Yellow Corporation

Good afternoon and welcome to the Yellow Corporation's fourth quarter 2021 earnings call. All participants will be in a listen-only mode. After today's presentation, there will be a question and answer session. Please note this event is being recorded. I would now like to turn the conference over to Tony Carino, Vice President of Investor Relations. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to Yellow Corporation's fourth quarter 2021 Earnings Conference Call. Joining us on the call today are Darren Hawkins, Chief Executive Officer, Dan Olivier, Chief Financial Officer, and Darrell Harris, President and Chief Operating Officer. During this call, we may make some forward-looking statements within the meaning of federal securities law. These forward-looking statements and all other statements that might be made on this call, which are not historical facts, are subject to uncertainty and a number of risks. And therefore, extra results may differ materially. The format of this call does not allow us to fully discuss all these risk factors. For a full discussion of the risk factors that could cause our results to differ, please refer to this afternoon's earnings release and our most recent SEC filings, including our forms 10-K and 10-Q. These items are also available on our website at myyellow.com. Additionally, please see today's release for a reconciliation of net income or loss to adjusted EBITDA. In conjunction with today's earnings release, we issued a presentation which may be referenced during the call. The presentation was filed in an AK along with the earnings release and is available on our website. I will now turn the call over to Darren. DARREN GILMORE.

Thanks, Tony, and good afternoon, everyone. Thank you for joining our call. We ended 2021 by staying on course and executing the initiatives that were laid out early in the year. Sticking to our strategy helped deliver strong results. And for Q4, we reported adjusted EBITDA of 115.5 million, which is double what we reported in Q4 2020. We also reported an operating ratio of 95.7, which is the lowest in three years. In a capacity-constrained freight environment, we remain focused on ensuring The right freight is flowing through the network, and the price reflects the value and capacity that yellow brings to the market. In Q4, year over year, LTL revenue per hundredweight, including fuel, increased 23.3%, and favorable pricing trends have carried into Q1 of 2022. For the month of January, yellow averaged between eight and nine percent on contract negotiations. As we execute our yield strategy, the LTL tonnage per day decrease that we saw in Q4 was in line with expectations. We have the capacity to take on freight that fits our network and that is priced appropriately. As we transform the network to operate as a super regional carrier, we expect to return to growing LTL tonnage per day. Another area of emphasis in 2021 was reducing the use of purchased transportation. Actions we took included purging the network of short-term rentals as we acquired revenue equipment and adjusting our line haul network to minimize the use of more expensive purchased transportation expense in certain lanes. We made steady progress and decreased the amount of PT expense as a percentage of revenue each quarter during the year. In Q4, it was down to 14.5%, which was 220 basis points better than Q1. We are also executing key steps on the multi-year transformation to OneYellow. Recently, Holland was the final operating company to be converted to the OneYellow technology platform. It was completed as planned and on schedule. The technology platform is the cornerstone of our fully integrated network and enables us to continue streamlining operations. In 2022, our roadmap to One Yellow includes the integration of the line haul network to support both regional and long haul service, as well as the optimization of pickup and delivery operations. You will hear more about this from Darrell. In Q4, we wrapped up one of the largest capital expenditure plans in our company's nearly 100-year history. Starting with the fourth quarter 2020 through the end of 2021, we have invested nearly $600 million. Those investments include tractors, trailers, technology, box trucks, containers, lift gates, and other assets. The number of tractors acquired over this timeframe was more than 2,400, which is around 17% of the fleet, and the number of trailers added is more than 3,600, which was roughly 9% of the fleet. The additions have lowered the average age of the tractor fleet by approximately two years and are expected to mitigate maintenance expense and help our sustainability efforts through enhanced safety, and improved fuel efficiency. As we look ahead, we expect to carry the momentum that we have generated into 2022. We will be enhancing the customer experience with a modernized super regional network as we complete the transformation to One Yellow. By providing customers with an all-in-one solution, we expect to grow our company and deliver a steady staircase of financial improvement. Overall, the economy remains healthy with strong consumer and industrial demand, while constraints from a tight labor market and supply chain disruptions attributable to the COVID-19 pandemic are keeping a lid on LTL capacity. I will now turn the call over to Dan, who will share additional details about the quarter.

