TXNM Energy, Inc. (TXNM) Q4 2017 Earnings Report, Transcript and Summary

Good morning and welcome to The PNM Resources Reports Fourth Quarter and Year End Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Jimmie Blotter, Director of Investor Relations. Please go ahead.

Thank you, Andrew. And thank you everyone for joining us this morning for the PNM Resources fourth quarter 2017 earnings conference call. Please note that the presentation for this conference call and other supporting documents are available on our Web site at pnmresources.com. Joining me today are PNM Resources, Chairman, President and CEO, Pat Vincent-Collawn; and Chuck Eldred, our Executive Vice President and Chief Financial Officer as well as several other members of our Executive Management team. Before I turn the call over to Pat, I need to remind you that some of the information provided this morning should be considered forward-looking statements pursuant to the Private Securities Litigation Reform Act of 1995. We caution you that all of the forward-looking statements are based upon current expectations and estimates and that PNM Resources assumes no obligation to update this information. For a detailed discussion of factors affecting PNM Resources results, please refer to our current and future Annual Report on Form 10-K, quarterly reports on Form 10-Q as well as reports on Form 8-K filed with the SEC. With that, I will turn the call over to Pat.

Thank you, Jimmie and good morning everyone. Thank you for joining us today on this beautiful sunny International Polar Bear Day. Let's begin on Slide 4 with the financial results and some key highlights of the year. Our GAAP earnings per share in the fourth quarter of 2017 reflect a loss of $0.68, while the full year reflects earnings of $1. The enactment of tax reform in December resulted in a $0.72 per share non-recurring expense. Ongoing earnings per share were $0.24 for the fourth quarter and $1.94 for the full year. Last week, we revised our guidance expectations for 2018 and 2019 primarily to reflect the outcome of the PNM general rate review and the impact of tax reform. Chuck will get into the details of these results in future expectations in a few minutes. Which brings me to our key highlights for 2017. PNM's100th year in business was an eventful year. We worked through a settlement in our PNM general rate review, which I'll talk more about on the next slide. At the same time the transformation of PNM's generation portfolio begin to take shape. We filed our Integrated Resource Plan in July showing that we plan to seek approval to retire the remaining San Juan unit after 2022 and exit our participation in the Four Corners power plant in 2031 resulting in a coal-free generation portfolio. To replace this energy, we will seek approval for cleaner resources. Together these actions would lead to a dramatic reduction in carbon emission which we've outlined in more detail in a climate change report that we published on our Web site. We have already achieved a significant reduction in carbon emissions 40% over 2012 levels as a result of the December retirement of units 2 and 3 at San Juan. The replacement power in that plant included the transfer of Palo Verde Unit 3, a carbon free resource into our rate base to serve customers beginning in 2018. Let's turn to Slide 5 to walk through the regulatory calendar for 2018. A few of the items on this slide do not have any updates since our last call. I'm only going to speak to the items with updates. Of course, the first item in 2018 was the resolution of our general rate review at PNM. The final order in the case graded a $57.9 million increase before flowing through the impact of tax reform. As the proceeding worked its way into 2018, we were able to take the opportunity to pass through to customers the benefits of tax reform with the new rates beginning this month. This made PNM customers among the first in the country to benefit from tax reform through their retail rates. In addition, it allowed us to implement the first steps of our transition away from coal while holding the customer bill impact at just over 1%. Moving next on to PNM's Integrated Resource Plan. The hearing examiner issued an order limiting the scope of the case to determine if the IRP was developed in conformity with the IRP rule and whether it provides all of the information required by the rule. We agree that this is the appropriate scope for this finding and are looking forward -- this filing and are looking forward to demonstrating our compliance. Hearings are scheduled to begin in June. Switching to TNMP, we filed a TCOS filing at the end of January for the recovery of transmission investments made through the end of 2017. The final request of $600,000 revenue increase based on a $3.2 million increase to rate base. This will be our only TCOS filing in 2018 ahead of our general rate review filings. Once the general rate review has been resolved, we will resume our usual pattern of making TCOS filings twice a year as allowed under the rule that the PUCT confirmed earlier this month. Speaking of our general rate revenue in Texas, we are still on track to file in May of 2018 with the 2017 calendar test year period. We expect rates to become effective during January of 2019. With that, I'll turn it over to Chuck for a detailed look at the numbers.

