Q1 2020 Earnings Call

Ladies and gentlemen, and what can they XL energy first quarter 2020 earnings conference call.

Question for I'd be taken from institutional investors reporters can contact we didn't really short for inquiries individual investors and others can reach out your investor relations. Thank you.

Today's conference is being recorded at this time I turn the conference over to Paul Johnson, Vice President Investor Relations. Please go ahead Sir.

Good morning, and welcome Excel Energy's 2021st quarter earnings Conference call.

Joining me today, our Grenfell Chairman, Chief Executive Officer, Bob Frenzel, President and Chief operating Officer.

Brian Valuable Executive Vice President and Chief Financial Officer.

This morning, we'll review, our 2021st quarter adult sure business development and regulatory developments.

That's how we're managing through uncertainty around Corona virus.

There was an expanded list of flights a day.

On our website as a reminder, some of the comments during today's conference call may contain forward looking information.

That's good factors that could cause results to differ from those anticipated.

<unk> earnings release.

Yes.

On today's call will discuss certain metrics that are non-GAAP measures, including ongoing earnings.

Second natural gas margins information on a comparable GAAP measures and reconciliations are included in our earnings.

I'll turn the call over that.

Well, thank you Paul and good morning, everyone.

We for example in the past few months my heart.

After the individuals and families impacted by the krona buyers.

Health care professionals are bravely Serbia.

And the businesses across all sectors experiencing tremendous economic challenges.

Okay. So energy, we understand how critical work.

Health and safety of our communities and local businesses.

So pleased with how our employees and industry have responded doing this unprecedented time working people see.

Well service to customers and providing support to those.

As we've done.

I also want to thank our employees for their dedication.

Creativity and finding ways to support our communities.

Simulate local economic growth.

I will turn into the core.

And off to a solid start booking 56 cents per share for the first quarter.

Compared with 61 cents procure last year.

We believe we can take actions that will allow us to weather the impacts of coal was 19.

As a result.

I mean, I'm 2020 gardens.

And we'll discuss the financial results in more detail.

I think sell energy, we're taking significant strides to help our customers and protect are important.

While continuing to deliver critical energy services.

Some of our actions include committee not disconnecting residential customer service and arranging payment plans are having difficulty.

Minnesota.

Goes into reduce our Uh huh.

Kasbar $25 million to give immediate relief to our customers.

That's all for Carol.

During this time.

We're working closely with our regulators and state and local leadership identify constructive solutions to support our communities and customers.

Please see by implementing work from home policies, providing personal protection equipment and following C.D.C., social dispensing guidelines and enhancing cleaning practices conducting temperature checks are critical facilities.

It's crews and staggering work times.

What's your continued reliability implemented business continuity funds, which allows us to prioritize work.

Compared to sequester critical employees on site if necessary.

More financial standpoint, we've enhanced our liquidity and developed contingency plans to mitigate the impact of cold Whitman.

Finally, we expect to be part of the solution to help get the economy back on its.

Continuing to invest in our communities through our capital expenditure programs that great jobs and drive demand for equipment and supplies.

Paul This is a fluid situation with considerable uncertainty Xcel energy has always shown a remarkable dedication to serving our customers during difficult times and this set of challenges is no exception.

Moving on to business developments, we recently announced the opportunistic sale.

Natural gas plant for $680 million.

Recall, we originally proposed acquisition that's fully regulated assets. However, when the Minnesota Commission rejected this proposal we acquired nine cater was a non regulated asset and stuff into the power purchase agreement.

Well, we thought my cater would provide significant long term value.

That's actually as we shutdown coal assets you heard from several investors that have any nonregulated acid cloud at T cell energy story.

As a result, when several potential buyers expressed interest in acquiring the plan, we decided to sell it and preserve our status as one of the very few fully regulated pure play utilities.

Since the earnings were backend loaded, we don't expect to sell materially impact or projections.

And while it was not part of the rationale for the sale the transaction will prove our liquidity.

