Chesapeake Utilities Corporation (CPK) Q1 2017 Earnings Report, Transcript and Summary

Good morning. My name is Alice and I will be your conference operator today. At this time, I would like to welcome everyone to the first 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. [Operator Instructions] Thank you. Ms. Beth Cooper, you may begin your conference.

Good morning, everyone. I’d like to welcome you to Chesapeake Utilities first quarter 2017 earnings conference call. We are thankful today to be hosting the call live from Wesley College in Dover, Delaware. We have several of our officers as well as our employees that graduated from this college in attendance, and we typically recruit from this college and have new employees joining the organization all the time. We’re especially thankful to Dr. Gibson, Provost and Vice President of Academic Affairs for enabling us to conduct today’s call here at Wesley College, as well as members of the faculty and students that are in attendance. So good morning everybody. Turning to Slide 2, you all are accustomed to our normal disclosure regarding forward-looking statements. We actually refer you to our Form-Q where we describe the reasons for why the forward-looking information may actually differ from our actual results. I am now going to turn the call over to Mike McMasters, our President and CEO, and he is going to make some introductory opening remarks.

Thanks, Beth. I guess, first, I am going to talk just very briefly about the first quarter. The margin growth in the first quarter was coming from both regulated and unregulated operations of $6.8 million, a very strong performance in that regard. Additional margin of $2.3 million came from Eight Flags, or Combined Heat and Power plant down in Florida, $2.2 million came from Peninsula Energy Services Company, our natural gas marketing operations. $1.6 million came from our natural gas transmission and distribution customer growth. Our Florida reliability infrastructure program also generated $680,000. So overall again a very strong quarter in margin. We also had higher operating expenses, depreciation and taxes due to growth primarily; cost increases in our regulated and unregulated operations; multiple system expansions and growth in our unregulated energy business: Eight Flags, Aspire and PESCO; due diligence costs associated with an investment that we’re reviewing that we decided to not pursue; higher appreciation and taxes associated with capital spending for Florida GRIP, Eastern Shore, Aspire and Eight Flags. There are some other factors that are impacting our earnings for this year. The third warmest weather on Delmarva Peninsula during the last 50 years negatively impacted us by $0.12 when compared to normal weather. Shutdown of Xeron our wholesale marketing company in Houston costs $0.02. Common stock issuance in September of 2016 to finance recent capital expenditures for $0.07 and higher interest from increased debt and other expenses cost $0.02 more. Overall, again a very strong quarter, we’re committed to the long term sustainable growth and you’re seeing that in terms of margin growth and we’ll talk about some of the operating costs in a moment. I’ll turn it back to Beth.

