Good day and welcome to the Sempra Energy Third Quarter Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Ms. Nelly Molina. Please go ahead, ma’am..

Good morning. And welcome to Sempra Energy’s third quarter 2020 earnings call. A live webcast of this teleconference and slide presentation is available on our website under the Investor section.

Several members of our management team are on the line with us today, including Jeff Martin, Chairman and Chief Executive Officer; Trevor Mihalik, Executive Vice President and Chief Financial Officer; Justin Bird, Chief Executive Officer of Sempra LNG; Allen Nye, Chief Executive Officer of Oncor; Kevin Sagara, Group President; and Peter Wall, Senior Vice President, Controller and Chief Accounting Officer.

Before starting, I’d like to remind everyone that we will be discussing forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected in any forward-looking statements we make today.

The factors that could cause our actual results to differ materially are discussed in the company’s most recent 10-K and 10-Q filed with the SEC. All the earnings per share amounts in our presentation are shown on a diluted basis and we will be discussing certain non-GAAP financial measures.

Please refer to the presentation slides that accompany this call for reconciliation to GAAP measures.

I’d also like to mention that the forward-looking statements contained in this presentation speak only as of today, November 5, 2020 and the company does not assume any obligation to update or revise any of these forward-looking statements in the future. With that, please turn to slide 4 and let me hand the call over to Jeff. .

Thanks, Nelly, and thank you all for joining us today. Before I start, I'd like to take a moment to recognize the exceptional work of our 18,000 employees who have been working hard to improve the safety and resilience of the communities we serve.

We power thousands of hospitals and emergency service providers, the nation's two largest ports hundreds of clean transit and heavy-duty trucking fleets and essential electric generation. Millions of people count on our critical energy infrastructure and the work we do is a great credit to the dedication and professionalism of all our employees.

Last quarter we successfully concluded a two-year capital rotation program where we divested noncore assets and repositioned our business and what we believe are the best markets in North America and we continue to see steady improvements in our financial results.

Today we're proud to be reporting strong earnings and reaffirming and guiding to the high end of our full year 2020 adjusted EPS guidance range. Additionally we're reaffirming, our full year 2021 EPS guidance range. Now please turn to the next slide.

In addition to improving financial performance, our current strategy of focusing on lower risk T&D investments as the added benefit of producing stable cash flows and improved earnings visibility.

In large measure this is a result of strong growth that we're seeing in our California and Texas Utilities where constructive regulation limits exposure to the price and volume of electricity and/or natural gas sold. Also when taken together, our U.S.

utilities have a blended authorized ROE of right around 10.1%, which is excellent given the current environment. Adding to the growth profile of our utilities, our North American infrastructure businesses also provide attractive economic returns and are supported our take-or-pay contracts with over 20-year terms on average.

As we've demonstrated in Peru and Chile, as well as our renewables business we built strong franchises that competed locally and globally. When we sold those businesses, investors not only bought the assets but also the franchise value we had built up over decades, which was reflected in the premium multiple that we received.

Similarly we think we've built a strong franchise in our LNG business and to fund its growth needs, we're focused on sourcing the lowest cost of capital to enhance value to our shareholders. At Cameron LNG we believe cash flows from phase one should cover any required equity for the phase two expansion.

Separately at Port Arthur LNG, we're evaluating efficient financing options with a view towards shifting post-FID equity contributions until much later in the construction phase. And at ECA LNG phase one, we estimate that Sempra and IEnova's equity funding to be approximately $250 million for each company.

That's why with all this growth in front of us, we're actively looking at different financing structures and different forms of infrastructure and strategic capital.

In doing so we think it gives us the opportunity to efficiently fund growth, to highlight the growing value of our LNG franchise and to strengthen Sempra's balance sheet, which is important since we expect to also increase our investments in our utility businesses over the next five years.

Beyond highlighting our continued execution and the strong organic growth from our infrastructure platforms, I would also like to update you on the recent recognitions we've received in the area of diversity and inclusion, which I would note is central to how we think about a high performing culture. Please turn now to the next slide.

In the last month, we received two awards recognized in Sempra for its industry-leading approach to diversity inclusion. The first was the National Association of Corporate Directors -- NXT award, which recognizes company boards for their excellence in utilizing diversity and inclusion as a strategy for building long-term value for their companies.

And the second was the Forbes JUST 100 list, which recognizes companies are doing right by all of their stakeholders.

We're proud of the results of our continued focus around people priorities and culture across our management and more broadly our workforce we compare favorably to industry benchmarks and the representation of both women and people of color. We also have a strong record and commitment to supplier diversity.

And I think, the key takeaway is we're focused on advancing our strategy in a way that is increasingly responsive to all stakeholders over time. Now please turn to the next slide, where I'll highlight some of our more notable accomplishments for the year. This slide shows why I couldn't be more proud of our team.

I won't discuss everything that's referenced here, but several points are particularly noteworthy. This year we launched a record five-year capital plan completed the sale of both our Peruvian and Chilean businesses with cash proceeds of approximately $5.8 billion before tax.

Guided to the high end of our 2020 adjusted EPS guidance range in May and then raise guidance in June, and now we're guiding to the high end of that increased range. And lastly, we executed a $500 million share buyback. Before turning to the next slide, I wanted to briefly discuss the San Diego franchise agreement.

The city charter here in San Diego requires a competitive process to renew the franchise with a view towards getting the best outcome for the residents of the city. And those same residents happen to be our customers as well. So we have a strong alignment of interest here with this city to ensure a great outcome.

SDG&E recently submitted a competitive bid and looks forward to concluding the process later this year. But because we are in a quiet period we need to be respectful of the city's process and accordingly, we'll not be able to comment further.

Please turn now to the next slide, and I'll turn the call over to Trevor to review some of the more notable operational and financial developments..

$56 million of lower earnings due to the sales of our Peruvian and Chilean businesses in April and June of 2020 respectively; $32 million of lower income tax benefits from flow-through items due to the timing of the 2019 GRC final decision at SoCalGas; $32 million of unfavorable impacts from foreign currency and inflation effects at Sempra Mexico net of foreign currency derivatives.

Third quarter 2019 had approximately a $10 million gain and third quarter 2020 had approximately a $20 million loss. $29 million charge related to an energy efficiency program inquiry at SDG&E; $3 million of lower earnings at Sempra Texas utilities, including $21 million from unfavorable weather.

The lower earnings were also due to increased operating costs partially offset by increased revenues from rate updates to reflect invested capital.

