Covenant Logistics Group, Inc. (CVLG) Q2 2021 Earnings Report, Transcript and Summary

Excuse me, everyone. We now have all of our speakers in conference. Please be aware that each of your line is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. [Operator Instructions] I would now like to turn the conference over to Joey Hogan. Please go ahead.

Thanks, Olivia. Welcome to Covenant Logistics Group Second Quarter Conference Call. As a reminder for everyone, this call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties, and actual results could differ materially from those contemplated in the forward-looking statements. Please review our disclosures in our filings with the SEC, including without limitation, the Risk Factors section, and our most recent Form 10-K and our current year Form 10-Qs. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. A copy of our prepared comments and additional financial information is available on our new website, at www.covenantlogistics.com in the Investors section. I'm joined this morning by Paul Bunn, our Senior Executive Vice President and Chief Operating Officer; Tripp Grant, our Chief Accounting Officer. Our Chairman and CEO, David Parker is sick today and is on the phone but won't be participating on the call. First of all, we'll start with an adjusted EPS perspective. We've reported our best quarter in our history. And the team was able to improve on our record first quarter results by 71% to $0.96 per share and significantly versus the difficult second quarter of 2020. As we discussed in the first quarter, the multiyear transformation into a full-service logistics provider that we began in 2015, is really starting to gain traction. Second, I'd like to take a moment and thank our teammates for their contribution to these results. It's been the most difficult period, especially the last year, 18 months for everybody, the industry, not only our company, and I'm very proud to participate in this industry and I think our teammates the industry as a whole, has performed exceptionally all things considered to keep the economy moving and to continue to work hard in the supply chain. So, we want to say thank you to our teammates that are participating on this call. In summary, the key highlights of the quarter were: our operating freight revenue grew 29% to $232 million compared to the 2020 quarter. Second, our asset-based truckload group revenue grew 9% versus the second quarter of 2020 with 369 less trucks. Our less asset-intensive Managed Freight and warehouse segments grew a combined 89% compared to the second quarter of 2020. On the safety side, despite rising casualty insurance premiums, we produced another solid quarter with our DOT accidents per mile being 7% below the year ago period and our total cost down approximately $0.03 a mile. After a strong first quarter, our TEL leasing company investment produced another good quarter, contributing an additional $0.12 per share versus the year ago period. And then lastly, we're able to continue to capitalize on strong cash flows by reducing our net indebtedness by $35.2 million since the first quarter of this year. Regarding the business units, I'd like to make a few comments. First of all, the Expedited division continued its strong performance in the second quarter. The freight market continues to offer strong -- the freight market continues to be strong and offers rate and lane improvement opportunities, evidenced by a 43% improvement in revenue per truck per week. Please recall that last year we still had our solo division and the closure of that unit contributed to the 342 reduction in this unit. The resultant mix change is producing some big swings in comparisons but nevertheless an outstanding quarter with an 86 OR. Versus a very weak freight market last year, during the second quarter, revenue per mile for Expedited increased 10%, despite the length of haul increasing 31% and miles per truck increased a large 31%. The driver market continues to be a challenge with us instituting a second large driver pay increase in July of this year. Our overall team count has remained flat versus the first quarter of 2021. For the future, we are working diligently to solidify long-term capacity commitments with key Expedited customers, which to date we are very pleased with the results. Our Dedicated division made progress in the second quarter. We discussed at length during the first quarter call our improvement plan and we are slightly ahead of that schedule. There were huge growth in this division throughout 2020, as we merged three separate Dedicated fleets under common leadership and operating systems. The leadership structure has been resolved and the system merger was complete in May. Revenue per truck is beginning to move nicely. It's up 10% sequentially versus the first quarter and 17% versus the second quarter of 2020. All that is giving us great confidence toward reaching our mid to high 90s OR target for the third quarter. The third quarter includes the results of a lot -- the second quarter, includes the results of a lot of execution changes with key customers and we're extremely appreciative of the hard work of our dedicated and equipment management teams, as we work through this quarter. The new business topline growth with existing targeted accounts is very encouraging, which further feeds our optimism regarding our improvement plan. Our Managed Freight division doubled its revenue base versus a year ago, primarily driven by increases in some of our larger TMS customers and by significant growth in our brokerage freight. This unit works very closely with our Expedited and Dedicated divisions providing both committed and overflow and project capacity. The robust freight market plus continuing to capitalize on the full enterprise sales and service capabilities excite us, as we continue to drive this strategic growth unit. We are cautious about the long-term sustainability of the topline revenue and operating ratio in this unit, as gross margins and volumes can be volatile. The division leadership team is working diligently with current customers to currently satisfy their needs, but also help provide long-term stability for this business unit. Nevertheless, even at lower margins the return on capital is extremely high for this non-asset-based business. The Warehousing division continues its solid profitable growth. We had one large startup last year in the second half that is affecting the first half results, with revenue being up 33% versus the second quarter of last year. As a reminder, around the current revenue size, the growth in this can be choppy, as we expect revenue growth versus a year ago to level out in the second half, unless we have an additional startups in the second half. We do have a small startup planned early this fall. Overall, we are very pleased with the direction of this unit and may invest more in this unit in both sales and operations to facilitate faster growth in this high return on asset service. Regarding our outlook for the rest of the year. Although, we are not providing specific earnings guidance, we expect to have a very strong second half of 2021, which should mean meaningful improvement over a good second half of 2020 and likely continued generation of discretionary cash flow that can be allocated across a broad range of growth, debt paydown and stockholder return alternatives. We intend to remain acutely focused on three main areas. Number one, upgrade and improve our Dedicated division; number two stabilize and diversify within our Managed Freight division; number three sustainability and long-term capacity plans within our Expedited business unit. We believe all have good accountable plans with each leadership team focused on results. Achievement of each of these though will greatly benefit our goal of driving a stronger more profitable and more predictable business, with the opportunity of significant and sustained value creation. Olivia, that's all our prepared comments and now, we'll open it up for questions.

