Welcome to the SJW Group Second Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that, today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Andrew Walters, Chief Financial Officer. Please go ahead..

Thank you, Operator. Welcome to the second quarter 2023 financial results conference call for SJW Group. I will be presenting today with Eric Thornburg, Chair of the Board, President and Chief Executive Officer. For those who would like to follow along, slides accompanying our remarks are available on our website at sjwgroup.com.

Before we begin today, I would like to remind you that, this presentation and related materials posted on our website may contain forward-looking statements.

These statements are based on estimates and assumptions made by the company in light of its experience, historical trends, current conditions, and expected future results, as well as other factors that the company believes are appropriate under the circumstances.

Many factors could cause the company's actual results and performance to differ materially from those expressed or implied by the forward-looking statements.

For a description of some of the factors that would cause actual results to be different from statements in the presentation, we refer you to the financial results press release and to our most recent Forms 10-K, 10-Q and 8-K filed with the Securities and Exchange Commission, copies of which may be obtained on our website.

All forward-looking statements are made as of today and SJW Group disclaims any duty to update or revise such statements. You will have an opportunity to ask questions at the end of the presentation. And as a reminder, this webcast is being recorded and an archive of the webcast will be available until October 23, 2023.

You can access the press release and the webcast at our corporate website. I will now turn the call over to Eric Thornburg.

Eric?.

Welcome, everyone, and thank you for joining us. I'm Eric Thornburg, and it is my honor to serve as Chair, President and CEO of SJW Group. 2023 continues to be a successful year for our company with a strong second quarter performance that has advanced key elements of our growth strategy.

We achieved constructive regulatory outcomes on our California Cost of Capital proceeding that allows for our increased return on equity and balances the needs of customers and capital providers. At Connecticut WICA effective on April 1st, and approval in Texas of our KT Water Resources acquisition.

Future earnings growth will be driven by the California Water Cost of Capital Mechanism, system improvement charge in Texas, and general rate cases and infrastructure investment surcharges in Connecticut and Maine.

We also invested $115.7 million in water and waste water utility infrastructure through the second quarter, which is 45% of our $255 million 2023 capital expenditure plan. And continued to progress towards our 2030 goal of 50% reduction in Scope 1 and Scope 2 emissions through the electrification of our vehicle fleet and expanded use of biofuels.

In California, 8% of our fleet is electrified and 24% now runs on biofuel. We also delivered earnings per diluted share of $0.58, which is in line with our guidance. Andrew will review our financial results and regulatory updates in our state operations.

Andrew?.

Thank you, Eric. This morning prior to the market opening, we released our second quarter 2023 operating results. As we noted in the first quarter, quarter-over-quarter comparisons between 2023 and 2022 operating results are affected by and reflect the delay in San Jose Water Company’s 2022 to 2024 general rate case proceeding.

As a reminder, while the California Public Utilities Commission approved the settlement agreement in San Jose Water recorded the authorized revenue increase from the general rate case in the fourth quarter of 2022. The revenue increase was retroactive back to January 1, 2022.

This delay in recognizing the revenue is authorized in the general rate case affects quarter-over-quarter comparisons through 2023. Operating results for the second quarter were affected by the end of the declared drought emergency and mandatory conservation as well as unusually cool and wet season in California.

We have experienced reduce water usage in Maine and Texas principally due to weather, and in Texas, most of our service area is in Stage 3 drought condition and a small portion is in Stage 4. The U.S Drought Monitor has classified our service area as extreme to exceptional drought.

In California, as of April 11, San Jose Water is no longer afforded the regulatory revenue protection mechanisms that were in place during the declared drought emergency. Results for the quarter do not include any benefit from these mechanisms beyond April 11. I will discuss this and water usage in greater details shortly.

In the second quarter, we reported revenue of $156.9 million and net income of $18.3 million, or diluted earnings per share of $0.58. This compares to 2022 quarterly revenue of $149 million, reflecting a 5% increase and net income of $11.6 million, reflecting a 58% increase, or diluted earnings per share of $0.38 reflecting a 53% increase.

As you can see, the quarter-over-quarter increase in diluted earnings per share for Q2 2023 was primarily driven by rate filings of $0.41 per share, which I will break down for you shortly. $0.08 related to partial release and income tax reserves and $0.04 related to regulatory mechanisms.

