U.S. Xpress Enterprises' (USX) CEO Eric Fuller on Q1 2022 Results - Earnings Call Transcript

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U.S. Xpress Enterprises, Inc. (NYSE:USX) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET

Company Participants

Matt Garvie – Vice President of Investor Relations

Eric Fuller – President and Chief Executive Officer

Eric Peterson – Chief Financial Officer

Conference Call Participants

Scott Group – Wolfe Research

Brian Ossenbeck – JPMorgan

Christyne McGarvey – Morgan Stanley

Adam Roszkowski – Bank of America

Operator

Good afternoon, ladies and gentlemen. Welcome to the U.S. Xpress First Quarter 2020 Earnings Conference Call. During today’s presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions and instructions will follow at that time. As a reminder, this conference is being recorded.

I would now like to turn the call over to Matt Garvie, Vice President of Investor Relations. Please go ahead, sir.

Matt Garvie

Thank you, operator, and good afternoon, everyone. Welcome to the U.S. Xpress first Quarter 2022 earnings conference call. Eric Fuller, U.S. Xpress’s President and CEO, will lead our call today, followed by Eric Peterson, our CFO, who will discuss our financial results.

Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risks and uncertainties that can cause actual results to differ materially. These risk factors are described in U.S. Xpress’ most recent 10-K filed with the SEC and in the Form 10-Q for the quarter ended March 31, 2022, that is expected to be filed with the SEC in the next several days. We undertake no duty or obligation to update our forward-looking statements.

During today’s call, we will discuss certain non-GAAP measures, which we believe can be helpful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with U.S. GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release.

As a reminder, a replay of this call will be available on the Investors section of our website. We have also posted an updated supplemental presentation to accompany today’s discussion also available on our website at investor.usxpress.com. We will be referencing portions of this supplement as part of today’s call.

And with that, I would like to turn the call over to Eric Fuller.

Eric Fuller

Thank you, Matt, and good afternoon, everyone. Today, I would like to provide an update on the sequential improvement we saw in Variant in the first quarter, highlight key achievements in the quarter from our other business segments and following Eric Peters’ discussion of our financial results, provide our market outlook for the remainder of 2022.

As a reminder, I spent much of the first quarter in Atlanta with our Variant team reviewing the business and determining where we needed to focus our time, efforts and resources to turn the corner from the nimble startup to a sustainable growing business and ultimately improve the profitability of the division.

Variant is the growth engine for our company and improving its financial results is critical to our long-term success. We continue to believe there is a large customer need for one-way freight movement and that we can implement technology to improve capacity, cost and service levels for our customers while at the same time improving the experience for our professional drivers.

Variant generated operating revenue of $84 million in the first quarter net of fuel, an increase of 17% sequentially compared to the fourth quarter of 2021. The increase in revenue was primarily due to the 9% increase in tractor count combined with a 4% increase in average revenue per mile. Exiting the first quarter, Variant is approximating a $360 million run rate business.

In the first quarter, we were able to increase the amount of freight that the optimizer was able to select from, which contributed to revenue per tractor per week increasing 9% sequentially to 4,065. The increase was due to a 5% increase in utilization and a 4% increase in average revenue per mile. We saw utilization improve in the quarter as we reorganized our fleet operations to establish single-threaded accountability, which help to sequentially improve driver availability and lower debt head.

During the quarter, we added 136 tractors to the Variant fleet, exiting the quarter with 1,691 tractors in the fleet. Although we grew our fleet in the quarter, we didn’t grow as much as we would have liked. Variants turnover spiked in the first quarter totaled 148% due to process changes we implemented in the quarter, which we expect will have an overall positive impact on turnover in the coming quarters. However, in the short-term, we saw an increase in turnover as we transitioned to operating workflows, which brought more structure and discipline to our fleet operations.

Turning to achievements in our other business segments. In our Dedicated division, revenue per tractor per week increased 13% year-over-year to $4,709 and was up 2% sequentially from the seasonally stronger fourth quarter. The increase in revenue year-over-year was due to an 18% increase in average revenue per mile, which was partially offset by a 4% decline in utilization. The decline in utilization was partially caused by the number of drivers off truck due to COVID in the early part of the quarter, but the division performed strong in March. Our focus for Dedicated going forward is to continue optimizing the portfolio for profitability. And as such, we expect modest growth in tractor count.

Our Brokerage segment generated revenue of $94 million, an increase of approximately 15% year-over-year and was driven by a 15% increase in revenue per load. This segment produced a small operating loss in the quarter but was within our expectations of being approximately breakeven. We continue to expect this segment to break even for the remainder of 2022.

Before I turn the call over to Eric Peterson to discuss our financials, I want to thank all of our employees who have worked tirelessly over the last quarter to accelerate our transformation at U.S. Xpress. We made a lot of progress in one quarter, which gives us confidence that we are moving in the right direction.

With that, I would like to turn the call over to Eric Peterson.

Eric Peterson

Thank you, Eric, and good afternoon, everyone. This afternoon, I would like to discuss our financial performance in the first quarter and capital allocation priorities as well as provide some financial guidance before turning the call back to Eric to provide our market outlook. Turning to our performance in the first quarter, we generated revenue of $464.3 million, excluding revenue associated with our fuel surcharge program, an increase of 11.2% year-over-year. The increase in revenue was primarily the result of a $34.6 million or 10.3% increase in Truckload segment revenues and a $12.1 million or 14.8% increase in Brokerage segment revenues.

Turning to adjusted operating expenses. Total adjusted operating expenses were $461.6 million, an increase of 12.7% or $51.9 million compared to the first quarter of 2021. This excludes $3 million in non cash write-offs, which we recognized in the quarter. As a reminder, Eric and I spent the last 90 days reviewing Variant, including our technology stack. As Variant transitions from a nimble startup to a scalable business, the team has instituted a more disciplined management approach, focused on key metrics and earnings growth.

