U.S. Xpress Enterprises, Inc. (USX) on Q4 2022 Results - Earnings Call Transcript
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Operator: 00:06 Greetings, and welcome to US Xpress 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. As a reminder, this conference is being recorded. 00:28 It is now my pleasure to introduce your host Matt Garvie, Vice President of Investor Relations. Thank you. You may begin.
Matt Garvie: 00:35 Thank you, operator, and good afternoon everyone. Welcome to the US Xpress fourth quarter 2021 earnings call. Eric Fuller, US Xpress’s President and CEO will lead our call today, followed by Eric Peterson, our CFO, who will discuss our financial results. 00:51 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 that could cause actual results to differ materially. These risk factors are described in US Xpress’s 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. We undertake no duty or obligation to update our forward-looking statements. 01:24 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 US GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. 01:46 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.usxpress.com. We will be referencing portions of this supplement as part of today's call. 02:03 And with that, I would like to turn the call over to Eric Fuller.
Eric Fuller: 02:08 Thank you, Matt, and good afternoon everyone. Today, I would like to highlight some of our key achievements in the fourth quarter, provide an update on Variant and our path forward. And after Eric Peterson discusses the financials, I will provide our outlook for 2022. 02:25 Turning to our fourth quarter achievements, in Variant, we added 272 trucks to the fleet in the quarter, exiting the year with 1,555 tractors, achieving our target to have more than 1,500 tractors in Variant by year-end. Variant’s tractor count growth helped to drive a sequential increase in our overall tractor count of approximately 300 tractors. As a result, we were able to increase our average tractors in the fourth quarter to 6,147, 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, at terminal 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. 03:19 In 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%. Operating income was $3.1 million and benefited from surge capacity that we provided for some of our customers during the holiday season. 3:49 Turning to Variant, 2021 was a successful year for Variant in terms of truck count growth. Ending the year at 1,555 tractors and establishing itself as a standalone business unit. However, 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. 04:16 Before I get into the issues of remediation efforts, I want to touch upon a couple of key points that were reinforced , while I spent time with the team in Atlanta over the past couple of months. 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. 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. Due to the work with Clayton Christensen and other academics, we have seen examples of how disruption could be managed successfully within a large business. 04:54 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 the autonomy and funding necessary to build something substantial. 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. This can involve transitioning some leadership, moving away from a growth at all costs startup mentality and implementing a more disciplined management approach focused on metrics and earnings growth. We believe Variant reach 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 would define parts of the broader organization to drive cost reduction and operational efficiency, while maintaining the integrity and culture of the new model. 06:00 In the disruptive start up model, history shows there is risk acting too early or too late and in integrating too much or too little. Based on the growth of Variant to 1,550 tractors in almost 3 years, the immediate progress in restoring operating metrics this past month and the strong cooperation and unified teamwork between Variant and other trucking experts, I believe Variant has progressed better than most efforts and internal disruption. Although it is not been and we never thought it would be a straight line forward. 06:34 The first issue was that as Variant grew, it did so without properly increasing the balance of domain expertise, 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 US Xpress operations team, which has domain expertise in trucking. These 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. 07:11 As a reminder, we built Variant purposely outside of US Xpress with the team that had technology expertise. The team has little trucking experience, which was about a dime, so as they work to build the technology enabled OTR fleet they wouldn't be held back by any preconceived notions about trucking. We understand that is Variant scale, they would need to work more closely with those in US Xpress to understand our core business of delivery freight for our customers and supporting our drivers. 07:41 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. With the process of blending what 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 to the optimizer. As background, we build a freight funnel designed to allow our OTR fleet to have first selection of the freight that fit best within our network. We decided this way to maximize selectivity for assets while at the same time, providing additional capacity for our customers. There was a flaw in the funnel, which meant that the Optimizer was not taking it from a complete population of freight. 08:30 This is not an 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. 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. Third, 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 have made refinements in the logic rules already, which we believe are contributing to the better results we're seeing in January. 09:16 Finally, as issues continuing to grow, the team at Variant disproportionately continue to work on longer term solutions rather than focus on remediation efforts related to the current deterioration in the business, which resulted in an inability to adequately resolve driver issues. As the fleet grew so did the issues from our drivers, which lead to deterioration in response times and increased driver frustration and an increase in driver availability as it wasn't a single lot of accountability for the driver. We continue to believe an exceptions-based approach to fleet management, which will scale better and at a lower cost than the traditional fleet manager model. 09:56 As part of our improvement initiatives we are making some refinements to our operation specialist model at Variant, which includes combining specialists currently employed at Variant and others from US Xpress who manage other fleets in the company. We believe this approach will drive better accountability within the fleet and help improve availability, reduce driver frustration and ultimately contribute to better revenue per tractor per week and a lower driver turnover in the quarters ahead. 10:25 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 at US Xpress.