Thank you, Darren, and good afternoon, everyone. Full year 2021 operating revenue was $5.12 billion compared to $4.51 billion in 2020. Operating income in 2021 was $103.6 million compared to $56.5 million in the prior year, which included $45.3 million of net gains on property sales. Adjusted EBITDA for full year 2021 was $306 million compared to $191.9 million in 2020. For the fourth quarter 2021, operating revenue was $1.31 billion compared to $1.17 billion in 2020, and operating income was $55.8 million compared to $13.7 million in the prior year. Adjusted EBITDA for the fourth quarter 2021 was $115.5 million compared to $57.9 million in 2020. Our revenue growth of 12.4% in the fourth quarter reflects strong yield performance, offset by lower volume as we continued executing our targeted pricing strategy. Including fuel surcharge, fourth quarter LTL revenue per hundredweight was up 23.3%, and LTL revenue per shipment was up 20.3% compared to the prior year. Excluding fuel surcharge, LTL revenue per hundredweight was up 16.2%, and LTL revenue per shipment was up 13.4%. LTL tonnage per day in the fourth quarter was down 10%, driven by a 7.8% decrease in LTL shipments per day and a 2.4% decrease in LTL weight per shipment. Sequential LTL tonnage per day trends compared to the prior year were as follows. October, down 10.1%, November, down 9.5%, and December, down 10.2%. On a preliminary basis, January LTL times per workday was down approximately 14%. Total liquidity at year-end 2021 was $359 million compared to $440 million at year-end 2020. Total capital expenditures for the fourth quarter were $55 million compared to $99 million a year ago. And full-year 2021 capital expenditures were $498 million. In 2022, we plan to return to a more normal cadence of equipment refresh, and we expect our full-year capital expenditures to be in the range of $325 to $400 million. During the fourth quarter, we took a step to de-risk the balance sheet by transferring approximately $250 million of our single employer pension plan obligations and assets to an insurance company. This resulted in a non-cash, non-operating settlement loss of $54.9 million, reflecting the accelerated recognition of unamortized losses in these plans. Executing this transaction will help mitigate potential future volatility associated with the transferred obligations and assets. And finally, in December, Moody's Investor Service upgraded Yellow's corporate family credit rating to B3 with a stable outlook. This upgrade reflects our improved operating performance as we continue to execute our One Yellow strategy. And for more on that, I will turn the call over to Darrell.

Thanks, Dan, and good afternoon, everyone. As you heard from Darren, we are making steady progress, and we are well on our way to becoming One Yellow in 2022. After successfully getting the operating companies on the same technology platforms, the journey continues with the transformation of the network. Historically, our regional companies have operated independent networks that overlap YRC Freight's North American footprint. This results in different pickup and delivery drivers from our operating companies visiting the same customers for shipments that have varying lengths of haul. As we transform the network to operate as a super regional carrier, we are integrating the line haul networks to support both regional and long-haul service, as well as optimizing pickup and delivery operations. Like the move to a single technology platform, the network transformation is complex with many moving parts, so we are phasing in the changes by region around the country, beginning in the Northeast. We plan to give you updates on how the integration is progressing throughout the year. When completed, The line haul optimization efforts will help drive speed, efficiency, and consistency in our network. Over-the-road operations will operate as yellow, which will optimize trailer density and further enhance our sustainability efforts. The city pickup and delivery optimization efforts will eliminate the overlapping coverage that currently exists between brands, and we will have one yellow driver interacting with our customers for both regional and long-haul services. Overall, we expect the network transformation to enhance customer service, lead to greater efficiencies and cost savings, and create capacity in the network without adding terminals. Turning to the current quarter and the impact of the Omicron variant, we started seeing a rapid increase in COVID-19 cases among our employees in the final weeks of December that carried into the first quarter. While this variant is more contagious, it appears to be less severe, and as a result, the majority of our employees are recovering quicker and returning to work faster. Overall, the spike in COVID cases around the country is temporarily slowing productivity for many companies and continues to apply pressure on the supply chain. In closing, I couldn't be more excited about our path ahead. The yellow team of more than 30,000 truckers made great strides in 2021. They remain focused on safely meeting the evolving needs of our customers while transforming one of the largest logistics companies in North America. I will now turn the call back over to Darren for some closing comments.

