Q2 2023 Spire Inc Earnings Call
Speaker 1: I C.
Speaker 2: Good morning and welcome to the SPIRE 2nd Quarter Fiscal Year 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Speaker 2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch tone phone. To withdraw your question, please press star then two.
Speaker 2: Please also note this event is being recorded.
Speaker 2: I would now like to turn the conference over to Scott Dudley, Head of Investor Relations. Please go ahead.
Speaker 3: Morning everyone and welcome to our fiscal 2023 2nd quarter earnings call.
Speaker 3: We issued an earnings news release this morning and you may access it on our website at spireenergy.com of your newsroom.
Speaker 3: There's also a slide presentation that the companies are webcast and you may download that either from our website.
Speaker 3: or from the webcast site. On our site, you'll find it under investors and then events and presentations.
Speaker 3: Before we begin, let me cover our Safe Harbor Statement and use of non-GAAP earnings measures.
Speaker 3: Today's call, including responses to questions, they contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Speaker 3: factors that may cause future performance or results to be different than those anticipated.
Speaker 3: These risks and uncertainties are outlined in our quarterly and annual filings with the EGC.
Speaker 3: In our comments, we will be discussing economic earnings and contribution margin, which are both non- GAAP measures used by management when evaluating our performance and results of operations.
Speaker 3: Exclamations and reconciliations of these measures to their GAAP counterparts are contained in both our news release and the slide presentation.
Speaker 3: On the call today is Suzanne Sutherwood, President and CEO . Steve Lindsay, Executive Vice President and Chief Operating Officer.
Speaker 3: and Steve Rashi, Executive Vice President and CFO .
Speaker 3: Also in the room today are Scott Carter, President of Spire Missouri, and Adam Woodard, Vice President and Treasurer and CFO of our gas utilities.
Speaker 4: Outlook.
Speaker 5: First, I'd like to begin with reflections on my plan to retire as President and CEO of Aspire at the end of this calendar year.
Speaker 5: of a team who successfully transformed our company into an industry leader.
Speaker 5: Foundation that keeps us centered strong. This foundation allowed us to develop our great strategy that ultimately increases the scale of our utility business by investing in organic growth and expanding our portfolio of gas-related businesses.
Speaker 5: As you know, SPIRE now includes successful gas utility companies in Alabama, Mississippi, Missouri along with expanding midstream businesses.
Speaker 5: As our second quarter results demonstrate, having a diverse portfolio of natural gas businesses and different geography enhances our ability to consistently create value.
Speaker 5: All in all, over the past decade, we grew the company through acquisitions and expansions, ultimately increasing Spire's enterprise value more than six-fold, and we continue to be diligent in executing our strategy and in bringing value to our shareholders, customers, and community.
Speaker 5: We've done this all this while staying focused on the safety and reliability of our systems, reducing emissions, advancing innovation to better serve our customers, and investing in our employees who are the heart and soul of our company.
Speaker 5: I mean personally, my retirement represents the culmination of a wonderful career and in more than 40 years in the natural gas industry.
Speaker 5: As you know, based on decades of experience and a global perspective, I believe that National Pass is a vital part of America's energy future. And I'm energized to continue leading Spire through December and continue to represent Spire and our national industry as the chair of the American Gas Association. I'm delighted to come into your area to buddy.
Speaker 5: In terms of what's next for Steyr, our board has initiated a thorough and comprehensive search, including internal and external candidates. And it isn't simply those who have built upon our culture and positions by our continued long-term growth and success.
Speaker 5: Spire is a strong and well positioned company.
Speaker 5: well-positioned company, it's proven growth strategy.
Speaker 5: We have confidence in that strategy and in the ability of our experienced management team and employees to be excellent employees......
Speaker 5: and that strategy and in the ability of our experience management team and employees to successfully execute on our plans as well.
Speaker 5: in the future. Now, I'll pass the call to Dave Lindsay.
Speaker 6: Thank you, Suzanne.
Speaker 7: I want to begin by acknowledging the outstanding work of our employees and continue their focus on maintaining safe and reliable gas delivery operations and excellent service to our customers.
Speaker 7: Your efforts and dedication are especially important and greatly appreciated during the winter heating season.
Speaker 7: Let me start with an update on capital investment.
