Q4 2019 Earnings Call
Welcome to the Freightcar Americas fourth quarter 2019 earnings conference call and webcast at this time all participant lines are in listen only mode.
For those of you participating on the conference call there will be an opportunity for questions at the end of today's prepared comments. Please note. This conference is being recorded an audio replay of the conference will be available from roughly two P.M. eastern today until 11 59 Eastern time on February 27th 2022 X.
That's the replay please dial 8662 071 barrel for one the replay access code is 850 to southern Afore three an audio replay of the call will be available on the company's website within two days. Following this earnings call I would now like to turn the call.
Over to Josh Lipman Investor Relations.
Thank you and welcome.
Joining me today, or Jim Meyer, President and Chief Executive Officer, Chris Apple Chief Financial Officer, and match, our Chief commercial officer.
I'd like to remind everyone that statements made during this conference call relating to the company's expected future performance future business prospects for future ventured plan may include forward looking statements as defined under the private Securities Litigation Reform Act 99.
Participants are directed to Freightcar Americas 2018 form 10-K for description of certain business risk.
Some of which may be outside of the controlling the company that may cause actual results to materially differ from those expressed in forward looking statements.
Lastly, disclaim any duty to provide updates to our forward looking statement, whether as a result, new information future events or otherwise.
22 form 10-K and earnings release for the fourth quarter 2019 are posted on the company's website at Www Dot Freightcar America.
With that let me now turn the call over to Jim for a few opening remarks. Thank you Josh good morning, Thank you for joining us today.
I'm going to speak on our recent performance, where we're headed in general and our approach towards navigating our way through what will undoubtedly be challenging 2020.
We will then here from our new Chief Commercial Officer Tom.
And finally from Chris who will provide detail on the fourth quarter numbers and delivery outlook for 2020.
We spent the last two years executing our back to basics strategy, our plan to transform Freightcar America.
Enjoy world class manufacturer that offers all the right car types fully competitive cost structure.
Back to basics has the all about getting our business fundamentals, where they need to be in order to allow ourselves to start to grow again and to be profitable even at a future downturn.
We made more progress and 29 Jane and over the last two years, we have completed the majority of the work really needed to realize these calls.
Before we can declare it back to basics complete however, we need to finalize a few outstanding product development efforts and complete the build out of our new operations in Mexico.
Sector. These remaining steps to be completed within the next few quarters.
As a reminder of our back to basics efforts and progression.
We first started by setting a manufacturing foundation for how our Shoals facility operates on a daily basis.
From leading practices inside and outside the rail industry.
The first phase of this work has been done for sometime now and shoulders, delivering substantially improved performance and safety quality productivity and cost.
As we have reported for a number of quarters now.
We are operating at World class levels for safety, a critical leading indicator for any manufacturing site.
Beyond its face value being world class first safety speaks volumes for training process that hear us and the quality of maintenance so the physical plant.
It is also a critical enabler for delivering superior product quality.
Which in turn as a critical a mandatory enabler for achieving superior productivity and cost.
It all ties together and of course without those four elements, it's nearly impossible for our company.
In our business to the commercially successful and to grow.
So I'm happy to say, we are now poised to finally realize the full potential of the shoals footprint.
Which as many of you know is the newest railcar production facility in the United States.
Possesses enormous potential.
As it relates to product quality ours is every bit as good as what is coming from our competitors, but this is not nearly good enough for us.
Safety, we intend to lead the industry and product quality.
Our approach is the same by bringing great new talent adapting proven processes from other industries.
And then focusing on continuous training discipline and improvement.
We have very big goals for where we expect to take product quality and this will be a important part of our operational story and 20 trying.
Moving to plant productivity.
In other direct labor hours per unit for building a car we saw productivity gains of 29 chain of over 20% per car.
This improvement was largely attributable to the combination of our model changeover process visual management and what is now full year of training our team members and lean manufacturing principles.
We are starting to excel at model Changeovers, which is critical given how we see our position in the industry, which I will touch on shortly.
We also continue to make great strides in our product material cost savings initiatives, reducing these costs by another $2000 for railcar on average and 29 chain.
This brings our two year material cost reduction total tomorrow on $5000 for railcar.
We also expect to have another solid year performance some 20 twond.
Material cost reduction and plant productivity were major focus areas that need of improvement when I joined the company and are now both important company strengths.
Perhaps the most significant improvements to our operations over the past few years. However.