Thanks, Darrell. We made tremendous progress in 2021, and like Darrell, I am excited about what is ahead for our company, and I remain confident that the transformation of One Yellow positions us for continued operational and financial improvement. I am extremely proud of all of our Yellow employees who stand up to the supply chain challenges daily by continuing to provide essential freight transportation services to the customers and communities we serve. Truckers are heroes, and our employees are an important part of the U.S. supply chain, and I am grateful for their efforts. Thanks for your time this afternoon. We would now be happy to answer any questions that you may have.

Thank you. We will now begin the question and answer session. If you are using a speakerphone, please pick up your handset before practicing the keys to enter the queue. At this time, we will pause momentarily to assemble our roster. Our first question will come from Jack Atkins with Stevens. Please go ahead.

Okay, great. Good evening, and congratulations on a great quarter here, guys. I know this has been a long time in the making for you.

Thank you, Jack. We're proud of it.

Well, you should be. I guess maybe if we could start, I guess, most obvious question, and this one's probably for Dan, but when you think about the first quarter and the idea of a stair step or a staircase of improving profitability, there's obviously some seasonality at play in the first quarter, and then you've got the January trends and Omicron and all that. I guess when you kind of put everything through the wash and you think about the yield momentum in the market, what you're seeing with your trends and what you would expect to see with the trends, plus the company-specific things going on. How do you think that translates into the quarter-over-quarter seasonality from an operating ratio perspective? I know it's a long-winded question, but I just would like for you to maybe give us some context there.

Sure, Jack. Good afternoon. Thanks for the question. First, let me say that I am pleased that we were able to improve our operating ratio by 60 basis points from Q3 to Q4. when historically it's a couple of percentage points worse. That was primarily driven by continued yield strength along with cost controls around our usage of purchased transportation. On the yield front, sequentially from Q3 to Q4, our LTL revenue per hundredweight excluding fuel was up 3.5%, and LTL revenue per shipment excluding fuel was up 5%. On the PT front, as you heard from Darren, our purchase transportation expense as a percentage of revenue was 14.5% in Q4 compared to 15.4% in Q3. So now to your question, as we move from Q4 to Q1, we historically see degradation in our OR of about 200 to 250 basis points. Most of the time that's weather driven. But as Darrell referenced in his opening comments and you mentioned, the surge of the Omicron variant starting in late December that has carried on throughout January has put even more pressure on the entire supply chain and will have an impact on Q1's ton of jam productivity. Offsetting that to some degree, of course, is the continued yield strength that I mentioned. So I guess net-net, as I sit here today, with two full months still left in the quarter, and the impact of Omicron not yet having run its full course, it's just simply too early to project how margins will move sequentially versus what they normally do.

Yeah, and I would just tag on to that. In LTL and for the 30 years I've been doing it, Jack, and I think about Q1, You know, you got to look at between Valentine's Day and Easter. You know, that's when you make your quarter. You're always dealing with the normal weather events and those type things in January. We've got, you know, extenuated pandemic pieces that are in play. But when I think about 2022 and our fleet age being down two years, looking at where the economy's at right now, manufacturing, retail, wholesale, Anywhere I look, things are good, and e-commerce shining through strong, the consumer standing up good, all that contributing to LTL. It allows us to put our price out there, be selective about the business that we allow into our network. Our network has got so much value with our drivers, the physical plant facilities, the terminals, and where we're located. And our 316 terminals are in some of the best locations. So you put all that together, I'm confident about where we're headed, and I like the way we've positioned. And then lastly, having all of the companies on one yellow technology is something I've been working on for a few years, and I couldn't be more excited about having that in the rear view mirror.

