Q1 2020 Earnings Call

Ladies and gentlemen, and welcome to the XL Energy first quarter 2020 earnings Conference call.

Question for I'd be taken from institutional investors reporters can contact we didn't really shot for inquiries individual investors and others can reach out to 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.

Thank you good morning, and welcome Excel Energy's 2021st quarter earnings Conference call joining.

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 review, our 2021st quarter results sure business development and regulatory developments.

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

There's an expanded list the slides that accompany our call 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 the notes anticipated or does it need and the earnings release and our finds its yet.

On today's call me will discuss certain metrics that are non-GAAP measures, including ongoing earnings and electric and natural gas margins.

Operation on a comparable GAAP measures and reconciliations are included in our earnings release, I'll now turn the call over them.

Well, thank you Paul and good morning, everyone.

As I reflect back on the past few months my heart really goes out to the individuals and families in passive mother krona buyers. The devoted health care professionals, who are bravely, serving our communities and the businesses across all sectors experiencing tremendous economic challenges.

Xcel energy, we understand how critical our work is to the health and safety of our communities and local businesses.

I'm, so pleased with how our employees and industry have responded doing this unprecedented time working to keep people say.

Reliable service to customers and providing support to those.

As we've done 400 years.

Creativity, and finding ways to support our communities and stimulate local economic growth.

I will turn into the quarter.

We've gotten off to a solid starts will be 56 cents per share for the first quarter 2020, compared with 61 cents per share last year.

I believe we can take actions that will allow us to weather the impacts of Kogas 19.

It resolved we are reaffirming our 20 Twond gardens, Brian will discuss the financial results in more detail.

I'd Excel energy, we're taking significant strides to help our customers and protect our employees, while continuing to deliver critical energy services.

Some of our actions include committee.

Not disconnecting residential customer service and arranging payment plans that are having difficulty paying their bills.

Minnesota, we're proposing to reduce our.

Forecast by $25 million to give immediate release, where our customers.

We stepped up or Carol.

Her helping our communities during this time.

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

Well, keeping our employees say by implementing work from home policies, providing personal protection equipment and following CDC, social distancing guidelines and enhancing cleaning practices conducting temperature checks a critical facilities segregating cool crews and staggering work times.

I'm sure continued reliability, we implemented business continuity plans, which allows us to prioritize work and are prepared to sequester critical employees on site if necessary.

My 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 create jobs and drive demand for equipment and supplies.

Well 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 and then Kato natural gas plant for $680 million.

You recall, we originally proposed as acquisition that's fully regulated asset however, when the Minnesota Commission rejected this proposal we acquired Mankato was a non regulated asset and step into the power purchase agreement.

While we thought Mankato would provide significant long term value.

Actually as we shutdown coal assets, we heard from several investors and having a nonregulated acid cloud at T cell energy story.

As a result.

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 to materially impact or projections.

And while it was not part of the rationale for the sale the transaction will improve our liquidity remains uncertain times, we will use the proceeds to reduce funding needs and improve our credit metrics. In addition, we will book again, which we will use to fund charitable giving efforts, including supporting Cobot 19 believe methods throughout her.

Yes.

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

Bob Frenzel was named President and Chief Operating Officer, Brian Van able 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 sell energy well, Brian has had increase heroes and finding them, including treasurer financial planning that analysis in corporate development.

Both Bob and Brian are extremely intelligent and talented employees, who have been instrumental in developing and executing their strategies and delivering I consistently strong financial results.

Well I don't plan to retire anytime soon these promotions reflects a deep bench strength and thoughtful plan, we have at XOMA energy.

So with that let me turn the call over to Brian will provide more detail on our financial results and outlook, along with our actions to mitigate cooling a virus impacts right.

Thanks, Ben and good morning, everyone.

Richie solid results recording 56 cents per share for the first quarter of 2020, compared with 61 cents per share last year.

Majority of the quarterly deviation is driven by weather.

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

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

Our lower effective tax rate increase earnings about three cents per share. However, the majority of the lower MTR is due to an increase in production tax credits for slow back to customers through electric margin in tax reform impacts both of which are largely earnings neutral.

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

Sure reduced earnings by three cents for share and which offsets riders and regulatory outcomes.

Increased depreciation 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 covert 19 in the actions, we're taking to mitigate a range of outcomes.

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

The Corona virus buyers crisis had a minor impact on first quarter sales.

Economic shutdown started and started in mid March So we did not experience the full monthly impact.