Thank you. At this time, we will open the floor for questions. [Operator Instructions] Our first question comes from Jack Atkins with Stephens. Please go ahead.

Okay. Great. Congrats on a great quarter guys and good morning.

Thanks, Jack.

Good morning, Jack.

So, I guess Joey going back to your comment on your outlook, and I'm not trying to put you on too much of a spot here. So just kind of bear with me for a minute. But your comment was you expect a really strong second half of this year relative to last year. Would you anticipate that your results in the second half of this year would be above maybe what you earned in the first half of this year? Just trying to get a feel for that, just so everyone can kind of get on the same page in terms of how you guys are thinking about the business as we go into the last six months of the year. And then I guess more broadly, if you want to kind of add on to that sort of what you're hearing from your customers around peak season? And how you think that could trend this year?

Yeah, Jack, I think – let's start with peak, because I think it impacts some of the answer to the first part of your question. Peak as you all have looked back let's say over the last three or four years, our peak revenue continues to slowly drop. We had one year, it was a pretty big move down. And that's been intentional. As we've kind of dropped back and looked at the overall impact of our capacity plan, talent management plan overhang into the first quarter it's heavy. It's an opportunity to make some money, but it's stressful, let's say it that way on our management team. And we're running a business for 52 weeks a year not six. And so as we thought through that and worked through that for years, and years, and years, and been very appreciative of what we've had we just felt that the commitment to that and the pricing to that needs to be even higher. So as we move that higher our volume has been slowly decreasing. Effectively now, we're down to one key customer that we support on peak. Pretty much the capacity commitment has already been made. It's going to be less than it was last year, but pricing is higher than it was last year. So you've got volume will be down. And last year, we did probably $15 million to $18 million I want to say in peak volume in the fourth quarter of last year. On a quarter that we're going to do 200 – let's say this year, we did $250 million. So the impact into the quarter for the fourth quarter is continuing to drop as the business transforms and as we strategically manage it differently. So that's it. As we look at second half, again, we're not giving specific guidance. Thank you for giving me that qualifier. Your question was do we expect second half to be better than the first half from an earnings standpoint, I would say, emphatically yes. So we expect to have a good second half of the year.

Okay. That's super encouraging to hear. And I guess, maybe following up on that and thinking more longer term here. Joey, you guys made – have made some comments in your prepared remarks around what you're doing to not only structurally improve the profitability of the business. We've been seeing those actions over the last 18 months but in a lot of ways add some sustainability and durability to the strength of the business that we've been seeing this year. Could you talk a little bit about the efforts that you and your team are taking to really kind of lock in to the extent that you can some of the business that's come your way this year as you think forward to maybe a time of the freight cycle that's not as favorable for Covenant?

