PPL Corp
NYSE:PPL
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PPL Corp
Earnings Call Analysis
Q3-2023 Analysis
PPL Corp
PPL Corporation has reported a solid third quarter with earnings of $0.31 per share and an improvement in ongoing operations earnings to $0.43 per share, up from $0.41 a year ago. They have importantly narrowed their 2023 earnings guidance to $1.55 to $1.60 per share, maintaining the midpoint at $1.58 per share, showcasing resilience and a capacity to overcome earlier weather-related headwinds. PPL emphasized their ability to deliver 6% to 8% projected earnings per share and dividend growth rates through at least 2026, reflecting their confidence in a low-risk business plan.
The company revealed their intent to invest $12 billion in capital and aim for over $175 million in targeted operational and maintenance (O&M) savings by 2026 to transition to a more reliable and sustainable energy future. To fund this growth, PPL expects not to require equity issuances through at least 2026, indicating strong financial planning and revenue prospects.
PPL has unveiled their generation investment plan, looking to replace up to 1,500 megawatts of aging coal generation with a combination of natural gas, solar, and battery storage by 2028. They expect a decision on this plan from the Kentucky Public Service Commission by early November, demonstrating a forward-looking approach to energy production.
They have secured regulatory approval to deploy advanced metering functionality across Rhode Island, representing a significant milestone in modernizing their energy networks. This initiative, supported by investments of up to $153 million, is set to start in late 2024 and span over three years, largely recoverable through Rhode Island's annual ISR process.
PPL's segments displayed mixed performance with their Pennsylvania Regulated segment up by $0.02 per share compared to last year, Kentucky segment also up by $0.02, and Rhode Island segment down by $0.01 per share. The Corporate and Other results decreased by $0.01 per share. Despite a 6% increase in ongoing earnings per share compared to last year, they've managed to remain on track with their annual forecasts, buoyed by strategic maneuvers such as offsetting sales volume and storm costs in Pennsylvania.
PPL has taken strategic steps to mitigate the impacts of rising interest rates, including a financing move that cut its floating rate exposure to under 5% of the total debt portfolio. With less than $2 billion of debt maturing through 2027, the company has limited refinancing risks and does not anticipate any need for equity in the near future. They remain confident about achieving their financial targets and preserving strong credit metrics.
The executives at PPL concluded that despite the challenges faced, such as mild weather and storms impacting performance, they have succeeded in staying true to their commitments. With the integration of Rhode Island Energy on track and the company set to complete substantial investments in infrastructure, PPL is well-positioned to deliver value to its shareholders and customers, reinforcing its goal to be the top utility company in the U.S..
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Good morning, and welcome to the PPL Corporation Third Quarter 2023 Earnings Conference Call. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Andy Ludwig, Vice President of Investor Relations. Please go ahead.
Good morning, everyone, and thank you for joining the PPL Corporation conference call on third quarter 2023 financial results. We have provided slides for this presentation on the Investors section of our website. Begin today's call with updates from Vince Sorgi, PPL President and CEO; and Joe Bergstein, Chief Financial Officer and conclude with a Q&A session following our prepared remarks.
Before we get started, I'll draw your attention to Slide 2 and a brief cautionary statement. Our presentation today contains forward-looking statements about future operating results or other future events. Actual results may differ materially from these forward-looking statements. Please refer to the appendix of this presentation and PPL's SEC filings for a discussion of some of the factors that could cause actual results to differ from the forward-looking statements.
We will also refer to non-GAAP measures including earnings from ongoing operations or ongoing earnings on this call. For reconciliations to the comparable GAAP measures, please refer to the appendix. I'll now turn the call over to Vince.
Thank you, Andy, and good morning, everyone. Welcome to our third quarter investor update. Let's start with an overview of our financial results on Slide 4. Today, we announced third quarter reported earnings of $0.31 per share. Adjusting for special items, third quarter earnings from ongoing operations were $0.43 per share compared with $0.41 per share a year ago. These results position us well to deliver our 2023 earnings guidance, despite the significant impact of mild weather and storms in the first half of the year.
