Ahmad Chatila: Yes. Let me – I’ll take this one. This is Ahmad. Thank you, Sameer. So the – there’s two ways. One is to control the overhead costs, not reduce it, but control it. And as volumes expand to be careful of how we expand that overhead costs, like services in the field and so on and so forth. But the vast majority of that gross margin improvement comes from unit cost reduction like bill of materials, value-added manufacturing and logistics.
Sameer Joshi: Great. Great. Thanks for that color. And then just one last question. In the income statement, there is a $4.1 million gain from disposal of investment. Can you give us – tell us what it is?
Ahmad Chatila: Cathy?
Cathy Behnen: Yes. We previously had an investment in a subsidiary that we disposed of back in 2021. And we had an earnout on that. And as that earnout gets earned, and we recognize the revenue at that point in time.
Sameer Joshi: Got it. Thanks for that clarification. Thanks for taking my questions and good luck.
Ahmad Chatila: Thank you.
Operator: Thank you. And one moment for our next question. And our next question comes from the line of Jeff Osborne with TD Cowen. Your line is open. Please go ahead.
Jeff Osborne: Thank you. Good morning. Just a couple quick ones. I was wondering if you could categorize either Patrick or Ahmad, the growth in the second half. I assume that those in the U.S., would you say it’s with larger developers, smaller developers? Any context would be helpful.
Ahmad Chatila: Thank you, Jeff. This is Ahmad. So it is in the U.S., it is with smaller developers. I mean, just to give you some color, our stock price being where it is, we are not as successful yet in penetrating Tier 1 accounts. And that’s something that I think will change as we break even in Q3 and become profitable in Q4 so that’s the color on the growth.
Jeff Osborne: That’s helpful. Just going back six months, nine months ago, Patrick and the team were a bit maybe overly specific, but I think there was reference to like the Cat Creek project in Idaho and then some agri-photovoltaics in Italy and some potential projects in Spain. I was just wondering if you could update us on where those stand. And then specifically in Italy, I think the government is looking to possibly shut down the agri-PV sector as a whole. And so I wasn’t sure if there’s any notable backlog in that vertical, just given that, that was a focus of the…
Ahmad Chatila: So Jeff, I will give you color on Europe, and then Patrick can talk about Cat Creek. Look, the Italian potential business is not material to the company. I would say that Spain is going to become very interesting for us and international, especially with expanding our team and adding senior executives. So we’re going to see some nice progress in the next 12 months. And Patrick, why don’t you give color on Cat Creek.
Patrick Cook: As it relates to the Cat Creek project? Obviously, it’s one that we’re really excited about, just as a lot of other projects have seen. There’s been, some kind of inherent yet small delays that are going on with that project. But we expect it to start here in the short term and, really kind of carry the back, carry into the back half of the year and into 2025.
Jeff Osborne: Great. And two other just rapid fire ones that, Ahmad, how do you define high wind? Is that 120 or 140 miles an hour for the award winning?
Ahmad Chatila: I define it as 135 and 150.
Jeff Osborne: Got it. That’s helpful. And then is there a bias to pay bonuses in Q3 or Q4, or have you accrued for either period.
Ahmad Chatila: I’ll get Cathy to answer that.
Cathy Behnen: No, we have not accrued for either period at this point in time, but do anticipate that there will be an opportunity to pay bonuses in Q4.
Jeff Osborne: Got it. Thank you.
Ahmad Chatila: Thank you, Jeff.
Operator: Thank you. And one moment for our next question. [Operator Instructions] And our next question comes from the line of Kashy Harrison with Piper Sandler. Your line is open. Please go ahead.
Kashy Harrison: Good morning, everybody, and thank you for taking my questions. So just a few ones for me. First off, remind us on the definition of the contracted backlog, and then can you also give us a sense of what proportion of this backlog you would say is fully derisked from a permitting perspective, interconnection financing, high voltage critical equipment panels. Just trying to make sure that the customers have what they need to move forward with these projects.
Ahmad Chatila: All right, Patrick, why don’t you answer this question?
Patrick Cook: Yes. So as it relates to our backlog, our contracted and awarded, we haven’t changed the definition since the IPO. So it encompasses signed purchase orders, LOIs, and as well as verbal awards. And I think we’ve spelled that out in our filings. As well as it relates to derisking we have $485 million worth of signed POs, of that $1.8 billion that sits out there today. But we’re not guiding to, on an individual project basis, who’s got financing and inverters. But once you get a signed purchase order, the projects are moving along in accordance with kind of the time that they’ve laid out.
