Exelon Corp (EXC) — Q2 2019 Earnings Call Transcript

Thank you, Laura. Good morning, everyone, and thank you for joining our second quarter 2019 earnings conference call. Leading the call today are Chris Crane, Exelon's President and Chief Executive Officer; and Joe Nigro, Exelon's Chief Financial Officer. They're joined by other members of Exelon's senior management team who will be available to answer your questions following our prepared remarks. We issued our earnings release this morning, along with the presentation, both of which can be found on the Investor Relations section of Exelon's website. The earnings release and other matters, which we discuss during today's call will contain forward-looking statements and estimates that are subject to various risks and uncertainties. Actual results could differ from our forward-looking statements based on factors and assumptions discussed in today's material and comments made during the call. Please refer to today's 8-K and Exelon's other SEC filings for discussions of risk factors and factors that may cause results to differ from management's projections, forecasts and expectations. Today's presentation also includes references to adjusted operating earnings and other non-GAAP measures. Please refer to the information contained in the appendix of our presentation and our earnings release for reconciliations between the non-GAAP measures and the nearest equivalent GAAP measures. We scheduled 45 minutes for today’s call. I'll now turn the call over to Chris Crane, Exelon's CEO.

Thanks, Dan, and good morning, everyone, and thank you for joining us today. Before I turn to the financial results for the quarter, I'm going to spend a few minutes providing some key updates on a number of positive developments in our businesses over the last three months. First, we continue to move forward on our utility regulatory strategy, filing distribution rate cases at BGE, ComEd, and Pepco, DC, reflecting our safety and reliability investments across those service territories. In DC, we filed our first multiyear rate case. The plan provides the necessary framework to align Pepco system investments with DC policy goals, including grid modernization and further improvements to customer service and reliability. Joe will discuss the details in his remarks. Second, last week, Pepco and other parties filed a settlement agreement at FERC for PECO’s formula rate transmission rate. The settlement includes a 10.35% ROE inclusive of a 50 basis point ROE adder. PECO made the original filing in 2017 and we expect the final order from FERC in 2020. Third, in June, we issued our annual corporate sustainability report, marking our performance and sustainability goals and priorities. In addition, the Benchmarking Air Emissions report found Exelon is the largest generator of zero emissions energy in the U.S., producing 12% of the nation's clean energy, with the lowest emissions rate admitting at a rate that is four times less than the next cleanest generator. Fourth, the New Jersey BPU approved ZEC payments for the state nuclear units including our interest in sale. We appreciate the state support for the carbon-free power produced by these units. Fifth, we were unable to get legislation done in Pennsylvania in time to reverse the decision to close TMI this fall. Since then, there have been continued discussions on a path forward for the remaining nuclear plants in the state, including consideration of placing a price on carbon through the regional carbon trading. Sixth, we are also pleased the Trump Administration decided not to impose quotas on uranium which would have jeopardized the continued operation of commercial nuclear reactors in the United States. And finally, last week, FERC issued an order directing PJM not to run the capacity auction in August. We agree with FERC’s decision to delay the auction until the rules are finalized. The delay provides PJM and the state policymakers time to adjust to the commission’s changes. Before I turn to the financial results, I also want to address two matters that you have raised with us recently. First, we've received a number of questions from investors about the impact on our business from a steep decline in power prices. The decline presents a considerable challenge for us, but as you know, our hedging disclosures are a point in time estimate. If you have seen them move up and down in the past, we need to be thoughtful and deliberate about our response if these prices persist. We have a variety of levers that we can pull and decisions we can make if this is the future of energy markets. We are pursuing a number of market reforms addressing the financial challenges many of our plants face. Against this backdrop, I can once again assure you that we will not operate our unprofitable or negative free cash flow plants. You've seen us close money-losing plants in the past. You should expect that discipline to continue if reforms are not enacted. The bottom line is that fundamental market reforms in the United States are essential if we want to meet the nation's clean energy climate goals, maintain fuel security, and ensure a reliable system. We need to sustain and increase electrification while preserving significant economic value through good paying jobs and property taxes. We'll continue to work at the state level and the national level with both Congress and the administration to achieve these goals. Second, we have received numerous questions from our investors about the subpoena in Illinois from the U.S. Attorney's Office. We are cooperating fully and are providing all information requested by the U.S. Attorney's Office. We simply can't comment further on the investigation, and we're not going to speculate on whether it may affect legislative efforts in Illinois this fall. What we do know about this fall session is that there are a number of stakeholders who want to see clean energy legislation enacted. Illinois is behind other progressive states on clean energy policy, and passing clean energy legislation is a priority for many stakeholders in Illinois, including the Citizens Utility Board, Labor, the Clean Jobs Coalition, and the Renewable Community. These stakeholders want to significantly expand the renewable penetration, so the state can achieve the 100% clean energy target by 2030. Kathleen and her team are working with the stakeholders to help craft the legislative package and educate the Board members of the General Assembly on its benefits. It's important to remember that while we are putting real effort into preserving the value of the generation fleet, our focus remains on the utilities. The bulk of our capital investment and the majority of our earnings are coming from the regulated business where we continue to see great opportunities to invest and grow for the benefit of our customers and communities. Now I'll turn to the financial results on Slide 5. We had a good quarter, delivering earnings at the midpoint range of our guidance. On a GAAP basis, we earned $0.50 per share versus $0.56 last year. On a non-GAAP basis, we earned $0.60 per share versus $0.71 last year. Joe will cover these drivers in his remarks. Turning to Slide 6, operational performance of the utility was mixed during the quarter. We continued to perform at top quartile levels of costs for reliability and customer operations metrics, while our safety performance has slipped. Safety is the priority, and we are focused on ways to improve our safety culture and performance. Outage frequency and outage duration performance is in the top quartile for three of our four utilities, with ComEd performing in the top decile. On the customer operations side, all of our utilities performed in the top quartile for service levels and call abandonment rates. Our relationship with our customers is improving due to the investments we are making to enhance reliability and the customer experience. This improvement is reflected in our customer satisfaction scores and in the recent J.D. Power electrical residential customer satisfaction ratings. BGE, PECO, and ComEd achieved top decile performances in the customer satisfaction index. We improved or maintained our rankings in the J.D. Power rankings. Delmarva ranked first in the east mid-region, making it the first Exelon utility to ever rank first. BGE and PECO maintained their first quartile performance in the East Large segment, while ComEd improved its ranking to the second quartile. Generation performed well during the quarter, with nuclear producing 38.8 terawatts hours of zero-emission electricity, achieving a capacity factor of 95.1%. Exelon power had a gas and hydro dispatch match of 99.7%, exceeding our plan, while wind and solar capture was weaker than plan at 96%. Now I'll turn it over to Joe.

