Q4 2023 Atmos Energy Corp Earnings Call
Hello, and welcome to the Atmos Energy Corporation fourth quarter earnings Conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star one on your telephone keypad.
If you would like to withdraw your question again press Star One I will now turn the conference over to Dan <unk>, Vice President of Investor Relations and Treasurer. Please go ahead.
Thank you J L.
Morning, everyone. Thank you for joining US with me today are Kevin Akers, President and Chief Executive Officer, and Chris Forsythe, Senior Vice President and Chief Financial Officer.
Our earnings release and conference call Slide presentation, which we will reference in our prepared remarks are available at Atmos energy Dal tile com under the Investor Relations tab.
As we review these financial results and discuss future expectations. Please keep in mind that some of our discussion might contain forward looking statements within the meaning of the Securities Act and the Securities Exchange Act.
Forward looking statements and projections could differ materially from actual results.
The factors that could cause such material differences are outlined on slide 37 and are more fully described in our SEC filings I will now turn the call over to Kevin.
Thank you Dan and good morning, everyone. We appreciate your interest in Atmos energy.
Saturday is veterans day, I would like to take this opportunity to say, thank you to the men and women who have served in our armed forces and those currently serving approximately 300 of our Atmos energy teammates are part of the nearly 20 million Americans, who bravely served our country.
Thank you all for your service yes.
Yesterday, we reported earnings per share of $6 10, which represents the 20 <unk> consecutive year of earnings per share growth.
Chris will provide some additional color around our financial results later in the call.
I will begin today's call highlighting a few of the many accomplishments achieved in fiscal 'twenty, three and will close with a few updates on key pipeline projects and some thoughts about fiscal 'twenty four.
This past October 18th Mark Atmos Energy's 40th anniversary as an independent company.
We continue to build upon in the past and focus on the future and be guided by the simple values laid out by our founding chairman Charles K Vaughan.
Honesty integrity and good moral characters.
Supported for more than a quarter century by our culture Atmos spirit. These values combined with the laser focus of our 5000 dedicated employees on our vision continue to benefit our customers our communities and the environment.
I've said, it before and I'll say it again today, our employees are the heart and soul of Atmos energy and provide the foundation for sustained long term success of our company.
In fiscal 'twenty, three we continued to execute our proven strategy of operating safely and reliably while we modernize our natural gas distribution transmission and storage systems.
Our fiscal 'twenty, three capital investment of over $2 $8 billion.
Ported the modernization of our distribution and transmission system through the replacement of our 900 miles of distribution and transmission pipe.
And the replacement of more than 47000 service lines.
This investment also supported the strong economic development, we continue to see in our service territories.
Fiscal 'twenty three we added nearly 61000, new customers with over 46000 of those new customers located here in Texas.
And according to the Texas Workforce Commission. The state continued its streak of record employment for the 12 months ended September the seasonally adjusted number of employed reached a new record high and over $14 5 million.
Texas again added jobs at a faster rate than the nation over the last 12 months, adding.
Adding nearly 436000 jobs from September 2022 to September 2023.
And according to a study recently conducted by site selection group.
The Dallas Fort worth Metroplex is projected to add over 674000 people.
By 2028 to reach eight 5 million.
While the Austin round rock Georgetown corridor is projected to add over 324000 people by 2028 to reach $2 7 million.
In fiscal 'twenty, three we continued to see good commercial growth as well, adding nearly 3000, new commercial customers.
Our industrial demand for natural gas in our service territories has also remained strong in fiscal 'twenty. Three we added 55, new industrial customers with an anticipated annual load of approximately 19 Bcf once they are fully operational.
The 19 Bcf of annual usage is equivalent to adding nearly 367000 residential customers on a volumetric basis.
This growing demand from all of our customer classes demonstrates the value and vital role natural gas plays in economic development across our service territory.
We continue to enhance the safety reliability versatility and supply diversification of ADT system to support this growth during fiscal 'twenty three.
We completed phases, two and three of our four phase 104 mile line S. II project.
As a reminder line as to bring supply from the Haynesville and Cotton Valley shale plays to the east side of the growing DFW metroplex.
Additionally, we completed the final 63 mile portion of our 137 mile 36 inch line ex integrity replacement project.
