Oge Energy Corp. Q4 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to the Q4 2021 OGE Energy Corp. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Jason Bailey, Director of Investor Relations. Please go ahead.

Thank you, Dennis, and good morning, everyone. And welcome to OGE Energy Corp.’s fourth quarter 2021 earnings call. With me today, I have Sean Trauschke, our Chairman, President and CEO; and Bryan Buckler, our CFO. In terms of the call today, we will first hear from Sean, followed by an explanation from Bryan of financial results, and finally, as always, we will answer your questions. I’d like to remind you that this conference is being webcast and you may follow along on our website at oge.com. In addition, the conference call and accompanying slides will be archived following the call on that same website. Before we begin the presentation, I’d like to direct your attention to the Safe Harbor statement regarding forward-looking statements. This is an SEC requirement for financial statements and simply states that we cannot guarantee forward-looking financial results, but this is our best estimate to date. I’ll now turn the call over to Sean for his opening remarks. Sean?

Thank you, Jason. Before we begin, I do want to acknowledge the sad and disturbing news out of Ukraine this morning and share our thoughts for a peaceful resolution. With that in mind, thank you for joining us today. It’s certainly great to be with you. Before I get into the specifics of 2021, I do want to mention a few items at the outset. Some of you may recall that over the last five years I’ve shared with you how we were changing our operational paradigm, with an intentional focus on reliability, resiliency, and affordability to really drive load and customer growth, and we push to change how we engage our customers, concentrate economic development efforts to grow our communities, operate the business with excellence, and create the sustainable business model we have today. This effort was very intentional and this focus led to the tremendous load growth we’re experiencing today and we’re not done. I’m incredibly proud of every single employee for their exceptional performance and how they’ve adapted to create a brighter future for OGE Energy. We are well positioned for future growth and I have confidence in our team, our business, and our company. With that, let’s take a look at 2021 results. This morning, we reported earnings of $1.80 per share for the utility and a holding company loss of $0.04 per share. Additionally, we included $1.92 per share from natural gas midstream, which includes a gain associated with the Enable merger transaction. In total, consolidated earnings totaled $3.68 for the year, and Bryan will provide more detail shortly. Turning to operations, every employee in this company took the opportunities in front of them to deliver outstanding results and they did so across all metrics. We are celebrating two key operational performance indicators this year. 2021 was our second-best safety year on record, making each of the last six years the safest in company history. Additionally, Escalent recognized OG&E as a Business Customer Champion for 2022, thanks to all of our efforts on delivering a great customer experience. This is confirmation of our intentional focus. We continue to make investments in the grid to benefit our customers and communities in both Arkansas and Oklahoma. The impact of our grid investments is real. Last May, a windstorm swept through Fort Smith and our data shows 20,000 fewer customers experienced a sustained outage, and the power restoration process was reduced by 50%. Thanks to those grid modernization efforts in that state. The Oklahoma Grid Enhancement program kicked off in 2020, and we expect to see similar results in the future. In 2021, we invested approximately $232 million in the grid, including work on 104 distribution circuits, 64 distribution substations, four technology platforms, and three communication systems; these investments improve service to more than 175,000 customers or nearly 20% of our customer base. For 2022, we plan to continue these investments, improving reliability and resiliency for an additional 145,000 customers. Combined, the two program investments ensure a better customer experience by reducing and eliminating outages. We continue to expand our solar offerings; underway, we have another 5-megawatt solar