Comment our manufacturing footprint.
We've made great progress in reducing our fixed cost and optimizing our footprint.
This started when we exited two legacy coal manufacturing facilities. The second of these the closure of the Roanoke facility, which we announced last summer.
We'll complete on budget and in mid March a few weeks ahead of schedule.
We now expect to say $5 million per year fixed costs, starting at the end of the first quarter, which is also a slight improvement from our original plan.
I again want to acknowledge all that great employees, and Roanoke, who gave so much to our company.
Also within this couple of years timeframe, we optimized our Shoals, Alabama facility.
My first taking complete control and be coming this whole China.
And then by working with our landlord to reduce our footprint, which will take effect in January 2022.
Our new agreement will generate cash savings of $7 million.
Also starting in January 2022.
So in total we have all of our U.S.U.S. operations consolidated into the state of the art Shoals facility, while maintaining an ability to produce 4000 6000 units per year.
And annualized fixed cost reductions of $5 million per year, starting next month with an additional 7 million of annual cash savings starting in January of 2022.
The rest of our footprint story is the new JV and just styles from Mexico.
One might wonder why now is the appropriate time to build a new factory.
The reality is we have two if we're going to compete grow and make money and all business conditions.
Ranged Mexico labor rate is approximately 20% of that in the U.S.
That's a lot of extra gross profit on car types with inherently higher margins.
And it's the difference between being in or out of business and car types with inherently lower margins.
Our competitors move their long ago, and we are going to level, the playing field and then song.
As said on prior calls Mexico has been part of our back to basics strategy since early on but we knew it was critical to find the right partner and we found a terrific partner.
This partner helped our competitors build their presence is in the region has deep and touched his expertise that assure success.
The build out of the physical facility is on track and expected to be completed in early summer.
And when we will have the newest purpose built railcar facility in Mexico.
Just as we already do in the U.S.
In an industry like ours, having the newest plants, coupled with the best operating systems is fed Ross to becoming the industry's most efficient highest quality producer and listen to the quote them. So.
As we made progress with our operations cost an overall footprint strategy. We also invested in the portfolio.
Focusing on having the right products on the right cost structure.
As we spoke about last quarter Freightcar wants competitive and roughly one third of the North America non tank car market when I joined in the second half of 2017.
The portfolio enhancements, we are implementing will allow us to be.
We will allow us to build for customers and approximately two thirds or the market within just a few more quarters.
Let me now part of it and speak to the market and our cash position.
As all of you know the current market environment as very challenging set more plainly we are in one or the industries in some of us downturns.
Further rail supply Institute Q4, 2019 industry backlog is down 12% relative to two third quarter of 29, Jane and stands at 51000 units the lowest level since 2000 out 11.
As of yearend, roughly 400000 cars or approximately 24% of the total fleet is in storage.
Well. This is certainly on one of the timing this happens in our industry and asked history has proven time and again.
Moving on goods by rail will continue to be a preferred reliable mode of transportation for shippers.
Well come back and more times.
Not in the past it has surprised us by the strength and speed of the come back.
In the meantime.
The president industry conditions make and everything we are doing all the more challenging.
We need to finish our work, including the build out of Mexico.
While also managing a comfortable cash balance.
Our cash position remains strong. Despite these challenges as Chris will discuss in greater detail. We ended the fourth quarter with $70 million with cash uptime million dollars from the end of the third quarter.
We will continue to maintain strong liquidity as we finish transforming the company and navigating these harsh industry conditions and Tony Tony.
This is not an either or situation, we need to do both.
And we will do so in consideration of all tools and our possession.
We cannot change market dynamics, and we cannot change what we do not control.
What we can do and are doing is finishing the job of retooling. This company. So that we will be ready to compete profitably as we enter the next upturn in the cycle.
As we prepare to bring our back to basics initiatives to conclusion, one of the items you have not heard us talk a lot of out as our commercial positioning.
It was clear from the beginning.
That we first needed to get our operations and costs and order and then our products and positioning.
Well, we believe strongly in our ability to now compete toe to toe.
And we know our customers value our position as a third use supplier either alone or not enough.
What we are also building at Freightcar America is a meaningfully differentiated position in the market.
Our position as a pure play manufacturer.
Combined with our excellent newer capabilities for making efficient changeovers and long established.
Track record for executing conversion programs.