Thank you, Pat, and good morning, everyone and thank you for joining us today. Let's start with a discussion of tax reform on Slide 7 before getting into the quarterly results, guidance and updates to our growth targets. Since tax reform came out, we've been working through the impacts to our books. As a result deferred tax assets and liabilities on the balance sheet were revalued with a new 21% income tax rate from the previous 35% rate. Changes to the balances that were associated with items collected through regulated rates were reclassified to regulatory liabilities and were returned to customers over time. However, when the change was associated with an item that is not recovered through retail rates, the change was recorded to the income statement. This resulted in a total non-cash non-recurring charge of $57.5 million in 2017. Looking forward, the impact of the lower tax rate is consistent with our message during the past year. The regulated utilities will pass the benefit through to customers beginning in 2018 and corporate and other will have a $0.02 hit to EPS because of the lower tax benefit on the losses in that segment. We continue to believe that we do not have any material exposure under the interest expense allocation methodology for the holding company that is used across the industry and supported by EI. Although no firm guidance has been released by the IRS at this point related to how to apply the 30% EBITDA limitation. With the elimination of bonus depreciation for utility plant placed into service beginning October 2017, booking tax depreciation will start to line-up more closely. As a result, the ADIT liability balances will be reduced and this will cause an increase in rate base compared to what it would have been otherwise. As expected tax reform will reduce cash flows and credit metrics. The impacts are manageable and we have not increased the planned issuance of equity under the Hathway market equity issuance program that we discussed previously. From a rating agency perspective, our financial metrics have been at the high-end of the ranges for our ratings, which helps to counterbalance these effects. As a result, we have been in contact with the rating agencies about tax reform and they are aware of the impacts we expect. Now let's move to Slide 8, to cover the results for both the quarter and the year. As Pat indicated ongoing earnings per share were $0.24 for the fourth quarter of 2017 compared to $0.34 in the fourth quarter of 2016. PNM was down $0.07 primarily due to an expected $0.05 increase in outage cost including planned outages at Four Corners [indiscernible] SERs and at the [acting] [ph] generation station. Similar to the first three quarters, earnings were reduced by higher depreciation and property taxes and reduced low. O&M overall was flat as any increases were offset by our continued efforts to control costs. We also have the additional contributions of PNM Resources Foundation to fund economic development programs that we discussed in our third quarter call. The decrease in earnings was partially offset by higher transmission revenues as we continue to see opportunities arise in this area of our business with renewable developers looking to send their power to California. FEDC and market prices for Palo Verde, Unit 3 were higher than 2016. As a reminder fourth quarter was the final quarter of Palo Verde 3 as a merchant resource that power now has been dedicated to serve the retail jurisdiction. TNMP was down $0.01 as increases from TCOS rate relief, load and colder temperatures were offset by expected increases to O&M and higher depreciation and property tax expenses on capital investment. Corporate and other was down $0.02 as we continue to see increased interest expense from higher debt balances and lower net interest income as a Westmorland loan agreement is paid down. As a reminder, we fixed the interest rate on $150 million of debt last year through interest rate swaps and we will continue to look for opportunities to fix more of our variable rate debt at the holding company. For the full year, we had a strong earnings of $1.94, the changes for the year-over-year results were primarily at PNM. Rate relief from 2016 rate review increased earnings by $0.27. We also had realized gains in PNM's nuclear decommissioning trust. This was due to stronger than expected market performance as we executed our plans to rebalance the portfolio. Our guidance for 2018 and 2019 incorporates a much more conservative asset allocation with returns coming primarily from interest income. We ended 2017 with a $0.02 increase to earnings for these items compared to 2016 as opposed to the $0.5 decrease that was expected. Turn to Slide 9 for the loan details. Results for the full year were in line with our forecast and we have not changed our expectations for 2018 and 2019. Economic growth in Texas continues to outpace the rest of the country. We also see strong demand in our service territories and particularly with interconnection request in our West Texas region. We continue to see our end user expanding their operations there. Economic conditions in Albuquerque continue to remain relatively stable although employment growth in the Albuquerque metro area tracking slightly lower than the national average. The addition of Facebook will provide stability to our load results as the remainder of the local economy slowly recovers. As I've discussed in prior quarters, the customer growth that we see at PNM is being offset primarily by our successful energy efficiency programs as well as the adoption of private solar systems. Now let's turn to Slide 10 for earnings guidance. We revised our 2018 and 2019 guidance last week primarily to incorporate the final order in PNM's rate review which reflects the impacts of tax reform. 