farm supporting our Customer Subscription programs. We will provide you an update on our utility-scale solar RFP that we’ll issue later this year. Our regulatory calendar continues to be steady. In December, we obtained the securitization order in Oklahoma to cover nearly all the fuel and purchase power costs associated with Winter Storm Uri. We are awaiting the Oklahoma Supreme Court to certify those bonds. In Arkansas, we reached a settlement in our fourth formula rate evaluation report, which we filed in October. We expect an order soon, with rates going into effect in April. At the same time, we also filed for a five-year extension of the formula rate plan. We filed a rate review in Oklahoma at the end of the year. First and foremost, this rate review is about recovering the capital investment we’ve made for our customers in 2019, 2020, and 2021. Additional elements of the review include the continuation of the Oklahoma Grid Enhancement program and established recovery mechanism. Also included in the reviews are options for the Oklahoma Corporation Commission to consider a performance-based rate plan, like those used by the natural gas utilities in Oklahoma. The review also includes updating the depreciation schedule to reflect the useful life of assets in service, and these new rates would likely become effective in July. The customer impact of the review is an increase of approximately 9% to the current rates for residential customers. We are sensitive to the financial impact on our customers and are committed to continue our long track record of affordable rates and program offerings to help customers manage both their monthly bills and energy usage. Turning to economic development activities, we ended 2021 on target, with 2.4% load growth and customer growth of 1.4% outpacing our customer growth projection. Strong growth like this means the combination of our highly affordable rates and ability to serve as commercial expansion in our markets drives results for OG&E and the communities we serve. We expect continued load growth in the 3.5% to 5% range for 2022. This tremendous growth reflects our economic and business development efforts designed to support existing business expansion with new growth in healthcare, defense contracting, and other industries in our service area. We ended 2021 with 201 megawatts of new connections, landing right on target with the estimate I shared with you last quarter. Oklahoma and Arkansas’ key economic indicators are strong, with unemployment rates lower than the national average, reflecting a competitive business environment. Additionally, Oklahoma City was recently listed as the 12th Best Place for Startups in the U.S., thanks to an affordable cost of living and business-friendly environment. As we look to the future, we intend to grow our utility OG&E earnings by 5% to 7% over our forecast period, underpinned by the reliability and resiliency investments as a result of our growing service area. Additionally, we expect to grow the dividend, targeting a dividend payout ratio of 65% to 70% based on utility earnings. Over the next several years, we expect our earnings per share growth to exceed the dividend growth rate to help achieve this target. Regarding our Energy Transfer units, our plans are consistent with exiting the majority of the position by the end of the calendar year, and we will update you quarterly on the progress we’ve made. Before I hand the call over to Bryan, I want to recap a few important points. First, the economies in our service area are strong, driving economic development that leads to growth and capital investment that fuels our business. Second is our regulatory agenda; we’re delivering on our customer commitments and look forward to constructive regulatory outcomes and rate reviews and finalizing securitization in both jurisdictions. Third, our balance sheet is among the strongest in the industry, and we’re on a path to becoming a pure-play utility. Our plans include grid and generation infrastructure that add value for customers and support our growing service area. Finally, it’s about our people. Our employees told us through a survey last fall that they feel a higher sense of purpose in working for OG&E, and our customer experience is the result of our employees' dedication to what we believe is our noble purpose to energize life. So, with that, thank you, and I will now turn the call over to Bryan.