This was partially offset by $79 million of higher equity earnings from Cameron LNG JV, primarily due to Phase 1 commencing commercial operations and $21 million impairment of non-utility native gas assets at SoCalGas in 2019. Please turn to the final slide. We're pleased to report a successful quarter both operationally and financially.

Benefiting from a more narrowed strategic focus, we're reaffirming and guiding to the high end of our full year 2020 adjusted EPS guidance range and reaffirming our full year 2021 EPS guidance range.

We remain committed to creating long-term shareholder value, and I could not be more pleased with our overall year-to-date financial performance even in these challenging market conditions. And with that, this concludes our prepared remarks. And we'll stop to take your questions..

Thank you. [Operator Instructions] We'll take our first question from Shar Pourreza with Guggenheim Partners..

Hey, good morning, guys..

Good morning, Shar..

Just a couple of questions here, Jeff.

Can we just first – can we touch on some of the moving pieces on sort of the 2021 earnings drivers as you're thinking about it? Especially, as it sort of sets up to be a cleaner year from a business mix perspective, I guess, how do you think about year-over-year growth from your prior revised higher 2020 EPS guidance range, which now actually points to the top end.

So what are some of the pushes and takes as you think about 2021 and build off the higher 2020 base?.

Well, I appreciate the question Shahriar. And I think, I would just start by saying that we feel great about the year we're having in 2021.

And I think, I want to emphasize the fact when you think about what the market backdrop is, I think it's one of the toughest situations that any of us have gone through in terms of the COVID, and the impact to our economy. But as you think about 2021, you raised a great point, which is it will be a very clean year for us.

It will be the first year you will not see contributions from any of our divested businesses. You recall that, we've divested roughly $30 billion in enterprise value of assets over the last two and half years. And I think the whole goal was to make sure that we improved our performance going forward.

So as you look to 2021, I think you should continue to expect that the lead driver for our company will be our utilities, right? So you've got upwards of a $30 billion, five-year capital program dedicated to our regulated investments. You've got a blended ROE across that platform of about 10.1, which is differential in today's marketplace.

And to a point that you alluded to next year will be the first year that you'll see full annual run rate earnings from Cameron, which we talked about being in that $400 million to $450 million range.

But I do want to mention that, the goal of this whole capital recycling program Shahriar over the last two years was to put this management team in a position where we had a clear field of vision to do one thing, which was improve our financial performance.

Now, I was thinking about it coming into this call but if you think back Shahriar to 2019, we began the year with a guidance range of $5.70 to $6.30. And then last year on the Q3 call, we raised the entire guidance range to $6.50 of EPS, and then we delivered the year with an actual earnings number adjusted of $6.78.

And that really set us up quite well for 2020. We began this year with $6.70 to $7.50 guided to the high end of that range you may recall on the Q1 call. And then in June, just over a month later we raised the entire range to $7.20 to $7.80.

And I think, I call this out on our last earnings call, which you may remember back when we used to provide five-year guidance. I went back and looked at 2016. In five years in advance, we had forecasted an adjusted EPS range of $7.20 to $7.80.

So being able to deliver that performance in 2019 and 2020 and now be in a position to your point to guide to the high end of the range, we're going to exceed a 12% earnings CAGR over the last five years.

So this idea that, we're going to be nimble we're going to keen to compete our capital and adjust our portfolio to deliver returns, I think has set us up really well for 2021. So I would just conclude on this point. We're optimistic about the returns we can produce next year..

Terrific. Terrific. And then just on ECA, I know clearly the gating factor for Phase 1 is the permits. Any sort of updates Jeff at this juncture? And is the perception out there that this process really now relies on a second proposed LNG project.

Can you just maybe touch on that? And then what's your sort of stance or threshold in further Mexico investments?.

Yes, there's a couple of questions embedded there. But I'll start from the top and say that for the ECA project to go forward it is 100% disconnected from another project going forward.

So, I think the most important development has caused us to have improved confidence is that we completed the successful consultation down in Baja over the last three weeks. We may have seen that we received a positive vote with strong local support around the 60% level.

And what's most important is that sends a strong message to the central government where we've developed some great relationships. So, I think I have been wrong on this before I must confess. We originally thought that how we get this permit with the team in Q4 of last year.

But I think what has been the big difference now has been the relationships we've developed and the consultation that occurred down in Baja. The goal here is to get the SENER permit which we're forecasting to get this month that's the authorization to export hydrocarbons off the coast of Mexico.

And we also think it's reasonable Shahriar that we will have a final investment decision with the permit this quarter. Transitioning to the larger picture down in Mexico. I think you've heard us talk about this in the past where we're constructive I think over a longer term horizon. I think the short term we definitely envision some headwinds.

There have been some dislocations in the market based upon some of the policies and protections around state-owned enterprises. And that's why you saw the IEnova team earlier this year adjust their plans.

And namely they backed off on just over $200 million of capital for 2020 and that was designed to free up cash to support an opportunistic share repurchase program. They have bought back to date I believe roughly 77 million shares which has increased Sempra's ownership in that public company to the 70% level.

And I think when you trace that through they put about $230 million to work in their share repurchase program. And their approach very similar to ours at Sempra is to be opportunistic when they think the market supports that. And then I think the final update I would say is I recently cut their dividend.

So, they're doing all the things you expect them to do to preserve the value of the business and be opportunistic about positioning the business for more value. And the dividend cut is really designed to bolster liquidity and short the balance sheet.

So, I would just say big picture the focus of Sempra LNG and the focus of the IEnova is really about getting the ECA project launch which is a very, very big project. It will be the largest construction project in the history of Baja California I think we're very well positioned to execute it..

Got it. And then Jeff just one last one for me. A little bit more of a strategic question for you is Sempra is effectively one of the last sort of hybrid utilities will be with the scale of the infrastructure investments that you have. So, it's been a big theme this year by derisking about simplifying.

So, I'm just kind of curious what are your thoughts on sort of the overall business mix, especially if your stock really never gets the value that it really does deserve when do you and the Board start to like maybe consider options and rethink the current strategy?.

Yes, I would say one of the things that's embedded in your question Shahriar is you should assume that we're doing that all the time. I think sometimes outside perception is that a Board of Directors or a management team will have a strategy session once a year. That's not the way it works with Sempra.

And I think as a credit to our Board and our management team, you can't find another company in our space that's had the transactional activity we've had in the last 24 months. So, you think about transaction on enterprise value roughly $30 billion of transactions in two years. It's a pretty sweeping change to our portfolio.

