Q3 2019 Earnings Call

Sounds cool.

Does that make his financial reports for the third quarter ended September 30 2019.

Then, leaving today's prepared remarks arc with eastern COO and enjoying CEO .

Brian Boehner Executive Chairman and John Michelle Vice President operations you strategy.

After their prepared remarks, the management team will take a question.

As a reminder, really no doubt Modi PBF of the presentation like the will accompany that he works and based on today's conference call.

Thank you did in the press release, we issued earlier today.

They exercise this is lights in the Investor Relations section apartment sites.

Before we go further I would like to talk a little over two books Hamilton with the Alpha IR group will be the Companys Safe Harbor statement within the meaning of the private Securities Litigation Reform Act of 19 that you fight that provides important cautions regarding forward looking statements Brooks.

Please go ahead.

Thanks norm.

Turning to slide to for a view of our safe Harbor and non-GAAP statements.

Today's presentation contains forward looking statements that's within the meaning of the private Securities Litigation Reform Act of 1990, but.

Rejected financial information, including our guidance outlook are forward looking statements forward looking statements, including those with respect to revenues earnings performance strategies prospects and other aspects of data fuse business are based on management's current estimates projections assumptions that are subject to risks and uncertainties.

That could cause actual results could differ materially from our expectations and projections.

Encourage you to read our filings with the Securities and Exchange Commission for discussion of the risk that can affect our business antonopoulos undue reliance on any forward looking statement.

We undertake no obligation to revise or forward looking statements to reflect events or circumstances occurring after today, whether as a result of new information future events or otherwise, except as may be required under applicable securities laws. During the call. There also be a discussion of some items that do not conform to U.S. generally accepted accounting.

Principles or get including adjusted EBITDA adjusted operating ratio adjusted net income or loss and free cash flow.

Reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in the appendix the investor presentation and press release issued this morning, both of which are available in the investors tab of the death due on site Www Dot dot dot com.

Now I would like to turn the call over the dusky COO and interim CEO Mr., Chris Easter Chris.

Thank you Brooks and good morning, everyone starting on slide three.

Today, we will cover several topics first I will start article by providing detailed overview of the significant operational and strategic actions taken a dansky over the last few months.

This will include an update to the first phase of our operational improvement and Rightsizing plan that was launched during the third quarter.

I didn't ask as executive Chairman, Brian Bahner provide some commentary on a few board and strategic development, followed by John Michelle Our Vice President of Operation strategy will give a more detailed discussion of our third quarter financial results I'll close our prepared remarks with a few picture big picture thoughts, but could we take your questions.

Turning to slide four.

I want to start out with a recap of last hundred days.

This has been a period of decisive action for the company, we embrace change mobilized our team and came together as an organization to reposition the business, we have a tremendous platform to leverage as the industry leader in the flatbed specialize transportation markets in North America.

The strategic actions, we're taking today will allow us to capitalize on this leadership position as we drive enhanced profitability and repositioned ASCII for future growth.

Let's take a step back and review how we got here in our last earnings call you heard us outline our shifting focus as we pivoted away from concentrating on acquisitions and made a commitment to operations excellence, which included intelligent integration and building better organizational efficiencies.

As a reminder, that plan had two key components. The first involve integrating three of our lower performing operating companies and the three other high performing sister companies. We are emerging these units for the purpose of capturing operational synergies and driving improved efficiencies to better asset utilization and the use of shared services.

Additionally, these integrations will allow us to better leverage the deep talent institutional know, how and functional support teams of some of our strongest performers across our portfolio.

Second we initiated a broader business improvement plan across our operating company simply put we identified specific underperforming operating units, where we must drive improved performance. These business improvement plans are targeting areas such as yield management capacity allocations rightsizing trailer truck ratios.

And maintenance execution to name a few.

Later in August the company announced the retirement of founder and CEO Don to asking.

It remains a member of our board of directors as well as our largest individual shareholder.