All right. Thank you, Sean, and good morning, everyone. Let’s start on slide eight and discuss 2021. Fourth quarter results were as expected, and the details can be found in the appendix of the slides. For the full year 2021, the utility achieved net income of $360 million or $1.80 per share, compared to $339 million or $1.70 per share in 2020. The $1.80 of earnings per share at OG&E is right at our original guidance midpoint of $1.81, representing an increase of 5.8% in earnings per share at the utility. After Winter Storm Uri, we committed to get back within our original guidance range, and we met that commitment with strong execution across our operations, including cost mitigation efforts. As Sean mentioned, we could not be more proud of the employees of OG&E and their dedication to excellent customer service in 2021 while meeting our financial objectives for our shareholders. On a year-over-year basis, the increase in net income was primarily driven by strong weather-normal load growth of 2.4%, increased revenues from the recovery of our capital investments and customer programs, as well as strong cost mitigation efforts. These favorable results were partially offset by the impacts of Winter Storm Uri, including the fourth quarter regulatory settlement we reached in Oklahoma and higher depreciation on our growing asset base. Regarding our natural gas midstream operations, we report a net income of $385 million or $1.92 per share, compared to a net loss of $515 million or $2.58 per share in 2020. The impact of the closing of the Enable merger with Energy Transfer in December 2021 was a net gain to the company of $265 million after-tax. As a reminder, 2020’s results were impacted by a loss due to an Enable investment impairment charge of $590 million after-tax. Holding company and other operations resulted in a loss of $8 million or $0.04 per share in 2021, compared to a gain of $2 million or $0.01 per share in 2020, primarily due to higher short-term debt levels and lower income tax benefit. We expect holding company and other operations to have a minor impact on consolidated results in 2022 of a $0.01 to $0.02 loss. Putting it all together, on a consolidated basis, we had an excellent 2021, with net income of $737 million or $3.68 per share. Turning to our 2021 load results on slide nine. Fourth quarter load came in as expected, and for the full year load was 2.4% above 2020 levels. The residential class maintained its 2020 weather-normal volumes of approximately 4% above 2019 levels, sustained by outstanding customer growth. We also began to see real strength in the commercial and industrial classes. Overall, our 2021 load surpassed the pre-pandemic levels of 2019 by 1.5%, and we are bullish on the future of our local economies. As we look at 2022, as shown on slide 10, we expect total load growth between 3.5% to 5% above our 2021 levels. Our commercial segment is forecasted to experience double-digit increases. A large portion of that growth will come from data mining companies attracted to our service territory by our low customer rates. We also expect to see strength in several other commercial segments. Further, we expect volumes in the residential class to be supported by customer migration into Oklahoma and Arkansas. Lastly, we are also forecasting solid growth in the public authority and oilfield sectors as volumes return to pre-pandemic levels. Turning to slide 11, you can see how these load trends play into a strong EPS growth equation for 2022. We expect utility earnings per share to be in the range of $1.87 per share to $1.97 per share. The midpoint of $1.92 represents 6% growth from the midpoint of our 2021 guidance of $1.81 and nearly 7% growth based on actuals. In addition to outstanding load projections, we expect new customer rates to come into effect in Arkansas and Oklahoma during the year. Other drivers in our 2023 financial plan include an expectation of normal weather and higher depreciation in line with our capital investment plan. With respect to O&M, our non-radar O&M in 2022 is forecasted to be approximately $25 million below 2019 levels. Our company’s cost discipline has been an important factor in maintaining some of the lowest customer rates in the nation. Let’s turn to slide 12, where we are introducing our five-year capital plan through 2026. This targeted capital investment plan will address the robust investment needs in Oklahoma and Arkansas to maintain and improve reliability and resiliency while adding capacity for the load and customer growth expected in the coming years. Over 75% of our plan is customer-focused, concentrating on distribution and transmission investments. This new five-year capital plan of $4.75 billion excludes potential additional investments associated with our 2021 IRP. We will update you on investment needs related to our Integrated Resource Plan as we receive the results of our RFPs. From an earnings perspective, as Sean and I have looked at the five-year financial forecast, we see a business with strong fundamentals, a compelling customer-focused capital investment plan, and a service territory with outstanding load growth prospects. These factors give us confidence that OG&E can annually grow earnings per share in the 5% to 7% range over our forecast period based on the midpoint of our 2021 guidance of $1.81. Turning to our financing plan on slide 13. Our balance sheet strength remains a key advantage and supports our long-term growth plan and dividend without the need to issue equity in our five-year planning horizon. Our cash flows will benefit from the sale of the Energy Transfer units as we exit a majority of our ownership interest by the end of 2022. Regarding the fuel costs we incurred during Winter Storm Uri, in December, we received a financing order from the Oklahoma Corporation Commission, and the 30-day appeal period ended in January. We await certification from the Oklahoma Supreme Court and anticipate the securitization transaction to close in the second or third quarter of 2022, which will solidify our credit metrics to more normal levels. We project FFO to debt of 18% to 20% for 2022 through 2024. Earlier this month, Moody’s revised the ratings outlook on both the holding company and the utility to stable from negative, reflecting their expectation that OG&E will recover the costs incurred during Winter Storm Uri in Oklahoma through the issuance of securitization bonds. Separately, we expect to issue long-term debt at OG&E of approximately $300 million in the second half of 2022 to support our capital investment plan. Before I turn the call back over to Sean, let me summarize where we stand. Our employees have built a strong foundation for this company and they delivered outstanding results in 2021. Looking forward, we have put together an operational and financial plan for 2022 through 2026 that will continue to deliver great value to our customers and drive economic development in our communities. We expect to deliver strong earnings per share growth of 6% in 2022. Lastly, our 5% to 7% long-term earnings per share growth rate, coupled with a stable and growing dividend, offers our investors an attractive total return proposition. That concludes our prepared remarks, and we will now open the line for your questions.