Partially offsetting the quarter-over-quarter increase was an $0.18 decrease due to water supply costs and a $0.13 decrease related to lower water usage as well as $0.06 in higher interest expense. Now a breakdown of the increase in revenue compared to the second quarter of 2022.

The revenue increase was mostly driven by $14.7 million in cumulative rate filings. The total includes California second quarter 2023 revenue increase, and the 2022 portion of the general rate case that was approved in Q4 2022.

The benefit of the five general rate case approvals in Maine that were authorized after Q1 2022 and a water infrastructure and conservation adjustment increase in Connecticut that was effective in Q2 of 2022. The revenue increase was partially offset by $9 million decrease due to lower usage.

Since drought conditions in California have vastly improved, the drought declaration and mandatory water conservation that were in place in the first quarter of 2023 ended April 11. We are still waiting to see how usage will be affected longer term by these changes. As noted earlier, we are seeing weather effects on usage in Maine and Texas as well.

There was a slight increase in water production expense when compared to the second quarter of 2022. The increase was largely driven by $6.6 million increase in average per unit costs for water supply of purchase water and groundwater extraction charges.

Partially offsetting the increase expenses was $4.3 million decrease in production costs related to lower customer usage. The 1% increase in total other operating expenses compared to the prior year was primarily driven by depreciation and amortization and taxes other than income taxes.

The increase was partially offset by reduced expenses due to lower maintenance expenses and other factors. Year-to-date we reported revenue of $294.2 million and net income of $29.8 million, or diluted earnings per share of $0.95.

This compares to 2022 year-to-date revenue of $273.3 million, reflecting an 8% increase and net income of $15.3 million, reflecting a 95% increase, or the diluted earnings per share of $0.50 reflecting a 90% increase.

As you can see, the year-to-date increase in diluted earnings per share for 2023 was primarily driven by rate filings of $0.90 per share in California and Maine that were approved after the second quarter of 2022, including delay of SJWC's 2022 general rate case.

$0.08 from a partial release of income tax reserves related to the repair tax, and $0.07 attributed to regulatory mechanisms and one-time true-ups of $0.07 that occurred in 2022.

Partially offsetting the increase was a $0.40 increase in water supply costs, a non-recurring $0.15 gain on sale of nonutility property and year-to-date 2022 and a decrease due to lower water usage of $0.12. Turning to our financing activity. $65 million has been raised in the first 6 months through our at the market program.

$50 million is for general corporate purposes, and the additional amount was raised for acquisitions expected to close in the third quarter. At the end of the quarter, we had $267 million available and $83 million drawn on our bank lines of credit for short-term financing of utility plant addition and operating activities.

The average borrowing rate for the line of credit advances during the first 6 months was approximately 5.96%. The average borrowing rate in the same period of 2022 was approximately 1.44%. The effective consolidated income tax rate for the first 6 months ended June 30, 2023 and 2022 were approximately negative 1% and 18%, respectively.

The lower effective tax rate was primarily due to partial release of uncertain tax position reserved. The CPUC issued a final decision and a Cost of Capital proceeding for San Jose Water and the state Other Class A water utilities for the years 2022 through 2024.

The constructive and perspective decision maintains the previously authorized Water Cost of Capital Mechanism, or WCCM. It established the capital structure of 54.55% equity, which is an increase of 1.27% and 45.45% debt. The overall rate of return is 7.28% based on a 8.8% return on equity.

The WCCM is triggered when the average Moody's Aa utility bond index rate varies by more than 100 basis points between October 1 and September 30 when compared to the same period in the prior year for the years two and three and the three year rate case cycle.

For the period ended September 30, 2022, the index rate increased by 103 basis points, surpassing the required WCCM trigger, which allow -- then allows for a 50% of the change or 51 basis points to be added to the ROE. San Jose Water filed advice letter number 598 to trigger the 2023 WCCM on June 30, 2023.

On July 31, 2023, the company expects to file a separate advice letter to implement new rates that reflect the WCCM adjusted return on equity of 9.31%, a cost of debt of 5.26% and an overall rate of return of 7.47%. In accordance with the final decision, the new rates will be effective as of July 31 filing.

As mentioned earlier, the declared drought emergency and mandatory conservation in California ended on April 11.