That's not ideal partner for all the major rail customers. This is particularly true for all the pure play leasing companies out there.
Many of these leasing companies all things equal see value and partnering with a builder, whose primary business is not that have a competitor of a competing lesser.
Many of these companies play smaller to medium sized orders requiring the changeover skills that we now have.
And many of these companies also on a significant number of cars that are or will eventually be.
Version candidates.
Our position as a pure play manufacturer that is particularly well equipped to efficiently execute medium sized production runs combined with our conversion expertise, which is the deepest in the industry.
As what customers have been asking of US. This is where we will play and this is where we will win.
Last quarter, we announced that Matt Tom joined our team as Chief commercial officer.
We're excited to have them.
That brings exceptional knowledge and depth to the company.
Now that he has had some time to familiarize himself with freight car. We thought he did share a few words with everyone.
Thanks, Jim I'm really excited to be part of this team and and as such a pivotal point.
I thought I would take a moment and share why I thought now with the right time to choose freight car.
I have over 30 years of experience most of that in rail and most of that involve working and challenged markets and as part of turnarounds I understand how to navigate difficult markets from a commercial perspective and produced strong results.
As a former supplier I held a multi decade relate working relationship with freight car and many of its employees. Obviously freight car has a long term historical reputation as a premier railcar builder.
Looking back three to four years ago and would have been a tough tough decision for me to join this organization as the company's competitive position was growing weaker.
Given my position in the supply chain I've been able to keep a keen eye on what Jim and his team have been doing I saw first hand, the tough decisions that were being made the reset in the culture and the way things were changing down to the smallest task.
It's important to me that freight car focuses on being the highest quality producer and that helps me make my decision a lot easier.
I'm also truly excited about what this organization can do with what will be the two newest state of the art manufacturing facilities in the U.S. and in Mexico.
It is clear to me that this is not the old freight car and the changes Jim and his team have made our why I want to be part of the future.
I've been through market cycles, before and I am, particularly optimistic in the rail market recovery and freight cars value proposition as a pure play manufacturer.
Since the start of my role I've had the opportunity to meet with several of our key leasing railroad and ship or accounts.
The feedback on freight cars path.
Pat improved path towards improved quality and expanded product portfolio has been positive.
While we are fortunate to have key customers that are true partners, our ability to execute will be what sets freight car apart from its competition.
As Jim noted earlier all of our customers are facing an equally challenging market landscape looking ahead and over the next few months I will be focused on strengthening customer engagements with an emphasis on solution development.
Before I turn the call over to Chris I'll walk through our backlog and delivery figures for the fourth quarter.
Our order backlog as of December 30, Onest 2019 consisted of 1600 50 railcars compared to 1700 for railcars at the end of the third quarter.
Our backlog has an estimated sales value of approximately 206 million up sequentially from 188 million.
Deliveries for the fourth quarter of 2019 totaled 439 railcars, which includes 354, new cars and 85 and rebuilds.
This compares to 1047 deliveries in the same quarter of 2018, which included 827, new cars and 220 rebuilds.
In the third quarter of 2019, we delivered 467 railcars, which included 255, new cars and 212 rebuilds.
We received 385 orders in the fourth quarter of 2019. This is down year over year compared to 835 orders in the fourth quarter of 2018 and down sequentially compared to 1050 orders in the previous quarter.
While we do not typically speak of post quarter activity, given our reported backlog figure. We felt it was important to tell you that we received orders for 300 additional railcars in February.
With all that said, Chris can you. Please walk us through the financial results for the fourth quarter.
Thanks, Matt.
As a reminder, the company will file its annual form 10-K with the Securities Exchange Commission next week on March four.
Turning to our financial results.
Solidly in revenues for the fourth quarter 2019 totaled 44.9 million compared to 87.8 billion in the fourth quarter last year. This is due to our lower deliveries in the quarter that Matt alluded to.
Our gross margin fell to a negative 8.1 million compared to a negative 4 million in the fourth quarter last year.
Current quarters gross margin does include material cost savings of approximately 2000 per car. However, this quarter's results were largely influenced by our operating our loss of operating leverage associated with lower deliveries and costs associated with winding down our Roanoke facility as a reminder.
There are carrying costs associated with right now we'll be out of our run rate by the end of the first quarter 2020.
As today for the quarter totaled 7.5 billion up from 7.2 million in the fourth quarter 2018.
