The Williams Companies - Earnings Call - Q4 2024

Executive Summary

• Another record year: Q4 Adjusted EBITDA rose to $1.776B (+3.2% YoY) and FY24 Adjusted EBITDA reached $7.08B (+4.4% YoY), while GAAP results were depressed by prior-year litigation gains and unfavorable unrealized commodity derivatives.
• Guidance raised: 2025 Adjusted EBITDA range lifted to $7.45–$7.85B (midpoint $7.65B, +3% vs prior midpoint), leverage midpoint improved to 3.55x, and dividend increased 5.3% to $2.00 annualized.
• Operational momentum: Transco expansions (REA, Southside Reliability, Carolina Market Link) and Gulf Coast Storage integration underpin capacity records and continued project execution; NW Pipeline and deepwater Gulf projects add multi-year growth visibility.
• Trend vs prior quarters: Q4 Adj. EBITDA ($1.776B) was above Q3 ($1.703B) and Q2 ($1.667B); Adj. EPS ($0.47) stayed roughly flat YoY, while GAAP EPS compared unfavorably to Q4’23 due to one-offs in the base.
• Estimates context: S&P Global consensus data was unavailable during this session; comparisons to Street estimates are therefore not provided and may need follow-up when accessible (see Estimates Context section).

What Went Well and What Went Wrong

What Went Well

• Record infrastructure throughput: “Transco has experienced unprecedented demand… we set an all-time record moving 522 million dekatherms… with back-to-back all-time peak days” supporting the natural gas-focused strategy and execution.
• Project execution across footprint: Completed Transco Regional Energy Access, Southside Reliability Enhancement, Carolina Market Link; advancing NW Pipeline expansions and a 10 Bcf Gulf Coast storage expansion to serve LNG, power, and industrial demand.
• 2025 guidance raised: Management increased Adj. EBITDA midpoint by 3% to $7.65B, citing conservative Transco rate case assumptions, deepwater ramp (Whale, Shenandoah), and Haynesville projects (LEG).

What Went Wrong

• GAAP compression vs prior year: Q4 GAAP net income fell $661M YoY, reflecting absence of a $534M Energy Transfer litigation gain and a $384M unfavorable swing in unrealized commodity derivatives; tax decreased with lower pretax income.
• Segment volatility in marketing: Gas & NGL Marketing Services saw a $358M net unfavorable change in unrealized commodity derivatives in Q4, pressuring Modified EBITDA despite Adjusted EBITDA normalization.
• Lower dry gas activity: Management trimmed expectations in certain dry gas Northeast areas, and gathering volumes were generally lower, though liquids-rich areas and rate increases offset in part.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the Williams fourth quarter 2024 earnings call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star one one on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please bear in mind that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Danilo Juvane, Vice President of Investor Relations, ESG, and Investment Analysis. Please go ahead.

Danilo Juvane (VP of Investor Relations)

Thanks, Marvin, and good morning, everyone. Thank you for joining us and for your interest in the Williams Companies. Yesterday afternoon, we released our earnings press release and the presentation that our President and CEO, Alan Armstrong, and our Chief Financial Officer, John Porter, will feature this morning. Also joining us on the call today are Michael Dunn, our Chief Operating Officer, Lane Wilson, our General Counsel, and Chad Zamarin, our Executive Vice President of Corporate Strategic Development. In our presentation materials, you'll find a disclaimer related to forward-looking statements. This disclaimer is important and integral to our remarks, and you should review it. Also included in our presentation materials are non-GAAP measures that we reconcile to generally accepted accounting principles, and these reconciliation schedules appear at the back of today's presentation materials, so with that, I'll turn it over to Alan Armstrong.

Alan Armstrong (President and CEO)

Great. Well, thanks, Danilo, and thank you all for joining us today. We have a very positive story to share with you today on our fourth quarter performance, but even more so on how 2024 has really driven positive momentum for growth in 2025 and beyond. So beginning here on slide two with a look back at some highlights from 2024, I'll start by noting that this winter, Transco has experienced unprecedented demand for both natural gas and, importantly, for peak capacity on our system. In fact, last month, we set an all-time record, moving 522 million dekatherms, or about 10% more than the previous monthly record that occurred during January of 2022. And despite the milder weather for this time around, we had back-to-back-to-back all-time peak days, with each one surpassing the previous due to consistent widespread demand across the Northeast, Carolinas, and the Southeast.

And in fact, 17 of the 20 highest volume days that we've ever recorded on Transco happened just this winter. And it wasn't just due to cold weather. It was from a combination of heating, power generation loads, and LNG exports along the Transco corridor. So we are really rewriting the history book on peak days, and we remain convinced that our strategy of staying intensely focused on natural gas infrastructure is in the very early innings of paying off for our shareholders. But a good strategy also has to be married up with crisp execution, and our team continues to deliver in a big way on executing large-scale expansion projects in a very reliable manner for our customers. And these aren't the run-of-the-mill projects.

They include expanding in some of the toughest areas, like 8,800 ft of water depth on our Whale project that came in well under the original budget, or even more hostile places like New Jersey for our Regional Energy Access project, and then in December, we brought on the Southside Reliability Enhancement Project in Virginia, and for the sake of our customers and the consumers in these areas, it's a good thing that we did, as both REA and the Southside Reliability Enhancement Project are running at full contracting capacity, despite the opposition claiming they weren't necessary. The irony is that even though the opposition has been motivated by greenhouse gas emission concerns, these expansions have been key in reducing emissions in the areas by avoiding fuel switching to oil and coal.

Not only do we have a clear line of sight to a full roster of projects in execution, but we continue to commercialize vital, high-return projects across our footprint. To that point, we announced six new transmission projects and continue a steady beat of actualizing these new projects. We also further optimized our asset portfolio by consolidating our interest in the Gulf and the Deepwater Discovery System and the Wamsutter upstream joint venture, and we also divested our interest in Aux Sable last year. Moving across the slide, I'll call out our emission reduction project. We've long stated that our natural gas-focused strategy remains synonymous with sustainability, and last year, we continued efforts to drive out emissions from our system by replacing 92 compressor units, most of which were over 50 years old, and these older units were certainly not designed to limit NOx or methane emissions.