As a result, San Jose Water no longer afforded the revenue protections of the Water Conservation Memorandum Account or WCMA, and the Water Conservation Expense Memorandum Account or the WCEMA that were in place to offset the effects of lower water usage due to mandatory conservation.

The temporary 20 basis point reduction that was in place while the WCMA and WCEMA were in effect has since been restored.

However, our water wholesaler, Valley Water declared a 15% voluntary water use reduction goal when the drought emergency was lifted in an effort to make water conservation a way of life as climate change indicates the likelihood of future droughts.

On April 20, based on this voluntary water use reduction goal, we filed with the CPUC requesting continuation of the WCMA and WCEMA. The CPUC has not issued a decision on our filing.

In the meantime, there has been reduced water usage in California, it is unclear how quickly and fully water usage will recover and with the end of the mandatory conservation period. As I mentioned earlier, uncharacteristically cool and wet weather has contributed to lower usage in the second quarter.

We expect weather and usage will continue to be a factor in California for the rest of 2023. For the remaining months, we are well prepared for typically hotter and peak usage months in San Jose area as usage recovers following the drought.

Our California Water Supply is best -- is the best it has been in years because of plentiful precipitation during the rainy season, that continued into the spring and early summer.

The increased production from our owned surface water supplies benefits customers because it cost less to produce than purchasing higher priced water from our water wholesaler.

In Connecticut, we filed an application with the Connecticut Public Utilities Regulatory Authority for a 1.19% increase in the water infrastructure and conservation adjustment. This application covers 11.5 million in completed projects and we generate $1.3 million in annualized revenues, if approved as filed.

A decision is expected and any authorized WICA increase would be effective in Q4. Connecticut Water is also planning to file a general rate case in the fourth quarter of 2023. In Maine, we filed for a temporary annualized rate increase of 1.5 million in the Biddeford Saco division. And if approved, as requested, it would be retroactive to July 1.

The filing was related to the general rate case application filed last March that requested a $2.9 million increase in annualized revenues to recover the operating expenses and increased borrowing costs of the Saco River drinking water resource center that went in service last summer.

The amount of the temporary request is related to the uncontested portion of the total request between the Maine Water and Office of Public Advocate. The Maine Public Utilities Commission will determine whether a temporary rate increase is granted. A final decision on the $2.9 million requested increase is expected in the fourth quarter of 2023.

Maine Water has also filed an application with the MPUC to recover $1.7 million and completed infrastructure investments in the Camden Rockland division through the water infrastructure surcharge or WISC. If approved as requested, it would generate $158,000 annualized revenue. A decision is expected in the third quarter of 2023.

General rate cases are also planned in two other divisions later this year. On April 24, the Public Utilities Commission of Texas approved our acquisition of KT Water development of 570 connection residential water system. The closing is expected in the third quarter of 2023.

The PUCT's final order that transfers a certificate of convenience and necessity to Texas Water is expected in the fourth quarter. And we expect approval at that time on our request for fair market value and applied rate doctrine treatment.

The PUCT approved the application for the transfer of 520 acres of water service area and 314 acres of sewer service area from San Antonio Water System to Texas Water, no customers were transferred as part of the transaction.

Texas Water also filed an application with in April with the PUCT to acquire the Elm Ridge water system that serves 21 residential customers in Comal County. Texas Water has asked for the filed rate doctrine treatment, which allows the acquiring utilities current rates to be applied to the time of the acquisition.

We continue to advance our application for System Improvement Charge or SIC in Texas. The SIC would allow Texas water to add certain utility plant additions made since 2022s rate base, thereby increasing revenue and avoiding the immediate need for a general rate case.

The SIC is projected to increase Texas Water's revenue by $1.6 million within 1 year of the PUCT's approval. Decision is expected by the end of Q1 2024. As mentioned earlier, our service area has systems in Stage 3 and Stage 4 drought conditions. We are targeting a 20% reduction in water used in the Stage 3 area and a 25% reduction in the Stage 4 area.

Texas Water has quadrupled its service connection since 2007. And we intend to continue this momentum through prudent acquisitions, Organic growth and securing water resources to support that growth.

Texas Water, it currently serves more than 26,000 water connections and 900 wastewater connections in the rapidly growing area between Austin and San Antonio, and it serves three of the five fastest growing counties in the U.S according to the Census Bureau.