Year over year increase was driven by incentive compensation expenses, which were partially offset by certain cost reductions that were enacted.
Over the past year. The company has undergone a precise effort to review is ongoing needs and corresponding investments in SJ day.
Frank has a different company going forward versus where it was several years ago as such we reviewed every aspect of our cost base, how it fits into our go forward strategies. This list includes but is not limited to artwork structure, our benefits professional services compensation programs and corporate south.
Thing level.
Net adjustments to each in all of these areas moving forward.
And into 2020.
And as such we will have a lower SG SGN a run rate going forward.
While we do not give specific guidance on line items detailed in the PM now it is safe to assume the company is now comfortably below 7 million in quarterly SGN, a run rate, excluding any special projects that could occur in the future.
Consolidated operating loss for the fourth quarter 2019 was 9 million compared to operating loss of 11.3 million in the fourth quarter of 2018.
Reflected on our operating losses, a 2 million dollar charge from the loss of sale on approximately 100 railcars previously held in a loose in the leasing fleet.
Currently have 545 cars remaining in our lease fleet all of which have leases beyond 2020.
As we mentioned last quarter, we terminated our post retired medical benefit plan, which generated a noncash gain of 6.6 million in the quarter. We expect ongoing cash savings associated with these actions of approximately 400000 per year going forward.
We also recorded a restructuring gain of 2 million.
In the quarter, which included 2.5 million noncash gain for our Roanoke, Virginia facility related to the termination of the lease.
Moving to the balance sheet, we finished the quarter with cash and cash equivalents marketable securities that restricted certificates of deposit of 70 million, which is up 2 million compared to our 2018 year position and up 10 million from September 32019.
We continued to make.
Cash based decisions that are consistent with our long term strategy.
We have shown the ability to maintain ample cash position despite industry headwinds.
Our revolver position remains unchanged from the previous quarter, where we had zero drawn against our asset backed lending facility and 10 million drawn against our lease fleet loan.
Jim mentioned, we will continue to prioritize maintaining liquidity, while I would direct while delivering shareholder returns.
Capital expenditures for 2019 totaled $5.6 million, which includes some initial capital spend associated with new Mexico JV in the fourth quarter.
We're still finalizing our 2020 production schedules in Mexico, Mexico, and as such our cash acquisition.
Will vary based on that scenario.
It is important to note that our spending will be time to align with the launch schedule, which implies or is some variability to our cash spend in 2020.
We will continue to update everyone on that progress.
Property or on our earnings calls I'd like to spend a minute discussing 2020.
For the full year, we expect deliveries to range between 2000 2500 units.
We do expect delivery to ramp up as you move throughout the year. We're in the process of launching three major production belts and the delivery process will not begin until the second quarter. Thus, we expect deliveries to start out small and then gradually increase as we move throughout the year.
For the year, we expect expenditures capital expenditures to range between 10, and 12 million inclusive of the build out of the Mexico facility.
Now I'd like to turn the call back to Jim for a two remarks as well as the operator for questions. Thanks, Chris as we look ahead to 2020, our goals will be familiar themes to you.
In Mexico, we are now in the equipment installation phase inside the factory and this will take us through June.
Our goal is to produce and our first car there in the third quarter timeframe and be in production by year end are on track.
In shows we will complete the installation of a new car lending facility.
Continue to invest and automation as part of our quality and efficiency initiatives.
And implement what we believe will be a best in industry quality system inside the factory.
Third we will finish all all our planned product development work.
And fourth we will take all actions necessary to ensure that we maintain a strong balance sheet and more specifically a strong cash position such that under even a prolonged industry downturn. We can finish the work set forth and give Matt and his team the time needed to rebuild our backlog to healthy.
Levels.
With that I would like to conclude our prepared remarks, and turn the call over to the operator for today.
Ladies and gentlemen, if you wish to ask a question. Please press. The line then zero on your telephone if you are using a speakerphone. Please pick up the handset before pressing the number once again if you have a question you May press. One then zero at this time.
One moment.
[laughter].
We have a question coming from Matt Alcott from Cowen and company. Please go ahead.
Good morning, Thank you and congratulations on the progress you guys made them in the quarter.
Jim when you when you talk about profitability and the next upturn our upcycle.
Is there a specific production number that you guys have.
That would.
Gets you to profitability and my profitability did you mean, I mean does it mean net profitability or does it mean EBITDA profitability.
Anymore color on that would be helpful.