As Joe will cover in his financial review, we've been successful in overcoming these headwinds through effective regulatory mechanisms, our continued focus on operating efficiently and outperformance in several other areas. The team has done an outstanding job in keeping us on track to deliver our 2023 financial objectives, while providing energy safely and reliably to our customers. As a result of our progress through Q3, we have narrowed our 2023 ongoing earnings forecast range to $1.55 to $1.60 per share, with the midpoint of $1.58 per share unchanged.
As we look to close out the year in a strong fashion, we also remain on track to invest nearly $2.5 billion to modernize the grid, strengthen grid resiliency and advance a cleaner energy mix. In addition, we're on pace to achieve our targeted $50 million to $60 million O&M efficiencies this year. Looking forward, we've reaffirmed our projected earnings per share and dividend growth rates of 6% to 8% through at least 2026 as we remain confident in our low-risk business plan. This growth is supported by our $12 billion capital investment plan and targeted O&M savings of at least $175 million by 2026 to advance a reliable, resilient, affordable and cleaner energy future.
We expect to fund this growth without the need for equity issuances through at least 2026, while maintaining superior credit metrics and one of the strongest balance sheets in our sector. Turning to Slide 5 and some operational highlights. We continue to deliver top quartile reliability and advanced industry-leading grid innovation that drives efficiency and improve service to our customers as we execute our utility in the future strategy. In support of this work, the Department of Energy has selected PPL Electric Utilities and Rhode Island Energy to receive a combined $100 million in federal funding for planned smart grid projects in our service territories.
The projects that were selected by the DOE were generally included in our current capital plan. However, these grants will certainly help to support affordability for our customers, which we remain keenly focused on. Our Pennsylvania project will extend PPL Electric self-healing smart grid already one of the most sophisticated energy networks in the nation to further enhance great reliability and resiliency. Meanwhile, our Rhode Island project will accelerate Rhode Island Energy's investment in great resilience and smart grid capabilities to support the state's leading clean energy goals. The process to receive this funding through the IIJA was highly competitive. PPL was one of only a few companies to be selected for multiple awards in this initial round of funding.
As we focus on creating the utilities of the future that are agile, innovative and technology enabled, we continue to be recognized for our leadership in the smart grid space. During the third quarter, PPL Electric Utilities received 2 additional awards for innovative, industry-leading work that has helped improve the safety, reliability and affordability of electricity delivered to our more than 1.5 million customers in Pennsylvania. Moving to Rhode Island. We remain focused on supporting Rhode Island's clean energy goals and bringing more affordable offshore wind opportunities to the state. On October 13, we issued an RFP to procure 1,200 megawatts of offshore wind to help power the state's energy needs.
The RFP was the state's largest ever renewable energy solicitation and was issued just a week after Connecticut, Massachusetts and Rhode Island signed a memorandum of understanding, paving the way for a potential multistate selection of offshore wind opportunities. Each state is conducting procurements in a similar time frame and we're hopeful that our larger procurement, a streamlined application process, flexibility on contract durations and the potential for multistate coordination will provide better economies of scale for developers, and reasonable pricing options for our customers. Bids are due by January 31, with any resulting selection expected next summer.
Many PPAs agreed to by Rhode Island Energy would be subject to review and approval by the Rhode Island Public Utilities Commission. Lastly, on this slide, LG&E began contract negotiations a few weeks ago for a labor contract that expires on November 10. The contract covers more than 600 of our employees in Kentucky. For decades, we have successfully worked together with our unions in Kentucky to reach agreement, and we're optimistic we can continue that success. We look forward to continued progress over the coming days and weeks to achieve an outcome that balances the needs of our employees and our customers. And importantly, the company has completed its preparedness plan to ensure we can continue to deliver safe and reliable service to our customers should negotiations break down.
Moving to Slide 6 for a couple of key regulatory updates. We remain focused on advancing our generation investment plan as we seek to replace up to 1,500 megawatts of aging coal generation with an affordable, reliable and cleaner energy mix by 2028. We continue to believe that our plan represents the best path forward for our Kentucky customers. As proposed, it would replace several 1970s era coal units with over 1,200 megawatts of new combined cycle natural gas generation, nearly 1,000 megawatts of solar generation and 125 megawatts of battery storage. In addition, it would establish more than a dozen new energy efficiency programs. The Kentucky Public Service Commission conducted public hearings in August, followed by post-hearing [ crease ] in September. The hearings as well as the intervenor briefs have largely been as expected. And looking forward, we continue to expect a decision from the commission by November 6.
