Landstar System Inc (NASDAQ:LSTR) Q4 2022 Earnings Call dated Feb. 02, 2023.
Corporate Participants:
Jim Gattoni — President and Chief Executive Officer
Jim Todd — Vice President and Chief Financial Officer
Rob Brasher — Vice President and Chief Commercial Officer
Joe Beacom — Vice President and Chief Safety & Operations Officer
Analysts:
Todd Fowler — KeyBanc Capital Markets — Analyst
Scott Group — Wolfe Research — Analyst
Jack Atkins — Stephens Inc. — Analyst
Bruce Chan — Stifel — Analyst
Bascome Majors — Susquehanna International Group — Analyst
Stephanie Moore — Jefferies — Analyst
Daniel Hultberg — Oppenheimer & Co. Inc — Analyst
Jason Seidl — Cowen & Co. — Analyst
Presentation:
Operator
Good morning, and welcome to Landstar System Inc.’s Year-End 2022 Earnings Release Conference Call. [Operator Instructions]
Joining us today from Landstar are Jim Gattoni, President and CEO; Jim Todd, Vice President and CFO; Rob Brasher, Vice President and Chief Commercial Officer; and 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.
Jim Gattoni — President and Chief Executive Officer
Thank you, Bill. Good morning, and welcome to Landstar’s 2022 fourth quarter earnings conference call. 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 2021 fiscal year described in the section Risk Factors and other SEC filings from 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 such forward-looking information and Landstar undertakes no obligation to publicly update or revise any forward-looking information.
Note throughout these remarks that the 2022 fourth quarter included 14 weeks of operations and the 2021 fourth quarter included 13 weeks of operations. Once again, Landstar delivered record financial results in fiscal year 2022. Our record performance in 2022 followed another record year for Landstar in 2021. Among many new annual financial records, we established in 2022, Landstar achieved record annual revenue of $7.4 billion, $900 million higher than the previous annual record set in 2021. Diluted earnings per share in fiscal year 2022 was an annual record of $11.76, an increase of $1.78 or 18% above our prior fiscal year record of $9.98 in 2021.
During fiscal 2022, Landstar generated a record free cash flow of $597 million. Additionally, during fiscal year 2022, Landstar paid dividends of $116 million and purchased $286 million for the company’s stock. In December, the Board declared an additional dividend totaling $72 million to be paid in January 2023.
Within our record financial performance in 2022, the 2022 first quarter proved to be a peak following six consecutive quarters of strengthening in the macroeconomic freight environment. As we move further into the year, supply chain congestion began to ease and the macroeconomic freight environment, although still relatively strong by historical standards began to weaken, not unlike typical cyclical patterns historically experienced into the best domestic freight environment.
Beginning in the 2022 second quarter, Landstar experienced a deceleration in quarter over prior year quarter growth rates for both truck revenue per load and the number of truckloads that ultimately led to truck revenue per load and the number of loads hauled via truck in the 2022 fourth quarter to both be below the 2021 fourth quarter. Heading into the 2022 fourth quarter, it was clear these cyclical conditions were continuing. As such, during our October 22nd, 2022 third quarter earnings conference call, we provided 2022 fourth quarter revenue guidance of $1.775 billion to $1.825 billion, below the 2021 fourth quarter revenue by 6% to 9%.
The guidance anticipated truck volume to decrease from the 2021 fourth quarter in a range of 2% to 4%, even given the extra week in the 2022 fourth quarter. And revenue per truckload to be 5% to 7% below the 2021 fourth quarter. 2022 fourth quarter loads hauled by truck were 6% below the 2021 fourth quarter and revenue per truckload was 7% below the 2021 fourth quarter. Note that the number of truckloads hauled by Landstar reached an all-time record level in the 2021 fourth quarter and remain relatively strong by historical standards throughout 2022.
Although revenue came in below the low end of the earnings guidance, earnings per share came in at the low end of the guidance. This can be attributed to a higher variable contribution margin than projected, along with lower SG&A and other operating costs in the 2022 fourth quarter as compared to the estimated amount reflected in the guidance.
As compared to the 2021 fourth quarter, revenue hauled via truck was $211 million or 12% below the 2020 fourth quarter, approximately 16% when excluding the estimated truck revenue of $60 million contributed by the extra week in 2022 fourth quarter. And revenue hauled via other modes was almost $60 million below the 2021 fourth quarter. While we experienced a 12% decrease in truck revenue from the 2021 fourth quarter, to be fair, one needs to put the impact of the pandemic-driven demand and supply chain congestion in perspective.
Since the end of the summer of 2020, strong consumer demand, along with supply chain congestion drove truck rates and volume to historic highs. Landstar’s two-year growth in truck volume from the pre-pandemic fourth quarter of 2019 to the record 2021 fourth quarter was 37%. Truck revenue per load grew 39% during that same time period. We expect that, that growth was going to subside as supply chain disruptions eased and economic cyclicality returned to the freight industry, and when that happened, year-over-year comparisons will become very challenging. Leaving aside the tough quarter over prior year quarter comparisons, we experienced in the 2022 fourth quarter, truck revenue in the 2022 fourth quarter was still 68% higher than that of the pre-pandemic 2019 fourth quarter.
Revenue hauled via van equipment in 2022 fourth quarter was $154 million lower than the 2021 fourth quarter, but $373 million above the 2019 fourth quarter. Revenue hauled via on-site and flatbed equipment in the ’22 fourth quarter was only $13 million below the 2021 fourth quarter, but a $121 million over the 2019 fourth quarter. And revenue generated via other truck transportation services, mostly power-only services was $48 million lower than the 2021 fourth quarter, yet a $116 million above the 2019 fourth quarter.
Clearly, the van market was more favorably impacted by the pandemic-driven consumer demand than the unsided flatbed market throughout the past two years. Van loadings in the 2022 fourth quarter were 5% lower than the 2021 fourth quarter. Unsided flatbed loadings were 2% below the 2021 fourth quarter and other truck transportation loadings were 16% below the 2021 fourth quarter.
After the decrease in van and other truck transportation loadings, the number of loads hauled via our substitute line haul service offering, primarily on van equipment and some power-only moves was 35% below the 2021 fourth quarter, even with the extra week in 2022. Additionally, load count from consumer durables, building products and food stuffs were down 8%, 6% and 31%, respectively from the 2021 fourth quarter.
