Yellow Corporation
Q4 2021 Earnings Call Transcript

Published: 2 Feb 2022

[Operator:]

Good afternoon, and welcome to the Yellow Corporation's Fourth Quarter 2021 Earnings Call. Please note this event is being recorded. I would now like to turn the conference over to Tony Carreno, Vice President of Investor Relations. Please go ahead.

[Tony Carreno:]

Thank you, operator, and good afternoon, everyone. Welcome to Yellow Corporation's Fourth Quarter 2021 Earnings Conference Call. Joining us on the call today are Darren Hawkins, Chief Executive Officer; Dan Olivier, Chief Financial Officer; and Darrel Harris, President and Chief Operating Officer. During this call, we may make some forward-looking statements within the meaning of federal securities laws. These forward-looking statements and all other statements that might be made on this call, which are not historical facts, are subject to uncertainty and a number of risks. And therefore, actual results may differ materially. The format of this call does not allow us to fully discuss all of these risk factors. For a full discussion of the risk factors that could cause our results to differ, please refer to this afternoon's earnings release and our most recent SEC filings, including our Forms 10-K and 10-Q. These items are also available on our website at myyellow.com. Additionally, please see today's release for a reconciliation of net income or loss to adjusted EBITDA. In conjunction with today's earnings release, we issued a presentation, which may be referenced during the call. The presentation was filed in an 8-K, along with the earnings release and is available on our website. I will now turn the call over to Darren.

[Darren Hawkins:]

Thanks, Tony, and good afternoon, everyone. Thank you for joining our call. We ended 2021 by staying on course and executing the initiatives that were laid out early in the year. Sticking to our strategy helped deliver strong results and for Q4, we reported adjusted EBITDA of $115.5 million, which is double what we reported in Q4 2020. We also reported an operating ratio of 95.7%, which is the lowest in 3 years. In a capacity-constrained freight environment, we remain focused on ensuring the right freight is flowing through the network and the price reflects the value and capacity that Yellow brings to the market. In Q4, year-over-year LTL revenue per hundredweight, including fuel increased 23.3% and favorable pricing trends have carried into Q1 of 2022. For the month of January, Yellow averaged between 8% and 9% on contract negotiations. As we execute our yield strategy, the LTL tonnage per day decrease that we saw in Q4 was in line with expectations. We have the capacity to take on freight that fits our network and that is priced appropriately. As we transform the network to operate as a super-regional carrier, we expect to return to growing LTL tonnage per day. Another area of emphasis in 2021 was reducing the use of purchased transportation. Actions we took included purging the network of short-term rentals as we acquired revenue equipment and adjusting our linehaul network to minimize the use of more expensive purchase transportation expense in certain lanes. We made steady progress and decreased the amount of PT expense as a percentage of revenue each quarter during the year. In Q4, it was down to 14.5%, which was 220 basis points better than Q1. We are also executing key steps on the multiyear transformation to One Yellow. Recently, Holland was the final operating company to be converted to the One Yellow technology platform. It was completed as planned and on schedule. The technology platform is the cornerstone of our fully integrated network and enables us to continue streamlining operations. In 2022, our road map to One Yellow includes the integration of the linehaul network to support both regional and long-haul service as well as the optimization of pickup and delivery operations. You will hear more about this from Darrel. In Q4, we wrapped up one of the largest capital expenditure plans in our company's nearly 100-year history. Starting with the fourth quarter 2020 through the end of 2021, we have invested nearly $600 million. Those investments include tractors, trailers, technology, box trucks, containers, lift gates and other assets. The number of tractors acquired over this time frame was more than 2,400, which is around 17% of the fleet and the number of trailers added is more than 3,600, which was roughly 9% of the fleet. The additions have lowered the average age of the tractor fleet by approximately 2 years and are expected to mitigate maintenance expense and help our sustainability efforts through enhanced safety and improved fuel efficiency. As we look ahead, we expect to carry the momentum that we have generated into 2022. We will be enhancing the customer experience with a modernized super regional network as we complete the transformation to One Yellow. By providing customers with an all-in-one solution, we expect to grow our company and deliver a steady staircase of financial improvement. Overall, the economy remains healthy with strong consumer and industrial demand, while constraints from a tight labor market and supply chain disruptions attributable to the COVID-19 pandemic are keeping a lid on LTL capacity. I will now turn the call over to Dan, who will share additional details about the quarter.

