Q2 2020 Southwest Gas Holdings Inc Earnings Call
[music], ladies and gentlemen, thank you for standing by welcome to the southwest gas Holdings, 2022nd quarter Earnings Conference call at this time open.
Just a bit Saar in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question during the session and you'll need to press star one on your telephone as a reminder, today's program is being recorded and now I'd like to introduce your host for todays program Mr., Ken Kenny Vice President Finance and Treasurer. Please go ahead.
Thank you Jonathan.
Welcome to southwest gas always eight 2022nd quarter earnings Conference call.
Often stated my name is Ken Kenny and I'm, The Vice President Finance Treasure Our conference call is being broadcast live over the year now for those of you would like to access the webcast. Please visit our website at Www Dot SW gas holdings Dot com and click on the copper.
It's called me, we have slides on the internet, which can be accessed the fall the presentation.
Today, we have Mr., John P., Hester Southwest's, President Chief Executive Officer, Mr., Gregory Jay Peterson, Senior Vice President Chief Financial Officer.
Mr., Justin L. Brown Senior Vice President General Counsel and other managers members of senior management to provide a brief overview. The copies operations in earnings ended June Thirtyth 2020, and reaffirm earnings per share guidance for 2020 also the company will address.
Those factors that may impact is coming years hurting.
Further our lawyers have asked me to remind you that some of the information that will be discussed contains forward looking statements. These statements are made.
Our based on management's assumptions, which may or may not come true and you should refer to the language in the press release slide three of our presentation and also our FCC filings for a description of the factors that may cause actual results to differ from our forward looking statements.
All forward looking statements are massive today, we assume no obligation to update any such team.
All that said I would like now to turn the time over to John.
You can.
Turning to slide or taking a look at our 2020 highlights for the second quarter. This yourself what steps holdings realized earnings per share 68 cents. Approximately 22 subsequent quarterly earnings per share result, accrues from gains on company on life insurance totaling $12 million.
Our regulated utility operations, we sell 36001st time meter sets added over the past year 5.7 million dollar decrease and operations maintenance expense, we issued $450 million of new debt at a very attractive 2.2% interest rate and we filed.
The settlement and our ongoing California general rate case filing.
At our unregulated infrastructure services group, we realized record second quarter net income of over $26 million, 55% increase in electric service revenues total revenue increase of $41 million and our operating income increased by 30%.
[music].
Moving to slide five we present, an outline for today's call Greg Peterson will present, the details on our financial results for the period ending June 30, including segment breakout for a regulated and unregulated operations, Justin Brown will overview activity or many regular.
Steven and I will close with updates on cobot 19 customer growth capital expenditures dividend sustainability efforts and our expectations for 2012.
With that I'll now turn the call right.
Thanks, John let's start with a summary of total company operating results on slide six.
For the second quarter of 2020 consolidated net income was $38 million were 68 cents per diluted share compared to 22.1 million or 41 cents per diluted share for the second quarter 2019.
In addition to solid improvements in operating income for both segments consolidated revenues and consolidated results for the current quarter were aided by a 12 million or 22 cents per share increase from the cash surrender values of company owned life insurance for coli policies compared to a 3.4 million or six cents per share.
Equally increased during last year's second quarter.
[noise] for the 12 months into June Thirtyth 2020, net income was $208 million for $3.76 per diluted share compared to net income in the prior year period of a 199 million or three d. two per share.
The coli closed during the current 12 month period was $2.9 million or a nickel a share while in the prior year period. It was 6.5 million or 12 cents per share.
Let me touch on some highlights by segment and the next couple of slides starting with a quarterly comparison of natural gas operations on slide seven.
Net income for natural gas operations increased $8.5 million between quarters. The waterfall chart shows the major components. The 1.4 million dollar overall margin increase reflects a 2.5 million dollar contribution from customers associated with the 36001st time needs.
Resets and $400000 of rate relief in California.
Somewhat muted by about $2 million in suppressed late fees to help customers during the cold at 19 challenge.
The 5.7 million dollar decline in operations and maintenance Roman M. expenses reflects a reduction in travelling in person training as well as management initiatives to contain costs, including deferral of various planned projects and delayed hiring of incremental and replacement personnel.
Bad debt expense was only up about $100000. During these marker shoulder months compared to last year.
Our customer service Representatives continue to assist customers by identifying outside sources of health and offering extended payment plans to assist them at this time.
