Northwest Natural Holding Co (NWN) 2020 Q4 法說會逐字稿

Good day, and welcome to the Northwest Natural Holding Company Fourth Quarter 2020 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Nikki Sparley, Director of Investor Relations. Please go ahead.

Thank you, Tom. Good morning, and welcome to our fourth quarter 2020 earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur. In addition, some of our comments today reference non-GAAP adjusted measures. For a complete reconciliation of these measures and other cautionary statements, please refer to the language and reconciliation at the end of our press release. We expect to file our 10-K later today.

As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note, these calls are designed for the financial community. If you are an investor and have additional questions after the call, please contact me directly at (503) 721-2530. News media may contact Melissa Moore at (503) 220-2436.

Speaking this morning are David Anderson, President and Chief Executive Officer; and Frank Burkhartsmeyer, Senior Vice President and Chief Financial Officer. David and Frank have prepared remarks and then will be available along with other members of our executive team to answer your questions.

With that, I will turn it over to David.

Well, thanks, Nikki, and good morning, everybody, and welcome to our 2020 year-end call. While years come and go, but 2020, as we all know, was unforgettable. The pandemic affected many aspects of our daily lives, and I'm proud of the way our employees pulled together to provide our customers with superior service. We successfully navigated a number of challenges while still achieving our key financial and operational goals. We reported net income from continuing operations of $2.30 per share for 2020. That's driven by a solid performance at the gas utility and a strong contribution from our new platform of water utilities.

On the gas operations front, our field crew successfully handled everything from wildfires to restoring service in several towns over Christmas to navigating COVID, social unrest, et cetera. Just a few weeks ago, our employees in the natural gas system once again rose to the occasion and provided reliable service through an extreme weather event. Our storage facilities and overall hedge positions worked to mitigate the amount of gas purchased on the spot market and helped to minimize the impact to our customers' bills. This was incredibly important as prices, as everybody knows, spiked across the country from the widespread cold snap. Our balance sheet remains strong with ample liquidity.

In 2020, we also executed on one of the largest capital programs in the company's history aimed at supporting reliability. We continued to operate one of the most modern and tightest systems in the nation, a system that has no cast iron and no bare steel. In 2020, we invested over $270 million in our natural gas infrastructure.

From an economic perspective, 2020 was truly unprecedented. Prior to the pandemic, we had a very fundamentally sound, sustainable, growing economy with record low unemployment, both nationally and in our service territories. We continue to see economic recovery and steady growth in several important areas. Portland's unemployment rate now at 6.1%, in December, actually, essentially the national rate. That's down from a 14.9% high in April. Single-family housing activity remains strong. In the Portland metro region, home sales were up 8.3% from 2019, with price growth of about 12%. And new single-family permits issued last year were up 4% compared to 2019 levels.

At Northwest Natural, we continue to see good customer growth. New construction plus conversions translated into connecting over 13,000 meters during the last 12 months ended December 31. Our overall customer growth rate as a result, was 1.5% for the same period based on the strong single-family home construction, partially offset by the loss of some commercial customers due to the pandemic. The rollout of vaccines is expected to ease pandemic-related restrictions and allow businesses to reopen.

Still, we know these are difficult times for some customers, and we've worked very closely with commissions, staff and stakeholders to determine the best way to return to normal business practices. We have agreed the time lines for resuming collection processes and continue to evaluate the parties what makes sense for customers given the economic conditions, while also providing financial assistance and payment plans to vulnerable customers. Enhance the system includes a bill forgiveness program and working with the Oregon legislature to provide additional funding for bill relief.

Through a variety of programs and agencies, we provided over $4 million to over 10,000 households to pay their bills and stay warm during the last heating season. We also donated about $1 million to nonprofits in our communities and initiated a special COVID-19 Employee Giving Campaign. For Oregon, previously approved new rates took effect on November 1 last year. Gas bills continue to remain low. Our customers are paying about 40% less today for their bills than they did 15 years ago. In addition, in June, we passed back a record $17 million in storage bill credits to Oregon gas customers.

Safety, reliability and affordability makes natural gas a preferred fuel source. 8 out of 10 homeowners in our service territory prefer natural gas, according to a study conducted in December 2020. There is a strong recognition that natural gas is affordable, efficient and preferable to electricity for heating and cooking. In fact, over 80% of respondents said they would pay $50,000 more for a home that has gas amenities over an all-electric home. Customers also showed their appreciation by ranking Northwest Natural second in the West among large utilities in the 2020 J.D. Power's Residential Customer Satisfaction Survey.