Yeah, Matt Hi, good morning.
Our our goal as a company and where our back to basics work was designed to take us.
As to the bottom line profitable.
Even in an industry downturn condition.
As we've seen for a number of years to be profitable in the good times and then essentially give it back in that that times isn't the right place to be and.
It's certainly not.
Our goal is again to be bottom line profitable all the time.
Well what in terms of a number.
I'm not going to give you a breakeven volume or something like that but I think what's important to keep in mind is.
We have.
Fundamentally improved our cost structure on every single front.
Be it product cost the fixed cost DNS gionee cost and these are small improvements there significant theyre very large improvements.
And then I'll stop it there.
And but again thanks for the question.
We see ourselves.
Getting to a position again were profitable under all likely anticipated business conditions.
And our next question comes from the line of Justin Long with Stephens Associates. Please go ahead.
Thanks, and good morning.
So I know in the fourth quarter and there was some management incentive instead look like they were were updated as it pertains to raising capital and potentially selling an ownership stake in the business. So I was wondering if you could talk about the catalyst for some of those changes in how you.
You're thinking about addressing those items this year and just kind of the bigger picture strategy on that front.
Hi, Good morning, Justin This is Jim again.
First of all our board of directors more specifically our compensation Committee.
Undertook the exercise and recommended that certain retention mechanisms be put in place for T. management.
It's pretty normal course for our business going through a turnaround situation and.
Our board you know.
Agreed with that and took the actions, but it did.
I will tell you secondly, the senior management team all of us.
Absolutely committed and excited to see this through we've worked too hard to get to this point.
And.
Yeah, we want to be here now to enjoy the the fruits of the work.
Having said that.
The rest of your question around raising capital on so far.
Again, I think I would leave at that we like all businesses going through a turnaround and not just a turnaround, but a turnaround in a very challenging market conditions.
It's important that we.
Plans strategize workday in whatever you want to color for all types of business scenarios, including a prolonged.
Industry downturn, and we just want to know that.
Whatever we do we're in we're well positioned to.
See it through and realize the the fruits of all the work that's been accomplished today.
Okay. That's helpful and then circling back on some of the cost items I just wanted to get your thoughts around kind of expectations for cost 10, 2020, you mentioned that the fixed costs associated with Roanoke coming down $5 million.
After the first quarter.
Anything else out on the operating side or the cost side with additional material savings that you would call out that we should be contemplating in our model.
Yeah, Justin let me put it this way for right now.
We were at two years ago. When we started our focused work on material cost reduction we put a target out there I think it was originally about $2500. We eat that we did something similar again in 2019.
We have internal targets again, this year, which the team is working for we Havent put those out just yet because you know those there's enough softness in the market theres enough uncertainty and the backlog that we will build that we just didn't think it was appropriate to do it just.
But rest assure that as we said on prior calls.
Our focus on material cost reduction it's now.
As part of our DNA, if you will.
Those there's more to get there's.
And also our focus on productivity improvements.
There's plenty more to get so it's going to continue to be significant.
And and then we've already spoken as you mentioned on fixed cost reduction we've made a few highlighting comments.
DNA reductions.
So.
We're going to continue to get tighter and tighter and run a you know the tightest shipped we can't hear.
Okay, and just in terms of that event demand environment right now based on the inquiries that you're seeing in the market. What's your assumption for industry railcar orders and 2020 relative to what we've seen the past couple of quarters. So I'm just curious if you.
We're expecting kind of more on the same or or any change.
I'll, let Matt addressed yeah, we see we sure volume being down year over year, and I think thats going to continue based on the level of inquiries and just the general the general atmosphere of the market right now.
I'm looking looking long term and getting back to more normalized.
Orders and deliveries, we see an upturn starting in mid 21 with with things getting back to normal level in the 22 early 23 timeframe.
But just to be clear on the first part of that have you seen a slowdown in activity from the fourth quarter to the first quarter.
In terms of in terms of inquiries correct.
No we have not.
Okay. So there isn't a pretty similar words have been relatively steady, but there are at a lower rate.
Stork like.
Okay.
And then last question for me was on the cash balance you know you gave the guidance on Capex, we have the delivery guidance and if you kind of cost items. When you put it all together do you have an initial expectation on on where we're going to end the year from a balance sheet perspective as it relates to cash.
I just this is Chris.
