Southern Company (SO) — Q2 2021 Earnings Call Transcript

Thank you, Rita. Good afternoon and welcome to Southern Company's second quarter 2021 Earnings Call. Joining me today are Tom Fanning, Chairman, President, and Chief Executive Officer of Southern Company; and Drew Evans, Chief Financial Officer. Let me remind you that we will be making forward-looking statements today in addition to providing historical information. Various important factors could cause actual results to differ materially from those indicated in the forward-looking statements, including those discussed in our Form 10-K, Form 10-Qs, and subsequent filings. In addition, we will present non-GAAP financial information on this call. Reconciliations to the applicable GAAP measure are included in the financial information we released this morning, as well as the slides for this conference call, which are both available on our Investor Relations website at investor.southerncompany.com. At this time, I'll turn the call over to Tom Fanning.

Thank you, Scott. Good afternoon and thank you all for joining us today. Drew and I will cover our usual business updates in a few moments, but first, let me provide an update on Vogtle Units 3 and 4. Unit 3 Hot Functional Testing is complete. Through the testing, we have validated the operation of critical primary and secondary systems at full temperature and pressure and demonstrated that the design basis is sound. The completion of Hot Functional testing marks the last major milestone before and represents a significant step towards placing Unit 3 in service. While the duration of Hot Functional testing was longer than we originally anticipated, we remain committed to getting it right for all aspects of the project. Taking into account the length of hot functional testing for Unit 3, the remaining activities for both units, and recent productivity trends, we now project placing Unit 3 in service during the second quarter of 2022 and Unit 4 in service during the first quarter of 2023. From a cost perspective, Georgia Power’s share of the total project capital cost forecast increased by $460 million, largely driven by our updated schedule, recent productivity trends, and the replenishment of contingency to fund expected future risks. As a result, Georgia Power recorded an after-tax charge of $343 million during the second quarter. With Unit 3 Hot Functional testing complete, our next and final major milestone for Unit 3 is fuel load. We project fuel load to occur sometime near year-end 2021 or early in 2022. As we approach fuel load, our commitment to getting it right remains our top priority. And as the operator of these units, safety is our paramount objective, and we strive to meet first-time quality standards prior to significant testing and operations activities. We will not sacrifice those commitments to meet schedule or milestone dates. The scope and time required for the work remaining prior to fuel load includes; one, completion of the nuclear fuel systems and the associated documentation; two, completion of remediation work and additional work identified during hot functional testing; three, completion of the work necessary to implement our plant support systems; and four, a reduction in productivity levels consistent with recent site performance. Unit 3 ITAAC submittal and review process is ongoing and continues to follow our construction and testing activities on site. To date, 208 ITAAC have been submitted to the NRC. We will submit the remaining 191 as we approach fuel load. Recently, the Nuclear Regulatory Commission conducted a special inspection of electrical quality issues that we had identified earlier this year, and the remediation efforts that are underway. The on-site inspection is complete, and we expect the NRC's report to be published within a couple of months, though that exact timing will, of course, be determined by the NRC. Turning to Unit 4, direct construction is now approximately 84% complete and we achieved initial energization in May. Our revised construction productivity assumptions are consistent with recent trends. And as I mentioned, we now project an in-service date during the first quarter of 2023 for Unit 4. Our updated timeline for Unit 4 reflects several factors, including the slower than expected recovery from our COVID-19 related staffing reductions in early 2020. At the time, the staffing reduction disproportionately impacted Unit 4 as we shifted our focus to Unit 3 critical path work fronts. We reduced the density of personnel on the site and moved people from Unit 4 to Unit 3. Second, the timeline of Unit 3 leading up to and during hot functional testing delayed our plans to transition resources to Unit 4. More recently, we have staffed Unit 4 independently as work on Unit 3 continues. Third, over the past three months, the growing economy and demand for skilled labor have impacted our ability to attract and retain electricians; as a result, we experienced higher than expected attrition. Attaining the necessary levels of craft labor to meet construction milestones for Unit 4 has been more challenging than expected. In recent weeks, we have seen positive staffing trends, driven in part by offering enhanced electrician compensation, which has helped to mitigate further schedule impact. Construction completion for Unit 4 has averaged 1.4% per month since the start of this year. To achieve a November 2022 in-service date, we estimate that Unit 4 would need to average 1.9% construction completion per month. To support our first quarter 2023 in-service goal, Unit 4 would need to average approximately 1.3% per month for the rest of this year. Looking now at costs, the $460 million pre-tax charge recorded during the second quarter reflects the schedule update for both units, including updated assumptions for construction activity and support resources, as well as replenishing the contingency for potential cost risks associated with completing both units. In conclusion, while the timing of Unit 3 Hot Functional Testing took longer than originally expected, I am encouraged by the success of the test. Even so, with the completion of this enormous milestone, we still have a lot of important work ahead of us to achieve fuel load. For Unit 4, we are focused on progressing through the next several milestones while continuing to navigate through the COVID-19 pandemic and broader economic recovery efforts that have impacted productivity at both sites. As a company and management team, we remain focused on bringing Vogtle Units 3 and 4 safely online to provide Georgia with a reliable, carbon-free energy resource for the next 60 to 80 years. As always, I want to thank our employees, contractors, co-owners, and community partners for their unwavering dedication to this important statewide project. Drew, I'll turn it over to you now for an update on the financials.