The 4.1 billion dollar increase in depreciation amortization and general taxes was driven by 684 million or 9% growth in average gas plant services, we continue to expand and reinforce our distribution system.
The increase in other income shown on the slide reflects incremental coli improvements this quarter as the overall stock market, which under wise approximately two thirds of the cash surrender values of our policies.
Rebounded sharply from the significant declines experienced during the first quarter 2020.
Based on the market close yesterday, it's estimated that wholly values are now positive on a year to date basis.
Next let's go to slide eight and discuss centuries quarterly results [noise].
As John mentioned in his opening remarks century, our utility infrastructure services segment recognized record second quarter earnings of $26.3 million, a 7.4 billion dollar increase over the prior year.
Electric infrastructure services revenues were up an amazing 55%.
Compared to the prior year quarter and was the main driver than overall revenue increase of 40 in the half million dollars.
Included in this revenue growth was approximately 7.3 million and storm related electric services, if you'd like please refer to slide 44 in the appendix. So this presentation for a listing that some of our major utility customers, who rely on century companies help them replace improve and expand their energy distributions.
[noise] infrastructure expenses increased $28 million between quarters due to the incremental work noted partially offset by increased productivity and efficiencies on electrical infrastructure projects.
Favorable mix of mainline versus services replacement work.
3.4 million in wage subsidies from the Canadian government admits Ur Cobot 19 environment also mitigated incremental expenses associated with enhance safety protocols and social distant CNN efficiencies.
The 3 million dollar increase in depreciation and amortization was primarily due to incremental depreciation associated with equipment needed for expanded operations.
Slide nine shows the relative contributions by our two business segments. During the 12 months ended June 32020.
As you can see natural gas operations provided nearly three fourths of our consolidated net income while centuries utility infrastructure services group provided a little more than one.
This general pattern, plus or minus 2% is expected to continue.
Slide 10 depicts the component changes in natural gas operations income between 12 month period.
The 40 million dollar improvement in operating margin includes 13 million from customer growth and 7 million combined rate release in Nevada in California.
The prior year period included a one time unfavorable 5 million dollar tax reform adjustment associated with the Arizona decoupling mechanism.
The remaining increase in operating margin includes incremental recoveries of regulatory assets of which approximately $10 million as correspondently reflected in amortization expense.
There were also various miscellaneous revenue.
The 6.1 billion or 1% increase Sonoma now includes incremental expenditures for pipeline Dampens prevention programs and higher legal claims experience, partially offset by lower trading and travel costs that I mentioned previously as well as the cost Kirby measures, including delays in planned staff.
Increases.
The 26.8 million dollar increase in depreciation amortization and general taxes reflects the impact of 651 million or 9% increase in average gas plant service.
Yes, the $10 million increase and regulatory amortization I previously noted.
The 7.7 million dollar decrease in other income primarily relates to changes in coli cash surrender values between periods.
The current 12 month period reflects a 2.9 million dollar increase while the prior year period included $6.5 million of coal yes.
Interest income on regulatory balances receivable also declined $1.9 million.
Yes.
The 8.9 million dollar increase in interest expenses, primarily due to 300 million a debt issued in May 2019 to support the continued expansion in fortification of our distribution system.
The 8.8 million dollar reduction.
Net income taxes was primarily due to lower state income taxes due to apportionment changes and 1.2 million and amortization of excess deferred income taxes, following us tax reform, which reduces tax expense.
The major components of the 12 month change in our utility infrastructure services segment are reflected on slide 11.
This slide shows the components of the 10 million dollar increasing century net income between 12 month periods.
Revenues increased $178 million, including 165 million of incremental revenues from wind Tech, which we acquired in November 2018.
Utility infrastructure services revenues also grew with existing customers due primarily to additional pipe replacement parts across the U.S. in Canada, partially offset by non routine customer requested support in 2018 in early 2019 during strike related an emergency response situation.
Did not recur in the current period.
Infrastructure expenses were $141 million higher than the prior year period, primarily due to an incremental 138 million.
For Laitek operations, and greater operating expenses to support revenue growth.
The prior year period included $6.9 million of yield costs associated with the line Tech acquisition in 2018.
Gains on sale of equipment, which are reflected as an offset to infrastructure expenses were 4.9 million in the current period and $2.3 million in the prior year period.
Depreciation and amortization increased 21, and a half million dollars, primarily due to 15 and a half million of incremental amounts associated with line tech operations as well as depreciation on additional equipment purchases to support a growing volume a border.
