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spk01: Good morning and welcome to the Landstar System, Inc.' 's year-end 2021 earnings release conference call. All lines will be in a listen-only mode until the formal question-and-answer session. Today's call is being recorded. If you have any objections, you may disconnect at this time. Joining us today from Landstar are Jim Gattoni, President and CEO, Fred Pensari, Vice President and CFO, Rob Brasher, Vice President and Chief Commercial Officer, Joe Beacom, Vice President and Chief Safety and Operations Officer. Now, I would like to turn the call over to Mr. Jim Gattoni. Sir, you may begin.
spk16: Thank you. And before we begin, let me read the following statement. The following is a safe harbor statement under the Private Securities Litigation Reform Act of 1995. Statements made during this conference call that are not based on historical facts are forward-looking statements. During this conference call, we may make statements that contain forward-looking information that relates to Landstar's business objectives, plans, strategies, and expectations. Such information is by nature subject to uncertainties and risks, including but not limited to the operational, financial, and legal risks detailed in Landstar's Form 10-K for the 2020 fiscal year described in the section Risk Factors and Other S&P Filings Come Time to Time. These risks and uncertainties could cause actual results or events to differ materially from historical results or those anticipated. Investors should not place undue reliance on this forward-looking information, and Landstar undertakes no obligation to publicly update or revise any forward-looking information. Last fiscal year 2021 performance exceeded even our highest expectations. 2021 revenue was $6.5 billion, $2.4 billion, or 58% above the 2020 fiscal year. Variable contribution exceeded prior year by 53%, and operating income was doubled out of 2020. During the year, 80% of the growth in variable contribution was passed to operating income, resulting in earnings per share more than doubling from 498 in fiscal 2020 to $9.98 in fiscal 2021. It would be an understatement to say 2021 was an outstanding year for Landstar. The year started with record first quarter financial results, and each quarter grew from there. In fact, each quarter of 2021 set a new all-time Landstar record for revenue and earnings per share for that quarterly period. Actual second and third quarter revenue and earnings per share exceeded both our initial and updated revenue and EPS guidance provided during those quarters. The 2021 fourth quarter was more of the same. Initial guidance updated mid-quarter to increase revenue and earnings estimates for the quarter, followed by actual fourth quarter results exceeding the updated guidance. The 2021 fourth quarter earnings per share beat up six cents to our updated guidance was largely due to a favorable tax rate that added four cents to our results. Early in 2021, there was a lot of speculation by many in the industry trying to predict a peak to truck pricing at some point during 2021. However, that peak never materialized during the year, and in fact, December's revenue per load hauled via truck was the highest monthly revenue per load in the company's history. Overall, the company set many financial records in the 2021 fourth quarter, ended the year with a record 11,864 trucks provided by BCOs, and had a record 90,000-plus third-party carriers approved to hold Landstar freight, of which over 64,000 had hauled the Landstar load in the 180 days preceding year end. Agents generating at least $1 million of Landstar revenue during the fiscal year climbed to 593, a 17% increase over the number of million-dollar agents in 2020. New agent revenue in fiscal year 2021 was an annual record $181 million. As it pertains to the 2021 fourth quarter, revenue, variable contribution, operating income, and earnings per share were all-time quarterly records. Revenue in the 2021 fourth quarter was a record $1,945,000, 50% above the previous fourth quarter record set last year. The 2021 increase in revenue over the 2020 fourth quarter was driven by an increase in revenue hauled via van and unsighted platform equipment of 45% and 40%, respectively, which combined made up 75% of revenue in the 2021 fourth quarter. Other truck transportation that includes primarily power-only, expedited cargo van and straight truck increased $95 million, or 61% over the 2020 fourth quarter. Additionally, ocean cargo, although a small percent of all of our revenue, increased over the 2020 fourth quarter by $88 million on a 61% increase in loadings and an average rate increase of 127%. Landstar operates primarily in the spot market for U.S. truck transportation, where truck rates are generally a condition of the balance in market demand and available truck capacity. Revenue per load hauled via van and unsighted platform equipment in the 2020 fourth quarter each exceeded the 2020 fourth quarter by 20%, as market dynamics strongly favored the truck provider. As it relates to the number of loads hauled via truck, the diversity in depth and expertise among members of the company's agent family and Landstar employees enables the network to handle the needs of most shippers, whether it be drop and hook, unsighted platform, heavy haul, expedited hazmat, power only, cargo van services, or straight truck. Through the efforts of our unique capacity network, the total number of loads hauled via truck exceeded the record 2020 fourth quarter by 22%. That increase in the 2021 fourth quarter over the 2020 fourth quarter was driven by impressive increase in the number of loads sold via van, unsighted platform equipment, less in truck load, and other truck transportation services by 21%, 17%, 13%, and 43% respectively. In the 2021 fourth quarter, each of these lines of business within our truck service offering set a new all-time quarterly record for the number of loads hauled. The number of loads hauled via truck increased 7% over the 2021 third quarter, one of the highest 13-week period increases from Q3 to Q4 in Landstar history. The increase in loadings was mostly due to consumer doorables, automotive and substitute line hauled loads, while metals and machinery loadings were approximately flat to the 21% third quarter. However, the number of loads hauled via truck and the machinery and metals commodities in the 2021 fourth quarter compared to the 2020 fourth quarter increased 14% and 25% respectively, contributing to the 70% increase in loads hauled via unsighted platform equipment. That growth is a positive sign for flatbed business heading into 2022. Loads hauled via BCO capacity increased 6% over the 2020 fourth quarter on a 10% increase in the average number of BCO trucks during the 2020 fourth quarter, offset by lower truck BCO utilization of 3%. During the 2021 fourth quarter, approximately 78% of loads hauled via BCO truck utilized a Landstar trailer, primarily in drop and hook operations. Truck loads hauled by third-party truck brokerage carriers increased 36% over the 2020 fourth quarter to a new quarterly record of over 400,000 loads. Ocean revenue increased 266% above the 2020 fourth quarter. Rates, which are somewhat influenced by mix, increased 127% over the 2020 fourth quarter, while ocean volume increased 61%. The growth in loadings was attributed to a few new agents in 2021, plus growth within the existing agent network. Landstar's customer base continues to be highly diversified. During the 2021 fourth quarter, revenue contributed by Landstar's top 100 customers by 2020 fourth quarter revenue contributed 44% of the 2020 fourth quarter revenue. Revenue from those top 100 accounts in the 2020 fourth quarter increased 33% over the 2020 fourth quarter. Revenue of customers beyond those top 100 accounts increased 66% over the 2020 fourth quarter. To quote Landstar's lack of customer concentration and perspective, Revenue from the 100th customer by revenue was only $2.8 million in the 2020 fourth quarter. I will now pass it to Fred to comment on additional P&L metrics and a few other fourth quarter financial statement items.