And then finally, our Board approved the dividend increase in the fourth quarter, making 2020 the 65th consecutive year of annual dividend increases. We're proud to provide the return to shareholders and be one of only 3 companies on the NYSE with that long record.

With that, let me turn it over to Frank to give a little bit more details on the financials. Frank?

Thank you, David, and good morning, everyone. I will begin by discussing the financial impacts of COVID-19 and the highlights of the fourth quarter and full year 2020 results and then conclude with guidance for 2021. In 2020, our utility commissions approved COVID deferrals and term sheets that outline the types of revenues and costs that may be recovered. These include PPE, bad debt expense, financing costs associated with additional liquidity and certain lost revenues. Direct expense reductions such as lower travel, and meals and entertainment are to be netted against the deferral. Prudency review and recovery of the deferral accounts will be determined in future proceedings.

While our business model is resilient, we are experiencing some financial impacts related to the pandemic. Through December 31, we incurred an estimated $10 million pretax of incremental costs and lower revenues due to the effects of COVID-19. Of this, $4.8 million were deferred to regulatory accounts. In addition, $1.3 million of late fee revenue that has not been charged to customers since the suspension of normal collection processes, will be recognized in a future period when we begin to recover the foregone fees through rates. The remaining $3.8 million that cannot be recovered through rates are primarily due to lower natural gas utility margin from customers that stop service and slightly lower usage from customers that are not decoupled. In order to further mitigate the financial effects of the pandemic, we initiated temporary cost savings measures, which provided approximately $3.5 million of savings in 2020. In summary, the total P&L impact of COVID in 2020 was $1.6 million.

Turning to our detailed financial results. Note, I'll describe earnings drivers on an after-tax basis using the statutory tax rate of 26.5%. Also note that year-to-date earnings per share comparisons reflect the successful issuance of 1.4 million shares in June 2019 as we raised equity to fund investment in our gas and water utilities. As a reminder, Northwest Natural's earnings are seasonal with the majority of revenues and earnings generated in the first and fourth quarters during the winter heating season.

For the quarter, we reported net income from continuing operations of $45.8 million or $1.50 per share compared to $38.3 million or $1.26 per share for the same period in 2019. The gas utility posted an increase of $0.19 per share related to new rates in Oregon beginning November 1, 2020, offset in part by higher depreciation and general tax expense and the impacts of COVID-19. Contribution from our other businesses increased $0.05 per share from the water assets we acquired in Washington and Texas and lower expenses at the holding company. Utility margin in the gas distribution segment increased $11.5 million from the benefit of new rates in Oregon and customer growth, partly offset by the effects of COVID-19. Utility O&M decreased $500,000 in the quarter, reflecting cost savings efforts. I am proud of our employees for this hard work and commitment allowed us to accomplish this while still providing exceptional service. Depreciation expense and general taxes increased $2.9 million related to the ongoing investment in our system.

For the full year 2020, we reported net income from continuing operations of $70.3 million or $2.30 per share compared to net income of $65.3 million or $2.19 per share for 2019. 2019 results included a regulatory disallowance of $0.22 per share related to an Oregon commission order on tax reform and pension expense. Excluding that disallowance, on an adjusted non-GAAP basis, earnings per share from continuing operations was $2.41 for 2019. The $0.11 per share decline is largely due to year-over-year growth in expenses, the effects of COVID and the positive effects of weather and pipeline constraints on 2019 results.

In the gas distribution segment, utility margin increased $11.3 million. Higher customer rates in Oregon and Washington, customer growth and revenues from the North Mist Expansion Project contributed an additional $21.5 million. This was offset by lower entitlement and curtailment fees related to pipeline constraints in 2019 and warmer weather in the first quarter of 2020 compared to 2019, which collectively reduced margin by $4.5 million. Utility margin also declined $1 million due to lower revenues from late fees as we suspended normal collection processes. The remaining $5.2 million decline in utility market is a result of the 2019 Oregon order. With the exception of the first quarter pension disallowance, this order has no impact on net income as offsetting adjustments were recognized through expenses and income taxes, as I'll describe in a moment.

