Donovan Schafer: Okay. That’s helpful. And then just a follow-up, if we, you guys have always stood out, as you have the presence in Puerto Rico, on some other islands and even kind of maybe more southern markets and less so say, California compared to some other peers. So I’m wondering in terms of the LMI, adder for the tax credits and the IRR and the energy communities are you finding like you kind of — like luck of the draw, like you you’re finding out in hindsight gee-whiz. If you like I look at California in California you’re probably not going to have quite so many low or middle income Home owners. You have a lot of low middle income residents in the state, but that property, now house prices are so high. And it’s not as often you’re going to get an overlap between homeownership and somebody sort of physician and associate economic sense, whereas you know maybe somewhere like Puerto Rico or parts of Texas or other your other Island nations and markets you’ve been in the past and similar thing with the energy communities.
Yeah. I’m just curious, if I think of oil and gas companies that had so much acreage held by production. And then the whole shale revolution happened. And it was like, oh, my gosh, they’re sitting on a goldmine. Yeah. They didn’t know. Are you seeing any like, things like that from known geography just when you look at like LMI and energy communities?
John Berger: Yeah. That’s an insightful question. The answer is yes. You’re right.
Donovan Schafer: Okay. Okay. Thank you. Well, I appreciate it. I’ll address my questions offline.
John Berger: You bet. Thank you.
Operator: Our next question comes from Maheep Mandloi from Mizuho. Your line is now open. Please go ahead.
Maheep Mandloi: Hey. Thanks for squeezing me in. Just a question on asset sales versus ATM and they said none of those are planned into the guidance for 25-26. But in your talks today or what you’re seeing which look more attractive here? And how should we think about asset sale pricing? We keep hitting low to mid-teens for high-yield tranches from some of the asset it manages, but just curious how you’re thinking about pricing? Thanks.
John Berger: So, we think about pricing holistically, we think about whole stack pricing and where does it make sense to sell assets and thinking through the entire stack versus the fully burdened unlevered return. And it’s not really an either or when we’re looking at the ATM and the asset sales, the asset sales are a function of what’s more attractive to us, what’s going to yield a better cash return and better liquidity? Is it an asset sale, or is it a full-stack securitization? Or is it a securitization with monetizing the residual the ATM? Like we said that’s housekeeping. That’s not meant to be in there. That’s not something we’re looking at to be using. This is something that we just said have been saying for a while. It has been a request of the Board for much longer than that that we go ahead and put into place an ATM, and again good housekeeping and the best time to do it when you don’t need to do it.
Maheep Mandloi: And then just a question on the guidance here at the end the prepared remarks you talked about not changing at this stage and maybe in the next quarter we’ll revisit it. So what’s the upside there, like, it’s mostly on the OpEx cuts, anything else we should look for? And how much of tax credit transferability is in the EBITDA guidance at this stage? Thanks.
John Berger: Sure. Like I said on the EBITDA guidance, we’ve got about $30 million to $40 million of ITC sales per quarter in there. So fairly modest and less than what we had produced this year. We could certainly do much better than that, but it’s not a big part of the guidance. And then we have gone through the budget process, but part of what we want to make sure is to see how this market starts to develop to see how we do with lease and PPA growth versus loan growth, as well as making sure that we can roll through and grind out a lot of the cost cuts that we’ve been doing and see what we can get some additional impact and uplift there. So we don’t necessarily expect guidance to change, but admittedly it’s pretty wide range out there. So we’re hoping to be able to maybe tighten that up a little bit and get a bit more granular there.
Maheep Mandloi: I appreciate that. Thank you.
Operator: Our next question comes from Dylan Nassano from Wolfe Research. Your line is now open. Please go ahead.
Dylan Nassano: Hey, good morning. Thanks for your time. I know we’re running a bit long here, so just one quick question for me. So you said on the prepared remarks that you may update 2024 guidance once you see how cost cutting is playing out. You’ve laid out some upside cases for EBITDA. But I’m also wondering, is there a scenario where customer additions may be a bit lower as we reduced the gross unit growth initiatives. Any elaboration on that comment would be appreciated? Thank you.
John Berger: This is John. Possibly. But I think we feel pretty good about where this range is I would say that we had — as we cut our cotton CapEx down from the Q3 call for this year, we clearly had customer additions north of this range in our plan. And so I think we’re just coming back into plan. So we feel pretty good about where we are. Again we have the ability with the accessory channels and the other services to be able to sell more or grow customers faster, as I mentioned, earlier than our CapEx growth. So, right now, we feel pretty good about our trend, here, we are seeing more and more pickup on growth as the quarter goes on. So that’s a quite nice to see for obviously us, but also the industry as well. And so I think we’re I think we’re going to have a better year overall as an industry than people think. And certainly, we’re on track to what we feel like is going to be at yet another. It’s a record year for us.
Dylan Nassano: Great. Thanks.
Operator: We have time just for one more question from Ameet Thakkar, BMO Capital Markets. Your line is now open. Please go ahead.
Ameet Thakkar: Hey, thanks for squeezing me in on. I think in the past you guys kind of targeted a 60% debt to cap ratio and we’ve been a little bit north of that the last couple of years. I was just wondering, it means that ratio you’ve got more ability to kind of add more leverage given the size and decreasing size of the overall entity or the asset sale is going to be designed to kind of bring you back towards that 60% and that’s kind of what we are kind of trying to drive towards?
John Berger: You’re right. So we’ve been targeting that, so we’ve been targeting that 55% to 60% and we’re about 68% and pegging there for the last few quarters. We’re on a long term target is to bring that down in the 55%, 60%. So again, primarily focused on generating cash and paying down debt. So even with selling of assets and monetizing, I would expect to see that be a net reduction of debt it, or wouldn’t necessarily make that much sense to do. So we’re going to bring that down. I think that’s a good call out and it’s something that clearly it’s my top focus?
Ameet Thakkar: Okay. And then Mike something within kind of the loan portfolio and you guys talked about kind of what sorts of assets would be more I guess make more sense for you to kind of potentially look at monetizing. Can you just give us a sense for like how like what’s the — what’s kind of the notional value of that weather loans or TPO?
John Berger: On the marginal origination that which has not been securitized yet?
Ameet Thakkar: Yes.
John Berger: So we’ve probably got not quite 1 billion within in service and within our warehouses right now on loans, it probably will generate another call it 1 billion of net origination over the course of the next 12 months. So that’s that your pool of existing assets that we could go after action absent a pickup in loan origination.
Ameet Thakkar: Great. Thanks for time.
John Berger: Thank you.
Operator: That concludes the Q&A portion of today’s call. I will now hand back over to John Berger for any final remarks.
John Berger: Thank you. We’re going to continue aggressively pursue cost cuts, to improve our operating leverage. We’re going to continue to expand our margins, most importantly, we are reaching scale, and we’re prioritizing cash generation. We look forward to updating you on our execution as we work to deliver excellent energy services to a growing number of customers around the country and to delivery returns to our shareholders. Thank you for joining us.
Operator: That concludes today’s Sunnova’s fourth quarter full year 2023 earnings conference call. You may now disconnect your lines.