In March our toll residential sales increased slightly false you know I sales declined 4%, resulting in total retail electric sales decline of 3% on the weather adjusted basis.

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

Residential sales increased 3.2%, while she and I sales declined 13.7% Untold retail electric sales declined 9.6% on the weather adjusted basis.

Keep in mind, we have a sales drove mechanism for all electric classes in Minnesota and decoupling for the electric residential and non demand small so you're not classes in Colorado. This covers about 45% of our total retail electric sales.

And to help us prepare financially 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 a sales decline of approximately 2% compared to 2019.

Our base case indication, which we are reaffirming or earnings guidance around but seems a severe impact through the second quarter with the slower you type chip 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. type shape recovery. This is a challenging scenario with the deeper longer bottom and our base case, resulting in a sales decline of approximately 8% for the year.

We use these scenarios as we developed our contingency plans, we view the mild to severe case scenarios is having a low probability of occurring we think the base case. There is the most likely outcome or at least within a 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 protecting the duration of the downturn malignant lingering effects.

So confident in our ability to mitigate what we view as most likely scenario and the April sales results came in slightly better than our forecasted giving us greater confidence.

We're also colton 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 into 2008 to two bills on time period as a reference point.

Additionally, our commission to Wisconsin, Texas in Michigan have issued order subtracting the for pandemic related expenses.

We've also filed for deferred accounting treatment of incremental covert 19 related expenses, including bad debt in Minnesota, Colorado, New Mexico, North Dakota in South Dakota.

We are implementing contingency plans to reduce our overall cost structure and mitigate the impact to covert 19. Some of these actions include cost reductions related to employee expenses consulting variable compensation deferral of certain work activities and the implementation of hiring freeze.

Based on our contingency plans, we now expect annual on M. expenses will decline, 4% to 5% 2020, which was offset the impact of covered 19 in the base scenario.

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

However, there are limitations to what we can offset we will focus on providing strong customer service reliability and then we will not make short term decisions that have a negative long term impact on our customers for shareholders.

Turning to supply chain. The situation is fluid, but we have not had any material impact source of 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 two of our wind farms into 2021, we're monitoring BARDA.

During the situation closely striving to complete the projects. This year. However, we have fully documented our activity. Since 2016, we have maintained continuous efforts. Since then so we are confident these wind farms will qualify for 100% PTC benefit even if they're completed in 2021.

In the last topic I want to cover and called the 19 is liquidity.

We're 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 dollar tenure holding company. Bob We now have available liquidity liquidity of approximately $3.1 billion.

In addition, the sales proceeds from the Mankato plant will increase liquidity by approximately $650 million and finally, we issued in equity forward last year, which we expect the federal later this year and will provide another approximately $740 million in cash in total this will provide liquidity of nearly 4.5 billion dollar.

Yes.

We also plan to issue $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. Please see our earnings release.

Next let me provide a quick regulatory update we have three rate cases pending in the krona viruses that resulted in any material delays in regulatory proceedings.

In new Mexico, we reached a constructive unanimous settlement net reflects a rate increase of approximately $31 billion.

Our or we have my 0.4 or 5% in equity ratio of 54.8% and acceleration of depreciation on the <unk> coal plant to reflect in earlier retirement.

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

In Texas Sps in intervening parties have reached an unopposed constructive settlement agreement in principle, we are working with parties to document and file the settlement, which we expect to appear shortly we anticipate a commission decision in the third quarter.

In February 2020, we follow natural gas case in Colorado seeking at that rate increase of $127 million based on our or we have 9.95% 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 affairs impacts. Therefore, we have implemented contingency plans to manage their 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 $2.83 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 a short term in long term for both our customers in investors.

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

With that I will wrap up we have implemented steps to mitigate the impact of covert 19, we sold to make Kato facility for a modest game.

We increased our dividend 6.2%.

We reach constructive rate case settlements into 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 above the opportunities in front of us 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 state leadership to help our communities and customers recover from the crisis.

Looking forward to being 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 show by pressing star one on your telephone keypad keypad. Please make sure that mean function on your phone is turned off so the signal can be red bar equipment.

Star one for questions, we'll pause a moment to assemble the queue.

Well take our first question from Steven fired.

Morgan Stanley. Please go ahead.

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

Thank you you too good morning.

I wanted to just.

Get an update at a high level in terms of the opportunity for additional PA 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.

Kevin 19 dynamics and just curious at a high level whats your views on on that opportunity.

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

People in more detail yeah. Good good question in SaaS or 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 proceeding of the moller acquisition in from the commission and we.