Utility O&M and other expenses declined $5.4 million. This decrease is associated with the Oregon order, which resulted in $14 million of additional expense in the first quarter of 2019, as discussed previously. This was offset by a $6 million increase in underlying O&M related to higher compensation costs, contractor and professional service expenses as well as moving costs. This was partially offset by the management-driven cost savings measures I described earlier. Pension expenses included in other expense increased $2.8 million. However, this expense is now recovered in rates. Over the last several years, we have invested in our gas system at historically high levels. As a result, depreciation expense and general taxes increased $10.2 million.

Finally, utility segment tax expense in 2019 included a $5.9 million benefit related to the implementation of the Oregon order with no significant resulting effect on net income. Net income from our other businesses increased $2.2 million from higher earnings from the wastewater -- water and wastewater utilities and lower expenses at our holding company, partially offset by lower asset management revenues.

A note on CapEx. We invested $294 million into the business with $273 million of gas utility capital expenditures and $38 million for water acquisitions. Our balance sheet remains strong with ample liquidity.

With regards to the ongoing effects of COVID-19, approximately 97% of our commercial and industrial customers are current with their bills. Nonetheless, we have seen some commercial customers go out of business and shut off their meters as they have been negatively impacted. We will continue to closely monitor usage levels and commercial customer losses. We will also continue to be disciplined regarding cost management in an effort to mitigate these circumstances.

Moving on to 2021 financial guidance. Gas utility capital expenditures for the year are expected to be in the $280 million to $320 million range, including significant projects related to system reinforcement, resource center renovations across our service territory and technology upgrades. The company initiated 2021 earnings guidance today in the range of $2.40 to $2.60 per share. Guidance assumes continued customer growth, average weather conditions and no significant changes in prevailing regulatory policies, mechanisms or outcomes or significant changes in laws, legislation or regulations.

With that, I'll turn the call back over to David.

All right. Well, thank you, Frank. While the past year held challenges, our focus remains the same, providing superior customer service, maximizing returns from our strong and growing regulated natural gas utility and diversifying our business by investing in the water sector. We've made progress on that last front with the sale of 2 investments that were no longer central to our strategy. In August, we sold our interest in the Trail West Pipeline project. And in December, we completed the sale of the Gill Ranch storage facility in California. Proceeds from the sales are expected to be reinvested in our gas and water businesses.

This past year, we reinforced our decision to build a water and wastewater utility platform and highlighted the value we bring and can create in this sector. Our water and wastewater utilities experienced organic customer growth of almost 3%, 2.8% to be exact, over the 12 months ended December 31, 2020. We also completed infrastructure improvements and filed our first water utility general rate case. Although COVID temporary slowed acquisition -- temporarily closed acquisition activity slowed -- excuse me, temporarily slowed acquisition activity, we were still able to add water and wastewater utility in Washington to our portfolio and made our first acquisition in Texas. And we continued to make smaller acquisitions within our existing footprint while pursuing new expansion opportunities. I remain -- I continue to remain very excited about the investment potential in this business.

Another key pillar of our strategy is aggressively pursuing a renewable future in working to decarbonize our gas utility system. Before I take you through our approach, it's important to remember our starting point. Northwest Natural serves about 74% of the residential square footage in our service territory and meets 90% of our space in water heat customers' energy needs on our coldest days. Yet the emissions associated with that use accounts for only 6% of Oregon's total greenhouse gas emissions. In the Northwest, the gas electric system have concurrent peaks in the winter. The gas system delivers about twice as much energy during the peak than the electric system with even more capacity available. This advantage positions us well to help drive decarbonization in the region in a way that ensures reliability and affordability. And as we have seen in recent weeks, one can never underestimate how important reliability is during the winter.

Let me walk you through 3 components of our vision of carbon neutrality by 2050. First, we intend to continue to pursue aggressive energy efficiency to lower energy usage. In the past 40 years, the number of residential natural gas customers in the U.S. has grown by almost 90%, but demand has remained flat, which is a testament to the industry and how well they foster continued efficiency. Our residential customers today use half of the amount of natural gas that they used in 1970, despite consistent growth in the average size of homes and more appliances per home. Second, we're striving to integrate renewable natural gas from a variety of waste streams into our system. The technical potential of RNG supply in Oregon alone is estimated to be nearly 50 billion cubic feet, about the same amount as all of the residential gas throughput in our state. Nationally, early estimates show about 14 trillion cubic feet of technical potential or about 88% of all throughput. Clearly, there's vast technical potential. Now we need to collectively focus on getting as much as we can to market economically.

