Q3 2022 American Electric Power Company Inc Earnings Call
Court ruling related to our App co Triennial review, which you'll see on the waterfall today is a six cent catch up of the 2017 through 2019 under earnings.
Positive weather on our western jurisdictions and increased transmission revenue. These items were somewhat offset by an increased an increase in depreciation lower normalized load and increased income taxes, just as a reminder, on O&M and depreciation as I mentioned on last quarter's call and included in our 2022 guidance details because.
A change in accounting related to the rock Port unit to lease it I am we're seeing approximately five cents of favorable O&M offsets offset by five cents of unfavorable depreciation in each quarter of 2022, but no consequential earnings impact I'll talk a little bit more on low performance, but I'll get to that here in a minute so bear with me.
The transmission and distribution utilities segment earned 32 cents per share up a penny compared to last year favorable drivers. In this segment included rate changes and positive weather in Texas, and Ohio and increased transmission revenue offsetting these favorable items were unfavorable O&M depreciation and income taxes.
D. P transmission Holdco segment contributed 33 cents per share flat compared to last year favorable investment growth of two cents was somewhat offset by unfavorable income taxes.
Generation and marketing produced 14 cents per share up 10 cents from last year. The positive variance is primarily due to higher retail margins increased renewable wind production higher market prices impacting generation margins and favorable income taxes finally, corporate and other was down two cents per share driven by unfavorable interest expense mainly as a.
Result of the increase in short term debt rates and increased O&M, partially offset by reduced investment losses. The reduced investment losses are largely related to charge point losses that we had in the third quarter of 2021 that have reversed this year I'll note that we exited our position in charge point during the third quarter. So aside from the year over year comp.
Paris, and we will not have any new volatility in this particular aspect of corporate and other and corporate and other segment relating to our direct ownership of charge point shares since the position has been liquidated. So let's go to slide 10, and I'll talk about our year to date operating earnings performance.
Year to date operating earnings totaled $4.04 per share compared to $3 76 per share in 2021 operating earnings for vertically integrated utilities were $2 15 per share up 28 cents similar to the quarter favorable favorable drivers included rate changes across multiple jurisdictions the resolution.
The Opco triennial positive weather in our western jurisdictions increased transmission revenue and favorable normalized retail load. These items were somewhat offset by depreciation increased depreciation and lower off system sales. Once again the change in accounting around the Rockport unit two lease results in 17 cents a favorable O&M offset.
By 17 cents of unfavorable depreciation.
The transmission and distribution distribution utilities segment earned <unk> 95 per share up 10 cents compared to last year favorable drivers. In this segment included rate changes in Texas, and Ohio favorable weather and increased normalized retail load and transmission revenue offsetting these favorable items were unfavorable O&M property taxes and depreciation.
<unk> B P transmission Holdco segment contributed 95 cents per share down seven cents per share compared to last year favorable investment growth of six cents was more than offset by an unfavorable true up of seven cents and increased income taxes as I mentioned last quarter. This is entirely consistent with our guidance. Our 2022 guidance had this thing.
Went down by eight cents year over year as a result of the investment growth being more than offset by the annual true up that occurred last quarter and some unfavorable comparisons on the tax and financing side.
Generation and marketing produced 34 cents per share up 14 cents from last year. The positive variance is primarily due to the sale of renewable development sites improved retail margins increased wholesale margins and land sales in the depreciate or in the generation segment.
Finally, corporate and other was down 17 cents per share driven by lower investment gains unfavorable interest and increased O&M. The lower investment gains are largely related to charge point gains that we had in 2021 that reversed this year.
Turning to slide 11, let me provide an update on our normalized load performance for the quarter overall AEP service territory has maintained significant momentum through the first three quarters of the year, despite increasing headwinds impacting the macro economy, starting in the lower right corner normalized retail sales increased by two 6% in the third quarter.
Compared to last year. Once again every operating company experienced positive year over year growth for the quarter. Furthermore, the growth in the commercial and industrial sales this quarter more than offset the modest decline in residential sales.
For the year to date comparison, a P. S normalized retail sales increased by three 1% with growth spread across all major retail classes and operating companies. In fact, we're on pace to experience the strongest year for low gross since the mid 19 nineties and that's on top of the recovery, we had last year when the load increased by two 1%.