In times.

We'll use the proceeds to reduce funding needs and improve our credit metrics.

This year, we will book again.

The fun charitable giving efforts including important.

Exactly.

Robert.

Finally, we recently announced some important promotions as part of our succession plan.

Bob Frenzel was named President and Chief operating Officer, Brian to enable was named Executive Vice President and Chief Financial Officer.

Bob has been our CFO for the past four years and has extensive experience in industry prior to joining so energy.

Well, Brian that's had increasing roles and finding that Gordon Treasurer financial planning that analysis in corporate development.

Bob and Brian are extremely intelligent and talented employees, who have been instrumental in developing and executing our strategy.

Where we are consistently strong financial results.

While I don't plan to retire anytime soon.

Promotions reflects a deep bench strength and thoughtful plane, we haven't XOMA energy.

With that let me turn the call over to Brian will provide more detail on our financial results and outlook along with our actions can mitigate cool virus impacts.

Thanks, Brian and good morning, everyone.

Richie solid results reporting 56 cents per share for the first quarter of 2020 compared to 61 cents per share last year.

Majority of the quarterly deviation driven by weather.

We experienced warmer than normal winter weather this year compared with cooler than normal weather last year, which results in a four cents for sure on favorable comparison.

Most significant earnings drivers for the quarter include lower ore and I'm expenses increased earnings by three cents for sure.

Lower effective tax rate increase earnings rectory set for sure. However, the majority of the lower each yards due to an increase in production tax credits were switched back to customers through electric margins and tax reform impacts both of which are largely earnings neutral.

Offsetting these positive drivers were lower margins due largely to unfavorable weather.

Jurors worried about three cents for sure and which offsets writers and regulatory outcomes.

Depreciation and interest expense, reflecting our capital investment program reduced earnings by five cents per share and other items combined decreased earnings by three cents for sure.

Next I want to discuss the potential impact to cope with my team and the actions, we're taking can mitigate a range of outcomes.

Starting with sales our first quarter, whether in leap year adjusted electric sales declined by 1.1 person or natural gas sales increased 5.4%.

Krona virus buyers crisis had a minor impact on first quarter sales the economic shut down starting it started in mid March. So we did not experience the full monthly impact.

For March our toll residential sales increased slightly false unites sales declined 4%, resulting in a pull retail electric sales declined to 3% kind of weather adjusted basis.

However, a better refer reference point on the multi called Nike impact is what we saw in our pool in the April numbers, which almost all of our states were under relatively strict shelter in place orders.

Residential sales increased 3.2%, we'll see an ice sales declined to 13.7% Untold retail electric sales declined 9.6% on the weather adjusted basis.

Keep in mind, we have a sales through a mechanism for all electric classes in Minnesota and decoupling for the electric residential and non to ban small seemed like lots of in Colorado. This covers about 45% of our total retail electric sales.

And to help us prepare for naturally for the pandemic, we developed three sales scenarios as outlined in our presentation.

The Bob's scenario assumes a severe impact through may followed by a relatively quick recovery in the third quarter. This results in the sales decline of approximately 2% compared to 2019.

Our base case indication, which we are reaffirming our earnings guidance around what seems to have severe impact through the second quarter with the slower you touchy of recovery with lingering effects for the rest of 2020. This results in the sales decline of approximately 4% on a year over year basis.

Lastly, the severe scenario assumes a severe impact last through the third quarter, followed by a protracted l. pipe sheep recovery. This was a challenging scenario the deeper longer bottom in our base case, resulting in sales decline of approximately 8% for the year.

We use these nurses who developed for contingency plans, we view the mild and severe case scenarios is having a low probability of occurring we think the base station there the most likely outcome or at least within the band wrong with sales in fact, we've all lines have incorporated the base case into our guidance assumptions.

There was considerable uncertainty on what will actually occur, particularly the duration of the Dr. Miller again lingering effects.