We also see the potential for hydrogen being added to the pipeline. We believe there are 3 applications for -- of hydrogen from the power to gas process: blended, methanated and dedicated hydrogen systems. We also envision the possibility of blue hydrogen made from natural gas impaired with carbon capture utilization and storage as playing a role in the U.S. gas system, and we're watching Europe, Canada and Australia's efforts in this area.

In 2019, Northwest Natural sent a technical team to Europe to meet with government agencies, think tanks and gas companies, and we learned a lot about new technologies, projects and policy. It was clear Europe is many years ahead of the U.S., and they're thinking about the gas networks, system and the role of green molecules in the energy transition that we're all going to go through. What they realized, gas infrastructure, which is already in place, is a huge advantage. And one great example of this is storage. The natural gas infrastructure is built to provide long duration energy storage that doesn't degrade. It can store RNG in methanated renewable hydrogen today in existing facilities. And when we think about decarbonization strategies across the energy sector, the fact that the infrastructure already exists and has significant cost advantages is incredibly important in my opinion.

For example, Northwest Natural has 20 billion cubic feet of underground storage today. That's equivalent to storing about 6 million megawatt hours of renewables. In today's cost, that would be about a $2 trillion lithium battery. And this is where policy is key to helping us leverage our existing infrastructure in new ways and accelerate our region's decarbonization efforts.

In Oregon, we have Senate Bill 98, the first-of-its-kind renewable natural gas legislation that sets 30-year targets for gas utilities to procure RNG and renewable hydrogen for customers. We just announced our first RNG investment under the bill and are actively working on more. Northwest Natural has started hydrogen blending testing at our training facility, and we're working with Eugene Water & Electric Board in Oregon to propose a project that would include methanated hydrogen for our system.

We're excited about these early steps and are committed to pushing for solutions that include system resilience as part of the energy transition. Now more than ever, it's clear to us how critical our gas infrastructure is to furthering our collective climate goals while also ensuring energy system diversification and reliability for the communities we serve.

So thanks for joining us this morning. And Tom, with that, we'll open it up for questions.

(Operator Instructions) And the first question comes from Chris Ellinghaus with Siebert Williams.

David, can you talk a little bit about the Texas crisis and how you think that will help with the electrification, diversification, decarbonization, education process that you seemingly have to go through with municipalities and legislators today?

Yes. Chris, thanks for the question. And as you know, Texas is my home state. So I really -- my heart goes out to what all that took place down there, and it's a very, very sad situation. But with that said, I think we all need to make sure that we look at that and we learn from that. I think it proves a point that I've been making for a long period of time is you need to have resiliency of systems and redundancy in systems and not have all your eggs in one basket. I'm a big fan of electricity, it's where I started my career. But the natural gas infrastructure is also a critically important aspect of that.

And I think when you apply it to even our current region, Chris, we had some very severe electric outages up here in the electric company, worked very hard and diligently to get everybody on. But if you have natural gas, you have the ability to have your gas fireplace work. You have the ability to have cooking in place. And I know at my own household that was greatly appreciated. So it is my hope that we all learn from these, and we understand that the infrastructure that's in place. I don't -- I'm not as close to Texas, Chris, anymore as I used to be 17, 18 years ago, but I do know in our region, I want to make sure policymakers are making good decisions and ensuring that we are prepared for those events because they will happen. If you believe in climate change, it believes -- which I do, it shows that extreme weather events like this are going to continue to happen. So we need to make sure that we're doing all we can to provide these services to our customers so that they stay warm on those coldest days.

In Washington, the electrification bill that failed, you probably had some kind of interaction with that group of legislators. Were they well educated at the point that they brought that bill?

Well, the bill was brought by a freshman legislator. So he was brand new to the process. And I'm not going to guess whether he was educated or not. But I will tell you, like a lot of times what happens is bills are put in the hopper and then things are figured out after they've put in the hopper. And once that happened, there was a tremendous amount of pushback on the bill, everything from building trades, electricians, gas unions, business and industry associations, grocery stores, home buildings, restaurants, utilities, they kind of pointed out that the bill, as it was currently written, was really probably not a good outcome for the region. And I think once more people started looking at it, then they decided not to move the bill forward at this time. So I'm cautiously optimistic, Chris, that, that will stay that way. You mentioned the word dead. I don't think bills are ever dead. But I think at this juncture, it does look like it's not going to move forward.