Thank you, Chris, and good morning, everyone. Today, I'll cover our second quarter results, along with our quarterly financial updates, including trailing 12-month ROEs at the utilities and our hedge disclosures. Turning to Slide 7, we earned $0.50 per share on a GAAP basis and $0.60 per share on a non-GAAP basis, which is at the midpoint of our guidance range of $0.55 to $0.65 per share. Exelon utilities delivered a combined $0.39 per share net of holding company expenses. Utility earnings were modestly higher than our plan, largely due to O&M timing at ComEd, BGE, and PECO, which will reverse itself over the course of the year. This was partially offset by milder weather than expected in the Philadelphia area, impacting PECO by about $0.01 per share. ExGen earned $0.21 per share, which was behind our plan. This was a result of lower load volumes at Constellation due to mild weather and an extended outage at Salem. These factors were partially offset by favorable O&M, strong performance of our generation fleet, and realized gains in our nuclear decommissioning trust funds. We are reaffirming our full-year guidance for $3 to $3.30 per share and for the third quarter, we are providing adjusted operating guidance of $0.80 to $0.90 per share. On Slide 8, we show our quarter-over-quarter walk. The $0.60 per share in the second quarter of this year was $0.11 per share lower than the second quarter of 2018. Exelon Utilities less holdco earnings were up $0.04 per share compared with last year. This earnings growth is driven primarily by higher distribution rates associated with completed rate increases and higher transmission revenues at ComEd and PHI relative to the second quarter of 2018. This was partially offset by unfavorable weather at PECO. ExGen earnings were down $0.13 per share compared with last year. The decrease was driven by lower realized energy prices, partially offset by higher ZEC revenue from the increase in New York ZEC prices and the start of New Jersey’s ZEC program. Moving to Slide 9, our utility ROEs remain strong and we continue to exceed our 9% to 10% earned ROE targets across the utilities. The consolidated PHI utility earned a 9.1% ROE for the trailing 12 months. This was supported by a constructive distribution rate case settlement at ACE, Pepco DC, and Pepco Maryland, as well as equity infusions across PHI. Legacy Exelon Utilities maintained a strong 10.5% earned ROEs in the quarter. Importantly, consolidated our ROEs across our utilities were 10.2%. We remain focused on meeting our utility earnings growth targets by maintaining earned ROEs at PHI and sustaining strong performance at our other utilities. Turning to Slide 10, on May 24, BGE filed for a combined $148 million rate increase in electric and gas distribution revenues. The increase is primarily driven by the ongoing need for capital investments to maintain and modernize the electric and gas distribution system. It also reflects moving $15.8 million of revenues currently being recovered via the stride in electrical liability investments surcharges into rate base. We expect to receive a decision in the fourth quarter. On May 30, Pepco filed a multi-year plan in the District of Columbia, requesting a revenue increase over three years to recover capital investments made in the 2019 period and planned investments over the 2020 to 2022 time period. The request provides the necessary framework to align Pepco's system investments with policy goals set by the commission and enable us to continue making investments needed to modernize the energy grid, support the district's energy goals, and sustain first quartile reliability performance, along with enhanced programs and tools that have resulted in improved customer satisfaction. The multi-year plan includes five Performance Incentive Mechanisms or PJMs focused on system reliability, customer service, and interconnection of distributed energy resources. The multi-year plan provides performance-based rate-making approaches designed to encourage good utility performance while penalizing underperformance. The multi-year plan provides customers with rate predictability and reduces administrative costs to customers caused by frequent filings for traditional rate cases to recover costs. On July 9, the Chief Public Utility Law Judge issued his proposed order in the Pepco Maryland distribution rate case. The Chief Judge recommended a $10.3 million revenue increase and a 9.6% allowed ROE, which is 10 basis points higher than Pepco Maryland's current ROE. A final order by the Maryland PSC is expected by August 13. Finally, ComEd's annual formula rate update filing is expected to be decided in December of this year. More details on these rate cases can be found in Slides 20 to 23 in the appendix. Turning to Slide 11, we are continuing our robust capital deployment program at the utilities. During the second quarter, we invested $1.4 billion