Okay. All right. Well, that makes sense. I understand the difficulty projecting that. So we'll just kind of put a pin in that for now. Maybe kind of shifting gears to One Yellow and the impact that could have on financial results in 2022 and beyond, you know, from the outside looking in, if you were trying to model this from where we're all sitting, you know, I guess one where will you be seeing the biggest impact? Will it be in PT, maybe further improvements there? Will it be in salaries, wages, and benefits per hundredweight? How should we be thinking about where the impact from the savings will be showing up? And also, is it just costs that you're taking out? Also, it sounds like there's a real revenue opportunity here as you look forward once this is complete, now that this is complete.

Jack, in my opening comments, this is Darren, in my opening comments when I talk about growth, growing the company from a revenue aspect, closing the gap on our tonnage decline, being able to get yield and positive tonnage at the same time, the One Yellow piece is certainly the driver of those things. It's an iterative approach. So the big linchpin for the entire One Yellow was the technology. That's done. There's benefits there. But moving forward, the big benefits come in two areas, line haul and pickup and delivery operations, and I'll let Darrell speak to those.

Good afternoon, Jack. Yes, this is Darrell. As Darren said, you know, there's been a tremendous effort and resources and spend and time and bandwidth, as you can imagine, on the technology component. But as he's always said, you know, that's the linchpin, you know, to making all of this happen. And so what we're excited about is Starting out the year, we're moving down this path of the network optimization, which as he mentioned, the top two costs in any LTL company is in the line haul area and the pickup and delivery area. As we've talked before, there's a tremendous amount of duplicity and redundancy in our network, particularly on the P&D side, but also there's tremendous synergies to be gained with line haul optimization as we start to think about providing regional and long haul services in one network. The last piece I would just say that gets us really excited is upon the completion of this, this is a growth story. This is an opportunity for us to start to leverage our network in ways that we weren't able to leverage it in prior to the technology transition. And so when you think about a lot of areas of the country where, as an example, we don't have regional services today, in the future, once we have the network optimization complete, we will start to provide those services and it offers an opportunity for additional growth. Then lastly, the whole all-in-one solution concept where we're going to be able to pick up both regional and long-haul services with one driver, one truck. That's extremely attractive. It's what our customers have been telling us that they want to see us do. With our scale and size, I think you can see the opportunity that's in front of us from there. So that's It's a lot that I just mentioned, but it's certainly something that we're excited about, and it's a growth story in the end of the day.

Okay, got it, got it. And maybe I guess last question before I hand it back, but this one's for Dan. Just a question on the balance sheet and capital structure. You mentioned the upgrade from Moody's, I believe, that came late in December. With EBITDA really improving here and the business growing, getting its footing here finally. You know, that gives you, I would think, some optionality from a capital structure perspective. How are you approaching that? Could we maybe see some opportunities to refinance the debt, maybe take out some operating leases in 2022? Can you maybe walk us through some options there?

Yeah, a couple of things on that. You know, in prior quarters, Jack, we've discussed that with, you know, no significant maturities until 2024. Our transformation to one yellow and our staircase of financial improvement would provide us the opportunity to improve and grow into that capital structure, which ultimately then would open the door to more favorable options around the capital structure. Up to this point, I believe we've certainly made some progress there, and as evidenced by the Moody's upgrade that I did reference and that you mentioned, I also do believe we still have opportunity in front of us. You know, you brought up the operating leases. That is one area where over the last couple of years we've made significant improvement in the balance sheet by buying out old leases and not entering into new leases. When you look at our combined short and long-term operating lease liabilities at the end of 2021, they are $195 million, but that is down from $287 million a year ago and down from $367 million at the end of 2019. So nice improvement there and still more room to go. Part of that 325 to 400 million capex number for 2022 still includes a significant number of additional lease buyouts.

Okay. Thanks for your time, guys. I'll turn it back.

Thank you, Jack.

Our next question will come from Scott Group with Wolf Research. Please go ahead.

Hey, thanks. Good afternoon, guys.

Hello, Scott.