spk15: Fred? All right. Thanks, Jim, and good morning, everybody. Jim covered certain information on our 2021 fourth quarter and full year performance. I'll cover some of the other key fourth quarter financial information included in the press release. Starting with the gross profit and variable contribution, Just as a reminder of what we discussed last quarter, cost of revenue has two categories, variable cost of revenue and other cost of revenue. Variable cost of revenue includes purchase transportation and agent commissions, while other cost of revenue includes numerous costs that fluctuate to differing degrees with revenue, including trailer depreciation and maintenance costs, VCO recruiting, training and qualification costs, insurance-related expenses such as premiums paid and cost of claims for various freight transportation-related insurance policies and other costs included in SG&A in the company's consolidated statements of income. For example, insurance brokerage commission and other fees incurred to administer the insurance programs available to BCO independent contractors that are reissued by the company, reinsured, excuse me, by the company, as well as costs related to our internally developed technology that directly support our revenue, as detailed in the table in our earnings release reconciling gross profit to variable contribution. In the 2021 fourth quarter, gross profit was $209.8 million, an increase of roughly 48%, compared to $141.7 million in the 2020 fourth quarter. Gross profit margin was 10.8% of revenue in the 2021 fourth quarter, only slightly below 10.9% gross profit margin in the same period of 2020. Also as a reminder, in conjunction with the definition of gross profit, we initiated the use of the term variable contribution last quarter. This is a non-GAAP financial measure to refer to the amount represented by revenue less or variable cost of revenue, which again includes purchase transportation and agent commissions, as detailed in the table I just alluded to in our earnings release. In addition, we defined variable contribution margin, also a non-GAAP financial measure, as variable contribution divided by revenue. This measure has always been and continues to be an important one for us. Purchase transportation and agent commissions are the primary expenses that are 100% variable with revenue and give us a view into spot market trends in the freight transportation industry on a shipment by shipment basis. In the 2021 fourth quarter, variable contribution increased roughly 44% to $263.3 million, compared to 182.4 million in the 2020 fourth quarter driven by strong revenue. Our variable contribution margin was 13.5% of revenue in the 2021 fourth quarter compared to 14.1% in the same period last year. The decrease in variable contribution margin compared to the 2020 fourth quarter was entirely attributable to the mix between our BCO independent contractor capacity as our brokerage business increased from 53% of total revenue in 2020 in the 2024 quarter to 59% of total revenue in the 2021 fourth quarter. It's important to note that while our gross profit and variable contribution margin might feel some compression in times of significant growth, where excess volumes are handled disproportionately by brokerage capacity, we still benefit significantly in terms of additional accretive earnings growth and cash flow. So in my view, that's a good tradeoff. Last point I'll make on these margins is that the year-over-year growth rate and margin performance of gross profit exceeded that of variable contribution due to the ability of the Landstar model to leverage the most of the semi-variable costs I described earlier that are included in gross profit. Moving on to our costs, other operating costs were $9.4 million in the 2021 fourth quarter compared to $7.4 million in 2020. This increase was primarily due to increased trailing equipment costs increased BCO recruiting and qualification costs, and an increased provision for contractor bad debts. Insurance and claims costs were $30.3 million in the 2021 fourth quarter compared to $21.2 million in 2020. Total insurance and claims costs was 4.2% of BCO revenue in the 2021 period and 3.8% of BCO revenue in the 2020 period. The increase in insurance and claims as compared to 2020 was primarily due to increased severity of current year claims during the 2021 period and increased unfavorable development of prior year claims. Selling, general, and administrative costs were $62.6 million in the 2021 fourth quarter compared to $42.9 million in 2020. As we discussed last quarter, the majority of the increase is related to our variable cost cash incentive compensation plan and stock-based compensation arrangements. driven by a record-setting financial performance this year. Wage and benefit pressure also contributed to the increase, partially offset by a decreased provision for customer bed debt. In the 2021 fourth quarter, stock compensation expense was $8.8 million, and the provision for incentive compensation was $8 million. In the 2020 fourth quarter, stock compensation expense was $1.9 million, and the provision for incentive compensation was $1.7 million. Appreciation and amortization was $13.1 million in the 2021 fourth quarter compared to $11.6 million in 2020. This increase was primarily due to increased depreciation on technology tools resulting from the recent deployment of new and upgraded applications for use by agents and capacity. Our effective income tax rate was 23.3% in the 2021 fourth quarter compared to 22% in 2020. The effective income tax rate was favorably impacted in both periods by resolution of certain tax items and tax benefits resulting from equity compensation arrangements. Looking at our balance sheet, we ended the quarter with cash and short-term investments of $251 million. Cash flow from operations for 2021 was $277 million, and cash capital expenditures were $23 million. In 2021, we returned $235 million to shareholders through a combination of regular dividends of $35 million, share repurchases of $123 million, and a special dividend of $77 million paid in January of 2021. After an increase in our authorization by our board of directors in December of 2021, we now have 3 million shares available for purchase under the company's stock purchase programs. And since we're on the topic of returning capital shareholders, I want to be clear that returning capital is important, but investing in our business is just as, if not more important, for the long-term health of our company. These investments relate to our people, our agents, and our capacity, which we refer to collectively as our network, as well as our technology ecosystem. And they will continue to grow as we support a business that is much larger today than it has ever been, and that is operating in an increasingly competitive environment requiring continuous improvements to our systems and processes. With that, I'd like to thank you all for joining us today, and we'll now turn it back over to Jim. Thanks, Fred.