And lastly, the 4.1 billion dollar increase an income tax expense primarily reflects higher pretax earnings.
For the 12 months ended June Thirtyth 20, Twentyth century operations contributed 57.6 million in net income toward our consolidated results.
With that I'll now turn the call over to Justin Brown for a regulatory helping.
Thanks, Greg.
Slide 12 provides an overview of our $90 million rate case in Arizona, including a summary of the various positions of art.
Just prior to hearing we were able to reach a stipulation with the parties to continue the COYL program.
Add on the appropriate amount of time period for amortizing certain excess for income taxes, including the implementation of an adjusted or mechanism for any future income tax changes.
The hearing was conducted virtually and it concluded July Ken we're now in the legal briefing stake offshore which will continue through September 14, after which we'd expect to see a recommended opinion in order from the annual Jay within 30 to 60 days with new rate before the end of the year.
Turning to our California rate case on Slide 13, we reached a settlement agreement with the public advocates office, resulting in a revenue increased 6.4 million, including an ROI. We have 10%. We also agreed to continue our annual attrition filings, which will allow us to adjust revenues by 2.75% annually.
Two other very important components of the rate case include approval of our proposed risk informed decision, making programs, which will allow us to invest up to $119 million over the next five year rate cycle on safety measures to ensure continued safe and reliable service for our customers and will also be able to recover these.
Costs annually through a surcharge.
In addition, we agreed to remove a large replacement project and North Lake Tahoe from the base rate request and instead the parties agreed to simply recover the costs annually as segments of the project are completed. This was originally estimated as $60 million project and we included about 30 million of it as part of our future test period in the original.
Like which accounted for nearly 4 million of the original $12.8 billion proposed deficiency in the case.
Proposed settlement agreement has been submitted to the California.
Public Utilities Commission for review and approval and we expect to file decision before the end of year.
With respect to our $38 million, Nevada General rate case on slide 14, we won't be filing rebuttal testimony later today responding to the direct testimony in the other parties in the case as you can see on slide 17 around 14, not much differences on rate base, what the primary difference in the position of the party being recognized.
And our return on equity. We're currently scheduled the heart of virtual hearing beginning August 17th and we expect a final decision before the fourth quarter.
Turning to slide 15, as previously mentioned, we reached a black box settlement on our Paiute rate case that was slight related slightly reduce the existing cost to service based upon a stated pre tax rate of return of 9.9%. In addition, the parties agreed to continue the turn differentiated rate design and both our.
Patient and LNG storage customers agreed to five year contract extensions as part of the settlement. The proposed settlement was recently approved by FERC without modification.
Turning to slide 16 at a quick update on several expansion related projects in southern Nevada, We continue to make progress on our $28 million expansion project in the ski inline with our expectations and northern Nevada since receiving approval to proceed with our 62 million dollar SB 151 Spring Creek proposal our cost.
Tracker has started construction with some initial clearing work and the right away. We've also started our customer outreach and thus far nearly a 100% of all customers who have been approached about signing up for natural gas service have accepted we are still on track for serving our first customers. This year.
Turning to slide 17, another important focus at southwest gas has been working with stakeholders on various sustainability initiatives, including partnering with key stakeholders on compressed natural gas and renewable natural gas opportunities.
We currently have two proposals pending there in Arizona to build facility to allow renewable natural gas suppliers to interconnect with our distribution system one of the dairy farm and the other is a wastewater treatment facility.
In California, and Nevada, we now have the ability to begin purchasing renewable natural gas as part of our gas supply portfolio in both state and we have become the process of working with both customers and our gas supply team to pursue R&D resources.
Lastly on slide 18.
Slide 18 highlights the various supportive regulatory treatment. We have received Workover 19, we have orders in California, and Nevada authorizing us to track the financial impact associated with Copa 19, and reset them to the commission at a future date for possible recovery in rates in Arizona. The Commission ultimately decided not to issue a blanket accounting order.
Sure, but rather indicated a willingness to entertain individual utility requests for either an accounting order or proposals for cost recovery in a future rate case, our plan at the likely address these impacts in the context of a future rate case and with that I'll turn it back to John.
Thanks, Justin.
Moving to slide 19.
Really the biggest top of mind issue in the country continues to be the Corona virus pandemic and how it is impacting families and businesses as an essential services provider the safety of southwest gas customers employees and contractors is our number one concern.