Shifting to Rhode Island. In late September, we received regulatory approval to deploy advanced metering functionality statewide as we lay the foundation for a smarter, more resilient, reliable and dynamic grid that supports the state's leading climate goals. As part of its unanimous decision, the Rhode Island Public Utilities Commission authorized capital investments of up to $153 million for this initiative. We're pleased with the outcome of the commission's decision for this important project. Advanced metering functionality, which we've deployed in Pennsylvania and are currently deploying in Kentucky is a key step in modernizing our energy networks.
And as we've seen in our other service territories, it delivers significant benefits for our customers. We expect to begin installing the digital meters in late 2024 and to complete the deployment over the next 3 years, capitalizing on our experience in both Pennsylvania and Kentucky. These investments will also be largely recoverable through the annual ISR process in Rhode Island. That concludes my operational update. I'll now turn the call over to Joe for the financial update.
Thank you, Vince, and good morning, everyone. Let's turn to Slide 8. PPL's third quarter GAAP earnings were $0.31 per share compared to $0.24 per share in Q3 2022. We recorded special items of $0.12 per share during the third quarter, primarily due to the integration and related expenses associated with the acquisition of Rhode Island Energy. Adjusting for these special items, third quarter earnings from ongoing operations were $0.43 per share, an improvement of $0.02 per share compared to Q3 2022.
The primary drivers of the $0.02 per share increase were [indiscernible] higher interest expense due to increased borrowings. While weather was a significant factor in our earnings for the first half of the year, for the third quarter, weather did not materially impact our financial results versus our expectations.
Turning to the ongoing segment drivers for the quarter on Slide 9. Our Pennsylvania Regulated segment results increased by $0.02 per share year-over-year. Results were primarily driven by higher transmission revenue and higher distribution rider recovery, partially offset by higher interest expense and higher O&M expense related to IT amortization costs. Our Kentucky segment results increased by $0.02 per share year-over-year. Results were primarily driven by lower O&M expense, partially offset by higher interest expense. Our Rhode Island segment results decreased by $0.01 per share compared to 3Q 2022 primarily driven by higher O&M expense as we had fewer open positions this year than we did in the third quarter of 2022 when we were in the early stages of staffing up our teams.
Finally, results in Corporate and Other decreased $0.01 per share compared to the prior year, primarily due to higher interest expense. Moving to Slide 10. Our Q3 performance puts PPL's ongoing earnings at $1.20 per share for the first 9 months of 2023 or a 6% increase compared to the same period last year. As Vince noted, our teams have done a fantastic job of executing our plan and have positioned us well to offset the significantly unfavorable weather and storm impacts we experienced in the first half of the year to deliver the midpoint of our earnings forecast. And as outlined on our second quarter call, we expected to achieve this objective through several areas, which are being reflected in our year-to-date results.
In Pennsylvania, the disc mechanism has already more than offset the sales volume and storm cost implications in this segment. Our Rhode Island integration continues to go well, and we've already achieved our targeted ongoing earnings forecast for the year, setting us up to achieve the $0.01 to $0.02 per share of outperformance that we discussed on the Q2 call. And finally, the team continues to focus on operating the business efficiently, and we expect to achieve at least our targeted O&M savings of $50 million to $60 million this year.
We remain very confident in achieving our 2023 earnings forecast due to this excellent year-to-date performance and expect to build on our track record of achieving our financial targets. As a result, we have tightened our forecast range with just a few months remaining in the year and a clear path to deliver on our objectives. Moving to Slide 11, recognizing the current macroeconomic environment of higher interest rates, I want to emphasize our strong credit position, one that places PPL among the best in our sector. This is a clear strategic advantage that provides the company with significant financial flexibility, and we continue to project strong credit metrics throughout our planning period despite the rising cost of new debt.
This includes maintaining a 16% to 18% FFO-to-debt ratio and holdco to total debt ratio below 25%. During 2023, we've taken proactive steps to mitigate the impact of rising interest rates. This includes the financing activity that we completed during the first quarter which significantly reduced our floating rate exposure to less than 5% of our total debt portfolio. Looking forward, we have limited near-term refinancing risk through 2025 and with 0 holding company maturities and just over $600 million of total utility maturities through that time frame. In fact, we have less than $2 billion or just 13% of our total debt portfolio maturing through 2027.