[Dan Olivier:]

Thank you, Darren, and good afternoon, everyone. Full year 2021 operating revenue was $5.12 billion compared to $4.51 billion in 2020. Operating income in 2021 was $103.6 million compared to $56.5 million in the prior year, which included $45.3 million of net gains on property sales. Adjusted EBITDA for full year 2021 was $306 million compared to $191.9 million in 2020. For the fourth quarter 2021, operating revenue was $1.31 billion compared to $1.17 billion in 2020, and operating income was $55.8 million compared to $13.7 million in the prior year. Adjusted EBITDA for the fourth quarter of 2021 was $115.5 million compared to $57.9 million in 2020. Our revenue growth of 12.4% in the fourth quarter reflects strong yield performance, offset by lower volume as we continued executing our targeted pricing strategy. Including fuel surcharge, fourth quarter LTL revenue per hundredweight was up 23.3% and LTL revenue per shipment was up 20.3% compared to the prior year. Excluding fuel surcharge, LTL revenue per hundredweight was up 16.2% and LTL revenue per shipment was up 13.4%. LTL tonnage per day in the fourth quarter was down 10%, driven by a 7.8% decrease in LTL shipments per day and a 2.4% decrease in LTL weight per shipment. Sequential LTL tonnage per day trends compared to the prior year were as follows

[Darrel Harris:]

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

[Darren Hawkins:]

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

[Operator:]

Our first question will come from Jack Atkins with Stephens.

[Jack Atkins:]

Congratulations on a great quarter here, guys. I know this has been a long time in the making for you.

[Darren Hawkins:]

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

[Jack Atkins:]

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

[Darrel Harris:]

Sure, Jack. Good afternoon. Thanks for the question. First, let me say that I am pleased that we were able to improve our operating ratio by 60 basis points from Q3 to Q4. When historically, it's a couple of percentage points worse. That was primarily driven by continued yield strength along with cost controls around our usage of purchased transportation. On the yield front, sequentially from Q3 to Q4, our LTL revenue per hundredweight, excluding fuel, was up 3.5%, and LTL revenue per shipment, excluding fuel, was up 5%. On the PT front, as you heard from Darren, our purchase transportation expense as a percentage of revenue was 14.5% in Q4 compared to 15.4% in Q3. So now to your question, as we move from Q4 to Q1, we historically see degradation in our OR of about 200 to 250 basis points. Most of the time, that's weather-driven. But as Darren referenced in his opening comments and you mentioned the third of the Omicron variant starting in late December that has carried on throughout January, has put even more pressure on the entire supply chain and will have an impact on Q1's tonnage and productivity. Offsetting that to some degree, of course, is the continued yield strength that I mentioned. So I guess, net-net, as I sit here today with 2 full months still left in the quarter and the impact of Omicron not yet having run its full course, it's just simply too early to project how margins will move sequentially versus what they normally do.

[Darren Hawkins:]

Yes. And I would just tag on to that. In LTL and for the 30 years I've been doing it, Jack, and I think about Q1, you got to look at between Valentine's Day and Easter. That's when you make your quarter. You're always dealing with the normal weather events and those type things in January. We've got extenuated pandemic pieces that are in play. But when I think about 2022 and our fleet age being down 2 years, looking at where the economy's at right now, manufacturing, retail, wholesale, anywhere I look, things are good. And e-commerce shining through strong, the consumer is standing up good, all that contributing to LTL, it allows us to put our price out there, be selective about the business that we allow into our network. Our network has got so much value with our drivers, the physical plant facilities, the terminals and where we're located and our 316 terminals are in some of the best locations. So you put all that together, I'm confident about where we're headed, and I like the way we're positioned. And then lastly, having all of the companies on One Yellow technology is something I've been working on for a few years, and I couldn't be more excited about having that in the rear.

[Jack Atkins:]

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

[Darren Hawkins:]

Jack, in my opening comments -- this is Darren. In my opening comments when I talk about growth, growing the company from a revenue aspect, closing the gap on our tonnage decline, being able to get yield and positive tonnage at the same time, the One Yellow piece is certainly the driver of those things. It's an iterative approach. So the big linchpin for the entire One Yellow was the technology that's done. There's benefits there. But moving forward, the big benefits come in 2 areas

[Darrel Harris:]

Yes, this is Darrel. As Darren said, there's been a tremendous effort in resources and spend and time and bandwidth, as you can imagine, on the technology component. But as he's always said, that's the linchpin to making all of this happen. And so what we're excited about is starting out the year, we're moving down this path of the network optimization, which, as he mentioned, the top 2 costs in any LTL company is in the linehaul area and the pickup and delivery area. And so as we've talked before, there's a tremendous amount of duplicity and redundancy in our network, particularly on the P&D side. But also, there's tremendous synergies to be gained with linehaul optimization as we start to think about providing regional and long-haul services in one network. The last piece I would just say that gets us really excited is upon the completion of this, this is a growth story. This is an opportunity for us to start to leverage our network in ways that we weren't able to leverage it in prior to the technology transition. And so when you think about a lot of areas of the country where, as an example, we don't have regional services today, in the future once we have the network optimization complete, we will start to provide those services and offer us an opportunity for additional growth. And then lastly, the whole all-in-one solution concept where we're going to be able to pick up both regional and long-haul services with one driver one truck. That's extremely attractive. It's what our customers have been telling us that they want to see us do with our scale and size, I think you can see the opportunity that's in front of us from there. So that's a lot that I just mentioned, but it's certainly something that we're excited about, and it's a growth story in the end of the day.

