Northwest Natural Gas Company (NWN) CEO David Anderson on Q4 2019 Results - Earnings Call Transcript

Northwest Natural Gas Company (NYSE:NWN) Q4 2019 Earnings Conference Call March 2, 2020 11:00 AM ET

Company Participants

Nikki Sparley - Director, Investor Relations

David Anderson - President and Chief Executive Officer

Frank Burkhartsmeyer - Senior Vice President and Chief Financial Officer

Justin Palfreyman - Vice President, Business Development

Conference Call Participants

Chris Ellinghaus - Siebert Williams Co.

Aga Zmigrodzka - UBS

Tate Sullivan - Maxim Group

Operator

Good morning and welcome to the NW Natural Holding Company Fourth Quarter 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.

Nikki Sparley

Thank you, Grant. Good morning everyone and welcome to our fourth quarter 2019 earnings call. As a reminder, some of the 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, 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 we will be available, along with other members of our executive team to answer your questions.

With that I will turn it over to David.

David Anderson

Thanks, Nikki and good morning and welcome everybody to our fourth quarter and full year 2019 earnings call. We closed out 2019, our 160th year in business with very strong financial results and significant progress on our long-term strategic objectives. And most importantly, we kept our commitment to customers by providing them with safe and reliable service. Earnings per share from continuing operations was $2.19, but that included a one-time regulatory pension charge of $0.22 per share related to the Oregon commission order we have discussed in previous calls. Excluding that this allowance, on an adjusted non-GAAP basis, earnings per share from continuing operations was $2.41 compared to $2.33 in 2018. These results reflect new rates in Oregon and Washington, gas storage service beginning at North Mist, customer growth and some colder weather and additional fee revenue earlier in the year. Frank will walk through the financial results in detail in a minute.

But in summary, we had a very strong year. This financial growth is a product of multi-year efforts, a keen focus on our long-term plan and a proof that small steps do add up. Three years ago we went through a comprehensive strategic planning effort that explored different views of the future and how best to position our company for continued success. Our management team thoughtfully determined a path to proactively address the evolving needs and priorities of our business. We also validated the guiding pillars of our business strategy that we live by each day. First and foremost, safety is paramount in everything we do. That is followed very closely by providing superior customer service. Our regulatory relationships in providing a constructive approach for all stakeholders, is also essential. In addition, we must continue to maximize returns and enable growth in our natural gas and water utilities.

And finally, environmental stewardship remains a core value. We can and will strive to leverage our modern system, technology and our passion to achieve a low carbon future. Executing on these pillars has culminated in many achievements in 2019 and we will walk through those accomplishments in a moment. As you know, growth is not always linear and in certain years the focus will be on initiatives that set the stage for future growth. 2020 for us is such a year. I’ll end this morning with our plans going forward as we transition to our next stage of growth.

On the operations front in 2019, we continue to make significant safety and reliability investments. Our pipeline system is one of the most modern tightest systems in the nation, and we’re working hard to keep it that way. In 2019, we began several reinforcement projects to support growth in and around the Portland metro area. These projects are expected to be completed in 2020. We’re also planning upgrades to our highly valuable Mist gas storage facility. Colder weather coupled with reduced pipeline capacity from Canada created supply challenges early in 2019. But we were able to maintain service to our customers and other utilities in the region because of the Mist storage field. Our region has been depending on Mist since the 1980s and this past year, we completed the latest expansion North Mist. The expansion provides an innovative no-notice service that supports a local utility as they manage the volatility of the electric grid integrate renewables. Mist delivers energy to our region at the most critical times with only a single pipeline serving our territory. Storage will continue to be essential for ensuring reliable service. And last year, we also advanced multiple efforts to harden our infrastructure and facilities in preparation for natural events like seismic activity. For example, we are currently moving into a new operation center that was built to continue functioning after an earthquake.