Just a few questions for me. Just following up on one from Jack, do you see enough to say that you'll be profitable in first quarter from an operating ratio perspective?

Scott, I'll start with that one. Certainly, Q1 has unpredictable parts. We've talked about the pandemic and those pieces. The Yield Foundation that we're starting 2022 with has me very confident about the year and also the demand environment. We're 316 terminals strong right now. We've got a motivated group of employees. Our hiring efforts are still running wide open, and so is all of our driving academies. I like our position. All of those 2,400 tractors that we mentioned, they're in the network running today. So the benefits, the maintenance savings, the yield power, and then the operational efficiencies that Darrell and his team are driving. You put all those together. I'm still not giving guidance, but I'm very confident about Yellow's trajectory even at this point in the year. Okay.

I missed it. Can you give us the contractual renewals for fourth quarter and starting first quarter?

Yeah, for the fourth quarter, Scott, this is Dan, our contractual renewals averaged between 9% and 10% in January. They're still holding firm there in the 8% to 9% range. And that's been the consistent story now going all the way back to late Q1 last year. So still strong momentum on that front.

Okay. And it sounds like you want to start growing tonnage this year. When do you start to focus a little bit more on that tonnage growth?

I'll let Dan start with some comments just on January and the beginning of the year, and then I'll wrap that one up. But Dan, you go ahead.

Yes, if I go back and look sequentially from Q3 to Q4, our tonnage typically decreases about 4%, and this year it only decreased about 1%. I did mention in my prepared remarks that January's LTL tonnage per day was down approximately 14%. which was certainly impacted by resource constraints, you know, caused by the rapid increase in COVID cases that Darrell mentioned. You know, if we would have seen the normal historical sequential change from December to January, you know, January's LTL tonnage per day probably would have been down around 12% on a year-over-year basis. And then for the full quarter of Q1, you know, on a sequential basis, our tonnage per day from Q4 typically declines about 3.5%. But based on what we saw in January and the fact that the full impact of Omicron hasn't completely subsided yet, I would say it's reasonable to expect our sequential change in LTL tonnage per day at least to be moderately less than our historical average.

Yeah, and then I would just cap that off with when I look at where we're at and I watch it closely daily, weekly, monthly to make sure that this is a balanced approach that we're taking. From a pricing standpoint, we've still got room to run from a tonnage aspect, I want to see it head back into single digits. And I think that is more of a near-term opportunity. And then from there, Scott, the value proposition as Daryl goes through the line haul network and the local pickup and delivery operations, which we will be reporting out on throughout 2022. This is not a multi-year transformation like the technology piece was. This is all happening in 2022, and that value proposition, I believe, allows us to have the yield momentum that we have right now, but also to move back into a tonnage environment that transpositive as we move through this process in 2022. Okay.

And then just last, Eric, I want to just talk about the CapEx plan. So, Is that, that 325 to 400, is that now more of a normal run rate for CapEx, or would you still say that that's elevated relative to normal or maintenance?

No, that's going to be, I guess, more of how you described it as normal. You know, obviously spending $600 million in CapEx over five quarters is, you know, we've always talked about that being about double what our normal cadence of reinvestment is going to be. You know, in 2022, we're definitely going to return to that more normal level, you know, that $325 to $400 million. That includes, you know, more than 450 tractors, 2,200 trailers. Some of that will be dependent on, you know, the mix of equipment and production slots available. But, yeah, on a go-forward basis, it's fair to think that that's going to be the range that we're probably going to fall into.

Okay. And then with that, I guess, are there any plans for further terminal development reductions, and what's the operating ratio you need to get in order to be free cash flow positive with that amount of CapEx?

I'll answer the terminal question. We're at 316 right now as Daryl moves the company through the one yellow approach. That number could change slightly. We would expect it to be somewhere around 309 at the end of 2022. And these wouldn't be large terminals, Scott. So it's just a few more adjustments, but the heavy lifting's already been done. We're not giving up any geography. We're not giving up any capacity. We want to create capacity. We think the unique opportunity about yellow in 2022 is we free up the human capital to Darrell's example of having more than one employee at the same customer on a daily basis. And then we also improve our asset utilization. And Dan just mentioned 450 tractors coming in, but also we can remove some of the older tractors from the fleet as that asset utilization improves. So I expect further gains on the overall age of our tractors I'll let Dan comment on the other side, or choose not to comment on the other side. Thanks.