Thanks, Tom, and good afternoon everyone, I hope you all are well. First, I want to touch on the financial impacts of today's Vogtle update. We continue to be very committed to credit quality for both Georgia Power and Southern Company. Therefore, Southern Company will contribute capital down to Georgia Power to maintain its target capital structure and credit profile. We expect to fund the cash need at the parent company as it is incurred by reinstating new issuances under our internal equity plans, primarily the dividend reinvestment plan, which is expected to produce approximately $400 million over the next year. Importantly, with this financing strategy, we expect to maintain Southern Company's credit profile with consolidated credit metrics above current downgrade thresholds. This has a minimal impact on earnings given our size, and we continue to see our long-term EPS growth rate in the 5% to 7% range. We are also reiterating our 2024 projected EPS range of $4 to $4.30. Turning now to earnings; we had strong performance in the second quarter of 2021 with adjusted earnings per share of $0.84, $0.06 higher than both last year's second quarter and our estimate. Recall in the second quarter of last year we were experiencing the peak impacts of the COVID-19 pandemic on our kilowatt-hour sales. This peak was primarily related to shelter-in-place mandates and working remotely. In response, we implemented significant cost savings initiatives. Therefore, it is no surprise that the primary drivers of our quarterly earnings this year, as compared to last year, were increased customer usage at our state-regulated utilities, coupled with strong customer growth in the Southeast, as well as constructive state regulatory actions. As you would expect with rising kilowatt-hour sales versus last year, our non-fuel O&M was higher due to increased maintenance and planned outages at our generating units. Weather impacts for the quarter were negligible year-over-year. When looking at adjusted EPS compared to our estimates for the quarter, the main drivers of the increased earnings were customer growth that remains higher than our expectations; new connects are exceeding forecast by 25% due to continued expense discipline. Year-to-date through June 2021, adjusted EPS is higher by $0.26 compared to the first six months of last year. Drivers are similar to those for the second quarter; increased usage, stronger customer growth, and constructive state regulatory actions, and are partially offset by higher non-fuel O&M. Year-to-date weather impacts were $0.08 favorable compared to the prior year and $0.05 unfavorable as compared to normal. A detailed reconciliation of these reported and adjusted quarterly and year-to-date results, as compared to 2020, are included in today's release and the earnings package. Turning to the economies in our service territory, we continue to see significant improvement from the lows we experienced at this time last year related to the pandemic. In the second quarter, weather-normal retail sales in aggregate were up by 6% compared to last year, with commercial and industrial segments seeing sharp declines and slight dips in residential sales. We have been analyzing retail sales compared to pre-COVID levels to assess recovery relative to historical norms. Early data indicates that, in aggregate, our retail sales have recovered to between 97% and 98% of 2019 pre-pandemic levels. Sales in the residential segment remained elevated due to continued hybrid working, while industrial and commercial sales remain slightly below 2019 comparables; around 97% of the 2019 level. In the industrial segment, we are seeing strong momentum across nearly all sub-segments, and commercial sales are also improving, though sales may take longer to reach historical norms. As the COVID-19 delta variant becomes more widespread in the service territories, we will closely monitor for any signs of change but have yet to see any material impacts. Underpinning these positive sales trends is a strong labor market evidenced by shrinking unemployment rates that are below 4% in both Georgia and Alabama. In addition, customer growth remains robust with new connects significantly outpacing our expectations across the electric utilities, reflecting construction of new homes as well as new commercial businesses and continued net migration. Economic development continues to be very active in the Southeast. In Georgia alone, there are over 200 active projects with the potential to bring over 30,000 jobs in the coming years. Capital investment and job announcements are far outpacing what we experienced even before the pandemic. These are positive signals for continued improvement of both customer growth and sales. With our solid adjusted results for the first half of the year, we are well positioned as we head into the peak electric load season. Our estimate for the third quarter of 2021 is $1.22 per share on an adjusted basis, and consistent with historical practice, we will address earnings for the year relative to this EPS guidance after the third quarter. With that, Tom, I'll turn it back to you.

