Q4 2024 Old Dominion Freight Line Inc Earnings Call
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Fourth quarter 'twenty 'twenty four earnings conference call.
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Speaker Change: I would now like to turn the conference over to Jack Atkins Director Finance and Investor Relations. Please go ahead.
Jack Atkins: Thank you Betsy and good morning, everyone and welcome to the fourth quarter 2024 conference call for old Dominion framework.
Jack Atkins: Today's call is being recorded and will be available for replay beginning today through February 12, 2025 by dialing one 870 734 475 to nine access code 375569 to the replay of the webcast may also be <unk>.
Jack Atkins: For 30 days at the company's website.
Jack Atkins: This conference call may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995, including statements among others.
Jack Atkins: Guarding old Dominion's expected financial and operating performance for this purpose any statements that may any statements made during this call that are not forward looking statements of historical fact may be deemed to be forward looking statements without limiting the foregoing. The words believes anticipates plans expects and similar expressions organ.
Jack Atkins: Tended to identify forward looking statements you are hereby cautioned that these statements may be affected by the important factors among others set forth in old Dominion's filings with the Securities and Exchange Commission and in this morning's news release and consequently, actual operations and results may differ materially from the results discussed in the forward looking statements.
Jack Atkins: Company undertakes no obligation to publicly update any forward looking statements, whether as a result of new information future events or otherwise.
Jack Atkins: Please note that all prior period share and per share data discussed on today's conference call have also been adjusted to reflect our March 2024, two for one stock split.
Jack Atkins: As a final note before we begin please.
Jack Atkins: Welcome your questions today, but ask that you limit yourselves to just one question before returning to the queue.
Jack Atkins: At this time for opening remarks, I would like to turn the conference call over to.
Marty Frame: The company's President and Chief Executive Officer, Mr. Marty frame. It Marty. Please go ahead Sir.
Speaker Change: Good morning, and welcome to our fourth quarter Conference call with me on the call today is Adam Satterfield, our CFO.
Speaker Change: After some brief remarks, we'll be more than happy to take your questions.
Speaker Change: Old Dominions fourth quarter financial results reflect continued softness in the domestic economy, while our revenue declined seven 3% in the quarter due to a decrease in our volumes or market share remained relatively consistent while we continued to strengthen our customer relationships.
Speaker Change: Although our fourth quarter earnings per diluted share of $1 23 represents a 16, 3% decrease compared to the same period a year ago.
I am proud of how our team continued to deliver superior service, while also operating very efficiently despite headwinds from lower density.
Speaker Change: The past few years have been full of challenges with our industry, especially given the sluggish macroeconomic environment that has continued for longer than most of us would have anticipated.
Through all of this we have remained committed to the key elements of our proven long term strategic plan and I would like to thank our OD family of employees for unwavering dedication to our core strategic priorities.
Speaker Change: While we are focused on what we can control providing superior customer service remaining disciplined in our approach to pricing and controlling our cost by maximizing our operating efficiencies and minimizing our discretionary spending.
Speaker Change: We have also continued to invest in our network, our technology and our people as we strengthen our balance sheet.
Speaker Change: Allows us to remain focused on long term market share opportunities.
Speaker Change: The consistency of our execution through the ups and downs of the economic cycle has been a key element in our ability to win market share through the years.
Speaker Change: Our customers know they can rely on us to be therefore, the and then help them keep their promises to their customers.
Speaker Change: Proud to report that once again the case in the fourth quarter as we provided our customers with 99% on time service and our cargo claims ratio below 0.1%.
Speaker Change: By consistently providing our customers with best in class service, we are adding value to their business, which in turn supports our yield yield management initiatives are long term consistent approach to pricing, which focuses on individual customer profitability.
Speaker Change: Designed to help offset our cost inflation and support future investments and our capacity and technology.
Speaker Change: In the face of this challenging demand environment. Our team has worked hard to control our costs and preserve our profitability by looking for ways to operate as efficiently as possible.
Speaker Change: As a result over the past two years, our direct operating expenses have declined as a percentage of revenue despite headwinds from lower network density and continued cost inflation.
Speaker Change: This shows the flexibility of our network as well as the commitment of our entire team to match, our direct operating cost to our business levels.
Speaker Change: Importantly, our efforts to control costs have not prevented us from continuing to invest in our business for long term.
Speaker Change: We spent 771 million on capital expenditures in 2024, which follows the $757 million and capital spending we executed in 2023.
Speaker Change: These figures include $664 million, we have invested over the two year period and the ongoing expansion of our service Center network. We opened four new service centers in 2024, and we also have several other facilities under construction or nearly complete that we can open quickly once the demand environment supports it.
Speaker Change: We have over 30% excess capacity in our service Center network, but we know how quickly the market can change. These ongoing investments have created some short term headwinds to our overhead expenses due to higher depreciation cost that said, we are willing to incur these costs in the short term. So that we are in a pause.
Speaker Change: Vision to grow with our customers and support them, while the capacity and technology. They will required in the years ahead.
Speaker Change: Thanks to the hard work and dedication of our OD family of employees I'm cautiously optimistic as we start the fiscal new year.
Speaker Change: While we cannot predict what we will see an inflection in demand.
Speaker Change: We are well positioned to respond to an improved operating environment when it materializes over the past decade, our consistent execution and commitment to superior service has allowed old dominion to win more market share than any other L. T O carrier.
Speaker Change: We are confident that by continuing to implement our proven strategic plan. We are position to continue to win market share and drive increased value for our shareholders over the long term.
Speaker Change: I appreciate you joining us this morning, and now Adam will discuss our fourth quarter in greater detail Adam.
Adam Satterfield: Thank you Marty and good morning Aldo.
Old Dominion's revenue totaled $1.39 billion for the fourth quarter, 2024, which was a seven 3% decrease from the prior year.
Adam Satterfield: Our revenue results reflect an eight 2% decrease in <unk> tons per day, and a 0.4% decrease in <unk> revenue per hundred weight.
Adam Satterfield: We also had one extra workday as compared to the fourth quarter of 2023.
Adam Satterfield: On a sequential basis, our revenue per day for the fourth quarter decreased two 7% when compared to the third quarter of 2024 with <unk> tons per day, decreasing 3.0% and <unk> shipments per day decreasing four 6%.
Adam Satterfield: For comparison, the 10 year average sequential change for these metrics includes a decrease of <unk>, 3% and revenue per day.
