Jose Mas: Yes. Look, I think it’s unchanged for the full year in 2023. It’s just – it’s heavier in the fourth quarter than it was in the third quarter because of the delays. Remember, we started ramping that project in September. We had to get roughly 3,700 people with some of the delays in early on in that project, there was a lot of delays just in terms of fully understanding what was going to be allowed and not allowed. We got to that full ramp towards the latter half of the quarter, so we moved some revenue into Q4. And I’d say we’re probably at this point – I don’t know what they’ve said publicly, so I don’t really want to give a revenue number for 2024. But for us, it will be in the hundreds of millions.
Justin Hauke: Okay. Fair enough. Thank you.
Jose Mas: Thank you.
Operator: We will take our next question from Neil Mehta from Goldman Sachs. Please go ahead.
Neil Mehta: Good morning, Jose, Paul, I wanted to start off on tax [indiscernible] has been a big driver of some – can you hear me okay, Jose? Sorry.
Jose Mas: Yes. Go ahead, Neil. Good morning.
Neil Mehta: Okay. Good morning. I think some of the concerns to your point have been around tax equity and that’s created a lot of the volatility in the Clean Energy segment. And you had made a comment that you expect to get a little bit more clarity by the end of this year around that. So can you talk about what gives you confidence on that? And do you think that’s going to translate into greater activity from the customer base?
Jose Mas: So the short answer is absolutely. I think there’s been an enormous amount of work that’s happened since guidance was released on some of the language in the summer. I think the industry customers are feeling really comfortable and better about the conversations that have been happening with everybody from treasury to energy to commerce. I think the final language will be out by the end of the year. And I think that will spur an enormous amount of activity because it will open up. It will give people the understanding of what it means to hit the bonus tax depreciation opportunities that exist within the bill, which makes tax equity clear, which makes – then makes it sellable. And we have a lot of customers who – it significantly changes their capital profile and the return profile and they don’t want to give it up, so they don’t want to commit to the tax equity today and so they fully understand what all their bonus opportunities are.
And I think we’re getting very close to that being finalized, which, again, I think adds a tremendous amount of activity to the market. And I think it’s important to, again, we’re trying to build our 2024 plan with projects that aren’t super dependent on that and then really use that as potential upside as we think about the year.
Paul DiMarco: Yes. And I would just add, Neil, that direct transfer is another provision of the IRA that’s starting to become much more prevalent, right? I think there was some uncertainty on the – how that transaction – how those transactions would be effectuated early on. But what we’re seeing is more and more developers and renewable power generators finding ways to monetize their tax equity through direct transfer, which as long as it becomes efficient from a cost perspective – from a value perspective, it’s a much more efficient from an administrative perspective. So we are positive on developments.
Neil Mehta: Thanks Paul and that’s helpful. And then Jose for the follow-up is just on margins. We spend a lot of time on this call talking about the top line, but margins have been a source of volatility over the last couple of years as well. So can you give the market confidence in the way that you’re modeling out the margin profile, where do you think the biggest risks are? And where do you think the areas for upside surprise could be?
Jose Mas: Sure. Again, as we thought about 2024 and then what we’re seeing here, I think we took, again, a view as to where we are today and how we’re thinking about that with where the revenue is going. We haven’t changed our long-term margin profile expectations, which I also think is important. There’s nothing that we’re seeing in the business that we don’t – that we think doesn’t allow us to reach our previous targets. If anything, I think we’ve said, as we’ve talked about, the full company margins for the year, I think they’re based on very reasonable and conservative assumptions with, quite frankly, upside across the board, right? We’re starting the year at mid-teens in oil and gas in a year where there’s a lot of new work coming on projects where they’ve traditionally beat those types of margin returns.
We think there’s upside there. On the communications side of the business, obviously, we started the year stronger than we had the previous year. We’ve had a – we’ve taken a step back here in the second half. But when we think about where they were for 2022, there’s no reason we shouldn’t get back to those levels very soon, which are significantly better than where we’ll end the year this year. Our power delivery business, again, this was – this is really the first post year one after acquisition. So I think there’s been some noise in and out of the margins, but I think that we’re – our ability to hit double-digit margins there is completely unchanged. And I think Clean Energy, despite – even despite all the challenges that we’ve had, margins have improved on a year-over-year basis and held somewhat steady.
And I think that with the volume that we’re expecting, margins have an opportunity to really increase. So I feel good about where margins are going to go over time. And again, I think we’ve set a really conservative base level for 2024 that everybody should feel comfortable with.
Neil Mehta: Okay thank you both.
Jose Mas: Thanks Neil.
Operator: We will take our next question from Marc Bianchi from TD Cowen. Please go ahead.
Marc Bianchi: Thank you. The first question I had relates to the electric businesses, so Clean Energy and Power Delivery and you had mentioned, and I think, like the market has been generally concerned with the higher cost of capital that’s affecting those businesses. So, if you think about project development and higher cost of capital, that’s one thing for Clean Energy and then higher cost of capital in the utility sector, and you mentioned some customers slowing spending. So that systemic issue seems to be continuing into 2024 but you made the comment that you’ve got some of the utility customers picking spending back up once they renew their budget. So can you kind of talk about how much of that systemic risk do you think is continuing to overhang the business in 2024 and how much of it is getting cleared up and what the maybe mechanisms are for that?
Jose Mas: Yes. So I think when we think about planning for 2024 and again, we’re very early in the cycle, the way we’ve thought about it is we’ve had a lot of success in growing our business. So, in basically either picking up territory or expansion within existing territories in the last x months, right? And we’ve done that with major customers, with major utilities on both the East Coast and the West Coast, and we feel really good about that margin expansion. And in a normal typical year where we wouldn’t have this overhang of concern relative to what’s happening with interest rates and costs, our growth projections just based on that would be dramatically higher than what we laid out today. So, I think we’re hedging the opportunities that we’re getting from a growth perspective with some of the challenges we think utilities will continue to face.