Well, clearly I'm not going to give guidance on what OR it takes to get cash flow positive, but I'll make a couple of comments around cash flow. You know, the path to generating free cash flow is at the top of our priority list every single day, and it's got a lot of components to it. I did want to call it out that when you look at our full-year operating cash flow of $10 million for 2021 compared to $122 million in 2020, it's important to keep in mind the year-over-year delta in the FICA tax deferrals under the CARES Act and the delta in the amount of picked interest in each of those years. If we exclude the impact of those couple of items that will be non-recurring on a long-term basis, our operating cash flow actually improved $50 million year-over-year. So even though I won't provide specific guidance, you know, with the continued improvement in our operating performance, I'm comfortable that we're well on our way to being there.

Okay. Our next question will come from Bruce Chan with Stifel. Please go ahead.

Hey, gents. Good afternoon and congratulations here. You know, Daryl, appreciate the color and the detail around one yellow. Just, you know, maybe wondering if you can help us to understand the magnitude of that line haul and P&D network consolidation as it you know, kind of filters through the model there because it feels like this could be, you know, pretty powerful with the labor efficiency and with the equipment efficiency. You know, is it too simplistic to say that you're replacing three P&T drivers with two or four with three or something like that?

You know, hey, Bruce, it's good to talk to you. You know, I would say directionally that makes a lot of sense to view it in that way. You know, when you think about The opportunities that yellow has right now, there's so many different areas from an efficiency perspective that you can talk about. I mean, obviously, we've seen some gains in the facility-related costs, and there's, as Darren mentioned, there's still some opportunity there. But the operational management synergies are nearly immediate as we start to go through and convert certain regions of the country. The reduction in the city P&D routes, that's pretty clear and obvious. in the fact that we'll see additional improvement in our asset utilization, but I get more excited in this environment about the human capital component of it all. As Darren mentioned, this is a growth story. I don't feel like we have a demand issue right now. Human capital is a top priority for us. It's why we're so aggressive about our hiring initiatives, our driver academies, because finding drivers and dock workers in this environment is challenging for everyone. But these synergies that we have through this network optimization are going to be meaningful for us in relationship to maybe where some of our competitors are. And of course, the reduction in line haul schedules, that's obvious. We have folks that are driving right past each other each and every day from the YRC Freight brand and some of our regional brands. And so I can't give you any specific guidance at this particular point. I am committed to making sure that we update everyone throughout the year as we start to take on the full consolidation here, but there is meaningful opportunity there that exists for our company in this area.

Okay, that's helpful, and I appreciate that. And I guess, you know, maybe if I could ask it another way, is there, you know, you mentioned, you know, those route reductions on both the P&D side and the long haul side. I mean, is there a target percentage of route reductions that you have, whether that's, you know, over a couple years or over the life of the project? I guess I'm just trying to understand if this is hundreds of basis points of reduction per year or if this is something much more incremental than that.

Bruce, this is Darren. The way I think about that is 40% of our revenue right now is overlapped in those areas. The opportunities to grow that, but also those operations overlap. Now, we've made tremendous progress in getting those operations under one roof where they would fit together, so that's why we're not going to have a dramatic reduction in the number of terminals. But as far as the opportunity, we're not talking about a multi-year transformation. It's phases. All the phases occur in 2022. It's happening in the Northeast right now, and it'll continue moving across the country. because we're going to get to the greatest density first and the best opportunities. The other piece, part of the line haul benefit comes from just being on one technology, which is already in play. So not only do we have a pressure fleet for us and yield momentum going into 2022, we have the momentum of being on one technology platform that's already in our back pocket. So you put those together as We've devoted the majority of this call and the majority of our script to the One Yellow subject, so we certainly think it's a big opportunity and our customers have validated that over the time. It's also a very methodical process that we mapped out. It's not slamming things together in a very short period of time. This is a methodical process that moves across the country that's coordinated, our employees are aware and we'll be very steady in the way we approach it. But I wanted to make clear it's a 2022 effort and we'll provide more guidance as we go. But for now, you know, there's a lot of opportunity and a lot of things happening there, but it's already in motion.