To the upper left corner normalized residential sales decreased by eight tenths of a percent in the third quarter, but remained up three tenths of a percent through September compared to last year for the quarter residential counts increased by four tenths of a percent, but this was offset by a one 2% decline in weather normalized usage. This is not.
Surprising when you consider that last year many of our customers were receiving extra income from the fiscal stimulus that is not happening in 2022, while the results were mixed by operating company the strongest residential growth for the quarter was it swept go.
Moving right weather normalized commercial sales increased by three 4% for the quarter and were up three 8% for the year to date comparison the growth in commercial sales was spread across nearly every operating company in eight of our 10 top 10 commercial sectors. The fastest growing commercial sector is data centers, where load was up 33% compared to last.
Year for the quarter and for the year to date comparisons.
Finally, focusing on the lower left quarter corner, you'll see that the industrial sales posted another strong quarter up 6% for the quarter and up five 5% for the year to date comparison to last year.
Sales were up at nearly every operating company and most of our largest sectors. We continued to experience double digit growth in a number of key industries, this quarter, including chemicals manufacturing and oil and gas extraction. We also saw robust growth in primary metals manufacturing pipeline transportation paper manufacturing and coal mining to.
To summarize the AEP service territory has maintained significant momentum through the first nine months of the year. Despite the challenging headwinds of inflation higher interest rates supply chain disruptions and the labor shortage. We know the federal reserve's approach to address inflation is designed to slow down the economy, which will eventually work its way through our footprint. However.
I'd like to remind you that there are things that we've done and we'll continue to do to help mitigate the impact of slowing economic conditions in our service territory, specifically, we're talking about our economic development efforts. So turning to slide 12, I want to highlight how our commitment to economic development is helping to sustain load growth even in the face of challenging economic conditions. The chart on there.
This slide illustrates why this strategy is so important to us.
Blue bars on this chart show the growth in gross regional product or G. R. P for the AEP service territory over the past year. So you can see that it has been slowing over the period in fact for the third quarter growth in Aep's G. R. P was essentially flat however, the green bars here show that our industrial sales growth over the same period, you'll notice that they have.
Maintaining their strength, even improving 6% without the help from G. R. P. How does this happen that's because of our consistent disciplined approach to economic development over the years a lot of the growth in industrial load that we're seeing today is a consequence of economic development projects from previous years that are coming online. This year. Examples include a large steel plant and <unk>.
LNG processing facility there now online in the AEP, Texas Service territory, New chemicals plant that is now operating in Tennessee or paper plant that is now producing in Oklahoma and these are just a few of the many examples that we could mention but the key takeaway here is that a piece commitment to economic development is what allowed is allowing us to be on track to post our strongest year for load growth and deca.
Despite an economy that is beginning to slow down another key point to remember is that you cannot turn it on or off like a light switch economic development projects take time to materialize in the results that we see here today are largely the result of activities that occurred years ago by making this a key component of our strategy. A P is helping to mitigate the impact of economic down.
Turns on our customers our communities and our investors.
And a piece of economic development team has a proven track record of helping bring these new customers to our service territory with an emphasis on jobs and load in fact, the AEP service territory has added over 106000 jobs. This year. So let's move on to slide 13 to discuss the company's capitalization and liquidity position, where we're doing well in this regard.
On a GAAP basis, our debt to capital ratio held constant from the prior quarter at 61, 4%, taking a look at the left upper quadrant on this page you'll see our F. S voted that metric stands at 14, 5% on both a Moody's and a GAAP basis, which is an increase of one 1% and one 2% respectively from the prior.
Quarter. The primary reason for the increase is attributed to the completion of the P. S O securitization efforts, which increased cash from operations as we stated on our last earnings call, we anticipated trending toward our F. F O that I put in that targeted range of 14% to 15% as the year progressed and we currently sit comfortably within that range.
You can see our liquidity summer in the lower left quarter on the slide our five year $4 billion bank revolver, and our two year $1 billion revolving credit facility support our liquidity position, which remains strong at $3 $6 billion on the qualified pension front, while our funding status decreased 3% during the quarter it remains comfortably.
<unk> at 105, 3% negative returns on the risk seeking in fixed income assets. During the quarter were primary drivers of the funded status decrease however, rising interest rates cause plan liability did you get to decrease which provided a favorable offset to the negative asset returns. So we're in a good place in terms of funding.
Let's go to slide 14, so I can do a quick recap of today's message. The third quarter continues to provide a solid foundation for the rest of 2022 and allowed us at our recent analyst day to narrow and raise our operating earnings guidance range to $4.97 to $5 seven with a midpoint of $5.02 as you know a P offers.