Finally, we also continue to be uniquely positioned to continue to fund our growth without requiring equity for the foreseeable future while maintaining excellent credit metrics. I'm extremely pleased with our position and outlook to execute our plan in this macro environment. That concludes my prepared remarks. I'll turn the call back over to Vince.
Thank you, Joe. In closing, I'm proud of the work our team has done this year to keep us on track to deliver on our commitments to both customers and shareowners. As highlighted, we've narrowed our ongoing earnings forecast achieved significant success in offsetting this year's headwinds from mild weather and storms, and remain confident in our ability to achieve the midpoint of our earnings forecast of $1.58 per share.
At the same time, we've continued to advance key regulatory proceedings, most recently achieving a positive outcome in our AMF filing in Rhode Island. I'm also proud of the rigorous generation replacement plan that our team developed and presented during the CPCN proceeding. A plan that is right for Kentucky. And while we believe our plan is the best plan forward for our customers, we remain confident we will be able to achieve our stated growth targets under a variety of outcomes in that case. Our integration of Rhode Island Energy continues to proceed as planned, putting us on pace to exit all remaining transition service agreements with National Grid in 2024.
We're on track to complete more than $2.5 billion in infrastructure investments this year. And through the third quarter, we're ahead of plan in delivering $50 million to $60 million in targeted O&M savings to drive better value for customers and share owners alike. Across PPL, we continue to make progress in advancing our long-term vision to be the best utility company in the U.S. And I remain excited for our bright future that will continue to deliver for our customers and our shareholders. With that, operator, let's open it up for questions.
We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Nick Campanella of Barclays.
Hey, I just want to start right off the bat. Sorry if I missed it, but I know that there has been some sales volume declines this year. Obviously, higher interest rates is hurting everyone. To your point, no major maturities in '24, which is great across the business. But can you just confirm, as you kind of wrap this all together that you can continue to kind of grow the business from an EPS perspective linearly, '24 and '25? And how we should kind of think about that?
Yes. Nick, it's Joe. Thanks for the question. Yes, we expect linear growth through our plan period, as we've talked about before. Obviously, there's market forces at place, as you mentioned, but we think that they're manageable and can deliver that linear growth.
That's helpful. And then I know that on the current plan today, there's no rate cases and you'll be staying out. But can you just help us understand what would force you to file if you had to in the next few years? Is it more dependent on current regulatory proposals in front of you in Rhode Island and Kentucky and how those go? Or is it more dictated by the size of the capital plan and ROEs?
Yes, sure. Well, you're right. In our current plan, we just have 1 rate case in Rhode Island in the back half of 2026. There's obviously a lot of factors that go into determining rate case timing, including -- and you named a few of them, capital plans, interest rates, regulatory lag on capital that doesn't run through some sort of mechanism and many, many more. We're going through our business planning process now, Nick, and we assess all of those factors as we do so. We'll provide views on what we think about rate case and potential timing when we give an update on our year-end call.
All right. Thanks a lot. We'll see you in Arizona.
Yes. Great.
The next question comes from David Arcaro of Morgan Stanley.
Let's see. With the CPCN, I was wondering, we've seen inflation across supply chains fairly broadly and a lot of components. Wondering if costs have risen for the solar that you're requesting and for the CCGTs that you've got in the plan in front of Kentucky since your initial filing.
Yes, David, we have seen cost increases for the replacement generation plan. We updated all of that in our testimony for the commission. So they have the latest CapEx estimates for our plan. Those are confidential, so I can't disclose here at this time how much those went up. But even with those higher costs, where our analysis is showing that our proposed generation replacement plan is still significantly NPV positive and is, again, the best option that we're showing for customers. So the commission has all of that in the record as they're looking at it.
Yes, makes sense. So it's still economic, and I presume, so a higher CapEx essentially for kind of the full plan that's in front of the commission now.
That's correct. If the whole plan is approved, it would be incremental to what we have, yes.
Yes. Okay. Yes. And then as you look forward toward rolling the capital plan forward a year, should we expect equity to be incorporated into the financing strategy? Or is there still balance sheet headroom as you look out to add more CapEx and rate base growth?