2018 guidance revised to the range of a $1.82 to $1.92 as a reduction to the rate review settlement amount and the impact of tax reform lowered the total rate increase resulting in a total customer bill impact of a little more than 1%. As a result of the final order including the immediate pass through of tax reform, the [indiscernible] no longer has as much of a reduction to earnings in 2018. We have also planned some costs in 2018 for O&M that supports reliability such as doing preventive tree trimming and additional maintenance on our substations. We have narrowed 2019 by bringing up the bottom-end of the range to $2.04 from $2. The resolution of tax reform and the PNM rate review gives us greater confidence in our 2019 estimates. Guidance also reflects the realignment of our cost to match the $4.4 million revenue reduction in the final order at PNM. Updates to the detailed guidance drivers that we provided in December are also in the appendix. They reflect these changes in the calculation of new tax rates on all the drivers. Please reach out to Jimmie and Lisa, if you have any questions on those items after today's call. Before we view the next two slides, I want to point out that we are rolling forward with our rate base and earnings growth targets to begin measuring from a 2018 base period. Let's turn to Slide 11 for a look at capital and the rate base growth. Our capital forecast is consistent with the plan provided in December although we have separated out amounts related to transmission expansion coming from new developers within the chart to give greater clarity around the amounts that are being invested in this demand driven growth area. Additionally rate base growth has been updated to reflect the impacts of tax reform particularly reduction in ADIT liability due the elimination of bonus depreciation that I discussed earlier. Rate base growth at PNM through 2021 has increased to a range of 4.5% to 6% from a 2018 base. Depending on the outcome of items under appeal with New Mexico's Supreme Court and approval of smart meters in New Mexico, TNMP's rate base growth remains high through 2021 at 10.7%, when we roll forward to the 2018 base period bringing consolidated rate base growth to a range of 6% to 7% for 2018 through 2021. The rate base growth percentages do not include 2022. We have many moving pieces we look out that far. Driven by replacement power, transmission opportunities, grid modernization efforts at PNM and further system investments at TNMP. As we gain more clarity around these various projects we'll begin to include the revised numbers in our rate based growth targets. Now let's turn to Slide 12 for a look at how this impacts earnings potential. We previously communicated a growth target of 6% through 2021 from a base period of 2016. As we roll forward, the base period to our revised 2018 guidance midpoint, the potential earnings power the business continues to support 6% earnings growth through 2021. PNM retail growth in 2021 is largely driven by the increase in rate base calculated by tax reform that I discussed earlier. The combined impact this for PNM retail and FERC is about $150 million and for TNMP it's about $30 million. I want to point out that the potential earnings power reflects the Four Corners investments at a debt only return has allowed in the final order of our rate case. We believe that our transition away from coal will continue to be challenged by the intervening parties to our rate proceedings. We are confident that our investments are prudent and justified and therefore should be recoverable. Moving to FERC transmission, this provides good growth over the target period. As I discussed earlier, the need to expand our system to support the development of third-party renewable developers who are transmitting power to California as well as New Mexico while maintaining system reliability. TNMP also continues to be a strong growth opportunity as we invest to support customer expansions and system maintenance. We expect some dilution in 2020 and 2021 related to the previously announced equity issuance under at the market program. We've updated our assumptions here to reflect a more current stock price. As I mentioned before tax reform has an impact to our cash flows. But our credit metrics remain strong and we did not project any additional equity needs through the ATM program. As you can see from earnings power, our original plan to deliver a solid performance into 2019 is achievable. We are expecting to earn our allowed return at PNM and subsequently at TNMP, once our rate case has been finalized. We also expect to achieve our 6% earnings growth through 2021. Now I'll turn the call back over to Pat.