Given our pivot from an acquisition space strategy focused on building size took platform rooted in operations excellence and capturing value through our scale the transition of Don's responsibilities to me made sense.

In conjunction with Don's retirement, we named Brian Bonnard, two the role of executive Chairman and CEO . Similarly taken the range of leadership at the board of directors level.

Two weeks later as we started to execute execute against our operational and cost improvement plan. We quickly sharpened our line of sight to our ability to drive value and accelerated the pace of our original plan.

Then in September we enhance that plan to include corporate cost reduction.

Effectively we went from a 20% 25 million dollar net improvement goal over two and a half years to a $30 million Golan roughly eight months for clarity that goal is based off of our first half 2019 revenue and operating cost run rate on an annualized basis in the large majority the drivers of a $30 million will be cost.

And today I'd like to share some changes within our operations team. These changes will allow us to better leverage the capabilities of our company's deep industry experience and talent to the creation of new leadership roles, including a new leadership Council transformation office and operating segment leaders.

These phase one strategic actions from our accelerated plan are summarized on slide five.

There are three core components to this accelerated plan.

First with regards to our operational integrations are leaders and associates were onboard from the start their willingness to embrace change allowed us to accelerate the timeline and goal for this initiative to $19 million in operating income improvement on a run rate basis by the end of first quarter 2020.

Turning to our business improvement plans, we again saw an opportunity to move with a greater sense of urgency our new goal raised our original outlook to $7 million by the end of the first quarter next year.

Lastly in early September we announced the Rightsizing of our executive management and board and the substantial corporate cost reduction plan.

This is expected to yield an additional $4 million decrease in our operating costs by the end of the first quarter of 2020 as well.

These savings come after evaluating and subsequently eliminating several management positions and other meaningful cost within our corporate office as we look to hone our focus and consolidate certain duties at the executive management level.

That's a quick strategic summary of what was obviously, a very important quarter for to asking we took decisive action and drove significant but necessary change across the business.

Our team is maintaining a sharp focus on actions that drive immediate value, but are also clearly prioritize that initiatives that are appropriate and required to sustain long term improved performance and note. The title of this slide this is just phase one.

These actions represent only the first steps and evolving strategy.

We are rebuilding a culture centered around operational excellence continuous improvement and accountability.

We look forward to updating you as our strategy evolves in the coming months.

With that review the last 100 days complete please turn to slide six so I can walk you through a number other important changes that we've made to better leverage the tremendous talent, we have across the company.

The head of our operating companies have decades of experience and our true thought leaders in the flatbed specialized transportation and logistics industry.

But they have been a largely untapped resource to date outside of their operating company responsibilities.

Therefore, we have formed a new leadership structure that mobilizes. These talented individuals to helped drive our much needed performance improvement across the entire organization.

First we created a little leadership council comprised of several Dansky operational company leaders, which will be headed by fill bird.

Phil Phil is the current CEO Bulldog Highway Express was previously the chairman of the American trucking associations and has received several distinguish industry awards. The goal of the new counsel will be to promote and champion organizational improvement and best practice initiatives as we move forward.

Second we're pleased to announce the creation of a new transformation office, which will be headed by John Wilbur. John is currently the CEO of a roadmaster fruit John background includes experience in private equity in banking and he was responsible for the integration of our our and our acquisition in 2018.

He is a perfect fit to head up this new important office.

The transformation office will be responsible for ensuring the successful completion of the previously announced operational integrations and business improvement class plants across the das the organization.

As we complete phase one of this important work in late Q1 2020. This office will work hand in hand, with our leadership council to take it initiatives and drive them across the company by tracking execution and ensuring accountability.

And third we created a new segment head roles to oversee operations for each of our divisions. This is expected to improve our reporting and management structure by streamlining decision, making within our two segments to these talented individuals.

Our next Robbins CEO Lone Star Transportation heads up our specialized segment, while Rick Williams CEO of Central Oregon Truck company heads up our flatbed segment.

Thanks, and Rick have decades of experience in our business and collectively they will be responsible for overseeing and implementing best practices across our segment operating companies.