Steady and predictable growth driven by our low risk regulated business robust electric infrastructure investment pipeline and our proven track record of managing cost pressures over time, while growing our rate base. This along with the updated 2022 load forecast we provided at our October 4th Analyst Day, and the Virginia Supreme Court ruling related to.
<unk> 2017 to 20 in 19, Triennial really triennial review position us to navigate headwinds remaining this year that you would expect such as continued inflation interest rates, whether risks etcetera, which is why we maintained a 10 cent range. When we recently lifted and tightened our 2022 guidance range. We continue to be committed to our long term growth rate of six.
So 7% continued dividend growth and a strong balance sheet, while we are derisking the company focusing on the customer and actively managing the portfolio. So we really do appreciate your time and attention today I know you guys are super busy with all the animal or the all the earnings calls so with that I'm going to kick it over to the operator. So we can hear what's on your mind to take your questions.
Thank you and ladies and gentlemen, if you wish to ask a question. Please press. The one then zero on your Touchtone phone you will hear an acknowledgment on that you'd been placed into Q.
May remove yourself from queue at any time by repeating the ones Zero command and if you're on a speakerphone. Please pick up your handset before pressing the number once again if you have a question. Please press the London zero.
Our first question is Jeremy Tonet from J P. Morgan. Please go ahead.
Jeremy Good morning, good morning.
Just wanted to pick up on one of the key themes at the analyst day talking about the transmission within AEP in the significant growth.
The potential there as you see it.
And what appears to be a valuation disconnect with AEP stock relative to public.
Cops and transactions I'm, just wondering if that conversation invited any reverse inquiries on your assets. I know you said these are core to you, but just kind of curious how that's developed and any other thoughts on that side you might share.
Yeah, I'll just follow up would be did I mention transmissions I'll turn it over to Julie.
[laughter]. Thank you. Thanks, Jeremy Thanks for the question. Let me tell you, we certainly got a lot of attention from our Investor base and so I'll answer it that way. So we appreciate that because that means we're doing our jobs I think we still need to do a lot of work here to make sure that we make it easy for you all to understand what the earnings stream is in the earnings potential of that particular business.
And so as we were getting ready for this call today, you know I'm looking at the waterfalls on pages nine and 10 of the presentation today and so let me go to page 10, just real quickly. So the AEP transmission Holdco, which as you know our peer play transmission component contributed 95 cents of the $4.04 a year.
To date and as you know we've got more transmission in play across this waterfall two that shows up in the vertically integrated utilities in the T&D segment, so as a swag and will do better with this as we go into 2023 to give you a more granular view of the transmission component in the aggregate from AEP, but assume that roughly 50% of.
The earnings and the vertically integrated utilities in T&D utilities is is is essentially the part of the the 95% or I'm, sorry, adding to 90 90.
95 cents to another let me say it another way I'm totally tripping over myself, you're 95 cents from the AEP transmission Holdco essentially double that so that's about half so half of our earnings are coming from that particular segment. The other half is coming from the vertically integrated utilities and in T&D utilities, so not insignificant when you compare that.
Just under two Bucks to the four O. Four so we will do better and I'll do better explaining this stuff as we go forward in 2023, but wanted to have that number kind of in the back of my pocket here in case you asked the question. So I'm glad you did but the overarching theme around transmission is that certainly with the movement to a clean energy economy.
The focus we have on renewables being put in place you can't put these renewables in place without additional transmission transmission is becoming more constrained. So it turns out to be very positive from an A&P perspective from an opportunities to really focus on not only the development of transmission, which we're the largest in the country.
But also in terms of the renewables build out and in fact, the distribution would just ruin.
Energy Resources', it'll drive different resource needs as well so all in good shape from that perspective, so we feel very very bullish about our transmission.
Yes.
Got it that's helpful. And then just shifting gears a little bit rates rates moving up here. So just wondering.
What you can say about that with regards to short term rates.
Moving higher in long term debt issuances being more expensive just.
Thinking about historic test years, and lagging jurisdictions I'm wondering what could be done or how do you see that unfolding.
Yeah no. Thanks again for the question, we're keeping a watchful eye on that and you're absolutely right. So let me, let me kind of compare and contrast, the short term debt rate that we were realizing last year through the first nine months was about 27 basis points to date through the first nine months that was about 1.46% so a significant uptick.