Turning to Slide 4, what you will see – the factors that Mike described resulted in our earnings per share being down for the quarter by $0.16 per share. For all that Mike talked about is strong gross margin growth of $6.8 million, net operating expenses that increased by 8.5 for many of the reasons that Mike talked about, so overall EPS for the quarter was $1.17 compared to $1.33 last year. Turning to Slide 5, what we've tried to do is lay out some of those -- the impact of some of those non-recurring unusual items. And so when you begin looking at 2017, the first thing you add back is the variance in terms of the weather quarter over quarter and that represented $0.04 per share. Xeron that Mike talked about was clamped down in the quarter, we made a decision that we were going to exit that business. As a result of making that decision, we recorded expenses that translated into $0.02 per share. So on an adjusted EPS basis, we were basically sitting on $1.23. Pretty much the same as last year when you look at it also on adjusted basis. The factors that we adjusted for 2016 on the slide include: first the fact that we have been providing OPT 90 service last year on an interim basis before the physical facilities could actually been constructed. So factoring that in, the construction of those facilities, they are now in place in 2017 but putting the two on an apples to apples comparison, we would deduct that $0.08 per share and then also this year we continue to have further decline in our retail propane margin per gallon that represented $0.02. So last year was $0.02 higher but we did start to see last year, if you recall the beginning of the decline in those margins. So once again flat year over year, quarter over quarter on a year to date basis. The other two things to point out is that there's nothing that’s showing on the slide related to the revenue requirement for the system reliability project that we're in the process of completing this month, and then there is nothing at this point that's been factored in as it relates to Eastern Shore Natural Gas rate case. Digging into the segments, but first, looking at our regulated energy segment, talk a little bit about the margin growth. So margin growth wasn’t basically 50% in each of the two segments but it was pretty close. When you take a look at the regulated segments, our gross margin was up by $3.1 million. There are a lot of factors, a lot of things happening within our business, those included that our natural gas distribution businesses continue to have organic growth, that represented right around $800,000, an equal amount was also as a result of the service expansions that we've put into place the last couple of years. Above and beyond that, our Florida GRIP program which has been in place for several years added $680,000 of additional margin for the quarter. Our Delaware division rate case that was finalized of new rates that were placed into service in January of this year added incremental just under $550,000 of margins and then lastly we were able to provide natural gas services to Eight Flags plant that contributed additional regulated margin of just under $500,000. So those were the key gross margin increases for the quarter, very significant overall but again we talked about -- we did have higher operating expenses. So turning to Slide 7, you'll see where those expenses were largely incurred. The first being as a result of the growth that we've experienced on the pipeline side. We had increased outside services maintenance facilities, those type of costs related to Easter Shore that represented about $1.2 million, higher staffing costs associated with being able to serve growth that were about $800,000 and then some various other costs. The total of those representing $2.1 million of the $3.5 million that the segment had in terms of increased operating expenses. You recall I mentioned on the previous slides, two things that are underway that have not been factored in when you think about the quarter. On the distribution side, both in Florida and Delmarva we also had increased costs to support our growth and then lastly about $200,000 just in other operating expense. On the unregulated side, I mentioned that our margin pretty much was about -- little more than $3 million both in the regulated and unregulated segments. Here you will see the gross margin of $3.7 million with the key drivers being are natural gas marketing operations, PESCO adding about 2.2 million in margin. As a result of that key contract that they had executed as well as additional customers that have been added that they're delivering both to the bar for them serve those customers as well as the utility that they deliver a natural gas to. In addition, Eight Flags added $1.8 million. Recall Mike talked about in total the plant generated $2.3 million of gross margin; 500 coming from utility side as we're providing services to the plants. And then the plant is generating, that’s seen, that’s being sold to industrial costumer, that generated $1.8 million. Aspire Energy, our natural gas infrastructure company located in Ohio added about $0.5 million and then the other and also the pressure on retail margins that I talked about earlier resulted in as a client in gross margin of $100 million. O&M expenses there increased by $3 million and we’ll turn to the next slide, Slide 9, you will see there were several very large factories that contributed to that increase. First about a $0.5 million was related to the shutdown of Xeron. Eight Flags does not in operation last year, this year $800,000 were expenses associated with the operation of Eight Flags -- Eight Flags is not in operation last year; this year they are. So the 800,000 corresponding to the $1.8 million of margin that I talked about on previous page. We also had higher staffing costs to support growth in PESCO and our propane distribution operations as we continue to expand some of our initiatives there and then lastly some outside services, facilities costs related to Integrity management and other programs that we’re implementing in those entities. So overall a $3 million increase. Earlier this week our Board of Directors considered our dividend recommendation and ultimately approved a dividend increase that represented $0.08 per share, that's a 6.6% dividend growth for the company and the key point about this is that it demonstrates our commitment to ensuring that we have long term dividend growth that’s supported by our earnings growth. That’s been underlined to our decisions that we’ve had at the company and the financial discipline that we've executed and this decision supports that and continue to support that philosophy. If you look at our balance sheet, we've been doing a lot over the last year and continue to do a lot to ensure that we have the capacity to support the growth that Mike is going to talk about that’s on the horizon for us. So as you sit and look at us from a pro forma standpoint at the end of April we completed the equity issuance last year, Mike talked about the dilution in the results of the shares that were issued. The other thing that we did in April of this year was we completed our long term debt placement for $70 million. So we're sitting with both capitalization just over $800 million, our equity and total capitalization is about 57%. So we've got the capacity to support the growth that we're undertaking. We've all initiated and have in place some additional debt capacity that’s needed to support our future growth. And with that, I am going to turn over to Mike, he is going to talk about our strategies for growth.