Thanks, Drew. We understand that global news often dominates our earnings calls, but I think it's important that we also focus on the terrific performance we see across our businesses. As Drew highlighted, our adjusted financial results of the first half are outstanding, and operationally, we are performing well. We have already endured a tropical storm in Georgia earlier this summer and our system has demonstrated resilience during the extreme temperatures experienced throughout this week in the Southeast. I would like to mention one more topic before we take your questions. Five years ago this month, we closed on our acquisition of AGL Resources, now known as Southern Company Gas. Our objective with the transaction was to deliver even greater customer shareholder value by continuing to invest in high-quality predominantly state-regulated utility assets, and we have done just that. We bolstered investment at the regulated gas utilities, continued to strengthen the position of our retail natural gas franchise in Georgia, and divested non-regulated assets. Over the past five years, Southern Company Gas has; one, increased its JD Power customer satisfaction scores; two, increased its regulated business mix to 90%; three, increased its authorized equity ratios to 55%; four, increased our annual growth in rate base by 14% annually; five, raised $3 billion from the sale of non-strategic assets, some at all-time high PE multiples; and six, reduced risk by selling assets like the Atlantic Coast Pipeline and the Sequent Asset Management business; while increasing opportunities for talented leaders to take on new and important roles across the Southern Company enterprise. A great example of that is sitting right next to me, Drew Evans, our Chief Financial Officer, who is doing a terrific job. His breadth of experience and engaging thought process has helped us all. In summary, the acquisition has far exceeded our own expectations. The positive results of our gas business are indicative of the approach we take across all of our businesses and to the nine million customers and communities we are privileged to serve. This approach best positions our state-regulated utility-centric business model for the future as we seek to maximize our return to shareholders on a risk-adjusted basis. Once again, I want to thank everyone for being with us this afternoon. Operator, we'll go ahead and open the floor for questions.

Hey, Julien, how are you?

Hey, this is actually Cody Clark on for Julien. How are you?

Oh, okay. Great, fantastic.

So, maybe first, if we can talk about Hot Functional testing. I'm wondering how you're thinking about the post-test analysis that you're working through right now. You took temperature back down to normal. And I'm wondering, this year, assuming that you have all the data now that you can kind of proceed, is there still the potential risk for additional remediation work there?

So, let me point out a couple of things that are interesting, I think. Number one is, everything is progressing right now as we said it would. In other words, now that we've completed HFT effectively, we take the car, lift the hood, and look at the engine to see what happened. The experience in China showed that there shouldn't be any big issues. That’s our experience in China. But certainly, that's an important part of work. The other thing I just want to point out because I know this has been a topic on prior calls, just want to bring this up. If you recall, I want to say it was the first unit that went through HFT in China had to re-perform their HFT. They had significant operational issues concerning vibrations and other factors, and that took over six months. We have passed through those issues, we learned from them, and for the issues they experienced, our plant worked great. So, we are where we thought we would be. Of course, between now and fuel load, as we highlighted in the script, there are certainly four main areas we need to work on. I like page five, or I think slide five, on the information we've given you guys this morning, you see Vogtle Unit 3, and the Cooling Tower has water vapor coming out of it. That was a wonderful sight to see. I was on site, frankly, when that was going on. It was heated with affluent heat from the reactor coolant pumps, which performed beautifully during the test. Now we're going to heat it with nuclear fuel. We need to put all the systems necessary to get nuclear fuel in there and use that as the heat source. Secondly, as we went through the process of starting HFT, and then through HFT, we found some things we can improve for the long-term operation of the plant. We will do those things. Also, we call them plant support systems, but this essentially includes balance of plant activities like HVAC, portable water, some signage, and things necessary to support an operating workforce at the plant. Finally, we made an adjustment and reduced our estimate of productivity of the workforce on site to more closely match our recent experience. But that's what's left to get to fuel load. All of these things represent a significant effort. But I will say the biggest risk was getting the HFT completed in an excellent manner, and we did that.