of capital to benefit our customers. We expect to exceed our capital plan in 2019 by $100 million. We have been able to take advantage of favorable weather to fund investments in our gas business at BGE, along with some additional storm-related work. As Chris mentioned, these investments are improving our infrastructure, increasing reliability and resiliency, which results in a better customer experience. Today, I'd like to talk about two projects that are part of these efforts and will enhance operations for our customers in DC and Northern Illinois. The first project is the District of Columbia Undergrounding project, or DC PLUG. This is a $500 million multi-year partnership between the District's Department of Transportation and Pepco focused on the underground placement of more vulnerable distribution power lines. Over the course of the initiative, up to 30 feeders will be replaced underground, with six completed during the first phase. The underground placement of these lines will make the electric distribution system more resilient during severe weather events, reducing the duration and frequency of electric outages. The second project I want to highlight is the expansion of the ComEd Itasca Substation, a $48 million project that will install new distribution terminal and associated equipment, including an indoor switchgear building, three medium-power transformers, and 12 138kV circuit breakers. This expanded substation will provide capacity to power the equivalent of 45,000 homes and will support three new data centers in the Itasca/Elk Grove technology corridor near O'Hare airport. These customers chose the Greater Chicago area after several years of discussions with ComEd's Economic Development team, as part of our ongoing efforts to attract additional investment and jobs to Northern Illinois. On Slide 12, we provide our gross margin updates and current hedging strategy as a generation company. Before addressing the gross margin update, I want to spend a moment discussing the drop in the illiquid forward power curves during the second quarter, particularly in June. Prices in PJM for 2020 and 2021 saw sharp declines. Around-the-clock power prices fell nearly $3 per megawatt hour, approximately 11% in 2020, and around $2.40 per megawatt hour, close to 10% in 2021. PJM West Hub prices dropped more than $4 per megawatt hour, a decline of approximately 13% to 14% in both years. Jim can provide more detail during the Q&A, but at a high level, we see these declines reflecting several factors: lower natural gas prices, a mild start to summer, which negatively impacted crop prices, and some market anticipation of certain plants seeming less likely to retire. Additionally, market participants have been selling based on changes in the economic viability of revenue options supporting new build power plants over the past few years, driving down prices. Despite the mild weather and low price environment, total gross margin in 2019 is flat compared to our last update. During the quarter, we executed $100 million in power new business and $50 million in non-power business. We are highly hedged for the remainder of the year and well-balanced in our generation-to-load matching strategy. In 2020 and 2021, our total gross margin is projected to decline by $100 million and $250 million, respectively. Open gross margin decreased by $550 million and $500 million, mainly due to lower energy prices at PJM West Hub, New York Zone A, and PJM NiHub. Mark-to-market of hedges increased by $500 million and $300 million respectively, as our hedge position mitigated some impact of the price declines. We also exited $50 million of power new business in both 2020 and 2021. We remain behind our ratable hedging strategy and expect a smaller than ratable amount of hedges across our regions during the quarter. By the end of the quarter, we were 10% to 13% behind ratable in 2020 and 7% to 10% behind in 2021 when considering gross commodity hedges. Our generation-to-load matching strategy remains a competitive advantage, contributing positive margins and providing a pathway to market our generation output in a disciplined manner. We remain comfortable with this strategy, expecting to hold an open market length given the continued strength of our balance sheet. Finally, moving onto Slide 13, we remain committed to maintaining a robust balance sheet and our investment-grade credit ratings. Even after June 30 pricing marks, we believe we will stay within our consolidated debt metrics disclosed for the period 2019 to 2022. Our consolidated corporate credit metrics remain above our targeted ranges and significantly above S&P thresholds. Looking at ExGen, we expect to be ahead of our debt-to-EBITDA target of 3 times. For 2019, we anticipate achieving 2.5 times debt-to-EBITDA and 2 times on a recourse basis. With that, I will now turn the call back to Chris for his closing remarks.