There are lots of go we implemented work from both policies for both business segments increased use of personal protective equipment and our practicing social distancing.
We also are mindful of the adverse economic impact being felt by many of our customers and have temporarily suspended late fees and this connections for non payment and are working with customers and need to coordinate access to programs, providing utility bill payments or.
On slide 20.
We're also working with community leaders and have increased community financial support with additional funding from the southwest gas Foundation.
We are closely monitoring and financial impact of southwest gas operations and see that utility margin under decoupled rate designs remains strong as previously mentioned demand by utilities for centuries infrastructure services also continues impressively.
We will continue to monitor the impact of utility uncollectible expense, although we've generally been pretty successful offering customers for billing arrangements matching customers up with state and local financial support and also keep in mind that gas utility companies are in the low billing part of the year or.
Arizona and southern Nevada customers are experiencing average monthly bills around $20.
Turning to slide 21.
Growth continues to be strong.
As I mentioned earlier, we realized first time intercepts of 36000 over the past 12 months and expect to realize a similar number at the end of 2020.
Residential home construction continues to be strong in existing home inventory relatively low new customers are being added across three different states each of which provides decouple Drake designs for our customers.
On slide 22, we believe the desert southwest will continue to be a desirable place for people and businesses to relocate to.
Multiple large business expansion projects are underway or plan for our service territory large projects from defense contractors technology providers transportation companies and entertainment entities are expected to drive continued prosperous growth in our service territory for years.
To come.
Moving to slide 23.
We feature several quotes from regional experts on the growth in our service territory as previously mentioned new home construction in the states. We serve continues to be astonishingly stroke Corona virus, notwithstanding with new customer growth expected at 36000 new meters.
For 2020 by yearend.
Turning to slide 24, and other quantitative perspective on our robust growth environment as demonstrated by new hope permits issued in Phoenix, Las Vegas and to selling for the first six months. This year. Despite the economic challenges presented by Proto virus, New home permits issued this year.
Actually exceed the number issued in last year's prosperous called.
On slide 25.
As is the case for centuries utility customers across the country southwest gas continues to invest in its gas distribution system to enhance safety and reliability and serve new growth. This year, we anticipate investing $700 million and capital.
That number totaling $2.1 billion for the three year period, ending in 2020 to.
15% of these investments are expected to be financed from internal cash flows with the remaining 50% being funded through a mix of debt and equity issuances.
Moving to slide 26.
Additional detail on capital funding has shown with the addition of our payout of dividends, which increases our total funding needs to approximately $2.4 billion over three years.
On slide 27.
The need for investments, increasing the safety and resiliency of our gas distribution systems ultimately culminates with increases in rate base, we anticipate rate base, increasing from $4.1 billion at the end of last year to $6.2 billion by the end to 2024.
For this increase in rate base represents an 8.6% compounded annual growth rate over the five year period ending 2024.
Moving to slide 28.
Selfless gas holdings has a strong liquidity position our capital expenditure in working capital needs are supported by strong operating cash flows a $400 million credit facility and a $50 million commercial paper program as of June 30, we had zero loans outstanding full available.
Really of our credit facility and available cash of $190 million hundred $25 million of our cash reserves will be used to redeem 4.4 or 5% notes next month.
Turning to slide 29, we show the history of our dividend growth dividends are very important part of our shareholders total shareholder return earlier this year, our board of directors approved increasing our dividend to an annualized $2.28 per share our latest dividend increase.
Constitutes a compound annual growth rate in the dividend of 7.1% over the past five years.
On slide 30.
As Justin mentioned earlier sustainability is core to the business strategy of southwest gas holdings, we have committed to achieving a 20% reduction greenhouse gas emissions from our utility sleep and facilities by 2025.
We are partnering with fleet operators throughout our service territory to facilitate the increased use of clean burning natural gas and displaced use of both gasoline and diesel fuel and we're working with a variety of businesses.
As Justin mentioned, such as dairy farms and wastewater treatment operators in our service territory to help bring increase supplies of renewable natural gas to end use customers.
Moving to slide 31.
We believe we have a strong discipline business strategy of southwest gas holdings with two separate business segments of that great prospects for continued growth.
At a regulated natural gas operations, we expect continued investment of capital and rate base growth continued growth and customers continued focus on cost controls and affordable builds for our customers expanded opportunities for energy efficiency and de carbonization of supplies concern.
