Christopher Franklin: Yes, we think about tanks, right, each of them – by the way, most of our systems where we’re doing mitigation are small systems. We do have some large ones, but a lot of them – the vast majority of them are small systems, when you think about two different tanks. So those tanks have to be fabricated, purchased and fabricated and put use. And we think about 2 times all of the systems that we have to implement, which are hundreds. And then the carbon material is also something now that would be ongoing, essentially because that would have to be replaced or regenerated. But we think about those materials. We could – there could be some constraints on the ability to deliver. That’s why I say over a five year period, spreading it out, it’s going to be a lot more palatable to people because if we try to squeeze that into three years, it’s really tough.
We’re out there. We’re already doing mass purchases to get ready. So that’s not going to be a challenge for us necessarily, but it could be for others. Let’s remember that EPA significantly underestimated the impact of this rule. And so the rush on some of these materials is going to be much more significant than I think was initially anticipated by EPA.
Travis Miller: Okay. Makes sense. And then just a real quick follow-up. The tanks that you mentioned, if you obviously are doing a lot of the PFAS stuff already, can you use the tanks you’re using already? Or are those unique tanks that you would have to replace or don’t have? Does that make sense?
Christopher Franklin: Yes. It makes sense. These would be brand new added to the site of each of these sources, right? And so, the 210 could be in a building or outside of a building, but they would be brand new to the process at each site.
Travis Miller: Okay. That makes sense. And then one other to the hottest topic in the sector right now to data centers. Any impact there, either or even large manufacturers for the Gas business, large factories. Anything there that would be upside?
Christopher Franklin: Yes, Mike is here, and there’s none that I’m aware of that would be materially impacting gas. But Mike, anything you’re seeing?
Mike Huwar: I think it’s a great question. And I will say that locally within our service territory, there are project developers that are looking for opportunities that include sites with connection to the grid, customers that may even want to take power offline, and the value of being located with vast pipelines, as well as ample and low-cost natural gas is driving that opportunity.
Travis Miller: And anything on the Water side? We fear that the data centers are water-intensive anything? That would be relevant there?
Christopher Franklin: Yes. No, it’s a good question. And well, I’ll tell you what, Ohio has been really successful at attracting some of these facilities, not only data centers, but also chip manufacturing and also general manufacturing. They’ve really done a beautiful job there. And we would like to participate in that. And so, we are engaging in Ohio. And of course, there’s a lot happening in Texas as well. In fact, Travis isn’t necessarily the plant itself. But then the housing that comes along with a new manufacturing plant because of the employee base that’s added. And so we’re seeing that kind of growth, particularly in Texas. And so that would be more the nature of our participation on the waterside, not necessarily the plant itself, but the follow-on housing.
Travis Miller: Yes. Okay, makes sense. Thanks so much for the time.
Christopher Franklin: You bet.
Daniel Schuller: Take care, Travis.
Operator: Thank you, sir. We’ll now be moving to Jonathan Reeder calling from Wells Fargo. Please go ahead.
Christopher Franklin: Hi, Jon.
Jonathan Reeder: Hi, good morning.
Daniel Schuller: Good morning, Jonathan.
Jonathan Reeder: I was hoping to just get a little more clarity on the guidance exactly. So excluding the $0.24 gain on sale, do you expect to be able to deliver the full year ’24 EPS within that $1.96 to $2 range? In other words, can you offset the $0.05 weather headwind in Q1?
Daniel Schuller: Jon, I think we’d say that that’s a difficult challenge at this point given that the $0.05 weather impact in the first quarter.
Christopher Franklin: I think the math Dan took you through is pretty clear. What we can’t predict as we had in, I guess, 2022, Jonathan is a blockbuster decent November, December in natural gas, which could make up. But we try to predict and guide based on normal weather. And that’s why when we add in the weather normalization, it makes it a much easier prediction. We would not have anticipated, especially two years in a row to have the weather impact that we just saw in 2023, Q1 and 2024 Q1. So, again I think Dan’s math took you through how we think about that on an impact given what we saw in the first quarter.
Jonathan Reeder: Yes. For some reason, I was thinking the impact on Q1 ’23 was even larger, like closer to $0.08. So when I saw or when I heard you guys say $0.05, it sounded like, okay, maybe that was something that could be a little more manageable? Or like you said, maybe you get some favorable weather, whether it’s at the Water business over the summer or the Gas business in Q4 that helps kind of balance things out, so.
Daniel Schuller: Yes. Jonathan, I might add that last year, there was a significant impact in the first quarter. But by this point, we also had a few positives that we were already – had already experienced in the year or we’re seeing ahead of us. So we already had that New Jersey contractor – contract fee reversal that we talked about in the first quarter last year, we had a Texas Water pass through that you’ve heard us talk about. We had some things that were cleanup from our SAP implementation, where we had some capitalization of 2022 expenses in the first quarter 2023, which were beneficial. And then at this point when we had the call, we knew we had a relatively chilly April. So we had a – we’re in a little bit different situation.
And then ultimately, we saw the Natural Gas safe harbor come through, which was beneficial as well last year, in terms of getting back on track and inside that guidance range. I think this year, we’re a little bit more susceptible to the weather impact. As you know, we’ll do everything we can to claw back pennies and focus on our operating model in order to do that. But just in transparency that here today, it’s just a little bit harder than it was last year.