And your first question comes from Shar Pourreza with Guggenheim Partners. Please go ahead.

Hi. Good morning, Sean and team. It’s actually Constantine here for Shar. Congrats on a great quarter.

Hey. Good morning, Constantine.

Good morning, Constantine.

It looks like a healthy CapEx rolled forward. I am thinking you’re now hitting that $950 million run rate of CapEx per year. Can you talk a little bit about the drivers for the step-up? There seems to be more generation and more transmission spending, and you’re not including upsides from the IRP at this juncture. So just any color that you can provide on a step-up and maybe the regulatory mechanisms for recovery there?

Yeah. Well, I think the two parts there. The driver there is really around the growth we’re seeing in our service territory. And as I mentioned in my comments, we’ve been intentional. We built this the right way, trying to attract businesses and customers to our service territory, and we’re seeing the results of that. So those investments are really targeted to that growing service territory. You’re exactly right. There’s nothing in there for the results coming out of our integrated resource planning process. As we get feedback from those, we will certainly layer those in. As far as the recovery of that, we have a case underway right now, and we’ve proposed two alternatives, one with this grid enhancement mechanism in Oklahoma to kind of recover that. Alternatively, we’ve also proposed a performance-based rate-making program. Both of those would serve as the recovery mechanism for a lot of these investments. As you know, in Arkansas, we have a formula rate, and we’re in the process of seeking a five-year extension for Arkansas. Does that help, Constantine?

Yeah, that’s very helpful. And the second question is on just longer-term assumptions for growth, as you’re presenting today. What level of load growth and inflation do you embed over the five years and maybe a little bit more broadly kind of what takes you to the top of the 5% to 7% growth that you’re projecting today, any assumptions on rate case outcomes or the performance base rates, as you mentioned?

Yeah. Well, I think I’ll turn this over to Bryan here to get into the details. But I think very succinctly, what’s going to drive this is load growth, and that’s what’s going to be the driver of this. So the more load we have, you should expect higher earnings coming out of our company. But Bryan, you want to fill in the details?

Sure. I believe that incremental load growth is the key factor that can lead us to the higher end of the 5% to 7% earnings per share growth expectation. As we developed our five-year plan, we considered various scenarios regarding load growth, capital investment plans, and different regulatory outcomes. We are confident that we can achieve that 5% to 7% growth over the five-year period under these scenarios. For load growth, we are seeing strong performance in 2022. However, as we create our core financial plan for 2023 and beyond, we anticipate a return to a more historical 1% load growth level. There is certainly some potential for upside there. We are proud of the capital investment plan we have set for our customers over the next five years, which balances necessary infrastructure investments for the community with affordability. We believe that this capital investment plan, coupled with the load growth we are experiencing, will keep us among the most affordable options in the nation while ensuring that rate increases remain modest.

Okay. I think that’s a great message. And maybe just one part that you didn’t touch on is the performance base rates. Are there any timing embedded in the plan for an outcome there, or is it too soon?