These forward leaders at over 100 years of collective truck and experience and institutional knowledge and each has been instrumental in helping to drive positive change over the last several months.

Further each has run high.

Each run high performing operating companies within to ask delivering industry, leading return and profitability metrics.

Thus, we believe they have a lot more to contribute to our organization I look forward to their expanded contributions.

Now moving onto the third quarter results and key themes that are highlighted on slide seven.

Our third quarter revenue was $450 million, which was flat versus the second quarter and down slightly year over year.

From a big picture perspective, we continued to see softness in our flatbed markets. Although we are starting to see some signs at the rate environment may be bottom.

Our specialized segment saw a 1.4% increase in revenue driven by ongoing strengthen our when did it went end markets that offset a weak oil and gas sector.

Third quarter, adjusted EBITDA was 43 million, which was down versus 53 million in the prior year quarter.

Third quarter net loss was 273.3 million.

We took decisive action, which resulted in extraordinary costs and we will deliver exceptional results in the future.

Furthermore, our team has aligned behind a simple simplified disciplined focus we're excited to demonstrate our ability to execute and deliver profit.

With that I'll now turn the call over to Brian Bahner, Our executive chairman to provide a number of corporate and board related updates Brian .

Thank you, Chris and good morning, everyone I'd like to take a few minutes to update all of you on a few corporate developments. Please turn to slide eight.

First an observation under Chris This leadership I want to say, how proud I am of everyone at Taski and how hard they work to drive significant change across the company in a short period of time.

Additionally, our operating company leaders have stepped up and embraced our integrations and business improvement plans.

Most proud of the commitment by all of our leaders to drive measurable financial improvements.

Next you will see detailed in our press release that we've taken a noncash impairment charge. This quarter of 306.8 million. The recent decline in our stock price and an update at look at our historical acquisitions, given today's market conditions prompted an impairment.

Review.

We do not expect these charges to impact our ability to generate cash flow or have any impact on our ongoing operations for our debt covenants.

Next I want to update our investors on the closing process.

Transportation and energy services acquisition, we completed in June 2018.

As a reminder, this acquisition had a potential earn out associated with it desking takes a conservative approach with respect to reserving for earnouts related to acquisitions.

Upfront, we reserve the full amount if any earn out until the final earn out obligations are determined.

So we have and will continue to reserve the full charge of 21 million in our financial statements until our discussions with the of the to shareholders representative are finalized.

It is important to note that this does not mean that in our opinion that we will be obligated to pay the full $21 million, but rather simply a testament to our conservative treatment of this potential payment until the discussions are included in.

In accordance with this agreement we have submitted our earn out calculation to the beta shareholder representative and are in effective communication related to earn out calculations, we will not comment any further on the aveda earn out until we have completed our discussions with the Aveda shareholder representative.

Lastly, I want to update the taski investors and stakeholders on our status of our ongoing CEO search the board remains focused on fulfilling.

Fiduciary responsibility to secure the best individual for this critical leadership role Chris remains a high quality candidate for the job by thank him for his commitment to the organization as both Chief operating officer, and interim CEO as well as an impressive amount of heavy lifting he and the whole team have undertaken.

The operational improvement efforts.

I'll now turn the call over to John Michel to review, our financial performance last quarter John .

Thank you Brian .

Our Q3 financial details are presented on slide nine.

Revenue was $450.4 million compared to 461.6 million in the year ago quarter.

The decline was driven primarily by the softer freight rate environment in our flatbed segment, which was partially offset by 1.4% revenue increase in our specialized.

As Brian mentioned, the integrations resulted in a triggering event, which required us form an impairment test of our goodwill.

Part of the process. There was a review of effected assets you evaluate each asset and perform an analysis and determine if you have the economics for the carrying values.

The total amount of the impairment was 306.8 million.

Production deferred tax liability was 57.7 million for a total tax adjusted in the impact to earnings of approximately 272 million.