Dropped over results from our many regulatory proceedings and continued growth in earnings and dividends.
For our unregulated century infrastructure services group, we will continue to focus on operations execution excellence cost control and resource optimization cross selling of services to combination utility customers, increasing profitability and dividends and providing sort.
First of cash for a regulated operations.
Turning to slide 32, we affirm the earnings guidance range that we've provided earlier this year for 2020, we expect to earn between $3.75 and $4 per share. We will continue to monitor and manage the impacts of cobot 19, which can impact the timing a general rate case reserve.
Walter utility customer growth rates changes in operations and maintenance expense capital investment by centuries utility customers and incremental costs associated with ensuring the maximum health and safety of our customers and employees.
On slide 33, we provide some further detail on our 2020 expectations with line item guidance for a regulated and unregulated operations for our regulated utility operations, we expect margin to increased by 3% to 5% due to continued customer growth expectations of 1.6.
<unk> percent this year operating income should increase by 3% to 5% pension costs are expected to increase by $13.6 million due to lower discount rates measured at year end, partially offset by asset performance.
Definitely $5.2 million. So the increase is reflected in the other expense.
We assume normal as coli returns of $3 million to $5 million.
As I mentioned earlier, we continue to have a three year capital expenditure budget of $2.1 billion with $700 million of that expected to be invested this year.
And to help fund our capital expenditures, we expect to issue between 150 and $200 million through our ATM program.
At our century infrastructure services business segment, we expect revenues to increase by 2% to 7% through organic growth operating income is expected to be 5.5% to 6% of revenues.
Interest expense should total $10 million to $11 million and please keep in mind net income expectations are net of approximately $5 million non controlling interest and the fluctuations in Canadian exchange rates can influence results.
On slide 34, we affirm our longer term expectations equity issuances at the parent should totaled $500 million to $675 million over three year period ending 2022.
With a targeted dividend payout ratio of 55% to 65% at a regulated utility segment capital expenditures are expected to totaled $3.5 billion over the five year period ended 2024 with rate base growth over the same period expected to grow at a rate of 8.6%.
[music].
And at our century unregulated operations revenues are expected to grow at an average of 5% to 8% annually through 2022 and operating income is expected to be 5.5% to 6.5% revenues over that same period.
And then finally on slide 35, we believe southwest gas Holdings has two solid utility focus business segments that are well positioned for strong growth for years to come.
We believe that for the three year period, ending 2022 regulated operations should contribute 73% net income plus or minus 2% unregulated operations contributing 27% a regulated operations are expected to experienced continued strong customer.
Our growth additional rate base, and we'll be focused on continued capital investment to enhance safety and reliability and served new growth.
Century, we believe we have a premium quality cash flow positive business or 93% of revenues come from regulated utility customers with whom we have long term relationships and attractive lower risk contractual arrangements.
With that I'll return the call to Ken.
Thanks, John.
That concludes our prepared presentation for those who have access our slides. We have also provided an appendix slides, which include other pertinent information about southwest cash holdings Inc. and its subsidiaries and can be reviewed at your convenience our operator, Jonathan will now explain the process.
As for asking questions.
Certainly ladies and gentlemen, if you have any question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered and you'd like to move yourself from the Q. Please press the pound key our first question comes from the line no Richard Sutherland from Jpmorgan. Your question. Please.
Good morning, Thanks for taking my questions today.
Good morning.
Just.
Just looking your 2020 guidance Unisys year to date results seem to imply is fairly low bar to the back half the year to date that range.
Curious what puts and takes we should consider for the balance of 2020 here and maybe where you should result is tracking the range now.
[noise]. This is this is Richard Greg.
I think one of the big things that we have going on is there's still some of the uncertainty Justin could certainly respond to this about.
The timing and amount of rate relief, we are certainly in the middle.
Three general rate cases, one of which we are in the process of settlement.
And Oh, we certainly still have some.
Expect patients for the rest of the year that some of our costs, especially on the OEM side at the utility we'll start to go back up as we get a more out of this cobot environment and people can start getting back together with some training and travel that's been delayed as well as some staffing.
Okay fair enough so.
Okay. Appreciate our utility side, but maybe just following up here.
In terms of century there were.
A couple of different items contributing to the strength this quarter and.
It seems like some of those could persist.
At least for now and maybe through the balance new year due to the insight into those moves recent trends in terms of work mix and maybe if you expect those to continue or revert it sometime.