spk16: The environment continues to be strong as ever. Typically, the first quarter of any year is seasonally softer than the preceding fourth quarter. I expect that to be no different in 2022, although at these levels, we expect a record first quarter performance. As such, I expect revenue per load on loads hauled via truck to be flat to down 3% compared to the recently completed 2021 fourth quarter. I expect the number of loads hauled via truck to be 8% to 10% below our record-setting truck load count of the 2021 fourth quarter. Based on those expectations, revenue guidance for the 2022 first quarter is estimated at a range of $1.7 to $1.75 billion. And based on that level of revenue, I expect earnings per share to be in a range of $2.70 to $2.80 per share. Assuming we achieve revenue guidance, revenue would easily be a record for any first quarter, 32 to 36 percent higher than our record 2021 first quarter revenue. Also, assuming we achieve our earnings per share guidance in the 2022 first quarter, Earnings per share would exceed the record 2021 first quarter earnings per share by 34% to 39%. Although it is way too early to predict operating conditions for fiscal 2022, operating conditions that led to our record-breaking year have so far carried through the first few weeks of January. As demand for van capacity as well as other truck services remain robust throughout the 2021 fourth quarter, we experienced our strongest quarter of the year with respect to the demand for flatbed services. We also continue to see very broad-based demand for our services across industry sectors. We begin the year with a record number of trucks provided by BCOs, a record number of approved carriers, and an unparalleled network of independent agents ready to meet and exceed the needs of our customers. Landstar is very well positioned heading into 2022. Landstar's network of small and large business owners provide the expertise to satisfy shipment demand in almost every sector and every geography region in North America. sourcing capacity of varying equipment types while Landstar provides the tools, financial support, and capacity network to empower their success. The strength and resiliency of the model proves itself over and over again, 2021 was no exception. As a final note before we turn to questions, I want to take this opportunity to recognize and thank all of our Landstar employees, agents, PCOs, and other capacity buyers for an incredible performance in 2021 as we now look forward to all we can accomplish together in 2022. And with that, we will open to questions.
spk01: Thank you very much, sir. At this time, we will begin the question and answer session. If you would like to ask a question, please press star 1 on your touchstone phone. Once again, that is star 1 to ask a question. To cancel your request, please press star 2. Our first question is coming from the line of Todd Fowler of KeyBank Capital Markets. Your line is open.
spk12: Great. Good morning. Thanks for taking the question. Yeah. So, Jim, to follow up on your comments there about, you know, looking out into 22 and certainly understand that there's a lot of, you know, moving parts at this point. But, you know, you've shared in the past kind of your thoughts and kind of how the years can progress. And it sounds like that you're comfortable starting off, you know, pretty strong here in the first quarter. You know, what would your expectations be? I mean, would you expect to follow normal seasonal trends off of one cue? Or do you expect things to kind of tail off as we get into the back half of the year?
spk16: Yeah. You know my position on optimism and pessimism, right? So I'm always – look, we all thought after coming out of March we were at peak. We thought coming out of June we were at peak. Coming out of September we thought we were at peak and we're going to slow down in the fourth quarter. Here I am sitting here going to tell you the same story because that's who I am, right? I think eventually we're going to see that whether the shippers start to lock up long-term contracts, right, and we shift a little bit from spot to contract, pulling rates down a little bit, or we see a softness in demand. I don't think the capacity is coming back as much as we look at maybe the demand side a little bit more coming into maybe the end of the second quarter, back half. But I still anticipate we're going to see some kind of transition where spots pull back a little bit and the contract market kind of accelerates with these longer-term deals as opposed to where we've been. Look, for four quarters in a row, we've been saying we're going to see some kind of peak and we're going to see a conversion. But my pessimism will say I just think we're an extended cycle. I think we're going to cycle back. And a question everybody's asking is when does it happen? And, you know, if it were me, I would say that we're, you know, I don't think it's going to be dramatic, but I think you're going to see leveling off or cycling down a little bit, you know, maybe early summer. It's just based on, you know, the way things cycle over time and some of the things we're seeing. So you are getting a little more inquiries on 12-month contracts as opposed to the mini-bids. And it's not a big deal, but that would be a sign that maybe shippers are starting to understand that these prices may be here to stay. And, you know, and if they do lock up 12 months, clearly it would be a little bit lower than spot. But, you know, I think that's what you're seeing, and some of the indications would drive me to, you know, that summertime thing. The other thing we got, like we don't give full year guidance really because the unpredictability of the spot market. You see how it turns. But the one thing we do, you know, we would – You talk about there's a little more predictability in our cost below the line, below variable contribution. And to share some of that, Fred probably can give some input of what we think below the variable contribution line.
spk15: Yeah, sure, Jim. So just to give you some context, you recall that for our cost structure, you'll recall in the third quarter, we talked about having some tailwinds going into 2022. from our variable compensation and stock-based comp plans. I think we said specifically $35 million of tailwinds. So, you know, that's obviously part of the cost structure picture. And as you might expect, there's also some headwinds going into this year. So let me just put those into maybe three broad categories. First, I think of a category being it's kind of a normalization of our costs as we hopefully are able to do things this year that we were not able to do in 2021, for that matter, even in 2020 due to COVID. So I'll elaborate a little bit on that in a moment. The other two kind of buckets I kind of think of is cost-related to just supporting what is now a much larger business than it was even a year ago, and then investments that are going to enable our growth going forward. So Let me just go through those in a bit more detail and give you some of the rough ranges for the expense lines as we report them on our P&L. So first, as I mentioned, we expect to spend more on travel, this is related to COVID, as we have more events to support and recognize our agents' capacity compared to what we did in 2021, where of course our spend was quite suppressed due to COVID. So we're at least planning for a more normal year. on both the travel and events front. Second, we're continuing to make investments in people and external services to support the growth that we've experienced over the last year and support our strategic long-term investments in technology. So that means more people to keep up with higher truck volumes, more load volumes, and more external spend, including software and services, to accelerate our IT investments And you won't be surprised to hear that we experienced a fair amount of inflation last year on wages and benefits, which we haven't fully lapped as we enter 2022. And frankly, I think, and most people I think would agree with me, that that's not going away anytime soon in 2022. So everything I just mentioned will have an impact on our SG&A costs, which are expected to run roughly $50 to $55 million per quarter. lower in the first quarter and then increasing in the second quarter due to our big agent convention in the second quarter that I think you all are probably familiar with, as well as some of the items, some of the other items that I just mentioned. And then just as a reminder, our SG&A costs are comprised of probably 65 to 70% of that is related to compensation and benefits. And then lastly, but very important on the investment front, we did make investments in trailers last year to keep up with a growing number of BCO trucks. That investment was a bit more skewed to the second half of the year, so we have yet to lap the full depreciation impact of those acquisitions. And then in addition, we also plan to take additional trailer deliveries this year to replace some older trailers. So a little bit of growth, but a lot of that being replacement in 2022. And unfortunately, and probably also not too surprising, we're seeing inflation on trailer prices that are in some cases in excess of 30% in 2022 above what we were paying in say early 2021. So that obviously will come into play as well on our depreciation expense line this year. So between the trailer investments and the launch of some of the new and enhanced software tools that I was alluding to, both what we deployed last year and what we expect to deploy this year is gonna have an impact on depreciation Our expected total depreciation expense will be in the range of $14 to $16 million per quarter. Again, similar to SG&A, a little bit lower in the first quarter and then increasing in the following quarters as we take more trailer deliveries and also put into service some of the various tools that I was just alluding to. Then on our other operating costs, those should range from between $9 to $11 million per quarter subject to gains on the older trailer dispositions that I was just referring to. We do expect trailer maintenance, which makes up about 75% of our other operating costs, to go higher as costs of labor have gone up, as well as we've got more expensive tires and parts, largely related to part shortages that we've been seeing for some time. And then our second largest expense line, rather, is insurance and claims, second largest after SG&A. And we do expect it to trend higher this year compared to last year. Just as a reminder, about 25% of that insurance and claims expense line is made up of fixed insurance premiums, and the remainder relates to insurance claims, which are highly unpredictable just based on the nature of our business. We typically measure insurance and claims costs as a percentage of BCO revenue, since a significant majority of the cost relates to revenue hauled by our BCO network. And then just for purposes of forecasting, we're using 4.2% of forecasted BCO revenue for the full year estimate. But obviously, the ultimate outcome, as you can imagine, will vary and will depend by the severity and frequency of accidents that we'll have this year. along with any changes to the VCO rates of revenue per load, which can impact the insurance and claims as a percentage of VCO revenue compared to the 4.2% forecast that I just mentioned. So that's a not-so-short rundown of how we're thinking about our cost structure for 2022, but I thought it might be helpful to just take you through that. So, Todd, with that question, we probably only have time for one more.