Yes, Joe, do you want to talk about that?
Yes, sure. So as I talked about in my prepared remarks, Dave, the balance sheet is strong, and we expect to operate in that 16% to 18% FFO or CFO to debt range that we've been talking about. Clearly, we can finance the current capital plan without any need for equity even in today's market. We'll see as we roll the plan forward what that looks like.
Clearly, we have needs for capital investment beyond what's in our plan and how that comes into view. But I feel really good about where our balance sheet is. The strength of the balance sheet and able to maintain our current credit ratings without the need for equity.
Next question comes from Shar Pourreza of Guggenheim Partners.
So Vince, I know you mentioned that the O&M savings year-to-date is tracking ahead of the original forecast. It obviously was a key point of the talking points. I guess maybe taking that a step further, can you speak to how you're tracking for the total $175 million by '26. Is there room to exceed now that you've gone further into it?
Well, overall, Shar, we're tracking very well against the $175 million. So obviously, we have that layered in '24, '25, '26. Joe, I'll let you cover a little more detail on kind of the outperformance for '23. Of course, when we're looking at the additional storm costs and weather, those are anomalistic. And so some of the areas that we targeted to help offset that are things like open positions looking at our maintenance schedules, et cetera. So some of those things will not be permanent, Shar, but we're tracking very well on the $50 million to $60 million, which obviously are permanent on our way to the $175 million.
Yes, got it. I would just add that we -- as we talked about, we're on track to achieve at least the $50 million to $60 million of efficiencies this year, which gives us confidence in our ability to achieve the $175 million. We have a robust pipeline of initiatives that we're working on. So the team has clearly been extremely focused on delivering on the initiatives that we've established, which is why we're tracking ahead. So we feel really good about where we are today and our ability to hit that $175 million.
Got it. Perfect. And then Vince, I know -- just to maybe reiterate our conversation from the prior call. I mean at this point, are you prepared to be flexible in your plans, depending on how the Kentucky PSC ultimately rules on the CPCN next week? Is that something, I guess, you will be prepared to talk about right after that at EEI? Or you have to wait for the 4Q update?
Sure. So from a communications perspective, Shar, in a very timely fashion, we'll respond to the decision coming out, what we expect would be next Monday. So you'll hear from us shortly after that. Of course, we'll see many of you all investors and analysts at the EEI Conference the week after that. So likely, I'll be able to get into more detail there. And then we'll do the full business plan update incorporating all of this plus all the other business plan refreshes at our normal cadence of the year-end call.
As we think about the various outcomes of the CPCN, we've talked about this before. Based on all of the test [indiscernible] that's been filed, I don't see the outcome being an all or nothing situation regarding the coal plant retirements. But as we just think about the generation portfolio, I've talked about in the past that the CapEx that would be needed to run those plants safely and reliably if we do not retire them would be in that $500 million to $1.5 billion range, really depending on where we end up on the ELG regulations. The source of that is we have to put the maintenance capital for the 4 coal units back in. That would be a couple of hundred million dollars.
We have a few SCRs that would have to go on some of the plants. So that's in the $300 million, $400 million range. There's some ancillary environmental upgrades that would also need to be done to keep these plants in compliance. That's about another $100 million. And then the ELG regs, as I said, can be quite a significant amount of investment. But on the low end of the range, we think the estimate there is likely around $150 million. Also just talked about the CCGTs. And if we were to get one and not both, right, there is some incremental CapEx there as the prices have gone up from what we had originally had in our plan.
Beyond the generation portfolio, though, we continue to see the need for significant grid-enhancing investments in T&D, particularly transmission and especially in Kentucky. As we've talked about in the past, the large generation investments that we've been making in Kentucky have really resulted in less T&D investment there. However, the need there is great. And so we really need to start making those T&D investments, primarily transmission as soon as we can. So once we have the decision from the commission, we can factor all of these things into ultimately what the capital plan will look like as we update it.
But we feel very confident that the investment needs are there, Shar. We can finance them with the balance sheet that we have that Joe talked about, not only finance them, but finance them without equity. And so it's why we're confident that we should be able to deliver our growth targets really under various scenarios that we might see next week.
The next question comes from Angie Storozynski of Seaport.