We also completed our third salt dome cavern at our Bethel storage facility. This cabin provides additional support to Apt's operations and adds over six Bcf of new working gas capacity.
We remain on track to complete land PC by the end of the calendar year. This 22 mile 36, and July will connect the southern end of ADT system with a 42 inch Kinder Morgan's Permian Highway line that runs from Walhalla cadence.
Our new landlord support current demand and the forecasted growth as well as increased supply diversity to the north of Austin, and both Williamson and Travis counties in Texas.
Our customer support associates and service technicians continue their exceptional customer service and once again received a 98% satisfaction rating from our customers.
The Atmos energy team continues to build trust as they help nearly 62000 customers.
We've over $29 million in energy assistance funds.
Thank you Dave for taking exceptional care of our customers each and every day.
Finally through our appealing safe and thriving communities initiatives our employees made a difference in the lives of others, while supporting schools and students with books.
<unk> labs as we also honored our health care workers first responders and helped our neighbors in need by supporting more than 1400 nonprofits.
And for over 200, local food banks and shelters, the financial and volunteer resources. Our team provided translated into nearly $5 5 million meals being served through our neighbors in need.
And we continue to partner with local habitat for humanity organization to provide families with zero net energy home. These homes are designed to produce more energy than they consume through the use of high efficiency natural gas appliances rooftop solar panels and advanced insulation materials.
We completed two new zero net energy homes in fiscal 'twenty, three and we will have completed 12 total <unk> by the end of fiscal 2000 and for these homes demonstrate the value and vital role natural gas plays in helping customers reduce their carbon footprint in a cost effective manner and is another way.
<unk> energy fuels safe and thriving communities.
I am very proud of Atmos energy and our full team and there are many accomplishments in fiscal 'twenty three.
I will now turn the call over to Chris to discuss our fiscal 'twenty three financial results, our fiscal 'twenty for guidance and updated five year plan through fiscal 'twenty eight Chris. Thank.
Thank you, Kevin and good morning, everyone. Our fiscal 'twenty three earnings per share of $6 10 increased eight 9% of our fiscal 'twenty two.
Our performance continues to reflect the successful execution of our operating regulatory and financing strategies.
In fiscal 'twenty, three we implemented $269 million of annualized operating income increases, excluding the amortization of excess deferred tax liabilities.
These outcomes combined with outcomes received in fiscal 'twenty to increase operating income by $254 million this fiscal year.
Strong customer growth higher consumption and rising industrial load in our distribution segment increased operating income by an additional $30 million.
Consolidated O&M increased $55 million to $765 million.
Largely driven by higher levels of service orders and increased head count to support our growing service territory, primarily in Texas.
This thing came in at the lower end of our updated guidance range as we saw some moderation in inflation in the third and fourth fiscal quarters.
Fiscal 'twenty three capital spending of $2 8 billion represented 15% increase over the prior fiscal year.
85% of that spend was dedicated to improving the safety and reliability of our system.
As a result of the spending our rate base increased by 18% to an estimated $16 6 billion as of September 30.
Finally, we completed $1 6 billion in long term financing and completed the securitization process in Kansas and Texas.
We finished the fiscal year with an equity capitalization of 61, 5% and approximately $2 7 billion of available liquidity, which leaves us well positioned to support our future operations.
Looking forward our strategy continues to focus on system monetization and disciplined capital spending speaking.
Taking timely recovery of our costs through our regulatory mechanisms all financing our operations using our balance of equity and long term debt to preserve the strength of our balance sheet mitigate financing risk and minimizing the cost of financing to our customers.
We anticipate the execution of this strategy will continue to support 6% to 8% annual and annual earnings per share and dividends per share growth.
For fiscal 'twenty four we anticipate earnings per share will be between <unk> between $6 45.
And $6 65.
And we anticipate fiscal 'twenty eight earnings per share to be in the range of $8 35 eight.
$8 75.
Additionally, Atmos Energy's board of directors approved a 168 consecutive quarterly cash dividend with an indicated fiscal 'twenty four annual dividend of $3 20.
Eight 8% increase over fiscal 'twenty three.
This plan anticipates total capital spending of approximately $17 billion. This level of spending will continue to support rate base growth of about 11% to 13% per year, which is expected to increase estimated rate base by approximately by two approximately 29 billion in fiscal 'twenty eight and.