And you couple that with the earnings performance that we've demonstrated over the last two years we have something special going on the company in terms of a unique growth and income story. And I'm not here to tell you that the market gets it right every day. But I do believe in efficient markets over time we certainly think our stock is undervalued.

And that's why you saw it be proactive this summer in terms of executing the share repurchase program. But I will tell you this we're not wedded to any single asset. So, if there's opportunities or dislocations in the marketplace you should expect us to look for them.

And let me highlight one example for you that I referenced in my prepared remarks, when you think about the LNG space as a vertical category we have a pretty confident view that we've got a leading franchise in North America. It's well-capitalized.

I think there's a series of built-in competitive advantages that allows us to access both the Asian market in a unique way as well as being able to dispatch directly into the Atlantic. And if you look Shahriar at the runway of growth in front of our LNG business, it's differential from any other company in North America.

So in my prepared remarks, one of the things I highlighted is that, we're actively looking at ways that we can create more value of the portfolio and really compete, different sources of capital, so that we can fund growth.

Our goal obviously is to source the lowest cost of capital to fund that growth, but I want to be very clear, where also Shahriar looking for ways to highlight value for our shareholders. And strengthen our balance sheet. So as I thought about, this call today, we went back and looked at some of the transaction values in the marketplace.

And a lot of the research work around our business, we'll show people in the sum of the parts analysis looking at our LNG business at nine or 10 times EBITDA.

But you look at some of the transactions and some of them are quite recent whether it's co-point Sempra Energy Partners is a variety of transactions where there's value being highlighted in the marketplace. And you're seeing those, chart go off at 12 times to 14 times.

So, there's certainly a dislocation between the, value being attributed to our portfolio. And that's why I would say, that the bottom-line is, we think there's a lot of franchise value, in our LNG business. You saw that show up, in how we transacted around wind and solar.

You saw that franchise value in the transaction multiples in Peru, in Chile which went off at 16 times and 17 times. So one of the things I can commit to you is, we're going to be active. And we're going to be active about driving value for our shareholders. I certainly agree with you that, we haven't seen that show up in our stock price.

But we will not be standing still..

Terrific. That's very helpful, Jeff. And thank you Justin and Trevor. Hi guys..

Thank you..

Thank you. And we'll now take our next question from Steve Fleishman with Wolfe Research..

Good morning, Steve..

Yes. So sorry I -- my question actually was related to that last question in the comments you made in your remarks about, looking at different financing structures and strategic capital for the LNG projects.

And I guess my question there is, when you make that comment is it more for each individual project, as you're thinking about that, or is it for kind of the business as a whole?.

Right. Well let me start Steve by saying, we appreciate having the opportunity to participate in the conference over the last couple of weeks. I know I didn't participate on the day that the conference actually went off. It's always a conference, we look forward to. So, as we think about, the options we're looking at.

And you can go back and review my prepared remarks we're active in both regards. We're looking at both, financing options and financing structures at the project level and at the portfolio level. And to be very specific, we're also looking at both, infrastructure and strategic capital..

Got it. That's helpful. And the -- I guess there's a balance between value and then, you're actually particularly on Cameron, good earnings out of the business.

So when you think about, kind of, value creation, how are you just thinking about that aspect, in terms of -- I guess, really making some things may be accretive or not, or how are you thinking about that?.

I think you can go back. And look at our track record. As we look at, things that we divest and things that we invest in, we always do it through the lens of accretion. I think the three comments I've made, I think twice now on this call, is we're looking to source lowest cost of capital to fund growth. We're looking to highlight value.

And certainly we feel quite constructive about looking at things which are only accretive. But I also think that in doing so, this is not just an academic exercise. I think that our partners particularly in the, LNG space really think that one of the things that's unique about our LNG story is the strength of financial commitment behind that business.

And particularly in this marketplace, I think it has really allowed us to have a more competitive position, particularly relative to our peers here in North America. So, I would just say it's about funding growth efficiently. It's about highlighting value and accretion. And it's about supporting our balance sheet..

Got it. That's helpful. I’ll let others ask question. Thank you..

Thanks for joining Steve..

Thank you. We'll have next from Julien Dumoulin-Smith with Bank of America..

Good morning, Julien..

Hey. Hi. So perhaps just to pick up, Steve. This is the game [ph]. Just to be very clear about your thoughts on, buybacks, right? So obviously you did some early this summer. Perhaps less so this quarter, how are you thinking about capital allocation in the nearer term sense here? I mean, obviously, think you're fairly clear last quarter.

So I just want to make sure we're hearing you right as to how you're thinking about some of the nearer term priorities for capital?.

Well, I think if you go back to the early part of the year, we announced what was our largest ever five-year capital program of just over $30 billion to $32 billion of capital over five years. And that's completely geared towards supporting the growth in our regulated business.

As you heard Allen talk about, or at least we talked about with Allen in our script. The growth we're seeing at Oncor and he's always got another $750 million of capital outside of that plan that they've circled in their tracking, which could also increase.

So our job is to continue to find ways to produce what we think is the differential growth and income story. We're going to support our dividend. We're going to manage our balance sheet and we're going to fund the growth that's right in front of us.

If there's times where we see a dislocation in the marketplace Julien like you and I have talked about before, we will always look for opportunities to be opportunistic around the share repurchase program. I think you've seen IEnova take that approach. Obviously you saw us do that earlier this summer.

Having that dry powder with the $2 billion approval by our Board is very helpful. It's something we constantly look at and it's available to us. And it's going to be driven by where we think that we can produce the most value. So you saw a decline in our stock price, in the mid part of the summer and we were active there.

But we're also going to meet the growth needs. So it's a balancing issue. It's something we look at a lot Julien. We don't take a firm view and now a “$2 billion program”. That authorization is there to let us do what we've done in the past, which is approach it opportunistically to create value..

Let me give an overview of what’s happened, you all talked about upside potentials previously upwards of $1 billion. You raised I think I'm going to call it just $300 million of late.

How do you think about feathering in further outside capital and Oncore in this $300 million relative to the larger numbers you guys have talked about as some of the potentials there earlier?.

Yes. So, obviously, we own right over 80% of Oncor. This is an investment that we think very highly of. So when you think about our commitment to invest in T&D assets or assets that have T&D level risk.

One of the things that Allen outlined in our analyst conference was some incremental capital opportunities between right around $770 million to $1.17 billion of incremental capital. We think that a lot of that opportunity is still there that's outside of this $12.2 million.

