Alex Vrabel: Yes. Many of your peers would say you’re in the large project business. I know they sort of point to the same. Maybe if I can just ask, obviously a strong environment for storage, obviously sort of a very price elastic product as far as how the returns evolve. But the other thing I want to ask about is how much of this is just – I mean, as far as the volume growth that you guys are able to put up, how much of this is sort of new customers or a higher win rate as opposed to the size of the projects you’re seeing are just ballooning in size? Because if we look at the developer side, it seems like we’ve gone from 200 megawatt hours to two-gigawatt hour projects in a year and a half. And I’m just sort of curious how much of that is really kind of driving the confidence here where it’s not just we have to win a bunch of new customers.
It’s literally just, hey, it’s the same customers. The projects are just five times bigger than they used to be two years ago. You can kind of expand on that.
Julian Nebreda: Yes. My view is that all of the above. Clearly, our customers are doing bigger projects, so great. We’re also entering new markets like Canada, which are new customers that we didn’t have before, and doing more work in Germany. So, I’ll say in the US, it’s mostly our projects getting bigger. Outside of the US is new customers we’re working with. And that’s kind of the way I would put it. So, we have a lot of repeated customers constantly all the time, but we’re also looking for customers that meet our profile, trying to entice them to come and work with us. So, it’s …
Manu Sial: I think in general, as the project sizes get bigger across, at least in the US and also outside the US, given the fact that we are one of the select set of providers that can provide multitude of attributes between great safety records, bankability, supply chain flexibility on attribute management, I think the current customers keep coming back to us and you’re starting to see new customers who now want to work with partners who can manage large projects with multiple attributes start to come our way. That’s a way to think about how we step up as we grow through the years.
Alex Vrabel: Yes, it’s a very fair point. Well again, guys, congrats. Again, Manu, we’ll miss you, but good luck. Good luck.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Chris Ellinghaus with Siebert Williams Shank. Your line is now open.
Chris Ellinghaus: Hey, good morning, everybody. Congrats to Manu and Ahmed. The fourth quarter, the adjusted gross margin was 11.6%. Is that informative for 2024 relative to the guidance, or were there some special circumstances there, particularly related to the legacy contracts?
Julian Nebreda: Yes, I think our guidance is a 10% to 12%. So, midpoint is 11%. In the fourth quarter, there was some change orders that helped. That’s what I will say, that helped bring it up beyond, below, above the – and those are difficult to predict. So, that’s the way I would put it.
Chris Ellinghaus: Okay. And Julian, you, you talked a lot about battery costs, but there’s a bit of a slowdown in EV sales. Are you expecting that to maybe be a tailwind for battery costs in 2024?
Julian Nebreda: I think that today, my view is that I don’t think prices will continue coming down. That’s our current view. They will stay kind of where they are. They won’t go up, but I don’t see these prices of batteries and lithium and lithium carbonate coming down below where we are. But if I knew where they were going to trade, I wouldn’t be doing this job. I’ll be doing something where you make a lot more money, to be very sincere with you. But that’s our view, and I think that talking to our suppliers and talking to the markets and our visits to China, we’re kind of – that’s kind of where things will – we feel comfortable that that’s the way to think about it.
Chris Ellinghaus: Thanks, Julian. I appreciate it.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Pavel Molchanov with Raymond James. Your line is now open.
Pavel Molchanov: Yes, thanks for taking the question. As you look to boost your services and software revenue, would you be open to the idea of placing some battery assets on your own balance sheet from the perspective of virtual power plants, peak saving, rate arbitrage, any of these services that new wins could participate in directly?
Julian Nebreda: Yes, no, not really. I mean, my view on this is that it’s our customers’ job. They should do it. If I started doing what my customers do is a recipe for disaster. So, no, I’m not planning – we’re not planning to get into the storage business or using storage as a service business to third parties.
Pavel Molchanov: Understood. A quick follow up on M&A. As you look at potential software acquisitions and like AMS a couple years ago, is it fair to say that valuation multiples in a private company arena have come down quite a bit since AMS, for example?
Julian Nebreda: Yes, I mean, as I said, we are not actually in the market. So, whether or not, I’m not testing prices, so I cannot give you first evidence of where prices are for potential acquisitions. So, but generally, I heard what you are telling me. What I hear from the banks is that when they come and pitch me stuff, that there’s like all these great opportunities around, but as I said, we’re not shopping around. We’re in the process of capturing growth.
Pavel Molchanov: Okay. Thanks very much.
Operator: Thank you. One moment for our next question, please. Our next question comes from the line of Ameet Thakkar with BMO Capital Markets. Your line is now open.
Ameet Thakkar: Hi, good morning. Thanks for squeezing me in. Hopefully two quick ones here. It looks like – we talked a lot about ASPs out in 2024, but it looks like in the current quarter for your revenue recognition, megawatts were kind of flat at 600 megawatts, but pretty big revenue increase. I was just wondering what kind of caused that big kind of step up in ASPs? Was it the change orders you mentioned a little while ago, Julian?