Adam Satterfield: Decrease of one, 2% and <unk> tons per day and.
Adam Satterfield: And a decrease of two nine person and <unk> shipments per day.
Adam Satterfield: The monthly sequential changes in <unk> tons per day during the fourth quarter, whereas follows.
Adam Satterfield: October decreased 3.0% as compared to September.
Adam Satterfield: November increased 0.7% as compared to October and December decreased 4.0% as compared to November.
Adam Satterfield: The 10 year average change for these respective months a decrease of three 1% in October.
Adam Satterfield: The increase of three 1% in November and a decrease of seven 2% in December.
Adam Satterfield: For January our revenue per day decreased by four 2% when compared to January of 2024 due to a seven 1% decrease in our <unk> tons per day that was partially offset by an increase in our <unk> revenue per hundredweight.
Adam Satterfield: LTM revenue per hundred weight, excluding fuel surcharges increased four 5% in January.
Adam Satterfield: Our operating ratio increased 410 basis points to 75, 9% for the fourth quarter 2024.
Adam Satterfield: The decrease in our revenue had a deleveraging effect on many of our operating expenses during the quarter, which contributed to approximately a 300 basis point increase in our overhead cost as a percent of revenue.
Adam Satterfield: Within our overhead cost our miscellaneous expenses as a percent of revenue increased 110 basis points due primarily to lower gains recorded on the disposal of property and equipment during the fourth quarter of 2024.
Adam Satterfield: We generally expect our miscellaneous expenses to average approximately zero to 5% of revenue. So these calls for more normalized in the fourth quarter of 2024.
Adam Satterfield: Our direct operating cost, which are generally variable in nature.
Adam Satterfield: Also increased as a percent of revenue when compared to the fourth quarter of 2023.
Adam Satterfield: Contributing to the increase in cost was a 100 basis point increase in our insurance and claims expense as a percent of revenue, which was primarily due to changes in the adjustment recorded for our annual third party actuarial reviews of accident claims.
Adam Satterfield: We were otherwise pleased with our team's effort to control our direct operating expenses in relation to current business levels, while also maintaining tight control over discretionary spending.
Adam Satterfield: Old Dominion's cash flow from operations totaled $401 1 million for the fourth quarter and $1 7 billion for the year, respectively, while capital expenditures were $179 million and.
Adam Satterfield: $771 $3 million for the same periods.
Adam Satterfield: We utilized $142 $5 million and $967 3 million of cash for our share repurchase program during the fourth quarter and the year respectively.
Adam Satterfield: While our cash dividends totaled $55 $4 million and $223 6 million for the same periods.
Adam Satterfield: We were pleased that our board of directors approved a quarterly dividend of <unk> 28 per share for the first quarter 2025, which represents a seven 7% increase compared to the quarterly cash dividend paid in the first quarter of 2024.
Adam Satterfield: Our effective tax rate for the fourth quarter of 2024 was 21, 5% as compared to 24, 1% in the fourth quarter of 2023.
We currently expect our effective tax rate to be 24, 8% for the first quarter of 2025.
Adam Satterfield: This concludes our prepared remarks. This morning, operator, we'll be happy to open the floor for questions at this time.
Adam Satterfield: We will now begin the question and answer session.
Adam Satterfield: To ask a question you May Press Star then one on your Touchtone phone.
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Adam Satterfield: At this time, we will pause momentarily to assemble our roster.
Adam Satterfield: Okay.
The first question today comes from Jason Seidl with TD Cowen. Please go ahead.
Adam Satterfield: Okay.
Speaker Change: Thank you operator, Marty and team good morning, appreciate the time today.
Speaker Change: Marty you guys talked about tonnage being down seven 1% here in January but it's.
Speaker Change: Obviously been all over the news about the really bad winter weather conditions in parts of the country that quite frankly are prepared for bad winter weather.
Speaker Change: How should we think about sort of that tonnage number going forward as it moves throughout the quarter should we expect that to get a little bit better how much was weather impacted.
Speaker Change: Well, we go through bad weather every.
Speaker Change: January and February it seems like in my career and we.
Speaker Change: We get most of that revenue back when customers are closed down due to bad weather because the carriers can't pick it up it usually comes back in a couple of days some of it could be moved over to full truckload, if they're able to build a full load from the shippers.
Speaker Change: Most of that comes back.
Speaker Change: But to answer your question it would depend upon what.
Speaker Change: The weather is going forward.
We had some unusual weather here in the South where we live and we've never seen cold temperatures like we had a couple of snows, but.
Speaker Change: I don't look for that to be a big issue with us going forward from a weather standpoint.
Speaker Change: So.
Speaker Change: Im optimistic.
Speaker Change: Almost out of the woods, we it was 70 degrees here yesterday.
Speaker Change: We loved that.
Speaker Change: Well, we're getting the bad weather up here.
Speaker Change: You guys give us any numbers in terms of the amount of terminals that you guys had that closed down in January maybe versus the prior January to give us a better feel.
Speaker Change: We don't normally get into that level of detail, Jason but we obviously, we had service centers that were disrupted as Marty said.
Speaker Change: I think we always think about trucking is an outdoor sport and so when we look at things like our 10 year averages.
Speaker Change: We're just going to be bad weather, that's built into.
Speaker Change: To those 10 year averages and so forth we had bad weather in there in January last year, but we're pretty pleased with how.
Speaker Change: How we performed and what our volumes look like.
Speaker Change: In January overall relative to December and our tonnage was a little bit under.
Speaker Change: Use the five year average and the December and January.
Speaker Change: We outperformed the five year average in December.
Speaker Change: By about 100 basis points and.
Speaker Change: We underperformed by about 100 basis points at five year average in January and we usually look at the 10 year average going forward. So tonnage senior average would be up 1% about one 5% in.
Speaker Change: In February over January and then the 10 year average and March would be a four 9%. So I think the key would be just we continue to perform.
Speaker Change: And look and see how business levels build throughout the month of February and obviously, we will give our mid quarter update as normal and then do we see this this optimism we are hearing from customers.
Speaker Change: Things like I assume finally going above 50, and those things really translate into increased business levels and see the acceleration that you would otherwise typically see or what we have seen over the last 10 years.
Speaker Change: Yeah, well I got my fingers crossed for you guys I appreciate the time.
Speaker Change: Thank you.
Jordan: The next question comes from Jordan <unk> with Goldman Sachs. Please go ahead, yes.