And so what we'll be doing is continuing to manage across the different buckets of tenor and using a kind of a barbell strategy is to do our financings going forward, we still have a little bit of work we have yet to do this year and that's at the parent I mentioned at our analyst day back on October 4th and where.
Assuming that our rates would adjust to on a longer term basis to about 5% to 6% for us that compares to through the year to date a rate of about 3.34%, we will and do you have that embedded in our 2023 guidance, but we'll continue to work with that let me give you another finer point to that.
I pay attention to is how much of our debt is floating rate, we generally target somewhere between 15, and 20% of our total portfolio being floating rate as of the end of the third quarter. We were at about 14.8% about that equates to about the parent about $5 $7 billion.
90, $195 billion of that being C. P. So we've got a fair amount of fluctuation there, but that's already getting picked up in rates and it's absolutely embedded in 2023 guidance, we'll have more for you to.
Sure and and for your modeling efforts at the EI Conference. When you get when you get all the assumptions that we will have behind us the waterfall and details that you're typically used to seeing from us.
That's very helpful. I'll leave it there thank you.
I forgot to do.
Thank you and the next question will come from the line of.
To wrap up please.
Please go ahead I'm sorry from Evercore ISI. Please go ahead.
Hey, Hey, good morning, good morning.
Congrats on a solid quarter here okay.
I have two questions the first one.
Just maybe can you elaborate to the extent you can you mentioned phase one of the.
On the regulated renewables. So just worthy interested parties, you're the strategics are these brokerage or any any additional color you can share there.
I would certainly say that the list was robust.
And all the all the usual suspects that you would think of and beyond but there were a lot.
And I'd say it was still.
Generally I'm half and half 60, 40 or whatever it was of the strategics.
And others financials, and so and actually you know the phase two we're going into a list with strategics and financials and its a well balanced group.
One that I'm sure will hold each other accountable to here and there in the during the process, but but.
We're very happy with the responses we received.
It sounds like you're making very good progress there.
They'll go into.
On the call.
Confidential rooms, and all that kind of stuff and we're due diligence will be done and then they will go through the process with them. That's process. That's just what the process is.
Andrew This is Julia as you know we are a two step bid process and we would expect to be in a position to have a PSA signed in in early 2023 with with a closing in the first half of next year I think we shared that with you on October 4th and we get the question around who is the primary regulatory authority or body.
That will govern this in and that's work is as you know.
Got it thanks, and then maybe just two.
Onto the second ship you know from as you see just how how to read into the would it be implications for you.
I mean does that.
Good risks sort of potential sorry, Greg.
We view it as a continuing part of the process and we said we would be transparent.
And we have been transparent.
We'll continue to work in a positive fashion with the FCC during their investigation and certainly.
The issuance of a second subpoena is really you know they just need more information so and we're going to supply. So we're going to we're going to work with them and we'll continue doing so so our response is essentially the same as when the first one.
We recognize there there were governance issues, we need to change relative to pharma once you fours and we made those changes in.
And certainly from our perspective.
We will continue to.
To work with them to get this thing resolved.
Excellent guys. Thank you so much I appreciate that.
Thank you. The next question is from Julien Dumoulin Smith from Bank of America. Please go ahead.
Hey, Joe Hey, excellent.
And congrats Nick.
Sure thing.
Absolutely if I can't pivot it's still on this if I can continue with the last question a little bit and you can ask again about this second subpoena just what's your understanding of the process from here on out again I get that they continue to inquire here just can you elaborate a little bit further here again, obviously you're complying.
<unk> documentation, but just a little bit of a sense of what you get from Europe .
There's not much else, we can say about obviously because it is a process with the SEC and its really up to the SEC.
What how they want to continue to.
To analyze information and ask for new information.
And typically I guess.
Whenever they need new information no issue new subpoena so.
So it's just part of the process and.
It's really up to the SEC.
Our our only.
I mean, the only control we have is to continue.
To cooperate.
Very positively and respond and we'll continue to do that.
Excellent Okay, perfect and then if I can just with respect to West Virginia can you guys talk a little bit about the fuel situation. There and is there an ability to leverage securitization here to address the balance there and just to what extent can that sort of fully address that balance.
Yes, Julien Yeah, no. Thanks for the question Julien and no actually as a matter of fact that that's exactly what we're contemplating.
