Jason Bonfigt: Q3 gross margin in our residential business was about 33.7%. That is down historically just driven by the fact that we’ve had many of these markets that have been underutilized and we have underutilized crew capacity. We’ve made, as we mentioned on the call and our prepared remarks, many reductions, over $6 million, in the past four to five months. That’s going to help us drive margin improvement within the residential business. And then, we’re starting to see some lower cost procurement and materials coming through as well, so that will give us a little bit of lift here probably at the end of Q4. But again, I think we’re making a lot of these changes in some of these markets and not all of the benefits we baked in in Q4. So I think this is a gradual recovery into next year.
Philip Shen: Okay. So margins in Q4 could be similar to what you saw in Q3. Is that a fair way of thinking about it?
Jason Bonfigt: Within our commercial business, I think there might be a little bit of upside there relative to the 16%. We’re targeting, when we’re quoting with our customers and holding our operations teams accountable, to manage above 20%. So over the long term, we’d like to see some improvements there. And then, in our residential business, I think there’ll be some lift in Q4, but not materially.
Philip Shen: Right. Okay, great. You talked about exiting a few markets. Can you talk about which ones you left? And then, of the remaining revenue mix on a go-forward basis expected, what’s the mix of California for your business going forward, for the resi business only? So the California resi mix versus the next biggest one. Thanks.
Mark Trout: Hi, Phil. It’s Mark. In terms of some of the markets, what we did is we closed down a couple that were underperforming, underutilized. We had a shift in a few of our dealers as a result of the NEM 3.0 change in California. And so I think what you’re seeing is that transition that you’re probably seeing across the industry back from loans to more of a TPO kind of model in California. And we’re going through that just like everybody else. So California, as we shift back over to probably more TPO, is going to probably come back, we’re expecting. Maybe not to its pre-NEM 3.0 levels quite this year, but we do expect that to come back. California, we are still active in. We’re going to remain active there. And then, really, some of the markets that we’ve exited have been where they’ve been; less focus from our direct sales team and more focus from dealers.
And as dealers have lost some of their volume, we’ve chosen to reduce our EPC footprint. I think there’s a list of those in the earnings announcement.
Philip Shen: A list of the markets you exited?
Mark Trout: A list of the ones we’re staying in.
Philip Shen: Staying in, okay. So is California about 50% of your business still, or is it a little bit less or more?
Mark Trout: It’s actually less of our business right now. We’re seeing actually a shift in some of the other markets have really come on strong. And that’s probably due to AR focus as well as there was a lot of backlog. Frankly, I think that all of us felt in the lead up to NEM 3.0. And we’ve been working down that backlog, it kind of created a normal slowing right after NEM 3.0, and so that’s just kind of bouncing back.
Philip Shen: Right.
Mark Trout: So we’re probably about 30% California right now, if I do some quick math.
Philip Shen: Okay. So given your commitment to stay in California and given the transition to NEM 3.0 and storage, what’s your bookings momentum currently? Is it still down on a year-over-year basis? When do you expect your originations to perhaps be up year over year? Sunrun has talked about maybe breakeven near term, but I know others are having trouble or a harder time. So just curious, do you see that in Q2 of next year, maybe Q3? Or could it be sooner? Thanks.