One of the few volume growth areas was in automotive parts and materials, which grew 13% over the 2021 fourth quarter. New agents as of the end of 2022, which we define as agents who contracted with the company on or after the beginning of 2021, contributed $144 million of revenue in the fiscal — in fiscal 2022. This followed new agent revenue of $181 million in 2021. Our agent base is strong and these new agent additions will continue to drive new customers and truck volume into the network. During 2022, there were 625 agents who generated over $1 million of Landstar revenue. This is the highest annual number of million-dollar agents in Landstar history. Turnover for million-dollar agents is typically very low. During 2022, million-dollar agent turnover was only 2%, in line with historical million-dollar agent turnover rates.
We ended 2022 with 11,281 trucks provided by BCOs. The number of trucks provided by BCOs decreased 583 trucks or 5% from the beginning of 2022. Overall, BCO truck turnover was 29% in 2022 compared to 21% in fiscal year 2021. A decrease in a number of trucks provided by BCOs is typical during a cycle of decreasing revenue per mile. In December 2022 compared to December 2021, revenue per mile on van equipment hauled by BCOs decreased 16%. In December 2022 compared to December 2021, revenue per mile and on-site equipment hold by BCOs decreased only 2%. In each case, revenue per mile excludes the impact of fuel surcharge billed to shippers as 100% of fuel surcharges billed to customers are excluded from Landstar’s revenue and paid a 100% to the hauling BCO. In fiscal year 2022, total fuel surcharges billed to customers paid a 100% of BCOs were $445 million compared to $260 million in fiscal year 2021.
I’ll now pass it to Jim Todd to comment on additional P&L metrics and a few other fourth quarter financial statement items. Jim?
Jim Todd — Vice President and Chief Financial Officer
Thanks, Jim. Jim G has covered certain information on our 2022 fourth quarter, so I will cover various other fourth quarter financial information included in the press release.
In the 2022 14-week fourth quarter, gross profit was $180 million compared to gross profit of $209.8 million in the 2021 13-week fourth quarter. Gross profit margin was 10.7% of revenue in the 2022 fourth quarter as compared to gross profit margin of 10.8% in the corresponding period of 2021. In the 2022 fourth quarter, variable contribution was $234 million compared to $263.3 million in the 2021 fourth quarter. Variable contribution margin was 14% of revenue in the 2022 fourth quarter compared to 13.5% in the same period last year. The increase in variable contribution margin compared to the 2021 fourth quarter was primarily attributable to an increased variable contribution margin on revenue generated by truck brokerage carriers, as the rate paid to truck brokerage carriers in the 2022 fourth quarter was 294 basis points lower than the rate paid in the 2021 fourth quarter.
Other operating costs were $10.3 million in the 2022 fourth quarter compared to $9.4 million in 2021. This increase was primarily due to increased trailing equipment maintenance costs, partially offset by increased gains on sale of operating property.
Insurance and claims costs were $29.6 million in the 2022 fourth quarter compared to $30.3 million in 2021. Total insurance and claims costs were 5% of BCO revenue in the 2022 period and 4.2% of BCO revenue in the 2021 period. The decrease in insurance and claims costs as compared to 2021 was primarily attributable to decreased net unfavorable development of prior year claim estimates, partially offset by an increased severity of accidents during the 2022 period. During the 2022 and 2021 fourth quarters, insurance and claim costs included $3.8 million and $5.2 million respectively, of net unfavorable adjustments to prior year claim estimates.
Selling, general and administrative costs were $56.1 million in the 2022 fourth quarter compared to $62.6 million in 2021. The decrease in selling, general and administrative costs was primarily attributable to a decreased provision for incentive and equity compensation under our variable compensation programs and decreased employee benefit costs, partially offset by increased wages and an increased provision for customer bad debt. In the 2022 fourth quarter, the provision for compensation under variable programs was $5.3 million compared to $16.8 million in the 2021 fourth quarter.
Depreciation and amortization was $14.8 million in the 2022 fourth quarter compared to $13.1 million in 2021. This increase was almost entirely due to increased depreciation on software applications resulting from continued investment in new and upgraded tools for use by agents and capacity.
The effective income tax rate of 24.7% in the 2022 fourth quarter was 140 basis points higher than the effective income tax rate of 23.3% in the 2021 fourth quarter as the effective income tax rate in the 2021 fourth quarter was favorably impacted by the resolution of certain state tax matters. In addition, the effective income tax rates in the 2022 and 2021 fourth quarter were each unfavorably impacted by the impairment of deferred tax assets related to employee equity compensation arrangements as a result of performance conditions being attained as of year end. The increase in the effective income tax rate in the 2022 fourth quarter as compared to the 2021 fourth quarter drove approximately $0.05 of the $0.39 quarter over prior year quarter earnings decline.
Looking at our balance sheet, we ended the quarter with cash and short-term investments of $394 million. Cash flow from operations for 2022 was $623 million and cash capital expenditures were $26 million. The operating cash flow generation of $623 million during fiscal year 2022 was more than double the previous annual record operating cash flow of $308 million in fiscal year 2019.
Back to you, Jim.
Jim Gattoni — President and Chief Executive Officer
Thanks, Jim. As it relates to our 2023 first quarter guidance, recent trends in truck revenue per load and load volume indicate the continuation of a softer freight environment, consistent with cyclical trends we believe we have seen return to the marketplace over the last three quarters. As to truckload cap, we generally experienced a 2% to 3% sequential decrease in volume from the fourth quarter to the first quarter. Excluding the extra week from the 2022 fourth quarter, a truckload volume assumption has volume decreasing at a slightly more rapid rate than the historical typical range as demand softening has continued into the beginning of the 2023 first quarter.
Revenue per truckload trends from the fourth quarter to the first quarter have been inconsistent over the past several years. Over the past several weeks, revenue per truckload has drifted down, which is often the case in January. We finished 2022 with revenue per load approximately 10% below where we were as of the beginning of 2022. And our expectation is we could experience an additional 5% to 7% decrease in revenue per load during the 2023 first quarter.
Note that revenue per truckload reached its all-time high at Landstar in February 2022 and experienced levels without historical precedent throughout much of the 2022 fist quarter. As a result, the revenue per truckload comparisons for the 2023 first quarter compared to the record revenue per truckload established from the 2022 first quarter makes for an extremely difficult year-over-year comparison.