Feel confident in our ability to mitigate what we view as the most likely to narrow the April sales results came in slightly better than our forecast, giving us greater confidence.

We're also coffee monitoring our bad debt expense and working with our customers on payment plans, there having difficulty paying their bills AWS is difficult to reject wearable land bad debt expense increased approximately $20 million in with 2008 to 2009 time beard as a reference point.

Additionally, our commissions in Wisconsin, Texas in Michigan have issued order, so tracking buffer pandemic related expenses.

You have also filed for deferred accounting treatment of incremental cobot 19 related expenses, including bad debt in Minnesota, Colorado, New Mexico, North Dakota insults column.

We're implementing contingency plans or overall cost structure and mitigate the impact over 19. Some of these actions include cost reductions related to employee expenses consulting variable compensation deferral of certain work activities and the implementation of a hiring freeze.

Based on our contingency plans, we now expect and your own I'm expenses will decline, 4% to 5% <unk>, which was offset the impact of covered 19 of the based scenario.

We also have plans in place to ensure that we can implement additional contingency plans if the negative impact to cope with 19 exceed our base case scenario.

However, there are limitations to what we can offset.

Focus on providing strong customer service reliability.

That make short term decisions that have a negative walk for me in fact, our customers for shareholders.

Turning to supply chain the situation is fluid, but we have not had any material impact <unk> supply chain with the exception of our wind farms in mid April room form of supply chain disruptions, which will likely resulting in delays and the completion of tumor wind farms into 2021, we're monitoring moderate drinkers.

Situation closely that's driving to complete the projects. This year. However, we are fully documented arc it'd be since 2016 that maintained continuous efforts. Since then so we're confident these wind farms will qualify for himself he see benefit even if there are completed in 2021.

The last topic I want to cover uncovered 19 is liquidity.

In a very strong position after enhancing liquidity in March by enter entering into a 700 million dollar term loan is attractive terms and we issued a $600 million tenure holding company. Bob We now have available liquidity liquidity of approximately $3.1 billion.

Addition, the sales proceeds from the main Kato plant will increase liquidity by approximately $650 million and finally, we shoot in equity forward last year, which we expect to settle later this year and will provide another approximately $740 million in cash in total this will provide liquidity of nearly $4.5 billion.

We also plan to issued $1.9 billion of operating company debt throughout the year.

As a result of our enhanced liquidity, we have the flexibility on issuance timing to ensure the capital markets are accessible at attractive terms for more detail on liquidity, we see our earnings release.

Next let me provide a quick regulatory update we have three rate cases pending in the corner virus has not resulted in any material delays in regulatory proceedings.

In new Mexico, we reached a constructive unanimous settlement net reflects a rate increase of approximately $41 million.

Are we at my 0.4, or 5% <unk> equity ratio of 54.8% and acceleration of depreciation on the <unk> coal plant to reflecting earlier retirement.

We're all waiting or hearing examiner recommendation and commission decision.

In Texas, that's P.S.M. intervening parties have reached unopposed constructive settlement agreement in principle, we're working with parties to document and filed a settlement, which we expect to occur shortly we anticipate a commission decision in the third quarter.

In February 2020, we follow natural gas base in Colorado seeking in that rate increase of $127 million based on our we have my 0.95% and an equity ratio of 55.8%.

That's fair fairly early in the process. So there's not much to report, but the procedural schedule has been set with new rates expected expected to become effective in November based on statutory requirements.

In terms of earnings there was considerable uncertainty around the current of ours impacts. Therefore, we have implemented contingency plans to manage our cost structure and made regulatory filings that will help to offset the impact of covert 19.

As a result, we still expect to deliver 2020 earnings within our original guidance range of $2.73 to $2, an 83 cents per share based on our base case scenario, which we think is the most likely scenario. In addition, we can implement additional and then contingency plans if the covert 19 impacts exceed the base case however.

There are limitations to weak what we can offset as we balance the short term and long term for both our customers in investors.

