Q4 2021 US Xpress Enterprises Inc Earnings Call
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Greetings and welcome to U S Express fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode.
Speaker 1: Greetings and welcome to US Express fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
And answer session will follow the formal presentation if.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Speaker 1: If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.
As a reminder, this conference is being recorded.
Speaker 1: It is now my pleasure to introduce your host, Matt Garvey, Vice President of Investor Relations. Thank you. You may begin. Thank you, operator, and good afternoon, everyone. Welcome to the U.S. Express fourth quarter 2021 earnings.
It is now my pleasure to introduce your host Mark Garvey, Vice President of Investor Relations. Thank you you may begin. Thank you operator, and good afternoon, everyone. Welcome to the U S Express fourth quarter 2021 earnings call, Eric Fuller U S Express as President and CEO will lead our call today, followed by Eric Peterson our CFO .
Speaker 1: Eric Fuller, US Express's President and CEO , will lead our call to...
Speaker 1: followed by Eric Peterson, our CFO , who will discuss our financial results.
Who will discuss our financial results.
Speaker 1: Our discussion today includes forecasts and other information that are considered forward-looking.
Our discussion today includes forecasts and other information that are considered forward looking statements. While these statements reflect our current outlook. They are subject to a number of risks and uncertainties.
Speaker 1: While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that could cause actual results to differ materially. These risk factors are described in U.S. Express' most recent forms 10-K and 10-Q filed with the SEC and in the Form 10-K for the year ended December 31, 2021 that is expected to be filed with the SEC in the coming weeks.
That can cause actual results to differ materially. These risk factors are described in U S Express. His most recent forms 10-K, and 10-Q filed with the SEC and in our Form 10-K for the year ended December 31, 2021 that is expected to be filed with the SEC in the coming weeks, we undertake no duty or obligation to update our forward.
Speaker 1: winner take no duty or obligation to update our forward-looking statement.
Looking statements.
During today's call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U S. GAAP a reconciliation of these non-GAAP measures to the most comparable GAAP measure can.
Speaker 1: During today's call, we will discuss certain non-GAAP measures, which we believe can be useful in evaluating our performance.
Speaker 1: The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings relief.
Be found in our earnings release.
As a reminder, a replay of this call will be available on the investors section of our website. We have also posted an updated supplemental presentation to accompany today's discussion on our website at Investor day at U S Express Dot com, we will be referencing portions of the supplement as part of today's call and with that I would like to turn the call over to Eric Fuller.
Speaker 1: As a reminder, a replay of this call will be available on the investor section of our website. We have also posted an updated supplemental presentation to accompany today's discussion on our website at investor.usexpress.com.
Speaker 1: We will be referencing portions of this supplement as part of today's call. And with that, I would like to turn the call over to Eric Fuller. Thank you.
Thank you, Matt and good afternoon, everyone.
Today, I would like to highlight some of our key achievements in the fourth quarter.
Speaker 1: Today I would like to highlight some of our key achievements in the fourth course.
Provided update on variant and our path forward.
Speaker 2: provide an update on variant and our path forward. And after Eric Peterson discusses the financials, I will provide our outlook for 2022.
And after Eric Peterson discusses the financials I'll provide our outlook for 2022.
Turning to our fourth quarter achievements and variant we added 272 trucks to the fleet in the quarter exiting the year with 1555 tractors and achieving our target to have more.
Speaker 2: Turning to our fourth quarter achievements, invariant, we added 272 trucks to the fleet in the quarter, etched in the year with 1,555 tractors, and achieving our target to have more than 1,500 tractors invariant by year end.
1500 tractors and bearing it by year end.
Speaker 2: Variance tractor count growth helped to drive a sequential increase in our overall tractor count of approximately 300 tri.
Variant tractor count growth helped to drive a sequential increase in our overall tractor count of approximately 300 tractors.
Speaker 2: As a result, we were able to increase our average tractors in the fourth quarter to 6,147, which not only represented growth sequentially, but also year-to-year growth for the first time since the second quarter of 2020. And as a reminder, I terminate network, technology platforms, and key personnel are capable of handling over 8,000 tractors. So growing our fleet back to and beyond historical levels is key to realizing the operating leverage in our model.
As a result, we were able to increase our average tractors in the fourth quarter to 6147, which not only represented grow sequentially, but also year over year growth for the first time since the second quarter of 2020 and as a reminder.
Terminal network technology platforms, and key personnel are capable of handling over 8000 tractors, so growing our fleet back to and beyond historical levels is key to realizing the operating leverage in our model.
Speaker 2: And dedicated, we experienced a full quarter of the rate increases that we achieved actually in the third quarter, which contributed to an incremental $10 million in revenues sequentially. In brokerage, we continued to grow revenue as revenue for load was up approximately 27%. And load count was up approximately 15%.
Dedicated we experienced a full quarter of the rate increases that we achieved exiting the third quarter, which contributed to an incremental $10 million in revenue sequentially.
In brokerage we continue to grow revenue as revenue per load was up approximately 27% and load count was up approximately 15%.
Speaker 2: operating income was $3.1 million and benefited from surge capacity that we provided for some of our customers during the holiday season.
Operating income was $3 $1 million and benefited from surge capacity that we provided for some of our customers during the holiday season.
Turning to variant.
2021 was a successful year for variant in terms of drug out growth.
Speaker 2: 2021 was a successful year for variant in terms of drug count growth.
Ending the year at 1555 tractors and establishing itself as a standalone business unit. However.
Speaker 2: ending the year at 1,555 tractors and establishing itself as a standalone on the son.
Speaker 2: However, during the second half of the year, the business began to deteriorate as shown our utilization turnover and revenue per truck per week, and these trends accelerated in the fourth quarter.
During the second half of the year the business began to deteriorate as shown in our utilization turnover and revenue per truck per week and these trends accelerated in the fourth quarter.
Speaker 2: Before I get into the issues and remediation efforts, I want to touch upon a couple of key points that were reinforced with me. While I spent time with the team in Atlanta over the past couple of months.
Before I get into the issues in remediation efforts I wanted to touch upon a couple of key points that were reinforced with me while I spent time with the team in Atlanta over the past couple of months.
Speaker 2: We remain confident in varying its business model and continue to believe that we can use technology to better serve our customers while providing a better experience for our professional driver.
We remain confident in variant business model and continue to believe that we can use technology to better serve our customers, while providing a better experience for our professional drivers.