Got it, understood. Thank you for that.

And to be specific, one more thing, we have seen no data so far that gives us any concern, if that was part of your question.

Got it. No, that’s helpful. That is helpful. So can you give us a little bit more color on attrition at the site, and I know that was brought up in some of the testimony; what are you assuming in the new schedule and especially considering the enhanced pay that you mentioned?

Yes. So, we went through a period where we were really focused on getting HFT, getting into it, and going through it. We weren't planning on doing much else. Some quality issues we recognized - we want to ensure we fully understood the scope of everything we were finding so that we didn't repeat those mistakes on Unit 4, which I think we've done. At one point, during our meetings with co-owners, the NRC, and the PSC staff, we were seeing greater than expected attrition. We really attributed that to the improving economy in the Southeast, but also big data centers were attracting electricians. We implemented two stages of compensation increases that really addressed that. One week, we hired 25 electricians and lost 72. When we saw that, we realized we needed to fix that. I think we have. Recent experience would suggest that since the adjustment in June, which would be about four weeks of activity, we net added 350 people. So, we have around 1,000 now and would like to reach 1,200. There is still some hiring activity going forward for Unit 4, but we feel optimistic about our ability to do that. The other important point here is Unit 4 is now on an independent track from Unit 3. And prior earnings calls mentioned, we talked about an optimal relationship of nine months to 12 months. That is no longer applicable; Unit 4 is now on its own path from Unit 3.

Got it. And then, just one more if I can.

Yes, sure.

Just wondering what the impact of the delta variant is on staff and if you're assuming any impacts from this in the current schedule?

Yes, absolutely. We went through a period of just a handful of positive tests, and they have increased a little bit. Let’s see, since the start of the pandemic, we’ve had around 2,600 people impacted. Right now, we have somewhere around 65. That would be our latest data. That's an increase compared to a week or two ago when it was 25. One week before that, it might have been 10. So yes, it is rising. The other thing we're seeing is for those impacted, the severity of the illness associated with the virus has been less significant. One other thing I want to mention, I don't think we have a slide here that shows the progression of HFT. It took us a while to reach full temperature and full pressure, but once we got there, the plant has been running exceptionally well. It has been very stable. We fixed multiple smaller issues, and once we got there, it has been very stable.

Okay, that's great. Thank you for taking my questions. I'll jump back in the queue.

Thank you for joining us. Appreciate it.

Hey, Jeremy. How are you?

Hi, good afternoon. It's actually Ryan on for Jeremy.

Okay.

I guess, just wanted to ask one on any expectations that you have heading into this NRC report. They're very explicit about the Unit 4 timeline, but if there is any kind of baked in there for Unit 4 regarding what might come out of that report, any additional remediation or adjustments that might be required?

Yes. But I mean, this doesn't necessarily go to the NRC report but rather it really involves the time it took to get to HFT and the remediation plans we put in place to satisfy the quality issues. Remember, the term 'paper' is shorthand for the transition from construction to system testing and the documentation necessary for the nuclear quality to submit an ITAC. So when I say 'paper,' it's actually a big deal. We have put in processes to improve that effort, and our new schedule does include the effect of those processes. The only other thing I want to mention about the NRC is; this is their report, and it is in their hands. I, certainly, wouldn't speak for a state regulator in any of our jurisdictions. I'm not going to speak to the NRC. I will say that we have been completely transparent in all of our site meetings with all the co-owners, the NRC is well aware of what we found, and they are fully aware of our remediation practices. That is about all I want to say about that. Let the NRC speak for themselves beyond that.

No, understood. Totally understand. And then, I guess you guys mentioned the internal equity programs as a combination - I just want to get a sense of the timing there. It sounds like just over the next year - with the $400 million, what kind of timeline are you expecting?