Hi, Jack, this is Paul. How you doing?

I'm doing great. Good to hear you.

Good to talk to you. Yeah. We're entering into I would say longer-term partnerships with a number of customers with the goal of reducing the ebbs and the flows, or the volatility in the future. Really focusing a lot of that on the Expedited side, but also on the brokerage side Managed Freight side, we're doing that with some customers, where the goal is to probably give up a little bit of margin now, but to lock-in more volume over the longer term. And so both of those segments Managed Freight and Expedited are ones that are as you can see doing incredibly well. And so what we're trying to do is make deals where we can that minimize volatility in the future where – whether it's notice periods, whether it's asset commitments, whether it's pricing commitments, or how we're going to grade the price increases or decreases for customers. What we're finding is a number of our longer-term customers are really wanting to take this opportunity to make sure they have access to capacity. And it takes a variety of forms. We're being flexible to the needs of each of those shippers. And so we think the ones we've struck deals with thus far it's good for them and good for us.

Okay. That's great to hear Paul. I guess last question for me and I'll turn it over. But the balance sheet has come a long way over the last couple of years because of the actions that you guys have taken and the higher level of earnings over the last 1.5 years. I guess how are you thinking about cash flow in the second half of this year? And then how do you plan on deploying that cash? We've been reducing debt which I think is great for the long-term multiple of the company, but how are you thinking about maybe buying back stock from here, or what's the right debt level for the company as we move forward?

Jack, this is Tripp. I hope you're doing good. We made tremendous progress in the first half of the year with a paydown of a lot of debt. I think you're going to see cash flow soften in the second half of the year as we buy some new equipment. EBITDA is still going to be strong. You're probably going to see free cash flow in the neighborhood of $30 million to $40 million for the rest of the year. And then in terms of debt paydown I think we will continue to pay down some debt, but we're also evaluating a number of alternatives and how we're -- what we're going to do with that cash flow. So I can't say that it's going to go all to reduce debt but our mindset right now is to reduce debt as we get that cash flow and evaluate those options as they materialize.

I mean Jack I would add to Tripp's comment. There's no stated goal to be debt free by blank. So, we don't have that number one. Number two, the M&A market is very hot. We all know that. And it's actually really exciting. Some of the things have been done over the last few months this morning -- I mean it's an exciting time. And acquisitions have been part of our history at the right time. Right now though as it relates to M&A before somebody asks the question, it's not high on our list right now. We feel that there's too much earnings opportunity inside of our existing portfolio for the long term with much less risk. And so, we're going to stay focused on that at least through the first half of next year. We're -- kind of what would move that is around the three things that Paul -- well two of the things that Paul talked about I would say the third one get Dedicated in the low 90s and then how are we able to execute this kind of long-term sustainability capacity plan with some key customers in Managed Freight and Expedited. If we do well in all those 3 I think you'll see us start to explore some growth opportunities at the top line. But I agree 100% with what Tripp said as far as capital structure we're looking at a lot of things right now. A – Tripp Grant: Yes. There's been a tremendous amount and we've talked about this in previous calls, but there has been a tremendous amount of change and reorganization and all for the betterment and all for the development of our strategic plan. And when you think about an acquisition, we would be very, very picky about an acquisition. It has to be the exact right thing for us and fit into our strategic plan because again 100% committed to the strategic plan, and again also focusing the current business on where are we going to be in the down trough, where are we going to be when the cycle turns. So we want to make sure that we're in the best possible financial position when this cycle ends.

All that makes it a turn a fit. And I really appreciate the pulp of the spun. Thanks there, guys. A – Tripp Grant: Thanks Jack.

Thank you. Next we go to Scott Group with Wolfe Research. Please go ahead.

Hey, thanks. Good morning, guys. A – Tripp Grant: Hey Scott. Good morning.

Can you just share some thoughts for each of the businesses just directionally what you'd expect for margins in back half of the year?

Hi Scott, how are you doing. A – Tripp Grant: Be careful. Paul you should take that.