Net loss for Q3 was 273.5 million or $4 in 25 cents per share which includes noncash impairment charge.

Adjusted EBITDA was 43.2 million compared to 52.8 million in the year ago quarter.

The year over year decline in adjusted EBITDA was driven by softness in freight rates and higher driver pay.

Now, let's talk through some of these onetime costs, we incurred during the quarter.

Moving to slide 10, we've tried to make the impact of some of these costs easier to understand.

We had an impairment of goodwill of 112.8 million.

We had an impairment of intangibles of 85.7 million.

We had an impairment of PPD right abuse and other assets of 108.3 million for a total impairment of 306.8 million.

This resulted in a reduction of the deferred tax liability of 57.7 million.

Sure and approximately $35 million tax impact of the impairment.

The impairment is expected to reduced depreciation and amortization by approximately $7.4 million per quarter.

There were a number of onetime costs expense during the quarter as a result, the ongoing operational improvement plan corporate rightside.

In total there were $13.7 million in costs that don't impact adjusted EBITDA.

Broadly speaking these were $6.5 million per employee related costs.

2.8 million related to fixed asset write offs.

2.6 million of legal and consulting and 1.8 million for other related expenses.

Finally, we had 2 million attributed to the write off of an amortized financing fees.

Moving onto a more detailed look at or segment results on slide 11.

Specialized revenue in Q3 increased 1.4% to 288 million driven by strong wind energy related end markets.

Praised broad weakness in our oil and gas related end markets.

Team move very quickly in responding to market conditions.

At this time, we are maintaining our infrastructure that supports oil and gas transportation.

Such that we can take advantage of a rocket position when conditions improve.

Adjusted EBITDA decreased 15% $34.3 million.

Our operating ratio was 97.4% compared to 95.8% in the third quarter of 2018.

Especially as rate per mile was relatively flat versus a year ago quarter at $3.54.

Revenue per tractor increased approximately 1%, but this was offset offset by $3 million cost headwinds related to higher driver pay versus the year prior.

Slide 12 shows are flat, but segment.

Flatbed revenue in Q3 decreased 6.4% to 106 to 9.8 billion and adjusted EBITDA decreased 4.6% to 20.7 million driven by the softness in manufacturing and construction markets, coupled with truck downsizing across the segment.

Weaker flatbed rates versus prior year period represented at $3.7 million headwind to our universal.

Flatbed had an operating ratio in Q3 of 96.9% compared to 93.3% the year ago quarter.

The flatbed rate per mile Q3 decreased 7% to $1.90 and flat, but revenue per tractor decreased 7% 42600, which highlights the soft freight rate environment.

Now turning to our balance sheet free cash flow.

Slide 13 indicates at September 30, we had 79.6 million.

Zero outstanding and 84.6 million available under our revolving credit facility for total available liquidity of 164.2 million.

Net debt was 633.6 million and leverage in accordance with their debt agreements was at 3.25 times, which remains well below our 4.0 times Kevin.

Our credit agreements removed many of these onetime items, we've discussed today, so we maintained a healthy cash.

Cushion against our covenants.

For the nine months ending September Thirtyth cash provided by operating activities was 89.4 million.

Cash Capex was 17.4 million in cash proceeds from the sale capital property equipment was $23.8 million, resulting in free cash flow of 95.8 billion for that nine month period.

We financed 65.6 million PPD during the nine month.

Overall, we reduced our net debt by 16 in the half million dollars versus the second quarter, even in the face and softer industry conditions and before the full benefits of our operational and cost improvement plan.

I will close my prepared remarks with a quick reminder, that are fourth quarters, historically, our slowest quarter of the year from a seasonal perspective.

For example, our last three fourth quarter, so operating ratios of 100% or greater volumes tend to slow with the holiday season.

We still believe you'll see some solid time and progress based on the decisive actions we've taken to control costs.

Streamline the organization.

They will likely be more impactful as we knew pass fourth quarter and into fiscal 2012.

With that I'll hand, the call back to Chris.