Yes. This is Greg again, I think for century. They certainly have enjoyed as we indicated in our quarterly report a favorable mix of work due to the cobot nineteena environment. It pushed a little more of the work that's generally separated into mains and services at probably a little more.
We're heavily on the main side a much like a lot of things in the ultimate and those things will lead to revert back to the timing of which I don't know that we can really say there certainly was beneficial tailwind with the Canadian government, providing some subsidies.
We don't really expect those to continue in the future, but are appreciative of the ones that we received but otherwise is expected to be a very strong second half of the year per century.
But we are all are watching and and following along animal.
Again expect good results, but some of those tailwinds that we received are not likely to continue or not at the level. They were in Q2.
Got it thanks for the color I'll leave it there.
Thank you.
Thank you. Our next question comes on line of I've got it seemed like it has come from you be ask your question. Please.
Oh I just wanted to follow up on.
Kind of the Arizona risky so.
He looks like to final decision is now expected in Fourq.
That's the new rates will be delayed to 21 and could that push you to that may be lower end of the guidance.
Hi, good Justin Brown, Yeah. That's a possibility you know again, we're basing think based on our historic experience, where once that gets submitted to the Lj usually will see something within 30 to 60 days.
I also know that Theres two open meetings currently scheduled in early no or one in early November one in early December. So I think based on those factors I think it's reasonable to think that we should be on one of those but again as to certain degree it's out of our control in terms of the processing from the ale.
Okay, and ultimately what gets put on those agenda, but I think based on our past experience. There. We anticipate that we should be able to make one of those open meeting.
Perfect and then you're usually utility capex for this year was increased modestly what were the main drivers.
Yes.
This is Greg AG.
I think one of the drivers.
Was the a little higher customer growth as John mentioned at the outset Threesix thousand first time meter sets a we've seen continued strong growth, especially in the Phoenix market, but throughout our service territory. So some of that was in that and so was just a.
Working on some of our regular maintenance and facilities things that we had planned to do and the timing just seem to be beneficial to do it. This year. So we moved towards the upper end of that previous 650 to 700, and we expected for the year it'll be right around that 700 million dollar Mark.
Perfect and.
The potential impact.
So with if we see a second wave of covet 19, a default is that something w. incorporate into guidance.
Hi, This is John I think that we really have had a very successful implementation of our business continuity plans.
Right now we actually have extended our work from home policies until the end of the year.
Certainly we see a lot of things on the horizon. Some discussions of the potential for a vaccine et cetera, but I think that well, it's been challenging and while we have incurred some increased costs as Greg mentioned, we have tried to control costs aggressively so.
If we see that come up again, I think we're just going to have to stay vigilant to make sure that our employees stay healthy that we're protecting our customers and that we're going to be able to continue to provide the essential gas services that our customers need, especially given the number of residential customers in fact.
But a lot of those folks are spending a lot more time at home. So I would expect continued smooth operations and hopefully we can get through this challenge as soon as possible.
Thank you for the color in place.
Thank you.
Thank you. Our next question comes from the line of Chris Ellinghaus from Siebert Williams Your question. Please.
You might have your phone on mute.
Phil good.
Can you give us a little color on why centuries electric revenues were so strong.
Well the just the line tick acquisition or is there was there some special circumstances or.
Storm restoration for the quarter.
Chris This is John I'll start off and then maybe a sip Greg was at any color on to it but certainly you hit it right on the head with the acquisition of the line to accrue and remember from our previous discussions that not only did we acquire that entity and continue it at the size that it.
Before we invested significantly in that business to expand those operations. So the dramatic increase in electric service work was primarily related to the acquisition and the growth of the line Tech business since we acquired that.
And there will be some continued to storm work and I'm sure as seen on the news some of the storms that have been coming in recently, but it's primarily related to light touch anything else I think thats a a good point, we did talk about that a little bit in the queue that storm work was.
Partial benefit there and in fact as John mentioned, there are storms, all up and down the the east coast in South Gulf areas, and and we do have some crews deployed it.
To the extent that we need to interact biod, our utility customer reserve as perform we will certainly do that lets line tech growth has been.
Great I mean, they have that they've done well and that was exactly what we were looking for when we made that acquisition in late 2018.
Would it be fair to say that if.
The projected hurricane season is as significant as they say that that can be a tailwind.