Jordan: Yeah, Hi, I guess.
Speaker Change: Maybe it makes sense to sort of ask since we talked about tonnage a little bit on the operating ratio and putting all the puts and takes together with tonnage and trends in January how youre thinking about <unk> seasonality on an O R. Thank you.
Jordan: Yeah from a.
Jordan: Operating ratio standpoint, and normally we would expect about 100 to 150 basis point sequential increase in the first quarter.
Jordan: Relative to the fourth.
Jordan: For this year I'm expecting that we'll probably be up kind of flat.
Jordan: Flat to up 50 basis points in the first quarter relative to the fourth.
Jordan: We've got that.
Jordan: Insurance that was called out in the press release.
Jordan: We should see some improvement in those cost as a percent of revenue I would expect those costs to be closer to about one 5% of revenue in first quarter, so that kind of otherwise with offset.
Jordan: That normal sequential increase that we would see and so kind of that flat to up 50, you still think you know.
Jordan: We've got a little bit of risk.
Jordan: To revenue in terms of where we're not quite yet there we haven't had a period, where we've been on that seasonality.
Jordan: <unk> for a full quarter. So we'll see what transpires as we continue to go through.
Speaker Change: The rest of this quarter, but yes.
Speaker Change: We have a little underperformance, there then that puts a little bit more pressure on our overhead cost. We also expect that our op supplies and expenses as a percent of revenue will be a little bit higher.
Speaker Change: In the first quarter relative to the fourth as well so but just like we did in the fourth quarter is really pleased with.
Speaker Change: Our performance there, we outperformed on a core basis, what otherwise that normal seasonality would have been.
Speaker Change: Despite the.
Speaker Change: You know what the topline dictated forced there.
Speaker Change: That just is a testament to our team.
Speaker Change: The focus that we have everyday on managing their operating efficiencies and continuing to keep our belt as tight as we can and controlling discretionary spending.
Speaker Change: Very good cost performance and controlled through <unk> and would expect that we'll see.
Speaker Change: Some of that continue into the first quarter here until we really get back to more of a robust revenue environment.
Thank you.
Speaker Change: Yes.
Speaker Change: The next question comes from Chris Wetherbee with Wells Fargo. Please go ahead.
Chris Wetherbee: Hey, Thanks, good morning, guys.
Chris Wetherbee: Maybe if I could ask on pricing kind of get a sense of maybe how you're seeing the environment fourth quarter revenue per hundredweight.
Chris Wetherbee: Came in reasonably good it sounds like maybe a little bit of an acceleration in <unk>, but could you maybe help us sort of understand a little bit what's going on from a pricing perspective, what youre seeing in the market.
Speaker Change: Yeah, we're still getting good price increases.
Speaker Change: The revenue per hundred weight came right in line with pretty much that range that we gave for the fourth quarter. It was up three 8% excluding the fuel surcharge in.
Speaker Change: So we're right kind of in line with where we thought we'd be from a normal seasonality standpoint.
Starting out in good shape at the beginning of the quarter with with what we've seen thus far in January.
Speaker Change: Being up four 5%, but normal seasonality would be we'd be up about three 6% to 4%.
Speaker Change: In the first quarter. So we will see we saw a little bit of a drop in our weight per shipment from December into January that kind of help that metric.
Speaker Change: Full that we will see that weight per shipment.
Speaker Change: Reaccelerate and that's pretty standard to see January weight per shipment would be a little bit lower but hopefully we will see that.
Speaker Change: Accelerate as we go through the quarter that'd be more indicative of an improving economic environment, but.
Speaker Change: That's kind of what we've seen thus far and at.
Speaker Change: At this point through January outperforming.
Speaker Change: That range that we somewhat expect from a normal seasonality standpoint.
Speaker Change: Okay. That's helpful. Thank you.
Speaker Change: The next question comes from Jon Chappell with Evercore ISI. Please go ahead.
Speaker Change: Thank you good morning.
Speaker Change: Marty mentioned in his prepared remarks, several other service centers that are under construction are near completion.
Speaker Change: As we think about the outlook for this year maybe.
Speaker Change: Maybe not identifying the inflection yet do we expect for service centers or less.
Speaker Change: For 2025, and if we do get that inflection second half of the year customer optimism seems to be on point, how many service centers are pretty close so you could bring on pretty quickly to kind of keep the spare capacity, we'd like for it to be.
Speaker Change: Yes, a lot of that is going to be demand driven John.
Speaker Change: We're at 260 room service centers today.
Marty Frame: We continue to execute on our long term Capex plan really over the balance of the last couple of years like like Marty mentioned and so we had four openings overall last year.
Marty Frame: As we look out this year were a little north of 30% from an excess capacity standpoint. So.
Speaker Change: Unless demand really dictates, we don't have to open any.
Speaker Change: In that regard and we will be diligent in looking at the properties that we may finish construction on and in making that decision operationally, whether or not we want to turn.
Speaker Change: That new location on if you will and Theres a lot of cost that goes.
Speaker Change: Hand in hand, with our service center opening is not just the facility cost themselves, but it's working them into an operational plan and the impact of line haul operations and all the other incremental cost. So all of those will be factored in to.
Speaker Change: The decision as to whether or not we would want to open but we've got I think several that are near completion now and I think we would have several more so that we could finish here in 2025.
Speaker Change: So that number that you mentioned, we could open that many if demand dictated, but we're just going to be.
Speaker Change: So the prudent with making those decisions, but what we can say is I.
Speaker Change: I think we've done.
Speaker Change: We continue to execute according to what our long term plan has been and that's making the investments ahead of the anticipated growth curve.
We're confident in our continued opportunities ahead for market share.
Speaker Change: We want to make sure that we have prepared our network and our people to be ready when those volumes do in fact return to us and should return to a very strong incremental margins. So.
Speaker Change: That's that's something that we're in great shape for <unk>, and we will continue to evaluate those projects, but we can handle a lot of business right now but.
Speaker Change: But we want to be prepared if you think back to how things change quickly in 2021 2022, we put on accumulative $2 billion of revenue over that two year period. So I think we're in a great spot from a network standpoint that we could go through a robust economic expansion and <unk>.
Speaker Change: On a lot of.
Speaker Change: Good strong revenue and John to add to Adam's comments to those facilities that are that we're working on now and trying to complete our hub facilities, which will actually lower our costs in the future from a line haul standpoint, we're still.
Speaker Change: We're very excited that those things are near completion and that'll give us some further savings down the road.