Thanks, Joe. Turning to Slide 14, we recognize that the current power market conditions are creating headwinds for us. We're prepared to meet these challenges head-on and consider thoughtful actions if necessary. In the meantime, we are achieving the commitments we've made, including maintaining industry-leading operations, effectively managing our financial commitments, deploying more than $5 billion in capital across our utilities this year, and advocating for policies that support clean energy. Our strategy remains the right one and we are committed to our value proposition. We continue to grow the utilities, targeting a 7.8% rate-based growth and a 6% to 8% earnings growth through 2022. We will continue to use free cash flow from the Generation company to support that incremental equity needs at the utilities, pay down debt, and contribute to our growing dividend. We will continue to optimize the value of our Generation business by securing compensation for our zero-emission generation fleet, closing uneconomic plants like we're doing with TMI, and selling assets where it makes sense to accelerate our debt reduction plans and maximize value through the generation-to-load match strategy in our constellation business. We will sustain strong investment-grade credit metrics and aim to grow our dividend annually by 5% through 2020. The strategy that underpins this value proposition is effective. We remain committed to optimizing the value of our businesses and earning your ongoing support for Exelon. Operator, we can now open the call to questions.

Hey, good morning.

Hey, Greg.

So one high-level question and then maybe one or two in the weeds questions. And I don't want to ask you anything that you're maybe not comfortable delving too deeply into, but I'm going to anyway. You mentioned the concept of levers that you have to stay on track to generate the free cash flow and credit metric targets that you laid out for us at the beginning of the year despite the fall on the forward curves. And you talked about how you won’t run power plants that aren't cash flow positive. And look, I've covered the stock for a long time and covered the company for a long time. We've been in this situation before, and nothing is ever as good or as bad as it looks in the moment, but can you tell us should this persist? What some of those options are in a little bit more detail, please?

Yes. I'll let Joe go through the list of what we've got laid out right now. We've been talking quite a bit about it, meeting on it as we watch the markets. So Joe?

Yes. Good morning, Greg. Greg, you mentioned one of them. I think we've proven through our time with our financial discipline that we're not going to run power plants in perpetuity that are uneconomic. So that would be the first lever. Obviously, you've seen us continue to drive efficiencies in our business and look at ways to streamline costs across our Exelon Generation business as well as at the business services company. I won't speculate on details at this time, but we obviously have the opportunity, if necessary, to look at asset sales. We do have a small amount of growth capital in our ExGen business. We would look at that and assess it closely. Additionally, there are alternative forms of financing to consider, such as project financing. This is just a point-in-time estimate concerning our financials. Like you said, we have seen the markets move up or down. We are comfortable with our credit metrics through the disclosure period and we are continuing to allocate capital as we've laid out. If this situation continues, we would explore these levers.