Overall, we expect revenue in the 2023 first quarter to be in the range of USD1.400 billion to USD1.445 billion and diluted earnings per share to be in a range of $2.05 to $2.15. This earnings estimate anticipates variable contribution margin ranging 14.2% to 14.5%. Although we do not plan on providing full-year earnings guidance due to the unpredictable nature of the spot market. Jim will cover our estimates of cost and expenses for fiscal year ’22 as they are more predictable and fixed in nature. Jim?
Jim Todd — Vice President and Chief Financial Officer
Thanks, Jim. With respect to my expectations for Landstar’s full year other operating costs, assuming a normalized provision for contractor bad debt, I estimate 2023 other operating costs would increase by USD1 million to USD3 million as increased trailing equipment maintenance costs and increased transaction costs associated with the software rollout are partially offset by increased gains on sales of used trailing equipment.
With respect to anticipated insurance and claims costs, I continue to believe 4.5% of BCO revenue is the appropriate measure to utilize, but we will continue to reevaluate each quarter. My base case assumption on selling, general and administrative costs is a USD3 million to USD6 million increase year-over-year, assuming a normalized provision for customer bad debt. Included in that base case assumption is approximately $12 million of tailwinds from potential decreases in the company’s variable compensation programs. In a hypothetical 20% revenue decline scenario, those tailwinds could grow closer to USD18 million to USD20 million, which will result in a slight decrease in selling, general and administrative costs year-over-year.
I expect depreciation and amortization costs to increase USD4 million to USD6 million [Phonetic] year-over-year, depending on the timing and ultimate acquisition cost of new trailing equipment. I also expect that the information technology headwinds we have experienced on this line in recent periods will begin to recede in 2023, as a greater portion of our IT spend is expected to shift from initial development work to maintenance and enhancements of existing in-service digital tools and products.
Back to you, Jim.
Jim Gattoni — President and Chief Executive Officer
In closing, and as previously mentioned, the macro freight environment gathered strength from late summer 2020 through 2021 and drove Landstar’s truck revenue to historic highs. 2021 fourth quarter truck revenue was 91% above the pre-pandemic 2019 fourth quarter. The prior upmarket cycle reaches peak in the 2021 fourth quarter and 2022 first quarter and was followed by decelerating year-over-year growth rates in truck revenue per load and volume beginning in the 2022 second quarter.
Regardless of challenging year-over-year comparisons, a less robust freight environment and the inflationary pressures of labor, equipment and insurance costs, the resiliency of the Landstar variable cost business model continues to generate significant free cash flow and financial returns. For example, if we were to experience a 20% revenue decrease from the $7.4 billion of revenue reported in fiscal year 2022, we believe Landstar could still generate an operating margin, representing operating income over variable contribution of 50% or more.
We also expect free cash flow to exceed $350 million under that scenario. 2021 and 2022 were historic years at Landstar during which the company achieved new levels of record financial performance that resulted in Landstar’s historically strong business and balance sheet becoming even stronger than before. 2023 has its work cut out for it due to the tough comps to prior year and a less robust freight environment to start the year. Nevertheless, we have been through many business cycles before and we still expect nothing less than 2023 being a terrific year by historical standards with anticipated annual revenue well above pre-pandemic levels.
And with that, Bill, we will open to questions.
Questions and Answers:
Operator
[Operator Instructions] And we have the first question coming from the line of Todd Fowler of KeyBanc Capital Market. Your line is now open.
Todd Fowler — KeyBanc Capital Markets — Analyst
Hey, great. Good morning, everybody. Jim, I guess to start on the revenue per load commentary for the first quarter, it sounds like that the down 5% to 7% is in line with what you see from a typical seasonal standpoint. But you’ve got a little bit of easier comparisons coming off of the fourth quarter. And I think that on a year-over-year basis, it kind of implies like a mid-teen decrease. Can you just comment on do you feel that that’s reflecting where the market is or a little bit of a lag in kind of how your pricing flows through on the revenue per load side? And then just some expectations maybe as we move through ’23 for revenue per load during the year?
Jim Gattoni — President and Chief Executive Officer
Yes, I would say that generally, we do lag a little bit in the market by three, four weeks or so based on the reaction time of the shippers and agents kind of coordinating pricing. But I wouldn’t say it’s substantial. I would say that the market trends that we’re seeing today are probably a little more true at the market than we typically see as in our business. We did trend down into December, but I’m not sure with the dynamics we’re seeing in the marketplace right now that we wouldn’t continue to trend down the way we have in January. We did go through the fact that December was a little lower than we anticipated and would that drive a less drop into January, but we’re not experiencing that.
So I think we’re still pretty comfortable. We’re going to see that normal drop from being 10% in the fourth quarter, below the first quarter with plus another 5% to 7% drop will be that mid-teen drop off in the first quarter. We’re not seeing — I would say we’re seeing a little bit of — I don’t want to call it stable, but it’s a little more stable, I guess, than it has been over the last three or four weeks. But again, still pretty unpredictable because things have been flipping back and forth pretty quick over the last several months. As it relates to the year, we would — if you go back to the last two years, I would always say that I believe in cycles, regardless of the pandemic, I still think we’re going to — the spot versus contract cycle is going to happen.
And capacity tightens and you need business and spot markets climb and then it loosens and people go to contract and spot market drops. I was saying that for the last two years that we’re going to cycle down. And if you believe in cycles, our peak was in February, right? We went from August of ’20 to February of ’22. It was about 18 months from what I would say was like throughout the peak. And if you think another 18 months of peak-to-trough, that puts you back somewhere in the summer. And being a believer in cycles, I would project that things will start to improve and we’ll get a little bit more rate seasonality as it climbs into the third and fourth quarter. So that would be my guess is where we’re headed. It’s kind of what we’ve talked about here and what we expect to happen in the back half actually is that we see the spot market to drive rates up a little bit. Again, I’m not talking like tremendous, I’m talking seasonally normal increases in rates from Q1, maybe not to Q2, but into Q3 and Q4.
Todd Fowler — KeyBanc Capital Markets — Analyst
Yes. No, all of that makes sense. And I would say that it’s been surprising that it does turn out that it feels like a cycle even sometimes when it doesn’t. So just a quick follow-up, and I know you went through the detail on the end markets, but are you seeing any difference now? It feels like going through a lot of last year was more on kind of the consumer durable side slowing. It looks like some of your industrial end markets are still holding in relatively well. But just kind of any general comments between end markets where you’re seeing some strength and softness? Thanks.