In addition to our capital spending.
A significant use of cash will be for taxes we.
We expect a refund of $300 million of excess deferred tax liabilities over the next five years with approximately 70% of this amount refunded during fiscal 'twenty forward in fiscal 'twenty five.
And we anticipate will become a material federal cash taxpayer within the next three years because of 15% corporate minimum tax that was included in the inflation reduction Act.
Our O&M spending will continue to focus on compliance based activities that address system safety.
We have assumed O&M inflation of three 5% annually through fiscal 'twenty eight from fiscal 'twenty three levels.
Our fiscal 'twenty, four we anticipate O&M to range from $780 million $800 million.
This five year plan includes approximately $10 million incremental long term debt financing, which is reflected in our earnings per share guidance for both fiscal 'twenty four and fiscal 'twenty eight.
Following the completion of our $900 million long term debt issuance in October our weighted average cost of debt stood at four 1% and.
And our debt maturity schedule is very manageable our weighted average maturity is 18 four years and our next significant tranche of debt is not scheduled to mature until June of 2027.
Additionally, our financing strategy does not contemplate material exposure to floating rate interest rates.
To further mitigate interest rate risk, we have $900 million forward, starting interest rate swaps in place to hedge portions of our anticipated long term debt issuances in fiscal 2025 and 26, the effective weighted average rate of these swaps was 159%.
Finally, we intend to continue continued utilizing our ATM program to meet our equity financing needs as of September 30, we have priced $467 million, which.
Which represents a significant portion of our anticipated fiscal 'twenty for equity needs.
Timely recovery of our costs remains a key component of our strategy. We are off to a good start in fiscal 'twenty four.
At the beginning of the beginning of the fiscal year, we have implemented $113 million in annualized operating income increases in our distribution segment and.
And we have five filings in progress seeking about $137 million.
Included in this amount is $107 million requested Adt's general rate case on.
On October 24th ADT in the intervening parties filed a comprehensive settlement agreement with the Texas Railroad Commission.
The settlement proposes a rate base of $4 3 billion.
And authorized rate of return of 849%.
And recapitalization of 64, 4%.
The authorized ROE of 11, 45% we.
We anticipate the settlement agreement will be on the Commission's agenda with December 13th meeting.
If approved as filed the settlement would result in a $27 million increase in annualized operating income.
We remain confident in the execution of this strategy will continue to support our ability to modernize our system and to support the continued economic development in our service territories.
Our customers will continue to benefit from this strategy as we expect our average residential bill will remain one of the most competitively priced utility bills and our customers' health.
Thank you for your time this morning, I'll now turn the call back over to Kevin to closing remarks, Kevin. Thank you Chris.
As you've heard this morning, a successful fiscal 'twenty three is as well positioned for fiscal 'twenty four.
As part of our $2 9 billion fiscal 'twenty four capital spending plan Apta will continue to focus on enhancing the safety reliability versatility and supply diversification of its system.
<unk> will continue work on the remaining 40 miles of the line as 236 inch pipeline project, which we anticipate having the final phase in service by December of 2024.
In fiscal 'twenty, three ADT begin a multi face line <unk> project that will install approximately 80 miles of 36 inch pipeline supported by the northern part of the system that serves the Dallas Fort worth Metroplex.
As one approximately 24 miles is anticipated to be completed by the end of this calendar year.
Design is underway for phase II, which will install an additional 40 miles and we anticipate that phase III will be placed in service by the end of calendar year 2025.
Phase III will include the installation of the final 16 miles and we anticipate that that phase will be placed into service by the end of calendar year 2026 <unk>.
Additionally, in fiscal 'twenty four apta will begin construction of a 54 mile 36 inch pipeline from our Bethel storage facility to our gross back compressor station to support forecasted growth in Williamson and Travis counties in Central Texas.
We anticipate that the project will be placed in service by the end of calendar year 2025.
Our gas supply team has us well positioned for this upcoming heating season, the supply reliability and at competitive prices our gas supply team has hedged 50% of our winter supply needs through a combination of storage and financial contracts at a weighted average cost of $3 31.
I'm very excited about the direction and long term stability of Atmos energy.
The foundation has been set with a proven safety driven strategy the company with organic growth that yield 6% to 8% fully regulated earnings per share and commensurate dividend per share growth supported by a strong financial profile.