Thank you John .

Moving to slide 14.

We are reaffirming our outlook for 2019, although we expect to be at the lower end of the range.

Let's end on slide 15.

Well I'll summarize I'm, even more confident that we will achieve our $30 million target.

We have a sharp simple focus and our team has aligned and mobilized as we build a culture based on empowerment and accountability.

That concludes our prepared remarks, and I'm excited to turn the call over for your questions.

As a reminder to ask a question your mid to press Star one on your telephone and to be dry question Craig Hallum team.

Some buyer will become follow the kidney roster.

Your first question comes from the line of Jason Sito of Cowen and company. Your line is open.

Thank you operator, and Christian team. Thank you for taking the time today.

Bunch of different questions that sort of circle.

Front areas here, Brian you mentioned the CEO search is ongoing one.

Any hints on timing and to what about your search for CFO .

Yes, our timing still remains the same as we previously discussed which was.

Three to six months from the start so we're still looking at a first quarter completion of that effort and then regarding the CFO search we are doing that as we conclude the CEO search with the understanding that both individuals would like to understand where they're reporting to or have reporting to them.

Okay.

It makes sense.

And relationship to some of the impairments that you guys.

Took out there.

I understand what what triggered it on on the acquisition front.

Where it was there any one particular acquisition.

You guys made that the trick and most of this or was it spread out evenly over some of the ones you've made.

And then also on on the Reorganizational charges were a lot of them put in when you look at your.

Income statement or a lot of the numbers put already in salaries wages and benefits is that why jumped up as a percent revenue.

Yes, I'll take the first part of that.

Regarding the.

Good.

The trigger we had two triggers there it was the restructuring effort as well as the stock price that triggered an evaluation of impairments and we are falling FASB FC threefifty methodology to calculate the impairments. So that was what the overall trigger was there wasn't once.

Okay, perfect Opcos that what's driving that.

Okay. So it was more spread across specific opcos in terms of the impairment correct.

Yes, Jason and into your last question, a big part of the those costs were.

And need agreements are out there obviously, the severance related to the head count reduction and so thats the big increase in the SVB line.

Okay. That's what I thought I just wanted to just some quick modeling one.

On the on the operations front can you talk about some of your end markets.

A little bit more I know you mentioned when the little bit.

You made the comment that you sort of see the rates improving a little bit.

On the flat bed side I'd like some more meat on the bones, there and then I want to talk a little bit about brokerage.

Yes, I'd say from a.

Kind of a segment perspective for industry vertical perspective, we're seeing some strengthened some it's kind of a mix, especially on the specialized side you know with things like wind energy very strong, but oil and gas is down but theres. So theres offsets in there.

We're seeing some other a lift sequentially on CCAR security cargo in some of other segments and we're seeing.

Softness, though on steel and manufacturing.

But it's all a mix, we're seeing things I think kind of level off and I think even more importantly, though we're seeing that capacity is what's where we're seeing things tighten.

Thats, helping offset to some extent rate pressures and it's.

Given the for optimism more optimism as we're moving forward and what was the last part of your question again.

I was going to I was going to jump to brokers, but on the capacity tightening is just because you've seen some bankruptcies or what's what's going on there in the capacity. So I think thats clear evidence for part of it I think the.

The truck orders of new orders are down.

And you see the bankruptcies out there there's a lot of smaller companies in particular that had been struggling.

Okay I appreciate that not last one alternative with somebody else on the on the brokerage front, obviously you want from.

Very strong growth in Twoq.

Negative growth, we've been hearing brokerage has gotten a lot more competitive over the last few months, how should we look at that going forward, especially in Fourq Q.

Yes, I think it is tough market out there and brokerage and for US. It's we're apps, obviously able to execute well on brokerage, it's a large chunk of our business, but it also gives us installation so right now than when a tighter market we tend to more those loads tend to end up on our trucks, because we're wanting to make sure we're splitting those assets and using those.