Thanks, Beth. I guess when you look at the slide, you can now see five different points of focus that we have. First, promoting growth and development of our team. Obviously our team is critically important to our growth. This includes strategic thinking and creative energy. If you think about our strategy plan, we work on a plan, you shut it down, you start initiating that plan, invariably something's going to change. So the creative thinking part was about reacting to that change in a manner that's constructive and then creative energy just raised the stakes of our employees again, how they approach the project. Expanding our energy delivery services both organically and new graphic markets last longer expertise and certainly natural natural gas transmission and distribution customers. So we're looking both what, where we currently serve, and what opportunities do we have there but also to adjacent territories, how can we expand our footprint through this organic growth mechanism? Next bullet, expand our footprint into new growth markets through strategic initiatives. So if you look at a couple years ago we were looking for opportunities, that we were looking to Ohio actually. We were able to identify a pipeline gathering at that time and figure out how to make that project work for us, and that’s an example of getting out beyond the current footprint or even current territory. Fourth bullet, develop new and unregulated energy services and products that complement our existing businesses and growth strategy. We think about Eight Flags -- Eight Flags is a Combined Heat and Power plant, this is our first power plant that we’ve ever constructed in the company wherever they operator the company. And what was happening there is the customer, the host company, if you will, came to us and expressed a desire to get off of the grid if you will, we have the electric system there. And so, who is in Florida -- look for ways to solve what they believe was their concerns and identified it was really steam and so by doing a combined heat and power plants, we’re able to the solve the customer's concern, save the money and also generate earns for us. And so that's just an example of of the new products and services, or OPT-90 I think as mentioned a moment ago, was also a good example. We remain focused and determined to grow our company with unwavering commitment to service, safety, the environment, and financial discipline fostering our success throughout our 70 year history. Capital expenditures -- the key thing for us, as a primarily utility of 80% to 90% of our investments on utilities – what it does is it effectively requires – so for regulators requires that we invest capital effectively to grow the company. So when you're looking at the Slide 13, and that net cumulative expenditures of acquisitions, $910 million, you can see the magnitude of changes occurred as likely as 2012 and 2017 we’re looking at $241 billion, those are very big numbers. Over to capital expenditures to average capitalization, you can see the target range if you will is basically the amount that we need to grow at let’s say a typical utility rate. And you can see the level of capital expenditures that we're getting every year, the numbers are in the 20s and 30s, which simply means we should get higher growth. Attaining the build for the future, you can see $141 million, we're breaking it down each of the businesses. You see 50% of that is going to be in natural gas transmission at Eastern Shore, 33%, until our public utilities natural gas operations so to a large degree there's going to be the interstate pipeline and then also the Florida natural gas operations, so more of the natural gas is lot a big contributor – propane distribution. This Performance Quadrant is pretty forward for life in the US. It’s really a key indicator if you will. So what our growth rate will be and so you can see we have I guess across there, if you look at vertical axis weighted average ROE, and you can see the median running slightly below 10%. If you look at the capital expenditures/total capitalization, how much capital we deploy as a percentage of our current size. The median is somewhere around 13.5% and you can see where Chesapeake is right around 12%, slightly lower 12%, on the ROE. At the same on the capital expenditures of over 25. So what that means is we can deploy a lot of capital and we can earn returns on that capital higher than our peers, then you would expect our growth rate to be higher than our peers. We see your averages for this to take out some of the bumpiness. Current growth initiatives. In 2017 right now we've got a filing because FERC, so you get the authority to construct a pipeline on the Delmarva Peninsula, it’s a pipeline business, it's almost $100 million to significantly increase the capacity of our system, 61,000 or wanted 60s gate [ph] for a specific, but if you are a residential customer, that being the equivalent of 60,000 residential customers. We also have a project the Northwest Florida expansion project, that project is soon to be serving the Pensacola area. This is a new project, we're connecting with for gas transmission in the Western Panhandle. So that project, again 31 miles very very great opportunity for us. Continued investment in the Florida Gas Reliability Infrastructure System, and the completion of the Eastern Shore natural