Speaker 7: First half of fiscal 2023, Spire's total cat-backs was $308 million, 95% going toward our gas utilities.
Speaker 7: Over a year, our utilities spend increased 9% with more than $200 million going towards upgrading our distribution pipeline infrastructure and to connect more homes and businesses to safe, reliable, and affordable natural gas service.
Speaker 7: Based on our spend for the first half of the year, we reaffirm our FY23 capital investment target of $700 million. Our expected capex over the next 10 years remains $7 billion with a focus on investment in our infrastructure to support system safety and reliability, customer additions that drive growth and in innovation and technology to enhance customer service and experience, including advanced meters.
Speaker 7: We have upgraded 375,000 meters across our footprint since we began the program.
Speaker 7: Turning to the performance of our gas utilities in the second quarter, first and foremost we delivered for our customers continued solid operating performance as we worked toward our targets and key metrics for the year. Our gas utilities also delivered improved earnings and cash flow as new rates went into effect both Missouri and Alabama around the end of last calendar year offset combined headwinds of warm weather and higher costs.
Speaker 7: We face a very warm winter across our gas utilities, which resulted in lower volumes and that impacted margins. Temperatures were approximately 21% warmer, normal, and last year.
Speaker 7: While we do have weather mitigation in our rate designs, and largely worked in Missouri, it was much less effective in Alabama to experience one of the warmest winters on record.
Speaker 7: In fact, temperatures were 26% warmer than normal for Spire Alabama and 12% warmer than last year.
Speaker 7: The weather mitigation mechanism uses actual degree days compared to a normal. The formula does not capture all the usage variation from weather, especially during very warm periods. A reminder that weather mitigation also does not cover commercial and industrial customer usage so we had some exposure there as well. Last quarter we discussed the higher interest and O&M expenses.
Speaker 7: balances carrying or tied to gas costs.
Speaker 7: We expect to recover current gas costs by the end of the calendar year, and we made progress toward this goal last quarter.
Speaker 7: and margins. We believe that moderating O&M increases and fully recovering our working capital balances will enable our utility financial performance to further improve fiscal 2020.
Speaker 7: Let me provide one additional update on our utilities.
Speaker 7: In the last quarter, Spire Missouri filed for recovery of system upgrade investments for the October to February period.
Speaker 7: The Missouri Public Service Commission approved $7.7 million in new interest revenues effective May 6, 2023. Now let me provide a quick update on our midstream segment.
Speaker 7: First half of the year we invested $17 million for reflecting the spend in the first quarter expansion of Spire Storage.
Speaker 7: Preparations are underway this month to resume construction as spring begins in Wyoming. The project remains on schedule and on budget. I would note that there has already been strong commercial interest in the first phase of this additional capacity that speaks to the increasing demand and market value of storage services.
Speaker 7: I also recently acquired Soft Planes, a small storage facility in northern Oklahoma, 10 BTF of working gas capacity.
Speaker 7: This facility is valuable in addition to our midstream portfolio. We expect its operations to be a creative to net economic earnings.
Speaker 7: Next month, SBIRE will publish its fifth annual report on sustainability, reflecting continued progress in measuring our performance and impact as we work to become even more sustainable.
Let me cover a few highlights for calendar 2022, starting with protecting the environment.
The top chart on this slide shows, based on our initial assessment, 2022 our gas utilities achieved a 50% reduction in methane emissions since 2005 and a 4 percentage point improvement over 2021.
focus on leak reductions. Metric retract regarding methane emissions reduction leaks per 1000 systemiles. Please note that in fiscal 2022 we saw another significant reduction.
Our sustainability efforts also focus on how we care for people. This includes further strengthening our safety culture for the benefit of our employees and those they serve.
Employee safety, as measured by the OSHA-DART rate, continued to improve in fiscal 2022, with the rate of employee injuries decreasing 55% since 2018.
Over the years, Spire has built a reputation for having a strong corporate governance.
which was enhanced last year with our board assuming oversight for sustainability efforts and disclosures.
That will turn you over to Steve Racheath for a financial review and update. Steve?
Thanks Steve. Good morning everyone and thank you for joining us today. For our fiscal second quarter, we reported net economic earnings at $199 million, a 10% increase from last year.
driven by improved results from all our businesses, offset in part by higher corporate costs. Economic earnings per share of $3.70, or 8% above last year.