spk02: Yeah, right. I've got to turn it over at this point.
spk16: We just really want to – we always like to start the year – like I said, those costs are a little more predictable. I'd just like to share that so you guys have a feel for what we're thinking about below the line. Again, unpredictability of the spot market, but we're kind of comfortable with the below-the-line costs a little bit, other than, as you know, insurance is a little bit more unpredictable.
spk12: Yeah, no, I appreciate the line of sight into what you guys know. Jim, I will ask one follow-up, and I'll turn it over. But can you speak to the shift to the percent of revenue that's coming from brokerage revenue versus BCO? And, yeah, I know you're not having a problem finding capacity. You know, BCO utilization is coming down a little bit. But do you expect that to be kind of a shift here that we're going to see for the next couple of quarters? And then at normalizer, is that more of a permanent shift in the business?
spk16: I think if you look over time, it's been a permanent shift in the business to the extent, like, if we – Hey, I would love to add another couple thousand BCOs and just hold that 50-50 split. But in reality, it's just not the way it works. So all the excess freight, it's not even excess. Some of the brokerage freight is truly brokerage freight. It goes on third-party trucks. But I would expect that's a continuing part of the business model where the brokerage continues to grow. And that's fine with us because there's not a lot of infrastructure costs on that third-party truck business. You know when a third-party truck hauls a load, like insurance is a lot lower. risk for us on a third-party truck as a BCO. As you know, we're subject to the liability in the event of BCO as an accident, whereas we're not necessarily subject on a broker. So I would expect that truck brokerage to continue to grow as a percent of our revenue over time.
spk12: Yeah, okay. Makes sense. Hey, thanks so much for the time, and congratulations on a really strong year.
spk16: Yep. Thanks, Todd.
spk01: Thank you. Our next question is coming from the line of Scott Groop from Wolf Research. Your line is open.
spk14: Hey, thanks. Good morning, guys.
spk01: Good morning.
spk14: Jim, when I look at the first quarter guidance on the sequentials, it looks like maybe pricing a little bit better than historical and volume sequentially maybe a little bit worse. Can you just talk about the pricing and volume environment you're seeing so far in January, if you're seeing any impact from Omicron? Sure.
spk16: Now, on the pricing side, you know, probably a little bit better because January doesn't seem to be pulling back. We're four weeks into January and the revenue per load is still pretty elevated compared to where you'd see it drop from December to January. So it's seasonally a little bit better than what we're seeing. So it's really that pricing is just based on what we've been seeing. And we don't expect a significant turn in the next, you know, what's it, what do we got left, eight weeks. So that's on the pricing side. On the volume side, I'll just tell you that We had a little weather disruption in January, so it was a little hard to predict. I can't tell you that the four weeks of January represented the entire quarter. So I would say that we might have been a little conservative on the volume side, to be honest with you. That 8 to 10 might be conservative. So I think that's what you kind of implied, and I would agree that, you know, we probably maybe built maybe a little more storms and a little more disruption because it was based on a January run rate. But nothing unusual, really. It's just we might, like I said, it's – It is a guess for the next eight weeks of where we think we're going to come out based on what we're seeing in the market.
spk14: Okay. The net operating margins were, I think, 55% last year. The expense guidance last question was helpful, but when you add it all up, do you think you can improve on that this year?
spk16: I think it's going to be very difficult to improve on that, but it really all has to do with, yes, we can if we can get the variable contribution to grow, but But I think it would be a little bit difficult to grow off of that 55% that we put up this year. Now, again, there's a whole bunch of factors in there, right? If we're safer in 2022 than we were, there's more chance that we can do it. But you need safety, you need to be safe, and we need a little bit of goose in the variable contribution to offset some of that inflation we're seeing in the costs.
spk14: And then just last thing, just big picture, we've never seen this magnitude of brokerage volume growth for you guys. And it seems like it's happening when asset-based guys are struggling with, at least from a volume standpoint. So, I guess, how are you thinking about the sustainability of this brokerage volume growth?
spk16: Well, I think it's, you know, we're highly diversified, so it's really market demand driven. And the one thing good, when the demand is like this and shippers can't find capacity, you know, it helps our agents build relationships where they haven't had relationships before. So, I think it's sustainable, but it really has to do with demand side issues. If demand side drops, the brokerage will come down as a percent of total. It's just the way the cycle works. I think the higher highs with us, if you follow over time, things dip down, but then we come out of these higher highs and brokerage is always the driver of the volume. Not always, but typically the driver of the volume. I expect that to continue. And, you know, so I think it's sustainable, you know, just like every other cycle and continues to elevate higher. You may get a little pullback, you know, based on what we're seeing or what we expect from a cycle side, but then it elevates again. But it's highly diversified. It's across so many customers. It's really hard to speak to specific, you know, a specific customer, a specific industry where it's driven from. You know, it's really a demand-driven cycle. Okay.