Hopefully see a decision that in Q2, two or Q3, but then we're also looking at how we use the ERP in our higher processing processes to help jumpstart some that to some of the discussions around or acquisitions in Minnesota is you know how can we bedroom who is the process with our with the department our stakeholders.

To ensure that we're bringing forward and have a comprehensive discussion. So we're certainly active on that sage and we've talked in load for continues to be part of our plan, but we don't 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 further acceleration of renewables I guess on the deposit aside renewable costs keep dropping we may theres always a potential for tax credits to get extended the wind credit got extended again last year. The negative side I guess, you if we if demand uncertainty from from co bid.

In Texas, we at Keno.

So thats certainly around the the status at the energy sector overall, but how do you think about the potential for.

Additional sort of renewables growth additional shutdown. So some of your coal assets do you feel that the same as he felt the for the reasons to be more bullish or more cautious I would you think about that.

Well the 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 continues to be I think obviously economically attractive.

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

And this is where I think we can partner with our states in our commissions and stayed administrations to be part of the the solution the getting.

People back to work and then potentially accelerating some of our capital opportunities and using that to bring on more renewables, great price points, and actually helped save customers money and employees.

Jobs good jobs so.

Not unlike what a you know when we had the great recession and can tell you many times and had.

People stop and people that typically work in our labor unions and actually think.

Self and really the company for continuing to go forward with projects because that was the only job in town and.

Thats something we 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 Peters with Wolfe Research. Please go ahead.

Hey, good morning units.

Morning.

I was wondering if you could just give a view from where you guys see yourself with any guidance range into the state scenario.

<unk>, where they sit where we are in the guidance range.

Yeah, Let's let me just.

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 at the middle or above.

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 top rated.

However, so.

The first quarter I'm very confident under the base case scenario will be in the earnings guidance range and is the months in quarters role on as we've done in the passable.

Potentially give more color on it.

Great.

And then just under a preliminary sales data for April.

The sense of which states are seeing weakness and others just in our understanding that you have decoupling in Minnesota, and some protection in Colorado as well.

David we use so get whether it's a question about what's it lets states were affected the divergence in the states.

Paul is that basically you're asking you kind of breaking up on.

Yeah Yeah.

That's right.

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

I think as we look at it you know we saw the most resiliency on the scene I side in Sps and probably the biggest impacts on Missy and I side, and in Minnesota, and Wisconsin, the northern territories.

So I think that's that's a color you know certainly we'll watch it as as we go overtime. The part of what we saw in Minnesota as 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 seen I cited in Minnesota, and Wisconsin and less so in in Sps and Colorado's roughly in the middle or 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 Qaeda sale does that impact the equity plans at all either for this year next just kind of what you guys laid out last year.

No. It doesn't lets say you know will use it to reduce our financing costs for this year or we don't.

I expect to not settle our equity for this year, we do plan to settle it all and make it a dozen directly related to infusion of cash of $650 million and he'll provide some additional headroom on capital investment. If you have an opportunity to potentially accelerate investments and really help our communities and in customers and.

The regulators accelerate some of this rebound 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 our five year plans. So we'll reevaluate that and overall financing plans as we get to Q3 and lay out a new five year capital plan.

Great.

And actually just final question is the two 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 and in nature and we've had all the documentation since 2016.

And we've maintained continuous efforts and seven so we're highly confident even if they do slip a month or two into 2021 that will qualify for arms and ptcs.

Great. Thanks, guys take care.

Yes.

Oh.

Another question operator key advance next question please.

We know we have some people in the kids and maybe we're having some technical difficulties or somebody on mute for us.

Okay.

Just bear with us.

Meanwhile, Paul Johnson will send a song [laughter]. If you came here you were thankful that I won't do that [laughter].

I thought I should I will take our next question.

Jeremy to name with JP Morgan.

Hey, Jeremy Brian Hi, Good morning, Thank Terry.

Florida [laughter]. It was definitely had I think things are happening.

Thanks, a lot of car this morning really helpful.

Okay.

Just wanted to start off I guess, yeah, hi, regulatory obligation for guarantees associated with a win that could impact earnings because of the project away into 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 service in 2020, and you know where certainly working towards that and that's our goal is to get get them completed in 2020.

But in terms of obligations in term of of timing. We don't was there our obligations in terms of an overall cost cap.

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 our valves plant contractors get those to ensure that we bring in under the original order future cost cap. So we're pretty comfortable with that Germany. In addition, the Sps been projects to have a 100% PTC guaranteed.