We are reaffirming our 2023 guidance of $2.40 to $2.50 per diluted share, and our 5-year capital investment outlook of $1.6 billion, which includes estimated PFOSS treatment based on the EPA's proposed Maximum Contaminant Level. Through June, we issued 65 million in equity through our at the market mechanism.

As stated in their guidance we plan to issue 40 to 50 million in 2023 excluding acquisitions. The additional 15 million raised is the fund acquisitions are expected to close in the coming months.

Factors impacting the 2023 guidance includes no significant rate case decisions expected in 2023, continued inflation's affecting interest costs, labor costs, and other expenses.

Usage recovery associated with the end of the mandatory conservation and the end of the temporary decoupling mechanisms in California, as well as charges in -- changes in the effective tax rate. We also reaffirm our long-term growth rate of 5% to 7% anchored off of our 2022 diluted earnings per share of $2.43.

We anticipate EPS will be nonlinear because of rate case cycles. With that I will turn the call back over to Eric. Eric..

Thank you, Andrew. SJW Group strongly supports the proposed U.S EPA Standard for PFAS and drinking water. We are pleased to share that SJW Group utilities were among the members of the class action lawsuits against some PFAS manufacturers that were recently settled for approximately $11.5 billion.

It was and remains important to us to hold the manufacturers of PFAS and polluters in general responsible for the costs to address this contamination. It's too early to know when and how the settlement will be dispersed. But we will keep you updated on this progress.

In addition to the lawsuit against PFAS manufacturers, we continue to advocate that all water and wastewater utilities have access to available state and federal funding sources for PFAS treatment.

The current estimated capital expenditures for addressing PFAS at our local utilities is approximately $230 million, and is split between California and Connecticut. The estimate is based on testing to date and an assumption that the EPA is proposed Maximum Contaminant Level is adopted as proposed.

We endeavor daily to be stewards of the environment and leaders in sustainability. So far this year in 2023, we're moving forward with new initiatives to reduce our use of fossil fuels and greenhouse gas emissions. We expect more than 25 battery electric vehicles will be added to our fleet to replace internal combustion engines.

The vehicles will be charged at New EV charging stations at our facilities, including some that are solar powered. Further in California, we're preparing for a Mega Pack energy storage battery to replace a diesel fuel generator by 2025. We're also fueling some of our generators with biodiesel this year.

A measure that we estimate will reduce the use of 23,000 gallons of standard diesel fuel. These are among the many projects plan to help the company meet its goal to reduce greenhouse gas emissions by 50% in 2023, compared to 2019.

Our efforts for our community and towards corporate social responsibility have resulted in a prime status ESG corporate rating from institutional shareholder services or ISS from institutional shareholder services, or ISS. Further, our environmental, social and governance scores are among the best of our long-term U.S water utility peers.

We will continue to work towards achieving rankings that reflect our long-term commitment to our environment, customers, employees and communities. As I shared before, our people are what makes the difference at SJW Group. Our people allow us to provide an essential service with integrity, reliability, and peace of mind for our customers.

As an example, in September 2022, Connecticut Water acquired a small 118 customer water system in old line that had been out of compliance with drinking water regulations. Since 2016, in less than 9 months, our people had that infrastructure in place and made the operational changes needed to bring the system back into full compliance.

Customers again have confidence in their drinking water. Regulators know that we're the problem solver and shareholders will earn a return on that investment. That's our brand promise. I continue to be inspired by the contributions of our talented teams across our national footprint, serving customers, communities, the environment and shareholders.

I have confidence our team will continue to excel and reinforce SJW Group's strong positioning for a successful future. With that, I'll turn the call back over to the operator..

Thank you. [Operator Instructions] Our first question comes from the line of Richard Sunderland with JPMorgan. Your line is open..

Hi, good morning.

Can you hear me?.

Yes, we can, Richard. Thanks for calling in..

Great. Thanks for the time today. Starting with guidance, can you walkthrough 1H results relative to plan, and I'm particularly curious of the tax benefit and the sales impacts. I guess also curious how the CPUC Cost of Capital outcome positions you for 2H guidance as well..

Excellent. Excellent questions, Rich, and I'll a couple of the items. So first of all, from the tax aspects, we did expect the release of the reserve that was included in this quarter. That was largely budgeted. It came out a little bit better than we expected, but was largely in line with what we expected.

