Marc Pangburn: Sure. Thanks, Chris. So, I think the primary area to focus on when trying to think about our business as either NII or gain on sale as it relates to guidance is that we do not need to see any incremental growth in gain on sale to achieve guidance. But we’ll, of course, continue to work to maximize that to the best we can. But it is not baked into guidance.
Chris Souther: Got it. That’s great to hear. And then maybe just housekeeping. Can you talk about the gap income from equity method of investments there? That was a lot higher than it’s ever been. So I’m just kind of curious, if you could walk us through that piece.
Marc Pangburn: Sure. So, the primary driver for that is the HLBV pass through from some of our solar projects, that generally happens at initiation of an investment, primarily related to the tax credits coming through.
Chris Souther: Okay. That makes sense. I’ll hop in the queue. Thanks, guys.
Jeffrey Lipson: Thanks, Chris.
Marc Pangburn: Thank you.
Operator: Our next question is from Noah Kaye with Oppenheimer & Company. Please proceed with your question.
Noah Kaye: Thanks for taking the questions. I think, if we had looked back to the start of 2023 and looked to where 2023 ended, we would have been surprised that fuels transport in nature was 30% of the origination mix. Clearly, you’re giving some information on the pipeline mix as always, but talk to us about the incremental growers this year. Where are you bullish by asset class? And what if I think back to your Investor Day presentation are some watch items in terms of either new asset classes or maturing asset classes where you expect more participation?
Susan Nickey: Hey. Thanks, Noah. This is Susan Nickey. As we talked about in our Investor Day presentation, we’re very client centric focused, and not only with our existing clients, but as we add new clients and sectors, we look for the leading strategic and industrial companies that will do not only the first transaction, but programmatic repeats of transactions in existing asset classes, but also as they themselves expand into new sectors. I see that’s what you see represented as we look going forward, as we look at in the pipeline that follows from a top down approach of looking at where our clients are forecasting their growth and then how we fit into that capital stack in their projects. So, we have a diversified base and are seeing strong demand in energy and as well as fuel as companies and states want to continue to see growth in demand but also in decarbonization.
Jeffrey Lipson: And I’d add one thing to Susan’s answer, and looking at Page 7, you hopefully have the deck with you there. Our cadence is such that we have different leading asset classes in subsequent years, and I actually don’t think we ourselves would have necessarily, in your hypothetical — if we dialed back to the beginning of ’23 predicted that FTN would have been 30% community solar 18%, the pace of closings, we obviously know our pipeline very well, but the pace of closings is outside of our control and therefore that short term prediction of what’s going to hit in ’24 can be a little difficult. But think of our pipeline as more than 2 times what we need to be successful, and therefore it gives us the confidence that enough will hit that we will meet our guidance.
Noah Kaye: Thanks, Jeff and Susan. This is slightly around clarifying the cadence of distributable EPS. If I look at the dividend guidance for this year of $166 million, if we just took the midpoint of the payout ratio guidance, it would imply distributable EPS for 2024, a fair bit north of the prior midpoint. And so, without putting too much of a fine point on it and understanding EPS could be lumpy. Do we think about a potentially higher growth rate in ’24 versus the 8% to 10% based off of your pipeline and funding visibility?
Jeffrey Lipson: No, I don’t think so. It certainly could turn out that way, but that’s not the way I would propose you think about it. I do think if we stick somewhere near the midpoint of the guidance over the next three years and have dividend increases that I can’t quite, articulate right now publicly, of course, but something in terms of future dividend increases, you would — the math would be that you would end up in that 60% to 70%, through ’24, ’25 and ’26. So, I think that’s the math on how that was built.
Noah Kaye: Yeah.
Marc Pangburn: You mentioned…
Noah Kaye: Go ahead, Marc. Sorry.
Marc Pangburn: Sure, no worries. You mentioned midpoint of payout. I would think of it more as a midpoint of EPS with payout fluctuating to achieve the guidelines that Jeff already laid out.
Noah Kaye: Yeah. That would argue for a little bit higher payout in ’24. Last sort of housekeeping questions. It looked like portfolio cash inflows all in were down slightly year-over-year. Primary delta, or one of them, seemed to be collections from the equity method affiliates. So, just trying to understand the timing on that. Is there a catch up in 2024? Any color there would be helpful.