Got it. Well, that's super helpful. Congratulations and, you know, really looking forward to seeing, you know, what happens next quarter.

Thank you, Bruce. Our next question will come from Jeff Kaufman with Vertical Research Partners. Please go ahead.

Hey, everybody. Congratulations.

Thank you so much, Jeff. Good to hear your voice.

A couple questions. I just want to make sure I understand the transaction where you're annuitizing some of the payments for your union plans or pension plans, I should say. How does this show up in the P&L going forward? I mean, essentially you're offshoring the volatility, but where are we going to see a difference in the income statement?

Yeah, Jeff, so let me start with how overall we feel good about where we're at in our single employer pension plan. Our funded status has improved by nearly $200 million over the last two years, and our total benefit obligation, which was over $1.1 billion at the end of 2019, is now just over $800 million. We believe the partial annuitization that I mentioned in the opening comment that has strengthened the balance sheet, reduced the risk of volatility. I'm not going to get a lot into pension plan accounting on this call. There's a lot of information that will be in the 10-K about it. Essentially, pension plan accounting, the short of it is unamortized losses in pension plans get, you know, amortized over the life expectancy of the participants in the plan. And at such a point that you annuitize any of those pension obligations and assets, you recognize those losses and those come through as a non-operating expense. That $60 million of non-operating expense that you see on the income statement, $54.9 million of that was related to the fourth quarter annuitizations.

Right. So you're outside the corridor. You recognize a certain amount of that each year. So is this net-net other income positive in the future? Is it other income neutral? Is it other income negative? I realize we accelerated the losses into the period when you did this because you've done this before as a company, but it's been a while. I'm just trying to remember. How does this affect going forward that other income line?

Yeah, again, the other comprehensive loss relates primarily to the pension plan accounting just for the periodic actuarial changes in the value of plan assets. Again, when you recognize the value of those and remeasure the plans, that's when you see it up in the non-operating section. Again, in the 10-K, you'll see the roll forward of the accumulated losses the unamortized losses, which are now at $185 million compared to $370 million just two years ago.

Okay. All right. I'll follow up offline. So CapEx, a lot of companies I've been speaking with have told me, hey, we didn't get all the tractors we wanted. We didn't get all the trailers we wanted for whatever reason. is there any portion of this 325 to 400 that really kind of represents a role of 2021 CapEx into 2022? I know you mentioned in your earlier question that you consider this a more normal range and you stay within it, but I just kind of want to get an idea for if there's any hangover from 21 in that number.

No, absolutely not. The $600 million that Darren referenced, that was over that five-quarter period. All of the equipment was actually you know, mostly completed by the end of Q3 already in 2021. So there's no bleed over into 2022 for any of the tractors or trailers that we've been talking about for, you know, it feels like two years, but it's only actually 15 months now.

Okay. And Dan, I'm just thinking out loud at that level, you're still going to be free cash flow negative probably in 22, hopefully not in 23. Okay. Is there a minimum level that you want to keep balance sheet cash at as you go through this process of bringing on more CapEx?

We don't have a magical target there. It is very important to us that we maintain a strong liquidity position. We finished the year at over $350 million. That's five straight quarters where we're at the elevated level, and our plan is to keep it at that. Somewhere we're in a comfortable position where we don't have to worry about the risk of short-term decisions.

Okay, great. That's all I have. Thank you.

Jeff, thank you for your time today.

This concludes our earnings call. I would like to turn the conference back over to the company for any closing remarks.

Thank you, Operator, and thanks again to everyone for joining us today. Please contact Tony with any additional questions that you may have. This concludes our call, and Operator, I'm turning the call back to you.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.