But I would just comment that we have a strong view about our ownership position in Oncor. We certainly do not see any need to bring in outside third-party capital to support that. In fact we'd love to own more of that business.

But let me stop and bring Allen in and Allen perhaps you can talk about the current market environment and growth you're seeing on your system, which I think called as all of us to have more confidence about being able to better serve Texas customers..

You bet, Jeff. And thanks for the question Julien. First the incremental capital point just to reiterate, we're doing two things today. One, we've increased the five-year plan by $300 million. And then we're also adding another year right at the back end of the plan for 2025 another strong year at $2.4 billion, $2.5 billion.

So we do feel good about growth and where the state is going where our company is going. As Jeff said the $12.2 million is separate and part of the incremental capital that we talked about before.

So if you look back at my last analyst presentation as Jeff said, I think we had a slide around 775 to 1.275 in incremental capital opportunities above and beyond that. That is still available. That is not diminished by this increase today. And if we see -- we try to be conservative in our planning.

But if we see growth, really strong growth continuing at levels that exceed what we're anticipating now if we get oil and gas returning to pre-COVID or beyond levels, or if we continue to see really strong growth in renewables I'll talk about in a second. Then we may be back with more at some point.

But we feel very good about the $12.2 million over $5 million based on what we're seeing on our system now and our conservative planning approach. With regards to the growth that Jeff mentioned, when we talk about growth on our system there's several criteria we look at. One is obviously serve new.

It's basically the number of new premises or a number of new meters on our system. Notwithstanding, all the challenges of 2020, we did around 64,000 and we added about 64,000 last year in 2019. We added 21,000 in the third quarter of this year and we're on track to be right on top of our 2019 number.

So, notwithstanding economic downturn COVID and all the fun of 2020, we feel good about our new service coming in basically where it was last year. On the transmission side, we generally have two buckets, retail points of interconnection and generation points of interconnection. Retail is slightly down.

However, generation interconnection requests are significantly up and far exceed the decrease on the retail side to the point, where we're anticipating, we'll have probably our highest level ever of total transmission POI requests that we have active at any given time. We have I think, about 275 in the queue right now. So, growth remains strong.

We're still clicking along at about a 2% premise growth. Transmission POIs look good. And obviously, based on the move we made today on CapEx, we feel good about growth moving forward..

Thank you..

Thank you. We'll take our next question from Stephen Byrd with Morgan Stanley..

Thanks for taking my questions. I wanted to spend some time on California. I guess, first just talking about the event all move away from methane. I know, you've been a thought leader in approaches there.

I was just curious, in terms of your dialogue with regulators and legislators et cetera, just sort of generally the feedback you're getting and your sense of potential sort of concrete next steps or is this just a very long gradual process? How do you kind of see that unfolding?.

Yes. Thank you for the question. And I'll pull Kevin Sagara, our Group President for California into it momentary. There is a process underway at the PUC to look at a phased approach to how we integrate a natural gas strategy over multiple decades to help decarbonize the state. But I might start just with a little bit of a perspective, nationally.

I think that, over the last several decades, Stephen, the United States has led the world in reducing energy-related emissions. The IEA came out with the study in February that showed that emissions globally were flat in 2019, but they -- of all the nations in the world, it was the United States that led the declines in 2019.

So, we grew our economy at 2.3% and reduced our energy-related admissions by 3%. And in that study, what they indicated was, you saw declining emissions in OECD nations and increasing emissions in the developing world.

And since the year 2000, we've led the world an absolute decline in emissions where currently one giga ton of carbon below the 2000 period here in the United States. And with the IEA credit, the massive build-out of renewables combined with support from natural gas and switching from coal to natural gas.

So I think, it's a case study and is being viewed that way all around the world about the importance of getting LNG into developing markets, whether it's China or India or Malaysia or Vietnam or Thailand, they have the opportunity to build a lot of renewables and not back it was cold, but supported with natural gas.

So, I think that thesis is still in over Stephen and how people are thinking about LDCs particularly in Europe. Today, LDCs have outperformed U.S. LDCs by 30%.

And the narrative in Europe is there is a clear recognition that LDCs are a big part of the solution by taking exogenous methane in the form of renewable natural gas and putting that into the distribution system.

And second, leading the world in not only producing hydrogen, but distribute it across transportation and industrial usage and power production.

So, I think there's a thesis around methane that is really, really important that you can capture scaping emissions and you can be very proactive in terms of how you address environmental issues, but it is a core part of how we will support an energy transition globally.

And I think, the blackouts from this summer have had a big sea change in the state in terms of how we think about the long-term role.

But perhaps Kevin, you could talk about some of the things that are actively underway to support natural gases roll in California?.

Thanks, Jeff. Yes. Let me tell you, why we're so excited about the gas company's leadership position and energy transition. My optimism really springs from a couple of areas. One, it's what we're doing now; and two, it's how we are aligned with energy policy in California. The gas company has an important role in the energy transition in California.

Today, we have established a voluntary goal of having 5% of our core gas come from renewable natural gas by 2022 and 20% by 2030. Right now we're flowing 100% California produced renewable natural gas for all of our compressed natural gas refueling stations in our service territory. We will have reduced our fugitive methane emissions by 20% by 2015.

This they have a goal to do that by 2025. So we're five years early in meeting the state mandate. We're also accelerating like Jeff talked about innovative technologies like renewable natural gas and hydrogen. And I'm really excited also about opportunities in carbon capture, our infrastructure to play a role there as well.

Those are the things that we're doing. So now let's focus a little deeper on how we're aligned with the three legs of the energy policy stool in California. Those legs are clean energy safety and reliability and affordability.

In the area of clean, undoubtedly we need and we'll see increasing penetration of renewable energy and electrification in this state. However, natural gas is a fundamental component of getting higher penetration of renewable resources on the grid. Batteries are expensive, we can't provide the long duration of storage, we need at times.

During certain periods in the summer with 80% of our power was coming from gas and a little bit from coal. In August, like Jeff mentioned, there were blackout. And when the sun went down, I remember one day, you got about a system peak in California about maybe 50 or 60 gigawatts.

And 29 gigawatts were coming at that point when the sun went down from gas we were getting one gigawatt from batteries. And so that was a real warning shot for the state that gas infrastructure is important. And really gas infrastructure enables more renewable energy.

When you think about it, you want to get more renewables on, you got to have more back up and that comes mainly in the form of gas. In the area of safety and reliability, again gas backs of renewables for the reliable grid and in safety, it's obviously our number one priority.