[Jack Atkins:]

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

[Dan Olivier:]

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

[Operator:]

Our next question will come from Scott Group with Wolfe Research.

[Scott Group:]

A few one -- a few questions for me. Just following up on one from Jack. Do you see enough to say that you’ll be profitable in the first quarter from an operating ratio perspective?

[Darren Hawkins:]

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

[Scott Group:]

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

[Dan Olivier:]

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

[Scott Group:]

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

[Darren Hawkins:]

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

[Dan Olivier:]

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

[Darren Hawkins:]

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

[Scott Group:]

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

[Dan Olivier:]

No, that’s going to be, I guess, in the more of what -- like how you described it as normal. Obviously, spending $600 million in CapEx over 5 quarters as we’ve always talked about that being about double what our normal cadence of reinvestment is going to be. In 2022, we’re definitely going to return to that more normal level that $325 million to $400 million, that includes more than 450 tractors, 2,200 trailers. Some of that will be dependent on the mix of equipment and production slots available. But on a go-forward basis, it’s fair to think that, that’s going to be the range that we’re probably going to fall into.

[Scott Group:]

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

[Darren Hawkins:]

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

[Dan Olivier:]

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

[Operator:]

Our next question will come from Bruce Chan with Stifel.

[Bruce Chan:]

Congratulations here. Darrel, I appreciate the color and the detail around One Yellow. Just maybe wondering if you can help us to understand the magnitude of that linehaul and P&D network consolidation as it kind of filters through the model there because it feels like this could be pretty powerful with the labor efficiency and with the equipment efficiency. Is it too simplistic to say that you're replacing 3 P&P drivers with 2 or 4 with 3 or something like that?

[Darrel Harris:]

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

[Bruce Chan:]

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

[Darren Hawkins:]

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

[Bruce Chan:]

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

[Operator:]

Our next question will come from Jeff Kauffman with Vertical Research Partners.

[Jeff Kauffman:]

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

[Dan Olivier:]

Yes, Jeff. So let me start with how -- overall, we feel good about where we’re at in our single employer pension plan. Our funded status has improved by nearly $200 million over the last 2 years. And our total benefit obligation, which was over $1.1 billion at the end of 2019 is now just over $800 million. We believe the parcel and annuitizations that I mentioned in the opening comments that has strengthened the balance sheet, reduced the risk of volatility. I’m not going to get a lot into pension plan accounting on this call. There’s a lot of information that will be in the 10-K about it. Essentially pension plan accounting and the short of it is unamortized losses and pension plans get amortized over the life expectancy of the participants in the plan at such point that you annuitize any of those pension obligations and assets, you recognize those losses and those come through as a nonoperating expense that $60 million of nonoperating expense that you see on the income statement, $54.9 million of that was related to the fourth quarter annuitization.

[Jeff Kauffman:]

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

[Dan Olivier:]

Yes. Again, the other comprehensive loss relates to -- primarily to the pension plan accounting just for the periodic actuarial changes in the value of plan assets. Again, when you recognize the value of those and remeasure the plans, that’s when you see it up in the nonoperating section. Again, in the 10-K, you’ll see the roll forward of the accumulated losses, the unamortized losses which are now at $185 million compared to $370 million just 2 years ago.

[Jeff Kauffman:]

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

[Dan Olivier:]

No, absolutely not. The $600 million that Darren referenced that was over that 5-quarter period, all of the equipment is actually mostly completed by the end of Q3 already in 2021. So there’s no bleed over into 2022 for any of the tractors or trailers that we’ve been talking about for it feels like 2 years, but it’s only actually 15 months now.

[Jeff Kauffman:]

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

[Dan Olivier:]

We don’t have a magical target there. It is very important to us that we maintain a strong liquidity position. We finished the year at over $350 million. That’s 5 straight quarters where we’re at the elevated level. And our plan is to keep it at that some we’re in a comfortable position where we don’t have to worry about the risk of short-term decisions.

[Operator:]

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

[Darren Hawkins:]

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

[Operator:]

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