We have also made progress on a master plan to upgrade and retrofit our service facilities with the resiliency in mind. Second only to safety is our legacy of service. Our customers are central to our success here at Northwest Natural. I’m thrilled the customers once again gave Northwest Natural the highest score in the nation among large natural gas utilities in the JD Power’s Residential Customer Satisfaction Study. Adding to the good news, business customers ranked us best in the West. I’m proud of all of our employees who make this exceptional service happen every day. We work hard to continue anticipating and meeting our customers’ needs. Having a constructive regulatory agenda and a collaborative approach to balancing stakeholder needs is crucial. After an extended period without rate cases, we knew our strategic goals had to be focused on proactive communications and education with all of our stakeholders.

Due to our robust capital plan as well as cost pressures, we took the necessary step at the end of 2019 and filed an Oregon general rate case. The request includes a revenue increase of $71.4 million based on a 50-50 cap structure, an ROE of 10%, cost of capital of 7.3% and an increase in average rate base of $270 million. The Oregon Commission and stakeholders have 10 months to review the case and we expect new rates to be effective November 1. We continue to see great economic conditions in our service territory. Consequently, low unemployment translated to income gains for workers across Oregon as average earnings rose 4% last year. This was the eighth highest employee earnings growth in the nation. The housing market is remarkably strong even after a peak a few years ago. In the Portland area, single family permits were up 11% in 2019. Multifamily permitting recovered from a slowdown in 2018, rising 15% year-over-year. These factors translated in us connecting nearly 12,500 new customers over the last year, resulting in the growth rate of 1.7% which is one of the fastest among distribution companies in the country.

We continue to grow our natural gas utility but we also know from our strategic planning process that we wanted to add another business with a stable conservative risk profile. We believe the water and wastewater utility sector fits these criteria perfectly. So far, we closed nine water and wastewater transactions in just two years and we have regulatory approval in hand for the T&W transaction in Texas and I expect that to close any day. Cumulatively, we have committed nearly $110 million in this space and we continue to believe in the strong investment potential of this industry as aging infrastructure needs to be replaced. I’m proud of our water development team and the momentum we’ve built that will allow us to execute on the long-term opportunities in this sector. Since 2016, our compound annual growth rate for EPS is 4%. This growth allowed our Board of Directors to increase our dividend for the 64th consecutive year.

Our annual indicated dividend is now $1.91 per share. And we are proud to provide this return to our shareholders and be one of only three companies on the New York Stock Exchange with this long record. Environmental stewardship is a longstanding value here at Northwest Natural. And in 2016, we began pursuing our low carbon pathway, setting a voluntary goal of 30% carbon emission savings by 2005, which requires us to lead and innovate. I am excited to report that we are on track to reach that goal. Although we are starting from a very low level, just 5% of Oregon’s emissions come from our sales customers we know we can do more. That’s why 2019 was a significant year. With the passage of landmark Oregon Senate Bill 98, we now have another path for renewable natural gas to become an increasing part of the state’s energy supply.

Putting renewable natural gas on our system is one of the most effective ways to reduce emissions. In 2019 we also have a team abroad to learn about the innovations and renewable natural gas and renewable hydrogen. Our meetings with governmental entities, utilities and private companies across Europe confirmed that we’re on the right path. It also validated the investments that we’ve already begun making in our own backyard. I look forward to a growing portion of our supply coming from renewables and moving quickly on the opportunities in this market. I’m really proud of all that we’ve accomplished in 2019 in the last several years on our long-term objectives and there is more to come.

But with that, let me turn it over to Frank to cover more details on the financials. Frank?

Frank Burkhartsmeyer

Thank you, David and good morning everyone. I will begin with a summary of our fourth quarter and annual reported results and then discuss our cash flows and guidance for 2020. I will describe earnings drivers on an after-tax basis using the statutory tax rate of 26.5%. Note that our effective rate was 16.2% for 2019 as a result of returning excess deferred income taxes related to tax reform to our Oregon customers. Looking forward, we expect the effective tax rate to be approximately 23% as we continue to provide these benefits to customers. Also note that quarterly and annual earnings per share comparisons were impacted by the issuance of 1.4 million shares in June 2019 as we raised equity to fund investment in our gas utility.