Let's walk through the segments. National utility had earnings of $184 million, nearly 9% ahead of last year. As Steve just mentioned, we saw growth from new rates in Missouri and Alabama, which more than offset the headwinds of lower usage.
in higher interest expenses.
Yes, marketing was well positioned to take advantage of market conditions to optimize and storage and transportation positions this quarter.
hosting earnings of nearly $22 million of 50% last year. Similarly, our midstream earnings were ahead of last year as storage was able to optimize its operations and withdrawal commitments.
As I just mentioned, corporate costs were higher, primarily due to higher interest expense, a portion of which was incurred to finance our non-utility businesses.
Quad 9 provides an overview of key variances for the quarter.
We've already touched on contribution margin drivers, so here are a couple other highlights.
Gas utility O&M expenses were up, net of pension reclassification, by $12 million due to, first, the roughly $6 million of Missouri overhead cost deferred in the prior year at expense this year.
Secondly, higher bad debt expenses, $3 million, reflecting principally higher commodity costs. And lastly, higher non-employee costs, especially third-party contractor expenses as we continue to focus on high customer service levels.
Overall, gas utility O&M costs net of bad debts in Missouri overhead treatment
are expected to trend a bit lower than our 4% inflation marker as we focus on opportunities to control costs for the rest of our fiscal year.
Spine marketing costs were also higher, representing mostly cost driven by higher margins.
Another income was a turnaround from last year, up $8 million after reclassification, driven by unrealized investment returns, as well as interest-carrying cost credits. Let's take a closer look at our liquidity and interest expense.
We have made substantial progress in paying down a short-term bet. With the quarter end balances down $665 million from December 31st.
This has been one of our focus areas and we achieved this reduction through a combination of first, improved operating cash flow including reduction in deferred gas cost balances.
Second, terming out some of our debt needs, including $400 million in Missouri mortgage bonds, essentially advanced funding our pending $250 million maturity later this year, and $150 million hole-in-company private placement.
remembering that we had a $25 million maturity and we paid off last December .
I would note that both offerings were at net interest rates below current short-term rates due to our favorable hedging position coming into the year.
I would also note that in April we paid down $150 million of our term loan and we anticipate retiring the remaining balance later this quarter. Looking forward, our interest expense run rate at the utilities will continue to decline as we collect gas costs the balance of this calendar year.
As a reminder, we do get recovery on most of the utility interest expense, either in rates in Alabama or through the Missouri carry cost credits I just noted in other income. From a holding company standpoint, we have a lot of interest in the utility interest expense.
The financing plan I just outlined supports our marketing and midstream businesses, and the plan matures at the Spire Inc. level in 2024.
Now turning to our outlook, we remain confident in our long-term net economic earnings per share growth target of 5% to 7%. Starting from the midpoint of our initial fiscal year 23 guidance.
Our growth is driven by utility rate-based investments, and as Steve mentioned, we also reaffirm both our current year and our 10-year CapEx targets.
We have narrowed our 2.23 net economics earnings guidance range to $4.20 to $4.30 per share.
As Suzanne mentioned, the benefit of a portfolio of natural gas businesses is the opportunity to create value and offset headwinds across our platform.
So while the midpoint of our range remains the same, how we're getting there has shifted a bit due in large part to the results from winter.
Going by segment, we are lowering our gas utility range to reflect the headwinds we discussed earlier, offset in part by cost discipline and a lower effective tax rate, reflecting principally earnings mix and the timing of tax credits.
We've raised the ranges for both gas marketing and mid-screen due to strong year-to-date results.
Corporate cost moved up $5 million to reflect principally higher holding company interest cost.
And a couple quick observations on financing.
With new rates and a clear path of recovery of utility gas costs, we expect continued cash flow growth, supportive of our FFO to debt target of 15% to 16%. We've also updated our long-term financing forecast to reflect actual capital issued this year.
as well as reduced equity needs overall as a result of recycling the strong earnings from gas market.
So, in summary, we're on track with this year's plans, perhaps in a little bit different way than we had anticipated six months ago.
We've pivoted to ensure that we offset the headwinds this year and are well positioned to rebound in 2024 and beyond.
With that, let me turn it back over to you, Suzanne.
Thank you Steve and Steve. In closing we're well positioned to continue growing and delivering stronger overall performance for our customers, communities and investors.