Rob Brasher — Vice President and Chief Commercial Officer
Hey, Todd, this is Rob. Specifically on the output equipment plan, we’re seeing a lot of positive trending on heavy-haul projects. We’re seeing a lot of heavy equipment really pick up for us from the manufacturers direct. Now that could be the fact that again due to supply chain constraints that they’re now filling orders that they couldn’t over the past year and a half. But to that point, exactly to the cycling up and cycling down, more so in the metals and some of that more specialized open equipment freight, we’re seeing that come down, which is a typical cycle because it’s winter time, right? There’s not a lot when the ground freezes up north, there’s not a lot of those projects that are going on. But we do anticipate, as the season warms up and the year moves on, that will continue on an upward basis.
Automotive continues to be where it’s been both from a van and a flatbed perspective for us. When you look at the automotive suppliers and you talk about the business that we’re doing, I don’t know if they’re going to be caught up any time this year. That’s really hard to predict, but it doesn’t look like they are. So that will continue in that trend.
Todd Fowler — KeyBanc Capital Markets — Analyst
Got it. Thanks for the time this morning. I’ll pass it along.
Jim Gattoni — President and Chief Executive Officer
All right.
Operator
Thank you. We have the next question coming from the line of Scott Group of Wolfe Research. Your line is now open.
Scott Group — Wolfe Research — Analyst
Hey, thanks. Morning, guys. So yes, just wanted to get more of your perspective, Jim, on just the cycle. It sounds like you’re hopeful that rates bottoming Q1, Q2. So if you look, we have this from trough-to-peak, a 60% plus increase in rates and we’re getting close to the trough, a 20% or so drop from peak-to-trough. Does that sort of — you got a long history or does that sort of drive with what you’ve seen in prior cycles that we can hold on to most of these pricing increases?
Jim Gattoni — President and Chief Executive Officer
I would say that the timeline of the peak-to-cycle kind of — 18 to 24 months kind of make sense. But we’ve never had a trough-to-peak of 60% growth. So I think lot of the discussion is, then what’s your peak-to-trough? And seeing a little bit of where the rates sitting today is the trough down 20% or 25%. I don’t — you’re not going to go down 60%, clearly. I don’t believe we’re going to go back to 2019 levels. You just can’t because — so much more cost in the system move with inflation and insurance costs, I don’t see how the industry can bring rates back to that level. I’m kind of comfortable with what we’re seeing in the first three or four weeks of January, has got us heading slowly down and not driving down into a 60% drop off. So I’m pretty comfortable that with kind of the commentary is, I’m not sure we continue to drop into the second quarter. I would say that maybe we get a little improvement in the second quarter. And then from there, we get better improvement for spot markets more seasonal.
Scott Group — Wolfe Research — Analyst
So from a —
Jim Gattoni — President and Chief Executive Officer
Okay. The high to lows over the last two years have been crazy, right? Before that, it moved 10% or 15% from peak to trough. And not just pandemic drove it to new highs. And like I said, I just don’t think it pulls back that far, as far as it grew because of the cost structures.
Scott Group — Wolfe Research — Analyst
Right. Do you have a view on where we are contract for spot? And then maybe just to your point about how much costs are up, right? We saw some big drop in the BCO count and the approved broker carriers just — what you’re seeing in terms of capacity? Any update on how that’s trending in Q1?
Rob Brasher — Vice President and Chief Commercial Officer
Yes, this is Rob. From a pricing perspective, there are still real pressures on rates right now. And those pressures are because of the huge drop in spot market rates. I don’t know where we are, to Jim’s point, I think they’re starting to stabilize a bit. Assets have been pushing back for a long time because of their increased operating costs and the increases they put into their system. We are starting to see those carriers and those contract rates a little bit relaxed and start to succumb to some of the pricing pressures. I don’t know — so I think it’s weakening. I don’t know that we’re at the bottom. But from our perspective, I do think there’s some stabilization from a rate standpoint, spot to a contract.
Joe Beacom — Vice President and Chief Safety & Operations Officer
Yes, Scott, this is Joe. I’ll take the BCO and the capacity question. So it — we’ve seen we’re going to — we’re predicting that the first quarter will look a little bit a lot like the fourth quarter as far as a net decline. And really what’s driving that really doesn’t change. It’s — if you think about our model, on the ad side, we’re really — if guys can’t get used trucks, then it kind of makes it hard for them to come out of other systems and come here. The interest in Landstar is still strong, but a lot of that interest is predicated on identifying and finding a truck.
So as you see more broadly, as newer trucks get put into different systems and those come into the market, then that feeds to the used truck market. And as that availability and that price begins to be rational, I think you’ll see the ad thing kind of fix itself. And on the retention side, it’s really about the parts and labor to keep the existing equipment running. As you probably know, on the BCO side, they’re running used equipment. And you’ve seen the inability, where we’ve seen the inability to get trucks repaired and repaired timely, really affect our utilization throughout all of 2022 and that continues into ’23. So as that used truck market improves as the ability to get parts and get tax [Phonetic] into shops and get equipment back on the road, we think that helps a great deal because it’s really been pretty disruptive for the last few quarters.
And then you can — stabilization of demand, I think, also is a big factor on the BCO side. Once that price levels off, as we’ve just discussed, I think you’ll see a greater interest in coming back into the fleet, which I think a lot of these guys are currently sidelined. And you really don’t see a dramatic difference in my view from where the BCOs are challenged with carriers, about — over 60% of our brokerage business is on carriers of less than 10 trucks and they’re seeing a lot of those same supply-related, cost-related inflation and access to equipment-related challenges that everybody else is.
And so I think they’re — a lot of them are just trying to fight through it. It’s really, I think, a very tough condition for a lot of truckers in the marketplace today. And as some of these things that are out of their control, come back in their control, I think we’ll bounce back. But I think that’s going to be a couple of quarters.
Scott Group — Wolfe Research — Analyst
Okay. Thank you for the time guys. Appreciate it.
Joe Beacom — Vice President and Chief Safety & Operations Officer
Yes.
Operator
We have the next question coming from the line of Jack Atkins of Stephens. Your line is now open.
