Adams Resources & Energy, Inc. (NYSE:AE) has reported its financial results for the fourth quarter of 2023, indicating a mix of solid performance in certain areas and challenges in others. The company saw a significant increase in adjusted cash flow, reaching $6.8 million, which is a 44% rise from the third quarter and a 100% increase year-over-year. This improvement was bolstered by gains from the sale of assets related to the closure of Red River operations. Despite these gains, total revenue for the quarter was down to $709.8 million due to lower crude oil prices and volumes. The net loss for the quarter stood at $874,000, or $0.34 per share. Looking forward, the company anticipates market headwinds into the second half of 2024 but plans to focus on cost control and operational efficiency to drive growth.
Key Takeaways
- Adjusted cash flow increased by 44% over Q3 2023 and 100% over the prior year's quarter.
- Gains from Red River operations' asset sale contributed $2.6 million.
- Revenue declined to $709.8 million due to lower crude oil prices and volumes.
- The Marketing segment reported $671.7 million in revenue, Transportation at $23.3 million, and logistics and repurposing added $14.8 million.
- General and administrative expenses decreased by $2.8 million year-over-year.
- Net loss recorded at $874,000, or $0.34 per share.
- Cash and cash equivalents increased to $33.3 million, with total liquidity at $80.3 million.
- Market headwinds expected to continue into the second half of 2024.
Company Outlook
- Market headwinds expected to persist into the second half of 2024.
- Focus on cost control and operational efficiencies.
- GulfMark Energy to work on improving margins and customer negotiations.
- Phoenix Oil and Firebird Bulk Carriers acquisitions expected to contribute to growth.
- Service Transport positioned for success when market conditions improve.
Bearish Highlights
- Decrease in total revenue year-over-year.
- Net loss for the quarter at $874,000.
- Decline in barrels delivered due to third-party shipper's pipeline system repairs.
- Heavy competition for barrels, particularly in the Eagle Ford (NYSE:F) basin.
Bullish Highlights
- Increased cash flow from recent acquisitions.
- Decrease in general and administrative expenses.
- Improved cash flow and earnings in the chemical hauling division, Service Transport.
- Positive outlook for Phoenix Oil's upcoming rail transloading and lab facility.
Misses
- Lower crude oil prices and volumes impacting revenue.
- VEX pipeline behind volume expectations.
- Net loss per share at $0.34.
Q&A Highlights
- Focus on improving safety and managing insurance rates with new camera systems.
- Relatively flat barrels per day expected in Q1 2024 compared to Q4 2023.
- Anticipated decrease in overall mileage due to shift towards shorter-haul business.
- Lower capital expenditures forecasted for 2024, partly due to Red River operations closure.
In conclusion, Adams Resources & Energy has navigated a complex market landscape in the fourth quarter of 2023, balancing gains from asset sales and increased cash flow from acquisitions against lower crude oil prices and competitive pressures. The company is strategizing to mitigate market headwinds through cost control and efficiency improvements while preparing for growth opportunities in the upcoming quarters.
InvestingPro Insights
Adams Resources & Energy, Inc. (ticker AE) has demonstrated resilience in a challenging market, with a focus on operational efficiency and strategic asset management. The company's recent financial performance reveals areas of concern but also points to potential growth opportunities. Here are key insights drawn from InvestingPro's analytical tools and data:
InvestingPro Data:
- The Price/Earnings (P/E) Ratio for the last twelve months as of Q4 2023 stands at -7.59, highlighting the market's concerns about the company's profitability in the near term.
- A Gross Profit Margin of 1.65%, as seen in the last twelve months as of Q4 2023, indicates tight profitability, which corroborates with the company's own admission of facing market headwinds.
- Despite a challenging quarter, the company has maintained a Dividend Yield of 3.92%, showcasing its commitment to shareholder returns.
InvestingPro Tips:
- Analysts predict that Adams Resources & Energy will be profitable this year, which suggests that the company's efforts in cost control and operational efficiencies might pay off in the near future.
- The company has been trading at a low revenue valuation multiple, which could signify a potential undervaluation by the market, considering its long history of dividend payments and recent strategic acquisitions.
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Full transcript - Adams Resources & Energy Inc (AE) Q4 2023:
Operator: Good morning, and welcome to the Adams Resources & Energy Fourth Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask question. [Operator Instruction] Please note, this event is being recorded. I would now like to turn the conference over to John Beisler, Investor Relations. Please go ahead.