I look forward to seeing many of you at the upcoming AGA financial forum in a few weeks. Until then, thank you for your continued interest and investment inspire. I'm now ready to take your questions.
Thank you. We will now begin our question and answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.
To remove your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
And the first question will be from David Arcaro from Morgan Stanley . Please go ahead. Oh, hey, good morning. Thanks so much for taking my question. And, Suzanne, congratulations on your upcoming retirement.
Thank you very much, Dave. I appreciate it. Maybe starting there, on the CEO search process, could you give just a sense of what the timing would be for a potential decision when you would anticipate concluding that? Any thoughts on just the likelihood of an internal versus an external candidate?
I guess as you know the announcement was clear that I retired at the end of the year and the board has started a process but I certainly don't want to get over my fees in terms of the timing of all that but work the process in a very methodical way. They obviously know the vision and strategy of the company and they'll be concerned about
in air. Got it, thanks. That makes sense. And then also just curious at a higher level, you know, there have been media articles about several gas utilities potentially coming to the market. I was just wondering what your latest thoughts are on M&A and consolidation more strategically.
I guess it's great that there's so much interest in, I guess I would say, gas assets, but I hate to be the person this morning to say we're not commenting, but as you all know that are on the call, we don't comment on these types of activities in the market. From someone who's been in the industry for 42 years, it's always great to see the ebbs and flows across those decades.
I've seen a lot of change in this industry from consolidation to deployment of technology to sustainability. And I think it's very healthy for our industry to have these changes in decades. You know, goodbye. After 42 years, I have the ability to reflect. And I think that's the use.
Again, we don't comment directly on these types of activities.
Yeah, understood. Thanks. And then maybe one more. On the full year guide, economic earnings was down 15 million or so at the gas utility segment. I was wondering how much of an impact was the lower margin at the gas utilities during the winter versus the prior guidance expectation and then how much was.
and incremental interest expense drag.
David, this Steve, I'll take a shot at that. We had a fairly full view of the interest rate and interest cost exposure coming into the water. So I don't think it was much of a surprise, although with the warmer winter, there's always a little bit less pull-through in terms of paying down to fern gas costs, so the balances are riding a little bit higher than we get.
expected, so I would put that as a secondary consideration. It's really the margins, and as Steve mentioned in the prepared remarks, it's really the margins down in Alabama, and both of our utilities are large utilities. We earn a majority of our earnings during the winter heating season, and weather mitigation is designed to offset that, and in Missouri it largely worked in Alabama because of the way in which the weather pulled through it did not.
So that was the primary driver behind the re-rate that you saw on the utility range. But again, we've got plans in place to offset that. Weather always reverts back to normal and still in a good spot from a cost standpoint, so I think we're positioned well as we head into 24 and beyond.
The only part I would add to that, as I've mentioned, is that even with weather mitigation, that does not apply to commercial industrial market. When you have winter, it not only affects the residential but also the others. Okay, great. Thanks so much.
And our next question is from Richard Sunderland from JP Morgan. Please go ahead.
Hi, good morning, and thanks for the time today. Circling back on that last question, the O&M, I guess really let's say the 23 efforts and how you framed that for 24, could you parse that a little bit more in terms of what you're focusing on and how much of that is in reaction to the weather headwinds this year versus longer term efforts?
really targeted around 24 performance.
Well, I can take the second part because you know we have a long history of investing in technology, process improvement, et cetera, to offset normal inflation and create headroom in our customer bill because we also acknowledge that we're investing in rate-based growth and we want to be always cognizant of the impact on our customer bill. We really did createvi memory and that context of wire resources.
All of those macro plans continue at pace. We've actually looked to push the accelerator to a few of those, given the warmer weather. But in the longer term, that's always our goal is to offset as much of that discretionary cost if you want to use that.
that term as we can just because we want to make sure that we're being fair to our customer. In terms of this year, we're continuing to look in every place that we possibly can.
to offset cost and that isn't unusual. You know that across the space whereas the winter started done fold, it's been record warm in many areas including Alabama for us. To your point Steve, when the weather is warmer, it gives the operational teams more opportunity to look at some of those efficiencies versus when...