Jack Atkins — Stephens Inc. — Analyst
Okay, great. Thank you for the time. Really appreciate it, guys. Good morning. So I guess maybe kind of a macro question divided into two parts. I guess, one for Joe, one for Rob. But I guess, as you sort of think about — on the industrial side, I think there’s a lot of concern about the potential for destocking of industrial inventories. Similar to what we’ve been seeing over the last nine months or so on the retail consumer side. I’d just be curious if your customers are telling you anything about the potential need to do that? And then, I guess, just following up on Scott’s question about capacity, given the pressure on small fleets, are you seeing any signs that capacity is exiting the market or maybe that capacity exit is accelerating in any way? I know that’s a long question, but would just be curious about both those things.
Joe Beacom — Vice President and Chief Safety & Operations Officer
Yes, I’ll start, Jack. I think, yes, just based on the FMCSA data and some of the stuff we’re reading, the net revocations of carrier authorities has really — it’s been like 6,000 to 8,000 a week for the last several weeks of 2022. And we’ve seen our approved carrier count decline as well into the first quarter. So I think you’re going to continue to see that. I think until some of the conditions I was just referring to with Scott, kind of find a floor and start to see some level of consistency or predictability, whether it’s predominantly getting trucks fixed getting drivers, the labor side of things and keeping their trucks healthy and again, just feeling comfortable with where the environment is. I think you’re going to continue to see the larger market contract a little bit from a capacity standpoint and particularly in the small carrier realm, which is a lot of that one to 10 truck fleets.
Rob Brasher — Vice President and Chief Commercial Officer
And Jack, this is Rob. To address the destocking comment, that is not something that we’re experiencing or having those conversations again due to a lot of the constraints that have taken place over the last two years. We’re really starting to see a lot of the projects come back in the aerospace and the energy, automotive, government, things of that nature. So where they couldn’t get supplies before or they couldn’t actually fulfill their projects or orders, we’re starting to see those now come to fruition and continue going forward.
Jack Atkins — Stephens Inc. — Analyst
Okay. No, that’s really helpful. And I guess, Rob, another question for you and Jim Gattoni, Jim Todd, sorry. No questions for you from me on the call today. But I guess, Rob, I’d love to get your thoughts on Landstar Blue in 2023, sort of what’s the plan for that part of the business this year? And sort of I guess — as you think about that kind of as a springboard into 2024, what do you hope to accomplish to prepare that? I think we’re looking at that as a potential growth engine, but would just be curious if you could maybe talk about what the plan is for Landstar Blue in 2023?
Rob Brasher — Vice President and Chief Commercial Officer
Yes, absolutely. Landstar Blue is the volume growth mechanism. That’s what we’re there for. And we see this as a time of opportunity because, as I’m sure you’re hearing from others, companies are putting their freight up a bit, companies are looking for partnerships, they’re looking for solutions. Now a lot of the reasons why they’re doing it is in their mind, is to drive rates down or get the rates back to where they were, but it gives us an opportunity into lanes, into places that we haven’t been, into different sections of their business to continue to grow that. So we look at it as an opportunity. The more customers that we’re in front of talking about their supply chains, their needs in trying to provide solutions, I look at that as a benefit to that company.
Jim Gattoni — President and Chief Executive Officer
From an organizational standpoint, I know, Jack, I had to jump in because I know you weren’t going to ask me a question. So I’m jumping in anyway. We are working like crazy trying to get, Rob, all the automation into his systems for — to automate dispatch capacity stuff like that. So there’s — I don’t want to say we are pulling — I don’t say we’re holding back on growth there, but we’re doing it properly and we don’t want to disturb anybody supply chains until we get automated.
Jack Atkins — Stephens Inc. — Analyst
Okay. All right. That makes sense. Thanks again for the time and thoughts, guys. Appreciate it.
Operator
We have the next question coming from the line of Bruce Chan of Stifel. Your line is now open.
Bruce Chan — Stifel — Analyst
Hey, good morning, everyone. Appreciate the time here. Jim — Jim Gattoni, I guess, maybe just to follow-up on that automation comment. You all talked about a lot of the new technology investments that you’re making and how that’s going to start to ramp down this year. Can you maybe just give us an update on what those are and as far as the automation, how far you are along in that process and what the rollout looks like?
Jim Gattoni — President and Chief Executive Officer
We’re dealing in two different worlds. Once we started off Blue — Blue is right, more contract dedicated lane type business and it requires a little bit of automated dispatch and all, not that the agents can use that. And we’re kind of experimenting a Blue to build out tools for the agents. On the core side, which is the agent is it took a good six or seven years to build out a TMS. And the TMS is really the order to delivery system that the agents use to put the orders in, to dispatch a truck, to monitor the — not to monitor, but to just provide the transaction to a certain workflow.
On top of that — so that’s one — that’s our biggest spend is building out that new TMS. So that’s the biggest part of the spend we’ve had over the last five or six years. But we’ve attached a pricing tool to it, we’ve attached a credit tool to it. Trailer — we’re rolling out a new trailer maintenance app to help the drivers identify — to more easy get trailers maintain, more easily get trails maintained. Trailer request tools, Clarity, which is our visibility tool, which is where you can — how we track freight. Those are all connected in, right? So they’re always separate components of technology that lead into the successful move of freight from point A to point B with the proper communications. All those are actually up and running over the last year or two when they’re starting out, they’ve moved off of the — sitting in our balance sheet as an asset and they’re starting to roll out. Now since they’re rolled out, we depreciate them. So all that stuff is very far along.
The TMS is probably — it’s starting to roll out, the rollout is getting a lot quicker. I would say it’s probably made 15% of our truckloads are in it, but we’re shooting for getting that ramped up this year, so most of the agents be on it. And when you speak to some of our agents in the first 90 days, change is hard. So I don’t talk to a guy that has been it for 90 days, talk to the guy that has been in for 120, and you’ll get very favorable feedback on the efficiencies that are built into the way they do their business.
Bruce Chan — Stifel — Analyst
Okay. That’s great. Really appreciate all that color. And then maybe, Rob, just one follow-up. You mentioned some of the glimmers of positivity on the flatbed side. We’ve heard some discussion on a few of the industrials conference calls about mega projects this year, whether that’s related to chips or Inflation Reduction Act. Just wanted to know if you’re able to attribute any of that positivity on the unsided side to that project business there?