And that emphasis has been reflected in our most recent rate case, our PSEP decision that Trevor mentioned in his opening remarks. The CPUC is providing us the capital necessary to keep the gas system safe and reliable thus aligning with the state's priorities of a safe and reliable energy system.

And lastly, the gas system is an affordable second energy system for our customers. The average natural gas bill is something around $40 a month and stakeholders in California recognize the increasing importance of on affordability as we execute this transition.

So super excited about this energy transition you can watch on we're going to be leading at SoCalGas in this area..

The only other thing I would add Stephen too is that, if you look at natural gas penetration rates, I think you'd be hard-pressed to find anywhere in the country, where you have a 90% penetration rate like you see in Southern California with one of the largest population centers in the country. So look, we're going to be thoughtful.

We're going to partner with the governor. We've made a commitment to do that. I think there's a growing recognition that there's a transition here. And natural gas is part of the answer to help us get higher renewable penetration rates.

And I think Kevin made that point, there's an efficient frontier and California is setting the record in the world for renewable penetration on electric system..

That's really a thorough answer. Maybe just one follow-up on an element there. Just following up on the blackout that we saw this summer. I saw the root cause assessment that came out. You mentioned this in your response to my first question. Just curious, how is the states sort of thinking through mean that's kind of – it's a sign.

I mean the state has a long way to go still to add more renewables. So for having blackouts at this stage. I think that's kind of a warning sign in terms of just some changes that need to be made.

How is that dialogue sort of playing out? And what might come out of sort of that root cause assessment and desire to make sure you don't have further blackouts in the future?.

Yes. Thank you for the question. I think that you have a lot of people that take a lot of pride in California about being a leader around the clean energy transition. This is something that the state cares a lot about all the utilities up and down the state are committed to supporting it.

But when you think back about how challenged our system was you build the system in all your integrated resource plan in around a one in 10-year event. People are concluding that maybe it was a one in 30 event or one in 35 event. There's a couple of things that were uncovered, which I think they're really taking to heart in California.

The first of which is, the imports in the state routinely run between 20% and 30%.

So what happened during this southwest weather event was, a lot of the generation in Nevada and Arizona that we would otherwise rely on, which is all-natural gas and coal particularly at certain times during the day, was not available because it was being used in those states for cooling and air conditioning.

Secondly, when you look at our state, you may have been late in the afternoon where you're getting a lot of solar contributions, but there wasn't sufficient ability to basically load follow. So, you've got really two issues here. One is California's energy and secure.

We rely too much on imports and we need to build more generation in the state so that we're not reliant and dependent on other states. And number two, when you have a one in 30 event like that it causes you to go back and look at how you do your integrated resource planning to support your reserve margin.

So typically this data has looked at between a 15% and 17% required reserve margin by utility as you procure your resources. And that has an implied value of signs of solar with resource adequacy and implied value to win. All those assessments have to be revisited to make sure that we have a larger more reliable reserve margin.

So, I think the outcome from this will be the existing natural gas plants will be repowered. The state needs more peaking natural gas generation. You will see more electric storage put on in the state, and you need to see a lot more capacity built in the state of California.

So there will be a process that takes place between the three energy agencies, the California Energy Commission, the California independent system operator in the CPUC, it's about being less reliant on third-party states.

It's about revisiting our one in 10-year analysis and making sure that we revisit the capacity value that we allocate to planning around solar and wind..

Stephen Byrd:.

.:.

Thank you..

Thank you. We'll go next from Jeremy Tonet with JPMorgan..

Good morning, Jeremy..

Good morning.

Just wanted to circle back to Oncore for a minute if I could with the capital plan, and if you could talk a little bit more on the specific customer growth you're assuming under your updated plan here? And does this kind of bake in kind of the current trajectory in West Texas as it is? And I guess trying to feel out what type of sensitivity, what type of upside is possible if the commodity price environment does improve there?.

Yeah. Let me make a couple of comments. And Allen, you can feel in behind me. But I just want to recharacterize, when people think about West Texas, they think about the Permian and the Delaware Basin, it's really important to understand that what producers are trying to do right now is lower their marginal cost of production.

And there is a huge benefit to be able to attach to the grid instead of self generating. So a lot of what the capital that's being deployed by Allen right now in West Texas is largely been approved and locked in for the next two years.

And there's still a lot of demand for more infrastructure in that region because it's viewed as making their production more competitive. And then secondly, we usually circle something around 70,000 new meter additions a year. Allen can update on that.

But I just think going through this pandemic and going through the disruption we've seen, Texas today has roughly an 8% unemployment rate against something here in California, which is closer to 12%.

We think that Texas will be a big part of our nation's economic recovery and we think Oncor is as well positioned as any company to benefit from what we're forecasting in Texas. But perhaps Allen, you could provide some color behind my comments..

Yeah. Thanks, Jeff. And Jeremy the direct answer to your question as to what's in our kind of plan with regards to customer growth is for the last few years, we've seen 2% premise growth, which is around that number of premises that Jeff spoke about a minute ago.

And that's what we have currently in this 12.2 five-year plan we're assuming 2% -- continued 2% premise growth. So when you think about things that could lead to increased investment.

If we were to get things -- like I said before, if we could get residential or rather premise growth in excess of what's been planned or another example, which I gave earlier was, things returning to normal or better than normal in the oil field. That's a couple of examples. Obviously, a quicker or more aggressive implementation of renewable power.

Texas already leads the nation in renewable power, but there is currently more than 100,000 megawatts of renewable, be it solar, wind or storage, in the queue at ERCOT to the extent that that manifested a little higher than a historical average of 30% or 40%. Those things would all be drivers that could ultimately end up increasing our CapEx.

When you look at West Texas particularly, we're actually seeing some pretty good signs in West Texas, a couple that -- frankly were counterintuitive to me, just based on the fact that I know a lot of our customers out there have been significantly impacted.

But if you look at ERCOT data, month-over-month demand in the Far West Texas region is actually up every month in 2020 versus the corresponding month in 2019. So demand in the Far West Texas region for every month in 2020 is in excess of 2019 month-over-month. So that's one.

Two, Delaware Basin, we serve the portion of the Delaware Basin that we do on what's called the Culberson Loop, which is a transmission loop system that we have out there. The 2019 peak on that system was 550 megawatts. On September 25 of this year, we saw a peak of 678 megawatts.