gas system reliability project. We're constantly looking at service reliability and periodically you need to do something to improve that. And in the Eastern Shore case, you may remember the polar vortex a few years ago with the extreme weather that we saw -- we saw the need to increase our capacity. The acreage – ability to serve difficult situation. Ocean City, Maryland – we have a bay crossing, we’ve just completed on natural gas in the Ocean City, Maryland, it’s a pretty accomplishment and we’re working on to continuing conversion of Sandpiper customers. The new ocean pipe – and also, the limited filing to be completed – well, technical terms here. Basically what we have is a way of life assessment Florida and we're also improving the life quality of that and we're putting together -- we put together a filing to make it in Florida to get approval to recover those costs or timely basis. Expansion of PESCO, natural gas marketing operation in three primary markets, also PESCO has assumed the asset manager role for Delmarva natural gas operations. This is a lot of us facing natural gas marketing and helping with the scheduling of gas et cetera. Turning to Slide 17, when you look at gross margin for the period, this is basically we're isolating key PP large projects and so we're getting a feel for what this growth on these key projects are. So you will see 2016 we've got about 31.3 million of order being generated by four different areas: natural gas transmission, Florida GRIP, Eight Flags CHP, and Delaware Division Rate Case. If you look in 17, you'll see that that $31.3 million, the same things plus new things that we're doing, generates $39.5 million and then in 18, climbing to 54.42% million, and in 19, 16 million – 19, sometimes you get or but the numbers might be a little bit lower than what we end up with as we keep working on all these projects. Slide 18, this is the Eastern Shore Expansion project we just mentioned, 23 miles of living in Pennsylvania, Maryland and Delaware; 17 miles of new mainline extension, so that’s pretty significant project, actually, it’s the largest project, single project we've ever had sensed the initial construction over pipeline. So it is substantial. Expected to be of service the second quarter of 2018, right now we've got filing with the Federal Energy Regulatory Commission and we're waiting for them to approve the project. It could be, maybe the spring is always already hopefully we can get this thing. You have pipeline capacity, you can see all the way back in 1988, because their increase and you could see what’s happening in 2018 once that project is concrete. For that project, you'll see this project really starts just about the western most point in the Florida. Again running down to Pensacola, 33 mile pipeline, we're looking at capital investment for close to $36 million and $5.1 million is the estimate for margin on the first full year of operation. So again we've ordered to pay, we're going to be initiating that construction here. Regulatory updates, this is – always something going on with the regulatory side, we're heavily regulated. Natural gas distribution is regulated by the states, interstate pipeline is regulated by the federal energy regulatory commission. So you go through here at the start with the FERC, the federal stuff. White Oak Expansion placed into service in March of 2017. We got approval for that last year, now constructed that. System reliability project largely complete, that project is, I am going to say, within weeks of being complete. The 2017 system expansion project is that Oak project we just discussed, so we're looking to get approval in August of 2017 which is not too far away. And the new rates to become effective August 2017, but it will be subject to refund. Now that's a pretty big rate case, that picks up the costs associated with the system expansion project and several other things. Delaware rate case settlement, the increase of base rates effective January 1 of 2017. You will also have approximately $1.5 million of the $2.25 million rate increase recognized in 2016. So we've got things put on a Delaware as well. Maryland, we had a little regulatory issue there with $136,000 we’ve gotten, they've got to reverse their decision there or -- so we're pleased with that. And in Florida, as we mentioned they were working on a I guess, ESTAR which is so much as the GRIP, and they've withdrawn that file, and maybe another file, restructuring some of that and so we're pleased with that. Anyway I think that’s all for the regulatory side. Shareholder return, Slide 22, you look at though on the left side, it shows our ranking I guess OICD companies for the present review – more of 31 to 17 and you can see their percentile performance over one year starting 9%, we look at 3 year -- over longer term three year at 91%, 5-year 90%, 95% and 86%. So what that simply means is that means that we have outperformed 90, 89, 95, 86% of the companies on the NYSE. And last, shareholder returns for period ending March 31, it’s got an interesting dynamic. We’ve had about a 20% return – shareholder returns in the last several years and you can see how that has changed, I say, when you look at the peer groups at Lincoln and improves our performance significantly. Appear the median has changed. Moving on to Slide 23. I guess with that, we’ll open it up to question.