As you know we've got a fair amount of exposure in excess of $400 million as of the end of the third quarter of deferred fuel at West, Virginia, and West Virginia in particular, we want to be very sensitive to customer bills. So the plan is to see what we can do around securitization of the outstanding balance and manage rates for customers right now.
The current mechanism is we have a 12 month fuel clause to reset and account for the prior year at a year. We're currently in hearing there, but we want to be extremely sensitive to our customer base as it relates to that particular area. So standby, we'll have more to tell you and more to share as we make some progress but the securitization is absolutely key.
Contemplated yep.
Got it so theres no theres no qualification issues or needing to get clarification legislation right that it should be directly applicable.
Yeah.
But we do we do need some clarification on the legislation.
It becomes very specific to what you're trying to securitize, so that will be a critical path for us.
Okay. So we should look for that next year in terms of getting them stuff.
Yes. Thank you I appreciate it and Julia I wish you all the best Oh, Hey cause so much. Thank you. Thank you.
Thank you. Our next question is from Ross powers from UBS. Please go ahead.
Well Ross good morning, Nick Good morning, Julien how are you good morning.
Nick Thank you for the rush to quote.
Much appreciate that understand that the phone so good for you.
[laughter]. So I just had a couple of questions here.
Asking about the subpoena, but we've kind of beaten to death, but.
The strategic review that that's going to happen within sort of the first half of next year or are there other businesses that sort of fit into that same sort of potential strategic review category thinking about wholesale services are distributed resources or the core to you or is that something we could see.
In the future.
Yes, so obviously, we have a three.
I guess three of the normal four burners already loaded.
One's Kentucky ones the contracted renewables and then then the retail after that and we have to do a that's really a strategic review around retail because you include some of Ohio and that kind of thing so we need to.
Fully understand that.
And we said that we would look at other other parts of the business. If it fuels the growth that we're focused on relative to transmission and the movement to a clean energy economy, and so we will continue to do that I don't want to I really don't want to position.
Position, one business versus another at this point.
But we'll continue to look at all of our business to make sure that that we are being as efficient as possible to do as Julie always says actively manage the portfolio to ensure that we are moving forward from a from a growth perspective, but also from a derisking perspective to ensure that we are spin.
Or our capital on the right things and O&M as well so.
That's probably all I'll say at this point and I'll leave it to Julie in the future of the AR to answer those questions. Yeah. Yeah. I would leave you with this thought you know as it relates to onsite partners wishes are distributed energy solutions organization that we have wholesale services as well when you look at the quadrant of our unregulated components of our total.
AEP business I would submit to you that you should assume that they operate business as usual those are closer to customer those are things that we need to engage and to manage our day to day operations and we want to make sure that we're extracting all the intelligence, we possibly can and taken care of the customer at the same time, but if there is there are things we can leverage to help us in the regulated envelope.
We'll be doing that as well so distributed energy solutions teams to scratch that itch, and we've gotten a lot of a lot a lot of success in runway out of that so business as usual and we'll keep you apprised anything else that we put on deck like Nick said, we got all of our burners busy you know what's on deck, but the point here is to get as efficient as we possibly can so that we can.
Can deliver the goods take care of you take care of our customer and then when we get to go.
Alright fantastic Julie. Thank you and then just maybe one more around sort of the flexibility of our capital spend.
No.
You kind of reiterated that at the analyst day. Many times you will get a lot of the capital was a transmission.
We've seen some other companies maybe struggled to get transmission projects done.
On schedule, given the siting and permitting issues is that just a large scale transmission project issue and do you have sort of just a lot of smaller scale stuff you could move around in that transmission and even in the distribution bucket. Yeah. So so obviously we've had the same conversation.
[noise] in Congress.
Uh huh.
We are.
Our transmission large block of our transformation is transmission within our service territory.
And actually the.
You're just basically the nuts and bolts of making sure that we have a.
Rehabilitation of the grid replacement of old resources, we have some transmission lines.
Every time, we have our sub company Board meeting I always comment about you know these 100 year old lines that come up for replacement and and we're still we're still in the process of doing that we've talked a lot about.
The amount just the sheer magnitude of Aep's transmission system, and the average age being 57 years old or some number like that and and the spend that we have ongoing now just increases about a year every.
Every year it goes by like 50 to $7 50.
Six.
Spending 3 billion. So you see really we we have not we have not had issues.