Rob Brasher — Vice President and Chief Commercial Officer
To the project business, again, a lot of what I’ve seen is heavy equipment, aerospace, government — so while any time that we want to talk about infrastructure, anytime we want to talk about that, I can’t directly say that we have an impact in that directly, but I can say that the people that feed those projects, we have an impact with them. I don’t know if I answered your question exactly the way you wanted. But I see it more from the manufacturing side than I do it from the actual project excellence [Phonetic] side.
Jim Gattoni — President and Chief Executive Officer
Right, you’re seeing it from the supply chain lower down the supply chain, the raw materials and the equipment going into those projects as opposed to the — we’re not getting hired by the person running the project, we’re getting hired by the supplier supplying the stuff in.
Bruce Chan — Stifel — Analyst
Got it. Fair enough. Appreciate it.
Operator
We have the next question coming from the line of Bascome Majors from Susquehanna. Your line is now open.
Bascome Majors — Susquehanna International Group — Analyst
Yes, Jim, thinking about your hypothetical 20% revenue decline downside scenario, one thing you’ve really been good at over the years is outgrowing the market in a volume perspective and protecting not all of that, but a lot of that in downturns. Can you talk a little bit about if a scenario were to present itself where revenues were — fall 20% or close to that, like, where would you have to really break the model? Is it volumes would have to do something that they really haven’t done or is it just a rate reversion that’s more commensurate with the rate inflation? Can you just walk us through where you would be most surprised if we did print a 20% revenue decline for 2023? Thanks.
Jim Gattoni — President and Chief Executive Officer
Surprised that we had a 20% revenue decline. Well, our revenue decline in the first quarter is above that. So I mean, what we build into the year. First off, let me say that we look at what the street has us at for revenue. And if you look at what the street has and what we’re putting out as the first quarter, clearly, we have to improve off of the first quarter and we have to see that seasonal norm. And when I think about what that means is we’re going to see pricing strength coming into the back half and then the volumes trending off the first quarter, pretty normal seasonally. I — the unpredictable piece of our model, typically, as you know, is the spot pricing and how that moves month to month and quarter to quarter.
Never really surprising, maybe sometimes to the degree I see it move, but we do expect and kind of project that out a little bit in the short term and the long term. I wouldn’t be surprised if it move up or down 10% from now until the end of the year, it’s just very difficult. The volume size is the one that surprises us more than anything because we do see consistency, as you said, year-over-year and month-to-month, there’s a lot of consistency.
So if we were more than the 20% down and it was a volume-driven thing, I think we’d be looking at ourselves trying to figure out what happened and what — do a deeper dive. Typically, when we see that drop, though, you look at industry rates and we’re not dropping more than the industry is. So if we saw volumes down more than what the industry was down, I’d be surprised and concerned.
Bascome Majors — Susquehanna International Group — Analyst
Thanks for walking through that. And just one more clarification. You talked a lot about rates earlier. If I look at peak-to-peak for revenue per truck, it looks like it’s up 25% from 2018 on a full-year basis. Your net revenue per load is up exactly the same. Should we just look at — thinking about conceptually about the model, is there anything that would force the net revenue per load tranche is obviously pretty important indicator for the bottom line of your business? Is there anything unique that would drive that to really diverge from rate or is that really going to be a function of the rate on the way down as well? Thank you.
Jim Gattoni — President and Chief Executive Officer
Well, there’s a mix in there, right? It’s BCO or broker. One of the things we’ve been — one of the reasons, if you’re looking at that — if you’re looking at combined on a truckload and you’re not looking separate BCO versus broker, the one thing we’ve been struggling with over the last probably three quarters is BCO utilization, they’re not driving as much and that would actually drive — that mix would actually drive that variable contribution per load down because that’s a higher variable contribution per load because clearly, we have — as it relates to the BCOs where they’re under our — we cover their losses on insurance, so there’s other costs below the line. So there’s mix there based on who’s hauling a load in the percent of BCO versus broker as it relates to revenue.
The other thing clearly is the spread — the typical market spread between a tight market and a soft market as it relates to third-party trucks all in our freight. Right now, we’re clearly in the expansion mode as it relates to variable contribution per load and we expect that probably continues at least in the first half as capacity stays loose. So those are the things that drive it. But the thing about our model, it doesn’t necessarily move as much as you’d see in the pure broker play because, as you know, like 40% of our business is on a fixed margin. So if revenue per load goes down on the BCO, our VC per load goes down by the same amount, right? So that also would drive that margin down.
Our expectation for 2023 is that we’re going to be sitting on a VC margin that’s probably 60 bps — 60 bps to 70 bps above where we were in 2022, just based on the market dynamics right now of having more available capacity.
Bascome Majors — Susquehanna International Group — Analyst
Thank you for the time.
Operator
We have the next question coming from Stephanie Moore of Jefferies. Your line is now open.
Stephanie Moore — Jefferies — Analyst
Hi, good morning. Thank you.
Jim Gattoni — President and Chief Executive Officer
Yes.
Stephanie Moore — Jefferies — Analyst
Jim, I really appreciate the additional color on just kind of your thoughts on the cycle and I think very clear and you can see it in the trends, just peak activity in February of 2022. And to your point that based on normal cycle timing that puts us in a bit of a recovery or a normal period in the second half of this year. I’m just curious, if you just look at what has transpired with the kind of deceleration since February. How much of that do you think is just kind of an unwind normal cycle from what was a very abnormal two years with COVID? And how you think about what happen if the U.S. macroeconomic environment deteriorates at some point here more so than we’re at right now and how that kind of fits into somewhat of an improvement here in the back half? Just would love to get your general thoughts on how the freight cycle and economic cycles can kind of intersect together? Thank you.
Jim Gattoni — President and Chief Executive Officer
Yes, I’ve been reading a lot about economist — I’m not an economist, and that’s a hard word to say, by the way. When you read about the economists, you’ve got some that dire, there’s going to be a huge recession and others are talking about soft landing. So I’m not going to go with what anything the economists say because they’re all over the map right now. But look, clearly, if the economy was going to soften from this point forward more than we anticipated, we’re going to struggle with hitting even what the street has out there today as a revenue number because what — if you take our first quarter, USD1.4 billion to USD1.45 billion, that generally in the normal year is about 22% of annual revenue.