Speaker 2: With its urefinement, start technology and a little more structure and discipline in our processes, we believe we can get back on track quickly.
With a few refinements to our technology and a little more structure and discipline in our processes. We believe we can get back on track quickly.
Speaker 2: Through the work of Quentin Christianton and other academics, we have seen examples of how this ruption could be managed successfully within a large business.
Do the work with Clayton Christian said in other academics, we have seen examples of how disruption can be managed successfully moved into large business. One fundamental principle is to break free from legacy business constraints, we took it to heart and that's why we incubated variant outside of our headquarters and non traditional infrastructure with the individuals' new to the <unk>.
Speaker 2: One fundamental principle is to break free from legacy business constraints. We took it to heart, and that's why we incubated variant outside of our headquarters and non-traditional infrastructure with individuals new to the industry and gave it the autonomy and funding necessary to build something substantial.
Street and gave it the autonomy and funding necessary to build something substantial.
This is where most companies fail, but where we feel really excelled.
Speaker 2: This is where most companies fail, but where we feel that we excelled. Another fundamental principle is identifying the point when the new venture moves towards maturity and needs to make the transition from nimble startup to a sustainable growing business.
Another fundamental principle is identifying the point when the new venture moves towards maturity needs to make the transition from nimble startup to a sustainable growing business.
Speaker 2: This can involve transitioning some leadership, moving away from a grow-it-all-cost startup mentality, and implementing a more disciplined management approach focused on metrics and earnings growth.
This can involve transitioning some leadership moving away from a grow at all cost startup mentality and implementing a more disciplined management approach focused on metrics and earnings growth.
We believe variant reached the transition point during the second half of 2021 and we are rapidly transitioning from growing and emerging company in its own ecosystem to integrating what is now a sizable company with defined parts of the broader organization to drive cost reduction and operational efficiency, while maintaining the integrity.
Speaker 2: We believe very reach the transition point during the second half of 2021. And we are rapidly transitioning from growing an emerging company in its own ecosystem to integrating what is now a sizeable company with defined parts of the broader organization to drive cost reduction and operational efficiency while maintaining the integrity and culture of the new model.
And culture of the new model.
Speaker 2: In the disruptive startup model, history shows there is risk to acting too early or too late and in integrating too much or too little.
And the disruptive startup model history shows there is risk to acting too early or too late and integrating too much or too little.
Based on the growth of the variant and 1550 tractors in less than three years, the immediate progress in restoring operating metrics. This past month, and the strong cooperation and unified teamwork between variant and the other trucking experts.
Speaker 2: Based on the growth of variant to 1,550 tractors in less than three years, the immediate progress in restoring operating metrics this past month, and the strong cooperation and unified teamwork, which we variant in other trucking experts. I believe variant has progressed better than most efforts at internal disruption, although it has not been, and we never thought it would be, a straight line forward.
I believe variant that's progress better than most effort set internal disruption.
Though it has not been and we never thought it would be a straight one forward.
The first issue was that a very grew it did so without properly increasing the bouts of domain expertise, which led to a lot of innovative approaches to the business and the need recently to modify some of these approaches.
Speaker 2: The first issue was that it very grew. It did so without properly increasing the balance of domain.
Speaker 2: which led to a lot of innovative approaches to the business and the need recently to modify some of these approaches.
Variant will continue to be based in Atlanta, but I have reorganized variant, bringing together the Atlanta based technology team with the U S Express operations team, which has domain expertise in trucking.
Speaker 2: Variant will continue to be based in Atlanta. But I have reorganized variant bringing together the Atlanta based technology team with the US Express Operations team, which has domain expertise and truck.
Speaker 2: These groups are important directly to me, and I will provide overall accountability for variant, and ensure we remain balanced in our approach to using technology to provide a better product and variant.
Groups will report directly to me and I will provide overall accountability for variant and ensure we remain balanced in our approach to using technology to provide a better product at variant.
As a reminder, we built variant purposely outside of U S Express with the team that had technology expertise.
Speaker 2: As a reminder, we built variant purposely outside of US Express with a team that had technology expertise.
Speaker 2: The team had a little trucking experience, which was about a dime so that as they worked to build a technology enabled the OTR fleet, they wouldn't be held back by any preconceived notions about trucking.
The team has little trucking experience, which was about a dime so that as they work to build the technology enabled OTR fleet. They wouldn't be held back by any preconceived notions about trucking.
Speaker 2: We understand that as variant scale, they would need to work more closely with those in US Express who understand our core business of delivering freight for our customers.
We understand that as variant scaled they would need to work more closely with those in U S Express who understand our core business of delivering freight for our customers.
Porting our drivers.
Speaker 2: During the fourth quarter, we reached a point where the coordination needed to ramp up. The focus on long-term automation needed to be reduced.
During the fourth quarter, we reached a point, where the coordination needed to ramp up the focus on long term automation needed to be reduced.
And the focus on near term metrics and the driver experience needed to increase.
Speaker 2: and the focus on your term metrics and the driver experience needed to increase.
Speaker 2: With a process of blending what's good with the old along with the innovative new way of doing.
In the process of blending what's good with the old along with the innovative new way of doing things.
The second issue that we found during our operational review was that not all of our freight in our funnel was running through the optimizer as background. We built a freight funnel designed to allow our OTR fleet have first election of the freight that fits best within our network. We decided this way to maximize selectivity for our assets while at the same time, providing additional capacity.
Speaker 2: The second issue that we found during our operational review was that not all of our freight and our funnel was running to the optimizer. As background, we built a freight funnel designed to allow our OTR fleet to have first selection of the freight that fits best within our network.
Speaker 2: We decided this way to maximize the liquidity for assets while at the same time providing additional capacity for our customers.
For our customers there was a flaw in the funnel, which meant that the optimizer was not picking from a complete population of freight.
Speaker 2: There was a flaw in the funnel, which meant that the optimizer was not picking from a complete population afraid.
Speaker 2: This is not a issue when variant was initially scaling, as there was more than enough quality freight that the optimizer could see to produce strong results. But as variant continued to grow, it became more and more impactful.
This is not an issue and variant was initially scaling as there is more than enough quality freight that the optimizer could seats produced strong results, but its variant continued to grow it became more and more impactful.
We quickly identified why the freight was not visible to the optimizer and have initiated multiple work streams to address refining the technology.