Yes. Expedited I would say Scott should continue probably along the same path that it's been on for the first half of the year. There could be some incremental improvement, but I'd probably guide more near where we've been. Managed Freight, as long as this freight market stays as hot as it is, I think you're going to continue to see about what you've been seeing. If the freight market cools down then you're going to see some volume and margin reduction in that business. Warehousing, I think you're going to see probably about what you've been seeing. And then the one I know you want to hear about is Dedicated and I think you're going to continue to see incremental improvement from Q2 to Q3 and from Q3 to Q4 on the Dedicated side. Getting this thing from running 100 OR, if you think about it the last half of last year and the first quarter of this year to the low 90s which is where we're guiding long-term on Dedicated, it's taken some time. But there's a plan and the plan is working and you should see improvement quarter-over-quarter for the balance of the year.

Let me add on a couple of comments from Paul on the Dedicated because he made a good point there. I was talking with somebody about it last night. Dedicated is a strategic business unit. It helps volatility for our earnings flow. It provides an incredible complement from a driver standpoint as far as options to our Expedited team members when they're tired to team in. And it just -- it's a nice complement in a lot of different ways. And so 1,600 truck feet in Dedicated is a good size a dedicated operation. So one of the things that -- about it that we really like is stability, consistency all of that. Well, when it gets into a changing time, if you will, it's not as quick to move as the OTR side i.e. Expedited or regional. It's just not as quick to move. We're choosing, not to quick as move. We could, but we're taking a very long-term strategic approach, industry, geography because we have contracts. And so, we're working very closely with our customers, with our operations team to be as I said very strategic and practical long-term focus because we're not I would call it in a desperation mode. The overall enterprise is performing well. So we're taking a very long-term approach to addressing Dedicated in that way. Another thing I would kind of point to back up in Managed Freight, there's no question that Managed Freight is performing exceptionally well. I've been excited to see some of our competitors and their logistics groups posting some very strong margins, maybe closer to where we are. In that unit though and just remember in a slowing freight market a lot of the -- let's say the brokerage pieces of your managed freight, your margins will expand. So your margins will expand. Now, some of the business inside of that is -- I'm telling you right now we're losing money. But again, we're taking a very long-term strategic approach to those type of customers some of them are kind of contractual. So as things slow, whenever that is, when everybody's crystal ball says that is those margins will expand. Now, there's some in there that are very spotty very projecty if you will. That's the group that when we're talking about trying to take a very long-term capacity plan approach with those customers. Yes, the margin is good right now on those. But we're working our tail off. I mean, we've got an incredible amount of working time both on sourcing, planning to make that happen and those customers. We're working hard with those customers to make sure that we're satisfying their needs while trying to take a long-term approach with that and let's say solidify a longer-term view of that business. So I just want to comment around that. Some of that Managed Freight actually the margin will get better. Some will probably erode back closer to market. But then in our Dedicated side, we're just taking a very long-term strategic view of that business unit as we improve it.

That's helpful. So I guess that leads me to my other question. So -- and maybe this is a tough one. But if you think next year is that year where things start to slow, and I'm not saying recession or anything just not as sort of hot as it is right now. And maybe there's a little less Expedited a little less spot. But to your point Dedicated getting better, maybe some of the contractual brokerage getting better. Is that an environment where you think you can grow earnings next year?

Yeah Scott. Thank you. That's the -- I think the big question right now. If you look -- here's the way I would say, the enterprise has some gas left in the tank. There's no question in our mind about that. And there are several things I would point to probably as you see it in the financials. Let's say our safety program at all in total is performing well. I think two, as you think about the transformation, we're kind of in, I would say in the second base relative to what I call the internal financial management system of that. I mean we haven't rocked all the way around the home play yet and absorbing a new system. We got 1,600 trucks. We've smooshed from four systems down into one. I mean we're -- the momentum, the internal energy and the inertia of making change and absorbing and understanding and going that's -- it's improving month-to-month. I think that the Dedicated -- the pipeline is good on Dedicated. But the driver market is extremely difficult, extremely difficult. And this is my 25th year. I've never seen it like this before ever. I've never seen it like this. I've never seen the market like this before. And so to have a market that we've never seen before in my opinion that we've ever seen before the natural side, the human nature side for all of this is when is it going to end. We know it's going to slow. So is it -- I have an opinion. I don't -- please I'm not trying to make this a political phone call. You got mid-terms coming next year. My gut says, we're going to continue to do what we can do to keep things moving well at all, because I think that that's an important piece to the “economic question.” So if that's correct, our own internal planning has this kind of business as usual at least through the first half, possibly starting to moderate maybe in the second half. So that said, I put all of that in hopper joy and answer my question he's asked around the universe trying to answer my question, we feel really good about what next year could do. Is it going to grow over this year? I think it's too early to say that right now, all things considered.

Yes. Scott this is Paul. One thing I would say is, I would say we're probably more focused not on whether earnings are up or earnings are down next year, it's more on keeping proving that low watermark. And you've been around Covenant a long time and a lot of people on the phone have. And if you go back to 2010, 2011, the low watermark was breakeven. And if you go back to the mid part of the teens, the low watermark was $0.50, $0.60 a share. If you go back to last year, the low watermark is about $1 a share. We are intently focused on increasing that low watermark when things are solved. And I think we're still modeling that out and -- but the low watermark is significantly above where it's been in the past.

Yeah, I think that's a really good point. If I can just ask one more, you mentioned it -- you referenced it, but what are your thoughts on Uber Freight acquiring Transplace and just big picture either for you or supply chains broadly? What if anything you think this means?

Scott, I hadn't had a lot of time. It definitely grabbed my attention. I still wish we own 10% of Transplace, but we don't. That's not 10-plus years ago. It's definitely -- I'm not going to comment. I just -- I think Transplace has done a lot of new things over the years very -- obviously intimate knowledge albeit dated about what the mission was. And so I'm excited for the leadership team. And as far as the impacts of all of that, I know Uber seems to have -- anyway I better be quiet. They seem to have taken a few side steps over the last couple of years. So this is obviously a big statement. So that's about all I'll say.

All right. Thanks for the time guys. Appreciate it.

Thank you Scott.

Thank you. Our next question is coming from Bert Subin with Stifel. Please go ahead.

Hey guys. Good morning and congrats on the solid quarter.

Thank you Bert.

Good morning Bert.

Hey guys. If nothing is really -- I'm just, sort of, following up to those comments. If nothing is really changing on the driver side, anything it seems like it's potentially getting harder in certain pockets within your segments, why do you think things will necessarily worsen on the rate side? Is that just a function of you've been through this before and when things get this hot, they tend to roll over at some point? Is that just the way you're looking at it?

Go ahead Paul.

Yes. Bert it's Paul. Here's what I'd tell you. You are right, in the -- driver situation is no better in July than it was in May or June. The equipment situation is no better in July than it was in May or June, I could argue it. It may be worse. Long-term trucks down at shops waiting on parks and all kind of stuff. And so here's what I would say to that. The rest of the year we see it being real similar to what we've seen in the last few months. If you look into next year here's my view on it. Historically, there's been kind of one big variable in the equation and that's been freight volumes, economy, and geopolitical and drivers have been a piece of that. But these cycles have moved based on freight volumes and the economy. Now, you've got three different variables in the equation. You've got drivers, equipment, and the economy. And so you got to have three crystal balls not just one. And so on the equipment side, everything we're hearing is it's a year before this equipment cycle, the park, and chips, and labor, and the shops and I mean -- so everything we're hearing it's a year that you can't get a new trailer, you can't get a new truck, you can't lease one, you can't rent one, you can't -- you can give them away that's all you can do. And so -- that said the equipment thing you can probably put some boundaries on and say hey it'll probably take about a year to get straightened out. Drivers and freight are the two that are out there that -- those are the wildcards. And to your point I don't think you hear us saying we're projecting rates to come down. I think we're projecting things to stay high. The volumes start dropping off at some point next year. It's a next year kind of thing from where we're sitting right now if then but it's so far out who knows. I'd say you're going to have three crystal balls, but nobody says rates are going down anytime in the near-term.

Okay. Yes, I appreciate the thoughts. Just one quick follow-up on that and then I got one more if you don't mind. You talked about the equipment side. What do you see as the path forward for you guys on the tractor side? Standing at this point at the end of 2022, do you think you're larger or smaller than you are today?

About the same. I mean -- and here's -- that's more a function of the driver crystal ball than it is the equipment crystal ball. We'll be able to get equipment at some point next year. It's will we able to get a good driver to put in the seat.

Okay.

Our plan is if we can find drivers where we are -- if Dedicated gets into the low 90s, closer to 90 we consider growing with the right customer, the right industry, the right geography, so yes. Expedited is doing exceptionally well rocketing towards its goal kind of mid-80s on a sustainable basis getting close. And so as they get closer to that target, again assuming we can put two people in the truck together with the right industry, the right long-term capacity commitment, we consider that also. So -- but it all comes back to not only overall profitability of the unit but also getting somebody willing to handle that job.

Got it. Yes. No that makes sense. Just one last quick one if you don't mind still sort of on the theoretical side. I mean when you guys look over the next six months clearly a lot of things going on. You got Dedicated moving. You've had Managed Freight clearly outperforming. If you stand here today what do you guys get excited about in the second half? And maybe what do you think are potential headwinds something outside of freight demand suddenly dropping off? What are the things you're looking out for?

I would say that the driver availability and equipment are probably the headwinds equipment downtime, parts, service, shops. But if those things continue to stay in place, it's going to continue to be a very -- we're not the only people in the world experiencing those problems. And so it's just going to -- those are just going to extend the cycle because it's going to keep capacity down, rates up. And so those are headwinds in the short-term, but they're cycle extenders in the long-term.

I'd add one. We disclosed this back in the first quarter when we renewed our insurance. I mean, just for -- we disclosed it. But we do have a $3 million deductible now. We can be doing a lot of things great. Our incident rate could be great. DOT accidents could be great. And we have one bad one. And it's just really tough, when that happens. But that's a lot of earnings that can happen all of a sudden, I would say. But, staying focused on reducing your incident rates and makes sure your compliance programs where it needs to be all of those things are the critical things, because we're in an industry that when you have a bad accident it gets costly. What am I excited about? I mean, I'm just excited about the transformation. And what I mean by that is, I mentioned it a little earlier but the only way you can see it is if you can be here and watch it. But it's the energy and the momentum of a distributed decision-making management team. It's not all one or two people making all calls. And so the teams -- as the time goes by, the confidence the speed of, the decision, the information is getting faster-and-faster-and faster and as well as more-strategic-more-strategic-more strategic. Because when you're in the ditch, you got to go fast. And sometimes you're just -- you're pulling all kinds of levers, just to help you get out of the ditch. But if you're not in the ditch and you're in the middle of the road and you're running down the road you can look really far down and you can really be strategic about what you're trying to do. And so that's to me from an old guy I've been here a while,…

Yeah.

…I'm most excited about.

And I'd add a little bit to that, as the new guy who's been here for a few years, looking back at last year and all of the things that we did to park trucks, and payer trucks. I mean, we were just using everything we could do to get us where we need to just see from an operating model perspective. And now I think we're being more strategic in the changes and are laser-focused on those items that we're making. And we're seeing the improvements hit the bottomline, whereas last year we were making substantial improvements for the long-term that were negatively impacting the bottom-line. So we've made a lot of progress in the plan and the excitement of the team that's involved with and are participating in and have transitioned into good results from an earnings perspective. And I'm excited about the upside and Dedicated. And I think -- for the rest of the business I think it's going to be a great year. And we're going to continue to focus on the plan. And get it where it needs to be.

Great. Thanks for the time.

Thanks, Bert.

Thanks, Bert.

[Operator Instructions] Our next question comes from Jason Seidl with Cowen. Please go ahead.

Hey. Thanks operator. Hi guys. Good morning. I only have one here. It's probably a little bit for Tripp. Tripp you talked a little bit about uses of cash going forward, but sort of given the outlook that you provided that the second half is going to be better than the first half. That puts you guys above the $3 a share mark. So given that the stock hasn't moved probably quite nearly as much as it should today at least in my opinion, would you guys be -- would you say you're going to be active buyers of your stocks around these levels once you get out of the blackout period?

I'd say we're evaluating that, as a potential opportunity for us to deploy that cash.

Here's the way, that I might point you that's all public. We had a share repurchase program back in the winter. We had an amount that was approved and disclosed. We executed part of that program and then it expired. And so, that's a fact. And so that's first. And then second, we feel better today about where we're heading than maybe we did back in the winter. So I think that, it's an exciting time and an opportunity to depending on how you look at it.

Got you I'll read those two as well. I appreciate the time gentlemen.

Thank you, Jason.

Thanks, Jason.

Thank you. And gentlemen, at this time, there are no additional questions in queue.

Olivia, we appreciate your help. And thanks everybody for joining us on the call. If you got any questions, please don't hesitate to reach out to Tripp or myself or Paul or David. And we'll talk to you next quarter. Thanks a lot.

Thank you.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.