And if you believe that, then the back half contributes to the next 78%, which should get us to that $6.2 billion [Phonetic] $6.4 billion [Phonetic] in revenue. Now that’s in a normal environment where your seasonality — where the economy kind of grows a little bit out of the first quarter. But if it doesn’t do that, I think there’s more pressure on us to hit those numbers. I don’t think there’s any question, right. So trying to predict what’s going to happen is hard. But if that did happen, I would say that it’s — those numbers would be a little tougher on the top line. I don’t think there’s any question.
Stephanie Moore — Jefferies — Analyst
Right. No, that’s really helpful. And then as you kind of go back and I know thinking over what has happened the last, really, let’s call it, February. Do you feel like the commentary that you were carrying from your end markets, your customers, particularly on the consumer side, will make it seem like it was a bit more of an economic slowdown in their end like they were already in the recession or was this just again kind of a comedown from a weird COVID environment? I’d just love to hear what your customers were saying and how they were feeling about the environment?
Jim Gattoni — President and Chief Executive Officer
Well, I think a lot of customers got it wrong and overstocked, right? I think they didn’t anticipate the fact that, that was going to eventually slow down and we were going to see normal business cycles. So I think a bunch of our customers got it caught and stuck with inventory and then they see that coming out of the end of ’21, right? And they’re still dealing with inventory issues moving stuff around and I think that’s when things started to drop off. They started pulling back on spending, trying to — worried about inventory levels. And that’s kind of what brought us down. I would say that the customers might have been — not all of them, but some of the customers might have been a little late to the game on slowing down their inventory production. And once that happens, I think we’ve been reading about inventory since early summer. But I think it might have been a little sooner than that, that they were having problems and they just started to admit it.
Stephanie Moore — Jefferies — Analyst
Great. Absolutely. Well, I’ll leave it at that. Thank you so much.
Operator
We have the next question coming from the line of Scott Schneeberger of Oppenheimer. Your line is now open.
Daniel Hultberg — Oppenheimer & Co. Inc — Analyst
Good morning. It’s Daniel on for Scott. Thanks for taking our questions here. Curious on the other truck transportation line item. What you’ve been seeing recently across those categories and how we should think about that in the first quarter and maybe beyond, please? Thank you.
Jim Gattoni — President and Chief Executive Officer
Well, in that other truck transportation is power only and a lot of that was that substitute line haul business. We were dropping trucks in there and pulling someone onto other — someone else’s trailer. That started softening up halfway through last year. And I would anticipate that’s going to — it’s like the drop-off there is because it was so high before it really took off. It’s one of the fastest growers coming through the pandemic. And I expect that actually to slow down. It might be the one that slows down more than the van or flatbed. Just based on the business that we’re doing within that category, being the substitute line haul, which really was consumer-driven.
Daniel Hultberg — Oppenheimer & Co. Inc — Analyst
Thank you. And on SG&A, I mean, helpful color earlier, but how should we think about the cadence this year? Anything unusual?
Jim Todd — Vice President and Chief Financial Officer
Anything unusual in SG&A in ’23?
Daniel Hultberg — Oppenheimer & Co. Inc — Analyst
Yes, as far as the cadence goes.
Jim Todd — Vice President and Chief Financial Officer
Yes. The unusual would be kind of the mean reversion on the compensation under variable programs. But to Jim’s point earlier, there’s still a little bit of sticky wage inflation, benefits inflation. And with softness in the general economy, that could pressure the customer bad debt line a little bit. But that was all scrubbed and part of the guide earlier.
Jim Gattoni — President and Chief Executive Officer
I think one of the areas, too, is the one you didn’t mention other operating costs, which is really a smaller piece, but we’re experiencing like 20% to 25% inflation on the trailer maintenance per trailer. So there’s some inflationary not just in the SG&A line, some of the biggest inflationary factors we have going on right now is trying to maintain our trailing equipment between the labor and availability of parts.
Daniel Hultberg — Oppenheimer & Co. Inc — Analyst
Got it. Thank you. Thanks so much.
Operator
We have the next question coming from the line of Jason Seidl of Cowen. Your line is now open.
Jason Seidl — Cowen & Co. — Analyst
Hey, thank you, operator. Hey, good morning, guys. I want to circle back a little bit to Jack’s question, but command at a little bit different of a way. If we just assume normal seasonality from here in 1Q and into 2Q, how oversupplied is the market right now? Are we 2%, 3%? Is it more than that? So in other words, how much capacity do you think needed to continue to come out of the marketplace from here to get us back to sort of equilibrium?
Jim Gattoni — President and Chief Executive Officer
That’s a very hard question to answer. I would say it’s like —
Jason Seidl — Cowen & Co. — Analyst
That’s why I’m asking for you guys. You guys are the experts.
Jim Gattoni — President and Chief Executive Officer
I know, I was going to say, it oversupplied by 2.2774%.
Jason Seidl — Cowen & Co. — Analyst
Well, that’s what I thought. I was probably 2.2777%, but —
Jim Gattoni — President and Chief Executive Officer
In all, obviously, clearly, it’s oversupplied because when you look at the PT rates we were paying the trucks in the fourth quarter, it was probably the lowest it’s been. And I think we look back 10 years. So there’s clearly put the percentage on that, it’s hard to say how over — how much more capacity. I’m also a believer in a little bit of momentum, too, because people start getting scared when everybody starts putting up that rates are falling through the floor and the trucks get a little scared, so they start cutting rates on their own just so they can get freight. So there’s some momentum there, too. So I think there’s a little bit of too much capacity, not enough demand that — and then the, hey, I need to get a load because I’m scared rates are going to keep dropping mentality.
As to how many trucks, that is so — that’s such a hard measurement for us to figure out almost anybody around. We’re still seeing the trucks charging us. We’re still getting pretty good rates off of the trucks right now. And typically, it takes three to six months for that to tighten up. So I would say that that’s all I can give you is a period of time where I think it tightens up as opposed to how many trucks are in the market, how many excess trucks. I’m not a big believer if you add 50,000 trucks into the market that it’s going to move the needle that much. I think it’s more of a demand-driven environment than a truck-driven environment. You’ve seen sales climb, right? But I think that’s like sales — I thought I saw sales being at a record level in December were pretty high compared to where it’s been over the last three or four years.