Speaker 2: We quickly identified why the freight was not visible to the optimizer and have initiated multiple work streams to address refining the technology and are already seeing positive results in January as a result of these changes.
We are already seeing positive results in January as a result of these changes.
Third.
Speaker 2: As part of our deep dive into variant, we determined there were several logic rules that needed refinement in the optimizer that became more meaningful with more tractors to optimize.
As part of our deep dive into variant we determined there were several logic rules that needed refinement in the optimizer that became more meaningful with more tractors to optimize we.
Speaker 2: We have made refinement in the logic rules already, which we believe are contributing to the better results we're seeing in January .
We have made refinements in the logic rules already which we believe are contributing to the better results. We're seeing in January .
Speaker 2: Finally, as issues continue to grow, the team invariant disproportionately continue to work on longer term solutions, rather than focus on remediation efforts related to the current curation in the business, which resulted in an inability to adequately resolve driver issues.
Finally, this is continuing to grow the team at variant disproportionately continued to work on longer term solutions, rather than focus on remediation efforts related to the current generation in the business, which resulted in an inability to adequately resolve driver issues.
Speaker 2: As the fleet grew, so did the issues from our drivers, which led to deterioration in response times, an increased driver frustration, and an increased driver availability as there wasn't a single line of accountability for the driver.
The fleet grew so did the issues from our drivers, which led to deterioration in response times and increased driver frustration.
And an increase in driver availability as there wasn't a single item accountability for the driver.
We continue to believe in and exceptions based approach to fleet management, which will scale better and at a lower cost than the traditional fleet manager model.
Speaker 2: We continue to believe in an exceptions-based approach to fleet management, which will scale better and at a lower cost than the traditional fleet manager model.
Speaker 2: As part of our improvement initiatives, we are making some refinements to our operation specialist model at Variant, which includes combining specialists currently in polluted variant and others from U.S. Express who manage other fleets in the company.
As part of our improvement initiatives, we're making some refinements to our operation specialist model variant.
Which includes combining specialists currently employed at variant and others from U S Express who manage other fleets in the company.
We believe this approach will drive better accountability within our fleet and help improve availability reduced driver frustration and ultimately contribute to better revenue per tractor per week and the lower driver turnover in the quarters ahead.
Speaker 2: We believe this approach will drive better accountability within the fleet and help improve availability, reduce driver frustration, and ultimately contribute to better revenue for tractor per week and a lower driver turnover in the quarters ahead.
Before I close and turn the call over to Eric Peterson to discuss the financials in more detail I want to thank our shareholders for your continued support and patience as we execute on our multi year transformation that you Express.
Speaker 2: Thank you, Eric, and good afternoon, everyone. This afternoon, I would like to discuss our performance in the fourth quarter and provide more detail on how our operating model will deliver better operating leverage as we improve the per-unit economics of variant tractors and add more tractors to the variant fleet.
Thank you Eric and good afternoon, everyone. This afternoon, I would like to discuss our performance in the fourth quarter and provide more detail on how our operating model will deliver better operating leverage as we improve the per unit economics, a variant tractors and add more tractors to the variant fleet.
Speaker 2: Turning to our performance in the fourth quarter, we generated revenue of $487.3 million excluding revenue associated with our fuel surcharge program.
Turning to our performance in the fourth quarter, we generated revenue of $487.3 million, excluding revenue associated with our fuel surcharge program.
This represented an increase of 13, 7% compared to the fourth quarter of 2020.
Speaker 2: This represented an increase of 13.7% compared to the fourth quarter of 2020.
The increase in revenue was primarily the result of a $35 5 million or 46, 5% increase in revenues in our brokerage segment and a $23 million or six 5% increase in truckload segment revenues.
Speaker 3: The increase in revenue was primarily the result of a $35.5 million or 46.5% increase in revenues in our brokerage segment and a $23 million or 6.5% increase in truckload segment revenues.
Turning to our operating expenses adjusted operating expenses were $488 $1 million, an increase of 18% or 74 4 million compared to the fourth quarter of 2020.
Speaker 3: Adjusted operating expenses were $488.1 million. An increase of 18% or 74 million compared to the fourth quarter of 2020.
This amount excludes the impact of our fuel surcharge program as well as a $4 $3 million noncash write off we recognized in the fourth quarter, which related to technology, we determined to be obsolete.
Speaker 3: This amount excludes the impact of our fuel surge charge program, as well as a $4.3 million non-cash rideoff we recognize in the fourth quarter, which related to technology we determined to be obsolete.
Speaker 3: In the fourth quarter, salaries, wages, and benefits increased by $30.9 million, driven by a 16.7% increase in driver wages and a 31.9% increase in office wages primarily due to our digitization efforts in both variant and express technologies, and to a lesser extent across the entire organization.
In the fourth quarter salaries wages and benefits increased by $39 billion driven by a 16, 7% increase in driver wages and a 31, 9% increase in office wages, primarily due to our Digitization efforts and both variant and express technologies and to a lesser.
Extend across the entire organization.
Purchased transportation increased by $32 $9 million, primarily as a result of the increase in brokerage revenue of $35 $5 million.
Speaker 3: Purpose transportation increased by $32.9 million, primarily as a result of the increase in broker-driven of $35.5.
Operating expenses and supplies increased by $10 million, primarily due to driver acquisition costs related to increasing our seated tractor count by 298 in the fourth quarter.
Speaker 3: Operating expenses and supplies increased by $10 million, primarily due to driver acquisition costs related to increasing our seeded tractor count by 298 in the fourth quarter.
Speaker 3: Insurance premiums and claims expense increase $2.5 million as we experience two severe accidents in the quarter which increase our insurance claims expense by $6 million and partially offset by improvements in our company-wide safety proof.
Insurance premiums and claims expense increased $2 $5 million as we experienced two severe accidents in the quarter, which increased our insurance claims expense by $6 million and partially offset by improvements in our company wide safety programs.
Speaker 3: Offsetting some of the increased expenses in the quarter was a $6.2 million reduction in equipment cost year-over-year. The decrease was primarily attributable to an increase in proceeds from the sale of used equipment and fewer own tractors in the fleet.
Offsetting some of the increased expenses in the quarter was a $6 $2 million reduction in equipment cost year over year. The decrease was primarily attributable to an increase in proceeds from the sale of used equipment and fewer own tractors in our fleet.