Yeah. Our financial plan does not assume the PBR in Oklahoma occurs. We obviously believe the grid recovery mechanisms are working very well in Oklahoma. So we fall for an extension of that. But if the PBR is really another option for the commission to consider.

Okay. Thank you and congrats on closing out a good year.

Okay. Thanks, Constantine. Take care.

Thank you.

Your next question is from the line of Julien Dumoulin-Smith with Bank of America. Please go ahead.

Hey. This is actually Cody Clark on for Julien. Thanks for taking my questions.

Good morning, Cody.

Hey. Good morning.

So just piggybacking off of Constantine's question, I’m wondering how you’re thinking about investments driven specifically from the 2021 RFP and how that plays with the 5% to 7% growth rate, if we can kind of hone in on the solar investments there. I mean, depending on the ownership percentage, 150 megawatts of solar annually that you previously outlined can be fairly significant. So wondering since you’ve talked a lot about load growth, but how do these investments drive the range?

Yes, that is not part of the investment forecast for the five years Bryan mentioned. We will proceed with the RFP process while acknowledging current inflationary pressures. We have some flexibility regarding the timing of these investments. We will allocate those investment dollars once we evaluate the bids we receive. Additionally, I expect that we will own all of these assets rather than entering into contractual arrangements, which is an important distinction.

Okay. Understood. That’s very helpful.

Yeah.

And then curious if it’s a significant ownership, if it were to come to fruition; you just stated there is an expectation to own all of the assets. I’m just wondering, it’s not embedded in the plan now. Would you need to issue equity as you layer these investments in or are you thinking about using incremental leverage to kind of satisfy the funding needs?

Yeah. I think we’ll cross that bridge when we get there, and we’ll certainly lay all that out for you. I don’t think it’s good to speculate right now about what that would look like. But, again, we’ve got a lot of flexibility around our plan, and I’m really proud of what we’ve done here, because we built it the right way over the years, focused on affordability to drive this load growth. This wasn’t by chance; this was intentional. And so, we’re going to be cognizant of continuing to do everything we can to have load growth, too.

Okay. And just the follow up to that leverage question, just wondering if you could share any updated thoughts on how the rating agencies are thinking about the downgrade threshold as you’re exiting Energy Transfer?

Okay. Yeah. Bryan, you want to take that one?

Yeah. Absolutely. Hey, Cody. It’s Bryan. With respect to Moody’s, they recently issued the report on the company, the holding company and the utility. As I mentioned in my remarks, they put us back on stable outlook. In that report, they’ve taken our downgrade threshold from 20% down to 18%. Many of our peers are more at that 17% or 16% downgrade threshold. One thing I will say is that part of the reason they lowered the downgrade threshold is because we’re exiting the midstream business. So we’re lowering the risk profile of the company. As we fully exit the midstream business and as we continue to execute well on our operational plans, I think you’ll see Moody’s revisit that downgrade threshold. All in all, we feel like we’re in great shape with all the agencies over the next several years. And as you know, an 18% FFO to debt is one of the strongest in the industry and gives us a lot of flexibility on deploying our investment plan as needed for our customers.

Okay. Got it. I’ll pass it off there. Thanks again for the time.

Thanks, Cody.

Have a good day.

Your next question is from the line of Insoo Kim with Goldman Sachs. Please go ahead.

Thank you for taking my question. My first one relates to the balance sheet inquiry. As you divest from the midstream segment and consider your position among your regulated utility peers with a similar balance sheet, what is the typical threshold set by Moody’s? If that scenario plays out positively, potentially lowering the threshold compared to your peers, what additional leverage capacity do you think that would afford your company?

Yeah. Bryan?

Sure. Hey, Insoo. Again, when we’ve looked at our peers, with the BAA rating at Moody’s and BBB+ at S&P, S&P downgrade threshold is actually a good bit lower than Moody’s, so that for one gives you a lot more flexibility. As I mentioned before, we’ve looked at many of our peers in our sector, and they appear to have more of a 16% or 17% downgrade threshold at Moody’s. So that certainly, as you described, would indicate you’re able to deploy more capital with leverage without impacting your credit rating. So does that answer your question, what you were looking for?