[Operator Instructions] You have a question from Insoo Kim of RBC Capital Markets.

Just starting with the Pensacola project announcement, around what time period that decision by the Florida PSC and then maybe a follow up to that, now that you're in negotiation with other third parties for potential further expansion into their territories like, could you kind of describe at what stage are you guys are with those parties and could that maybe be a 2018 event as well?

I am trying to – make sure I heard your question properly. I think on the approval process, I think we're fully approved. There may be a couple little things out there but we’ve got pipe on order, which typically would mean we’ve gotten all of the approvals that we need. There might be a permit here or there but that’s been – we’ve been working on that project for, I want to say, a year and a half, maybe two years. So we're good to go there on that project in terms of getting started and bring into completion. I think, I am trying to think you were asking – I am thinking about how much -- a load we have to support for the project; is that –

I think it was more regarding the comment that you guys are in negotiations with other third parties for potential further expansion out there, at the current project base you have on task and whether that could be a 2018 event as well?

There is some potential that we will have additional customers on the system in 2018 and beyond, but we've already focused on. There are several opportunities that we're talking to right now. Yes, we know it's a solid investment with what we’ve got and so anything we do will enhance that. But this is most of the project.

And maybe sticking with Florida MD, the electric distribution system proposal – the ESTAR proposal they've got, would you run more to your limited filing -- Would – are you able to give kind of the magnitude of how much less the ask would be versus the original amount of $59.8 million?

I think it's probably premature to say what the expectation is. I think what we did was we restructured the filing and included – pretty much the same words, the way we're getting recovery is changing.

And then given the extreme mild weather, you guys recorded this year -- I know last year was also mild but it was even milder, how much leverage do you guys have on the O&M side to mitigate some of that impact?

Yes, that's a $0.04 a share, and now back to normal, that’s a pretty big number and on the O&M side in a single year it is very tough to do that. But we are looking at the things that we can do to bring our numbers up. There may be some things we’re looking around to see if we can do some revenue enhancements in addition to the cost contentment to improve 2017. We look at 2018 and we know we’re in a good position with those big projects that we have coming on-board, 2017 is a bit challenged and again we’re pretty focused on what we have to do there and try to make the 2017 as strong as we can get it.

Your next question comes from the line of Spencer Joyce of Hilliard Lyons.

Congrats on the Florida announcements, we always like to see you guys not knock out those big projects. Mike, kind of want to ask you from a high level; I know a year or two ago we saw you guys kind of wind down BravePoint and then seeing a similar actions with Xeron here this quarter. I'm wondering if there's been any kind of internal -- kind of broad strategic review of some of the legacy businesses or are each of these just kind of one-offs that eventually kind of presented themselves? Just kind of moving forward, I guess, is it possible that we see some other items like this or should we just kind of take these as kind of one-offs as they come?

Spencer, we have a strategic planning process every year, and so that kind of creates the forum to talk about these kinds of things. And this particular case, similar to the BravePoint case where non-performance was beating our expectations, then they required us to take action. This BravePoint had a little bit unique because it was a technology company as opposed to an energy company. But so this Xeron situation purely that performance concern that we had and our future view of what those earnings were going to be. So at some point in time, I believe it’s every year there is the opportunity to discuss that and the board is very engaged in the performance of each of these individual companies or whatever, and we’re certainly aware of that. And so we don’t want to have sustained losses in any of our businesses, we’ll just – what we can do to face it, if we can’t face it, then we’ll have to do something else. That’s where we go with Xeron.

Beth, maybe on, sticking with Xeron here for a second. On the profitability side, as we look out over kind of the balance of this year, remind us what Xeron contributed kind of Q2, 3, 4, in 2016 just from either margin or an EPS type standpoint?

If you look at Xeron, I can’t get the more detailed numbers – I am sorry, I am going to talk off the top of my head but my recollection is that Xeron contribution from an operating income standpoint was a little less than a negative $1 million down from last year. So when you look at the year, it’s about $1 million negative, but it decline operating income.

Great, so not a huge swing either way.

No.

I guess, Beth, sticking with you here for a second as well. Obviously a big jump-up in O&M which is totally understandable given what you all are doing on the growth side. But I just want to ask kind of everything listed slot 7 and then kind of everything listed slot 7, is there anything that we can parse out that is arguably either nonrecurring or extraordinary in some sense, I mean maybe you had to pay over time where you expect to have kind of regular labor next year? I mean is there any kind of nuance just given kind of the magnitude, and I just want to -- I mean it seems like there could be a piece or two that we should at least maybe adjust for kind of modeling Q1 2018 but any thoughts there?

Sure, and actually Spencer, that's a great question, and we actually had, I would say, opposite have happened when you look at last year, that really had a negative impact this year. And what I mean by that is, for example, with Aspire Energy, we completed that acquisition in 2015, we had a final valuation that was done on that business as to where we could record the purchase price and allocate the assets and as a result of that allocation we actually had a rise in depreciation expense and Aspire in our 2016 numbers in the first quarter about $300,000, that this year you would argue that depreciation is up by $300,000 but last year was understated because of that valuation. Similarly to that, when you look at our report, we guide on the health care spend, we've got about $700,000 higher of health care spend this year than what we had last year. We came out of last year at the end of 2015 looked at our claims, looked at our rate, we do a lot of different analyses there and had an opportunity to write-in on healthcare reserve that unfortunately did not repeat itself this year. That really was something -- we don't have a lot of information out there, Spencer, because from one year, from one quarter to the next it’s really a matter of what our health claims experiences were self-insured. But there is a huge volatility there that I would point out. And then lastly as we go through and look at our operation, I would say we have between $500,000 to $750,000 of non-recurring expenses, this in terms of things that we’re seeing within the business unit. So those I would say are the three key things when you look at it year over year that I would keep in kind.