Turning to variant for the full year 2020 , one expenses related to variant, which are primarily office wages were $25 million and we capitalized an additional $13 $7 million, which related to software development for initiatives, including our freight optimization engine, bringing our total investment for the year and variant.
Speaker 3: Turning to variant for the full year, 2021 expenses related variant, which are primarily office wages, were $20.5 million, and we capitalized an additional $13.7 million, which were later to software development for initiatives, including our freight optimization engine, bringing our total investment for the year and variant to $34.2 million.
To $34 $2 million in.
Speaker 3: In 2022, as Eric mentioned, we'll be intentional with our investment variant, and in the early months, we'll be focused on advancing our freight optimization engine. Turning to...
In 2022, as Eric mentioned, we will be intentional with our investments at variant and in the early months will be focused on advancing our freight optimization engine.
Turning to capital expenditures net of proceeds from.
Speaker 3: For the full year, net capital expenditures, which relate primarily to tractors and trailers, were $97 million, excluding equipment financed under operating.
For the full year net capital expenditures, which relate primarily to tractors and trailers were $97 million, excluding equipment financed under operating leases.
Speaker 3: This was below our previous guidance expectation of between $130 and $150 million, mainly due to delays in equipment deliveries, which were anticipated in the fourth quarter of 2021. In addition, proceeds from the sale of used equipment were higher than anticipated.
This was below our previous guidance expectation of between 130 and $150 million, mainly due to delays in equipment deliveries, which were anticipated in the fourth quarter of 2021 in.
In addition proceeds from the sale of used equipment were higher than anticipated in the fourth quarter.
While I am disappointed in our fourth quarter financial results as we have stated on prior earnings calls, Arkansas data results will improve as we grow our overall fleet back to and ultimately beyond our historical levels.
Speaker 3: While I am disappointed in our fourth quarter financial results, as we have stated on prior earnings calls, our consolidated results will improve as we grow our overall fleet back to and ultimately beyond our historical level.
Next I want to spend some time discussing the fixed cost infrastructure of our truckload segment and how operating income is expected to improve as we add tractor count to our overall fleet redefine our fixed costs as cost that do not vary directly with the number of miles traveled and excludes depreciation interest and rent expenses associated with that.
Speaker 3: Next, I want to spend some time discussing the fixed cost infrastructure of our truckloads segment and how operating income is expected to improve as we add tractor count to our overall.
Speaker 3: We define our fixed costs as costs that do not vary directly with the number of miles traveled and exclude depreciation, interest, and rent expenses associated with our Tractors and Trails.
After some trailers.
Speaker 3: Given the unprecedented impact of COVID on our industry, I would say that fleet growth at variant was a little ahead of our expectations. However, turnover in our legacy over the road fleet was greater than we expected. This dynamic combined with an increase in fixed cost and nominal dollars has led to delays in realizing the operating leverage in our business. I will cover this indeed.
Given the unprecedented impact of Covid on our industry I would say that fleet growth at variant was a little ahead of our expectations. However turnover in our legacy over the road fleet was greater than we expected. This dynamic combined with an increase in fixed cost in nominal dollars has led to delays in realizing the operating leverage in our business.
I will cover this in detail at the end of 2019, we launched variant as a startup and at the same time began to define our legacy over the road division.
Speaker 3: At the end of 2019, we launched variant as a startup, and at the same time began to defund our legacy over the road division. It was at this time that our overall tracker count began to decline as a trition in our legacy over the road division outpaced the growth in our startup over the road model variant. As you can see on slide 10,
It was at this time that our overall tractor count begin to decline as attrition in our legacy over the road division outpaced the growth in our startup over the road model variant.
As you can see on slide 10 of our earnings supplement quarterly from the fourth quarter of 2019 to the fourth quarter of 2020, our overall seated tractor count declined by 521 tractors.
Speaker 3: quarterly from the fourth quarter of 2019 to the fourth quarter of 2020. Our overall CTA tractor count declined by 521 tracks.
In 2020 for each tractor that we added in variant we're losing two tractors in our legacy over the road Division. This pressured our results as our fixed costs also increased in nominal dollars by six 7% for the full year of 2020 compared to the full year of 2019.
Speaker 3: In 2020 for each tractor that we added invariant, we are losing two tractors in our legacy over the road division. This pressured our results as our fixed cost also increased in nominal dollars by 6.7% for the full year of 2020 compared to the full year of 2019.
In 2021, we increased our investment in variant as we grew the tractor fleet from 688 tractors at the beginning of the year to 1555 tractors exiting 2021.
Speaker 3: In 2021, we increased our investment in variant as we grew the tractor fleet from 688 tractors at the beginning of the year to 1,555 tractors exiting 20.
Speaker 3: At the same time, we experienced a trition not only in our legacy over the road division, but also in our dedicated division as the overall market for professional drivers became extremely competitive as the year progressed.
At the same time, we experienced attrition not only in our legacy over the road division, but also in our dedicated division as the overall market for professional drivers became extremely competitive as the year progressed.
Our investments led to an increase in fixed cost of $55 $6 million for the full year of 2021 compared to 2020 or an increase of 17, 9%. This increased investment combined with the decline in tractor count of 208 tractors year over year led to our fixed costs increasing to 26.
Speaker 3: Our investments led to an increase in fixed cost of $55.6 million for the full year of 2021 compared to 2020 or an increase of 17.9%. This increased investment combined with a decline in tractor count of 200 naked tractors year over year led to our fixed costs increasing to 26.6% for the full year. And in the fourth quarter our fixed costs were 30.1% of truck load revenue.
6% for the full year and then the fourth quarter, our fixed costs were 31% of truckload revenues, we believe that our tractor count bottom in the second quarter of 2021, and we've added seated tractor count sequentially in both the third and fourth quarters of 2021, which are critical to growing back into our cost infrastructure.
Speaker 3: We believe that our track account bottom in the second quarter of 2021, and we have added C's track account sequentially, but the third and fourth quarters of 2021, which are critical to growing back into our cost infrastructure.
We expect our fixed cost infrastructure to grow in nominal dollars, but to decrease as a percentage of revenue as we grow our truck count in the coming quarters. As a reminder, every 1% reduction in fixed costs as a percentage of net truckload revenue creates approximately $12 $5 million of incremental operating income.
Speaker 3: We expect our fixed cost infrastructure to grow in nominal dollars, but to decrease as a percentage of revenue as we grow our truck count in the coming quarters. As a reminder, every 1% reduction in fixed cost as a percentage of net truck load revenue creates approximately $12.5 million of incremental operating.