As as best we can and I just think long term for us. The brokerage is certainly an avenue of growth, we love the non asset component and we already have got such great relationships and strength with our customers. We think it's a it's clearly a path for us in the future for growth.

Okay. So in Fourq, you would expect it to be down again do you think it's going to be any worse than it was in threeq.

Thanks.

Not so anything that would proportionately I think take a look at the seasonality for take a look at where we are I don't expect anything beyond those normal seasonal type shifts that you would see.

Alright, perfect I appreciate the time has always gentlemen, thank you.

Your next question comes from the line of Matt Brooklier Buckingham Research. Your line is open.

Thanks, Good morning.

Some kind of kind of a follow on question you did talk to the seasonality.

You have embedded in your business as we're thinking about fourth quarter.

The message there is right.

Weaker on a sequential basis.

If I'm looking at the midpoint of of your guidance.

Implies that that decline this year, maybe a little bit less worse than that that's been in years past.

So maybe if you could just talk too.

Some of the benefits.

At year end.

Acting im assuming some of the corporate restructuring right. The full run rate of that hitting in third quarter that provides a little bit of OLED for dessert.

And I'd like to confirm that and then b.

Is there is there anything else from the program that youve initiated that could start.

Benefit the fourth quarter here from a from a cost perspective.

Yes, I'll go ahead and take that Matt, Yes, I think the looking at the fourth quarter.

And again I made it a quick note of the slide we're confirming guidance, but yes, we absolutely are.

Confirming that we feel confident and comfortable with where we're headed our trajectory for the balance of the year and yes. We are seeing some of the lift from some of the actions were taken that are already so that will start start to come through in the fourth quarter, but of course, we will see the full lift until we get into next year.

Yes, and I'll, just Matt because I know apartments modeling question when you think about EBITDA.

There's a lot of noise below that around that depreciation and amortization and so my comment was around Hey, Chris Chris Chris is job simplify and we're focused on no arent just note that that Q4 has a bigger impact on all our than it does the EBITDA, which would you.

Right.

Okay. That's helpful.

And then.

Could you talk to contract grades where do we think rates are resetting and new.

You're feeling a little bit better.

Specialized business versus flat.

All in.

Where do we think contract rates are trending right.

And then I guess I'd say, we're seeing slight declines I don't want to go out there with a number right now, but when our contract renewals. They are kind of spread out during the course the year dependent upon the industry segment.

But we certainly.

I think they have plateaued on the low side and we're seeing items were seeing stability I think in our end markets.

Okay, and then last one and then.

In the long.

We think about them, we moving into next year, you think about.

Integrations that you have going on your thinking about kind of the.

The market, probably more and more headwinds and tailwinds until things turned around.

How should we think about the fleet is the expectation the key to consolidate.

Could we be down next year would if what are your kind of your your initial thoughts here.

We definitely are taken advantage of this this entire integration.

In operational focus process too skinny down.

Where its appropriate on trucks and trailers.

I think as we come out of the fourth quarter, you will we'll be able to show those numbers more clearly the market's been a little tough from a from a disposition perspective on the trucks, but the trailers had been real had been solid for us, but we're we're deepen exercising those as we speak.

So why would look.

At the macro level I would expect our count to start next year down some from the start of this year and we're going to stay late yet as you said there is not a blue sky outlook for next year. So we're not going to go up there with blue Sky optimism were seen lean.

And and be prepared to far earlier point on brokerage be prepared to lever up quickly with brokerage as we need to.

The idea there Chris.

Reduced the truck count will increase the utilization so don't impact volumes.

Absolutely.

Got it okay. That's very helpful. Appreciate the time guys.

Thank you.

Your next question comes from your line of Steve Dyer of Craig Hallum Capital. Your line is open.

Hey, guys trying to go on for Steve.

So given the recent business unit consolidations have you seen any impact to customer contracts or revenue and then secondly, what it's been the feedback I guess, if any are you hearing from customers in those regions.

I'd say that debt that we were proactive on our discussions with key customers for sure.