John Beisler: Thank you, and good morning, everyone. Welcome to the Adams Resources and Energy fourth quarter and full year 2023 conference call. Joining me on the call this morning are Adams Resources and Energy President and CEO, Kevin Roycraft and the company's EVP and CFO, Tracy Ohmart. This call is also being webcast and can be accessed through the audio link on the Investor Relations page at adamsresources.com. Today's call, including the Q&A session will be recorded. Please be advised that any time-sensitive information may no longer be accurate as of the date of any replay or transcript reading. I'd also like to remind you that statements made in today's discussion that are not historical facts, including statements or expectations or future events or future financial performance are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements by their nature are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to the earnings press release that was issued yesterday for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Adams Resources and Energy assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures, including adjusted EBITDA, free cash flow, return on and adjusted net income and earnings per share. Reconciliations to the nearest GAAP measures can be found at the end of our earnings release. Finally, the earnings press release we issued yesterday is posted on the Investor Relations section of our website. A copy of the release has also been included in an 8-K submitted to the SEC. Now, I would like to turn the call over to the company's President and CEO, Kevin Roycraft. Kevin?
Kevin Roycraft: Thank you, John, and good morning, everyone. I will begin today's call with some details on the quarter, before turning it over to Tracy for a more in-depth dive into the financials. I will then close the prepared remarks by discussing the outlook for the first quarter and full year 2024. Myself, Tracy and our division Presidents, Greg Mills and Wade Harrison will be available for your questions at the conclusion of the prepared remarks. I was encouraged in many areas by the company's fourth quarter results. Despite the continuation of the macroeconomic headwinds discussed in our last two quarterly calls, the business produced solid results for the fourth quarter. Adjusted cash flow, available cash and liquidity all improved sequentially on a year-over-year basis. For the quarter, we improved our adjusted cash flow of 44% over the third quarter of 2023 from $4.8 million to $6.8 million and 100% over the prior year quarter. Not included in the fourth quarter adjusted cash flow numbers were nearly $1 million of onetime expenses and $2.6 million in gains from sale of assets, both associated with the closure of our Red River operations during the quarter. Factoring in these onetime events into the company's adjusted cash flow numbers, we easily produced the strongest quarter we've had since the third quarter of 2022. For the full year of 2023, we improved net cash flow from operating activities by $16.5 million over 2022 from $13.8 million to $30.3 million. However, when adjusted for crude oil inventory changes, gain on sale of assets, and taxes, 2023's adjusted cash flow came in at $23.4 million compared to $29 million in the prior year. The largest of these adjustments was the inventory change differentials between 2022 and 2023. As I mentioned previously, we continue to see positive momentum in our cash and liquidity positions. Cash and cash equivalents improved 62% over the prior year quarter and 104% sequentially, finishing the year with $33.3 million in cash. Liquidity followed a similar trajectory, improving 44% over the third quarter from $55.9 million to $80.3 million at year's end. GulfMark Energy's legacy area volumes, which include South Texas, Michigan, North Dakota, and Louisiana were generally flat in the fourth quarter compared to the third quarter of 2023. Overall, quarterly volumes decreased, primarily due to the closure of our Red River operations in North Texas and Oklahoma. I was very pleased with our team's execution of this exit. We fully completed our contract commitments, while working on a very short timeline to exit the area and move equipment. Of 62 tractors and 88 trailers dedicated to the Red River operation, we sold 38 tractors and 68 trailers in the quarter for a net gain on the sale of $2.6 million. The remaining late model equipment will be moved into the GulfMark or Firebird operations, which is expected to reduce these division's needs for growth and maintenance CapEx in 2024. Turning to the VEX pipeline. GulfMark was able to drive a total of 9,377 barrels per day to the line in the quarter, an increase of 10% over the previous quarter's 8,548 barrels per day. Although the barrel growth is encouraging, VEX is still behind our volume expectations as our expected third-party shipper on the line continues to find and repair issues on their pipeline system. While VEX is still a critical asset to our company, providing huge cost savings by reducing truck-miles to reach its full potential, it will need third-party barrels to come online. It is a positive sign that our future shipper is still spending time and money to repair their system. However, I am reluctant to put a timeline on start-up since we have no control on the scope and timing of their repairs. Our most recent acquisitions of Phoenix Oil and Firebird Bulk Carriers finished their first full year with the company. Even with the continuing challenges in the market, the combined businesses produced more than $4 million in positive cash flow. I am especially pleased with the progress we are making towards vertical integration and the intracompany business. GulfMark has become a top five customer for Firebird. Using Firebird's trucks allows GulfMark to keep the overflow truck barrels in-house, providing cost savings and allowing safety and operational control over those units. Phoenix also continues to produce crossover business opportunities with service transport. Our over-the-road chemical hauling division, service transport company saw improved cash flow and earnings in the fourth quarter when compared to the third quarter of 2023. However, these increases were not due to improving market conditions, but were largely driven by favorable insurance premium adjustments related to better-than-expected safety performance in prior year periods. These credits are well earned and truly spotlights the work Service Transport is doing to run a safe and cost-effective operation. In fact, the National Tank Truck Association has just named Service Transport a Grand Award winner for their 2023 North American Safety Contest and a finalist for the Heil Trophy, awarded to the top bulk carrier for safety nationwide, an award STC won back in 2021. From a market perspective, service transports customers are still battling a sluggish chemical shipping environment that is expected to continue through the second quarter of this year. I will touch base on the outlook for Q1 and 2024 later. But now I'll turn the call over to Tracy for a deeper dive into the financials.