For the fourth quarter, we reported net income from continuing operations of $38.3 million or $1.26 per share compared to net income of $36.8 million or $1.27 per share for the same period in 2018. The $1.6 million increase in net income is a result of a $5.4 million contribution from our natural gas distribution segment, partially offset by a $3.9 million lower contribution from our other businesses. The gas distribution margin increased $5.1 million from customer growth, new customer rates and revenues from the North Mist facility, which began operations in 2019. This higher margin was partially offset by a $2.4 million increase in operations and maintenance expense primarily related to higher payroll and benefit costs. In addition, depreciation expense increased $1.5 million due to higher investments in our system and income tax expense declined $4.5 million dollars as a result of returning tax reform benefits to Oregon customers. Net income from our other businesses declined $3.9 million, primarily due to lower asset management revenues. The prior year results included higher revenues from an October 2018 Canadian pipeline incident.

Turning to full year results, on a consolidated basis, 2019 net income from continuing operations was $65.3 million or $2.19 per share compared to $67.3 million or $2.33 per share in 2018. Excluding the $6.6 million pension disallowance we have discussed previously, net income from continuing operations was $2.41 per share or an increase of $0.08 over 2018. The $0.08 per share increase is the result of a $0.27 increase in the gas distribution segment, partially offset by a $0.19 decline from our other businesses. In the Gas Distribution segment, utility margin increased $28.7 million as higher customer rates, customer growth and revenues from the North Mist expansion added $13.5 million. In addition, colder weather, along with higher fee revenue from interruptible customers contributed an additional $2.7 million. The remaining $12.2 million increase in utility margin is a result of the March 2019 Oregon order related to tax reform and pension expense. 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. While utility O&M and other expenses increased $26.4 million, the increase in underlying O&M was only $2.2 million. The rest of the increase is associated with accounting for the Oregon order.

There are three drivers of this increase. First is actual pension expense is now collected in customer rates. Pension expense increased $8.4 million. Second, the day one accounting impacts of implementing the March order increased expense by $9.2 million offset by higher revenues and lower taxes. Finally, we recorded the $6.6 million pension disallowance in the first quarter. Over the last two years, we have invested in our gas system at historically high levels. As a result, depreciation expense increased $4.2 million. In addition, interest expense increased $3.3 million dollars from higher long-term debt and commercial paper balances in the first half of 2019. Finally, utility segment tax expense includes a $5.4 million benefit related to implementing the March quarter with no significant effect, resulting effect on net income. Net income from our other businesses declined $5.3 million. Asset management revenues decreased from a combination of less favorable market conditions, and an increase in the portion of these revenues that is shared with customers following the Oregon rate case.

In addition, the water utility business had higher development cost during 2019. As a result of the Oregon general rate case and tax reform, there are lots of moving pieces in the 2019 financials, but the underlying drivers remain straightforward. The gas utility benefited from new rates in Oregon and Washington, solid customer growth, as well as weather and some fee revenue and North Mist came online in 2019. This was partially offset by lower asset management revenues and costs related to growing the water business.

A few notes on cash flow. For 2019, the company generated $185 million in operating cash flow. We invested $304 million into the business with $242 million of gas utility capital expenditures and leasehold improvements as well as $57 million of water acquisitions. Cash provided by financing activities was $115 million as we issued debt and equity in June 2019. Our balance sheet remains strong with ample liquidity. Regarding 2020 financial guidance, gas utility capital expenditures for 2020 are expected to be in the $230 million to $270 million range including significant projects related to system reinforcement, equipment replacements at Mist, resource center renovations across our service territory and technology upgrades. These capital investments coupled with higher forecast expenses from the new Union contract, facilities rent, as well as payroll and technology costs supported our decision to file the Oregon rate case with rates effective in November of this year.

Consistent with these business drivers, the company initiated 2020 earnings guidance today for continuing operations in the range of $2.25 to $2.45 per share. Guidance assumes continued customer growth average weather conditions and no significant changes in prevailing regulatory policies, mechanisms or outcomes or significant laws, legislation or regulation. Finally, this guidance excludes any gain related to the sale of the Gill Ranch storage facility and associated operating results. These items are reported in discontinued operations.

With that, I will turn the call back over to David for his concluding remarks.