So if we think about those three items, obviously the depreciation from 2016, were kind of a clear or a clean comparison here in 2017. The final item -- the $500,000 to $750,000 of items within the business units. Is that kind of a special but you know could be a recurring theme into next year or are some of those a little less likely to repeat next year?

Well, I mean those costs can include anything if we have like special initiatives that we're – in terms of projects that we're doing so much from our projects standpoint, we just get a little bit challenging in terms of trying to say they won’t, to be incurred again. I think we're trying to -- some of those could be regulatory related expenses given the fact and we've had multiple rate cases and we’re really going to have been through a lot of our jurisdictions. Those types of things might not repeat itself. So I think there's about $500,000 that we could stay we don't see recurring. The other thing I would add, Spencer, is that we also had – as Mike mentioned in the very beginning on Slide 3, we had transaction costs and we talked internally about, are those costs going to -- are you going to have those year over year over year we don't know, it really depends on the opportunities and which opportunities come to fruition. But for now we haven't included those as an add back, or an adjustment just because we are pursuing growth we've had success in that area and despite the fact that we had some costs that we didn't end up moving forward with the transaction. We don't want to say those aren't going to be incurred in the future. So Mike, I don't know if there is anything that you would want to add.

Yes, you might want to also think us, Spencer, about these are sort of rate case, rates are going to affect subject to refund in August. And so the things that – you’re going to get some sort of revenue pickup. We've disclosed revenue requirement on the reliability project, we haven’t talked about the additional revenue requirements but that’s another factor that would be fairly large in the second half of the year from August through December, and clearly in 2018.

Your next question comes from the line of Ken Argeee [ph] of Ladenburg Thalmann.

Hi, the weather impact was pretty significant in the quarter. Just asking, any opportunities [indiscernible] weather normalization –

Yes, we’ve had weather normalization in Maryland currently exists. Delaware has – looked, not looked upon that favourably or disaster discounts on the returns or more than we wanted to accept. And in Florida we’ve not -- it's a little bit more difficult in Florida just with warmer weather, generally speaking. That’s something again I think Florida – but anyway so, yes, we do look at that – made conversations, this last filing, particularly in Delaware, have elected not to move forward with that, in the past we made it differently, given two years in a row warm weather, and there’s something to look for.

[Operator Instructions] Our next question comes from the line of Michael Gaugler of Janney Montgomery.

Just wondering where do you see the sizable opportunities like the Florida natural gas in terms of larger of that investment; is it in Delmarva? Does it stay in Florida or somewhere else? And then as a follow up, what's the pipeline look like for those larger type projects?

I think it's fair to say that we've been getting growth -- strong growth in both Delmarva and Florida. Florida does have a significantly larger state than Delaware. So you would think that over time as long as we’re getting big pipeline projects, Delmarva, that's a fantastic place to be. But you would think that over time Florida will have significant opportunities down there and we’re actually committing on those now, and I think so we do like the state of Florida. You would also think that high up in Pennsylvania they also present opportunities for us. In terms of the pipeline, we do that strategic planning process every year and typically what we see is, we’ve got pretty clear view over the next three years but the fourth and fifth year get a little bit more catchy just because it’s so early in the game. But every year it seems like we go back over the next year and we fill in that fourth year, and we keep doing that. So I think we’re very confident in the future, we're pretty confident in the next three years and then we get a little bit weak on that back. We don’t disclose where that pipeline is at this – Michael. So sorry, I don’t have that information for you. End of Q&A

There are no further questions. Mr. McMasters you may continue.

Well, thanks everyone. Just want to show you our commitment to the communities we serve, our customers and our investors are steadfast. And you look at our brand values, we do not rest on our laurels, we're results oriented, we're relentless in our efforts to drive value. We're going to stay on that path. We appreciate your interest in our company and thank you and have a great weekend.

This concludes today’s conference call. You may now disconnect.