In addition execution of our transition to a more disciplined approach as we refine the variant product and scale should also contribute to a better fixed cost coverage and reduced our variable expenses as a percentage of revenue.
Speaker 3: In addition, execution of our transition to a more disciplined approach as we refine the variant product in scale should also contribute to the better fixed cost coverage and reduce our variable expenses as a percentage of revenue.
We believe this infrastructure that we have created can handle an additional 2400 plus seat attractors, bringing our truckload fleet to more than 8000, which would equate to an additional $500 million of truckload revenues net of fuel relative to where we are today without adding any meaningful infrastructure.
Speaker 3: We believe this infrastructure that we have created can handle an additional 2,400-plus seated tractors bringing our truck loads lead to more than 8,000 which would equate to an additional $500 million truck load revenues, net a fuel relative to where we are today without adding any meaningful infrastructure costs.
Cost.
Speaker 3: In 2022, it will be critical for us to continue to improve the overall variant product and scale the sleep, which will ultimately allow us to grow into our enterprise cost infrastructure and make progress towards our profitability and...
In 2022, it will be critical for us to continue to improve the overall variant product and scale. This fleet, which will ultimately allow us to grow into our enterprise cost infrastructure and make progress towards our profitability initiatives.
Speaker 3: Admittedly, the transition from product creation to scale didn't come without its challenges. However, we believe our thesis remains strong, and we have line of sight to improve result with the recent changes made that Eric Fess was.
Italy, the transition from product creation to scale didn't come without its challenges. However, we believe our thesis remains strong and we have line of sight to an improved result, with the recent changes made that Eric discussed earlier.
Turning to guidance for the time being we are focused on improving the unit economics of our variant trucks and are not the body's fleet growth targets until we are confident the operating issues within variant had been fixed in the truckload segment is ready to grow again, we expect sequential improvement in our results through 2022.
Speaker 3: Turning to guidance. For the time being, we are focused on improving the unit economics of our variant trucks and our not providing sleep growth targets until we are confident the operating issues with invariant advent fix in the truck load segment is ready to go again. We expect sequential improvement in our result through 2020s to, as our effort stay cold, but the pace of change may be uneven. With that, I'll turn it back.
Our efforts take hold but the pace of change may be uneven.
With that I'll turn it back to Eric for our outlook.
For the macro operating environment, we expect a robust freight market early in the year that moderates as the year goes on due to improvements in the supply chain inventory restocking and perhaps some slowing of manufacturing and imports based on fed tightening and a return to consumer spending on services.
Speaker 2: For the macro operating environment, we expect a robust freight market early in the year that moderates as the year goes on, due to improvements in the supply chain, inventory restocking, and perhaps some slowing of manufacturing and imports based on Fed tightening, and a return to consumer spending on service.
Speaker 2: At the same time, shortages of drivers and new tractors and trailers should limit capacity expansion.
At the same time shortages of drivers and new tractors and trailers shouldn't limit capacity expansion.
We expect this to result in low double digit increases in OTR contract rates and lesser and dedicated at least in the first half of the year.
Speaker 2: We expect this to result in low double digit increases in OTR contract rates and lesser and dedicated, at least in the first half of the year.
Speaker 2: We are also expecting higher new equipment prices to be offset by continuation of the strong market for new equipped
We are also expecting higher new equipment prices to be offset by a continuation of the strong market for used equipment to.
Speaker 2: To the extent that the macro environment is different than these assumptions, a pace of improvement could be faster or slow.
To the extent the macro environment is different than these assumptions, our pace of improvement could be faster or slower.
Yeah.
Speaker 2: Based on our macro expectations, improvements in our operating results are likely to come primarily from improvements in OTR per truck utilization.
Based on our macro expectations improvements in our operating results are likely to come primarily from improvements in OTR per truck utilization.
Better freight selection when more afraid as being run through the optimizer and better fixed cost coverage through increases in total fleet size and miles. The good news is much of this is under our control and I believe we have the right team and the right jobs with the right plan for success.
Speaker 2: better freight selection when more freight is being run to the office.
Speaker 2: and better fixed cost coverage through increases in total fleets at the mile.
Speaker 2: The good news is much of this is under our control. And I believe we have the right team and the right jobs with the right plan for success.
Speaker 2: The pace of our success will be apparent in the results of turnover safety, revenue for truck, and eventually total seated
The pace of our success will be apparent in the results of turnover safety revenue per truck and eventually total seated truck count primarily in variant, but also across our entire truckloads segment.
Speaker 2: primarily invariant, but also across our entire truckload segment.
One thing that was reinforced with me over the last two months is that across U S. Express we have incredibly smart capable people, who have the dedication and drive to make sure we achieve our goals.
Speaker 2: One thing that was reinforced with me over the last two months is that across US Express, we have incredibly smart and capable people who have the dedication and drive to make sure we achieve our goals.
With the new structure that promotes cooperation between the tech and operations teams, there's new energy to turn silo measurement into enterprise wide financial results.
Speaker 2: With the new structure that promotes cooperation between the tech and operations
Speaker 2: There's new energy to turn silo measurements into enterprise-wide financial results.
Early returns on our remediation efforts are positive as we have averaged approximately $4100 and revenue per tractor per week in variant over the last four weeks.
Speaker 2: Early returns on our remediation efforts are positive as we have averaged approximately $4,100 in revenue per tractor per week and variant over the last four weeks.
Speaker 2: And I've reduced our operating expenses by 10 million dollars in annual last call.
I never do our operating expenses by $10 million in annualized costs.
While it is still early we are encouraged by the progress made in a relatively short period of time.
Speaker 2: While it's still early, we encourage about a progress made in a relatively short period of time.
Somebody asked whether we still believe building variant is the correct strategy. We strongly believe it is because we believe this industry is ripe for a model that scales and a lower per unit cost.
Speaker 2: Some may ask whether we still believe building variant is the correct strategy. We strongly believe it is because we believe this industry is right for model that scales at a lower per unit cost.
The past 20 years of proven that most companies are industry worked diligently on cost and they have a hard time growing their fleet.
Speaker 2: The past 20 years of proven that most companies are industry work diligently and cost, and that will hard time grow in their fleet. We want to build a model for growth and a company.
We want to build a model for growth and economies of scale.