David Anderson

Thanks, Frank. Our efforts last year have built momentum for the initiatives we will advance in 2020. As we discussed, we are very pleased to be taking a significant step forward in our energy transition with the passage of Oregon’s groundbreaking renewable natural gas legislation. In 2020, we will also be executing on several other priorities related to our low carbon pathway. Separately and ahead of the legislation, three local renewable natural gas projects are being developed on our system that will interconnect and produce RNG that is roughly equivalent to 2% of our sales volume.

We expect to complete these projects in the coming year. In Washington State, under House Bill 12.57, we are developing our voluntary tariff that would allow us to directly purchase renewable natural gas on behalf of our Washington customers that opt into the program. We are working on a similar tariff in Oregon and are excited to offer renewable options to our customers. We are reaching across our entire value chain to achieve carbon savings. After several years of analysis and preparation, we are using internally produced proprietary first-of-its-kind program to analyze the methane emissions from our upstream providers. Now we can prioritize natural gas purchases to even a greater extent from the most responsible lowest emitting producers, and we can do this without paying more for the gas. I am excited with the progress our renewable team has made and the great strides I know they will take in 2020. We are pleased to help communities take advantage of our modern distribution system in new and exciting ways that pragmatically address climate change.

Another key priority in 2020 will be growth. For the natural gas utility, that means focusing on high quality customer service, including executing on several technology projects that will enhance internal processes and customers’ mobile experience. These investments will help ensure seamless interactions with our customers and support continued growth. Completing our capital projects will be a top priority this year, these are necessary investments to support the safety and reliability of the system and we will be working very closely with Oregon regulators over the coming months to ensure they have the information needed to review the general rate case and put new rates into effect on November 1. And finally, our water utilities and acquisition strategy will continue to be an area of focus.

Our disciplined acquisition approach has worked very well. We will continue to identify targets for roll ups, acquisitions and areas we’ve already established and examine new opportunities across the country. I believe Texas is one of those key growth areas. Its economy, business environment and growth make it an attractive region. The core population centers in Austin, Dallas and Houston continue to post some of the highest population and housing growth rates in the nation. At the same time, our team is working hard to efficiently integrate the water and wastewater utilities, we’ve already purchased and assess the maintenance and investment needs of those businesses I remain very excited by the growth potential of this business.

In summary, we have accomplished a lot since we rolled out our strategic plan three years ago. Our leadership team and employees have worked hard. None of our success could have happened without their dedication. As we enter our 161st year in business we will continue to address challenges and execute on the opportunities ahead of us. It is a truly a very exciting time to be in the energy in the utility business.

Thanks for taking time to join us this morning. And with that Grant, we’ll open it up for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Chris Ellinghaus with Siebert Williams Co. Please go ahead.

Chris Ellinghaus

Hey, everybody. How are you?

David Anderson

Good. Good morning.

Chris Ellinghaus

Frank, if you got the 2019 water acquisition cost handy?

Frank Burkhartsmeyer

Yes, but we don’t disclose particular water acquisition cost, Chris.

Chris Ellinghaus

I wasn’t thinking about the individual capital costs. I was thinking about just the transaction costs.

Frank Burkhartsmeyer

We don’t disclose the particular transaction costs, that level of detail.

Chris Ellinghaus

Okay. Have you got a better sense at this point what you think the timeline is for renewable natural gas investments?

David Anderson

Yes, Chris, this is David. We’re going to try to do as much as we possibly can. We’ve now – we basically have two avenues to do that. The Oregon IRP clearly recognizes that we can purchase renewable natural gas through that process. And then again, the Senate Bill 98, which is the most aggressive RNG bill in the country, it gives us another platform to do that. And we’ll continue to make strides in Washington as we look forward. So, kind of hard right now to put a number on it, but if you think about this, we’ve been at this a very short period of time and our first project was with the City of Portland, which ended up in their number one Climate Action ever, project that they’ve ever been part of. And for us, to already be at a point where we can get 2% of our sales throughput with RNG with just a couple of years of work here, I’m very encouraged that you’ll see more coming down the pike.

Chris Ellinghaus

Okay. Have you got any current thoughts on the Gill Ranch sale and how that’s proceeding?