Tracy Ohmart: Thank you, Kevin, and good morning, everyone. Total revenue for the fourth quarter of 2023 was $709.8 million, compared to $747.7 million in the prior year quarter. The decline was primarily driven by a decrease in the market price of crude oil and lower crude oil volumes. The decrease in crude oil price was primarily due to weaknesses in the Chinese economy and continued concerns over economic recession. Now let's look at the quarter by individual segments. Fourth quarter revenues for our Marketing segment were $671.7 million, compared to $707.7 million in the prior year quarter. The decrease is primarily due to a decrease in the market price of crude oil over the past year and a result of lower crude oil volumes. Operating income for the quarter for the Marketing segment was $4.1 million compared to a loss of $4.4 million in the fourth quarter of 2022. The increase is due to inventory valuation changes, partially offset by a decrease in the average market price of crude oil, lower crude oil volumes and higher operating expenses in the 2023 period. Our Transportation segment reported $23.3 million of revenue in the fourth quarter, compared to $26.3 million in the prior year quarter. Operating income was $1.6 million versus $1.8 million in the fourth quarter of 2022. The decrease is primarily due to a decrease in volumes in transportation rates during 2023 as a result of the softening in the transportation market. Our logistics and repurposing segment, which consists of Firebird and Phoenix that we acquired in August 2022, added $14.8 million in revenue for the fourth quarter of 2023, compared to $13.7 million for the prior year quarter. The segment reported a loss of $1.1 million, compared to $148,000 of earnings in the prior year quarter. General and administrative expenses were $4.3 million for the fourth quarter of 2023 and $14.9 million for the year, which is a decrease of $2.8 million compared to the full year of 2022, primarily due to an adjustment of $2.6 million for the reversal of the contingent consideration accrual related to the Firebird and Phoenix acquisition and lower personnel costs and legal fees. Interest expense decreased to $859,000 for the fourth quarter of 2023 versus $918,000 in last year's fourth quarter. For the total year, interest expense increased by $2.1 million compared to 2022, primarily due to a $1.6 million increase in interest expense as a result of borrowings under the credit agreement, which was put in place on October 27, 2022. Net loss for the quarter was $874,000 or $0.34 per share, compared to a net loss of $7.3 million or $2.34 per share in the fourth quarter of 2022. For the quarter, cash provided from operating activities was $22.4 million. For the full year, cash provided from operating activities was $30.3 million compared to $13.8 million in the prior year. The increase was a result of a decrease in the price of our crude oil inventory and an 18.5% decrease in the number of barrels held in inventory. Capital expenditures for the quarter totaled $3 million, primarily from the purchase of eight tractors, 13 trailers and other field equipment. Our available cash and cash equivalents as of December 31, 2023, totaled $33.3 million compared to $20.5 million on December 31, 2022. Total liquidity as of December 31 was $80.3 million versus $55.9 million in the prior quarter. Now I'll turn the call back over to Kevin for some final comments. Kevin?