Yes. Maybe I can give you a couple of boundaries on this. Understand that what we'll experience or what we just reported in terms of increased costs, we won't actually realize until we start to move later into construction. These are incremental to budgets that truly begin sometime next April. The sum total of those things led to the write-down we reported today of $343 million. We are incredibly focused on credit and felt the necessity to fulfill commitments we made to the rating agencies related to our coverage ratios particularly. The simplest thing for us to do is to activate the DRIP plan, whether that's temporary or permanent, we will monitor as we move forward on construction. The intent is for it to be quite temporary. But a single year of that program generates about $400 million, which I think reflects a debit created by this expectation that's only three-quarters of what we could issue under those plans per year. I would, however, say that our most significant focus with this is that we have made commitments to rating agencies and bondholders to maintain credit through construction, and that is our singular intent.

I think you mentioned it in the script too, Drew, that we stick to the plan. The financial plans we have in place, the guidance we have provided; the 5% to 7% range, $4 to $4.30. The impact of turning on the DRIP for some time has minimal effects.

Understood. Appreciate the color. I'll leave it there.

Thank you.

Hey, Mike. How are you?

I'm well, Tom. Thank you, Tom and Drew, for taking my questions, as always. One on Vogtle, and really one on Georgia. Specifically, in Georgia, how do you envision two regulatory processes playing from here? First of all, the timeline for how you think about getting Vogtle 3 and the rates and the proceeding for that? The second question is with Vogtle moving around in schedule, how do you think about the rate case that you're supposed to file next year? Will you just postpone that and attempt to do all of this in one big docket?

Yes. As I mentioned before, we certainly will not front run anything with the regulators or really kind of the plans that we have. Michael, you know, you've been around forever, you follow us, and you do a great job. We've already laid out a framework to address cost recovery and prudence, and in fact, the Unit 3 rate proceeding before the Commission is one of those early steps. So, let's leave it there. There are a lot of moving pieces in a constructive way. Since I was involved in the creation of an accounting order methodology back in 1995, we have managed really complex situations in a constructive manner. My sense is, with all these moving pieces here, we have a tough regulator, but I think they will do a fair job with it as we move forward.

Got it. And then, a question about the jurisdiction no one ever talks about, obviously one of the better places to be a utility. How are you thinking about Alabama in terms of the continued change in the generation fleet and how the pace of grid investment may play out over the next three to five years?

Great investments is an interesting question, and that's a much bigger than Alabama question, right? When we look at California, URI, and the dysfunction in organized markets, it is clear that all of our jurisdictions, Mississippi, Alabama, Georgia, have a very organized method of evaluating a transition to a generating fleet and the integration of transmission into the overall integrated resource plan. We have processes in place. All our companies have embraced, to some degree, the idea of renewables. Recall in the past, Georgia Power was cited as the investor-owned utility of the year by the solar industry. Recently, Alabama Power has embraced solar as part of their mix. Everybody has different ways to approach the problem. But I would say all of our utilities have a constructive approach to addressing the issue. There is accountability in the process, whether it's fuel procurement, generation, transmission, distribution, sales, we are accountable and work with the commission to develop optimal answers for our customers. This is the best market structure we have, and we've been able to do it for years; my sense is we will continue.

Got it. Thank you, Tom. Much appreciate it, guys.

Thank you.

Hey Paul, how are you?

All right. How are you doing?

Fantastic. Thanks for being with us.

Absolutely. So, just - this question came up I think when I heard somebody else ask about COVID. I'm curious, how many people - what percentage of your workforce is vaccinated? Do you have any number on that?

So, we don't know. But I would argue it's somewhere between 35% and low 40%.

Probably not materially different from what we've seen in the general population in the Southeast.

Yes. We're not requiring people to disclose that, for example. We are requiring certain behaviors in the workforce; that if you're not vaccinated, you wear a mask and socially distance, etcetera.

Okay, great. And then with respect to sales growth and COVID, I'm just wondering if there is any change in your outlook post-pandemic effects? What are your expectations for total retail sales once we are back to normal, or is there a new normal in terms of what your total sales growth expectations are now, given the pandemic?