[Technical Difficulty] generation creates opportunities to take advantage of New Mexico's abundant sunshine and wind. According to the National Renewable Energy Laboratory. New Mexico has the second highest technical potential in the continental United States for utility solar photovoltaics and is 6th for technical potential for land based wind. Our focus will be to develop a new generation portfolio that moves to increased renewable resources. As we have stated in our climate change report the company will seek to reduce annual CO2 emissions by 2040 to 87% below 2012 levels. To maintain system reliability, we'll need to invest in storage or backup power resources and also need to expand our transmission system. We are confident that we'll be able to execute on our plan and prioritize capital investment to achieve the earnings potential of the business. Thanks again for joining us today. Operator let's open it up for questions.

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Nicholas Campanella of Bank of America Merrill Lynch. Please go ahead.

Hey, good morning. Happy National Polar Bear Day.

Thank you, Nick.

There was a small shift in your earnings power supply in 2021. Can you just discuss the drivers there? I think it was just rate based growth maybe offset by a little bit more dilution but can you discuss that quick?

Yes. I mean you're right on. Actually if you look at the PNM retail, it's about $0.04 increase. So keep in mind we adjusted for the debt return on Four Corners that reduced rate base. But then we had a slight increase in rate base as a result of the changes to the tax reform. And so that impact -- that was about $0.04. And then to your other point, we modify the change in the stock price to be more reflective at current stock values which create a little more dilution on the -- at the market program with the issuance of $50 million to $100 million. Keep in mind that it will be variable based on what we assume to be stock values going forward and we'll adjust at appropriate times. But those are the main drivers that I think would probably reflect some of the questions that you had.

Got it. Thanks. And then just from a long-term perspective as you scale this renewable JV that you recently announced in your 8-K last week, do you have goals to make that a certain percentage of earnings or is it more of an opportunistic play at this point?

To be fair to say a more opportunistic, we did this to provide a opportunity to serve large customers and also serve public entities within New Mexico that have an interest in renewables, while maintaining a focus on our balance sheet on the regulated business. So we wouldn't stretch ourself to the situation of using that as a growth vehicle as much as a opportunity to serve customers or interested parties that want renewables and then optimize the 50% relationship with AEP to allow for that investment capital.

Got it. Thanks so much. See you in Boston.

Okay.

Thank you. Stay warm.

The next question comes from Ali Agha of SunTrust. Please go ahead.

Thank you. Good morning.

Hi, Ali.

Good morning. First question, Chuck can you remind us -- the fact that the 2017 results ended up coming in above even the high-end of your guidance range. What was the main driver for that?

Well, really all the adjustments on tax reform and the final rate case outcome would really be the net to that go against the increase that reflected 2018 earnings. And we can go over the details. Jimmie and Lisa can walk you through that. But it's just really the adjustments on the net effect to the final rate order in the tax reform adjustment.

We are talking 2017, right?

I'm sorry. I was thinking that…

But I'm just talking about this year; you came in at a $1.94. Your high end was $1.90 just curious what drove you above your guidance range?

Yes. Sorry about that.

We have moved into 2018. All right already.

I'm already heavy. No. I think as I pointed out in my comments the market performance that we saw was very strong in the fourth quarter on our NDT. And that provided some additional earnings as we rebalance that portfolio as we previously discussed in our prior calls for NDT assets.

I see.

And that really what's -- that's really what drove the earnings to be over the guidance level.

Got it. And then, separately in New Mexico and I'm just wondering your customer growth continues to be steady as you said. Any sense that the usage patterns or whatever energy efficiency impacts of stabilizing was still in the negative category in your guidance range for load is flat to down still. But anything you can point to say maybe we have bottomed out on the load growth trend there.

Well, it still is a very slow recovering economy. We've seen a slight increase in the residential growth from 2017 to 2018. We still see some slight negative decrease in the commercial side. And then as I mentioned Facebook will be using some of the system load until they work their way into 100% renewables and that helps provide some stability in our load profile for the next couple of years.

Okay. And last question as you pointed out off the 2018 base, you're looking at a 6% EPS CAGR through 2021. But if we do it at 2019, which is when you get the full impact of the rate case, since it still being phased in through 2018, the growth rate kind of slows down closer to around 4% or so. And I'm just wondering as you look at 2021 and I know you got 2022 CapEx as well. Is that a more realistic sort of longer term growth rate to think about once we get the full case impact in 2019 or could there be further upside as you're thinking about growth in that long-term outlook?

Well, I mentioned too that that 2022 certainly when you get to that capital allocation that we have in the budget you can begin to think about replacement power as I mentioned grid modernization possibly a PNM, some additional investments in TNMP. So there are some opportunities we're seeing some early development considerations on transmission. So there's a number of moving pieces that provide some opportunities for growth and looking at 2022. So we're reasonably opportunistic towards the direction we're going in. But just to be fair that we're not at a point where we can settle on those numbers, but we're confident in the 6% projection is a target from 2018 to 20 21

Thank you.

Thanks Ali.

The next question comes from Greg Gordon of Evercore ISI. Please go ahead.

Thanks. Hey, how you guys doing?

Good.

Fine Greg.

Do you guys raised the dividend obviously significantly here coming into the quarter, I think it was 9%. There's nothing in your written comments here about the dividend growth policy or the dividend growth. But target payout ratio -- clearly your earnings growth profile looks good and your payout ratio is well below the industry average. So can you articulate for us what you're thinking in terms of -- as we get out to 2021, is there's sort of a target payout ratio, is there an aspiration for total return profile earnings plus dividends? What's the best way for us to think about that?