Again, we think that those are getting into construction by the end of the year and.

We're very confident on 100% PTC.

<unk>.

That's great to hear thanks, and just the clean up question Slide 17.

Seemed like a FTD see equity ticked up a bit there just wondering if you pay that gave 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 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.

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

In the 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 marketing, calling in fact Julien.

Good morning can you hear me.

You can't Alex how are you doing gets good morning, I'm doing well how are you thinking like you're taking my question.

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

Hi, Thank you [laughter]. My first question is about your rate case filing. So you have for this year I was wondering if he would have any updates on whether or not you could potentially push out, Minnesota gap or potentially push out Colorado and beat.

How you're thinking about using existing trackers.

You know.

To track that rate base instead.

Hey, Alex Good morning, it's Bob.

Actually the question you know we recognized that these are challenging times and we do like to work with our regulators in advance.

You know in both Colorado in Minnesota.

We have been investing in infrastructure and assets that our customers value and 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 later this year.

Okay. Thanks, you understand understandable my second question and my last question. If you ask about your kids here over time I was wondering if you're still anticipating to potentially upper and fat long term guidance and thank you again.

Yes.

Yeah, I think it's great question, you know again.

Talk a little bit about it with an earlier question, but.

You know you look at what drives our 5% to 7% growth and it's investing.

In projects and opportunities that are very much aligned with our space or communities our regulators our legislators. So you know.

I don't see that changing.

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

I should mention two Bennett.

I think we have you know one other things I think we've done as a company.

Is on Sunny days prepare for the stormy days and we've got great dry powder on our balance sheet. Brian mentioned is the other things. We did we also continue to invest in our system, keeping a strong and reliable and so that allows you to weather situations like that and potentially come back stronger in a partner with our.

Stages, we look to jumpstart the economy.

We get all get through this.

Thank you very much.

Thank you.

Well take our next question from Travis Miller.

With Morningstar morning go ahead.

Good morning, good morning, Thank you.

And.

Question on the contingency plans are thinking might have entered this real quickly but.

On the island out of side, how much of these contingency plans have you been able to accomplish so far in talking about first four or five months of the year.

And then any change their capex plan within those contingency plans I think you just answered no, but just wanted to clarify Oh and I'm side and then.

Capex side.

Yeah Travis Thanks for the question in embedded to answer that capital of question, we really see no no plans in our Capex for this year and on the OEM side you know this crisis. It relatively recently so working through all those plans and we have a plan for a balance of the year in terms of implementing them and they.

Ben set a pretty well is easy you often near bended, Bob talk about dry powder and you know that's been using the context of our financial dry powder with our strong balance sheet. They are conservative dividend payout ratio, but we also have operational dry powder and we've invested in the system and then as its in the good day isn't there.

As a time the crisis year, we're able to whether it and we look at and we think about the OEM contingency plans, we're putting in place whether it's we've implemented the hiring freeze we're looking at reducing employee expenses and that'll happen overtime, reducing 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 base case narrow, but we do have the ability to flex buffalo, but in case, it's a little bit worse.

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

That's a fair assumption.

Okay, and 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 you know 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. We think that's an industry wide phenomenon I think it 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 while we're trying actively to get them completed in 2020, there's the potential they do slip into 21, but I do think it's it's stuff, we're seeing around the industry and it also not only that our vendors, but there's a logistics and supply chain is.

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

I wouldn't say its 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 now I've worked with upside.

I'll turn.

To know that.

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 theres been 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.

Yeah.

Particularly with these two wind farms, what would what do you guys as seen in the.

I came in El show de expects that the vicious me.

In fact sort of other areas needed conditional power generation transmission distribution businesses, where.

Mike effects as everybody else.

Parts like that as we move forward in deal of Downs and current assumptions continues.

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

You know other than maybe 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 in overseas in assembled here.

And so depending on the progress of the pandemic in which country it fit and which factories has cause 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 not just constraints on the o. that OEM side, but we do see logistics constraints around ports and air travel and shipping as well and so that's caused some of the problems I can't say that we've seen any other disruptions on any of our other components. We just havent those those discrete items or suffer watch.

And closely as Ben and Brian that said, we feel very confident in our ability to qualify for the PTC that 100% a 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.

Yes. Thank you Mrs. 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 is any follow up questions. You have good day. Thank you. Thank you everyone.

[laughter].

Ladies and gentlemen. This concludes today's conference. We appreciate participation you may now disconnect.

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