We operate in a diversified and growing jurisdictional footprint that is supportive of investment in natural gas infrastructure with 96% of our rate base situated in six of our eight states that have passed legislation in support of energy choice.
We have a long runway of work to support the planned $17 billion in capital spending over the next five years as we continue to modernize our natural gas distribution transmission and storage system.
As Chris noted most of our fiscal 'twenty for financing costs are now.
We have hedged $900 million of our financing needs beyond fiscal 2024.
The strength of our balance sheet and available liquidity will continue to support our operations in a cost effective manner for our customers.
Focusing on long term sustainability has always been a part of our strategy as reflected in the vital role we play in every community.
Safely delivering reliable and efficient natural gas to homes businesses and industries to fuel our energy needs now and in the future.
We appreciate your time this morning, and when they will open the call for questions.
Thank you if you have a question. Please press star one on your telephone keypad, if you wish to remove yourself from the queue simply press Star One again one moment. Please for your first question.
Okay.
And your first question comes from the line of Nick Campanella of Barclays. Your line is open.
Hey, good morning, everyone and congrats on the anniversary here.
So thank you Nick good morning, absolutely Martin So I guess to start you've been fairly programmatic in how you issue equity and acknowledging kind of 'twenty 'twenty four is largely priced here as well.
How do we kind of think about future issuances, just given the size of the capital plan seem to go up every year, that's likely going to pressure equity higher are you still very comfortable that you can do to the solid ATM or would you consider other means.
Good morning, Nicole Chris Yes, right now we remain pretty confident that we can still use the ATM to fund those equity needs and as you know we have a balanced financing strategy. We're certainly looking at a number of factors that cost to the customer the strength of the balance sheet, which supports credit ratings.
Credit facilities, our ability to finance attractively in the capital markets and equity as a component of that so we're certainly looking at.
That particular tool I mean, we have other tools available to us if needed.
At this time given the liquidity that we have in the market. We believe we can satisfy those needs through the ATM.
Got it that's super helpful and then congrats.
Congrats on the <unk> settlement I guess, just are you, reflecting that that current settlement outcome in the 6% to 8% guidance here or do you wait until December 12.
That's something that has been contemplated in the guidance we issued yesterday.
Alright, thanks, so much well talk to you soon thank you.
Your next question comes from the line of Richard Sunderland of Jpmorgan. Your line is open.
Hi, good morning am I coming through clearly.
You are good morning.
Thank you.
Following up on the financing side.
<unk> six 3% equity capitalization is still the target to think about 60 more appropriate given the outcome on the APC side.
So we look at the balance sheet holistically across all of our jurisdictions as well as what we need to continue to support our credit ratings. So we are skewed towards the upper end of a 50% to 60% range now for the last few years.
We're comfortable now that to be in that range, and that's kind of where we anticipate being over the next five years.
Understood and then turn it to the O&M side.
Laid out a little bit of this in the script, but just curious if you could parse the recent O&M trends a little bit more how much of <unk> moderation versus timing and then how much conservatism is or is not baked into that 2020 for outlook.
And again, we've been at this three to three 5% projection on O&M now for quite a long time, we feel comfortable in that range. As you know we these different levers over time when needed to mitigate any of the O&M pressures that we see coming down the road.
And again with.
Some of the.
Additional pullback in some of our service territories in the housing market.
We've seen long locate costs come down we've seen other compliance cost come down. So we remain confident as we head into 'twenty four right now that what we have projected out there of the 790 day 100, we feel very confident in.
Great very helpful. As always thank you for the time.
Your next question comes from the line of Gabe Moreen of Mizuho. Your line is open.
Hey, good morning, everyone.
If I could indulge us to come to the O&M topic, just a little bit of your adjusted a bit but I noticed that.
Over the long term O&M guidance went a little a smidge higher but it sounds like you're very confident at least in the near term outlook for sort of your O&M.
Costs can you just address the long term guidance in the context of sort of what you are seeing near term and how you felt maybe what was needed to nudge it up a little bit.
Yes, again I'll reiterate.
That said previously there towards the last quarter, we saw some of the line locating request.
Dropdown, just a few percentage points in some of our jurisdictions, even though here in Texas, we saw an 8% increase so that's what we were looking at there that certainly reduce some of our compliance cost.