Speaker 2: The combination of growing to the most difficult driver market in memory and being able to adjust the model rapidly over the past several weeks gives us confidence in the variant strategy and that we are on the path to success. And with...
The combination of growing through the most difficult driver market in memory and being able to adjust the model rapidly over the past several weeks gives us confidence in the variant strategy and that we are on the path to success.
And with that operator, we are ready to take questions.
Speaker 4: Thank you. 30th and gentlemen at this time, we will begin ducking a question and answer session. If you'd like to ask a question, you may press the star 1 on your telephone keypad. A confirmation tunnel indicate your line is in the question queue.
Thank you ladies and gentlemen at this time, we'll be conducting a question and answer session.
If you'd like to ask a question you May press star one on your telephone keypad.
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Our first question comes from the line of Jack Atkins with Stephens. Please proceed with your question.
Speaker 4: Our first question comes from the line of Jack Atkins with Stevens. Please proceed with your question.
Okay, great. Good afternoon, and thank you for taking my question, So Hey, Jack.
Speaker 5: Okay, great, good afternoon and thank you for taking my question. So, I guess Eric Fuller, for question. Yeah, first question for you. You know, when you think about the...
Yes, Eric Fuller.
Yeah question. Yeah first question is for you.
When you think about the.
I guess, what's left to do to get variant.
Speaker 5: I guess what's left to do to get variant on track? Could you maybe walk us through the next steps there? Are there any next steps in the first quarter, first half of the year? And then I guess from a bigger picture perspective.
On track could you maybe walk us through sort of the next steps. There are there any next steps in the first quarter first half of the year and then I guess from a bigger picture perspective.
Speaker 5: you know, could you maybe kind of take us through some lessons learned on your end in terms of being the CEO of the company and maybe how you're gonna manage the business differently is you kind of think.
You know could you maybe kind of.
Take us through some lessons learned on your end in terms of being the CEO of the company.
Maybe how youre going to manage the business differently as you kind of think forward yeah. Yeah. I think first off you know we've gone through some remediation efforts over the last 810 weeks I mean, there were some things that needed to get addressed we needed to infuse.
Speaker 2: Yeah, I think first off, we've gone through some remediation efforts over the last eight, 10 weeks. I mean, there were some things that needed to get addressed. We needed to infuse more domain knowledge back into the business. And so I think that we've done that. In fact, Eric and I have pretty much spent our entire time since we made the move in mid-December. We've spent all of our time in Atlanta. In fact, we're in Atlanta today. And so...
More domain knowledge back into the business and so I think that we've we've done that in fact, Eric and I have pretty much spent our entire time since.
We made the move in mid December we spend all of our time in Atlanta and in fact, we're in Atlanta today and so.
We're here actively participating and kind of managing the business. We have identified some of our key leadership in some of our other areas that we've put back into variant to drive.
Speaker 2: We're here actively participating in managing the business. We have identified some of our key leadership and some of our other areas that we put back into variant to drive better results. And a little bit like I said, really, the main knowledge piece was really the big issue. And so trying to use that domain knowledge back into the business has been crucial. And we've seen it in our results the last four weeks.
Better result.
A little bit like I said really the domain knowledge piece was really the big issue and so trying to abuse that domain knowledge back into the business has been crucial and we've seen it in our results. The last four weeks, we have seen significantly improved results.
Speaker 2: We have seen significantly improved results.
Just about across the board in our revenue per truck at our turnover of staff.
Speaker 2: just about across the board in our revenue per truck and our turnover stats and our phone stats like everything that we track and look at, things are moving the right direction, so we feel very confident.
And our phone stats like everything that we track and look at things are moving in the right direction. So we feel very confident that we are you know.
Speaker 2: that we are moving the direction that's gonna start driving positive earnings growth over the next year. And regards to lessons learned.
Moving the direction Thats going to start driving positive earnings growth over the next you know nobody.
Next year.
In regards to lessons learned Jack I mean.
Speaker 2: You know, when you build out something like this, we were very intentional about building it off site, building it within our outside of our four walls, you know, building it with a new team and kind of a new approach. I would say...
You know when you build out something like this we were very intentional about building it off site building it within or outside of our four walls, you know building yet.
With a new team and and kind of a new approach I would say.
We probably should have work towards transitioning.
Speaker 2: that we probably should have worked towards transitioning that business from start up to more of a mature business and Eric and I, especially myself, should have infused myself quicker. If I look back, we were really running really good stats in variants.
That business from startup to more of a mature business and Erik and I, especially myself should've infuse myself quicker.
If I look back we were really running really good stats and variant.
Speaker 2: until the summer. And then, you know, it was about summertime that things kind of started to drop off. And so, you know, hindsight, you know, maybe gotten down here a little quicker, but I don't know, I mean, I still think that we moved relatively fast, relative to when we started to see a deterioration in the numbers.
Till the summer and then you know it was about summer time that things kind of started to drop off and so no.
No hindsight.
Maybe gotten down here, a little quicker, but I don't know I mean, I still think that we moved relatively fast relative to when we started to see a deterioration in the numbers.
Oh, Okay got it got it.
Speaker 5: okay got got it uh... i guess maybe a follow-up on that you know you noted in your prepared comments that variant is still going to be based in the land uh... you know can you maybe take us through why you know that makes you know sense or why why you want to continue to have a base there you know that variance of future of the company from from what you guys sort of believe in the company's based in chat and you go what why is very it what is very and need to be based
Maybe a follow up on that you noted in your prepared comments that variant is still going to be based in Atlanta.
Can you maybe take us through why that makes sense for why why do you want to continue to have a base there.
Variance of the future of the company from from what you guys sort of believe in the company is based in Chattanooga. YY is variant why does vary I need to be based in Atlanta.
Speaker 2: Well, we have so most of our tech team, and we're still all in on this model. I know it feels...
Well, we have so most of our tech team I mean, we're still you know we're still all in on this model I mean I know it.
With with some of the changes that have happened over the last few weeks or last month or so that you know.
Speaker 2: with some of the changes that have happened over the last few weeks or last month or so, that I wanna make sure that that message goes across that we're not deviating from a strategy and our strategy all along is to be, is been to leverage the technology capabilities of the team down here to really build out a model that we think can scale long-term and we still believe in that basis. And so our team that we've built in Atlanta, our tech team is located here. Now a lot of our operations are more on-site at terminals and things like that, but most of the the managers, especially from a technology standpoint, are based in Atlanta.