Yes. So, let Drew and I double team this, because he brings a different perspective than me. But we've given you part of the chart package, I guess, page 11. It shows that to pre-pandemic residential is still up. One interesting thing to consider; when we evaluate our workforce pre-pandemic, roughly 80% were in the office and about 20%, perhaps 25%, mostly virtual. When we analyze what the new normal will be, those numbers are changing significantly and vary by location and work function. But think about this: I believe we will be around 20% to 25% permanently in the office, with about round numbers 50% being hybrid; sometimes they are in the office, sometimes working virtually. We will have that 20%-25% completely virtual. If the rest of the world follows this new normal, then I would expect residential sales to be elevated compared to the 2019 levels. Industrial seems to be racing back to pre-COVID levels. So, we are around 98% there. The economic development activity we see – for instance, Amazon is bringing in a thousand jobs with an investment of $250 million; that’s one example. I mentioned in an earlier discussion that economic development data indicates investment is up 85% compared to 2020, and 65% compared to 2019. There is this burst of activity from investment and job creation. Residential may remain elevated, industrial is catching up, and commercial is still a question; we'll see. Drew, what would you say?

I think you did a nice job with that. The only thing I would add would be around customer count itself. We usually add around 40,000 customers in a year; this year, we've likely added around three-quarters of that in just the first half. So, net in-migration is difficult to separate from use per customer, but residential is at 3% higher than what we would have expected pre-pandemic. I believe, as you described, that is probably going to persist. Industrial segments have seen a couple of large customers move in and out, but it's based more on global productivity than the region not being a good employer. There are a couple of strong sectors, like automotive, that could greatly benefit the Southeast. I'm quite optimistic about residential and industrial in particular. Commercial may take longer to normalize.

Yes, raw data year-over-year. Manufacturing and industrial was up 11.7%. The only segment down was chemicals, due to a plant taking down its production. Everyone else is up. We had three segments up over 30% year-over-year; primary metals, transportation, and pipelines. One last data point; Georgia looks to be the first state to hit its pre-COVID levels by the end of this year, and Alabama and Mississippi are expected to hit in '22. Those are among the fastest recovering states in the U.S.

Okay, great. And then, just turning to Vogtle. The testimony by staff mentioned some tensions regarding milestones and quality of work. With this hot functional testing, do you believe if the staff were to examine the situation now, given how well the plant performed in the hot functional testing, that perhaps those issues have diminished?

Here is my view on that. There have been several interesting arguments following your question. One, a consistent difference we've had with the staff has been our commitment to test early and learn from mistakes. The approach allows us to identify and resolve problems before they escalate. Critics may argue it costs more but value is determined by risk and return. The additional costs incurred through early testing and corrections are outweighed by the mitigation of risks. While we have found several issues going into HFT, they are not deal-breakers. We finished HFT and we don’t think we will repeat those issues on Unit 4. A rigorous argument was made on whether to estimate Unit 4’s completion in the first quarter or the second quarter. We agreed on the first quarter. We project around 16 months from where we are to in-service, and adding more would approach a 50% contingency which seemed excessive. We've had important discussions and we feel confident about where we stand. Right now, our primary focus is preparing nuclear fuel for insertion into the reactor vessel. Upon testing our spent fuel pool, we found greater than acceptable leaks, which we attribute to welding issues on Unit 3. We are completely remaking that pool to ensure it operates correctly. That’s currently the biggest concern. Overall, we feel confident that the lessons learned from Unit 3, through HFT completion, will be beneficial for Unit 4. I would also note that we completely respect the staff’s opinions and anyone else involved. Everyone sees everything; there are no secrets during the construction process. I believe this transparency has worked to our advantage.

Awesome, thanks so much.

You bet. Thank you.

No, he works for us. I don't think he - yes, that's a mistake. Go to your next question. Sorry about that everybody.

Yes, my question is what was Steve doing on the phone? For those of you who don't know, Steve is the CEO of our nuclear business and has direct management oversight for the construction of Vogtle 3 and 4. A key staff member, Glen Chick, has been instrumental in making this project a success. Here is what I would leave you with; we sometimes get frustrated with the tactics of hitting a milestone or schedule. However, the integration of the entire plant and making it work with a heat source that's not nuclear; while prolonged, it ultimately worked excellently. Once we resolved initial concerns and achieved temperature and pressure, it has been stable. We will continue to work to ensure we don't repeat issues on Unit 4. There is still a significant amount of work ahead to reach fuel load. Prior estimates have shown we can achieve necessary productivity levels based on historical performance. Beyond Vogtle, we are excited about progress in our broader company initiatives; whether it's transitioning our fleet toward a low-carbon future or safeguarding our operations against extreme weather and security threats, we are committed to delivering for our stakeholders. Lastly, I want to emphasize our efforts in diversity and inclusion, which are benchmarks of our culture and success. Thank you for being with us today, and we look forward to speaking with you all in the future.