Right now, we're not giving out a an ending cash balance situation based on what we talked about with some timing issues and and how the the spend in Mexico Maaco. As you mentioned, we are going to be very.
Precise and how we invest into Mexico in line with order. So there's a couple different scenarios, we modeled out but in general.
Again that that cash several we talked about in the units are our are the base and then some of these other opportunities will either be trigger not trigger based on other situation. So we're not today going to give you an exact cash number but just as Jim mentioned rest assured we're going to be focused on maintaining ample liquidity to.
Got it through the next few years.
Justin This is Jim I think part of the X factor here is well actually said we have to do both we have to finish back to basics, including the Mexico build out and we have to maintain a strong cash balance that's those are givens.
No.
As to how we will manage that as we go through the year you know part of it really the X factor is what we see happening in the marketplace. If we see the current industry funk, continuing or if we do start to see.
Yeah.
A meaningful a increase in activity out there would probably have some influence on.
On you know, how we probably balance the completion and the cash balance but.
So as Chris said, we're not going to give a number now.
That's a variables that will influence our thinking.
Okay I.
I appreciate the time I'll leave it at that.
And our next question comes from the line of Matt O'connor with Cowen. Please go ahead.
Thank you sorry, if I missed it but did you guys say.
How many of your or how much of your current backlog is for delivery this year.
Yeah, We did no we didn't know we didn't give that specific number we typically don't.
With that that number out.
Okay, but I got I meant yes, our run for deliveries this year as 2002 2500.
Okay.
So you yeah.
What's the what's the manufacturing lead time now because even if you're a all all of your deliveries have been or all of your backlog is delivered this year than you would still need based on this range I guess 350 to.
50 orders, which is not a huge number.
But I guess a lot of it would have to come in the first half just trying to get a sense of what the lead manufacturing lead times are right now.
Yeah, Matt This is Jim.
We've got plenty of time at this point to a.
Fill out the orders for the balance of the year, which is why we you know we've given the range we've given.
You know.
You know general lead times for the industry not to speak specific to us but for the industry.
From the time order received two when production can start typically is in a range of 10 to 15 weeks or so.
Uh huh.
And you know that's on average and there's lots of caveats with that for instance, or is are we oh. These quote tack on orders, where you've got a line up and running and theres incremental orders placed against that.
So there's lots of caveats.
As we you know we were pretty comfortable with the guidance at this point and.
You know have.
You know frankly, a fair bit of time.
Oh.
And then I think if I look back at the last several years at the height of the upside called the last up cycle, we have them on the Les Miserables cycle. We had in 2015, you guys delivered almost 9000 cars now with the new manufacturing lines and.
The reinvented manufacturing infrastructure.
Is there or what can maximum production output number that you can share with us Jim.
I'll have to give you a kind of a broad brush share and a.
Decision, you're probably looking for because keep in mind again.
You know car models differ a pretty tremendously in terms of build hours and the rate at which they flow through factories, a it depends on whether your stuff interrupting the lines to execute changeovers et cetera et cetera.
But as as I commented in the earlier part of my of our prepared comments.
On the Shoals factory of the is is a highly capable of putting out Florida 6000 units per year, depending on what that mix and number of changeovers and so forth looks like and.
No I don't I will comment about other than in prior calls, but not this one when we get Mexico up and running.
Our goal is to have one production line up and running this year with the second one next year.
And and you know obviously, that's good for incremental volume on top of the four to 6000.
So you know whether where were you.
You know going to be in a position to do 9000 units again I'm not sure I'm not sure I want to be.
Well you know the best as the best way to run our business is to is to be at full capacity. Most of the time not just once every decade or too.
Yeah that makes sense and then just one final question you know you're.
Forecast for for deliveries and your internal maybe forecasts for orders what kind of a assumptions are you guys, making for rail traffic and.
Mainly rail traffic I guess.
Or the or the and the macro as a whole for the year.
I think if you look at a the trend the rail traffic numbers have been flat to slightly down I don't think that we think that the industry is going to see significant improvement in rail traffic over the course of this next year.
Oh.
Got any segment.
Yes.
Makes sense all right. Thank you very much appreciate it.
You're welcome Matt.
And there are no more questions in queue. So I would think to turn the call back over to Jim for a few closing remark.
Thank you again for your time today and your continued support.
Forward to continuing to update you on our progress.
Great day, Thank you.
And that does conclude our conference for today you may now disconnect.
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