Yes, I'm very cognizant that some of those plants are large nuclear units in the state of Illinois. And I'm also aware that you're having a dialogue with legislators and other constituencies in the state around an omnibus energy strategy that includes certain actions concerning those plants. Can you tell us how broad that coalition is as we get into the veto session and whether you think the state policymakers understand the implications of the lack of necessary market reforms in PJM and the need to take back control of the market?

As you can imagine, we have a significant communications effort with both the legislative body and the administration regarding the situation. We are prepared to engage with this coalition. I'll let Kathleen share who she's been collaborating with to balance the needs for the state and the goals that the governor set after his election to achieve 100% clean energy by 2030 in an economical manner that protects our customers. Kathleen?

Yes, good morning, Greg. There are numerous stakeholders focused on enacting clean energy legislation in Illinois. As you know, many states across the country have already established 100% clean energy targets. It's not just states like California and New York; it's a trend more widespread. Illinois has significant emphasis on ensuring that it not only maintains its position as the cleanest state in the country but also sets ambitious new targets for renewable development. There are stakeholders in the environmental community focused on environmental justice, renewable developers aiming to address shortcomings in previous versions of the state's clean energy targets, and consumer advocates concerned about the prospect of the state having to pay twice for capacity. The labor community is also attentive to what these policies mean for both new construction and the preservation of these clean energy resources. This coalition is working intensely to communicate the message that achieving the state's energy goals hinges on recognizing these resources as capacity. That's why the FRP reform is foundational to getting this policy across the finish line.

Thanks. And my final question was actually a numbers question regarding the mark-to-market. There was a $50 million decline, and I'm curious whether that is a result of these figures moving into hedges because you executed sales or if it indicates assumptions of lower volumes or significantly reduced margins in the retail business moving forward?

Hi, Greg. Yes, this is Jim McHugh. That figure reflects executed business that has now transitioned into the mark-to-market of hedges. So when you net that all together, those two lines would equal flat from last quarter; it's just part of the execution phase.

Okay. Thank you.

Yes, thanks. I got -ups to both Greg's question. So first of all, just I know in the past when prices have fallen sharply, you’ve mentioned how many money-losing plants there are and potential offsets. Can you provide any insight on that regarding the number of plants that, if prices remain low, you could shut down, and what those offsets might look like?

If you're inquiring about market prices, we don't calculate the effect of uneconomic plants shutting down on market impact. If you're referring to the repercussions of removing the negative free cash flow, we haven't published those numbers yet. We're currently evaluating unit-by-unit and in aggregate, as we've stated publicly. Right now, you can see challenges in the future if this market persists between capacity and energy markets for Dresden, Byron, and Braidwood. However, we believe there is potential for support at the state level, and we are actively engaging with PJM and FERC to continue advocating for base-load scarcity in capacity market reforms that should correct these challenges and create a fair market. Absent those reforms, those three sites face potential financial challenges.

Okay. And I guess the point you’re making is that if we strictly use current forwards, include prospective losses on plants that you wouldn't sustain indefinitely.

Right.

Correct.

That's right.

Okay. And then just a specific question regarding the Illinois coalition: can you provide any insight into whether the conversations have continued since the news emerged a few weeks ago about the subpoena? Is there going to be any public process we can expect concerning those talks, or will it just materialize as a legislative proposal?

Steve, the activity that has continued for several months around advancing the clean energy legislation remains unchanged. Our meetings are ongoing, outreach to stakeholders continues, and we’re actively working on crafting a package while educating members of the legislature. The ongoing investigation and subpoenas have had no impact on the level or intensity of these activities.

Okay. Thank you.

Good morning. I was wondering if you could provide some background on your franchise agreement in Chicago, including its expiration date, terms for renewal, and your current thoughts about that?

Well, I'll start. Hi, this is Ann. Joe can add details here. The expiration date is the end of December 2020. The city needs to communicate to us their intentions by the end of the year regarding whether they wish to maintain the status quo, renegotiate, or terminate the franchise agreement. We'll know by the end of the year; however, we have begun discussions. We have a grasp of their priorities, which align with our emphasis on facilitating more clean energy in Chicago. They are also concerned about vulnerable populations concerning pricing. These areas of focus are central to our strategy.