Yeah, I think you know we don't we certainly don't want account and we don't want a hope for anything bad like hurricane coming through but certainly to the extent that were asked by our customers to go help them with restoration efforts, we will go do that and in Gen.
Well some of that work is a little more profitable the general work that we do.
So yeah, there could be some tailwinds there but.
With or without I think we'll have a good strong year for century.
Okay can you can you give us any sense of what kind of traction you're getting on cross selling pre existing customers.
Yeah with as we as you can see and I don't remember the exact slide that we have are we list out some of our major customers you can see the gas utility the electric utility and then those combo utilities and that's not to say that for those combo utilities. We are doing work for both sides of the house.
So we're getting a little bit of traction I think as we mentioned that one of our previous conference calls.
Most of the work that has done for these utility companies is it's a little sticky and so for us they get our foot in the door. It does take a little bit of time, but we have had some success and we will continue to March down that path, but I don't think you'll see.
See dramatic numbers that we'll be talking about in the near term, but it is certainly part of the long term growth plan.
The the number did you quoted of it was 3.4 million.
From the Canadian subsidies were there any offsets to that was that a pre tax number.
Yes. This is that's a that's a pre tax number and it's a pre tax U.S. number.
Certainly the Canadian government gave us money in Canadian dollars, but you know again there were some offsets just the normal cobot 19, I don't think we quantified that anywhere, but certainly the extra pp that was required and some of the social distancing did hamper our efforts and so that was a.
A welcome relief.
To have that benefit offset those costs that we incurred.
Okay. Lastly, can you give us a little bit of a sense of.
[noise] burnt native to search in Vegas, and how that's affecting.
The city in general.
Hey, Chris This is John again, I think that the you know what while we continue to have a of course expand that numbers. The cases in both Arizona and Nevada, I think that the governors in each of the states, including California has taken a lot of measures to try to guard.
Against that being.
A larger problem than it needs to be I think that you know occasionally I'll go on for example, the southern Nevada Health District website, and you can see what the hospitalization numbers have been and they have been coming down dramatically. So I think that consistent with some of the national Diamond.
Graphic that you're seeing increased testing you're going to go to increase positive cases, and a lot of that seems to be moving more towards the younger folks folks that may have.
Limited or be absent from having symptoms. So it continues to be a priority in both the states. They continue to have protections in place to try to to reduce that and and we're looking forward to continue it to get through this successfully and not have.
An unexpected surge as you suggest that's going to overwhelm the medical facilities. So I think that things are going okay. At the current time.
Okay. Thank you so much appreciate the detail because.
Thanks, Chris.
The Q. Our next question comes from the line of Chris Symanoskie from Jefferies. Your question. Please.
Hey, Ron this is Ryan on for Chris.
Most of my questions have been asked and answered. So just a quick ones from me related to the DNA expense that you guys reported this quarter.
There's been some significant volatility in that line item quarter over quarter over the last couple of years and I'm, just curious what might be going on there and maybe if our model is in capturing some predetermine cadence that that it today.
Yes, and this is Greg I think one of the things that.
It is important to remember is in the depreciation line, it's pretty easy to to model that is it's going up because it's a factor up the plant that we have in service and the deep plant that we add as we go along but there is a a sizable piece of.
The dollars that relates to amortization of regulatory assets and the amortization of regulatory liabilities and that is much more seasonal.
So maybe for an example high in Q1 up this year there was about $12 million regulatory amortization. That's included in that depreciation and amortization line, where last year, there was closer to $10 million oddity or on the quarter.
For this quarter again, theres not a lot of volumes in Q2, and certainly a lot less in Q3. So this quarter. It's it's it was actually have a regulatory.
Liability that they got amortized so about 300 Grand credits that ran through that line, where last year was about 300000 I think it's a 300000, so 300000 credit this quarter and about 300000 debit last quarter. So as you're doing your modeling the results.
Can't amount of volume metric differences in that amortization line they'd be most pronounced in Q1 and Q4.
Oh, Okay, perfect <unk> I don't believe that we were capturing not necessarily so thank you for the detail there that's it for me.
Thanks Ryan.
Thank you. This does conclude the question and answer session of today's program I'd now like to hand, the program back to Mr., Ken Ken Kenny for any further remarks.
Thank you Jonathan This concludes our conference call and we appreciate your participation and interest and southwest cash Holdings Inc.
Have a great Dane stay safe. Thank you.
Thank you, ladies and gentlemen for your participation in today's conference. This does include the program you may now disconnect good day.
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