Yeah. No, it does. And I guess the other question, I think, currently you guys are at the BBB+, BAA1. Is that something you want to maintain? I think a stable utility. So the other peers out there are okay to be in the mid-BBB range. Is that something that you’re okay with holding as well, or do you want to maintain your current ratings?

Yeah. We intend to maintain our current ratings.

That makes a lot of sense. Regarding load growth, particularly the commercial load you are projecting for 2022, we have discussed the trends over the last few quarters, and this number is indeed quite impressive. While the forecast beyond 2022 appears to be somewhat conservative, it suggests there could definitely be potential for growth if the current trends continue. Can you provide any insights into your expectations for 2022 and which industries or momentum might exist that could support growth beyond 2022, even if not at the same level, but still exceeding your conservative estimates?

I’m going to let Bryan get into the details. But Insoo, this is a great conversation. We’re discussing momentum and growth, which is really exciting. So, Bryan, could you provide some details on that?

Absolutely. I’m now in my fifth quarter at the company, and I’ve had a lot of discussions with Sean and Jason. We talked about the strong momentum the company had developed right before the pandemic. Load growth was exceeding 1% before COVID hit, and we had great momentum. Of course, 2020 brought challenges with the pandemic, but we are starting to see improvement. Oklahoma and Arkansas are very business-friendly states, and we also have some of the most affordable utility rates in the country. This has attracted great interest from both new and existing companies expanding their operations. In 2022, one of the major drivers for growth has been the variety of industries contributing to load growth. I mentioned data mining companies earlier. We’ve taken a conservative approach regarding the expected load from them, assuming a six-month ramp-up period for their operations, which is slower than what these customers anticipate. This should really kick off in earnest in the second quarter. As for whether we can see some upside going into 2023, I believe that is definitely a possibility.

Got it. And then the thought that the capital, the $950 million per year over the next few years, it’s starting to 2023 periods, that capital is assuming you’re relatively conservative load growth assumptions?

Yeah. And I wouldn’t point to the specific load I’ve been speaking to as driving our capital investment needs. It’s the overall momentum rising in Oklahoma of great customer demand, residential, industrial, oilfield, and public authority. It’s the entire economy here that we’ve been planning for years. You’re seeing not only new capital projects around capacity upgrades in our transmission system, like 69 kV lines and our substations on the distribution side. You're seeing us make investments needed to make the entire grid more resilient to protect it against extreme weather events and things of that nature. So these investments are needed; they’re critical for the safe and reliable operation of our grid over the next five years, irrespective of what you might see in 2023 load.

Okay, that's definitely the situation. And just one more question if I could. Regarding the 2022 guidance and achieving your 5% to 7% growth rate, I assume that's the utility growth excluding HoldCo and others. If that is the case, do you have any expectations on the range of either drag or benefit from the HoldCo side that we should consider from a modeling perspective?

Yeah. So, our 5% to 7% growth we mentioned that as our utility expectation of earnings per share growth. On the HoldCo, we had a $0.04 drag here in 2022. In my comments I mentioned, we expect that to go down to about a penny or $0.02 here in 2022. Really, what’s driving that, Insoo, is that our holding company debt levels go significantly down here in 2022 and 2023 as we sell our Energy Transfer units, get the proceeds from those sales, and harvest the distributions, if you will, from that investment. So we expect HoldCo to have a minimal impact on the company from an earnings perspective the next couple of years. Over time, as you deploy your annual $950 million of capital, you’re going to see HoldCo debt levels starting to move up, and you will have a bit of an interest expense drag in the out years. But we’ve modeled the utility by itself and then of course the utility plus the HoldCo and believe we can deliver in that 5% to 7% range on a consolidated basis once you exit the midstream business.

Okay. So that’s all embedded. Thank you so much.

All right. Thank you.