It's unusually cold weather, by the way that Steve Lindsey and the team operate the company under those conditions is different. And like you said, it's sort of a natural hedge there, if you will.
company. And the last piece I'll add is a little bit following up on Steve's comments, we are on common platforms across all of our companies right now which will allow us to really start to leverage some standardization around workload planning, around supply chain, around logistics. So I think we're in a good situation now as we move forward to really drive some strong cost management throughout all of our companies.
Okay, got it. That's helpful color there. Salt Plains, the 37 million investment, could you outline a little bit more about what's attractive there, how you think about that asset relative to the Spire storage expansion efforts?
And is this indicative of a platform you're looking to grow even further through additional acquisitions?
Well, I'll start. As we mentioned, it's a very small asset, but we think it is well positioned and we think it's going to help some of our other gas businesses in terms of what they can do going forward. I don't think it's directly connected at all with Fire Storage West. They're independent facilities. Relative to the platform, I think as Suzanne, Steve, and even myself had mentioned, we're going to have to be able to get the gas companies to the right place.
We think having diverse gas businesses as evidenced this year create a little bit of a natural hedging effect. So again, I don't know that I would necessarily say it's a platform enabler, but we looked at that opportunity as being something that, at least from our business perspective, made a lot of sense in the near term. And we do expect it to be a creative going forward.
Okay, got it. Is there any further investment with salt plains particularly that you're anticipating at this point?
At this point, no, again, we're looking to go in and take advantage of some early opportunities in terms of the way it's being operated and again looking for some leverage opportunities with our other businesses. And Richard, I would add that our spire storage facility in the same position in 2025, we
Once we invest the capital, this becomes much more utility-like in terms of dealing with customers. In fact, many of the customers are utilities and pipelines and folks who serve those. And they are on contracts that range in the industry from 3 to 5 years, and this facility is no different. So since we are buying an existing operating facility without a lot of CapEx needs for expansion, it really is just plugging it in and giving our customers the opportunity to do that.
our midstream team the opportunity to optimize the operations in that facility just like they are and will in Spire Storage West.
Got it, very clear. Thank you for the time today.
Got it very clear. Thank you for the time today Oh, thank you
And the next question will be from Shar Paresa from Guggenheim. Please go ahead.
Hey good morning guys. Just a quick one on just inflation and O&M. Just about a half of your O&M increase in the quarter came from the overhead costs.
which you were of course deferring last year, which is separate from just inflation in general. I guess how should we think about this six million on a go-forward basis? Any sort of special considerations? Or should we just treat it the same as all the O&M going forward? Thanks.
Yeah, it's really cost that we'd already incurred that shifted back into O&M.
You kind of take that out of the inflation calculus for what it's worth. Okay, perfect. That's that's helpful and just real quick lastly. There's just on the higher interest cost You know corporate drag was you know nearly 5 million in the quarter year over year
Obviously you guys have been very clear about your planned equity issuances. You've done mortgage bonds, you've managed short-term debt needs really well, done some private placements. But any thoughts around sort of the cash payment convert market that's formed? Could you still see a benefit there? Thanks.
Yeah, this is Adam. We're always at this.
Yeah, we're always interested in different interesting financing techniques, and I wouldn't say there's anything on the horizon there, but it is certainly an interesting trend that we've seen here so far this year. And Char, as you know, there's been a flurry of activity including this week.
and we do watch that closely. We, perhaps to our benefit and the credit of Adam and the team, we entered this year in an extremely strong hedge position from an interest rate perspective. So we all understand, those in the industry, that a convert actually does buy down the current interest rate versus just doing straight debt. I think we got every bit of that benefit, but we did it in the hedge market in prior periods.
Please go ahead.
Hey, good morning. Can you hear me?
Yes, we can. Hey, good morning team. Thanks so much for the time. I appreciate it. Hey look, I suppose a couple questions here. First off, just coming back to the guidance this year, obviously reracking things a tad in the competition. Just looking forward to 24 here and some of the knock on effects. You guys coming off confident and kind of getting queued up here.
prepared remarks in terms of getting back on top of interest rates and especially on the deferred gas balances which is a phenomenon that we and many in the industry are dealing with and I think we have a clear line of sight to doing that. We continue to manage O&M costs as we mentioned a bit earlier so I think that's another one of the places where I think we're very confident as we go into next year and the beauty of where we stand right now.
is that we're not in any regulatory proceedings within our gas utility. So we don't need a go-gette. There's no rate change that's built into our thoughts as we think about 24 because we have nothing on the horizon at this juncture. So those would be some of the clear things in my mind.
that position as well. And the capital mark's activity that we completed this quarter in many ways actually take some of the interest rate risk off the table going forward.