Eric Peterson: 10:38 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. 10:57 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. 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. 11:31 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. This amount excludes the impact of our fuel surcharge program as well as a $4.3 million non-cash write-off we recognized in the fourth quarter, which related to technology we determined to be obsolete. 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 Xpress Technologies and to a lesser extent across the entire organization. 12:21 Purchase transportation increased by $32.9 million primarily as a result of the increase in Brokerage revenue of $35.5 million. 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. Insurance premiums and claims expense increased $2.5 million as we experienced 2 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. Offsetting some of the increased expenses in the quarter with 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. 13:15 Turning to Variant. For the full year 2021 expenses related to Variant, which are primarily office wages were $20.5 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 in Variant to $34.2 million. In 2022, as Eric mentioned, we will be intentional with our investments at Variant and in the early months we will be focused on advancing our freight optimization engine. 13:48 Turning to capital expenditures, net of proceeds. For the full year, net capital expenditures, which relate primarily to tractors and trailers were $97 million, excluding equipment financed under operating leases. This was below our previous guidance expectation of between $130 million 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 in the fourth quarter. 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 levels. 14:35 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. We define our fixed cost as cost that do not vary directly with the number of miles traveled and excludes depreciation, interest and rent expenses associated with our tractors and trailers. 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 to nominal dollars has led to delays in realizing the operating leverage in our business. I will cover this in detail. 15:19 At the end of 2019 we launched Variant as a start-up and at the same time began to de-fund our legacy Over the Road division. 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 start-up over the road model variant. 15:40 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. In 2020 for each tractor that we added in Variant we are losing 2 tractors in our legacy over the road division. This pressured our results as our fixed costs also increased to 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 1,555 tractors exiting 2021. 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. 16:37 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 26.6% for the full year and in the fourth quarter our fixed costs were 30.1% of Truckload revenues. We believe that our tractor count bottomed in the second quarter of 2021 and we have added seated tractor count sequentially in both the third and fourth quarters of 2021, which are critical to growing back into our cost infrastructure. 17:19 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 Truckload revenue creates approximately $12.5 million of incremental operating income. 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 reduce our variable expenses as a percentage of revenue. We believe this infrastructure that we have created can handle an additional 2,400 plus seated tractors, bringing our Truckload fleet to more than 8,000, 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 costs. 18:15 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. 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 improved results with the recent changes made that Eric discussed earlier. 18:45 Turning to guidance. For the time being, we are focused on improving the unit economics of our Variant truck and are off the body fleet growth targets, and so we are confident the operating issues within Variant had been fixed and the Truckload segment is ready to grow again. We expect sequential improvement in our results through 2022 as our efforts take hold, but the pace of change may be uneven. 19:09 With that, I'll turn it back to Eric for our outlook.