A tremendous job by our team of getting this important work done in time to be included in the latest Transco rate case, and again, very crisp execution on some very complex projects across the system. Looking at earnings growth, we reported another year of record adjusted EBITDA, which marks the 12th consecutive year that we've grown our earnings. Important to note that 2024's earnings record was achieved in a backdrop of natural gas prices that averaged about $2.20 per MMBtu, and this was nearly as low as the average price of nearly $2 that we saw during the pandemic in 2020, just to put that in context. This really does continue to underscore the resiliency of our business through a number of price cycles.

I'm very pleased with our 2024 performance and the long track record of growth, but the fundamentals ahead of us present an even more fruitful environment on a per-share growth basis in 2025 and beyond, which I'll dive into here in the next slide. Our keen focus on industry-leading returns remains a key driver of earnings growth in 2025 and beyond. I'll highlight a few notable drivers here. First, we are placing into service eight interstate transmission projects totaling 1.25 Bcf per day over the course of the year. In addition, we will also benefit from a full year's earnings contribution from recently completed projects such as Regional Energy Access, the Southside Reliability Enhancement, the Carolina Market Link, and the Uinta Basin expansion on the MountainWest transmission system.

Also of note, our guidance includes conservative earnings expectations from the Transco rate case, especially considering the large amount of capital we have invested over the last few years in things like our emission reduction project and other large maintenance projects on the Transco system. In the Deepwater, we will have four projects come into service during 2025, including the Whale expansion, which Shell began producing into here in January. And these additions will lead to a significant earnings increase from our Gulf of Mexico assets in 2025 and 2026. In our gathering and processing business, we will place two large Haynesville projects in service this year, including the Louisiana Energy Gateway project, and that'll come on in the second half of the year and also drive earnings in 2025 and 2026.

And we should see a stronger environment for gathering volumes with the current 12-month strip averaging around $4 per MMBtu versus the $2.20 that drove price-related shut-ins last year. To be clear, our guidance does not anticipate a big ramp-up in drilling activity, just a lower level of price-related curtailment that we saw last year. And as I mentioned earlier, we're continuing to invest in our business through strategic bolt-on acquisitions. In the Wamsutter, we purchased the remaining 25% interest in our upstream JV. By controlling these upstream operations and development, it will ensure that Williams can maximize the long-term value of the total asset by better leveraging our existing midstream and downstream assets, and in doing so, capture significant margin on each molecule through gathering, processing, NGL, transportation, and fractionation.

So lots of incremental value for us coming off of this asset as we focus on developing this large play and really driving the free cash flow through our midstream systems. In the DJ Basin, we acquired Rimrock, adding another gas gathering and processing system to integrate into our footprint and add value to the downstream NGL assets. Given the strong fundamentals around our strategic asset footprint, we remain positioned to continue growing our business beyond 2025. I'm pleased to announce two additional projects on the Northwest Pipeline System in addition to the three that we announced last quarter. These are a clear indication of the incremental needs for natural gas consumption in the Northwest that seems to be gaining momentum.

Within our Gulf Coast storage facilities, I'm pleased to announce that we are advancing a 10 Bcf capacity expansion that'll support industrial power generation and LNG demand for natural gas as these sectors ramp up and the usage of clean, affordable natural gas supplies, so really excited to see the support out there for expanding our storage facilities that we acquired just last year. We continue to close on agreements that support our backlog of 30 interstate transmission projects, and we are moving attractive projects such as the Dalton Lateral Expansion on Transco and the five recently announced projects on Northwest Pipeline from our backlog into execution and have continued to successfully refill the sales funnel, supporting growth beyond 2025. Important to note, this interstate transmission backlog does not include direct investment in data center projects that are currently in development.

These projects are moving at a very fast pace, and the most mature of these has gone far enough to fully support us ordering all of the major equipment and long lead items for this first project. And we will be announcing more details on this project in the near future once we have a fully binding agreement with this large creditworthy customer. This deal will contain terms similar to the high-value transmission projects that we have been executing along our system. So really excited about that project and would tell you that a lot of things to handle on the PR and government relations side before we get out in front of ourselves with an announcement on that, but we're really excited about the way that project has moved on very quickly for us.

So here on slide four, our natural gas-focused strategy has differentiated us from our peers, and it continues to drive profitable growth year after year. Not only have we delivered record EBITDA in 2024, but we have done so with the same share count and without stretching the balance sheet, as evidenced by our EPS growing at an impressive 14% compound annual growth rate over the past five years. This growth has been driven by our sharp project execution, where in the past four years, we have placed 17 large-scale projects in service with an additional 14 projects in execution today. What stands out the most here, again, distinct from many of our peers, is the quality of the returns that we are seeing from these projects.

Equally impressive is the commercial activity behind our attractive asset footprint, which continues to give us confidence in delivering on at least our long-term 5%-7% earnings growth objective without issuing equity or stretching our balance sheet. To go further, the strong natural gas fundamentals have us positioned to potentially exceed our long-term earnings growth objectives over the next five years as we gain clear line of sight to the impacts of LNG exports, coal-to-gas switching, particularly out west, as we're seeing that rapidly change, and industrial reshoring, and using our skill sets to help solve demand for a whole new customer segment that is looking for highly reliable, fast-to-market, and fast-following power generation. So we are really excited at how attractive the current macro environment is in supporting the long-term growth of our business.

With that, I'll turn it over to John to walk through our financial metrics. John?

John Porter (CFO)

All right. Thanks, Alan. Starting here on slide six, let's begin by looking at the longer trend of our financial performance for the company, starting with Adjusted EBITDA in the upper left corner, which grew about $300 million in 2024, or about 4% over 2023. At $7.08 billion, our 2024 result exceeded our original Adjusted EBITDA guidance of $6.95 billion by $130 million in a year where Henry Hub natural gas prices averaged about $2.20, which was almost 18% lower than our original business plan assumptions for 2024. On the following slide, we'll talk about our revised 2025 guidance, which features a 3% increase in our Adjusted EBITDA midpoint.