Our contingency plans without offset the severe scenario, which would likely result in earnings lower guidance range, but we feel the severe scenario has a low probability of occurring.

With that I'll wrap up.

Implemented steps to mitigate the impact of covert 19, we sold to make you know facility for a modest game.

We increased our dividend 6.2%.

We reach constructive rate t. settlements in new Mexico in Texas.

We remain committed to delivering on our 2020 guidance and our long term earnings and dividend growth within five or 5% to 7% objective range.

We continue to provide reliable energy service to our customers, while ensuring the safety and well being of our employees in communities.

Despite the near term economic challenges, we're executing our strategy extremely well and we remain positive about the opportunities in front of loss for the benefit our customers communities and shareholders.

And finally, we believe we can help rejuvenate our local economies and work with our regulators and stay leadership to help our communities and culture of recover from the crisis, but looking forward to be part of the solution.

This concludes our prepared remarks, operator, we'll now take questions.

Thank you, ladies and gentlemen, if he would like to ask a question you may do you feel by pressing star one on your telephone keypad keypad. Please make sure the mute function on your phone it's turned off so the signal can be red bar equipment.

Start one for questions well pause a moment to assemble the queue.

Well take our first question from Steven fired.

With Morgan Stanley. Please go ahead.

Hey, good morning, I Hope you all are doing well.

Thank you use your good morning.

Wanted to just.

Get an update at a high level in terms of the opportunity for additional P.P.A. buyouts. Just what are you seeing in terms of the opportunity or orders is that sort of a little bit on pause just given the.

Cover 19 dynamics Im just curious at a high level whats your your views on on that opportunity.

Great question, Stephen because we're all focused on cobot 19, but there are still running a business and still looking for opportunities Brian.

Give little more detail, yes. Good question in size, we think about it nowhere and regular contact with our current Counterparties and obviously there could be potential here is you see what's happening if any of them having interest. So upselling. We're certainly regular contact we have are perceiving the model or acquisition in front of come.

Mission and we hopefully see a decision that in Q2 Q2 Q3, but then we're also looking at how we use the ERP in our IR p. processing processes to help jumpstart some that too you know some of the discussions around or acquisitions in Minnesota is you know how can we better improvement process, which are with the department nursing.

Holders to ensure that we're bringing on board and have a comprehensive discussion. So we're certainly active on that stage and we've talked a little for continues to be part of our plan, but we do don't include any of that in our base capital plan.

Understood and just maybe at a high level in terms of resource planning, how do you think about the opportunity for a further acceleration of renewables I guess on the deposit of side you know renewable costs keep dropping we may theres always a potential for tax credits to get extended the when credit got extended again.

Last year you on the negative side I guess, you we had demand uncertainty for from Cove. It.

In Texas, we as you know.

So uncertainty around the the status at the energy sector overall, but how do you think about the potential for additional sort of renewables growth additional shutdowns of some of your coal assets do you feel that the same as he felt before the reasons to be more bullish or more cautious.

As you think about that.

How many I guess the short answer is probably a little more bullish.

The cost as you mentioned Steven continue to come down and so our steel for fuel strategy and continues to be I think obviously economically attractive.

And you know I think the test of that was the ability to to get renewables improved in Texas in new Mexico, and basically on economic terms I think the element and the other element to Steven which makes me bullish is that.

And this is where I think we can partner with our states and their conditions and stayed administration would be part of the you know the solution the getting.

People that work and then potentially accelerating some of our capital opportunities.

And that the bringing on more renewables that had agreed price points and actually helped save customers money and employees.

Jobs good jobs so.

No I don't like with a you know when you have the great recession I can tell you many times and.

People stopping.

People that.

We work in our labor unions, and actually think myself and really the company for continuing to go forward with projects because that was the only job in town and.

That's something to be really proud of and I think we can replicate that again.

That's helpful I'll pass it on thank you.

Thank you.

Well take our next question from David theaters with Wolfe Research. Please go ahead.