David Anderson

Yes, we’re working really hard, Chris, to close that transaction. The good news is, we’ve received all regulatory approvals. So, now, we’re just working with the buyer and doing the typical the process of these things, getting the T’s crossed and the I’s started to fund. I would expect that to be completed by the end of March.

Chris Ellinghaus

Okay, great. Frank, as far as the guidance goes, can you just sort of give us some color on what headwinds you see for sort of a flat 2020?

Frank Burkhartsmeyer

Sure. Great question, Chris. If you look at 2019, we benefited a little bit from some weather and the incident on the Enbridge pipeline earlier this year. So, I would start by saying the midpoint of our guidance about – in the $2.35ish range is probably our normalized level for this year. Of course, we don’t assume any benefit from weather or anything like that in 2020. On the positive side, for earnings, we continue to expect to have solid customer growth, the full year of North Mist and a little bit of contribution from the water business. But what really drives us into this guidance range is continuation of our capital program we are investing at a higher level. So, depreciation is running. It was up 2019, it will be up a bit more in 2020. We had issued equity last year. So, now we’ve got a full year with those $90 million of shares outstanding. And then quite importantly, there is a number of O&M pressures as we move forward. It’s a big part of why we filed the rate case. In addition, we are investing in more and more technology right now. A lot of that comes with O&M right now we need to add some people around cyber security and some other technology advances we’re putting in place. We’ve got a new Labor Accord with our union employees which is increasing salaries and benefits. We have a tight job market, which also just drives up salary costs in the region. And then, we’ve got some new facilities. We’re moving into a new operation center, which has a lease associated with it. It’s higher than the building that we’re in right now. So, all of those things are driving O&M up, which we will get into – which we’ve got in this rate case, as well as a higher level of depreciation, I’d say, and then, just the typical lag of an accelerated or elevated capital program.

Chris Ellinghaus

Okay, great. Thanks for the details, guys. I appreciate it.

Operator

The next question comes from Aga Zmigrodzka with UBS. Please go ahead.

Aga Zmigrodzka

Good morning.

David Anderson

Good morning.

Aga Zmigrodzka

Could you please provide details, drivers of higher than previously discussed long-term CapEx, and how that is impacting your rate base growth, as well as how do you plan to fund it? Is there a need for equity issuance on ATM?

Frank Burkhartsmeyer

Great. Thanks, Aga. This is Frank. I’ll take that. The main change from our prior program, there’s a couple of significant projects. One is, we will be putting more money to work in our Mist facility. There is some things, there is a large dehy that needs to be replaced and some other equipment up there that has just outlived its life and we’re moving forward on that. In addition, we have a number of large technology investments. We – our ERP system, our customer information system, they’re all getting quite old and we’ve been updating the strategic plan around our IT and we’re starting to move forward on that. And between them, we’re adding, over the 5-year period, about $150 million. There is a few other things that are driving that as well. But as we get better and better line of sight on some of these large infrastructure projects, we’ve decided to put them into our capital forecast. They don’t – we have a band of 4%, 6% on the rate base growth over the period. This doesn’t change that band at all, it’s within that. It’s not that huge of a change. It’s just additional. And regarding financing costs, at the level that we are investing now Aga, we will be in for rate cases more often, we were in 2 years ago, we’re in now because of this – largely, because of this investment cycle. We’ll have to stay pretty close to a 50:50 capital structure over that time. We will have to access the capital markets. We raised equity last year that was a big raise for us, we were looking ahead we know that. And we’re also investing in water company. So, over time, we will have to continue to access the capital markets. We can’t be specific about timing in part, because the timing of some of these investments, we can’t be that specific, but also it’s just not our practice to be super specific about when exactly we will access the markets. But we do need to stay close to that 50:50 capital structure for our utility.

Aga Zmigrodzka

That makes sense. Recently approved ROE in Oregon was 9.4%. What is the risk that based on the lower interest rate environment that ROE would actually be lower and how that would impact the requested revenue?