Yeah, no, I got that
We're relatively defensively postured on interest rates going forward from here. Bringing those balances down is certainly key. I think that's no different than most of our peers as well. So feel pretty good about that 5 to 7 on a go forward basis.
Right, so maybe you said more specifically here. With respect to the O&M, you feel like that's pretty much entirely offset. And when you think about the composition, you know, 23 might have shifted a little bit. The 24 composition, if you think about it that way, you're able to get a lot of stuff out of the O&M. Such that we should get back to the typical earned ROE trends.
I think we have seen ability to get after that. We have a historical ability to get after that as well and feel good about the same going into next year.
Got it, excellent. And then just coming back to the balance sheet side of the equation super quickly, I noticed the Alabama point yesterday from Moody's here. Can you talk a little bit more about just your commentary and the prepared remarks at least alluded to in intact metrics, and you talk about it in the slides.
Can you talk a little bit about some of the plan here with respect to the subsidiary and overall financing plan?
Thanks for noting the Moody's report. We were very pleased to have Missouri come off of negative outlook and affirmation of our ratings. They did, as you mentioned, go to a negative outlook on Alabama. It's something that we had discussed with them.
before was not a surprise. But I think you could take that report also as an affirmation of what our execution on our plan and towards our targets. And it's something that we certainly stay close to both the agencies on that topic and...
Again, we continue, I think you hear us continually restate those targets and progress towards those targets and that does get wrapped up into our progress around our equity plans as well, which we continue with. But again, still see.
see that pathway towards our credit metric targets and feel pretty good about it. All right, excellent. We'll leave it there. And best of luck. It's been a pleasure.
And again, if you have a question, please press star than one.
The next question is from Christopher Jeffrey from Mizzou host securities, please go ahead Everyone thanks, maybe just two quick ones on salt plains just curious as far as the funding mix. I know it's not a huge acquisition But whether that changed from maybe your typical funding for the expansion for example and then also just how much that's contributing to the
guidance change for the midstream business for 2030. I can take that and important, Christopher. We typically guide, and I think it's a good benchmark, that you can expect a 5050 cap structure underneath the acquisition. And that was factored in to our updated financing guidance for this year, and that's really the strength of inspire marketing and the ability to receive.
in the SPIRE world is in the stub year of acquisition, we do not include the earnings for any newly acquired entity including any transition cost in net economic earnings, and then it's fully reflected in the first full year operations. And we'll deploy the same thought this year. So.
Sure, an answer is no. It was, in fact, it entered the range for midstream this year, but you would fully expect it to be reflected in the update when we launched 24 times. Great, thanks. And then maybe just more generally, as far as lower natural gas prices, just kind of wondering a timeline of when and how you expect to see the benefits coming through, either on working capital or that debt expense or...
even if it could maybe shorten the timeline on the deferred costs, deferred gas costs from last year. I don't know if that's possible, but if you could kind of speak to that. Yeah, this is Scott Carter. I'll take a first stab at that. We're already seeing the benefits of that as it works through the dollar cost average, our inventory and then our gas costs. Obviously we're working through some of the other things that we've seen.
the backlog of that with our stormy rate policy we're recovering over the years. And then kind of the higher gas costs we saw last year. But it's now in our plan. We're seeing it, obviously you're seeing the impacts of bringing down some of our working capital. But going forward as we work off those balances, again, we think we'll get most of that done this year. So,
you'll start seeing that then translate into lower bills. So as soon as we get line of sight of that, we'll assume the market holds up, we'll start being able to lower our gas cost rates to customers, and then that translates into the bad debt. So you've got the complete lineage correct, and we'll see that coming through pretty strongly, we believe, into the next calendar.
Great. Thanks, everyone. See you at AGA and congratulations to Zach. All right. Thanks. And ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.
Thank you all again for joining us. We'll be around the rest of the day for any follow-ups. We look forward to seeing many of you at AGA in a couple weeks. Thanks for joining.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
sudden Thanks for watching!