Hey, good morning.

Morning.

I was wondering if you could just give the new where are you guys see yourself within guidance range. There was a state scenario.

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He said, where we are in the guidance range.

Yeah listen.

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I guess I would say take a look at our track record over the last 15 years I think we've demonstrated that we can deliver within the earnings guidance range typically that's been a middle or Bob.

So we're quite proud of that and we expect we'll be able to do that this year, but if you look at what we've done in the past and our track record.

On the first quarter earnings call, we don't give any additional guidance, whether we're going to be the bottom the copper.

However, so.

So first quarter I'm confident under the base case scenario will be unions guidance range in the months quarter Sabra along as we've done in the past.

Potentially.

Give more color on it.

Great.

And then just under a preliminary sales data for April.

That sense of which speeds are seeing weakness I know, there's just no understanding that you have definitely Minnesota and some protection in Colorado as well.

David when you.

The question about what's it what states were affected the divergence in the states for April that basically you're asking you kind of breaking up.

Yeah Yeah.

That's right.

Yeah, I'd have to provide a little bit of color on that does thing.

We look at it you know we saw the most resiliency on the scene I cited and Sps and probably the biggest impact on Missy and I side in Minnesota, and Wisconsin or the northern territories. So I think that's that's a color you know certainly we'll watch it as as we go overtime a part of what we saw.

So it is we did have a.

Combined heat and power plant as we've talked a lot on our call before go online in May of last year. So that's part of what we see as we look at month over month, but overall commentary you know greatest weakness and see you know I cited Minnesota, and Wisconsin, and less so in and Sps and Colorado's roughly in the middle of those two.

Okay.

And last question I had its just.

I think you said the equity for do you expect to settle around year end.

But just on the bank cadence sale does that impact the equity plans at all either for this year and that's just kind of what you guys laid out last year.

No. It doesn't lets say you know will use deferred as our financing cost for this year or we don't.

I expect to not settle our equity for this year, we do plan to sell it form 8-K, 1000, or I could really it's a infusion of cash of $650 million and he'll provide some additional headroom on capital investment if we have an opportunity to.

<unk> accelerate investments in really help our communities and in customers and the regulators accelerate some of those rebounded in from this crisis. So I think it gives us just some additional capital headroom as we think about longer term you know we think about EUR five your plans. So we'll reevaluate that and overall financing plan.

As we get to Q3 and lay out a new five your capital plan.

Great.

And actually just final question is to renewable projects that you mentioned that could slip into 2001, which ones do that.

Those are the the to Minnesota farms that we're looking at but I'd say you know weve done as you'd expect from US right. We dig in a very conservative approach in a major we've had all the documentation since 2016.

And we've maintained continuous efforts. Since then so we're highly confident even if they do slip a month or two into 2021 that will qualify for harms that'd be Pcs.

Great. Thanks, guys figure.

Oh.

Another question operator, <unk> advanced next question. Please.

No we have some people in the kids and maybe we're having some technical difficulties or somebody on you perhaps.

Sure.

They are with us.

Meanwhile, Paul Johnson will send the song [laughter] have you seen here I know you were thankful that I won't do that [laughter].

I apologize for the delay will take my next question.

Jeremy to name with JP Morgan.

Hey, Jeremy Glenn Hi, good morning, Thank Terry.

The board and [laughter] itself I think things are happening.

Thank you on a call this morning really helpful.

Okay.

Just wanted to start off I guess, Germany regulatory obligation for guarantees associated with the wind that could impact earnings because of the project related to 21 here just wanted to touch based on that point.

Well take that went to Brian Yeah, No I mean in terms of we have no obligations in terms of getting in servers and 2020 and you know we're certainly working towards that and that's our goal is to get get and completed in 20 Twond.

But in terms of obligations in term of of timing, we don't we do our obligations in terms of an overall cost cap al but we're certainly working to mitigate any impacts on that as you start to see a delay in it and schedule. We're certainly working with our our suppliers and are bouncing <unk> plant contract because get those to ensure that we bring it in under the.