As you can see here, delivering on that $7.65 billion midpoint would drive an 8% five-year CAGR, a growth rate that continues to exceed the high end of our long-term growth rate of 5%-7%. Our Adjusted EPS for 2024 finished above the high end of our original guidance range, and at midpoint for 2025, our Adjusted EPS will see an impressive 13% five-year CAGR. Our Available Funds from Operations per share for 2024 also exceeded the high end of our original guidance, and at midpoint for 2025, it will grow at a 9% five-year CAGR. Our dividend will grow at about a 5% five-year CAGR while maintaining strong dividend coverage. Some of that dividend coverage has been based on what are increasingly looking like conservative cash tax assumptions, which I'll discuss further on the next slide.

And then finally, you see the improvement we've made to our balance sheet strength over these last five years with an 18% improvement in our key leverage metric, finishing favorably to our 2024 original guidance for leverage, and with 2025 leverage that's forecasted to move us close to the low end of our leverage target range of 3.5x-4x. We've got a lot more information about 2024 performance in the appendix. As Alan mentioned, we were impressed with the outperformance of the business up against a tough natural gas price environment where we saw substantial volume curtailments throughout the year. The trends on this slide demonstrate the consistently strong performance of our business through various commodity cycles, with a business that is primarily levered to the growth of natural gas volumes and reserved pipeline capacity.

Our natural gas-focused portfolio has consistently driven strong earnings growth through high-returning capital projects, and our balance sheet strength has allowed for additional growth contributions through immediately accretive bolt-on acquisitions without the use of any equity issuance during this timeframe. So having covered the longer trend of our strong financial performance for the company, let's turn our attention once again to the year ahead with a refresh of the 2025 guidance that we originally issued in February of 2024. So here you can see on the left side a few key elements of our original 2025 guidance, and on the right, you can see the updates that we have for you today. Starting with Adjusted EBITDA, you see our original midpoint of guidance was $7.4 billion, and now we're moving that midpoint to $7.65 billion, so an increase of $250 million.

$7.65 billion would drive an impressive 8% growth in this metric over 2024, as well as a five-year CAGR of 8%. That $250 million increase in guidance is split between incremental growth from the business since last year and the effects of the Crowheart JV consolidation and the Rimrock acquisition. In the Northeast, we've generally shifted expectations a bit lower in certain dry gas areas, but those reductions have been more than offset by improvements in the Northeast liquids-rich areas. In the Deepwater, we have seen some producer-customer delays that have unfavorably impacted the expected ramp in our growth projects, Shenandoah and Whale. And finally, in the West, we've seen some overall modest net improved expectations, and additionally, our marketing business is off to a good start with the cold weather that we saw in January of 2025.

We are encouraged by this increase in our Adjusted EBITDA guidance that would drive 8% growth over 2024 and that 8% five-year CAGR as well. Shifting now to AFFO per share, where we're moving last year's $4.25 to $4.50, basically just tracking with the expected increases that we just discussed in Adjusted EBITDA. I will point out that we continue to not assume any benefits from restoration of 100% bonus depreciation or any other favorable changes in the corporate alternative minimum tax, both of which are being discussed as elements of possible tax legislation for 2025. Our current guidance of AFFO assumes around $300 million of cash taxes, and restoration of 100% bonus depreciation for 2025 could cut that amount roughly in half, adding approximately another $0.12 in AFFO per share.

Most of the cash tax that would remain would be related to the corporate alternative minimum tax, which, of course, can be applied against future regular cash tax amounts owed. However, even without any tax benefits, the $4.50 of AFFO per share in our revised guidance covers our expected $2 per share dividend about 2.25x after growing that dividend 5.3%. Favorable developments on the cash tax front would further increase our AFFO per share growth rate and potentially serve as a catalyst for additional dividend growth. Finishing this slide up, you'll see improved leverage guidance of 3.55x even after further fueling our 2025 growth with the acquisitions that we've discussed. And also, you'll see no change to our growth CapEx guidance for 2025 at $1.8 billion, excluding acquisitions. That covers the major pieces of our 2025 guidance update.

As Alan highlighted, 2025 is an exciting year for our company with full-year contributions from last year's completed projects, as well as eight additional transmission expansion projects and four deep water projects coming online in 2025. We've got a major Transco rate case with the initiation of cash returns on our ERP investments of the last few years. We've got expectations for an improved G&P gathering processing environment versus 2024 for the Northeast and for the West, including our Louisiana Energy Gateway project. And then finally, we'll see continued growth from our strategic bolt-on acquisitions. Finally, before I turn it back over to Alan, I'd like to cover one more financial performance topic here on slide eight.

For many years, we've highlighted the strong cash returns we've generated from our capital investments, and we've talked about the proof of those cash returns showing up in balance sheet improvement and per share growth driven by a lack of issuing any equity to fuel our growth. Last fall, we were pleased to see sell-side research that highlighted the strength of our cash returns on invested capital, which placed us first among seven of our closest peers for the 2018 to 2023 timeframe. On this slide, we've mapped out those cash return on invested capital values along the horizontal axis, and then we've also charted leverage reduction over this period on the vertical axis. The result really shows the strength of the nearly 23% cash return on investment we've achieved during this timeframe, which drove a 26% reduction in leverage.

Additionally, we saw a 19% CAGR on our adjusted EPS during this same timeframe, with no equity issuances since the buy-in of Williams Partners in 2018. We are certainly pleased with the financial performance we saw during this period of 2018 through 2023. However, we are even more excited about the next five years based on the accelerating growth drivers for natural gas volumes and pipeline capacity. With that, I'll turn it back over to Alan.

Alan Armstrong (President and CEO)

Okay. Thanks, John. Just a few closing remarks before we turn it over to your questions. We've been implementing our long-term strategy to bring Williams to where we are today with a healthy balance sheet and a clear line of sight to a full portfolio of high-return projects.

During these early years of what is shaping up to be the golden age of natural gas, our natural gas-focused strategy is taking hold in a powerful way that is delivering robust growth and compounding returns for our shareholders. Simply put, no one is better positioned than Williams to benefit from the natural gas demand fundamentals. Now, under the Trump administration and a Republican Congress, the U.S. is seeing changes in energy policy that are aimed at bolstering energy independence and economic growth. This policy shift underscores the importance of our country's strategic initiatives and positions the U.S. to take full advantage of the evolving energy landscape. However, to fully realize our potential and maintain our leadership position as a country, we have to be able to unlock some of the nation's largest natural gas resources in places like the Marcellus and the Utica.