But remember, people are sitting on older trucks and they’re just starting to swap them out. I mean I don’t even know if we know how many of those — how many of the sales are being replacements versus additions. And then there’s all the access to drivers. It’s always talking about not getting drivers into the system. So it all plays into this how many more trucks are on the road and how many we need to come out. And it’s kind of more of your feeling trends and trying to identify what’s going on.
I mean, you can look into the truck counts that are coming out of like governments and stuff like that and how many CDL licenses are out there, but are they all driving? It’s just a very difficult question. But I would say that it was very loose in the fourth quarter, looser than it’s been in such a long time based on the rates we’re paying to the trucks. And I would anticipate that’s going to continue for a little while through the first quarter and then maybe swing up, tighten up a little bit in the — once we get through the second quarter.
Jason Seidl — Cowen & Co. — Analyst
That sounds good. Are we seeing any impact from weather? Because we’ve been hearing stories about truckers getting stranded down south of all these big storms sweeping through?
Jim Gattoni — President and Chief Executive Officer
Yes. But with us, what happens is, we’ll see a day like now that’s going on in Texas, like our dispatched loadings probably were pretty low yesterday because we won’t throw trucks on the road if it’s like that. But then the loads get the same loads that they were waiting on, they just pick them up today. So you’ll see is very short term for us. It doesn’t affect the quarter so much. What does affect the quarter if you’re running contract business and someone shuts a plant and all of a sudden, those 15 loads that day, they didn’t get produced. So there’s — you did lose freight. But in our world, we don’t necessarily lose the freight, it’s really just moves to a different day.
Jason Seidl — Cowen & Co. — Analyst
Sounds fair. Gentlemen, I appreciate the time as always.
Jim Gattoni — President and Chief Executive Officer
And if that’s not true, maybe I’ll have — if I’m wrong there, I’ll use some weather excuse at the end of the first quarter.
Jason Seidl — Cowen & Co. — Analyst
I look forward to it.
Operator
We have the next question coming from the line Scott Group of Wolfe Research. Your line is now open.
Scott Group — Wolfe Research — Analyst
Hey, guys. Thanks for the follow-up. So I go back and look in ’19 where revenue was down 10% and SG&A was down 15%. Explain to me again just why you think revenue could be down 20%, but SG&A up? I’m just not following.
Jim Gattoni — President and Chief Executive Officer
Why would SG&A be up?
Jim Todd — Vice President and Chief Financial Officer
Yes, thinking.
Scott Group — Wolfe Research — Analyst
Well, maybe, I’m just — like the last time we had a big drop in revenue. SG&A was down a lot. So why would this year be so different?
Jim Todd — Vice President and Chief Financial Officer
Yes. So Scott, I would tell you that pre-pandemic, the inflationary pressures were really isolated on the insurance line and the tech line, whereas post-pandemic we’ve got wage — two years in a row of [Indecipherable] wage inflation, the benefits inflation on that line is a little heavier. And then I think 2019 the comp under variable program snapped to like $4 million. And it was very low. And we’ve got some recent equity tranches that are based on lower base years like 2020, for example. So we’re not going to get as much of a — we’ll get softening, but we won’t get as much of a softening on those lines, ’18 versus ’19 and ’22 into ’23.
Jim Gattoni — President and Chief Executive Officer
The other piece is not just SG&A, it’s the — I believe that the insurance line was $70-something million and we’re running $125 million right now. So there’s $50 million of pressure right there from 2019 into 2023. That’s a big piece.
Scott Group — Wolfe Research — Analyst
Jim, I know you guys did the dividends. I didn’t see any buybacks. What’s the thought on buyback this year?
Jim Gattoni — President and Chief Executive Officer
I — this year, we’re going to continue to buy back. It’s our favorite thing to do here, other than work. But our thing is we didn’t buy back in the fourth quarter because we watched the stock run up. I think we ended the third quarter at about — I think the stock was trading like 145. And we don’t compete with buyers by the time we — by the time the window open and by the time we got to the end of the quarter, it went up to 160, 170. So that’s really why we didn’t get in. We’re just waiting for it to settle. Look, if it stays in the range that it’s at today and we see some stability in pricing and volumes over the next couple of months, we’d be in.
I mean, it’s the same thing. We’d be opportunistic, stabilize — see the stabilized price and see the market stabilize a little bit. I think we’re a little too early into the first quarter to determine whether we’re going to see the stabilization in rates that we see currently and whether we’re not confident in the volume trends, we got to get through February. February is such a tough comp. It was our best month last year. And so we’re watching all those signs, but we haven’t changed our thought process on buybacks, we favor them.
Scott Group — Wolfe Research — Analyst
Okay. And then just last thing, I may have missed some sort of comments you made about profitability on contractual over spot right now. I haven’t heard you talk about it that way before. If you could just expand on that because I think I missed it.
Jim Gattoni — President and Chief Executive Officer
We don’t — like most of — the Blue is so small. Blue is doing most of the contract work, but it’s pretty small. So we don’t really have much data on the comparisons there. But with us, it’s the profitability. We don’t really have the lot of contract dedicated freight out of the agent base at the core. I mean, they run some of it, but it’s still — even in our world, contract rates are almost like spot rates, right? If the shippers — if we’re running something that looks like a contract run like lanes and rates start dropping, the shipper comes back to us and drops our rates. So we have contract rates. They just don’t hold. So our whole world almost works in the spot world other than the little piece over at Blue.
I think the question was we’re trying to figure out where our spot rates today as compared to contract rates. And I don’t think we had a very good answer because I don’t think we know where they stand today. We get the data just like you get it from people who publish it.
Scott Group — Wolfe Research — Analyst
Got it. Okay. Thank you, guys. Appreciate it.
Jim Gattoni — President and Chief Executive Officer
Yes.
Operator
At this time, I show no further questions. I would like to turn the call back over to you, sir, for closing remarks.
Jim Gattoni — President and Chief Executive Officer
Thank you. Before I sign off on 2022, I want to thank all of Landstar’s agents, BCOs and employees for putting up another record year. The people in Landstar’s unique network of agents, capacity [Indecipherable] employees or what truly sets Landstar apart in our industry and enables the success we all achieved together. Thank you, and I look forward to speaking with you again on our 2023 first quarter earnings conference call currently scheduled for April 27. Have a good day.
Operator
[Operator Closing Remarks]