Chris Wetherbee: Great. Thanks, Marty Thanks, Adam.
Speaker Change: The next question comes from Daniel <unk> with Stephens. Please go ahead.
Daniel: Hey, good morning, guys. Thanks for taking my questions.
Speaker Change: And maybe to follow up on an earlier comment you made so demand has remained muted, but we did see PMI kind of returned to expansion. This month can you just talk about how long. It typically takes for that to show up in terms of more shipments moving through the network and what are the earliest parts of your business I do typically inflect higher in this cycle are you seeing any encouraging demand from those customers when you look.
Daniel: Across your portfolio. Thanks.
Daniel: Have we actually.
Daniel: In the fourth quarter, so our industrial business for the first time in awhile outperformed our retail related business.
Daniel: The revenue performance with those industrial related customers is actually a little bit better than the overall company performance and I think that kind of goes hand in hand with the enthusiasm that we're hearing from customers today and albeit it's everyone. I think has been a little bit cautious with it but we saw the acceleration in <unk>.
Daniel: In December and it didn't quite break the 50 threshold, but we.
Daniel: We felt like based on customer conversations that we would see it Buster at 50 in January and that's where it ended up being so.
Daniel: I think that will just continue to stay engaged with those customers and.
Daniel: Obviously be there for them when they need us and we'd love to see.
Daniel: Increased business levels with our industrial related customers typically it's a couple of months lag.
Daniel: When you see that performance with ISC him.
Daniel: In terms of the acceleration coming through I'd say for the industry overall, but certainly we're in a great spot to take hold those increased shipments.
Daniel: If they materialize.
Daniel: I appreciate all that color best of luck.
Speaker Change: The next question comes from Eric Morgan with Barclays. Please go ahead.
Eric Morgan: Hey, good morning, Thanks for taking my question.
Speaker Change: I wanted to ask another on the operating ratio.
Speaker Change: Just given the cost performance this year, and where you see pricing trending.
Speaker Change: And I don't know, maybe maybe you see a little bit of DNA or less of a G&A drag with Capex coming down do you think you can get to the margin improvement. This year. If we are kind of in a steady state macro or do you think you need to see some positive inflection here.
Speaker Change: Well I definitely think that's.
Speaker Change: Going to be dependent on the topline revenue and we've talked about a lot of the ore.
Speaker Change: The degradation that we saw this past year.
Speaker Change: Really was in the the overhead expenses line.
Speaker Change: Actually generated a slight but just a little bit of improvement in our direct cost as a percent of revenue for the full year. So it was really pleased again with.
Speaker Change: Our ability to control what was controllable.
Speaker Change: A low density environment, while actually improving our service standards. So.
Speaker Change: That's a testament to our operations team for how they handled and maintenance through this year, but so I'm really pleased with that but we did see the inflation there and those overhead costs.
Speaker Change: They've been averaging about $300 million per quarter, overall, plus or minus kind of $5 million and when you go through that allocation. So we've got to get back to a point, where we've got some some topline growth.
Speaker Change: I think that if we can see some return to seasonality.
Speaker Change: And that's certainly possible.
If you match seasonality or kind of trace it through the four quarters of this year.
Speaker Change: Can see back to are you get to the back half of the year in particular fourth quarter.
Speaker Change: You can see some some nice improvement overall in revenue and I think that if we do our job and continue to control our cost.
Speaker Change: It's certainly possible to get back to an environment, where we can have some improvement, but I kind of look at this is it's going to be a multi year type.
Speaker Change: Type of story in the sense of I think we see the economy really rebound and you go back to some prior periods by 2017 2018.
Speaker Change: It's going to happen at some point and that's called a cycle for a reason right. So whenever it does come through whats the leverage can we get on.
Speaker Change: The revenue growth and I think we can look at.
Speaker Change: The breakdown of our operating ratio for the year.
I think that if our total direct cost for the year were between 50% to 53% of revenue overheads, 20% to 21% of revenue.
Speaker Change: If you run the math, that's a pretty strong incremental margin. If we can just manage those two components and thats, where we'd expect to get the most leverage if our overhead cost or about 21% of revenue they've been 16, 17% before so we can swing that pendulum back to the lower end of that kind of 500.
Speaker Change: Basis point range that we tend to trade in and.
Speaker Change: And see some some really strong performance that should get us right back.
Speaker Change: <unk> towards our goal of producing an annual operating ratio below 70%.
Speaker Change: I appreciate the color.
Speaker Change: The next question comes from Brian Awesome Bank with Jpmorgan. Please go ahead.
Speaker Change: Okay.
Speaker Change: Hey, good morning, Thanks for taking the question.
Speaker Change: So I just want to come back to the NMS Ta, they're working through some changes to the class system.
Speaker Change: The proposal was out late last week to.
Speaker Change: What's your thoughts on this last time, but when it come back to in any dimension a vast majority of your freight already but now that we've seen a little bit more on the table in terms of the proposal.
Speaker Change: What do you think the implications are for yourselves, the shippers and for the broader industry. Assuming this goes forward as proposed thank you.
Speaker Change: Yep I personally think it's a.
Speaker Change: A big to do about nothing really because.
Speaker Change: Basically let them wanting to do is go.
Speaker Change: From a class rating system to.
Speaker Change: Density in key rating system.
Speaker Change: So.
Speaker Change: That doesn't necessarily mean that the shippers have to do that overnight. They have the choice to go to that if they want.
Speaker Change: So I don't I don't see that being a big deal and how that will affect the carriers certainly we would like to work towards that because it gives the carriers are better.
Speaker Change: System to rate their shipments.
Speaker Change: And cost of shipments but.
Speaker Change: I think it's probably a lot of hype over net and for the for the time being.
Marty Frame: Okay I appreciate that Marty.
Speaker Change: Thank you.
Speaker Change: The next question comes from Ken <unk> with Bank of America. Please go ahead.
Ken: Hey, good morning, Marty.
Ken: Just maybe just sounds like a deceleration in the market, if youre, saying youre maintaining share volumes down seven 8% versus I think you were talking maybe more mid single digits last quarter.
Ken: Can you talk about that and your market share usually maintain at this point in the downturn you only get the pick up in the Upturns and then Adam just a real quick clarification, I think you mentioned or up 50 to 100 basis points I thought last time, you had mentioned the normal <unk> seasonality was 100 to 150 so.