Your next question is from the line of Travis Miller with Morningstar. Please go ahead.

Good morning, everyone. Thank you.

Good morning, Travis.

Good morning.

Yeah. You answered all of my questions around the CapEx, but just the follow-up on what you’re talking about just then that 1% number that you’re planning for and beyond 2023. So if that were to go to a 2% or 3%, what areas of CapEx would you expect to be most affected, distribution, generation, transmission, where would you think we would see the most pieces moving around so to speak that plan?

Yeah. You’ll continue to see investments on the transmission and distribution side of the business. I mean, we’ve said for many, many years that really the wires are where we’re focused, as Bryan remarked, it’s really that customer focus, where there's benefit, and those will be the investment dollars we make to connect those new customers.

Okay. Understood. And then a couple of your peers around the Southeast and Midwest have talked about industrial demand driving a lot of renewable growth, ESG and greening of the energy use. Are you seeing that, and if so, what are the dynamics of trying to get users essentially to pay for that upgrade versus socializing across the system?

Yeah. We’re certainly having that conversation with some of our customers. I think the bar there is a little higher in our service territory because our rates are so attractive. Those industrial customers are looking for the economics there too. They’ve got a really good thing where they are now, so we’re working with them. Our solar subscription program, where customers are able to subscribe to some of that, has been very successful. We’ve gotten another one underway this year. But those discussions are ongoing. But just like we’re focused on the economics and the affordability for our customers, those industrial customers are looking at the same thing too.

Yeah.

Travis, the only thing I might add is that as being an SPP, we have access to a tremendous amount of wind generation, and when you look at RTOs in the country, SPP has probably done a better job than any as far as bringing renewable resources, and so we’re getting a pretty green electron flow as it is today.

Sure. Okay. Great. I appreciate the thought.

Thank you.

Our next question is from Brandon Lee with Mizuho. Please go ahead.

Hey. Good morning, Sean and Bryan. Congrats on the quarter. Most of my questions have been asked, but just a quick question. If you guys have good weather and you perform well during the year, are you guys looking to toggle and aim to stay within your 5% to 7% range, maybe pull forward CapEx?

Yeah. You’re forecasting 10 months ahead here, Brandon. But I think that’s something that our planning and operations are dynamic. Bryan talked about the efforts we undertook in 2021 to get in the guidance range. I think that’s the expectation that you’re adaptable and adjust things based on how the year progresses. I mean, things will surface, and we’ll adjust and adapt. We have every expectation to meet our numbers. And again, I want to be really clear; we’ve built this company and built this plan the right way and we’re focused on the long-term too. We’re not narrowly focused just on the current year either. We’re making sure that we’re going to deliver this for many years.

Great. And then just on your Energy Transfer sell-down. I think you guys mentioned that the majority of the Energy Transfer shares will be exited by the end of the year. Is that a change in strategy? Are you expecting to hold a small minority piece into 2023?

Yeah. There's no change in our strategy. We were just trying to communicate we’re going to exit this position.

Okay. Great. That’s all I had. Thanks.

All right. Thanks, Brandon.

Thank you, Brandon.

And I’m showing no further questions at this time. I would like to turn the conference back to Sean Trauschke for closing remarks.

Thank you, Dennis. As we close today’s call, I do want to leave you with a final thought. We will continue our sustainable business model of growing revenues by attracting new customers and managing expenses by utilizing technology and becoming more efficient as we focus on reliability and resiliency. This virtuous cycle helps us maintain some of the most affordable rates in the nation, which in turn attracts more customers as we’re seeing. I’m grateful for our team, for every employee who has brought us to this point, realizing the growth projections we set out five years ago. As we celebrate OG&E’s 120th birthday this week, we aren’t letting up. I look forward to sharing continued results with you in the future. So I’m excited about where we are headed and what the future has in store for the company. Thank you for your interest in OGE Energy Corp. and for being on the call today. Take care of yourselves.

This concludes today’s conference call. Thank you for joining. You may now disconnect.