Okay. David, you're also saying that Europe is much further ahead on the hydrogen side than we are. I was going to ask you when you thought we'd get a lot of hydrogen data so companies could start to make some decisions on the hydrogen investment. But really, why is -- why are pilots necessary here at this point if there's a lot of information from Europe available?

Well, I'll start, and then I want to turn it over to Kim Heiting to talk a little bit more about what she saw in Europe. But I will tell you, Chris, I'm old enough to be here when the electricity went renewable. And we did -- we had wind and solar down in Texas. And the only way that the electricity system got to where it is today with the amount of renewables is with policy support. And that's what we need here in this country. And I think Europe is ahead of us because they had policy support. I think they went down the path of electrification, figured out pretty quickly -- or maybe not quickly, but figured out that, that was not a doable path. I think they understand the value of the gas infrastructure. So I think there's a little bit of an education process here, Chris, to work with policymakers to make sure that they understand the energy systems, the importance of those energy systems going forward. And that these energy systems can't be clean and green, if you will. But Kim, anything you would like to add on to that?

No. I think you covered it well. I mean, you had asked, why do we need pilots? Well, part of our challenge is we need that policy overlay to accelerate bringing these technologies that are proven to scale. And that's one of the areas of focus for us in the Eugene project that we're working towards with Eugene Water & Electric Board and Bonneville Environmental Foundation, trying to make sure we can demonstrate what the technology here, the methanation technology that's already being applied in Europe and beginning to be applied in Canada so that we can then ask for that next step, which is really that policy overlay. I mean, David mentioned on the federal level, there are things here on the state level that we would like to see over time, treatment of methanation equipment or electrolyzers as we do batteries in our rate construct. So lots of, I think, possibilities, and we're certainly very pleased to see the level of interest now around RNG and hydrogen for the gas networks, and we expect that to only grow.

Okay. One last question. As far as the RNG announcement that you had earlier in the year, should we be expecting a stream of these types of announcements from you guys?

Chris, when we look at what we've been doing as a utility to do everything we can to decarbonize our system and we've got the tightest system in the country, we've been working with our upstream producers to lower their footprint or only buy from responsible producers, the last piece of that pie is to decarbonize the product going through our pipe. And we will move aggressively on this front to do all we can along that line. So I hope the answer is yes to your question, is that we would like to get as much renewable product on the pipeline as we possibly can.

The next question comes from Selman Akyol with Stifel.

A couple of quick things. I mean, first of all, can you just make some comments in and around how the water assets performed in Texas?

Yes. I think I'll start and then Justin Palfreyman, our President, Water, is on. In general, we are very pleased with our Texas assets, and we're trying to add more of those assets as we possibly can. And COVID, as I mentioned in my prepared remarks, has kind of slowed down the acquisition activities, just for safety reasons on both sides of the table. But Justin, do you want to talk a little bit? I know a lot of people saw the freeze-offs and things like that and give an update on what we saw in our operations?

Yes. Absolutely. Our Texas water operations were impacted similarly to many other utilities last week. However, our team reacted very quickly. There were power outages that affected some of the service and resulted in some freezing over and bursting pipes within about half of our overall systems and affecting about half of our customers. We were able to restore water service generally within 24 to 48 hours on our systems and get customers back online very rapidly relative to most of the other utilities in the state. So we're very pleased to see that response from our team down there.

Great. In your opening comments, you referenced, I guess, increased gas demand as well as prices in the first part of the quarter with the cold event. No reason for us to be anticipating anything from needing relief from a regulatory standpoint or anything in terms of incremental bad debts or anything of that nature?

No, Selman. We got hit a little bit before the rest of the country did with the system, and we did get pretty cold, but not like Texas and Arkansas did. But we did have some additional purchases and things like that. We also had some things that offset that, our storage facilities worked fairly well. And so we're in good shape. So you're -- we're not in a situation that some of my peers around with the unprecedented liquidity issues that they've had to finance. We're in good shape.

Glad to hear that. And then just the last one for me. You guys referenced testing 5% hydrogen blend at your trading facility. Can you just talk about how that's going on pipes leakage, anything to be noteworthy coming out of that?

Kim, do you want to take that?