spk14: Thank you, guys. Appreciate it.
spk16: Yeah.
spk01: Thank you. Our next question is coming from the line of Alison Polignac of Wells Fargo. Your line is open.
spk00: Hi, good morning.
spk01: Good morning.
spk00: I want to talk to, you know, obviously the cycle is still strong and, you know, that softening expectation continues to get pushed to the right. But assuming, you know, it will happen inevitably, can you talk to what your team is doing to better prepare your agents and carriers to better manage that inflection versus prior cycles? Any color there?
spk16: I think they live it, right? Our agents have been on for a long time. Clearly, we add new agents every year. You can see by our $181 million new agent revenue for 2021. I'm sorry, but they live the cycle just like we do. We push out information as much as we can. If we start seeing the pricing and demand start to slide a little bit, we try and push it out. Some of these guys, we got a lot of agents between a million and two and a half, and they're not up on the amount of information Landstar here has a corporate is a lot better than the information that a guy like maybe in Arkansas somewhere is running a $2 million business. So we try and push out as much information as possible, whether it's pricing, capacity, availability, or stuff like that to the agent family so they can react properly in the event we see pricing starting to pull back. Historically, what you'd see is the agents don't necessarily react fast enough. When pricing starts to pull back and then shippers, what they do is they pull a business and they go to the lowest price. Those are the things we try and avoid I think we're doing a better job at that today than we were five years ago because we have a pricing tool that didn't exist before. We automated a lot of things over the last three years to help them in making quicker decisions on some of that. Of course, it's showing up in our depreciation as we roll these tools out, but it's a benefit to the efficiencies of the agent family to try and react to shifts in the market dynamic.
spk00: Great. That's helpful. And then I just want to go back to the comments on capital deployment. You know, your share authorization, I think you said $3 million. But I guess my expectation or the tone that I came away with was that's going to be less important versus the capital investments as we enter 22. Just any color there in terms of how to think of that balance as we move through 22?
spk16: No, it's a cash spend thing more than it is. Depreciation is going to climb based on investments we made in the past, but I wouldn't say that our investments that we discussed, that Fred discussed, are much higher than they were in 2021. It's really what's happening is on the expense side, it's starting to roll over. So no, we invest where it's important, but I don't think it's going to impact our ability to give back to shareholders anymore. you know, to any material degree. We were really just trying to point out the investments we made and will be making and the impact more on the, you know, from the, you know, depreciating a software cost over the next five years, right, is really where we are. But the spending this year on those investments, if it's $5 or $10 million more than it was in 2021, that's all we're talking about. We're not talking about like a $50 million spend in excess of what we've done historically. It's pretty similar year over year.
spk00: Great, thanks for the color. I'll pass it along.
spk01: Thank you. Our next question is coming from the line of Baskan Majors from Susquehanna. Your line is open.
spk07: Yeah, thanks for taking my questions. Bringing it back to the SG&A comments, within that $50 to $55 million a quarter that you outlined earlier, can you talk about, number one, what the embedded reduction in incentive comp, including the stock comp, is for the full year. And Jim, does the board outlook to get to a, quote, target incentive comp level, does that assume the kind of 10% to 15% long-term growth rate of the company, or is there something different in that because of the unique cyclical environment we're in? Thank you.
spk16: Targets, first of all, I'll just say we're still sticking with that $35 million tailwind Yeah, that's right. But our targets vary each. So the bonus, the cash compensation is based on a target that is established actually in early January as a budget for 2022. And that does vary based on market conditions. Like if we have a, if we, for example, if we have a really bad safety year in 2021, we might see improvement in that line growing our target. But if we have a really safe year in 2021, we may have more insurance embedded in 2022 than we normally would have. So there's no, we don't tie the 10 to 15% goals. The 10 to 15% is more of a long term. It's not year over year. Typically, if you look at the way we cycle, I mean, you kind of have to build that out over three to five years is what we're looking for, as opposed to a year over year. The cash bonus target is a one year. And we really look at what we think is going to happen in a year. to establish that, which is like a one-time bonus is about $9 million, compared to, I believe, we had $30 million this year. So it's really our target built on our expectations for 2022, which were kind of outlined from the expense side. Fred gave you those. We just, you know, don't really speak to the target we've established on the top line.
spk07: Thanks for clarifying that. And from a high level, you know, over the last five years, A couple of lines have really outgrown others, like this other truck revenue, 8% to 12% of your revenue. I mean, ocean and air, 2% to 5% of your revenue. I think people understand a lot of what's driving the ocean and air piece, but can you talk to the rate impact there versus share gain and how durable you think some of that could be and maybe a little more information on what's happening in this other truck and the kind of business and how sticky versus cyclical that is? Thank you.
spk05: Excuse me, this is Rob. On the ocean side, I think it's no surprise that we continue to see disruption. We continue to see ships, especially at the LA ports, that can't get in. The supply chain is disrupted. You've got several issues that are coming on, especially in China with the Olympics. You've got Chinese New Year's going on. I think that continues. I think the rates obviously are elevated. I think they're stabilized to a point to where they are. We saw a bit of a dip in rate. a little bit in December. It's kind of come back up to the first four weeks of this year. So I think that disruption is just going to hang. It kind of goes back to Jim's opening comments as to when things start to tail off. It really kind of depends on when we shift from consumer spending to more about products and services spending. And we believe at this point in time that's mid-year. As far as the other truck transportation, we're talking substitute line haul, things like that. A lot of that's built around consumer spending. A lot of that's built around what we do from a substitute line haul, from a package piece, from different retail, big box retail, things of that nature. So, again, we're looking at it from a consumer spending side, and as long as we have people at home, as long as we're disruptive COVID, we kind of see that trend continuing in the manner in which it's trending. also to that point uh from the spot side of things um you know traditionally you're looking at a 80 20 90 10 kind of a contractual versus spot market and that's flipped on its head right now and jim mentioned in his opening comments we're kind of seeing the minibids are still there but we're but i think on the contractual side of things the customers are while i don't see those rates decreasing a whole lot they're looking for stability especially on the low priced commodities, they're looking for stability in what their supply chain is going to cost. And they're looking for the tender rejections to go down. They just have no clue right now. So they're looking to gain some control, I guess, over their supply chain. Did that answer part of what you were looking for?
