is the FX ratio or exchange ratio embedded in your CAFD guidance for 2023 for euro versus dollar?
Santiago Seage: So, yeah, as you know, we typically work with a range, and therefore, it would be a range around where the exchange rate is today more or less, today or yesterday or at least it was around £1.06 . So
Angie Storozynski: Okay.
Santiago Seage: we have a certain cushion, let’s say, around that number.
Angie Storozynski: Okay. Thank you. Thanks.
Operator: Thank you. We now have Mark Jarvi of CIBC Capital Markets. Your line is now open.
Mark Jarvi: Thank you. Good morning, everyone. Just in light the strategic review, just wondering, Santiago, what that means in terms of willingness or capacity to pursue M&A driven growth? Could you still do small tuck-in deals, I assume maybe larger transactions are sort of off the table for now?
Santiago Seage: So as we mentioned in the announcement of strategic review and we were explicit about that, the company will continue with its current plan. So call it the typical $300 million equity investment target that we have every year. Our intention is to work towards that, and that would be a combination of, let’s say, construction of projects we have developed, the ones we talked about earlier today, plus M&A, if we find the right opportunities. So the typical our, let’s say, our strategy does not change because of the strategic review and we will continue working as normally at least until the review is over.
Mark Jarvi: Okay. And then what about in terms of dividend and dividend increases, would there be a pause while you sort of initiate the strategic review or is that something if CAFD rolls through with incremental growth and performance, you could continue to — you could increase the dividend this year?
Santiago Seage: Yeah. Yeah. Our current strategy has not changed because of the fact that we are doing a review. As you know, the dividend is a decision to be taken by the Board every quarter, but our current policy continues being the same to have a sort of an 80% kind of payout ratio. So, obviously, depending on CAFD, but no change there because of the review.
Mark Jarvi: Okay.
Santiago Seage: We want to make sure that
Mark Jarvi: And then
Santiago Seage: we will continue operating and working exactly the same way.
Mark Jarvi: Understood. And then in terms of the incremental growth from what was announced last quarter, the one, like, what’s new this quarter versus prior Q3 disclosure? I mean the cost of batteries were discussed and the PV stuff was discussed. And then maybe in terms of the incremental growth, can you kind of comment on terms of where returns are trending for you guys in terms of the newest investments you are looking at?
Santiago Seage: Sure. So if you look at the, let’s say, the projects we have discussed today, some of them we announced them last quarter and others are new, including some of the PV projects, some of storage, plus a smaller hydrogen project I mentioned as well. In terms of returns, probably we haven’t seen a significant change in the last few quarters. Interest rates went up, it took the market a bit of time to adjust to that new reality, and for somebody like us today, and we think that returns are reasonable, given where cost of capital is both for projects we develop and build. And on the M&A front, as we have always done, we will close transactions if we believe that the numbers make sense.
Mark Jarvi: So in response to your comment about higher interest rates, you have not changed your hurdle rates, particularly just you are being able to pass through the higher debt costs. Is that what you are implying?
Santiago Seage: So what I am implying is that, in our case our order rates when we invest get adjusted automatically because of the way we work, and what we are saying is that, yes, we believe that we are going to be able to maintain the spread that we have typically maintained in the past.
Mark Jarvi: Okay. And then one last question, you did go through a strategic review a couple of years ago. I am sure the circumstances are different and there’s different absolutely backdrop today. Through that experience, what kind of disruptions of that cost for the organization and how can you protect this time as you go through the strategic review?
Santiago Seage: Yeah. So that was four years ago, but we think that we are able to go through something like this without affecting the day-to-day business and maybe that experience also helps. But as I mentioned before, our intention is to continue managing the business, doing our investments, paying our dividends following our current strategy, if you want, while we do the review and we think we can do both things at the same time.
Mark Jarvi: Okay. Thank you.
Santiago Seage: Thank you.
Operator: Your next question comes from William Grippin of UBS. You may proceed.
William Grippin: Thanks very much and good morning. My first question is just more of a clarifying question. But between the committed investments you are showing on slide 12 and then the pipeline on slide 13, is there any overlap between those two or should I just think about them being completely independent?
Santiago Seage: They are independent.