Ken: Does that mean youre looking at historical trends or as the historical trend changed or just trying to get update there. Thanks.
Ken: Yeah, Let me make sure I clarify that so the normal increases of 100 to 150 basis points.
Ken: And I was saying that we should be flat to up 50 basis points from the reported operating ratio in the fourth quarter.
Ken: Part of that is the benefit of that insurance and claims expense that was two 9% of revenue.
In the fourth quarter, we expect that to revert back to around one 5%.
Ken: In the first quarter, so you've got some benefit there and then some increases that I had mentioned.
Ken: Earlier.
Ken: But youre right. The normal average is 100 to 150 basis points of an increase there.
Ken: In regards to your.
Speaker Change: Your market share commentary.
Ken: I think that.
Ken: The thing that we've been looking at overall, obviously there was a lot of disruption over the last couple of years, we're trying to look at share.
Ken: Just comparing the publicly traded carriers. So we had to to try to look more at the entire universe.
Ken: Some of the data that we get that includes private carriers overall, and so we would say that in 'twenty three 'twenty four as well.
Ken: From all the information we get it looks like we have maintained market share and that's effectively what we targeted doing in a weaker economic period, we want to maintain our market share continued to.
Ken: To maintain discipline.
Ken: With regards to our yield management philosophy, as well and then be in a good spot to start growing with the market does the game and I.
Ken: I think that's what you see in the expansionary markets, we've outperformed the at least the public carriers.
Ken: By anywhere from 600 800 basis points. If you will so I think that we'll see that play out again.
Ken: Only time will tell.
Ken: In terms of how the others, we're able to to reshuffle.
Ken: Capacity, if you will and.
Ken: A window the market continues to improve.
Ken: In the fleet comes back and overall, we see the industry volumes are down probably about 15%.
Versus where we were in 2021 and 2022, so I think that's created.
Ken: Some of this capacity that's out there, but it'll be all about who can and control it.
Ken: Without any type of growing pains and referenced it earlier, but we've put on $2 billion of revenue cumulatively over that 21 and 'twenty two period. So I think we've got a proven team that can go out and execute and put on a significant amount of revenue growth that would be a top tier carrier.
Ken: Just putting it on organically.
Ken: At least what we did in 'twenty one 'twenty two.
Speaker Change: Great. Thanks, Sam.
Speaker Change: The next question comes from Scott Group with Wolfe Research. Please go ahead.
Speaker Change: Hey, Thanks, good morning.
Adam Satterfield: Hey, Adam last quarter, you sort of gave US a range of revenue outcomes I don't know for the for Q4 I don't know if you have a similar thought around Q1, I'm just trying to understand that.
As revenue starting to outperform seasonality or if this is just sort of the comment is more about sort of the key.
Adam Satterfield: Q4, starting point and then the yield ex fuel are it sounds like accelerating a little bit in January versus Q4 is that a mixed dynamic or is that pricing starting to reaccelerate again.
Adam Satterfield: Yes.
Speaker Change: So in the first quarter this year.
Speaker Change: We to start we've got one less operating day was 63 days in the first quarter. This year versus 64 last year, but I guess the way I framed up revenue last quarter.
Speaker Change: What's kind of creating okay. If we performed at seasonality.
Speaker Change: What would that look like and if we did that in the first quarter I think we'd be at $138 billion of all in revenue in the first quarter.
Speaker Change: But then kind of on the other side.
Speaker Change: Gave if we in the fourth quarter I'd gave if we underperformed seasonality like we had in the third and the fourth quarter.
Speaker Change: What would that lower end of our revenue range look like and we did perform a little bit better in the fourth quarter than we did in <unk> and <unk> relative to what our 10 year averages.
Speaker Change: But if we underperform seasonality kind of at that same pace.
Speaker Change: The fourth quarter than in first quarter revenue would be 134 billion. So.
Speaker Change: Maybe said more succinctly somewhere 1 billion three 4 billion 38.
Speaker Change: Put us somewhere.
Speaker Change: Normal seasonality range to kind of consistent underperformance like we had in <unk>.
Speaker Change: And I think that that's kind of like I was saying earlier. It's just we typically you see a big acceleration in revenue starts.
Speaker Change: Here in February and then a big acceleration in <unk>.
Speaker Change: March and so.
Speaker Change: That steel.
Speaker Change: Yet to be determined if we'll see that type of seasonal increase.
Speaker Change: We're cautiously optimistic I would say in the sense that we felt like a year ago. When we were sitting here. We felt like we were going to see things turned to the positive. So we're being diligent and preparing for it but we definitely want to see it transpire and before we get too far ahead of ourselves in terms of talking about what the.
The top line and the operating ratio might otherwise be.
Speaker Change: Thanks, Dan.
Speaker Change: Yes, I think.
Speaker Change: The debt yield question that you asked and just kind of follow on to what I said earlier.
Speaker Change: Four 5% normal seasonality would imply that revenue per hundredweight X fuel would be up 364%.
Speaker Change: So it was a little bit of a drop off.
Speaker Change: In our weight per shipment.
Speaker Change: From December to January so a little bit of mix.
Speaker Change: Kind of help that number but.
Speaker Change: But like I've mentioned earlier.
Speaker Change: I'd, rather see our weight per shipment, increasing and put pressure on that number.
Speaker Change: Naturally then and get us back into that range. If you will.
Speaker Change: Because that would be more of a sign on the economy is getting better and we should see that follow through both with weight and shipment velocity as well but.
Speaker Change: We continue to do our thing in terms of.
Speaker Change: Executing on our long term yield management philosophies and looking at individual account profitability and just trying to achieve increases that offset our cost but also continue to support.
Speaker Change: The investments in new service centers, and new technologies that ultimately are designed to improve our customer service, our enhanced operating efficiencies that.
Speaker Change: I may ultimately allow us to better serve our customers.
Speaker Change: Thank you guys appreciate it thanks.
Scott: Thanks Scott.
Scott: The next question comes from Bruce Chan with Stifel. Please go ahead.
Bruce Chan: Yes, thanks, operator, and good morning, everyone.
Maybe just.
To get your thoughts around the big competitor spin off that was announced at the end of the year last year I know there is a pretty long runway on that but maybe you could give us some color on how you see that affecting the competitive dynamic.
Bruce Chan: It may be increasing on the margins or if you're confident that there is enough opportunity for everybody with.
Bruce Chan: Actual cycle recovery.
Bruce Chan: Yes, I think that.