spk07: Yeah, I mean, on the substitute line haul and the other truck, just to clarify, so that business is more heavily retail and parcel than most the rest of your business? And to the point about spot, were you suggesting that There's more contractual sticky relationships there, or is it still fairly transactional?
spk05: No, no, I think it's more mostly transactional right now. Again, I think tender rejections continue at an all-time high. And, yes, I think from what you were speaking, the other, it is absolutely, the majority of it is consumer-driven.
spk07: Thank you.
spk01: Thank you. Our next question is coming from the line of Jack Atkins from Stevens. Your line is open.
spk06: Hey, guys. Good morning. Thanks for taking my questions.
spk01: Sure, Jack.
spk06: So I guess first question, you know, Jim, last week there was a lot of press around, you know, vaccine mandates at the U.S.-Mexico border. Just sort of curious if you guys have seen any disruption from that in terms of freight flows. And, you know, as you kind of think about looking forward there, is this perhaps an opportunity for some share gains, you know, given your scale and presence, you know, within Laredo specifically?
spk09: Hey, Jack. This is Joe. I would have told you I thought there would be some disruption, but I talked to my guys yesterday, and we really have not seen any significant disruption with the operators that are moving that freight across the border. They've done a pretty nice job at the crossing points, I think, of communicating the need for for the vaccination, and they've actually set up a lot of mobile locations for those shuttle drivers to get the vaccine. So I think it's kind of a non-issue on the southern border, at least to this point. And again, it's more about a weekend or so. On the northern border, I think there were some communication issues issues with Canadian agencies kind of contradicting each other a little bit. At least that's what I've heard. I think it's a little bit different on the Canadian border, and I think it's catching some people a little bit more by surprise. And so while we've not seen a big drop-off in volume, there does seem to be some challenges with getting capacity on the northern border. And as you would think, that'll probably impact rates if it doesn't get resolved. Okay.
spk16: Just to put it in perspective so you guys have a sense of what we do, our cross-border Mexico business was about $550 million of revenue in 2021, and cross-border Canada was about $160 million. Okay.
spk06: That's helpful. Thanks so much for that, Jim and Joe. And I guess, Rob, maybe follow-up questions for you. Could you maybe give us an update on Landstar Blue and maybe, you know, what are your expectations for that business in 2022? Sure.
spk05: Yeah, Landstar Blue continues to grow in the contractual brokerage market. We continue to add customers. We continue to put on awards. Again, I think the time is right, kind of as I spoke to the last question, as to tender rejects are at an all-time low. We continue to reach out and work with our customers. We continue to bring on that business and then match that with the capacity that we have available to us. We continue to grow our capacity models.
spk06: Okay, so you would expect, just given what you were saying earlier about shifting from the spot market to the contract market, could we see some pretty meaningful growth? And could Landstar Blue be a much more significant contributor to the top line in 2022, do you think?
spk05: Yeah, in 2021, I think we put up roughly $42 million in revenues for the first year. And we absolutely look for that to continue to grow. Again, capacity continues to come to us. We continue to work strategically. from a contractual standpoint with our customers. And I absolutely believe as we look at this business year over year moving forward, it will be a greater contributor.
spk16: Jack, we still have a little build-out to do there on the tech side. We're not fully automated. We've built out a separate TMS, really, over at Blue to handle dedicated, more contract-type business. But there's still a little work to do to accelerate growth there. Right now it's a little bit more manual. And over the next year or two, we should be able to automate some more of that functionality when you automate the capacity side and the customer side. So it's kind of a standalone really to head more contract business as opposed to that spot business. So we need a little of that technology in place to really accelerate some growth there. I'm not trying to discount Rob's ability to grow, but he is a little hampered until we get him the tools he needs. Plus I'm the positive guy in the company, which doesn't go well. Rob's the optimist.
spk06: Well, that sounds great. Thanks so much for the time, guys. Really appreciate it. Thank you.
spk01: Thank you. Our next question is coming from the line of Charlie Yukovich from Evercore. Your line is open.
spk03: Good morning. Thank you for taking my call, and congrats on the quarter. I was wondering if you could give us some more color on the individual truck segments for the first quarter guidance, just with regards to volume and pricing. and then how those segments have been performing in January so far?
spk16: Well, I think what you're seeing is more of the same from the fourth quarter. It's all carried over. Flatbed was a record volume in the fourth quarter, and there's still strength there. On the van side, it's more of the same. We're still seeing strong consumer doorables coming across. And then on the what we call the other truck transportation, which is 70% to 80% power only. It's kind of where we bring in a tractor and there's a loaded trailer for us. Not one of our trailers. It's a third-party trailer. We're seeing consistency coming out of the fourth quarter. So I don't think there's any special thing to say we're seeing flatbeds booming. Although flatbeds are doing really good, I think we're seeing consistency as we travel out of December into the first quarter. And, you know, typically you'll see a little bit of drop-off in the flatbed side due to freeze and stuff like that, and I'm not necessarily sure we're seeing that this year on the flat side. I think it's – you know, flat's still holding on pretty well.
spk03: Okay, great. And then as a follow-up, when you talk about the cycle leveling off and cycling down early summer, do you see that more as a product of additional capacity coming online or demand easing?
spk16: I think it's more of a shift from spot to contract and more of a – maybe a softening in demand, but, you know, my – My crystal ball is about as good as anybody else's. We've been guessing peak for the last four quarters. But to me, it's a demand thing. I still think there's issues with, even though you see some of the truck manufacturers starting to push out more trucks, I still think you've got a couple issues there. There's no resolution to the drug and alcohol mandate, which has got, I don't know, 80,000 guys on the sideline. They're talking about putting these younger drivers to an interstate, but they're required to have a driver with them. So I don't see the capacity side really turning that quickly. I think what would turn quicker is based on inflation, consumer confidence being down as the demand. I'm more of a demand guy here on my pessimism.
spk03: Okay, great. Thanks a lot.
spk01: Thank you. Our next question is coming from the line of Jordan Alliger of Goldman Sachs. Your line is open.
spk02: Yeah, hi. We've obviously seen big surges for everyone in ocean and air forwarding previously segments that perhaps weren't such a major focus or a major growth area. I'm just curious with this bigger chunk of growth in terms of revenue, is it an area that you may need to scale into more? Is it something you feel has a permanence to it once all the supply chain stuff goes away in terms of emphasis?