With the support of the administration and potential permitting reform, Williams stands ready both to help solve this problem and to be a major beneficiary of it. Pipelines power America, and our country and its citizens have reaped the benefits of this large-scale infrastructure for years. We should not take this historical benefit for granted and let competing countries rapidly build out their own infrastructure to capture tomorrow's opportunities. This is an important moment for our country, and Williams has the right strategy, team, and experience to deliver on the opportunities that we see ahead, and with that, I'll open it up for your questions.

Operator (participant)

Thank you. At this time, we'll conduct a question-and-answer session. As a reminder to ask a question, you'll need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and a follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Theresa Chen of Barclays. Your line is now open.

Theresa Chen (Managing Director and Senior Equity Research Analyst)

Good morning. On the gas-to-power side of things, specifically related to data centers in relation to the opportunity that you alluded to earlier, Alan, what is it going to take to get something like this across the finish line? And beyond this opportunity, can you help us lay out the addressable market ahead of you within this theme? How have other commercial discussions progressed, and how can Williams participate and capture economic value here?

Alan Armstrong (President and CEO)

Yeah, Theresa, thank you. I'm going to take the first part of that and then I'll ask Chad to fill in on that. First, as to what it takes in terms of getting things completed, I would just say, as I mentioned, we are very far along in the process and have full support from the counterparty for going ahead and acquiring the major equipment and long lead items. However, if you think about the complexity of land siting, air permits, a lot of the regulatory issues that need to be dealt with, a lot of that needs to make sure that that has cleared and you've gone and covered all the bases and the key stakeholders before you put those announcements out there.

So things are moving very fast. I can tell you it's kind of faster than for the scale of projects that we're talking about, a lot faster than we would normally see. But in doing so, we need to make sure that we've laid the groundwork adequately at the government affairs and public relations side to be able to make those announcements. And I think we're more focused on making the project successful than we are beating somebody the punch on making an announcement. And so I think that's what's driving us today. In terms of other alternatives, other projects, a lot is happening on that front, but a lot of those areas require gas pipeline infrastructure expansions and a lot of work that goes into that.

I will tell you the thing that I think has impressed us the most, though, is the desire for speed on these projects, and that's probably the one thing that is moving the fastest. But again, our counterparties, particularly the big folks, they're not really in a race to get an announcement out there, and they're the customer, and we're going to honor that as we move through these projects. So Chad, I'll turn it to you if you have anything to add.

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah, I would just add that I think we are really well positioned. We've been very intentional in creating a full suite of capabilities within the natural gas value chain. And so we are focused on project development, and I think, as Alan said, not just announcing opportunities, but developing projects the same way that we develop a Transco expansion project.

And so what it would take for us to get to announcement is, you'll expect to see us have fully contracted commitments from high-quality customers, and we are developing projects to the point where when you see announcements that we'll be effectively shovel-ready to start those projects. And what I would say is we have developed the capabilities to provide across the full value chain. There are projects that we're pursuing that will be pipeline interconnects and laterals and gas supply services to customers, but also, as Alan mentioned, we have the capability to go all the way to delivering power generation on the doorstep of a data center project. And so that's what we've been working on. And once we're fully contracted for a project, you'll see an announcement, and it'll look a lot like any other large-scale transmission project that we would pursue.

Theresa Chen (Managing Director and Senior Equity Research Analyst)

Thank you. Related to your gas storage projects, clearly, this is a part of the overall value chain that is seeing significant need for investment. Can you remind us how much expansion capability do you have remaining across your footprint, and what do the economics look like for something like this?

Micheal Dunn (COO)

Hey, Theresa, this is Michael. Yeah, I think we've got a lot of opportunities within our Gulf Coast storage opportunity that we acquired those last year or, sorry, earlier this year. And this is just the first one of those, a 10 Bcf expansion, which is about a 20% increase at that location. But we've got opportunities out in the west as well. The Clay Basin Storage Facility is something that we're keen on getting expansions done there.

The interruptible expansion that we've done is already in place, and hopefully, we can convert that to firm storage at some point in the future with some pretty nominal investment on our part. So we're certainly exploring those opportunities, and it looks to us now that prices have come up, especially in the Gulf Coast area, where we can accomplish these brownfield storage expansions and get nice returns on those, and certainly comparable to what we're seeing on our negotiated projects across the transmission footprint.

Theresa Chen (Managing Director and Senior Equity Research Analyst)

Thank you.

Operator (participant)

Thank you. One moment for our next question, and our next question comes from the line of Praneeth Satish of Wells Fargo. Your line is now open.

Praneeth Satish (Senior Equity Analyst)

Thanks. Good morning. So maybe just staying on this behind-the-meter opportunity, the first one that you're close to the finish line on, can you help frame how large of a project it is? Is it kind of in the billion-dollar range? Just trying to figure out the scale. And then secondly, can you help us understand how scalable this opportunity is given supply chain constraints around turbines? I know speed to market is the main selling point here, but I guess how fast can you get both this solution up and running and future solutions up and running?

Alan Armstrong (President and CEO)

Yeah, I would just say this will be a meaningful project in terms of impact on our capital budget, and this is not in our current capital plan. So just in terms of the size of the capital, this will be a very meaningful capital project, and it'll come pretty fast, a lot faster than the typical transmission project would come. In terms of the scalability, you're spot on that there's likely to be a constraint hit on power generation equipment.

We've been very pleased with what we've been able to pull together in that regard, but I do think that these opportunities, that's a likely point of constraint, is power generation equipment. So far, we've got capacity and helps that we're such a large buyer of equipment already in that regard and have key relationships that have certainly helped us on this transaction. But I do think that that is a limitation that will hit this market, is the power generation equipment.

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah, and Al, I would just add, I do think, though, we do see line of sight. Don't want to get too far ahead of the first project that we might announce, but I do think we see line of sight to be able to layer projects in over time that supply chain will lead to us layering in projects maybe further out.

But there is a speed-to-market opportunity ahead of us. I think there's also a likely ongoing need for a combination of grid expansion and behind-the-meter solutions to support the need of data center development, at least through the end of the decade. And so our strategy would be to continue to layer on projects in a more predictable ongoing basis, with obviously the earliest projects being the nearest to be in service.