Yes. To supplement what Ann said, we've been discussing new terms for some time. We've exchanged terms and engaged in detailed discussions regarding how the agreement might look moving forward. There was a pause in discussions due to the transition to a new mayor, but negotiations have resumed in full force.

Okay. And right now, these are your assets, and you would need to be compensated if anything changes there.

Yes, that's correct. However, again, our primary goal is to finalize the franchise agreement. We expect the negotiations to cover all the elements such as those Ann mentioned. Any proposal for municipalization would incur significant costs, as you know, and I don't think that's a practical path forward.

Okay. And I guess just for modeling purposes regarding the balance of 2019, you guided $0.80 to $0.90 for the third quarter, which seemed a little lower than we anticipated. How do you see the fourth quarter shaping up, and are there any O&M headwinds you foresee in the latter half of the year?

You heard me refer to reaffirming our guidance range of $3 to $3.30, inclusive of the third quarter earnings guidance we've provided. We are comfortable with those projections.

Okay. Is there anything to consider that might be one-time or non-recurring for either the third or fourth quarters that could bolster your year-over-year comparisons?

Yes, you've noted some of the factors affecting the earnings in the second quarter regarding lower load volumes driven by unfavorable weather. We anticipate continuing to execute our new business at Constellation and are managing the utility business accordingly, remaining comfortable with our full-year guidance.

Okay, great. Thanks, Joe.

Hi, guys. I just wanted to follow up quickly regarding the guidance on the $4.2 billion of cash flow generation from ExGen over the next four years. What does that assume regarding uneconomic plants and their operational status or any potential retirements impacting that number? What's built into that $4.2 billion figure?

Good morning, Michael. It's Joe. The forecast does include the three plants in Illinois that Chris mentioned: Byron, Braidwood, and Dresden, which are included in our cash flow projections. However, should power prices remain low, there are financial challenges associated with these plants. While we haven't released specific numbers yet, we anticipate providing an update on cash flow forecasts during our fourth quarter call. The figures disclose how we've modeled future expectations; thus, there's certainly potential for upside or downside considering current market conditions.

So, would it be reasonable to say there's potential for either upside or downside, especially given the current forward curves?

We’ll provide an update during our fourth quarter call, and it's important to remember that you're getting a partial view with just the numbers provided. As seen in our gross margin disclosures, these fluctuations can change quarter over quarter, especially due to significant price drops observed in the second quarter. The levers at our disposal are reflected in our disclosures, and you can refer back to what we've modeled during the fourth quarter call as we continue.

Okay, great. Thanks.

Thanks so much. Hi guys. Just following up on the power markets. It was very valuable to understand the levers you've outlined. However, from a PJM perspective, do you envision further market modifications, such as other players shutting down plants or other forms of rationalization, in addition to the regulations? How do you foresee PJM evolving? If conditions remain steady, it seems unsustainable.

Yes. Praful, this is Jim McHugh. To start, I want to emphasize that, as Joe noted, this is a point-in-time situation. We've already observed the Nighthawk market increase by $1 on the forward curve since the end of Q2, along with a $0.75 rise in PJM West Hub markets. Regarding market reforms, we've mentioned fast start pricing will likely be enacted, with ongoing work surrounding reserves and scarcity pricing and the ORDC curve in PJM. Over the longer term, while it's a lower priority at this juncture, we will keep our focus on base-load price formation and considerations around energy relaxation. We anticipate seeing new building alongside retirements over the next four to five years as a normal outcome of business cycles and our fundamental analysis. However, main reforms will concentrate on price formation. Also, both short-term natural market flows and anticipated resource retirements could alter overall dynamics moving forward. It's interesting to note that prices within the $22 range seem to gravitate towards figures observed during a mild quarter cleared. This observation suggests potential for additional price adjustments.

That’s incredibly helpful context. One more strategic question: should these trends continue, do you believe expanding retail could enhance your business, or do you foresee seeking additional acquisitions in retail?

Yes. Our customer-facing businesses are performing well; we're maintaining our margins, strong win rates, and holding market share within our retail sectors and wholesale auctions. As for expansion and acquisitions, we've maintained a top-tier platform, and we're open to acquiring additional business where there's clear value in integrating it with our robust platform. We will actively consider those opportunities.

All right, really helpful. Thank you, guys.

Thank you all for participating in the call today. We remain on track to meet our commitments to our customers, communities, and shareholders. With that, we'll close the call.