The original ordered beauty Costco.

Pretty comfortable with that Germany. In addition, U.S.P. has been projects do have a 100% PTC guarantee but again, we think that builds are getting into construction by the end of year and.

Or fair comment on 100% PTC.

<unk>.

That's great to hear thanks, and just a clean up question slide 17.

Seems like a MTBC equity ticked up a bit there just wondering if you pay that give a little bit more color on that.

Yeah, Yeah from our original guidance. It did hurt as you start to see some delays and some projects in part of that was our blazing star One wind farm that we just put in service in April we know that was that took a as we're in the wintertime it took a little bit longer. So that's that's part of it so just kind of across.

Cost of board as you see part of it the wind farms and part of it some other investments that we're making.

And they also there's also a little bit higher as we took steps to improve our liquidity also a little bit higher if you see rates.

Got it that's helpful. That's it for me thanks.

Well take our next question.

From Julien Dumoulin Smith with Bank of America. Please go ahead.

It's really Alex embarking calling in for Julien.

Good morning can you hear me.

You can't Alex how are you doing thats good morning, I'm doing well how are you think so much for taking my question.

Well, if we wouldn't normally you would of course are going to answer your questions.

Oh, I think you [laughter] [laughter]. My first question is about your rate case filing fit you have for this year I was wondering if you would have any updates on whether or not you could potentially push out, Minnesota, gad or potentially push out Colorado and deep.

How you're thinking about using existing trackers chair.

Hmm.

Track that rate base instead.

Hey, Alex Good morning, it's Bob Thanks to the question.

We recognized that these are challenging times and we do like to work with our regulators in advance.

In both Colorado in Minnesota.

We have been investing in infrastructure and assets that our customers value in our regulator support.

But like in the past, we do think their mechanisms that would allow us to not file those rate cases, and you could be assured that those conversations are happening with the staffs in the commissions as applicable in their respective states.

We'd like to not file those cases, and we'll probably have more information for you on the second quarter call where this year.

Okay. Thank you understand understandable my second question and my last question. It's just about war came here overtime I was wondering if you're still anticipating being potential upper and fat long term guidance and thank you again.

Yes.

Yeah, I think it's a great question, you know again and I talked a little bit about it was an earlier question but.

You don't get you look at what drives our 5% to 7% growth and it's investing a lot and projects and opportunities that are very much aligned with our states are communities. Our regulators are legislators so.

You know.

I don't see that changing.

And I don't see changes to our cap away capex forecast unless there's two the upside going forward. So that's what drives or growth than that so that's where we'll get it from.

I should mention too thanks.

I think we have no one other things I think we've done as a company.

Is on Sunny days prepare for.

Stormy days and we've got great dry powder on our balance sheet, Brian mentioned the other things. We did we also continue to invest in our system, keeping and strong and reliable and so that allows you to weather situations like that and potentially come back stronger and partner with our stages, we look to jumpstart the economy.

He gets August through this.

Thank you very much.

Thank you.

Well take our next question from Travis Miller.

With Morningstar morning go ahead.

Good morning dry morning, Thank you.

The question on the contingency plans I think you might have entered this real quickly but.

On the owe them side, how much of these contingency plans have you been able to accomplish so far in talking about first the four or five months of the year and then any change the capex plan within those contingency plans I think you just answered no, but just wanted to clarify that when I'm side and then the cap.

Next I'd.

Yeah, Travis <unk>. Thanks for the question embedded to answer the capital of question you know, we really see no no plans in our Capex for this year.

On the on M. side no. This crisis it relatively recently so we're working through all those plans and we have a plan for a balance of the year in terms of implementing them and they've been set a pretty well as.

You often hear Bennett, Bob talk about dry powder and no that's been using the context of our financial dry powder River strong balance sheet, our conservative dividend payout ratio, but we also have operational dry powder and we've invested in the system and then as in the good days and there was a time to crisis year, we'll be able to.