Praneeth Satish (Senior Equity Analyst)

Got it. That's helpful. And then one thing that surprised us is the 2025 CapEx guidance, $1.8 billion. That was maintained despite the opportunity set, and it looks like you've got a good amount of white space for more investments, I think around $400 million-$500 million of excess free cash flow in 2025. So maybe you could just help us think through two things.

First, what is your willingness to flex CapEx higher in 2025 if this BTM behind-the-meter project goes through or some of those 30 potential front-of-meter projects? And then secondly, what's your philosophical approach to pushing closer to free cash flow break-even levels or even exceeding it in 2025 or 2026 if you've got the right projects?

Alan Armstrong (President and CEO)

Yeah, well, first of all, as I mentioned, that project, despite the fact that we've made equipment orders that are fully supported by the counterparty, that is not included yet in our capital and won't be until we fully consummate the final agreements on that. But in terms of our capacity, yes, I think we have plenty of capacity, and I think we'll remain very disciplined because the kind of returns that we're seeing are very attractive returns and well above multiples on our cost of capital.

So we certainly have the capacity to go after that, and we really will continue to look at things from a risk-adjusted return up against our set of opportunities. So I actually see that certainly we're not going to stretch the balance sheet, and so that's a limitation. We're not going to go there. And we certainly are proud of the fact that we've gotten to where we are today without issuing equity, and we think that distinguishes us in the space. So I think those are kind of limitations on the upper end against the projects that we have out there in front of us, and therefore it becomes just a survival of the fittest within our capital allocation plan on a risk-adjusted return basis, and that's really how we'll continue to look at things.

Praneeth Satish (Senior Equity Analyst)

Got it. Thank you.

Operator (participant)

Thank you. One moment for our next question. And our next question comes from the line of Neel Mitra of Bank of America. Your line is now open.

Neel Mitra (Senior Energy and Power Analyst)

Hi. Good morning. I was wondering if you could give your outlook for gathering volumes in the Northeast and the Haynesville. I think you mentioned that you didn't expect a big uptick in activity, but some of the shut-ins and turned-in line wells that were delayed to come on. Just wondering what your producers are indicating now that we're in a much higher gas price environment in 2025 than in 2024.

Micheal Dunn (COO)

Hey, Neel, it's Michael. Yeah, I think we've still got the DUCs and the TILs, the deferred TILs that our producer customers are still holding back on, and we'll see those come on as prices continue to firm up and they bring those volumes on.

We still think we've got close to 3 Bcf a day of IP that's out there that could come on throughout the year at some point between the DUCs and the deferred TILs. The producers are talking about a lot of capital discipline as well, and they're talking about pricing needing to be sustained and much higher than even where it is today, possibly for rig activity to increase. We're taking a pretty optimistic approach, but pragmatic as well in regard to what our guidance has embedded in it. We certainly think pricing will help producers ultimately make the decision to start drilling at a higher activity rate than they were last year. Right now, we're pretty optimistic about the ability to bring on gas very quickly should the prices justify that for the producers with where the DUCs are.

And we've got those connections virtually already made, so they can get to market pretty quickly if they're ready to do so.

Neel Mitra (Senior Energy and Power Analyst)

Okay. Great. And not to beat a dead horse on the power generation opportunities, but wanted to ask, what gives you a competitive advantage in kind of being ahead in the supply chain for turbines, given that's the main supply chain constraint? Is it because you have ordered so many high-horsepower compressors through the Transco rig case and upgraded that system, and essentially those can be used as power generation turbines? I'm just trying to understand how you're able to kind of scale that versus some of your competitors.

Alan Armstrong (President and CEO)

Yeah. You got right on it there. The same drivers that are used for our large compressor systems are the same drivers that are used for power generation on simple cycle turbines. And so when you're talking speed to market, the simple cycle turbines are going to be the ones that are going to be getting utilized, and it is the same equipment on the power side or on the driver side of the project. So yes, that puts us in a very advanced position given the amount of purchasing power that we have on that front.

Neel Mitra (Senior Energy and Power Analyst)

Perfect. Thank you.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Jeremy Tonet of JPMorgan Securities. Your line is now open.

Jeremy Tonet (Utilities and Midstream Equity Research Analyst and Managing Director)

Hi. Good morning. Morning. Hey, good morning. Just wanted to come back to the servicing data center opportunity set. And I was just curious, I guess, how you think about the opportunities across your footprint, be it in Pennsylvania or Texas or Wyoming. Do those possible solutions look different in any state?

It seems like in Wyoming, with these recent acquisitions, you now have gas supply, G&P, pipes, marketing, land that could really be a compelling offering there. So just wondering how you think about what the opportunities look like from location to location.

Alan Armstrong (President and CEO)

Yeah, Jeremy, you are right. We do have some very attractive features and attributes that we bring to the table in some of those areas, particularly for hyperscalers that are looking to set up new opportunities. And so I do think, as Chad mentioned, we do think that we'll see a series of those kind of opportunities continue to build out over time. And so you are right.

I think we're extremely well positioned in a lot of those areas, and we are seeing a lot of activity, but it takes a lot of time to bring to fruition setting up a whole new campus area, if you will. So places like the Salt Lake market is a great area for us, and we're extremely well positioned out there. We're really excited about some of the development we're seeing out there, as well as a state that has been working hard to provide a friendly environment for development out there as well. So I tell you, the grids as well as the state politics are going to be pretty critical at trying to be able to keep up with the pace that's out there, and that is going to drive some of the winners and losers on this.

You certainly are seeing, particularly for the big hyperscale projects, you're certainly seeing people start to look back to the areas where the energy resources are, like Wyoming, where you have both the wind and the gas resources in the area and are not constrained. But I think that's kind of at least chapter two in this process, and because those are big, long-term projects to develop. I think in some of those areas, that'll be kind of chapter two on this spread.

Jeremy Tonet (Utilities and Midstream Equity Research Analyst and Managing Director)

Got it. That's helpful. Thanks. Just want to dive into Pennsylvania a little bit more if we could. As far as we can see in the state, if we look at constraints electric transmission relative to natural gas transmission, it seems like on the electric transmission side, there's not the same constraints as we see on the gas side, just given that it's hard to get new interstate pipes built, and so if there is ample supply and it's tough to get the gas out of the state, potentially lower gas prices could feed a higher electricity prices, a wider spark spread, and given your position there, it seems like Williams could possibly take advantage of the wider economic rent there. Just wondering if there's any thoughts you could share?

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah, I think what I'd share, and maybe just also related to Alan's prior comments around the activity we're seeing for increased power demand, data centers, Virginia, Pennsylvania, Ohio have been kind of the most mature markets to date. I do think the way we will think about it is we can offer a natural gas solution that is even potentially more competitive than grid power for projects along our footprint. And so we are seeing that opportunity. I think it's, yes, there's a desire for speed to market. There's obviously challenges with not just the speed of expansion of the grid, but also the cost and even some of the social, public, I think, concerns around reliability and cost to the consumer.

And so I think it presents a great opportunity, not just in Pennsylvania, but certainly in those core areas of our footprint, to provide a solution directly to these new loads that is both very cost-effective, low emissions, and in many cases, a better solution than grid capacity. So that's certainly part of the theme that we're pursuing, not just for data centers, but across the whole footprint.

Jeremy Tonet (Utilities and Midstream Equity Research Analyst and Managing Director)

Got it. Makes sense.

Operator (participant)

Thank you. Thank you. One moment for our next question. Our next question comes from the line of Manav Gupta of UBS. Your line is now open.

Manav Gupta (Senior Equity Analyst)

Good morning. You raised the guidance by 3%, which was very positive. Help us understand what could push you towards the top end of that guidance for 2025.

John Porter (CFO)

Yeah. Yeah. Good morning, Manav. Thanks for the question. Yeah, we've got a pretty wide range there.

And I think a lot of that would have to do with what exactly we do see in some of the gathering and processing areas. For example, we've discussed this morning that we are remaining fairly conservative about overall growth levels in some of our gathering and processing areas. We actually pulled back pretty significantly in some of the dry gas areas versus our original guidance. And so there's always definitely room that we could see outperformance around the producer customers in some of these gathering and processing areas. Sequent, as we all know, is a little bit of a hard one to predict. Maybe to just touch on that, we still have a pretty wide range of potential outcomes for Sequent, but we did get a strong start to the year here with January.

So we're pretty confident we'll beat $100 million or so for Sequent this year, but still really unclear whether we would get back to a level like we saw in 2024, which was $215 million. So some range of potential outcomes that you could see around Sequent. Continuing on, I mean, we talked about the number of projects that we have coming into service this year. Early in-service dates for a project always represents a potential upside to our base case. And as I mentioned earlier, we do have a number of projects coming online. We also have the Transco rate case, which we hope to settle this year if we can. And we've got a, I would say, a fairly conservative assumption embedded in our guidance. We did not change that assumption relative to the original guidance that we put out in February of last year too.

So really a number of different things that could come together, each one of them or a combination of those factors that could drive us more toward the high end of guidance.

Manav Gupta (Senior Equity Analyst)

Perfect. I'll just quickly follow up slide 35. Can you talk a little bit more about the coal-to-gas switching opportunities and how they are progressing as you see out there?

Alan Armstrong (President and CEO)

Slide 35, was that, Manav?

Manav Gupta (Senior Equity Analyst)

Yes, sir. Ample coal-to-gas switching opportunities, potential for 8.4 Bcf gas growth.

Alan Armstrong (President and CEO)

Sure. This is just showing within our footprint what we're seeing out there from coal-to-gas switching. I'll tell you, the area that we've really kind of has taken off in that regard has been out in the Mountain West region where we've seen a lot of big conversions from some very large plants like the Jim Bridger plant and the Naughton coal plant, which are in the Wyoming area there.

So we are really starting to see a lot of the big plant operators out there make those kind of commitments. Obviously, we've been seeing that in the Southeast and the Mid-Atlantic for some time. We have a project in Alabama that is specifically focused on repowering an Alabama Power plant to gas. So we are capturing a lot of those projects as we speak. And it's not really a big stretch for us to capture a lot of these projects, particularly out west. As you can see, those are right on proximity to our systems out there, and we're seeing some strong interest from the big power player out there in converting those plants. So this continues to be kind of a drumbeat for us in a lot of these markets.

The Dalton Lateral Expansion project that we announced last quarter there in northern Georgia is partially a conversion of coal as well as an expansion of power generation opportunity in that area as well. So we are seeing a pretty steady drumbeat on this opportunity.

Manav Gupta (Senior Equity Analyst)

Thank you so much. I'll turn it over.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Neal Dingmann of Truist Securities. Your line is now open.

Jack Wilson (Investment Banking Analyst)

Yeah. Hey, good morning. This is Jack Wilson on for Neal. Can we maybe just double-click on the momentum you're seeing in the Northwest? Looks like you've got about 580 additional capacity coming on by 2028. Do you see additional headroom beyond that, or is that kind of reaching saturation in that market?

Alan Armstrong (President and CEO)

Yeah. No, Jack, I would say in the last six to nine months, this has been the area where I think we've all been kind of surprised there. In our monthly commercial review meetings, we've just been really surprised with the amount of continued demand for capacity expansions out there, and it's actually gone faster than we've expected it to. But I will tell you that based on some requests for service that we've seen recently, this is going to. I would expect this to grow even faster than what we've seen here recently. So lots going on out here and pretty exciting.

Jack Wilson (Investment Banking Analyst)

Okay. It sounds like continued opportunity up there. And then is there going to be any sort of cross-border impact? I think it's the Huntingdon connector up there, or is that kind of a non-factor?

Alan Armstrong (President and CEO)

Yeah, Jack, that's a non-factor.

Jack Wilson (Investment Banking Analyst)

Okay. Perfect. Thank you very much.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of John Mackay of Goldman Sachs. Your line is now open.

John Mackay (VP of Equity Research)

Hey, all. Good morning. Thanks for the time. Last year, you guys were pointing to potentially revising the long-term growth target of five-to-seven up, or at least kind of talking about potential upside to that. Can you just frame up where that conversation stands now? Is that dependent on maybe formal FID or some of these data center projects? Maybe just walk us through that.

Alan Armstrong (President and CEO)

Yeah, I would say that. And as I just mentioned, a lot of growth in the Northwest. One of the things that I think the market misses on this growth opportunity is that because we serve so many of the big utilities that in turn serve a lot of the data centers, either on the gas side or on the power side, we're seeing a lot of these expansions.