As it relates to the Cost of Capital, the cost of capital actually came in better than we had originally planned for the year. However, our usage has come in below what we expected for the year. So there's been a balance between those two areas.

We've been effective at putting in measures in place to kind of balance out any of the risks so far associated with a lower usage. And as long as things are continue the way we expect, we should be within a range of guidance. And that's why we've reaffirmed it..

Understood. Very, very helpful there. I wanted to turn to the WCMA request. Any sense on timing of an outcome there? You have -- you asked for that retroactive treatment, if approved, I guess retroactive to April 11. And how much of that 2Q drag is California. I guess just thinking how much that mechanism would cover if approved..

Right. So what I would encourage you to do is look at the usage numbers. So the usage numbers are where that Q2 drag shows up in our numbers. In particular if you look at the EPS numbers, that's where it nets the difference between the revenue impacts as well as the production cost impacts associated with the lower usage.

If the WCMA is reenacted, it should be back to the date that the -- April 11 as we've highlighted. That been said, we will await the permissions approval. There's clearly issues related to usage in our California Utility that's the main driver, but it's not the only driver.

Both Texas and Maine have also have lower usage this year for different reasons. Texas was lower. Earlier just due to rain that was enough to water, but not enough to recharge our facilities there. So it did drive down usage. Now what they have is usage reductions due to conservation.

So we've got two areas that are reduced conservation and Maine has just suffered from lower usage due to overall weather as well as some other factors..

Understood. Very helpful. Maybe just one last one.

The PFAS CapEx for Connecticut and California, any thoughts on how you would seek recovery there? Is it through rate cases or potentially separate mechanisms?.

So as of today, it's going to be through rate cases, but where there is an opportunity to use separate mechanisms, we will avail ourselves with that..

Great. I'll leave it there. Thanks for the time today..

Thank you so much, Rich..

One moment for our next question. Our next question comes from the line of Gregg Orrill with UBS. Your line is open..

Yes. Thank you.

The 20 basis point ROE reduction related to the WCMA and WCEMA, how does that factor into the forecast?.

Sure. So it's not so much how does it factor into the forecast, but it factors into what the impact is on our revenues and earnings. So any time that we are utilizing the WCMA, that 20 basis point reduction goes into the calculation of how much we could recover associated with the WCMA. So I'll just give some numbers just for gross consumption.

If we have a $5 million reduction in revenues relative to authorized and then let's say that we had a $3 million reduction associated with the production cost. That would mean that we would have a $2 million shortfall in this particular case.

Then let's just furthermore say that we had $1 million associated with the ROE adjustment that means we would only be able to recover the $1 million as opposed to the full $2 million shortfall.

So in the case that I just highlighted, the ROE component will go away, but we are not getting any coverage for that $2 million shortfall that we have to start with. So the net impact year-over-year would be the $1 million change as opposed to the full $2 million change..

Okay. Very good. I got it..

And Gregg, feel free if you want to -- if you have any more follow-up to reach out, we can be very happy to talk through that with you. But it's -- I try to use just broad numbers to make it easy to understand, at least easier..

Okay. Appreciate it..

Thank you, Gregg..

Thank you, Gregg..

One moment for our next question. [Operator Instructions] Our next question comes from the line of Jonathan Reeder with Wells Fargo Securities. Your line is open..

Hey, how is it going, Eric and Andrew..

Yes. Hi, Jonathan. Thanks for calling in. Yes, thanks for having me. So Andrew, just to follow-up real quickly on your last comment.

Is that ROE reduction, the 20 basis points or the lack thereof, is that included in that lower usage net category? Or is it just purely the usage?.

That usage is just purely the usage when we look at that, that would be in the other regulatory mechanisms, I believe, is where we would have put that..

Okay. Okay. And then how much is usage below what is contemplated in the 2022 to '24 GRC? And how has that trend been in the more recent months of May and June once the restrictions were lifted. Like in other words, have you seen a ramp up in the usage more closer to the GRC levels or not necessarily yet.

And I don't want you to speculate it on July when it's been super hot and weather has been working in the other way. I'm trying to get to more of like a weather normalized feel..