David Anderson

Yes, Aga, this is David. I mean, you always have that risk as we go through. And I think Oregon, as well as Washington have both been very pragmatic commissions when it comes to ROEs. I will tell you the latest ROE, I think is from Avista in Oregon, and they got 9.4%. So, the most recent data point along that line is 9.4%. So, we would hope for a number not lower than that, but obviously our testimony, actually, supports a number higher than 9.4%, but more to come as we work our way through the rate case.

Aga Zmigrodzka

Thank you. And lastly, in 2019, you formed Renewable Resources Team. What are the opportunities and challenges that the team has experienced so far and see ahead to meet the company’s renewables goals, in particular on renewable natural gas?

David Anderson

Yes, let me let Justin Palfreyman kind of take that one. You want to go ahead and address that question?

Justin Palfreyman

Yes, sure. So, our renewable team is focused on basically getting and securing long-term renewable natural gas supplies to benefit our customers. We formed that team shortly after SB98 passed, which is really the RNG enabling legislation that gives us the opportunity to invest in RNG through the utility. They are focused right now on developing a pipeline of supply opportunities and getting the rulemaking in place with commission staff and our other stakeholders. And we expect that as the year moves on, we will start to see actual results and specific projects that we are identifying to bring onto our system.

Aga Zmigrodzka

Perfect. Thank you for taking my question.

David Anderson

You bet. Thank you.

Operator

The next question comes from Tate Sullivan with Maxim Group. Please go ahead.

Tate Sullivan

Hi, thank you. Good morning. Maybe it’s jumping the gun a little bit, but I think in previous presentations you’ve put in your 5-year strategic plan, including EPS growth of 3% to 5%. Is that under review or do you still have that target for the next 5 years? And if so, what is the base EPS number for that target?

David Anderson

Yes, thank you. This is David. I’ll take that one, Tate. Yes, that is still the plan, and the 5-year plan still exists right now. As always, we tweak. Obviously, a big driver of that underlying EPS growth is the cap – the rate base and the CapEx that Frank just went through. Since 2016, which is kind of the base year that I look at, because that’s when I kind of took over this role, we produced CAGAR of 4%. So, I think we’re right in the band that you’re talking about. And barring some kind of unforeseen situation going forward, it could be anything from recessions to other type items I would suggest that the 3% to 5% is still an appropriate level for us.

Tate Sullivan

Okay, thank you. I have a follow-up. And Frank, I have seen and I think you did it last year too, with your release you disclosed the natural gas distribution EPS number. So, in ‘19 that was $2.26 versus the $2.41 number. I mean, strategically, the 3% to 5% growth is it on the $2.41 or the $2.26?

Frank Burkhartsmeyer

I’d say that would clarify – I don’t remember us giving a specific natural gas distribution from just Northwest Natural Holdings, is how I would describe it as we put out one guidance band. Of course, water has not been a material contributor to that in that period. The way I would look at that 3% to 5% range that we put out was, we were assuming in the midpoint of our 2019 guidance of $2.35-ish, which was the – as I’d say, was the normalized number for 2019, if I were to normalize for weather and some pipeline optimization benefits that we were able to harvest.

Tate Sullivan

Okay, great. And then there was a couple of comments in the press release about maintenance water CapEx. But what are, I mean, have you started regulatory reviews or the process to get approval for growth CapEx or replacement CapEx or where do you stand with that?

David Anderson

Tate, we can – let me get into a little bit of detail. Obviously, when we acquire these things, Justin, who is the President of the Water Company, takes the lead along with Brody Wilson, the CFO of the Water Company, to look at the 5-year plans and put, frankly, 5-year plans in place with these entities. And sometimes, those entities have plans already and sometimes they don’t. And as we go through that and then along that line is when do you need to kind of go into the regulator to get certain reimbursements for that. It’s usually a couple of years after you acquire one of these, and it wouldn’t surprise me at all if you start seeing some of those take place. And of course, our first one was in Idaho and I think you’ll see activities as we play out going forward in that state and other states that we look forward.

Tate Sullivan

Okay. Thank you, David. Alright, thank you.

Operator

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

David Anderson

Right. Grant, thank you. Thank you everybody for joining us on this Monday. Again, as always, if you have follow-up questions, Nikki is your point person and we look forward to talking to you soon. Thank you.

Operator

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