So while we're undoubtedly seeing impact to our customers in the West Texas region, we're seeing some really positive trends with regards to consumption. So there’s hopefully light at the end of the tunnel there.

But if West Texas -- if oil and gas activity returns to pre-COVID levels or there above, or if we see some of these other positives from generation or customer growth, those are generally the kinds of things. There are certainly more -- those are the kinds of things that would drive increased capital allocation..

I think, Allen or likely Jeff. One of the things we've talked about that you might want to share is, we had a really major legislative development last year with act of 1938. And maybe talk about the overlay of that on top of the market description you just gave..

Yes, I'd be glad to Jeff. So just to refresh you all, 1938 which was passed out the legislature last year and signed into law effectively put into PURA, the current construct in ERCOT, which allocates transmission projects based on ownership of endpoint, substations more or less.

And so, when you think about generation development, when you think about transmission point of interconnections, when you think about adjusting the grid as we shift to more renewables and the impacts you have when you reallocate the flows around the system, to the extent those require transmission upgrades or additional greenfield transmission projects, those projects would be allocated to the owner of the endpoints based on the 1938 now allocate -- are now rather codified into PURA law.

We own more than 1,100, probably closer to 1,200 of those endpoints substations. So we believe we're fairly uniquely situated to capture a significant part of that growth. Thanks, Jeff.

Thank you, Allen. .

Got it. That's very helpful. Thanks for that.

And then maybe kind of pivoting here and recognizing that this dynamic impact appears far more than you, but how are you finding the insurance market in California, specifically for wildfire insurance here? And does your risk profile of your system relative to tiers benefit your ability to secure cost-effective coverage? And do you anticipate any changes here given the record prior season?.

Thank you for the question. I'll go back and talk about our original thesis where we're trying to build a portfolio. It's really focused on T&D investments or investments at T&D-like risk.

When you bring that into California, we certainly have received a differential approach by the insurance companies in terms of how they think about our risk relative to our peers. I'll pass it over to Trevor to provide a little bit more color about our insurance program..

Yes. Thanks, Jeff. Yes. So, Jeremy, we have not had a problem procuring insurance and we've got a separate wildfire tower of over $1 billion. And we're getting it at very competitive rates. And in fact, we were also able to put out cat bonds this year at under 10%.

So from our perspective, given all the technology and what SDG&E has done to fire harden the system and around the fire sciences, we are recognized differentially within the insurance markets. And procuring insurance at competitive rates is something that we're able to do fairly efficiently and effectively..

Got it. That's helpful. I’ll stop there and leave questions for others..

Appreciate it..

Okay. We'll take our next question from Michael Lapides with Goldman Sachs. Go ahead..

Hey, guys. Thank you for taking my questions and congrats on progress during what's been a crazy year. Jeff, in your remarks at beginning you hit a specific detail to reference potential financing options for both Cameron 436 and Port Arthur.

Can you give a little more of the detailed update on kind of what's you're expecting progress wise for both of those in terms of; a contracting; and b, going to FID? And then just broadly, kind of, the broader macro environment for incremental U.S. LNG or U.S.

Liquefaction?.

Sure. Well, first off let me say thank you Michael for joining our call. And we've got Justin on the line with us. And what I'd like to do Justin, if you don't mind perhaps tackle the macro side first and then come back and maybe provide a project-by-project update on the progress we're seeing around our contracting of capacity.

Sure. Thank you, Jeff and thanks for the question Michael. In terms of the market, I think, we're seeing continued growth in U.S. LNG exports this year, clearly dampened a bit by the hurricane season, but it looks like frankly LNG exports could set a record in November. It's really being underpinned by increasing demand and stronger prices in Asia.

We're also seeing stronger prices in Europe. Prices in Asia have actually tripled since the summer. And really we think it's a demonstration that LNG demand growth is driven by recovery in global GDP unlike oil, which really is at mobility or transportation fuel.

In terms of the longer-term in the LNG market we still think we'll see some short time oversupply. But we think over the medium term, let's call it 2023-2025 we see that the lack of FIDs over the past recent years will create a situation where demand will exceed supply and we see that continuing.

I think for us it's importantly because as Jeff mentioned, he talked about our uniquely positioned LNG business I think we have an opportunity to really capitalize. We will have Pacific and Atlantic access. We're bolstered by Sempra's strong balance sheet. And we have and continue to create strong relationships and partnerships in the LNG space.

So we think our business, our franchise will be more successful over the medium and long term. In the short-term let me talk about our development projects. As Jeff mentioned in his prepared remarks, we are hoping to take FID and plan to take FID at the end of -- during this quarter prior to the end of the year.

The offtake for that project is completely sold. And shifting to Cameron phase 2, we are continuing to work with partners on optimizing the design of that phase, really building on the strength of Cameron phase 1 and leveraging that to really create expansion and brownfield economics.

In terms of the timing of that development, we are progressing and we're working closely with the partners, but we don't have a specific time line for that. On Port Arthur, we previously announced that we were delaying final investment decision to 2021 and that's based on where we are what we're seeing in the market.

But we are seeing a little bit of rebound in the short-term market. We're frankly seeing some challenges -- practical challenge just as a result of COVID. LNG tends to be a face-to-face business. And although, we are all starting to use conference calls it's still I would say slowing down the process a bit. We still have continued conversations.

We're continuing to co-develop with Saudi Aramco, and we think Port Arthur really has the opportunity to be not only a successful first phase, but truly one of the great LNG mega projects in the world. So again, we're very excited about our development prospects.

As we've previously stated, we will not develop a project until the market is ready for it. We are -- show a tremendous level of capital discipline. We at Sempra LNG compete for our capital. And really we're here to create value for Sempra's shareholders.

So we think we have uniquely positioned franchise and we see both in the short-term and then the medium to long-term continued success..

Got it. Thank you, guys. I had a follow-on, but it's very unrelated. It's probably for Allen. Just curious Allen, any thoughts if I remember correctly Oncor has got to file a rate case next year.

Any thoughts on; a, given the just the broader economic environment with COVID you could delay or push out that rate case; and b, if you can any kind of early read on whether this is kind of a move-the-needle type of request, or is this just a mandatory coming back in, but it's not something that's going to drive significant rate pressure on the customer?.

Go ahead Allen..

Sorry Jeff. You're 100% correct. We are required by PUC rule to file our next rate case by October 1 of next year. And so we're currently planning on that, working on that. You're also 100% correct, very unusual test year to say the least. Now we will -- we have the opportunity to make no measurable changes and normalize some of our test year data.