Then again with some of other compliance activity and timing of those sort of things.
We think we've done a good handle on what the next year to three to five year window looks like on planned O&M activity compliance activity those sort of things. So those were some of the drivers. We were looking at that came out of the last quarter and allowed us to stay in that three to three 5% range and at 780 to $800.
Yes, Gabe I'll add to that there is a lot of compliance work that we still have to do is the utility the rules continue to become more stringent. So we're anticipating some of that in the three 5%.
Two higher led to higher inflation that we've had in the past, although it has moderated somewhat in the third and fourth quarters.
As a final reminder, with our annual mechanisms that we have in several of our jurisdictions, we have the opportunity to you recover that.
Fairly timely generally within a year so it shouldn't be a significant drag if approved through those annual mechanisms as we anticipate.
Yes.
Got it and maybe if I can also ask in the context of becoming a cash taxpayer over the next couple of years is there anything you can do kind of as an offset.
From a corporate level from a regulatory standpoint to offset maybe some of the cash impact there and then maybe also bigger picture just what youre, assuming sort of on interest rates and recoverability from a cost of capital standpoint.
Over the next couple of years, given how dramatically rates who shifted I.
I guess since philosophy uptake.
Sure.
Address the cash taxes first.
Firstly, we've got excess deferred taxes as I mentioned, that's beginning to tail off kind of after a couple of years. The IRI for US expect we should kick in in the <unk>.
Mid mid part of the five year plan and Thats predicated on understood continue growth of the company.
Fortunately there arent a lot of levers for us Paul it's really a the 15% or you end up becoming a cash taxpayer as we begin to burn off some of the NOL shield that we have.
And contemplated in our plan. So we knew going into this plan that we had either 15% or the fact that NOL shields, we're going to be coming becoming lower.
So there's not a lot of levers we can do our tax team is obviously looking at opportunities for tax planning strategies too soon to say if there is anything material that will come from that but right. Now we have conservatively estimated that will be a full cash federal cash taxpayer, Kevin the middle part of our five year plan with risk.
Back to interest rate cost.
Yes, we've certainly have reflected what we believe our current market conditions in the five year plan. I'll also just remind you that we would have a $900 million in hedges at a weighted average treasury cost of about one 5% 9%.
That's a significant portion of our anticipated FY 'twenty five need and a fair amount of our anticipated FY 'twenty six needs. So <unk> will continue to look for opportunities to.
To lock in some hedges.
Given the higher elevated or where the interest rates are right now it may not be as prudent course attracted to do so as it was a couple of years ago when rates were in the sub two range yes.
I want to reemphasize that the plan does reflect as Chris said, there us becoming a tax cash payer out in that timeframe. So that's all baked into the plan itself.
Understood. Thanks, guys.
Your next question comes from the line of Julien.
Julie Smith of Bank of America. Your line is open.
Thank you operator, good morning, Hey, I really appreciate the time, just maybe picking up where our Gabe left off there just on the question of taxes, if you don't mind.
About ink for income statement purposes, how do you think about effective tax rate, Jeremy and obviously the comments about going to full cash tax payer here in the next three years.
Certainly relevant from financing, but how do you think about the uptick obviously from 23 to 24 and then from there on out in terms of the effective tax rate on the income statement, obviously I get that some of that over time is going to be subsumed back into the regulated.
Cost structure.
Just curious on how you would set expectations and if there's any kind of question about recovery and timing there as well in the next few years as you see that uptick.
Yes, we'll certainly see an uptick in the effective income tax rate again, thats being influence right now certainly the last two or three years with these excess of deferred tax liabilities, our effective tax rate two years ago was in the 11% range. It ticked up closer to 15% and will they end up being in that 2000.
<unk>, 2% to 23% range here in the not too distant future again all of these costs. We believe are recoverable.
<unk>, the IRA corporate minimum tax.
Our regulatory and tax teams are working on strategies right now to begin the dialogue with those regulators too.
As you get them or where that is in terms of what the law requires and then what the recoverability might look like.
Got it right so regulatory strategy on the come here, but not overly concerned about what that does in terms of like maybe a lag headwind here in the let's call. It 25% in 2006 as you kind of get to that more normalized level. If you will.
Yes, correct, not a material impact and again all of that has been reflected in the guidance for FY 'twenty four through to FY 'twenty eight.