Bruce Chan: Not to speak for another company, but the company we've been competing with for for years and so you know.
Bruce Chan: It's something that we'll have to continue to keep watch oven and see what their new go to market strategy might be if there is any change to it.
Bruce Chan: But I think otherwise sustained alone.
Bruce Chan: [noise] brighter light, maybe shine room business and would expect to see.
Bruce Chan: Continued discipline there.
Bruce Chan: But.
Bruce Chan: I think that we've got a when you look at it.
Bruce Chan: At us compared to each of our larger national Nonunion companies.
Bruce Chan: If you look on the mask Dio surveys.
Bruce Chan: We've won the Matthew quality award for 16 years in a row and Thats something that we continue to focus on we want to stay as the industry leader there in terms of total service.
Bruce Chan: Better yet the ultimate value that we can deliver to our customers and so I think it's that value proposition that really gives us the opportunity to keep gaining share as we look out into the future.
Bruce Chan: One more market share than anyone else over the last 10 years, and we think we're better positioned than anyone to win.
Bruce Chan: More market share than anyone else going forward, but I think the opportunities there for the industry like we've said time and time again.
Bruce Chan: There is opportunity for more than just us to grow and we've been competing with other carriers for years that have been trying to grow their business and we've been able to compete very effectively.
Bruce Chan: We all believe that we are.
Bruce Chan: A capacity constrained industry.
Bruce Chan: It was commonly understood that that our industry was capacity constrained in 2022.
Bruce Chan: I think thats something thats, almost like daylight savings time, you can't.
Bruce Chan: The old saying about taken two inches off a blanket.
Bruce Chan: So on that on the other end of the blanket doesn't give you a longer blanket and when you had a carrier that exited the business and only half of their service centers have been reallocated to other carriers.
Bruce Chan: Cause the logo changed on the door doesn't mean, there's more capacity in the industry. It's actually less so I think when we see volumes actually normalize and start growing again and taken advantage of the e-commerce opportunities near shoring opportunities.
Bruce Chan: Freight that lends itself to LPL movement, I think thats when youll see the.
Bruce Chan: Entire industries start to grow again in us winning more than our.
Bruce Chan: <unk> share of the market.
Bruce Chan: [laughter].
Bruce Chan: Thank you.
Bruce Chan: Yeah.
Speaker Change: The next question comes from basketball majors with Susquehanna. Please go ahead.
Speaker Change: Thanks for taking my questions you talked earlier about looking at your market share from a broader data set including some of the private carriers did.
Speaker Change: Could you talk about.
Speaker Change: What segments of the market you think are gaining and losing share now that we've kind of settled out from all the noise of the yellow redeployment in the cyber attack that that were in comps for a while.
Yes. It is.
Speaker Change: Hard to parse through and we don't get that Greg.
Speaker Change: Granular detail for us in the industry, but we get a lot of detail.
Speaker Change: <unk> continued to see consistent performance throughout.
Speaker Change: Each of our operating regions.
Speaker Change: I think we've seen.
Speaker Change: And in some cases, the retail has had been outperforming.
And that was somewhat related to the weakness of the industrial market.
Speaker Change: <unk> had been below 50 for 25 out of 26 months I think so we saw that reflected in our business levels over the last couple of years, but.
Speaker Change: But all in all as we've talked on.
Speaker Change: On each call, we've been able to maintain customer relationships and we have not really lost.
Speaker Change: Any major customer accounts is just our customers who have had fewer shipments to tender to us.
Speaker Change: But I think that that's probably allowed.
Speaker Change: US to maybe see that better performance on the retail side as you go forward, though I think that we should see our industrial business start picking back up again.
Speaker Change: <unk> already started seeing business with that's managed by third party logistics companies.
Marty Frame: That business is performing better over the last couple of quarters and it's also we've seen an increase in weight per shipment what those <unk> customers as well. So we've talked before about we feel like and Marty mentioned it about some consolidation of loads that have probably moved into the truckload world and shippers taken advantage of.
Speaker Change: Of that.
Speaker Change: Environment, where the capacity was there and the rates were really low.
Speaker Change: It seems like maybe the rate environment's, improving a little bit in truckload and so we'd expect some of that freight should swing right back into to LCL. So I.
Speaker Change: I think we got multiple fronts that that should create some.
Speaker Change: Some volume opportunities be it continued growth of <unk>, the industrial strengthening the overall industry stress.
Speaker Change: Strengthening in that truckload market is it gets better.
Speaker Change: It's going to create <unk> opportunities, but it also we've got a structural advantage against our other competitors. Many of our competitors use an awful lot of truckload substitution for their line haul network and so when that rate environment starts increasing there.
Speaker Change: Their costs will be increasing so they typically have to raise rates.
Speaker Change: Much higher than us and that type of environment. So.
Speaker Change: That's going to create some some volume opportunities for us as well.
Speaker Change: If I could ask a brief follow up.
Speaker Change: A lot of focus on the largest player in this space as they become a standalone business over the next 12 plus months.
Speaker Change: How do you make sure you retain your talent as Theyre looking for new leadership.
Speaker Change: I think I'll answer that question I think that you have to maintain that doing the same thing we've done for years and that Saturday family culture.
Speaker Change: We treat our employees our sales reps very well, we pay them rail they have quarterly incentives.
Speaker Change: And I'm.
Speaker Change: I am not overly concerned that that's going to affect us in any way.
Speaker Change: Thank you both.
Speaker Change: Thank you.
Speaker Change: The next question comes from Tom lot of it.
Speaker Change: Please go ahead.
Mike: Hey, Good morning, guys. This is Mike <unk> on for Tom.
Mike: So as we think about potential improvement in the macro how do you view the impact of weight per shipment increasing on revenue per shipment I imagine it's not a one for one impact but is there a rule of thumb, where you say 50 or 60% of the increase in weight flows through to higher revenue per shipment all else equal just wondering how we should be there.
Mike: And about that thank you.
Mike: Yes.
Mike: That's a hard one to answer when you're spreading it over.
Mike: 50000.
Mike: Shipments per day, but.
Mike: I think generally speaking obviously, the the improvement that we'd see in weight per shipment leads to increased.
Mike: Revenue per shipment.
Mike: And so generally that's that's going to be.
Mike: Better for the bottom line if you will.
Mike: The cost all things considered if it's just a few more widgets on every power.
Mike: To handle might stay the same but.
Mike: <unk>.