Eric Fuller: 19:13 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. At the same time, shortages of drivers and new tractors and trailers should limit capacity expansion. We expect this to result in low double-digit increases in OTR contract rates and lesser in Dedicated, at least in the first half of the year. 19:49 We are also expecting higher new equipment prices to be offset by a continuation of the strong market for used equipment. To the extent the macro environment is different than these assumptions, our pace of improvement could be faster or slower. 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 freight is 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 in the right jobs with the right plan for success. The pace of our success will be apparent in the result of turnover, safety, revenue per truck and eventually total seated truck count, primarily in Variant, but also across our entire Truckload segment. 20:48 One thing that was reinforced with me over the last 2 months is that across US Xpress 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 is new energy to turn siloed measurement into enterprise-wide financial results. Early returns on our remediation efforts are positive as we have averaged approximately $4,100 in revenue per tractor per week in Variant over the last 4 weeks and have reduced our operating expenses by $10 million in annualized costs. 21:29 While it is still early, we are encouraged by the progress made in a relatively short period of time. 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 a model that scales and a lower per-unit cost. The past 20 years have proven that most companies in our industry we're diligently add costs and have a hard time growing their fleet. We want to build a model for growth and economies of scale. 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. 22:12 And with that, operator, we are ready to take questions.
Operator: 22:17 Thank you. Ladies and gentlemen, at this time we'll be conducting a question-and-answer session. Our first question comes from the line of Jack Atkins with Stephens. Please proceed with your question.
Jack Atkins: 22:49 Okay, great. Good afternoon, and thank you for taking my question. So I guess, Eric Fuller, first question -- yeah, first question is for you. When you think about the, I guess, what's left to do to get Variant on track? Could you maybe walk us through sort of the next steps there? Are there any next steps in the first quarter or first half of the year? And then I guess from a bigger picture perspective, could you maybe kind of take us through some lessons learned on your end in terms of being CEO of the company? And maybe how you're going to manage the business differently as you kind of think forward?
Eric Fuller: 23:30 Yeah. I think, first off, we've gone through some remediation efforts over the last 8 to 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 spend all of our time in Atlanta. In fact we're in Atlanta today. And so we're actively participating and kind of managing the business. We have identified some of our key leadership in some of our other areas that we put back into Variant to drive better results and a little bit, like I said, really -- the domain 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 4 weeks we have seen significantly improved results just about across the board in our revenue per truck and our turnover staff and in our phones, like everything that we track and look at. Things are moving in the right direction. So we feel very confident that we are moving in the direction that's going to start driving positive earnings growth over the next -- over the next year. 24:51 In regards still lessons learned, Jack. I mean, when you build out something like this, we were very intentional about building it off site, building it within -- outside of our 4 walls, building it with a new team and kind of a new approach. I would say that we probably should have work 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 Variant until the summer, and then it was about summer time that things kind of started to drop off. And so 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.
Jack Atkins: 25:56 Okay. I got it. I guess 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 or why you want to continue to have a base there. Is Variant the future of the company from what you guys sort of believe and the company is based in Chattanooga, why is Variant -- why is Variant need to be based in Atlanta?
Eric Fuller: 26:24 Well, we have -- so most of our tech team -- and we're still -- we're still all in on this model. I mean, I know it feels with some of the changes that have happened over the last few weeks or last month or so that I want to make sure that that message across that, we're not deviating from our strategy and our strategy all along is to be -- 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 basis. And so, our team that we've built in Atlanta, our tech team is located here. 27:03 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 and we don't think that we could probably source that level of talent in Chattanooga. This is not a market that can sustain the level of tech talent that we need. And so we think Atlanta is more appropriate.
Jack Atkins: 27:26 Okay, last question and I'll jump back in queue. But when you think of all the moving pieces and I’m not trying 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, 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?
Eric Fuller: 27:54 Absolutely. Yeah, we feel confident that we're going to start seeing sequential earnings improvement from here on out that we have -- we've kind of -- that inflection point that we talked about repeatedly at 1,500 or so trucks, we passed that, we are growing, continuing to grow. And so we feel very confident that we're going to be moving into positive earnings territory .
Jack Atkins: 28:18 Okay. I'll turn it over. Thank you for the time.