I want to make sure that that message goes across that we know we're not deviating from our strategy and our strategy all along.
There has been to leverage the technology capabilities of the team down here to really build out a model that we think can scale long term and we still believe in that thesis and so our team.
We've built in Atlanta, our tech team is located here.
Now a lot of our operations are more onsite at terminals and things like that but.
Most of the manager, especially from a technology standpoint are based in Atlanta.
Speaker 2: And we don't think that we could probably source that level of talent.
And we don't think that we could probably source that level of talent in.
Speaker 2: In Chattanooga, it's just not a market that can sustain the level of tech talent that we need. And so we think Atlanta's more pro.
In Chattanooga is just not a market that can sustain the level of tech talent that we need and so we think Atlanta is more appropriate okay. Our last question and I'll jump back in queue, but you know when you think of all the moving pieces and not trying to pin you down.
Speaker 5: Okay, last question, and I'll jump back into you, but when you think of all the moving pieces, and I try to pin you down.
But I guess, we're just trying to kind of think about the moving pieces here the costs that have come out of variant revenue per truck per week is improving.
Speaker 5: but we'll i guess we're just trying to kind of think about the movie pieces here the cost of come out of area and revenue project per week is improving uh... but you've got seasonality that's not your friend for quarter to first quarter you know do you think the business can be profitable uh... whether it's from an operating company perspective or from a20p ss and in the first quarter.
But you've got seasonality, that's not your friend fourth quarter to first quarter.
Do you think the business can be profitable, whether it's from an operating income perspective or from an EPS perspective in the first quarter.
Speaker 2: Absolutely. Yeah, we feel confident that we're going to start seeing sequential earnings improvement from here on out, that we have kind of, you know, that inflection point that we talked about repeatedly at 1,500 or so trucks. We've passed that. We are growing, continuing to grow. And so we feel very confident that we're going to be moving into positive earnings chart to where we're going to go out. Okay, I'll turn it over.
Absolutely.
Yeah, we feel we feel confident that we're going to start seeing sequential earnings improvement from here on out that we have we've we've kind of that inflection point that we've talked about repeatedly at 500 or so trucks. We've passed that we are growing.
Then you're going to grow and so we feel very confident that we're gonna be moving into positive earnings charge word figure it out.
Okay, I'll I'll turn it over thanks again for the time.
Yeah.
Our next question comes from the line of Scott Group with Wolfe Research. Please proceed with your question.
Speaker 4: Our next question comes from the line of Scott Group with Wolf Research. Please receive it with your question.
Hey, Thanks, just to follow up there where you're profitable in January .
Speaker 6: Hey thanks. Just a fault there. Were you profitable in January ?
Yes.
Speaker 3: Yes, questions where we profitable in January and I will say we're still finishing up January , but we were encouraged by the sequential improvement we made with the increased revenue productivity on the trucks and what the cost coming out. I will say that all of those costs, the $10 million they weren't out effective January 1st, that's nothing that's happened today. So I still don't have that full benefit in the month of January , but very encouraged.
Where we are profitable in January and I will say, we're we're still finishing up January but we were encouraged by the sequential improvement we made with the increased revenue productivity on the trucks and with the cost coming out I will say that all of those cost the $10 million. They werent out effective January 1st that's something that's happened to date, so I don't I still do.
Have that full benefit in the month of January but they're.
We're very encouraged with how January is looking relative to where we were in the fourth quarter.
Speaker 3: without January's looking relative to where we were in the fourth quarter. Okay. Whoa.
Okay, well, what's the what do you think sort of realistic.
Speaker 6: Operating ratio for the trucking segment this year, you guys have all the
Operating ratio for the trucking segment this year.
You guys have all the.
Success Youre, hoping to have.
Yeah, I mean, obviously, you know our targets for profitability.
Speaker 3: Yeah, I mean, obviously, you know, our targets for profitability is, you know, we want to subconsciously get better every quarter. And I think where we've struggled a little bit is not on if we believe in the species and what variant can do to our enterprise, but what's been tough is the wind. And we've put hurdles that popped up along the way that have made, you know, our timeline on expected profitability.
Wanted to sequentially get better every quarter and I think where we've struggled a little bit is not on if we believe in this thesis and what variant can do to our enterprise, but what's been toughest to win and we've got hurdles that popped up along the way that have made our our timeline on expected profitability.
Speaker 3: You know, go a little longer based off, you know, some of the challenges we've had, but look, we still believe this model is gonna get a longer term, you know, to the lower 90s and then then into the 80s and where we still have line of sight for that, I just can't give you a good answer of, you know, what that earnings look like by quarter.
Go a little longer based off some of the challenges we've had but.
Look we still believe this model is going to get you know longer term you have to the lower nineties and then then in the Eighty's and where we still have line of sight to that I just can't give you a good answer of you know what that earnings will look like by quarter.
Okay, and then any thoughts on capex guidance for the year.
Yeah I believe you are in the supplement on the last page will have that in there.
Speaker 3: Yeah, I believe you know, in the supplement on the last page, we'll have that in there. We're still in there about 130 to $150 million. And that's taken into account any delays we experienced in 2021 to get pushed to 2022. But obviously, it's not taken into account any unknown supplier disruption that we may encounter.
We're still in there at about $130 million to $150 million and that's taken into account any delays we experienced in 2021 that got pushed to 2022, but obviously it does not take into account any unknown supplier disruptions that we may encounter.
Yeah.
Okay, and then just last thing just bigger picture you talked about the issues at variant starting over the summer. It seems like that also happened just as the fleet started getting bigger so how do we know this isn't just an issue of.
Speaker 6: And then just last thing, just bigger picture, you talk about the issues it variance starting over the summer. It seems like that also happened just as the fleet started getting bigger. So how do we know this isn't just an issue of...
Speaker 6: This is a tough thing to scale and when you've got fewer trucks it's easier to have better utilization unless turnover and just naturally as the fleet gets bigger it just gets tougher.
This is a tough thing to scale and when you've got fewer trucks, it's easier to have better utilization and less turnover and just naturally as the fleet gets bigger it just gets tougher.
Speaker 2: Yes, God. I think it's a fair question. And I think there's some truth to that. I think that we saw that the model was incredibly successful at a smaller size and as it grew in scale, I'm not sure that we had some of the understanding around the domain that really needed to be there in order to drive that to a, you know, to a scale to a size to get the same results that we were getting previously.