Kevin Roycraft: Thank you, Tracy. I will now touch on the outlook for the first quarter and for full year 2024. All business units will continue to work on cost control and operational efficiencies as we expect the headwinds in the market to continue into the second half of the year. We saw the benefit of these efforts with improved results in the back half of 2023 as our cost reduction initiatives took hold. We will continue to build cash and liquidity positions as well as pay down the debt incurred from the KSA share repurchase conducted in the fourth quarter of 2022. GulfMark Energy will continue to battle heavy competition for available barrels, especially in the Eagle Ford basin, where the rig count has decreased from 76 to 55%, a 28% reduction over the past year. As we wait for drilling activity to increase in the area, GulfMark can still achieve success by improving margins through more efficient operations, cost reductions and customer negotiations. For the VEX pipeline, we will continue to work on finding new barrels to run on this operationally critical line. While third-party barrels from the recent connection with the potential future shipper remain a likely possibility, we are hesitant to put a time line on the start-up due to factors out of our control, as previously mentioned. Because of this, our team will focus on their efforts on the other conversations that are being held with multiple potential shippers on the VEX pipeline. We will look for growth in 2024 from both the Phoenix and Firebird acquisitions. Driver count has grown at Firebird from 97 drivers at the time of acquisition to 115 drivers today. The growth has come from increased hauling from the addition of new customers as well as internal hauling for GulfMark Energy's overflow. Firebird will continue to work on improving rates and returns in 2024. Phoenix oil should break ground on the new Dayton, Texas rail transloading and lab facility in the first half of 2024. Completion of this project will improve capacity and efficiency of the company as well as open up the ability to process new products. As I've mentioned in previous calls, our chemical Transportation division, Service Transport is well positioned for success when market conditions improve. Service Transport has added new customers and streamlined operations in anticipation of a market rebound. Driver turnover has remained low, and they are ready to provide additional capacity to the shippers when the time comes. In closing, we believe the company can see improved results over 2023 even if the current market challenges persist, as we expect them to for the first half of the year. Obviously, if market conditions improve, specifically in the areas of domestic chemical manufacturing, housing starts, automobile production and rig count increases, we could see significant year-over-year improvement. As the Adams team waits for market improvements, we will not sit idly. Rather, we will continue to take the necessary steps for the company and our shareholders to be successful. With that, I would like to open the line for questions. Operator?
Operator: We will now begin the question-and-answer session. [Operator Instructions] And our first question comes from Erik Volfing of Grand Slam. Please go ahead.
Erik Volfing: Hey, guys. How are you? Nice quarter.
Kevin Roycraft: Good. How are you doing? Thank you.
Tracy Ohmart: Good morning, Erik.
Erik Volfing: I'm doing well. So there's kind of a lot going on with the divestiture of Red River, and I was just trying to figure out where everything flows through. So you said you had an extra $1 million of expenses relating to that. And then on the other side, you had a gain on sale of about $2.6 million from selling the rigs and equipment. Where are those things flowing through on the P&L?
Greg Mills: In the cost and expense section for the marketing, so in the third quarter -- in the fourth quarter, there are like $665 million of costs and the expenses, the severances are in there, and the gain in sales of assets are also embedded in there.
Erik Volfing: Okay. So if I wanted to adjust, I would basically net those and say, okay, it's about $1.6 million benefit that's in that line, and that will give me a more consistent kind of view of where the -- where things were kind of I'm looking going forward.
Greg Mills: Correct.
Erik Volfing: Okay. And then even if I adjust for that it looks like the marketing margin was still very good. Was that just -- I know that margin fluctuates from quarter-to-quarter. Was some of that simply getting rid of Red River that that was a drag or how do we think about that going forward?
Greg Mills: Yes. That marketing margin continued to be strong. It was not related to the Red River. That was a separate business entity something we've talking about the GulfMark legacy crude oil marketing. That's just some -- a lot of hard work by the marketing team combined with focus on cost cutting.
Kevin Roycraft: Yes, This is Kevin. I'll add to what Greg's comment was -- is though the rig counts are down in our areas the marketing team has been successful increasing margins to make up for some of the barrel losses we've seen year-over-year.
Erik Volfing: Okay. All right, great. And then finally if you can talk a little bit about kind of what's going on with Firebird and Phoenix, what's -- they seem to have maybe not been performing quite at the level we were initially hoping for. How do you see that turning around here this year?
Greg Mills: Again, this is Greg. With Firebird part of the formula was just getting the driver count back up which we've been successful. I think we're 1.15, 1.16 now combined with not only are they hauling for GulfMark as our overflow carrier. But we're also picking up some new business with some other entities. And we see businesses coming along. I see us getting busier. I see the volume continuing to grow, as we move forward and continue to even hire. We're still hiring drivers beyond that count today. And then with respect to the Phoenix business, we're really focused on looking for repeat business, trying to get some term contracts. By the nature of that business, it's very much a spot business. And so as we work towards getting over-to-date, we see opportunities to make that business more consistent just having the assets and not in addition to the cost savings that we'll have working out of Dayton with the rail off flow directly to our tanks. So, we see good things coming on the Phoenix side as well.