But it's unquestionably going to be an unusual test year. I think there are four rate cases presently scheduled for the PDC to hear next year. Ours is, obviously the biggest. I have not had any discussions or received any feedback so far from the Commission as to whether they would like to delay. Certainly to the extent the state would like us to delay.

It's something we always work very well with the state and the intervenors and we would consider that. It's just not a topic that we've addressed yet. With regard to what we'll be asking for, we're putting that together right now. We haven't been in a few years. So we'll just have to wait and see. I can't really predict what we'll be asking for.

We're obviously cognizant of what other utilities and their experiences recently at the commission. I would just simply say, their rate cases are obviously very specific, specific to the time you file, who the utility is and what the facts and circumstances are. And I think our history has shown we have good relationships.

We've been a good player, a good supporter of ERCOT market. We've done everything the commission has asked us to do. So we feel like we're in a good position going into next year. To the extent we have to file, we're anticipating that we will unless we hold otherwise.

And we're anticipating that we'll do what we've always done and we'll work with stakeholders and we'll try to come up with something amicable and reasonable for the customers and for us. But that's kind of where we stand on the rate case. That answers your question..

Now that’s super helpful Allen. Much appreciate it. Thank you guys..

Thank you..

Thanks Michael..

We'll hear from Ryan Levine with Citi..

Good morning Ryan..

Good morning.

In light of the 2035 the California electric vehicle policies, what are your current thoughts around incremental infrastructure needs to prepare for these policies to enroll to semper play in this trend in light of the strong adoption rates in the in San Diego market?.

Thank you for that question. We do have a leadership position in the San Diego region with respect to electric vehicles. I think we've got roughly 60,000 on our system today which scores very high on a per capita basis. And I got to tell you, I recently published an article in the World Economic Forum about the importance of clean transportation.

And I was quite auditory about Governor Newsom's leadership position here. So this -- I said this earlier in my comments, this is a state that's justifiably prideful about their leadership position around all issues of clean energy.

And when you think about -- I think statewide, it's roughly 40% of the greenhouse stack is associated with transportation, here in the San Diego region, it's just over 50%. So a lot of times people who talk a lot about the clean energy transition we'll focus on things which are relatively small and don't move the needle.

This is probably the most complicated issue globally, if we're going to be successful about combating climate change. And I really think the state is real committed to progress here.

And the final comment before I pass to Kevin is, people don't fully understand the circuit-by-circuit changes you have to make is utility, what we refer to as make ready work. You start adding two or three electric vehicles to a street. You've got to upgrade the electrical system.

So there will be a tremendous amount of distribution infrastructure that will be required to accommodate the type of penetration we're expecting to see with electric vehicles. And Kevin perhaps you could talk about some of the things at SDG&E during this area..

No. Thank you for that question Ryan. We are really excited about the Governor's executive order. At SDG&E, we've gone a long way already of having a significant amount of work around charging for electric vehicles. Some of our newer programs have to do with exploring vehicle to grid.

And so taking like school bus fleets or something and charging those at the right time and then pulling only electricity offer at another time like Jeff mentioned all the make ready work presents a big capital opportunity for SDG&E over time.

And as Jeff mentioned at the beginning, we're not going to get where we want to go from a climate perspective and carbon -- reducing carbon intensity without addressing the transportation sector and that's why this executive order was so important.

And like we said a big opportunity for SDG&E, but also at SoCalGas, right? And so we can see on the medium and heavy-duty side, we've got by 20, 45 go to zero-emission vehicles there.

And so when you think about that particular segment right now there's some back of clarity whether it's electric or hydrogen fuel cells, but my own belief is we're leaning more toward the hydrogen side.

And like we've spoken about in the past refueling opportunities around hydrogen fuel cells and hydrogen itself for the gas company is a tremendous opportunity. So it's going to help both companies a lot and we're happy to see this..

I would also add Ryan that Trevor and I are also Board members in Oncor and Allen puts on a really thoughtful strategy session every fall. And Trevor and I just in the last couple of weeks joined Allen and one of the things we talked about really is the opportunity for clean transportation in Texas.

What's unique in a lot of Allen service territory is the commute time in Texas is shorter than it is in many communities in California. So certainly we think Texas is not going to move at the same pace as California. But going back to his footprint in the state of Texas, this is another long-term upside for that franchise..

Great. Thank you..

Thank you, Ryan..

Thank you. You will hear next from Anthony Crowdell with Mizuho..

Hey, good morning, Jeff. Good morning, Trevor..

Good morning..

Just hopefully two quick questions. Jeff, one is the LDC multiple valuation multiples have really come in maybe over the last 12 months.

I'm curious if you think that's more temporary or is that something that's going to continue just for the next couple of years?.

Yes. Thank you though. For many of us who have been around the industry for a long period of time. We've traditionally seen LDCs trade at a premium to electric utilities largely because natural gas could be stored. It was viewed by many as being more lightly regulated whereas electricity largely SBUs instantaneously intensely more politicized.

I would tell you I think that in my personal view I think it's temporary. And here's my base case for that. I was moving into takeover and run SDG&E in the fall of 2013, I think I stepped in in January of 2014.

And many of you will recall one of the common themes in our industry was the death spiral of utilities, particularly electric utilities and how embattled they were going forward. And I think what people couldn't see at that time was that they were taking steps particularly on the power generation side to change the feedstock for power generation.

As you decarbonize that commodity, it became a real weapon to actually electrify the United States and compete on the transportation side, which was similar to Ryan's question just a few minutes ago. So an entire new landscape opened up in front of those electricity businesses.

And now we all talk about electrification like it's a secular trend and it is. I personally think it is one of the most dominant trends in our industry is electrification, but if you go back six or seven years, there were a lot of dark clouds on the horizon to the electric business.

And I will tell you I think the European sentiment is further ahead of the United States in this area. There is a growing recognition outside the United States that a central player in leading energy transition will be our LDCs.

That's because they've got this prior investment, which is quite significant and they've got a leadership position if you go country-by-country and continent-by-continent most of the hydrogen work is being led by LDCs.

And that's one of the reasons that I've been participating in the World Economic Forum is to help us track some of the new developments in this area.

We think that SoCalGas, which is the largest LDC in the Western Hemisphere will be the natural leader here in the United States and Scott, Jerry and his team I believe have 10 to 12 projects pending currently.

And we've talked about this just in the last couple of weeks Anthony, we're going to make an entire breakout category in our March analyst conference around the clean energy transition and innovation and technology across each of our portfolio companies. So I actually think that LDCs will be valued differently in the future at a more premium value..