Issues with the construction of our of our transmission now if you do a new transmission with new large scale transmission, that's that's where you really get into permitting.
Permitting and.
Right of way issues.
That's really part of the permit legislation.
And then when you crossover stage, obviously the cost allocation.
Issues occur so, but by and large almost all of our transmission is really related to transmission that either already exist or or within our territory that we have.
We certainly have the ability to move forward with and we also have.
This is probably.
More than you asked for but but from a transmission perspective, we've increased our planning associated with that we used to do 120% of the capital plan now we do 130%.
And we're also looking at distribution actually to do the same thing around the 120%. So so those are those are mechanisms, where we continue to be able to use throttles, we continue to be able to adjust based upon.
Different projects being either slowed down sped up or whatever and we continually adjust to that because we have thousands of projects to be able to to work that through so that really drives that element of consistency around our ability to.
To provide capital for transmission and in fact distributions.
Fantastic. Thank you Julie best of luck.
Thank you so much. Thank you. Thank you.
And as a reminder, if you do have a question. Please press one then zero.
We will go to the line of Michael Lapides from Goldman Sachs. Please go ahead.
Hey, Michael Hey, Nick.
Or something from you, but go ahead big weekend coming up Alabama, LSU, We got 10 days.
That sounds like Youre looking for me from because youre going to get it Adam.
Uh huh.
Yes.
None of US go Tigers business.
Hey, a couple of questions first of all when I I Love Slide 41.
Looking at slide 41.
Nick.
Trailing 12 months earned ROE chart, just curious.
When I think about what's embedded into 2023 guidance, which of those get materially better in 'twenty, three which of those face even a little bit more lag in 'twenty three than they do right now.
Yes, Julien Yeah, Yeah. So Michael what you should anticipate is movement on on the P. S. O front I mean, we've got a little bit of momentum there. We've got the securitization taken care of now we will be making an application soon for a rate case. So anticipate that we do expect over time that Africa is going to improve to particularly now that we've got the Virginia triennial behind us and you're starting to see that.
Fruits of that effort already showing up in our waterfall slides and then we've got activity our regulatory activity underway at Schwab co too, but we will we will give you more granular detail at the EI conference on a company by company basis across the board so stay tuned for that but as you know the entire <unk>.
Objective is to move the needle and close the gap and I would submit to you that that is how we describe that another aspect of our active management. So we should be in good shape and moving in the right direction. Obviously, we're comfortable with the guidance, we already put out there.
Got it and then speaking of <unk> and the court case in Virginia, and the $37 million pre tax benefit you took this quarter how should we think about that for 2023. I mean is that just a nonrecurring one time or should we smooth that out over two three quarters I'm just trying to think about how to actually.
The model that yeah, Yeah, no I I love that question says fussing without myself as we've got the the good news. So yeah six cents that you saw in the third quarter, which is essentially like a catch up from the under earnings from 2017 to 2019. So that's unique to <unk>. This quarter and then I'll take it a step further let's go to the fourth quarter, because you probably asked me.
About that too we should have about a penny of earnings associated with this particular outcome in the fourth quarter of 2022, So think about that when you're calibrating your model and then for 2023.
We'll have about $37 million of additional revenues from rate increases that effectively covers in January of 2021 to September 2020 to that in terms of what we should have been able to recognize but we're spreading it over 16 months plus we have the going forward a benefit that starts October .
2022, so what does that mean that means six cents spread across 2023 and that will be included in the waterfall guidance that we give to you at EI. So I hope that helps kind of integrated care for you that does help and then finally, one last thing can you remind us what your cash tax position will be in the coming years, yeah cash tax.
It's really goofy with the the BMT.
So those those numbers kind of float all around and we can always help you behind the scenes with modeling, but for cash tax in 2022, I want to say that the rate is something like 10, 8% and then go out to 2023. The way. We're modeling it is just a little bit over 4%, but I would just direct you back to the.
GAAP annual effective tax rate and so we're looking at the traditional five 2% in 2022 and it bumps up a little bit to about eight 4% in 2023, but we'll be able to give you a more granular there too when we roll out all the backup to the 2023 guidance, but yeah. The BMT get it gets it it almost looks illogical when we're looking at some of them.
Modeling I mean, it works and it's accurate, but it's just the right kind of bounces all over the place from a cash perspective, because you're using those tax credits.
Got it thank you Julia and once again, congratulations hey, thank you Laurel.
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Yeah.