Sure. So look, I think the answer is that from kind of a range over the months. It would be kind of in that 10% to 12% range of what it's been relative to the previous year. There's -- the things to keep in mind is there was a very cool June, April and May with rain. I couldn't believe it.

I was looking outside my office window, and it was raining on June 6, which I don't think in my 9 years of employment with SJW Group have I ever seen rain out of my window in June. So that kind of gives you a sense of what it's been like. It has continued to remain cool generally in the Bay Area in San Jose.

So San Jose has not been outperforming the previous weather patterns from a heat perspective. So I would say that, that weather pattern has not necessarily been as beneficial to us as maybe some of the other areas. Texas, on the other hand, has had huge heat. But now we've got conservation that's going to hold that back..

Okay. When we are hearing about these scorching temperatures in California and stuff, that's not necessarily true in the Bay Area where you're serving territory..

Generally speaking, no. And Eric is there almost every day and I ask him often and he's like, no, it's not that high..

Lucky for Eric, kind of tired of the -- and tire you already, but anyway, does the $65 million of equity raised does that complete your total '23 issuances then? Or do you -- will you need to do a little more under the ATM in the second half of 2023?.

Yes. We will need to do a little bit more in the ATM for the second half, but it's enough to cover the acquisitions that we have in the hopper..

Okay.

Any guidance in terms of what the total value of those acquisitions are that are expected to close this year?.

Well, I did give some guidance on how much more equity that we expected to do. And if I remember right, it was $15 million..

$15 million above the $65 million already?.

Yes..

Okay. That helps.

Is that incremental to the $255 million CapEx budget then the deal closure values?.

The deal closure value is not associated. With our CapEx, we do that separately from our transactions. So that's the difference is that those transactions are funded for and are not included in CapEx.

CapEx really relates to utility plants that we are trying to put in place or other non-rate CapEx that we might have, which is minimal in our particular case..

Got you. Okay. And then lastly, can you give an update on, I guess, where Aquarion's appeal of their Connecticut rate case, where that stands? The timing of potential, I think, decision on their appeal and how that potentially impacts your planned filing in the state later this year..

Sure. I think from our perspective, obviously, Aquarion is going through the courts in order to changed or have them hear out what happened with theirs. What it does for us, though, is it's more goes back to the fundamentals of where PURA had comments on their case.

So we have spent more time on preparing our testimony associated with our capital programs to make it more fulsome than it has been in the past than the prior standard, and we are aiming and working hard to achieve what PURA is looking for there.

We also have implemented and increased our focus on our testimony to make sure that we have our testimony in order to make it easy to understand. And then finally, we changed our timing to be this latter part of the year with a focus on filing, a notice in September and filing a case in the fourth quarter..

Okay. And I guess the last question -- go ahead..

Yes, I think the key, Jonathan, sorry to interrupt. But the key for us is we have done our best to learn from what has happened before in order to prepare better for the 2023 filing that we will be doing..

Right. Right. Okay. And then I was just going to try to sneak one more and if you didn't mind just -- you just discussed, I guess, the increase in the water production expense this quarter and even year-to-date, I guess I was just a little surprised to see the water supply costs exceed the benefits from lower usage and the more favorable mix.

Can you kind of just talk about -- is that just purely related to the increase from the wholesaler? Or is there something else in there?.

Yes. It really is the increase with the wholesaler is the major driver that is in place. And I think that's going to be the biggest factor. The other thing just to keep in mind from our full cost balancing account. Any benefits that we would have received by the mix is no longer something that we receive. It actually goes to our customers.

And so that's the other aspect that you'll have to note in the overall -- when you're looking at the kind of combined production cost and as you model that production cost, the mix no longer has a major impact on the company..

Right. Right. Okay. But the 15% increase from the wholesaler is the big driver there..

And it's not just one wholesaler, but there's increases in Texas. There's also an increase there as well, but the biggest one is the Valley Water increase in California..

Okay. Got you. Thanks so much for taking my questions today, appreciate it..

Thank you. [Operator Instructions] I'm showing no further questions at this time. I'd like to turn the call back to Eric Thornburg for closing remarks..

Thank you, operator. SJW Group is a leading pure-play water utility with a strong platform for growth, an elite dividend track record and a recognized leader in ESG performance. We thank you for your interest in our company and support of us and our people. Look forward to talking to you next quarter..

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect..