Good morning, and welcome to American Water's Fourth Quarter and Year-End 2023 Earnings Conference Call. As a reminder, this call is being recorded and is also being webcast with an accompanying slide presentation through the company's Investor Relations website. The audio webcast archive will be available for one year on American Water's Investor Relations website. I'd now like to introduce you to your host for today's call, Aaron Musgrave, Vice President of Investor Relations. Mr. Musgrave, you may begin.

Thank you, Dave. Good morning, everyone, and thank you for joining us for today's call. At the end of our prepared remarks, we will open the call for your questions. Let me first go over some safe harbor language. Today, we will be making forward-looking statements that represent our expectations regarding our future performance or other future events. These statements are predictions based on our current expectations, estimates and assumptions. However, since these statements deal with future events, they are subject to numerous known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from the results indicated or implied by such statements. Additional information regarding these risks, uncertainties and factors as well as a more detailed analysis of our financials and other important information is provided in the fourth quarter earnings release and in our 2023 Form 10-K, each filed yesterday with the SEC.. And finally, all statements during this presentation related to earnings and earnings per share refer to diluted earnings and diluted earnings per share. After our prepared remarks, we'll then close by answering your questions. With that, I'll turn the call over to American Waters' President and CEO, Susan Hardwick.

Thanks, Aaron. Good morning, everyone. As we announced yesterday, we finished 2023 with very strong financial results that were right on plan. As shown on slide five, earnings were $4.90 per share for the year, which included $0.13 per share of favorable weather, most of which we discussed earlier in the year. Excluding the estimated weather impact, earnings of $4.77 per share were at the midpoint of the guidance rates we shared originally back in November of 2022. I'm very proud of our company's ability to stay focused on serving our customers safely and reliably through numerous economic events this past year, which gave us the ability to confidently execute on the plan we had for 2023. I'm also proud of the resilient service we consistently deliver, and especially over the past few months during a cold January and active storm season across the country. I want to thank our employees for safely providing reliable service to the 14 million people we serve in their homes, businesses, and communities. You can see here on slide five an abbreviated list of some of our key accomplishments in 2023, and John and Cheryl will add to these in their remarks. Overall, we believe the takeaway today for investors is that our strong execution in 2023 amid the challenging macro backdrop coupled with our clear top-tier growth plan demonstrates American Water's ability to deliver on our long-term plan. I'm very confident we will execute our plans in 2024 and beyond with the great momentum we have from 2023. Turning to slide six. As you can see, we have delivered an excellent total shareholder return over the past five and ten years, including our growing record of significant dividend increases. We're proud of this history, which compares very favorably to other utilities. I want…

Thanks, Susan and good morning, everyone. Let me start by turning to slide 9, where these graphs illustrate that our continued successful execution of our capital investment plan is succeeding in growing regulated rate base consistent with our long-term rate of 8% to 9%. Rate-based growth, of course, will drive earnings growth. We believe the high degree of visibility to our capital investment plan, combined with the low-risk nature of the plan, uniquely positions American Water in the utility sector and is fundamental to our investment thesis. Turning to slide 10, I'll cover the latest regulatory activity in our states, beginning with our most recently filed cases. In Pennsylvania, we filed a general rate case in November and are seeking recovery of $1 billion of investments. The case is proceeding as planned, including testimony and evidentiary hearings that are scheduled for February and March, with rates still expected to be effective in August. As a reminder, Pennsylvania uses a forward test year for rate-making purposes. In New Jersey, we filed a general rate case in January and are seeking recovery of over $1.3 billion of investments through December 2024. This case includes, for example, infrastructure improvement projects at all seven of our surface water treatment plants in the state. We expect the New Jersey case to be completed sometime later this fall. We also filed a general rate case last month in Illinois, where we have invested over $550 million since our last case. Our general rate cases in California, West Virginia, and Virginia are all progressing well and as expected. In California, we reached a partial settlement in the case in November related to the revenue request. We will prepare to implement the new rates retroactively to January 1, 2024, upon receiving the CPUC's decision on the settlement agreement…

Thank you, Cheryl, and good morning, everyone. Turning to slide 15, let me provide a few more details on financial results for 2023. The appendix also has details of fourth quarter EPS. Consolidated earnings were $4.90 per share in 2023, up $0.39 per share compared to 2022, and up $0.32 per share on a weather-normalized basis. Increased revenues were driven by general rate cases we completed in late 2022 and early 2023 in our larger states. These additional revenues are driven by the significant investments we've made and continue to make in our systems. As noted, earnings were higher in 2023 by an estimated net $0.13 per share as a result of weather in the second, third, and fourth quarters due to warm and dry conditions primarily in Missouri, New Jersey, and Pennsylvania. This compares to net favorable weather in the third quarter of 2022 of $0.06 per share, which related mostly to warm and dry conditions in New Jersey. In looking at operating costs, higher pension expense of about $0.13 per share and increased chemical costs of about $0.11 per share, including inflationary pressures, are being recovered in large part through higher revenues we proactively sought in general rate cases we completed in the last 12 months to 18 months. In the fourth quarter, we also had higher costs of about $0.10 per share related to waste disposal, equipment repairs, tank painting, and other maintenance costs across our footprint. Supporting our investment growth, depreciation expense increased $0.24 per share, and the cost of additional long-term financing increased $0.38 per share, primarily related to share count dilution. As I have mentioned all year, the EPS impact of the higher share count from our equity issuance back in early March was offset by avoided interest on the year. An additional benefit…

We will now begin the question-and-answer session. [Operator instructions] Our first question comes from Shar Pourreza with Guggenheim Partners. Please go ahead.

Hey, guys. Good morning. Yes, I don't usually lead off with sort of an M&A question, but I know John loves talking about M&A, and we saw that in the prepared remarks. And obviously, it's timely given the Eversource news yesterday where they essentially put a querying on the block. Can you speak maybe to your appetite for larger inorganic opportunities and specifically any geographic aversions to the Northeast in light of the developments yesterday?

Thank you. Yes, Shar, I think it's a great question. Obviously, we saw the news as well, and John certainly can comment more. I'd say, first of all, of course, we don't comment on any activity in the M&A space of that nature. I think for us, it continues to be our standards that we've shared. We have to be confident in the ability to grow. We have to have confidence in regulatory environments, confidence in policy, support in any jurisdiction that we're currently in or other jurisdictions we may be looking at. So I think that's always the gate at which we evaluate opportunities. So I'd probably just say that. John, any additional comments from your side?

Well said.

Perfect. And then just a follow-on. I know you're still kind of working through some of the ins and outs lead and copper rule. Is there even a general CapEx upside amount you could give us to think about would the spend sort of be additive in your view to the current plan? Or would it shift out some spend out like we saw with -- obviously, with PFAS spend on the last update.

Yes, Shar, let me again sort of generally answer and then Cheryl can add to it. I think it's -- first of all, it's sort of too early to be able to give any additional guidance around impacts to our overall plan. I think the important thing to remember here is it is over a much longer period of time than what we're seeing with the PFAS rules, for example. So it will give us more time to figure out what the actual impacts are to the plant, give us more opportunity to look at opportunity to move other projects around to sort of accommodate whatever spend we think maybe incremental here for us. So we just probably need a little bit more time to sort through it and then we can give a clearer guidance. Again, as Cheryl said in her prepared remarks, we know it will be significant. I don't think it will have the dramatic impact on our plan for shorter-term windows like we saw with PFAS, for example. Cheryl, anything you want to add to that?

Yes. The only thing I would add, Shar, is just that we have been making really good progress in that space and we'll continue to be focused on removing our lead service lines and the customer lead service line where they exist. But this is a more inclusive rule that, as Susan said, is over a longer period of time, so we'll continue to look at how we can layer that in.

Yes. I think just to sort of punch line on that one, and Cheryl again made the comment in her prepared remarks, this is about unknown service lines, unknown material, and it is about customer owns. So as we've been working through our own program of replacing our lines, now we have the added requirement to look at unknown pipe and customer service lines. So that's why it gets bigger. And then again, the long-term time horizon to deal with it, I think, is also important to keep note of.

The next question comes from Durgesh Chopra with Evercore ISI. Please go ahead.

Hey, good morning, team. Thanks for giving me time. Hey, just… Morning. Good morning, Susan. Just I hate to go back to the M&A. I know you're kind of going to be very limited in what you can say. But we've been getting a ton of questions on this. So I just want to be clear about something. In your seat, your peers generally describe M&A as a high hurdle rate, right, with the organic growth opportunities that they have as a company. How would you characterize the Connecticut water assets? Are these ones -- one-of-a-kind assets, those large assets that don't often come to markets extremely attractive? Or would you say the M&A opportunity is still a high hurdle rate versus the organic CapEx that you have? And I don't want to put words in your mouth, but I just want to see how you're thinking about it.

Yes. Durgesh, I'll tell you at the outset, you're not going to be happy with my answer because I'm not going to sort of go into a whole lot of detail here. I think -- our focus continues to be on the communities and the states that we currently operate in. And as you know, we're in 14 different states. We think there are just a significant number of opportunities in those states, and we're going to continue to focus on that. As you would expect anyone to do, we'll take a look at this kind of an opportunity as everyone would, but I think, again, our screens are the critical thing you should focus on. Regulatory environment, legislative environment, business climate and the ability to grow and that we're always going to look at opportunities from that perspective.

Understood. Susan, I appreciate that. Maybe then switching gears. Can you just update us on the Pennsylvania rate case, the commission, I think, came out in December, I think they may have suspended the rate case schedule. Maybe just talk to that, what does that mean? What are the next steps there, please?

Yes. Cheryl, I think laid out the details around timing. We've disclosed the size of the case, et cetera. Sort of big picture for me on this case. As is the case really with all of our general rate cases we have in progress, it's all about investment. We're not trying to do anything tricky in any of these cases, no significant policy changes from our perspective. This is simply about investment. That's what this Pennsylvania case is about and we'll continue to work through the process. There are no indications of any issues associated with this case as we work through the process, and we'll continue to to stay on that path. I'd say that's generally the case on all of our jurisdictions, all the cases that we have on file today. We've been signalling this, I think, for quite some time that the expectation to be in for general rate cases on this roughly 2-year cycle. We've been saying that for probably two, three years now, and this is just the continuation of that program. And it's all really driven again by our investment -- the pace of our investment, we've been increasing our capital spend plan for a number of years now to really address the needs that exist in the communities that we serve. And I think our regulatory strategy is consistent with that approach. So Pentyvania is no different than any other state in terms of our approach to it, and we'll continue to work the process there like we always do and we think Pennsylvania again, is a very constructive state, and we're confident in our ability to work through that case.

Got it. Just a quick follow-up there, Susan, -- like do does the procedure like the steps in the rate case in terms of testimony, intervenor testimony and all that stuff. Does that go along as planned with the suspension? Or is that on pause? I might have seen something that maybe on pause. I'm not sure if.

No, no change. Yes, no change. It's on schedule and on the normal process.

The next question comes from Angie Storozynski with Seaport. Please go ahead.

Good morning. I'm going to ask about Illinois first. I mean we have some very bad outcomes, regulatory outcomes on the electric and gas side in the states. You have a case there where we're already seeing some noise around it. So I'm just wondering how -- if there is any lesson learned from what happened in December and if you've incorporated that into the current timing? And then secondly, on PFAS, so we're seeing some lawsuits against investor-owned utilities on the back of PFAS. I understand that you've mentioned that you've been in compliance and going beyond requirements, but I'm just wondering how you manage this risk.

Yes. Again, let me sort of start off here. On Illinois, I would take my answer to Pennsylvania and insert the word, Illinois. We are proceeding there as scheduled with no significant issues in that case. It is about investment, and we'll continue to process that case like we always would. Certainly, there is noise around the electric and gas industry cases there. We think, again, our cases are different in that they are about investment only, and we're confident in our ability to continue to work through that case as well. On PFAS, Cheryl, you might just actually want to comment on Illinois, if you like. And then on PFAS. There's obviously a lot going on here, too. I think the litigation environment around this is probably not surprising. There'll be all sorts of plaintiffs' attorneys looking for an angle here. And I think that's probably what mostly you're referring to and what we're seeing. But Cheryl, anything you want to add on either of these topics?

Yes. I would just say, Susan, you were completely accurate on Illinois. We built a really strong case based on capital investment and we feel good about that case and the process. We're just going to go through the process there, the way we normally would. As far as the PFAS stuff, I do believe that there -- we've seen some lawsuits out there, Angie, as you mentioned. But we've been working really hard both to make sure that we're in compliance with all the rules that are out there that we're being proactive in our approach. But we're also working with EPA on the CRC designation and working at the federal level to try to get protections for water utilities all across the U.S. because we believe that we shouldn't be held accountable for polluted waters that are coming to us, and we're doing everything we possibly can to treat for that pollutant. And so we think that we should be protected from that. So we're going to continue to work in that vein and in that space and being part of the MDL, that's one step in that process to get recovery from the people who caused the solution in the first place.

Next question comes from Julien Dumoulin-Smith from Bank of America. Please go ahead.

Hey, good morning, team. Thank you very much for the time. I appreciate it. And nicely done on the guidance here, I got to say. Maybe actually, to that point on guidance, given the bump here. Just with respect to resetting higher the CAGR going forward, I just want to recognize that this goes through '26. Implicitly, could we say this is a statement of confidence through the forecast period? Or is this more nuance to the specific 3-year forecast period, '25, '24 to '26 here, if you will?

Yes. I think we've tried to be clear, Julien, on the sort of duration of this additional interest we'll have on the note. But John, do you want to comment on this further?

Yes, I think you've got it right, Julian. It's -- think of this as an increase over our ongoing guidance for that period through '26. And that's -- but we've not made changes as we tried to describe in our comments from our original guidance on the regulated strategy from back in November?

Right. Yes, understood. I just wanted to clarify that extra clear. With respect to Illinois here, obviously, you've got this case out there, there's a certain degree of attention. Can you comment a little bit about maybe some of the rate mitigation factors, what other pieces could help offset some of the rate increases to customers in Illinois? And any other mitigating factors and circumstances around that case that we can speak to here, for instance.

Yes. I'll comment on sort of overall strategy on that point. I think we treat Illinois the same as we do our other states. I mean we've been very focused on mechanisms or approaches to regulatory solutions that will help lessen and mitigate the direct impact of inflationary cost pension and other things, we've done that via trackers, we've done that via deferrals, and we've done that sort of across many of our jurisdictions, and we have a good amount of those costs actually, frankly, already sort of dealt with and embedded in rate structures across our territory. In Illinois, really no different than that. And as Cheryl said, we're just not experiencing other issues currently in that case. Now we obviously have to finish it. We have to get through the rest of the procedural schedule. And work through any issues that may come up. But we're not anticipating anything materially different there.

Yes. Excellent. And then lastly, just going back to the M&A point you were making earlier. I thought you were pretty clear about this. It needs to be accretive and/or provide robust visible growth. I just want to make sure I'm hearing you right about the growth piece there in terms of a key element in ingredient.

Well, I don't know that I said it has to be accretive. Are you -- I guess you're talking about the M&A piece. I think, again, I'll just repeat it. I think our view is that for us to look at new jurisdictions, it has to be productive, regulatory, legislative business environment. And the opportunity for growth, and I really, I guess, was referring to sort of footprint growth there. And obviously, you would apply a meaningful financial contribution from that too. So it's the same screens we've always had. It's the same dialogue we've always had on potential expansion into other territories. So I don't think this particular situation changes anything about how we feel about growth in other jurisdictions.

Got it. And just going back to lastly on that FMV piece, you guys commented extensible here, but just the time line on getting that clarity there. And you talked about being a little bit more protracted. Just how does this sort of at least from a process perspective, finally get to some resolution as far as you guys are concerned? And then prospects on expanding it even from there, given where we stand.

Well, Julian, you're going to have to help me. On the first part of your question, I'm not sure what you're referring to.

Well, just on the fair market value just in terms of potentially taking a little bit longer yes, indeed.

I got you. I just didn't hear the first part. Yes, I think that, as I said in my remarks, and John expanded on a bit, I think that what the PUC has done in Pennsylvania is actually quite helpful. And I've got a lot of experience in the regulatory world over the last 40 years or so. I've seen many pieces of legislation enacted, and I've seen many situations where commissions have to work through the implementation of that legislation. And I think that's exactly what we're doing here. And as we said, we applaud the commission for taking this approach and really being thoughtful about it and understanding the importance of this legislation to the larger strategy in the Commonwealth. So I think the steps that are being taken make good sense. Now having said that, we do have to continue to work through how those guidelines ultimately may be employed. But we think it's just helpful. And we'll give a framework for all of us to be able to work more productively in. Now having said that also, we do have to sort out what it means in terms of timing, and we've got a number of cases, acquisitions that we're working on in Pennsylvania through the regulatory and approval process, and it's obviously impacting that a bit currently, but we expect that to clear soon and be able to get back on our way here.

Next question Comes from Anthony Crowdell with Mizuho. Please go ahead.

Just a quick housekeeping question after Julien. You talked about the HOS note in the income, and you're very clear about that, that's more -- or not much of an ongoing earnings number. I think you talked about maybe it rolls off in 2026. When we move forward post '26, should we think about additional rate base that maybe backfills that on a more linear growth rate? Or -- and I know $0.10 of a $5 in some number is very small, but just does something backfill that to keep their earnings trajectory pretty linear?

Yes. I think you hit on it, Anthony, there at the end. It's not terribly material. We think this is a great benefit from a cash flow perspective. The additional interest is nice to have. We think the certainty associated with that contingent payment we had on the New York contract extension is quite helpful now to have that secured. So we think there's just a variety of things about the restructuring that made a lot of sense for us that don't necessarily translate into any material impact to our overall plan. So long answer to your question, we would not expect there to be a need for finding additional capital to sort of fill in that very minor hole that this $0.10 will create.

Great. And just if I could squeeze one more. And it's -- it's to Cheryl's comments earlier and unfortunately, it looks like most of the Q&A has been sidetracked by Eversource question. So I'm not asking an Eversource question. Just when Cheryl talked about the increased needs on water systems, cybersecurity, you just think of that, is that maybe a foreshadow to that maybe the smaller bolt-on acquisitions may come at a greater frequency because of the requirements that are being -- the compliance requirements that are being put on these smaller systems, was that where that was headed?

Yes. I think this is an area we've tried to signal, I think, for the last several discussions we've been having, and I think really probably what prompted that even was PFAS as an example. We see that as just another area that may be difficult for some of these smaller systems to be able to manage, both from an investment standpoint as well as an expertise standpoint. Cyber is another great example. Interest rates is another great example. I mean, the list just gets longer, not shorter for these communities to sort of have to deal with. And from our perspective, we have always been very focused on trying to define what the need is for a community and helping satisfy those needs. And again, from an M&A perspective or an acquisition perspective, as that list gets longer, it creates more opportunity for us to have that dialogue and work with communities to solve those kinds of problems. So yes, we think it does have upside to our acquisition strategy. It’s probably not a Tsunami though to use a water term. It's probably a much sort of longer-term impact I think it takes a bit of time for communities to sort of wrestle with these issues and determine impacts to them before the ready to make a move. So again, we use these kinds of issues in our discussions. I think it will take some time before we see any measurable impact directly related to these issues.

The next question comes from Steve Fleishman with Wolfe Research. Please go ahead. Hi. Good morning. Good morning, Steve.

Not an M&A question, so the -- a couple of things on the HOS changes. So -- just the -- thinking about the shift in the interest rate on the note 7%, 10%, which is great; I mean that's a pretty high rate to pay for the seller and I guess, I guess soon to get rid of the prepayment. And so I guess I'm just wondering how do I think about just making sure that, that seller in terms of getting paid back, getting paid.

Great question, Steve. Yes. John, do you want to take this question?

Sure. From a credit perspective, we stay very close to the HOS business. We're, in fact, a partner. And as lender, we're constantly in touch with the business. The company has evolved, the credit has improved. Extending the New York contract is a significantly positive credit move and as I mentioned in my comments, the company is currently making an acquisition with new equity funding from their owners as well as cash on their balance sheet. So we do have covenants. They've remained in compliance with the covenants. And in fact, we've taken the opportunity to tighten covenants as well. But when you look at the underlying business, it's frankly doing better than it ever has. So we feel very, very good about the underlying credit here.

Okay. Does the owner, does the private -- does the firm back it up to? Or is it just the business back up paying the rest?

Yes. No, the owner backs it up, and that's what I was trying to say. So when there's fresh equity coming into the business to make this acquisition, that's coming from APAC who owns the business.

Got it. And then just -- I know you have that sharing mechanism, too for the business. Could you just maybe let us know kind of how much income you made on the sharing mechanism part in, let's say, 2023 or 20 -- Yes.

Yes. Steve, I don't know if we had that disclosed. Is it separate in the 10-K? Yes. Steve, we can point you to it. I'll have Aaron follow back up with you to point you to it. But I think it is in the 10-K, which obviously, we filed last night. And this is the revenue-sharing mechanism you're referring to, where we collect the share of the revenue that's generated from the warranty work that they're doing in our various state jurisdictions where we have contracts. Yes. So Aaron will redirect you to that.

Last on the Pennsylvania case, I think two of the commissioners sent a letter at the beginning of the case, just kind of framing it. I'm not sure -- is that abnormal would you say? Or is that normal for your Pennsylvania cases? How would you characterize that?

Yes, I would say it's probably not necessarily customary, but again, we think that this case is proceeding as it should. We don't really see, again, any issues here. It's a big case. I mean it's $1 billion worth of investment and we were in just a little under two years ago on this case. So it's certainly material. And again, solely driven by investment in the jurisdictions that we -- or the communities that we serve there.

Next question comes from Jonathan Reeder with Wells Fargo. Please go ahead.

Hey, good morning, team. I just wanted to come back to EA and the fair market value stuff, do you anticipate that all the changes to the fair market value will come via the commission process? Or do you think some of the bills in the legislature will make it across the finish line?

Yes. Our view is that this is the best path and the likely path to sort of resolve issues around fair market value in Pennsylvania. Again, I think this is normal practice. And I'm not speaking specific to Pennsylvania. I'm just saying normal in my 40 years of experience, this happens fairly regularly where commissions are charged with interpreting legislation and applying the provisions of it. And that's what I think this commission is doing, and I think they took a very proactive step here to do exactly what you're talking about to resolve the issues and be able to effectively implement the legislation. I think there's no one -- well, I shouldn't say no one. There are a few probably that have conceptual problem with what fair market value legislation was intended to do. I think there's a good understanding of the need for consolidation in the state, and this is the mechanism to allow for that to occur. So I think it stands, and I think the commission will do the work necessary to make sure that the legislation is effectively enacted and implemented.

Yes. So I mean you're saying PA is, in your opinion, very much fully behind continued promotion of consolidation.

Yes. I think as a state, as a Commonwealth, I believe that is a true statement, yes.

Okay. what sort of impact do you think it will have on the deal activity? And would you say the proposed RRR will make it tougher for AWK to deliver on the M&A CapEx placeholders?

I think we'll have to see how it plays out and how ultimately it gets worked from a procedural standpoint. But I'd say, generally speaking, no. we do not see it having a material impact on available opportunities and then ultimately, the outcomes on transactions.

Okay. And then last question for me. I saw that in at least the PA and New Jersey rate case filings that revenue decoupling requests were made, possibly, it's in the Illinois case, too. Do you typically make those decoupling requests and just don't get them? Or is that something new that you're pursuing?

Yes, it's a good question. I'd say it varies across jurisdictions. And again, part of our job here is to really understand what each commission is comfortable with and what mechanisms work or don't work in a particular jurisdiction. And it's also part of our responsibility to educate and to inform commissions and their staffs about how various mechanisms can work and what the impacts are. So we do that across our jurisdictions. And I think we have really been more proactive in that regard over the last couple of years. And so I think as we do that education and that dialogue it will inform where we propose what mechanisms. So I wouldn't necessarily say it's a broad application. The decoupling is always on our list. In every jurisdiction, I think it's all circumstantial. What mechanisms work best in what jurisdictions and we work accordingly.

Okay. But for PA in New Jersey, are these new proposals? Or have they been there and, say, your most recent case, too?

Yes. I'd have to go back and look to see if we had them specifically in those cases. I don't actually recall. But again, I wouldn't necessarily think this is breaking new ground on either of these proposals.

The next question comes from Gregg Orrill with UBS. Please go ahead.

Yes. Thank you. Just a question on the PFAS settlements. Just sort of your expectation on the outcome following up on the 3M settlement there. And thanks for the additional updates. I'm just curious if anything's changed around your view of the company's sort of legacy liability to PFAS if there is one?

Yes. On the first question, Greg, around just settlement expected outcomes. Obviously, that process is proceeding. And we had one settlement approved and the other one fairness hearing has occurred, and we would expect it to ultimately get approved. And then the process begins of claim submittals and really going through the settlement allocation process. So obviously, it's too early for us to be able to give you any indication of what we think the outcomes will be financially. But as we've said all along, these will be cents on the dollar in terms of recovery. We don't expect, obviously, for it to cover the full cost of exposure here. But the amounts to be recovered through the settlement, we think is quite important and the best avenue, as Cheryl said in her remarks, to to collect dollars on behalf of the customer to reduce the overall obligation the customer has. So it's a good process. We've been happy to be involved in it. Our team, I think, in a lot of ways, is leading much of the effort around getting this work through the courts and getting outcomes here that are quite favorable. To your second question on how do we view sort of legacy exposure here. I don't think our view changes. As we said earlier, this will be an environment like all where there will be plaintiff's attorneys that are looking for an opportunity here and how that ultimately gets worked through the larger process around the MDL, the multi-district litigation is yet to be seen. But in terms of our exposure, we don't have any different view than we've had from a legacy perspective. Again, as Cheryl said, on a go-forward basis, we are treating and we're preparing to treat, and we're confident in our ability to do that on a go-forward basis.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending. You may now disconnect.