Yes. Yes, we're really pleased. Last fall -- well, I should back up, when we took our trip to Europe, we were really amazed at the level of specificity and kind of where they were with their testing protocol. Fast forward, we've started to build out our own blend test protocols, and we're starting at our training facility in Sherwood, Oregon. We have several buildings there. That's kind of our training town we call it. So it's a really good spot to do this kind of testing.

So last fall, we began the 5% blend, and we were really focused on looking at leakage detection equipment and the performance of that equipment. We were really pleased. We also purchased a hydrogen blending leak detection piece of equipment to test. That performed as expected. We've now moved on to testing the blend on end-use equipment. So fireplaces, water heaters, cooktops, and thus far, we haven't seen anything unexpected. We've been really pleased. So we're building out this testing plan for the rest of the year.

And our goal is to be serving the entire facility, with that 5% blend by the end of the year. We're also working with others in a high-deploy organization where we're sharing technical data. It's a huge database. Really companies internationally that are doing hydrogen blends, doing some technical analysis, not just on the pipes and the components and the end-use equipment, but also on the effect of different blends in the storage facilities. So we're taking all those learnings and applying those into our plan.

I think the final step we see as something probably in the near-term is to begin doing system audits on our system to look at where our great locations for blends at different percentages based on the characteristics of the pipe and maybe the areas that we're serving. So lots going on, a lot of exciting work, and we're staying close to our peers who are also sort of collaborating with us.

And that's all on the blending. You might just mention about methanated, we're not doing that yet, but the difference between blending and the methanated side.

Yes. We see 3 -- as David mentioned in his remarks, 3 applications of hydrogen. Obviously, blending, we think that blending will probably be capped between 20% and maybe 30% at the very high end before you have issues with end-use equipment or pipe components. Then, of course, dedicated hydrogen systems, think about the 2 industrial facilities or even over time to new communities, which they're testing in the U.K. And in that case, you obviously have pipe and components and equipment that were built specifically to deliver and use hydrogen. You don't have any limitations on the amount of hydrogen you can put in the pipe.

But the one that I think we're really interested in, in the near term is methanation of hydrogen because you can take waste CO2 from an industrial facility or a power-gen facility, apply that to the power to gas process and methanate that hydrogen. At that point, it is interchangeable with conventional natural gas molecule. You can also use biogenic sources. So let's pair a renewable natural gas facility with an electrolyzer and create methanated hydrogen. And so we believe that all of those applications will be in play and there's advantages to each one of them that we see being critical paired again with renewable natural gas to get us to that carbon neutrality in 2050. And we're right now doing some scenarios around what kind of components of those different tools will be necessary and planning around that.

Got it. And I apologize, I'm just going to ask one more. But in your comments, you talked about, I guess, government policies and support. And I'm just wondering, David, with anything with your AGA Chairman hat on, is there anything you can talk about plans from there to maybe help that along?

Yes. No, Selman, thank you. I mean the policy support I think can come in various ways. I mean, number one, you can see what we did here in Oregon with the renewable natural gas bill, what we call Senate Bill 98. So I think there's opportunities at the federal level to hopefully do something like that. But yes, that is one of the reasons I agreed to service the AGA Chair this year is to help drive some of this support. Now support can come in the form of tax credits and things like that, but it can also come in the support of other ways of helping the industry move forward. I'm pleased to see that the Biden administration has mentioned hydrogen in some of the discussions they've had. I was on a call the other day with the Speaker -- or excuse me, leader, Schumer, and I pointed out some of the issues that we need to have to kind of transition this system.

So as Chris asked me about Texas, again, I hope this is an opportunity for all of us to kind of look forward and say, how do we build the most resilient energy system. We already have it in this country, how do we make it better and how do we make it cleaner and I think there's just a great opportunity at the federal level. And I would argue at the state levels too. I think we need to continue activities at all the states and specifically the states that I'm part of here to continue to move in not only at the state level but at the federal level, whatever we can to support this transition.

This concludes our question-and-answer session. I would now like to turn the conference back over to David Anderson for any closing remarks.

Well, thanks, Tom, and thanks, everybody, for joining us on a Friday. Thanks for those great questions, by the way. But if you have any questions, Nikki Sparley, which you've got her contact information as your point of contact. And on the media side, Melissa Moore, both of their information is in the press release. And with that, we'll go ahead and sign off, and everybody have a great, safe and warm weekend.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.