Sure.
Excellent very very much appreciated and then just on the O&M side I just wanted to understand as you think about that normalized I think you said three to three 5% like how do you think about what is going on in the context of line locates within that composition through the future I mean, obviously that's been elevated here you saw a little bit of a <unk>.
How do you think about that contributing to that normalized level versus just being the norm.
The new norm or is there an elevated.
Located just embedded in that three to three and a half here.
Now Julia it's part of our ongoing strategy with whether they're contractors or internal labor, we always look at what's going on in the market, where we have contractors. We look at those on an annual basis to see if they need adjustment forecasted work for them than any strategic opportunities. We may have to in source opportunities there too.
To offset some of the cost <unk> taken a longer term view. So all of those options remain on the table as they have in the past, but we continue to look at these on an annual basis. So that's where we get the comfort.
In that range that we put out there right now.
Okay fair enough, but it's not like you have some.
Meaningful further uptick in line locates or something like that that we should be aware of here.
Now again with the growth that I'll talk to that on the front end and the population and trending that we've seen out there thats all been baked into the plan out there all the library <unk> labor. The current contracts we have in place the labor rates that are out there right now we have baked all that into the plan.
In the three 5% annual increase is off of FY2023 levels of kind of starting out that elevated level already.
Yes, thanks for flagging that Thats, a good point as well alright, guys I appreciate it you guys take care.
Thank you. Thank you.
Again, if you would like to ask a question. Please press star one on your telephone Keypad. Your next question comes from the line of Ryan Levine of Citi. Your line is open.
Good morning, everybody.
I wanted to follow up on that the O&M and getting a little more granular in terms of the outlook. It's more on an annual basis, but can you speak to maybe the seasonality attributes of the O&M outlook should we look to 2000 and its most recent fiscal year as indicative of seasonality trends on a go forward basis.
Is there anything else to call out.
Yes, there is.
On the O&M there is some element of seasonality, it's difficult to predict because we are managing our O&M over the entire fiscal year.
For example, like last fiscal year, where we had at the start of the year. We had crews in place kind of doing somewhat in line inspection work at ATT at the end of fiscal 'twenty two.
Made good business sense to go ahead to continue that work into fiscal 'twenty three although it had been planned originally to be in the back end of fiscal 'twenty three rather than to demobilize, the crews and re mobilize six or nine months later to meet our budget. We decided to go ahead and just continue forward. So that was an operating decision that we made that we thought was in the best interest of the.
Company, and our customers and so we make those decisions on a day in and day out basis. So it's it's difficult to predict.
Certainly those larger expenses windows when they could occur within a quarter, but certainly we are managing through a full fiscal year result, same thing on line locates Kevin talked about seeing some moderation right now that we're seeing that.
Six months from now and we can be in a different environment and line locating may pick up for any number of reasons and.
Yes, again trying to manage that on a full fiscal year basis, but quarter by quarter, we're not as focused on.
To get this work done in a quarter unless there's a specific time requirement, but again, we are well ahead of our compliance deadlines, which gives us the opportunity to manage for the full fiscal year basis.
Yeah, Ryan the other thing I'd say, Chris is spot on with that as we do given the economic growth that we've seen across our service territory. There are times when jurisdictions I want to pull forward projects, whether they're water sewer related or those fiber things going on fiber projects out there that will have to move and adjust to as well based upon their timeline.
It may not be seasonably low.
Ratable, but it may be in a quarter it may show up.
So again, we have to get the work done when we need to get the work done and work with our communities to make sure. We're we're in concert with their projects as well.
Great. Thanks for the answer there and maybe just one other in terms of within Texas Railroad Commission is there any discussion around consolidating jurisdictions or regulatory.
Contracts as U S.
As you can negotiate outcomes on a go forward basis.
Yes, we are aware of some filings that are out there is kind of looking at that opportunity. We're looking at those right now and saying if that would make potential makes sense for us.
We're aware of what others are trying to do at this point in time.
Thank you and good day.
There are no further questions at this time I will now turn the call over to Dan midyear for some closing remarks.
We appreciate your interest in Atmos energy and thank you again for joining US. This morning, a recording of this call is available for replay on our website through December 31 have a great day.
This concludes today's conference call you.
You may disconnect.
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