So I only have 1 question about the fraudulent conveyance lawsuit from Talen. You guys have tried to have a dismiss. It goes back to 2014. We're talking about potentially very large amounts. And I just wonder if you have any comment.
Yes, Angie, no real update since our last call. As you know, the trial date has been set for February of next year. We're looking forward to that trial. As we said all along, we fully believe the distribution of those proceeds were in compliance with all applicable laws, and we stand ready to vigorously defend that position. So nothing really, really new. It being in bankruptcy court, not surprising that some of our motions were not accepted. So not surprising there, but still feel very confident in our [ key ].
The next question comes from Paul Zimbardo of Bank of America.
Just to follow up a little bit on the transmission opportunity side. I know you addressed Kentucky pretty well, but what about the Eastern side, the PJM footprint? Like I think there was like a $145 million award. And just holistically, if you could talk about some of the opportunities from Pennsylvania, PJM broadly transmission.
Yes. We'll continue to see opportunity for transmission investments in and throughout PJM to your point, that's an area that we think there's additional opportunity in PPL Electric Utilities, not only supporting within our territory, but also some of the solicitations that are happening to support constraints that are outside of our territory. And as you know, we're active in pursuing those. And so we'll continue to do that. To your point, I think there's additional opportunity beyond what's in the plan.
We'll provide more color around that as we provide our fulsome capital updates and update the plan. But to your point, I definitely see transmission, not just in Kentucky as a real need, but also in Pennsylvania and even Rhode Island.
Okay. And then another one, probably fairly obvious, but I just want to check the box there. On the long-term emphasis on long-term refinancing for cap funding, like you're assuming kind of a market interest rate on those maturities with the CAGR purposes?
We are, yes.
The next question comes from the line of Anthony Crowdell of Mizuho, please go ahead.
Just one quick one. You talked about the RFP for offshore wind in Rhode Island. Just curious how committed the state is to offshore wind, as you've noticed some other states, particularly New York seems to be bulking at the higher power prices.
Yes. Look, I think New England in general, Anthony, is committed right -- their strategy is heavily relying on offshore wind for their clean energy future. We're committed to helping certainly Rhode Island helped to achieve those goals. I think what you saw in New York was as much procedural as it is pricing, where I think the states have concerns just modifying existing PPAs without reopening those up for bid because you may get better pricing if you reopen them. So I think it's more process driven than it is just the price.
Having said that, we rejected our original RFP due to price and other factors. So this latest RFP that we issued, we included an upsized RFP to 1,200 megawatts, which is a more efficient generation size for the developers versus the 800 plus that we had originally went out for -- we're allowing for a longer PPA term beyond 20 years. And then there's the possibility of a multistate solution with Massachusetts and Connecticut, as I talked about in my remarks. So hopefully, those things will be enough for the developers to bring the prices down for our customers. And at a level that both we and the state will be able to accept. So we'll see.
The next question comes from Ryan Levine of Citi.
Quick question. In terms of the 2.3% industrial load decline in Kentucky for the quarter on a weather-normalized basis, what was the driver of that? And what's your longer-term outlook for industrial growth in Kentucky ahead of the CPCN decision next Monday?
Yes. Ryan, it's Joe. Yes. The -- what you're talking about in Kentucky is that variance is really driven by one large steel manufacturer that's experiencing usage normalization after they saw a large spike during COVID. So they're just normalizing back to where they had been prior to that. And you're seeing that in the year-to-date or the quarterly variances. As we think about longer term for Kentucky, there's been -- and we've talked about it a number of times, significant economic development over the last 2 years or more really 2021 and 2022 at $10 billion of economic development each year.
The state is expecting another $8 billion this year. It's not all in our service territory, but we're seeing a good portion of it coming to our service territory. So longer-term outlook remains positive for low growth in Kentucky.
Yes. And Ryan, generally, the industrial class, especially in Kentucky, the margins are not as affected by kilowatt hours as they're predominantly driven on demand and fixed charges. So as Joe said, that was pretty much one customer driving that, but very little impact on margin.
This concludes our question-and-answer session. I would like to turn the conference back over to Vince Sorgi for any closing remarks.
Thanks, operator, and thanks, everybody, for joining us today. As I said, you'll hear from us next week following the decision from the KPSC on the CPCN and then look forward to seeing you all at EEI the following week. So thanks again for joining us.
Conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.