Great. And then just lastly I guess, Sempra, Jeff, you have this really high-class problem. There seems to be very little question or even on the earnings call like there's no question to the earnings whatever that earnings power of your the company's core utility businesses.

With most of the questions are uncertainty coming from maybe the smallest portion of the Sempra family, I guess, how do you move the focus away from the LNG business or maybe Mexico and focus more on the core earnings power of SDG&E and SoCalGas? I'll leave at that..

Well, I think, it's – I'll start by saying, I appreciate the positive comments about the earnings power of the company. I spent a little bit of time earlier in my remarks talking about, how we've seen steady improvement in the core earnings power of the company both in 2019 and in 2020. It's not just earnings growth.

To your point Anthony, it's also improved earnings quality and earnings visibility. So I think over time that will get valued into the stock. And I think going to your larger point about our unregulated businesses, you should expect that Sempra over time, will become increasingly have higher content in its regulated businesses.

So we think that, our utilities will become a larger part of our earnings stack, as you go forward in time. And that's kind of a signal about, how we expect to manage both Mexico and the LNG business. And I think part of what we need to do, there is, we just need to execute cleanly in Mexico and execute cleanly in LNG.

I spent some time earlier on today's call, talking about some active steps we're taking to make sure that we can demonstrate that value to the market. We're quite optimistic actually..

Great. Jeff, you are not in my group in the IMX next week though, I want to wish you any early happy Investment Day. And thanks so much for taking my question..

I appreciate it. Thank you very much..

Thank you. We'll continue next from Jonathan Arnold with Vertical Research Partners..

Yeah. Good afternoon. Thank you for taking my question. Jeff, I would appreciate that you are in this quiet period on the franchise agreement.

Are you able to share anything about the process from here which how it works and what the timing would potentially be for those have been used?.

Yeah. There's been a lot of obviously good research publications around this. We talked about it a little bit more effusively on our Q2 call. But because we're in the quiet period Jonathan, I have to apologize. I think it's really important for us to respect the process that this city has underway.

I would just say that, Caroline Winn and the team are really excited to work collegially with the city, and I made this point in my prepared remarks, I think we have an identity of interest here, right? We're both looking to serve the benefit of the same people and I remain optimistic..

And do we know is there going to be some sort of open bidding or hearing? Can you talk about at all?.

I would just say that, there was an invitation to bid process that process came to a conclusion in October. We made a filing, which we thought was competitive at the time that the bids were due. They have not announced whether there is one bid or more bids.

They had not announced when they plan to specifically open the bids and what the definitive process will be. But I think it's reasonable to expect that the process will be finished this quarter and we feel quite good about the bids that we've submitted..

Okay. Great. That's helpful. Thank you. And if I may just on to your comments about – pick up on your comments on 2021. I mean, earlier in the year you explicitly said you were positively inclined around the 2021 number – given this year like last quarter you did the buyback or we doing accretive something like that.

I'm just curious what hold you? Why would you – what's happened to change your view?.

Yeah. I'm actually smiling, because I did actually say that. And I was optimistic then and I'm optimistic now, and I think we tend to take a relatively conservative approach to planning.

What I will say is this is, if I was an outsider looking at the company, your first question is, is there something that you're not aware of that makes 2021 not look good or not. I would say, this is, we had a great year in 2019 and we have improved portfolio with improved earnings power. We're having a heck of a year in 2020.

And it's in a really difficult environment, right? I mean, our employees have really been challenged to both work at home and we've got a ton of people in the field working. So I think we're set up extremely well for 2021. I made a comment earlier.

I think you should expect to see the power of our earnings growth continue to be from our three leading utilities. And next year, we're really excited to see full run rate earnings from Cameron. So there's no real back story here other than us going through the planning process and we will have an updated view on 2021.

I'll be excited to come back to you..

Terrific. All right. Thank you very much..

Thank you..

Thank you. We'll hear next from Paul Patterson with Glenrock Associates. .

Good morning, Paul..

Good morning.

How are you going?.

Great..

So just sort of follow-up on the Michael Lapides question, on sort of the natural gas outlook. I was wondering if you had any thoughts on the LNG and I apologize if I missed it, quite distraction here. But the LNG next decade announcement and methane in Europe the concern there I guess.

Any thoughts about that, or any trends or anything you're seeing?.

Yes. I'm glad you asked the question, Paul. I would say, I view it a little bit as the red here and white. RNG was forming a partner with us in the Cameron facility. Obviously, Total is our partner now. We have MOUs for the full capacity of Cameron expansion.

RNG is in a little bit different position relative to Total, but I don't see any read-through from RNG to any impact on our LNG program. .

Okay. Great. And then just when do you think we might see the end of -- or the conclusion of the Aliso Canyon? And I know from quarter-to-quarter there's been some sort of small movements that seems to me on the activity there.

But when do you think we'll get some closure I guess -- more closure with respect to the Aliso Canyon litigation?.

Yes. The way I would think about it is you'll recall that we had a catastrophic equipment failure back in 2015. And out of that there arose really what I think about as three buckets of risk and exposure that we've been actively managing. The first of which was from a group or coalition of government plaintiffs which we resolved in 2019.

Justin Bird, who's now in our LNG business was our lead executive to help us resolve that. And now Paul, there are two remaining buckets that were managed in the first which is the civil litigation process. We're engaged in those activities.

You saw that last quarter, we recorded a charge related to the civil litigation and our settlement discussions there.

What you're looking at in this quarter is the ongoing process we have at the commission on what we might lose to SoCal, the penalty phase and that just shows the nature of our current discussions around trying to settle that process with the commission currently. .

Okay.

And when do you think it might all be sort of finished? Any idea?.

No. Any time you talk about litigation, we're going to be reticent to provide a lot of forecast about the timing of it. I would just say that we have good positions in both matters. We're working collegially with the folks that we should be working with and that's reflected in both our Q2 results and our Q3 results..

Okay. Awesome. It was my questions..

Thank you..

Thank you. Bye..

Yes. Really appreciate it. So as I come to the end of today's call, I wanted to thank everyone for joining us. I know that there's like a dozen other companies that are reporting this morning. I hope everyone continues to be safe and healthy.

And feel free as usual to reach out to anyone on our IR team if you have additional questions and this concludes today's call. Thank you..

Thank you. That does conclude today's conference. Thank you all for your participation. You may now disconnect..