Mike: I don't know that Theres necessarily.
Mike: One for one relationship.
Mike: But we can share.
Mike: Overall, it obviously will be a good thing that we've been suffering our weight per shipment has been pretty low in January we were at <unk> hundred 89 pounds.
Mike: Back in the.
Mike: 2021, and 2022 prior expansionary type periods, we've been around 600 pounds and so there's a lot of good things that come with that higher weight per shipment.
Mike: Translates into better line haul efficiency, there's just a lot of efficiencies that come with that increased weights.
Mike: That's something that we certainly will continue to watch and like I mentioned earlier that that's usually a good sign on an improving economy overall.
And then typically we will lead into increased shipments.
Mike: Customers as well and so it was just all kind of.
Mike: <unk> works to our advantage from a leverage standpoint.
Makes sense, thanks, a lot.
Ari Rosa: The next question comes from Ari Rosa with Citigroup. Please go ahead.
Ari Rosa: Hi, good morning.
Ari Rosa: To ask about inflationary cost pressures, maybe you could just discuss kind of what youre seeing across the board, particularly insurance, we heard from a number of carriers that they are seeing a lot of pressure on that insurance line item and obviously here in the fourth quarter, you saw a little bit of a step up there, which sounds like goes back in first quarter, but maybe kind of from a structural standpoint, you could talk about.
Ari Rosa: Just where youre seeing inflationary cost pressures level of confidence to get that back in pricing and then just a clarifying question if I could on the <unk> question.
Ari Rosa: Wanted to make sure.
Ari Rosa: I understand there are not noncompete clauses or anything like that with regard to any employees, whether senior management or salespeople or is it just a function of the culture and the comp being sufficient that you are confident you can kind of retain the talent that you have thanks.
Yeah, Let me see if I can keep up with everything there but.
From inflationary standpoint.
Ari Rosa: We ended up last year about where we thought we'd be from a cohort.
Ari Rosa: Cost inflation, we had anticipated that after a couple of years of increases that we would see.
Ari Rosa: Things kind of revert back closer to our long term average, which would be cost per shipment and the three 5% to 4% range. So we were a little north of that overall and 24.
Ari Rosa: Kind of expect to see a little bit higher cost inflation in 'twenty five as well thinking that may be more in that kind of four to four 5% type of range, just a little north of that longer term average but.
Ari Rosa: And that will continue to work on obviously, but we've been seeing.
Ari Rosa: Inflation in many items health care cost.
Ari Rosa: Fringe benefit cost overall.
Ari Rosa: Expect to see a little bit increase there the insurance specifically that you had asked about that's been a challenge for years the transportation industry.
Ari Rosa: Large companies in particular, and I think it hits.
Ari Rosa: The entire <unk> industry, but probably the large truckload carriers as well it's been.
Ari Rosa: Credibly difficult.
Ari Rosa: To maintain the insurance levels that.
Ari Rosa: We like the half we've taken increased premium cost and the double digit range for probably the past six years and thats taken on a little bit more self insured.
Ari Rosa: Our risk as well and so that's something that we always try to manage through in our team our legal and risk has done a great job to be able to continue to maintain.
Ari Rosa: The insurance coverage that we do have in place but.
Ari Rosa: Did something where our accident frequency ratios are at an all time best and we obviously invest in a lot of equipment on our trucks to try to mitigate.
Ari Rosa: Accidents, and we invest an awful lot of money in <unk>.
Ari Rosa: Training, our people as well for safe driving practices.
Ari Rosa: That's definitely a key to our foundation for success, but but that's something that I think continues to be a challenge until we can see tort reform in this country and it's something that at some point has got to happen.
Ari Rosa: It's just it's crazy some of the cases that you can kind of read about that have happened to some of the carriers out there.
Ari Rosa: Our sales turnover thank.
Ari Rosa: To answer that question for you is less than 1% a year and most of that comes from retirements are promotions into operations or management.
Ari Rosa: And it's not unusual for us to have other competitors.
Ari Rosa: To seek our salespeople and they're smart to do that because our salespeople are trying to sell value service and not price and we're proud of that fact so.
Ari Rosa: Again.
Speaker Change: We hang on to our salespeople they love working at all of the maintenance because we trade on say on pay them layoffs.
Ari Rosa: That's that's the least of my concerns it weighs on our salespeople to a competitor.
Ari Rosa: The next question comes from Ravi Shanker with Morgan Stanley. Please go ahead.
Ravi Shanker: Great. Thanks, maybe just a quick follow up on the insurance question can I is there anything more you guys can do from a balance sheet deployment standpoint that maybe you're going to do more of that in house or how do you sort of maxed out how much you can do that internally to maybe offset some of that inflation with third party insurers and also quickly to follow up I think Adam you said earlier.
Adam Satterfield: You pointed out that on behalf of the yellow one even come back online and so that's a net reduction in capacity, but you have also seen a lot of organic capacity growth in the industry over the last year and into 2025 are you concerned that that might come in and backfill capacity, that's not yet done that.
Ravi Shanker: Thank you.
Ravi Shanker: Yes.
Speaker Change: Well I think it's something that obviously, we'll continue to watch what's going on in the industry and like we've said I think it's going to take going through an up cycle to really prove this is not the first time that.
In my career that I've heard that.
Speaker Change: But other carriers are wanting to grow or they are adding capacity and that the.
Speaker Change: The growth story is going to be over it.
Speaker Change: Can recall hearing that back in 2016, and we've done a.
Speaker Change: Pretty nice job of being able to grow revenue from that point forward, but.
Speaker Change: It's something that we obviously pay close attention to and but a lot of our confidence about market share.
Speaker Change: Comes from from customer conversations more than anything staying in front of our customers know and how their business levels are changing.
Speaker Change: What their strategies going forward going to be and how we can add value to their supply chains and so we don't add capacity until we are confident that we're going to be growing in the markets, where we're expanding.
Speaker Change: And that's always been a key part of our <unk>.
Speaker Change: Expansion strategy so.
Speaker Change: I think that.
Speaker Change: Let's get into the up cycle, and then that's probably going to be the easiest answer to talk about where is the industry capacity versus what our industry volumes looking like but.
Speaker Change: But I don't see any change when we look forward.
Speaker Change: In terms of what our market share potential might be.
Speaker Change: Now versus the thinking that we had in place back in 2021 and 2022. So we still feel like we've got a long runway for growth and tremendous amount of opportunity.