And while everybody wants to just isolate it to what the actual direct project is, and certainly those will drive growth beyond 5%-7%, I feel pretty confident at this point if we're able to consummate these projects that we're finalizing, so the answer to that part of the question is yes, but I will just tell you that a lot of the growth like we're seeing in the Northwest, ultimately, that's going to go to serve power generation demand, which indirectly is being driven by a lot of the data center load.

So while everybody's kind of hyper-focused on the individual project announcements, we're seeing the impact of that growth show up in the way of IRPs from our utilities, which is in turn driving gas transformation demand on our system. So I actually know people are super excited about the data center projects. If I were an analyst paying attention to this, I'd be more excited about seeing the kind of peak day demands that we saw on Transco this year and the 10% growth in January that was not driven by weather over the previous cold snap. To me, that is more the fundamental drivers of growth for our business. And I'd be paying attention to seeing these peak days continuing to be hit that are not being driven by heating degree days more so than these individual projects.

John Mackay (VP of Equity Research)

Okay. Thanks. Yeah, absolutely. That makes sense. Just second one for me. Can you just remind us what the general strategy on the E&P side is, just following the JV buy-in? What's kind of the long-term plan there?

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah. Thanks, John. This is Chad. Well, look, I think Alan said on Wamsutter, and we've talked about how powerful that basin is with respect to driving value through our midstream infrastructure. We gather, we process, we move the NGLs through our NGL infrastructure. We fractionate the NGLs. We market the gas, the NGLs from that basin. And so very high margin from a production perspective. And we had a great partner with Crowheart and really thankful for what they did to help us consolidate that basin and position it for optimization.

But if you look at that basin from an upstream-only perspective, you might not develop it the same way as you would when you think about maximizing the value of the downstream infrastructure. And that's what our strategy is from an upstream perspective. It's all about driving value to our core business. And so the consolidation was all about making sure that we can drive the very best decisions from an upstream development perspective to maximize the value of our downstream infrastructure. And so we've consolidated the economics now of that basin with our midstream infrastructure. And we'll now work on making sure we've got that optimal development program that takes into account the full value chain. And it'll take a bit of time to, I think, dial that in.

At that point, we'll determine whether or not we need to be a long-term owner, or we can then reposition the upstream asset with an upstream counterpart. Clearly, the focus is on making sure that that basin gets optimal development to drive value to our downstream assets. Still in the Haynesville, we've pretty much achieved that. We've said before we've kind of stepped down the ownership there as was designed by the original partnership. GeoSouthern has been a great partner for us in the Haynesville. That's helped drive expansions of our gathering system and helped support our LEG expansion project. We have one more expansion project that we're working on for our midstream infrastructure that will add additional value for our Haynesville core business. That's something we're actively working on now, and we would expect to accomplish hopefully this year.

And at that point, I think we're in a good position to move further towards disposition of the Haynesville asset.

John Mackay (VP of Equity Research)

All right. That's clear. Thanks, Chad. Appreciate the time.

Operator (participant)

Thank you. One moment for our next question. Our next question comes from the line of Keith Stanley of Wolfe Research. Your line is now open.

Keith Stanley (Equity Research Analyst)

Hi. Good morning. Wanted to follow up on the 5%-7% long-term EBITDA growth target. Do you expect that to be pretty linear over time or lumpy? And I ask because there's not a lot of major new projects starting up in 2026 and 2027, but you do have a lot of balance sheet capacity if you wanted to do more M&A. So just how you're thinking about that.

Alan Armstrong (President and CEO)

Yeah. What I would say is we certainly don't include all of our projects that would be driving 2027 growth. Obviously, you've seen the SSE project, which is a powerful growth driver, but we have a lot of other drivers of growth going on within the system, including what we think will have to be a big pull on gas ultimately to keep up with the demand, which will drive some pretty substantial increases in EBITDA on our gathering systems without capital. So the growth we're going to see is going to be pretty powerful. And there's really not a way to balance the market and the demand side without pulling on some of these big gathering systems.

And we are extremely well-positioned to see the free cash flows generate off those assets. So actually, I would tell you, we're always most excited about growth that comes without capital, and I think we're positioned to see a lot of that.

Keith Stanley (Equity Research Analyst)

Thanks. One other follow-up just on the cash taxes. So $300 million you're baking in for this year. I think you said with bonus depreciation extension, that would be pretty much eliminated. Just can you give an update on path to being a full cash taxpayer both with and without bonus depreciation legislation?

John Porter (CFO)

Yeah. Actually, just to clarify, so it's $300 million in the current AFFO guidance for 2025. Restoration of 100% bonus depreciation would cut that in half, and so that would be about $0.12 of AFFO per share, so pretty significant effect. What would be left would be Corporate Alternative Minimum Tax, which is also sort of under review, and there's been some proposals that, especially for energy-related firms, that maybe we take another look at whether we should be doing that.

All of that, it would be speculative to assume that any of that makes it through, but it definitely is things that are being discussed right now, so a lot kind of to take in this year in terms of the future. What we've assumed in our long-range plan, which I do believe is pretty conservative, is just a gradual ramp in our cash tax rate until we get toward the latter years of the decade where we start to become more of a full cash taxpayer. I think there's a lot of things that would be affecting that trajectory. If you get 100% bonus depreciation, it could be really impactful in this cycle of capital investment that we're looking at when you think about things like some of the behind-the-meter solutions, non-regulated CapEx projects that would fall under the bonus depreciation.

So the ability to defer taxes, I think, could be really accelerated if we get a change in the bonus depreciation. And then we also see a cycle of strong capital investments, both of which seem like pretty good assumptions. But again, we're being conservative. We're not assuming that the bonus depreciation changes, but being conservative with our long-range plans and maintaining strong dividend coverage, accounting for that plan.

Keith Stanley (Equity Research Analyst)

Thank you.

Operator (participant)

Thank you. One moment for our next question. And our next question comes from the line of Brandon Bingham of Scotiabank. Your line is now open.

Brandon Bingham (Equity Research Analyst)

Hi. Thanks for taking the questions here. Just a couple of quick ones. Was wondering if you could maybe provide some incremental detail about the 30 or so projects in the backlog, just thinking things like composition and that, 30 or so project sizes and in-service dates at a high level. And then if you have any thoughts on the likelihood of some of those projects coming to fruition, just if you maybe have a risk outlook or a probability-weighted outlook that you could speak to.