And that the fact is that we've seen no real material impact if anything in some cases, we may have we may have.

Taken some action ourself as we're looking at yield management.

In the process, but yes, no real impact from a customer perspective, and I think our team did a fantastic job of proactively communicating and the strong brand names of those that the company that the parent company that others integrated into I think positions us to come out of that just fine.

Great.

Then switching over within the impairment charge I wanted to dig in I guess into one specific part of that related to the PRB impairment of I believe those 108 million if I caught that right.

That seems rather high I guess given these assets were recorded at fair value when acquired.

So I guess what happened over the past year to that these assets have deteriorated more than what the depreciation was.

Well, it's a complex.

Now I'd say that because I spent many many hours.

I feel like a clause that account at this point digging in on the numbers and.

Obviously, our current market value has a lot to do with that but.

And I'm not going to get into all the details, but John if you wanted to add any any comments over in terms of that from an overlay right. We have talked about this.

We've obviously got two things going on here one when we acquire assets as part of an acquisition, we've talked about the step up and basis than we have that step up in depreciation that's one and then to you're looking at current market values and given where used truck prices are.

You've got some impact there so.

Hi.

Yes, John is right Thats. The key I think I missed that point at first but yet that used truck market impact certainly came through as we were out of getting.

And current appraisals.

I'll leave it there.

Hi, guys. Good luck.

Thank you.

Okay. Once again, if you'd like to ask your question. Please press star one on your telephone. Your next question comes from the line of Greg Davis of Northland Securities. Your line is open.

Hi, Good morning, Chris, Brian and John Thanks for taking the questions and congrats on the quarter.

I guess.

First you've already identified these 30 million of operational improvements that have been broken out.

Just wondering if you could talk about our is there any room for additional cost savings that you think there'll be after that I mean, considering fuel costs and driver compensation as a bit beyond your control I mean, I know, it's early to talk about numbers, but.

Are you still seeing additional opportunities.

Absolutely not.

Absolutely feel.

There are additional opportunities again as we talked about this at the very started last quarter, where we sit in 999 are for the last many quarters that the opportunity certainly there are operators know how to run the business and that's what they're engaged announced so they are excited as they've been kind of empowered and unable to drive for.

Results and so there definitely is we'll be talking about that more in the future. So don't don't.

Same cook a bunch of numbers into your model other than the fact that we're confident we can do more and we will do more.

That's good to hear.

And then you talk a little bit about the end markets, you're seeing strength and weakness in which just wondering if you could call out some of the regional markets that you're seeing better than expected performance or even perhaps weaker performance in some of them.

Yes, great it's less regional more of that end markets.

We're seeing that.

Obviously.

Obviously, we kind of called out flatbed and we have section density in the southeast Theres. So much in the in the flatbed, so thats kind of regionally southeast it's difficult, but it's much more a function of the end market.

Geographically.

Got it okay.

And then in the past you did talk about moving some of the operating companies.

That were pretty heavy in spot market.

Toward more contracted rates just wondering if you could provide maybe an update on the progress here I imagine that would kind of help you become a little less dependent on where spot rates move.

Yes, yes, there is in fact.

In particular with one of our integrations.

Builders transport they had been.

Heavy in the spot market in there in the midst so that transition now we're already.

Is much more contract base. So that is kind of the in process as we transition you don't do that on a dime and so we're working our way there.

But.

It's back to I think that it's not like you want to get out of the spot market. The spot market is certainly can be an attractive component as well and we're going to maintain our feet in theirs.

As we're moving forward.

Makes sense thanks, guys.

Thank you I'd like to turn the call back over to speak equates Michelle. Please go ahead Sir.

Hi, Thanks.

And thanks again, everyone for joining us today, our strategic focus and execution continued to build momentum we have taken swift and decisive action to address the areas of our business that need our attention I am very excited about the path. We are on in the future of desking. Thanks again.

Ladies and gentlemen, today's conference.

And is concluded. Thank you for participating you may now disconnect.