Speaker Change: Out there ahead of us in.
Speaker Change: In regards to the insurance question.
Speaker Change: I think we've done a really nice job.
Speaker Change: In terms of managing those insurance costs. When you look at insurance and claims on the income statement, it's pretty much been anywhere from one point.
Speaker Change: One to one 3% of revenue if you look back over the last kind of five.
Speaker Change: 10 years, if you will.
Speaker Change: And it's something like I mentioned that we have had to take on some.
Speaker Change: Some increased exposure.
Speaker Change: In terms of what our self insured retention limits are and Thats something that we spend a lot of time going through and planning.
Speaker Change: With our legal and risk teams to looking at and evaluating what type of risk do we want to take.
Speaker Change: As we build out our insurance tower.
Speaker Change: And so there is a lot of strategy that goes in behind that obviously there is no perfect answer if you look at things in hindsight and say, Okay. We did this in and here was the result.
Speaker Change: This year, we just had a bigger step up in terms of that the annual actuarial.
Speaker Change: <unk> assessment that we complete in the fourth quarter and took a little bit larger.
Speaker Change: Entry, if you will see to adjust those.
Speaker Change: <unk> reserves on existing claims so.
Speaker Change: We do expecting I think last year, we averaged about one 2% of revenue.
Speaker Change: For the insurance and claims and I think that's probably going to go up to closer to the one 5% like I mentioned, so we will see a little bit more inflation, there, but all in all I think we've done a very effective job of managing our.
Speaker Change: Our cost of our reinsurance program.
Speaker Change: The other interesting thing that what goes in that line and where you've seen it improve over the long term is.
Speaker Change: That insurance and claims line, that's our auto accident claims as well as our cargo claims ratio and our targeted claims ratio we've talked about for years, how we've generated improvement.
Speaker Change: There and had got that balance down to <unk>, one will it actually rounds to point Z.
Speaker Change: <unk> zero for this quarter, we did said below zero to 1%.
Speaker Change: But we talked about wanting to be on time and claims free and in the fourth quarter. We were essentially claims free so very proud of that achievement for the for the team as well and it takes off a lot of investment.
Speaker Change: And claims prevention and training.
Speaker Change: Execution, but it's something we're really proud of.
Speaker Change: I wanted to ask you if you can get better than zero point zero, but thanks for that.
Speaker Change: [laughter].
The next question comes from Seth <unk> with Jefferies. Please go ahead.
Speaker Change: Great. Good morning. This is Joe <unk> on for Stephanie Thanks for taking our questions at the end here maybe more of a thematic question you mentioned, maybe that the tailwind of near shoring. How do you guys view the old Dominion network in relation to potentially sort of nearshore and onshore production and manufacturing manufacturing.
<unk> and maybe a curve ball question, but we've.
Speaker Change: So focus on the organic growth front is there anything from an M&A standpoint, as you guys look at the future of LPL that would maybe excite you in terms of beefing up your service offerings.
Speaker Change: Yes, M&A hasn't been a priority for us our last acquisition was 2008. So we just feel like we've been able to grow organically with really strong return on invested capital.
Speaker Change: And so that will most likely be the focus as we go forward.
Speaker Change: Being focused on what we do best which is L deal transportation.
Speaker Change: Again like I said earlier I think there's a lot of opportunity for the industry and certainly we feel like we can benefit the most.
Speaker Change: Given the quality of our network the quality of our service and a value proposition that is unmatched in our industry.
And to that end we have.
Speaker Change: 261 service centers throughout the U S. So we cover.
Speaker Change: All locations all Zip codes.
Speaker Change: And so as plants are being built or expanded in the U S.
Creates an awful lot of opportunity it creates opportunity on the inbound side.
Speaker Change: We're we're hauling parts and pieces in chemicals, and so forth raw material inputs for the manufacturing process.
Speaker Change: Then we've got the opportunity on the outbound side to take those finished goods and allow the shipper to leverage our LPL network, we can drop a trailer.
Speaker Change: At a customer location they fill it in.
Speaker Change: It's seamless through our <unk> network to get it to all points around the U S wherever their distribution centers or customer base might be so a lot of opportunity on both inbound and outbound as we see the potential for more manufacturing in the U S or even from a near shoring standpoint, if there is more.
Speaker Change: Sure.
Speaker Change: In Canada, or Mexico, or whatnot, we can get those goods as they come across border.
Speaker Change: Stead of goods coming into a port it's more likely that we would give them cross border in the freight could stay within an LPL network to get to final destination.
Speaker Change: <unk> been in.
Speaker Change: In our railcar and being pulled maybe to the middle part of the country before we get our hands on it. So it just creates a little bit more opportunity across all fronts.
Speaker Change: Got it thanks, so much and just because it's topical how much is cross border as a percent of revenue for you guys could you remind me.
Speaker Change: Yes, it's a pretty small percentage overall less than 5%.
Speaker Change: Thanks, so much guys and congrats.
Speaker Change: Thanks.
Speaker Change: The next question comes from Tyler Brown with Raymond James. Please go ahead.
Tyler Brown: Hey, good morning, guys.
Speaker Change: Hey, good morning.
Speaker Change: Hey, you got them all.
Speaker Change: Obviously covered a lot, but Marty do you think there's a little bit of an off the wall question, but do you think that the change in the administration could be an opportunity for the HCA or really the broader LPL industry to revisit the broader use of triples, I know that you use them out west, but that seems like a sizable opportunity.
Speaker Change: Mike Weinhold is probably your largest functional cost bucket.
Speaker Change: Yes, I think that Tyler I think thats, yet to be seen by the new administration.
Speaker Change: I do see some positive things down the road for the New administration taxes is one of them, but as it relates to triples.
Speaker Change: As in Pacific Northwest.
Speaker Change: That's yet to be seen I think thats something that they talk about all the time at the ATK.
Speaker Change: I'm not sure how easy that would be to do one of the the hub centers I mentioned earlier that we're building now will be able to to haul Rocky mountain doubles on the Turnpike, which youll help online how from that aspect, but I think the jury is still out for triples in other areas, but hopefully I would like to see.
That in some of the less congested areas in the future.
Speaker Change: Perfect. Thank you guys.
Speaker Change: Sure.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Marty Friedman for any closing remarks.
Speaker Change: Thank you guys very much today for your questions. We appreciate it and please feel free to give us a call after that after the call and we'll be glad to answer anything we didn't cover today. So thank you and have a good week.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].