Alan Armstrong (President and CEO)

John, you want to take that?

John Porter (CFO)

Yeah. The 30 Transco projects, I think, cover. We've been providing this kind of a look back at our backlog now for many years. And what we've seen over that time frame is just a steady progress in moving projects through the backlog and into our guidance. So I think it's pretty consistent with what you've seen in terms of the performance that we've had over the last many years. We do say here that they do cover a broad range of potential customer bases, industrial power, and LNG facilities. Importantly, this 30 does not include the direct behind-the-meter type solutions. But we're going to win some of these.

We're going to lose some of these. But what you've seen in our track record is a very consistent progress toward moving a substantial number of these from the sales funnel and then into our actual guidance. I don't know, Michael, anything to add?

Micheal Dunn (COO)

I think you've got it right. Every one of these has a probability weighting on them as well. So these are all specific discrete projects that we've identified, and then we're working to commercialize with customers. And every one of them has a separate and distinct probability weighting to them.

Brandon Bingham (Equity Research Analyst)

Awesome. Awesome. Thanks. And then just real quick, if we could go back to the Haynesville, more looking towards the broader outlook here in the slides, you show kind of expected production growth through, I think, 2033. I was just wondering if you could provide some detail around some of the drivers behind it, activity schedules, or just whatever you're seeing baked into that outlook to get that growth and maybe how it compares to what you saw exiting 2024?

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah. Yeah. I'd say, first of all, when you think about long-term supply growth, I mean, fundamentally, we've got to match demand. And so when you look at the amount of growth we're going to see, we're already seeing from LNG ramp through the end of the decade and even through the mid-2030s, more than doubling over the next decade, adding 10+ Bcf by the end of the decade. You've got the increase in power load and demand. You've got the increase in industrial demand across the industry.

Just solving for balancing supply and demand, you're going to need to see significant growth out of the Haynesville, and that's really where these forecasts, the longer-term forecasts, are derived from. Certainly, in the near term, I think we've spoken to what we've seen as far as curtailments and return of activity, and Michael talked about the price signals we might need to see to see a ramp up in growth, but if you just run the expectations for supply to meet the demand, you're going to have to have a pretty significant call on the Haynesville, and I think, generally, we're showing here not necessarily our own forecast, but I think it's a generally consistent forecast that the Haynesville is going to have to bring around 10 Bcf a day of growth over the next, call it, eight years.

And even then, you're going to need ongoing growth out of the Permian, a little bit of growth coming out of the Northeast in order to meet that demand. And so that's really where that supply forecast comes from.

Brandon Bingham (Equity Research Analyst)

Got it. Helpful. Thanks.

Operator (participant)

Thank you. One moment for our next question. And our next question comes from the line of Craig Shere of Tuohy Brothers. Your line is now open.

Craig Shere (Director of Research)

Morning. Thanks for fitting me in. First question, thoughts about, I mean, obviously, the data center opportunity is huge, but thoughts about still looking at LNG offtake and partnership opportunities like you had a couple of years back with an MOU with Sempra?

Chad Zamarin (EVP of Corporate Strategic Development)

Yeah. This is Chad. We continue to look at those opportunities. Hopefully, what you're seeing here is that we do, and Alan mentioned that we've got a great inventory of investment opportunities at really attractive returns. We've been very focused on making sure anything we do in the LNG space will compete with the attractive returns we're seeing across our core business. Clearly, we're focused on supplying LNG opportunities. Our LEG gathering system will deliver gas to Gillis. We continue to look at additional projects to expand deliveries into both the existing LNG terminals that we serve and also the ones that are coming online. We continue to look at whether or not it makes sense for us to take a further downstream position on a project or from an offtake perspective.

We remain very disciplined in ensuring that whatever we might do would fit within the profile of how we want to grow the business, but also compete with the attractive opportunities we're seeing across the footprint. So, still well within the fairway of our strategy, but has to compete with the attractive opportunities we're seeing across the footprint.

Craig Shere (Director of Research)

Understood. That attractive opportunity or return point kind of segues into my second question. We've all talked for a long time about the challenges of avoiding long-term excess deleveraging if you're constantly investing at four to six times EBITDA or better, maybe half levered. And as I think about the behind-the-meter data center opportunity, I'm thinking about kind of a core kind of directly contracted infrastructure that may be in the eight times investment to EBITDA area. But when I kind of envision the pull that has on all of your other spare capacity for related gas services and fuel supply, the all-in returns across the entire enterprise may still be in the mid-single digits or better. Am I thinking about that right?

Alan Armstrong (President and CEO)

Yeah, Craig, I would just say that obviously, that's very dependent on where the opportunity is. If we have available capacity that we can utilize, the one thing that's going to be different about the data center load from a typical merchant power facility is the very high degree of reliability that's expected on these facilities. And so capacity availability is going to be key in serving the behind-the-meter. And so, to your point, in areas where we have lower-cost expansions, we'll see very low-multiple projects complementing those projects. And in those cases, certainly, we'd drive it lower. In other areas where it's constrained, we wouldn't see those kinds of opportunities. So your point is spot on, but it's going to be highly dependent on where exactly the location is.

On these kind of what I would call the chapter one of these projects, they are moving at such a pace that the location to getting it near where there's existing pipeline capacity. You'll probably see less coordination. I think chapter two, we're seeing another level of attention on where available resources are. So anyway, your point is spot on, but it is going to be highly dependent on where the project is.

Craig Shere (Director of Research)

Great. Thank you.

Operator (participant)

Thank you. This concludes the Q&A portion of the call. I'll now turn it back over to Alan Armstrong for closing remarks.

Alan Armstrong (President and CEO)

Okay. Thank you all very much. Excited about the performance that the team delivered in 2024, particularly given the backdrop of super low gas prices, and very excited about the continued great execution on projects that we've been enjoying.And we're continuing to see improvements on that are driving very high returns for us, even in a lot of cases, better than what our initial expectations have been. So great execution by the team, and our strategy has us in a very enviable position that we're excited to deliver the benefits of that to our shareholders. So thank you for joining us.

Operator (participant)

Thank you for participating in today's conference. This does conclude the program. You may now disconnect.