Yes, Greg. I mean it -- we didn't comment because we are currently looking at the 50% to 60% pay out as a guidance for our dividend growth staying in that range because of the earnings projections still provides above average growth. But as we think about if the business begins to see a lower growth profile then we'll begin to look at a higher payout ratio could be the 55% to 65% level in order to sustain a total return expectation and make up for whatever growth is not anticipated in that business. So it's too early at this point to make any determination that we've had very good discussions with our Board and some of their long-term views towards the business and the dividend policy as we think about it in a longer term view.

Greg, things we like is that we still have that upside in the payout ratio because we do know our payout ratio is low for a regulated utility. So we have that as a lever for our total return proposition still to raise that.

Okay. So it's 50% to 60% now?

Yes.

If your growth rate were to slow you could reallocate capital to paying higher dividends.

Absolutely.

Correct.

Absolutely.

Perfect. Thank you.

Thanks Greg.

[Operator Instructions] The next question comes from Lasan Johong of Auvila Research Consulting. Please go ahead.

Thank you. Just to follow up on Greg's question first. Would it be fair to say that the payout ratio is in inverse proportion to growth opportunity? In other words, if you have capital to put it to growth you do that before you increase your dividend.

Yes. I mean it's -- we really see that the growth opportunity is potential for allocating capital to support growth, our dividend is aligned for that expectation.

Perfect. Four Corners, I understand that the debt return such et cetera but prudency has not been determined yet if I'm not mistaken, correct?

It is prudent. We don't see prudency being an issue for us. I say that because if you well know, Lasan in the rate order -- the final rate order there was no prudency see issue. It was certainly a discussion, but as you saw the commission in its final order removed any prudency on Four Corners and that's our position and that continues to. We feel very comfortable that we have the ability to recover those costs and we continue to work on our plan to exit coal but in a very financially prudent and transitional way to get there, but that yet to come.

Okay. Excellent. Eventual customer growth it kind of still stagnating despite the economy kind of picking up, is that due to the residential number, or was that due to the commercial number, is it a combination of both? Which one is kind of dragging that number along?

Yes. It's really a combination of both. I wish I could say that we had a clear confidence in solid growth, but we did see a very slight negative growth that we see some improvement as I mentioned earlier a little bit on the residential side from customer growth. And then, we're starting to see some improvement on the commercial side in 2019 as the economy begins to recover. And as I mentioned Facebook's load to the system as they come online will be using some of the resources that we allocate to support their load and that's helping to stabilize the overall load projection for the next couple of years.

Great. On the 50 megawatt solar that was increased by 10 megawatt looks like first of all. And second of all, would PNM consider doing that project outside of the utility to take advantage of 100% investment deduction?

Yes. Actually that one was always been 50 I think in there. And no that is utility solar because it goes for the renewable portfolio standard and we recover that through a rider. So that needs to get done through the utility.

I see. I see. Okay. Interesting. Last question, the merger between Sempra and Oncor seems to be going forward. Do you see an opportunities there for PNM to do something from the closure of that merger?

Well, Sempra hasn't signaled that they'd like to get rid of any little rural parts of Oncor, if they would like to get rid of some little rural parts, we would love to take a look at them but we don't see anything right now. So…

Okay. Thank you very much.

Thanks.

The next question comes from Paul Fremont of Mizuho Securities USA. Please go ahead.

Hi. Thank you very much. I guess I'm calculating roughly $300 million to $350 million pickup in rate base based on sort of your new growth rate, is that sort of a fair range relative to what you guys had provided during the Analyst Day?

Are you looking at the total growth CAGR?

Well, I'm just looking at PNM, I'm sorry.

Did you adjust for the Four Corners at that level?

I'm just looking at the rate base growth level that and comparing sort of the CAGRs and the numbers that I come up with.

Yes. I think we just need to go through your calculations, but the earnings power shows you the growth from 2018 at $2.3 billion to $2.5 billion dollars for PNM retail and then you can see the other components on the earnings potential side to come up with a number. So for that kind of level of discussion, Paul we just need to get on the phone and walk through your numbers.

Okay. But it's reasonable to use the $2.6 billion as a starting point, right for 2018 and that should have the Four Corners adjustments in that or not?

Yes. For what you're using that's about right. Yes, that's right. Yes, $2.6 billion, yes.