Kevin Roycraft: And Erik, I'll add to specifically the Firebird, one of the things Greg mentioned, obviously, is growing the barrel count, which we've been doing in the driver base. But also when we sort of unwound what expenses were actually associated with Phoenix and Firebird separated that out and put them into our own P&L system. We found that Firebird rates could be improved. So, we have been successful going back to our customer base. We saw some of it at the end of Q4, we'll see the additional rate increases in Q1. And I think, as the market conditions improve, we'll need to take more, but we have been successful pushing some rate increases across. I think we'll see a benefit of into this year.
Erik Volfing: Great. Maybe I can just do one more. Just on the pipeline. I heard you're saying you're looking for new customers. Do you need to do any more CapEx to again expand the pipeline's interconnection to other part lines?
Greg Mills: We have, as you know, an existing connection, we've already some capital on that. Our partner pipeline, I don't know, if we name them or not, but they're getting closer. They're continuing to work through getting their pipeline system ready. They are focused on connecting to another third-party pipeline and then we'll get to ours after that. So we're still optimistic that we'll see it this year. With respect to additional capital there is another opportunity out there where we can make a connection to a third party at this point. I don't know that, we would burn be burdened with all of the capital on that. There might be other parties help sponsor that. So I wouldn't expect that we have another large capital pipeline connect this year, but we're working toward that.
Erik Volfing: All right. Great. Thank you very much, guys.
Kevin Roycraft: Thank you, Erik.
Operator: The next question comes from Liam Burke of B. Riley. Please go ahead.
Liam Burke: Thank you. Good morning, Kevin. Good morning, Tracy.
Kevin Roycraft: Good morning, Liam.
Tracy Ohmart: Good morning, Liam.
Liam Burke: Kevin on the closing of the Red River operations, is the new barrel count volume, daily volume reset at that 73,000 level?
Kevin Roycraft: Yeah. So that sounds like I don't have the number in front of me, but that does sound like we're resetting that number to each to that number market.
Tracy Ohmart: That does not include the marketed barrels that are done out through the Rockies area. That's our kind of wellhead volume core volume, yes.
Kevin Roycraft: Yeah, I would say that's 73,000 of truck barrels, right, and we have additional barrels that aren't reported in the same year.
Liam Burke: Okay. No, no, that's perfect. And in terms of the expense at GulfMark, you really pushed back on -- it's a tight margin. You push back. How much more can you do to move those margins?
Greg Mills: Yeah. We will continue to work on that. We actually have been successfully renegotiated some labor rates already for this year going forward. And again, we've dash boarded our business now. So we're looking at every -- down to every district level, and we're managing costs. I feel very confident that we can manage our costs and give our marketers the best opportunity to continue to push the margins.
Tracy Ohmart: I would say, one of the key things as well, it's within our control, but sometimes it gets difficult to manage is the safety and the insurance aspect that, that can have. And so, I know Greg can talk about the new cameras and other equipment we're doing and enhancements we're trying to make from a safety standpoint to continue to drive it down or try to keep insurance rates as low as possible.
Greg Mills: Yes. What Tracy is referring to is, we're rolling out a new more elaborate camera system that effectively monitors behavior of the drivers to ensure that they're maintaining the utmost safety. And then we also have additional views that we haven't had in the past exterior to the truck. And so we'll know everything that's going on around us, which we find is going to be very helpful with our insurance risk.
Liam Burke: Great. Thank you very much.
Kevin Roycraft: Thank you, Liam.
Operator: The next question comes from Chris Sakai of Singular Research. Please go ahead.
Chris Sakai: Hi. Good morning.
Kevin Roycraft: Good morning, Chris.
Chris Sakai: Just a question, I guess now for GulfMark. Should we be looking at 4 barrels per day for Q1 in 2024? I mean should that be -- how should we be thinking about that?
Kevin Roycraft: I'd say relatively flat to Q4, Q1. We're continuing to have -- we have had some uptick as we get into this month March. We did have an uptick in some barrels, which also complemented the VEX Pipeline. Supply has been up a little bit. But overall, I'd say, it's relatively consistent and we're continuing to -- in a high market share or a high competitive market, we're continuing to hold our own. We have consistent business and continuing to maintain strong margins.