Operator: 28:24 Our next question comes from the line of Scott Group with Wolfe Research. Please proceed with your question.
Scott Group: 28:31 Hey, thanks. Just a follow-up there. Were you profitable in January?
Eric Fuller: 28:42 Yes, Scott. 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 with the cost coming out. I will say that all of those costs, the $10 million they weren't out effective January 1, that’s something that happened today. So I still don't have that full benefit in the month of January, but very encouraged with how January is looking relative to where we were in the fourth quarter.
Scott Group: 29:15 Okay. What do you think is a realistic operating ratio for the trucking segment this year. Do you guys have all the success you're hoping to have?
Eric Fuller: 29:25 Yeah. I mean, obviously, our target for profitability -- we want to sequentially get better every quarter. And I think where we've struggled a little bit is not on if we believe in the thesis, and what Variant can do to our enterprise, but what's been tough is the win. And we've hurdles that popped up along the way that have made our timeline on expect to profitability go a little longer based off some of the challenges we've had, but look, we still believe this model is going to get us longer term to the lower '90s and then into the '80s. And we still have line of sight to that. I just can't give you a good answer of what that earnings will look like by quarter.
Scott Group:
A - Eric Fuller: 30:12 Yeah. I believe -- in the supplement on the last page we'll have that in there. 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 get post to 2022, but obviously does not take into account any unknown supplier disruptions that we may encounter.
Scott Group: 30:35 Okay. And then just last thing, just bigger picture. You talk about the issues at Variant starting over the summer, it seems like that also happen just as the fleet started getting bigger. So how do we know this isn't just an issue of -- this is a tough thing to scale and when you've got fewer trucks, it's easier to have better utilization unless turnover and does naturally as the fleet gets bigger, it just gets tougher?
Eric Fuller: 30:59 Yes, Scott. I think it's a fair question. And I think there is some truth to that. I think that we saw that the model was incredibly successful at a smaller size and as it grew and 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 -- to a scale, to a size to get the same results that we were getting previously. And so that's a large part of what we've been focused in that here is looking at like all the components and the fact -- and all 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. 31:57 I think what we found was that, what was built here and the infrastructure here is really strong. I think there were some -- a little bit of maybe some -- some may be misguided approaches because of a lack of domain knowledge, but at the end of the day, what we've 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.
Scott Group: 32:26 Okay. And then just lastly, Eric Fuller, just maybe a tough question, but 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, how you think about that?
Eric Fuller: 32:48 We believe in what we're doing and we believe -- we have line of site. 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 going to be ultimately happy with the direction that we've taken. 33:06 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 feel confident about it, and so there is no reason for us to consider that at this point.
Scott Group: 33:24 Okay. Thank you for the time guys. I appreciate it.
Operator: 33:30 Our next question comes from the line of Grady Kara with JP Morgan. Please proceed with your question.
Grady Kara: 33:41 Yeah. hi guys. I'm standing in for Brian Ossenbeck on the call today. Thanks for taking my question. So just wanted to discuss 2 items a little bit further. One being the obsolete technologies that $4.3 million? And then some more details on the severe accidents and what that kind of looks like going forward? So, any more color on that would be helpful. Thanks guys.
Eric Fuller: 34:09 Yeah. I'll go ahead and go in reverse order, first on severe accident. We haven't had accident like that over the last 3 years, if you've been following our releases and then had 2 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 non-cash write-off, I really look at this as a positive. I mean, we've developed a lot of new technology, we're going to better platforms with some of the technology that was being developed and that we had used in the past. 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.
Grady Kara: 34:51 Got it, thanks. Thanks for the time.
Operator: 34:58 There are no further questions in the queue. I'd like to hand it back over to Mr. Fuller for closing remarks.
Eric Fuller: 35:04 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 Variant are within 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 are moving in the right direction. We thank you for your support. We look forward to providing a progress update on our first quarter call. Thank you.
Operator: 35:34 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.