spk16: Well, part of the growth is actually a few new agents we put on board. So that's clearly market share gain with guys who have real expertise in that area. But in all honesty, we probably have 10 agents that are experts on the ocean side. Maybe now we have 12. So it's really driven by those guys. It used to be more project driven, but I think we are doing a better job in getting more routine ocean line stuff. So if we're going to grow it out of there, that's where the expertise is. But I don't I think we did a pretty good job recruiting agents into that this year with some guys with expertise. We have a good support function of employees here and good connections. But from a long-term perspective, you know, I think truck is still going to dominate. We're trying to break more into ocean, there's no question, but I wouldn't expect to see accelerated growth coming out of there like it just did. Remember, a lot of it was rate, although we did good on volume rate and new agents.
spk15: Yeah, Jordan, if you look at what we released in our earnings release, we do break out volume and rates on ocean and air cargo carriers. And, you know, as Jim said, rate was up almost 150%, right, compared to volume, which was also good, you know, up closer to 29%. Excuse me, 20, yeah, ocean air cargo, yeah, 29%. So clearly a rate, you know, a rate-driven process. revenue increase. And the question is, you know, how sustainable is that longer term, right, when you have rates going from $4,700 to almost $12,000 per load?
spk02: Makes sense. And then you alluded to IT and some things you may do for a particular area. I'm just curious, you know, broadly speaking, as you think about your technology, and you also mentioned there'd be some investment there versus competition overall, how do you feel you benchmark or stack up? Is there a things that you need to catch up on, or is it really just more on the margin in certain products?
spk16: I don't think we need to catch up on anything. I think we've got everything everybody else has. We just don't talk about it as much. Like I say, I'm not pitching my technology investments to the investment community. I'm doing it for the people who drive the business, right? And you look at what we've done over the last three years – We probably, I would admit that maybe five years ago, we were a little concerned that we weren't keeping up with the app-based and cloud-based world. But in the last three years, we've gone to the cloud. We've developed the information highway. We're using middleware to share. Like I tell everybody for simple minds like mine, we've gone from the concrete block to Mr. Potato Head so we can plug and play. We've rolled out pricing tools, a visibility tool. We've automated the credit process, our trailer pool. So As I said at the opening, I think about 70% to 80% of the BCO freight is actually on one of our trailers. And there was a lot of manual process behind that. And we're a little unique in the way we do our trailers. But now it's all monitored via electronically. They can see where trailers are and stuff. So that's what we're doing. There's no way I think we're behind. I would say that we're probably ahead. Our mobile app, we call it Landstar One, has all the capability of anything else you'll see out there. It provides all the available loads. It provides fuel stops and stuff like that. So what it is is that what you're seeing is the things we've invested over the last three years, we continue to enhance them. We're adding new tools, and it's just adding a little bit to our depreciation line. But I think we're – I'm not going to ever refer to this as cutting edge because that's not really our job, but we are right in line with or above anybody else that's got the technology out there.
spk02: Great.
spk16: Thanks so much.
spk01: Thank you. Our next question is coming from the line of Bruce Chan from Stifel. Your line is open.
spk04: Hey, guys. This is Casey for Bruce today. Sure. How are you? Good. Great. So first I wanted to ask a little bit about the end markets. It looks like we saw some good growth, auto and industrial growth. Do you look at that or those end markets look at that as an indication that there's some fluidity back in the supply chain, seeing some things work together a little better?
spk16: Well, when you look at automotive, I think we're just doing a good job of penetrating into an account that isn't necessarily the one that is driven by the big three, right? So, within that grouping, it's a little more concentrated than most of our other groups as it relates to customer base, and I think that's more of a customer-driven phenomenon than a then an industry phenomenon I think there's still disruption in the auto side I think we're just doing a pretty good job with you know satisfying the request from certain certain customers we have out there but we can kind of speak to most of the sectors and what we think is going on at the level that's in our earnings release consumer doorables you talk to that one that's so highly diversified it's hard to you know it's such a big part of our business it really flows with what's going on in the consumer market, right? There's not a single customer in there that makes up more than 3% or 4% of that business. So it's really that's a market-driven, where automotive really is more relying on about four or five specific shippers. And as I said, we're doing a pretty good job penetrating into one shipper as opposed to an overall industry. Machinery stuff, like up 43%, again, another dynamic that's just – it's part of – I think if you go back to last year, we were talking about you know, if consumer, flatbed was kind of soft, right, because the manufacturing sector, heavy manufacturing was kind of soft in the first half of 2021, and consumer demand was through the roof, and, you know, we were growing revenue, and it was all coming from then, and we started talking about, well, if consumer, you know, drops off, we'll probably see flatbeds start to pick up, because sooner or later, manufacturing's got to come back, and it's actually, that's what's going on, right, so we're seeing on the machinery side, and even the metal side, we're seeing some pretty growth there, but just because that environment's coming back That's kind of what we see. Substitute line haul, we see it only grew 11%, but the thing there is the volumes actually grew. It's just we saw to specific business, we were counting multi-drops was going to be one load. It was driving the rate up higher. We saw the rate drop, but it's really a condition of mix, not necessarily the rates going down there. We only grew 11%, but it was actually on a volume growth with decrease in revenue per mile just because of the You know, we went from, you know, having multi-drops and a long route, and then we're now doing shorter routes. But, you know, that's kind of what goes on. If you have any other sector stuff, foodstuffs is pretty small. But it's mostly highly diversified customer base within here, other than the automotive, which is a little more concentrated.
spk04: Yeah, I'd say the only other sector stuff that I wanted to ask about was kind of building products. Looks like it grew pretty well. Yeah. we heard one of the rails speak about their expectations for soft housing starts in 2022. do you guys what are your expectations there is there do is there an agreement with that assessment um and what's the impact that you would expect for flatbed in the event that we had those soft housing starts this year well if you ask me i'm a pessimist it's all going to go to zero you know no in all honesty look i know i would i would say that that building products thing's been relatively strong
spk16: And I would expect the housing starts or stuff like that to kind of pull it back. I think everybody's got a new roof on their house or siding and stuff like that. So my expectation would be that you do see that's part of the slowdown in the summer. But, again, my crystal ball is as good as anybody's.