Chris Sakai: Would that be the same thinking for Service Transport for the number of miles for Q1 and 2024?
Kevin Roycraft: Wade, do you want to take that?
Wade Harrison: Yes. I think one thing that we've seen through I guess, kind of the quarter-on-quarter bid season is kind of a gravitation towards more shorter-haul business. And so, we've noticed an increase in our load count and a decrease in our kind of mileage per load. And so, that's not necessarily a terrible thing, because we can typically hire more drivers for localized business. And so through this bid cycle, we have seen kind of a shift in what we've been awarded. And so, we might see a decrease in our overall mileage just from that result. We're still dealing with some of the kind of downturn in volume from heritage customers, but the business that we have been awarded seems to have been more on a local regional type basis rather than the 500-plus mile loads. So, while I do anticipate a downturn in overall mileage, I don't think that will be total reflective in the results of the company.
Chris Sakai: Okay. That's helpful. And can you talk about capital expenditures for Q1 in 2024?
Tracy Ohmart: Yes. I can take that. I mean I think we have set out to really replace about 20% of our fleet every year. We've extended that out a little bit that we've seen better performance out of the tractors. But generally, that's what we're trying to do. But we received the benefit of closing down the Red River operations. One of the benefits was we were able to take about 25 tractors of the late-model tractors, because we had refreshed that fleet. And we're going to move that into the GulfMark and Firebird operations, which will really decrease their need for 2024 CapEx. And then Service Transport they use a different type of trucks. So they're using the over-the-road sleeper trucks. They'll stay on a pretty similar trajectory that we've seen over the last few years. So I do expect CapEx for 2024 to be lower. And because of those reasons the Red River closures Service Transport will remain the same. And then 2025 we'll get back on a more normalized CapEx.
Kevin Roycraft: The early part of 2024 we're still seeing some carryover from orders that were placed years ago. So the first quarter we're still seeing a little bit of spending nothing significant, but there's still a little bit of activity that's being brought forward from orders that manufacturers hadn't yet delivered.
Tracy Ohmart: Yeah we are still seeing delays not like we had before, but we are still seeing delays from the manufacturers producing equipment that were ordered in previous years.
Chris Sakai: Okay. Great. Thanks for the answers.
Tracy Ohmart: Thank you, Chris.
Kevin Roycraft: Thanks, Chris.
Operator: The next question comes from Jason Ursaner of Bumbershoot Holdings. Please go ahead.
Jason Ursaner: Good morning and congrats on the very strong cash flow in the quarter. Kevin I apologize if you already said it but the gradual recovery you're, kind of, expecting to start to see later in the first half what are any signs you're looking for or how are you going to kind of know that that's progressing? What are you sort of looking to see there to kind of see that that's on track?
Kevin Roycraft: Yeah, a few things. Obviously, we're monitoring internally what our volumes are both on the barrels per day count and then on Service Transport the load counts we're seeing. But outside of what we look at internally we're also monitoring what our major shippers are saying. And so they have been saying over the last couple of quarters I haven't heard what they said for their fourth quarter results yet. They expected to bounce along the bottom until about mid-2024. Admittedly, I don't know what their optimism is towards a turnaround what causes their feelings that way. We have seen a bit of a spike in Q1. We're not 100% sure at least on the chemical side if that's from customers refilling inventories. So we don't want to get out too far ahead and say that's a recovery at this point. Another thing we monitor especially on the Service Transport side is sort of the overflow loads that our major shippers have. So that means that capacity is getting tight and that shippers or carriers are turning down lanes. It means they don't have enough drivers to cover the loads that are out there. Throughout the course of 2023 there were virtually zero overflow lanes available. We have seen some overflow tick up early in this year not to a huge extent, but that list is getting populated which is an encouraging sign too. So while I don't think the turnaround is here I think we'll have some signs of when it's happening. Again, we're seeing some early signs of that but I'm not quite ready to say that turnaround's begun to -- needs to see some consistency.
Jason Ursaner: Understood. And appreciate all those details. Thanks.
Kevin Roycraft: Thank you, Jason.
Tracy Ohmart: Thank you.
Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Kevin Roycraft for any closing remarks.
Kevin Roycraft: Thank you for your continued interest in the company, and we look forward to updating you on our progress when we report the first quarter earnings in May. Thank you for joining us.
Operator: The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
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