And then, I guess are you committed to the early retirement of San Juan and Four Corners without some form of assurance on a stay in cost recovery or is that something that you potentially would need to reconsider if you were not able to sort of achieve stay in cost recovery?

Well, Paul all of the retirements at both San Juan and Four Corners are subject to regulatory approval. We have to file our abandonment certificate. And in the analysis that we did in the integrated resource plan that showed it was economically feasible to shut down both San Juan and Four Corners and replace it with other resources. That assumes full cost recovery. So we are -- that's the way the numbers go and we're going to make sure that we get cost recovery on those.

Okay. And then, can you sort of describe what happened, the legislature with the securitization proposal in the term that just ended. And are you planning on pursuing securitization sort of in future legislative sessions?

I have to tell you Paul, we made what I thought was just unprecedented progress during that 30 day session. 30-day sessions go by like this. And so we really worked and built trust with the environmental advocates. the legislative leaders and the Farmington community. So being given the complexity of the legislation coupled with the fact that it was only a 30-day session and their major task -- actually the only task by law they have to do is pass the budget. It wasn't surprising that that legislation ended up being tabled and it could have been brought up again. They just playing ran out of steam and time. So because of the work that we did during the session and leading up to it a lot of the stakeholders have already reached out to us to talk to us about what we do going forward to make New Mexico a leader in this transition to clean energy. So we will be able to have something for the next session based on all that great work that was done.

Great. So you would plan on pursuing it -- pursuing that again in the future?

Yes.

Okay.

Okay. The next question comes from Insoo Kim of RBC Capital Markets. Please go ahead.

Hi, guys. Actually my questions have been asked and answered. Thank you very much.

Okay. Thank you, Insoo.

Thank you.

Happy International Polar Bear Day.

You too.

The next question comes from Paul Ridzon of KeyBanc. Please go ahead.

Good morning.

Good morning, Paul.

Hi, Paul.

You have a big step up in commercial and industrial sales in Texas in 2019, it adds up to 78%, what'd driving that?

We've had considerable in the west area of Texas. A lot of the oil and gas businesses continue to produce and we have a very strong demand for additional transmission lines in that area that are increasing the need for supporting reliability and growth.

Permian Basin, Paul is just growing great guns. I mean that place is on fire and that's where we are in West Texas. So it's a struggle to work fast enough to fill demand there for transmission and distribution, but we're keeping up with it.

Okay. Thank you. And looking at your earnings potential slides, Analyst Day versus this where is that incremental rate base from deferred taxes and tax reforms on those?

Well, primarily in the PNM retail area. But again, we would have to really sit down and go through your numbers to kind of walk you through what the previous information was and what it is currently but PNM retail would be a driver on that for the most part.

Okay. Thank you.

Okay.

Thanks Paul.

The next question comes from Chris Ellinghaus of Williams Capital. Please go ahead.

Hey, guys how are you?

Good Chris. How are you?

Good Chris.

Good. Do you know when Penguin Day is?

No. When is it?

Let me know they're cuter and they scare me a less.

I know. And Lisa Goodman is a huge Penguin fan so we'll send an email on that day.

January 25.

January 25th. Okay. We missed it, sorry.

I don't know Chuck if you said this, but maybe I missed it. Did you say what the donation to the foundation number was?

$1 million.

Pre-tax?

Yes.

Okay. You're talking about the dividend growth expectations and you're sort of implying you want to maintain sort of above average dividend growth. Clearly 6% to 7% earnings growth is above average, but is that 6% to 7% which you would infer is above average dividend growth as well?

I would say based on what I see with companies down there, it would still be above average.

Okay. And lastly, you talked about the economy sort of still being slow -- slower than the U.S. in Albuquerque, but do you know enough about business development efforts. I presume you do that you have some expectations that Albuquerque may be able to catch up with the U.S. kind of rate at some point?

I think so Chris. I mean the new mayor is really focusing on sort of developing some home grown businesses and some entrepreneurial stuff. And there have been some good announcements that the Governor has made. So I think we will catch up it's just going to take a little bit longer for the economy here given how dominated we are by the military and I think that the President's new budget with its emphasis on military spending also is going to help in the spending on the [lapse] [ph] which are a huge part of our economy here.

Okay, great. Thanks the color. I appreciate it.

Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Pat Vincent-Collawn for any closing remarks.

Well, thank you, again, everyone for joining us this morning. We hope to see you all when we're on the road in March. But if not, we look forward to talking with you again at the end of April when we announce our first quarter results. Have a great day everyone.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.