spk04: Yeah. Okay. I got you guys. And then just have one more for you, and I'll turn it back. We know that M&A has been lower on the capital stack for you guys, not a huge – huge lever that you pull, but we do see some of your peers, some of your competitors making some investments in logistics technology and of the sort heard about you talking about the needs and Lance are blue. Like, is that something that you consider that you look at that you might need for use of cash going forward here?
spk16: Yeah, absolutely. If we saw an opportunity on the tech side or the capacity side, we would look at it. Nothing's popped right now. We do use some third-party services that actually provide some of the tools that we use over at Blue. If there was an opportunity, our eyes are open. I'm not saying we see one out there right now because our technology actually is all, we like the homegrown stuff that we have. We haven't found anything that would actually be additive, but if there was something, we clearly would look at it. There's nothing on the horizon, though.
spk04: Okay. No, that sounds great. I'll turn it back. Thanks, guys.
spk01: Thank you. Our next question is coming from the line of Stephanie Moore of Truist. Your line is open.
spk10: Hi. Good morning.
spk08: Morning. Hi. Good morning.
spk10: Most of my questions have already been answered, but I did want you to kind of a continuation of the last question. Maybe you could speak a little bit about what you're seeing with existing accounts as well as growth and new accounts. You know, it's new business. Are you seeing this in more of the consumer durable side or industrial? Any kind of color there that's driving some of this demand and incremental growth would be helpful. Thanks.
spk16: I think it's just across, you know, all sectors is, you know, like as we walk through automotive is primarily it's a handful of customers. Substitute line haul is a handful of customers. But the other categories we got are very diversified. So you've got, you know, small customers coming in, like I said, I spoke to the diversity of our model. Our 100th customer was only $2.8 million in the quarter, so it's really hard to speak to any specific customer driving the growth amongst the sectors that we deal with. We have customers come in and out all the time. The thing about the model, if you think about our model, we're a little bit different. We had about 600 independent agents and they're in market, and they're making relationships with shippers who only move one load a week, you know, and then we also have national accounts that move 1,000 loads a week. So it's highly diversified, and we've seen no shift in that. It's not like we see new customers coming in that are significant, but we also don't see new customers going out that were significant in the past. It's a lot of, you know, we play a lot of small ball here, and it's a lot of, you know, going out, finding those small customers and making them bigger. But there's nothing specific about any additional customers that are large or lost over the last 12 months or even going forward.
spk10: That's helpful. Thank you. And then more of a bigger picture question about the growth of EVs and EV trucks and even before that, some of the increased regulations around emissions or EVs, particularly in California. Maybe if you could just talk about the strategy behind the evolution of EVs in the truck market.
spk16: Yeah, you know, we don't own any trucks, so it's a little bit different for us as opposed to an asset-based carrier. You know, our BCOs, they're typically going out and buying used trucks. They're a little bit older, what you see out there in the industry. And if EVs start to become popular, they'll be buying those in 10 years. You know, it's just right now we do long-haul freight, 700 to 750 miles. You know, the electric vehicles really aren't conducive to that yet. Or even on the heavy-haul loads, you've got 80,000 pounds. So I think that market dynamics shifts for us later than it would for most. I think the regional carriers, the short haul lines, stuff like that will move into those EVs quicker than you'll see the long haul transport heavy haul guys move it.
spk10: Great. Well, thank you so much.
spk16: Yeah, we have trailers. The one that we do with our trailers, we do put the, you know, wind resistant, you know, low resistant tires on them just for environmental purposes. So we kind of comply with any regulation and and do our best as it relates to things we can't control.
spk10: Great. Well, I really appreciate the time.
spk16: Any more questions or closeout?
spk01: We have two more questions on queue, sir.
spk16: All right. We'll take those two and then we'll shut it down.
spk01: Thank you. Our next question is from the line of Scotch Nieburger of Oppenheimer. Your line is open.
spk11: Thanks. We're here at the end, so I'll be brief. I guess on the $50 to $55 million a quarter on SG&A, thanks for spending so much time on that. Is the second quarter going to be the high watermark because of the convention? I wasn't sure from the comments. Should we expect it higher in the third and the fourth quarter than the second? And then a quick follow-up. Thanks.
spk15: Yeah, it will step up in the second quarter, and then, you know, I wouldn't expect that kind of trend to continue because, you know, we'll be pretty close to that $55 million mark by the second quarter because, you know, that's when we have our big event, and then you'll have the absence of the event in the third quarter, but then some of the other things that I talked about will kind of take its place, so to speak. So, you know, Think of it more of a step up and then a little bit more consistent later.
spk16: Yeah, Scott, we're on a July 1 race cycle here for almost everybody in the organization. So what happens is the $2 million on the convention gets absorbed. So you expect that to come down in the third quarter, but it doesn't because then we elevate the wages climb up in the third quarter. So they kind of counterbalance each other. So your first quarter is probably your low watermark, and then you're kind of even in the back three considering, you know, depending on what happens with our variable count programs.
spk11: Thanks. Appreciate it. You know, I'll turn it over since there's someone else in queue. Thanks guys. Appreciate it.
spk01: Thank you. Our last question is coming from the line of Elliot Alper from Cohen. Your line is open.
spk08: Great. Thank you. And just one for me. Um, could you discuss any impact if at all, uh, that COVID had on the driver pool in the fourth quarter and then looking into 22, um, How is your new agent network trending and kind of what are your expectations about agent growth this year?
spk09: Elliot, this is Joe. We really haven't seen any impact in the sense of count. I think that all year long we may have, and it's hard to really pinpoint, we may have seen a little bit of utilization. impact if we had BCOs that were out with COVID or who were maybe being a little more cautious as to how much they were out, but no significant impact to the count. We're pretty happy with the growth in 21. I'll turn it over to Rob for your second question.
spk05: On the agent side, we continue to have a robust pipeline. I think that's because, again, the capabilities of Landstar, the ability to A lot of people come to us as they have customers, they have relationships, and they can't supply the capacity, they can't supply the service that they have. They come to us because we tend to be able to deliver that service and that capacity for them. So looking forward, I expect our agent ads to continue much like it did last year and our agent revenue to continue in the same fashion.
spk08: Thanks, guys.
spk05: Thank you.
spk01: Thank you. At this time, I show no further questions. I would like to turn the call back over to you, sir, for closing remarks.
spk16: Yeah, thank you. And I look forward to speaking with you again on our 2022 first quarter earnings conference call currently scheduled for April 21st. Have a good day.
spk01: Thank you for joining the conference call today. Have a good morning. Please disconnect your lines at this time.
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