Whether it and we look at you think about the only I'm contingency plans are putting in place whether it's we've implemented the hiring freeze the looking at reducing employee expenses and that'll happen over time, we've just seen consulting spend or other other programs.

As we think about right, we're targeting as I talked about targeting 4% to 5% truly mitigate that basically scenario, but we do have the ability to flex awful, but if it's a little bit worse.

Okay, so evenly spread more or less throughout the year.

That's a fair assumption.

Okay.

Then on the renewable development.

How much or are those delays project specific and how much are you seeing just across the entire industry supply chain issues or.

Other financing delays or.

Construction delays stuff like that industry wide versus.

The a couple of projects you mentioned.

Hey, Travis it's Bob I'll, just comment we work with our.

Our OEM vendors as well as our balance of plant providers to execute the schedules we have seen.

Some supply chain disruptions.

Started when China shut down for a while we've had mild disruptions from other plants, where we get some of our components that we think that's an industry wide phenomenon I think as Brian mentioned, we've been exceptionally diligent in tracking our costs, we are really comfortable with our ability to meet.

The safe Harbor provisions.

For achieving 100% PGC. These are projects that were originally scheduled to be later in this year anyway, and so what we're trying active lead to get them completed in 2020, there's the potential the do slip into 21, but I do think it's it's stuff we're seeing around the industry and also not only that our vendors that there's a logistics and supply chain.

She with sports and parts transport that we're seeing you know it's not.

I wouldn't say, it's catastrophic by any stretch is just mild we just happen to have these were later dated projects for us.

Yeah Ryan.

You know, we're very very confident no I've worked with outside.

Correct.

No.

We will pass the continuous efforts test.

Okay any difference you're saying between solar and wind in terms of what you just talked about with supply chain and and other logistics.

You know right now Travis we're only building a wind farms are on balance sheet I haven't seen or heard a lot of solar delays they spend a couple of.

Public force majeure filings on some solar farms around the country, but but I don't think we could speak with with any authority on the solar side.

Okay, great appreciate it thank you.

We'll take our next question from Sophie Karp with Keybanc. Please go ahead.

Hi, good morning, Thanks for having Florida.

I was curious if you could provide a little bit more color on the supply chain disruptions that we've been talking about.

No. It was particularly with these two wind farms, what's what's what do you guys have seen in the.

Supply chain.

I also do you expect that these issues may.

In fact sort of other areas.

Distribution power generation transmission distribution businesses, where it's Mike effect as everybody else.

Parts and things like that as we move forward and deal of Downs and current assumptions continuing.

Yeah sure. So we we haven't seen any supply chain disruptions on any of our other components.

You know other than baby toilet paper in hand, sanitizer and face masks.

But on the on the wind farms themselves you know a lot of the components are manufactured overseas in assembled here.

And so depending on the progress of the pandemic in which country it fit and which factories has caused you know 234 week delays in various places, which compounded equals you know, maybe a six or seven or eight week delay on our projects and that was enough to push them across potentially push them across the goal line.

We're seeing and not just constraints on the military OEM side, but we do see logistics constraints around ports and air travel and shipping as well and so that's cost some of the problems you know I can't say that we've seen any other disruptions on any of our other components from just havent dose those discrete items or suffer watch.

She closely as Ben Brine has said, we feel very confident in our ability to qualify for the PTC that 100% on working diligently with our vendors in our transportation providers to get all the components here and get them constructed by the end of the year.

Nick thinking this is all for me.

Ladies and gentlemen, this will conclude today's question and answer session. At this time I turn the conference Brecht back that Brian Van able for any additional at closing remarks.

Yes, Thank you and thank you for all participating in the earnings call. This morning. Please contact our Investor Relations team has any follow up questions and have good day. Thank you. Thank you everyone.

Ladies and gentlemen, this concludes todays conference. We appreciate participation you may now disconnect.

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