Yeah, Scott I think it's a fair question and I think theres some truth to that I think that we are we saw that the model was incredibly successful at a smaller size and as it grew in scale I'm not sure that we had some of the understanding around the domain that really needed to be there in order to draw.
Give that to a you know two are scaled to a size to get the same results that we were getting previously.
And so that's you know a large part of what we've been focused in down here is looking at like all the components in the facts and all the.
Speaker 2: And so that's a large part of what we've been focused in that here is looking at all the components and all the
The different pieces of the optimizer, making sure that the parameters are set accordingly, there were some parameters that were probably not.
Speaker 2: the different pieces of the optimizer, making sure that the parameters are set accordingly. There were some parameters that were probably not set the way that they probably should have been set. And so there were some small tweaks and some changes there. And so I think by infusing a lot of this domain knowledge back into the business, we're able to make some relatively quick fixes. I think what we found was that
The way that they probably should have been set and so there were some small tweaks and some changes there and so I think by infusing a lot of this domain knowledge back into the business, we're able to make some relatively quick.
I think what we found was that.
Speaker 2: What was built here and the infrastructure here is really strong. I think there was a little bit of maybe some maybe misguided approaches because of a lack of domain knowledge, but at the end of the day, what we built from a technology standpoint, the team that exists down here, we believe that that team and that technology is incredibly powerful and strong and now it gives us something to build up.
What was built here and the infrastructure here is really strong.
There was some a little bit of maybe some some some maybe misguided approaches because of a lack of domain knowledge, but at the end of the day. The you know what we built from a technology standpoint, the team that exists down here, we believe that.
That team and that technology is incredibly powerful and strong and now it gives us something to build off of.
Okay, and then just lastly, Eric Fuller, just maybe a tough question, but what.
Speaker 6: Okay, and then just lastly Eric Follower, just maybe a tough question, but, you know, what do you need to see to view success? At some point do you think about considering strategic alternatives for variant for the whole business?
What do you need to see to just two to view success at some point do you think about considering strategic alternatives for varian for the whole business.
How do you think about that.
We believe in what we're doing and we believe we have a lot of upside I mean I can tell you I think things are going to look a lot better in this next quarter and then subsequent quarters and as long as we see that then we're going to be very optimistic and I'm gonna be.
Speaker 2: We believe in what we're doing. And we believe, we have a line of side. I mean, I can tell you, I think things are gonna look a lot better in this next quarter and in subsequent quarters. And as long as we see that.
Speaker 2: then we're going to be very optimistic and going to be ultimately happy with the direction that we've taken. Now, with that said, I mean, we're not foolish if we see that for some reason that we aren't able to get the traction, then we would look at other alternatives, but I can tell you right now that we are getting the traction. We so confident about it and so there's no reason for us to consider that at this point. Thank you.
Ultimately happy with the direction that we've taken now with that said I mean, we're not foolish if we see that for some reason that we arent able to get the traction.
Then we would look at other alternatives, but I can tell you right now that we are getting the traction we feel confident about it and so there's no reason to.
So for us to consider that at this point.
Okay. Thank you for the time guys I appreciate it.
As a reminder, it is star one to ask a question. Our next question comes from the line of Grady car with J P. Morgan. Please proceed with your question.
Speaker 4: As a reminder, at his store one, they ask a question. Our next question comes from the line of Grady Carr with JP Morgan. Please receive with your question.
Yeah.
Yeah, Hi, guys I am standing in for Brian Austin back on the call today agree. Thank.
Speaker 1: Yeah, hi guys. I'm standing in for Brian Austin Beck on the call today. I agree. Thank you for taking my question. So just wanted to discuss two items a little bit further, one being the obsolete technology that 4.3 million. And then some more details on the sphere accidents and what that kind of looks like going forward. So any more color on that would be helpful. Thanks, guys.
Thanks for taking my question.
So just wanted to discuss two items a little bit further one being the obsolete technologies that $4 3 million.
And then some more details on the sphere accidents.
That kind of looks at looks like going forward.
So any any more color on that would be helpful. Thanks, guys.
Speaker 3: Yeah, I'll go ahead and go and reverse order first on severe accidents. We haven't had accidents.
Yeah I'll go ahead and go in reverse order for some severe accidents, we havent had accident like that over the last three years, if you've been following our releases and then have two in the same quarter and so obviously, we're not planning on that being our new run rate on a go forward basis as it relates to the noncash write off I really look at this as a positive.
Speaker 3: like that over the last three years, if you've been following our releases, and then have two in the same quarter. And so obviously we're not planning on that being our new run rate on a go for basis.
Speaker 3: Yeah, as it relates to the non-cash write-off, yeah, I really look at this as a positive. I mean, we've developed a lot of new technology. We're going to better platform.
I mean, we've developed a lot of new technology, we're going to better platforms. So some of the technology that was being developed and that we had used in the past.
Speaker 3: So some of the technology that was being developed and that we had used in the past.
Speaker 3: We're saying it's obsolete. We're saying we're not going to use it because we have better. So I actually think that this is a good thing. And it's another proof point that what we're building and what we're transitioning to is working.
What we're saying is obsolete, we're saying we're not going to use it because we have better. So I actually think that this is a good thing and it's another proof point that what we're building and what we're transitioning to what's working.
Yeah.
Got it thanks, thanks for the time.
There are no further questions in the queue I'd like to hand, it back over to Mr. Fuller for closing remarks.
Speaker 4: There are no further questions in the queue. I'd like to hand it back over to Mr. Fuller for closing remarks.
Speaker 2: Thank you, everyone, for your participation today. Before we close, I'd like to reiterate that speed and execution are key to getting variant turned around quickly in 2022. The changes that we're making in our control, we have the right people internally with expertise to execute our remediation plan. And we've seen improvement in our key metrics in January , which gives us confidence that we're moving in the right direction.
Thank you everyone for your participation today before we close I'd like to reiterate that speed and execution are key to getting variant turned around quickly in 2022.
The changes that we're making a variant are within our control we have the right people internally with expertise to execute a remediation plan and we've seen improvement in our key metrics in January which gives us confidence that we're moving in the right direction.
We thank you for your support and look forward to providing a progress update on our first quarter call. Thank you.
Speaker 2: We thank you for your support. We look forward to providing a progress update on our first quarter call. Thank you.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
Speaker 4: Ladies and gentlemen, this does include today's fellow conference. Thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
Yeah.