Our review determined that to turn the corner, we need to prioritize advancing our freight optimization engine and returning our product index to previous levels. As such, certain longer term technology initiatives, which when it advance our optimization engine or directly contribute to improving our product quality index would no longer be funded.

These write-offs relate to such projects, but represent only a small percentage of our internally developed technological solutions. In the first quarter, salary, wages and benefits increase $27 million compared to the first quarter of 2021 due to increased wages for our professional drivers from both the increase in company miles driven in the quarter, as well as from higher driver pay per mile.

In addition, headcount growth and wage inflation for office staff also contributed to the increase as we continue to invest in our digitization efforts across the company. Operating expenses and supplies increase $12.3 million due to increased driver acquisition costs combined with increased equipment maintenance expenses, due in part to increase company tractors as compared to the first quarter of 2021.

Purchase transportation increased $8.9 million due to increased cost per brokerage load in the quarter, which was partially offset by decrease in independent contractor miles driven compared to the first quarter of 2021. Lastly, the price of fuel rose rapidly in March and had a $6.2 million negative impact on operating income in the quarter.

Turning to our truckload segment. As we have discussed on previous earnings calls, we must continue adding tractor count to our fleet in order to realize the operating leverage potential of our business model. Sequentially, we added approximately 170 seated tractors to our overall fleet, representing the third quarter in a row of sequential growth.

This fleet growth contributed to improved fixed cost coverage in the quarter as fixed costs, excluding revenue equipment related costs as a percentage of revenue decreased sequentially to 29.1% from 30.1% in the fourth quarter. As Eric mentioned, we would have liked to have seen more tractor growth in Variant in the quarter. However, seeing modest fleet growth in a better fixed cost coverage is positive.

We continue to see opportunities to further reduce our fixed cost as a percentage of revenue as we grow our overall fleet size and improve our cost discipline throughout the company. As a reminder, each 1% decrease in our fixed cost as a percentage of revenue contributes approximately $14.8 million of pre-tax earnings contribution net of fuel.

Following our 90 day review at Variant, we continue to believe that our current infrastructure is capable of handling more than 2,000 additional seated tractors without adding additional meaningful infrastructure. This would bring our total seated tractor count to 8,000 total seated tractors and equate to an additional $425 million in Truckload revenues net of fuel, relative to where we are today.

Turning to capital expenditures net of proceeds. For the first quarter, net capital expenditures, which were laid primarily to tractors and trailers was $39.3 million compared to $2 million in the first quarter of 2021. The increase in net CapEx was primarily due to deliveries of equipment, which were previously anticipated in 2021, as well as from fewer net proceeds from the sale of used equipment in the quarter. In terms of capital allocation priorities, we’ll continue to prioritize investment in our fleet as well as our technology initiatives across the company.

Turning to net debt. At the end of the quarter, net debt, which we defined as long-term debt, including current maturities, less cash balances was $408.1 million at the end of the first quarter compared to $369.8 million at the end of 2021. Our leverage ratio was 4.6 times at the end of the first quarter and we expect it to decrease as our earnings grow over time.

Turning to guidance. To assist with your models, we expect the following; a blended low double digit increase in truckload average rate per mile with OTR contract rates up approximately 10% for the full year, likely higher than that in the second quarter, but potentially lower in the second half of the year, due to the tougher comps in the back half of the year.

Modest sequential growth in overall truck count through 2022, primarily driven by Variant fleet growth. We expect to see modest sequential improvement in utilization in the coming quarters. In addition, we continue to expect an effective tax rate between 22% and 24% before any discrete items, interest expense of approximately $16 million for the full year and net capital expenditures between $130 million and $150 million, assuming no additional unknown supply chain issues in the coming months.

We continue to believe that our thesis remains intact, and Variant will continue to improve sequentially as the remediation efforts, we have undertaken continue to take hold. Continued sequential improvement in Variant combined with sequential overall fleet growth are the key to improve financial results in the quarters ahead.

With that, I will turn the call back to Eric Fuller for our outlook.

Eric Fuller

Thank you, Eric. In terms of the overall market, we don’t expect as favorable of a market backdrop in the coming quarters compared to previous quarters. As we have seen a slowdown in freight demand exiting the first quarter. The consumers filling pressure, whether from general cost inflation, higher interest rates or concerns around the geopolitical environment. We are seeing more congestion in the ports outside Shanghai due to the lockdowns in China. However, we expect that pendulum to swing back and an increased need to move that freight once China opens back up, although the timing of this dynamic is uncertain.

In addition, we are also cautious of a more structural shift to experience base spending as COVID restrictions become more relaxed and potentially fewer discretionary dollars are allocated to tangible goods. On the supply side, seating tractors has become somewhat easier across the larger carriers in our industry. While early, this may be a consequence of the rotation out of the spot market business than back into company fleets for some professional drivers.

In addition, as the cycle turns, we expect some drivers will find work in other fields, such as construction, which could help to mute the impact of softening demand along with the continued supply chain issues in the equipment market. Finally, we are seeing increased inflationary pressures throughout the business. Wages, both office and driver are increasing, new equipment prices, insurance, maintenance, and fuel expenses are all up. And taken together, the cost of doing business is increasing across our industry.

This cost inflation can’t easily be retracted and therefore should help to support contract rates in the coming quarters. Beyond the industry factors discussed above, which we consider to be largely out of our control. We are focused on the company specific factors, which we believe are under our control, primarily improving Variants key metrics and sequentially growing our overall tractor fleet.

During the month of April, we saw Variants turnover decline as well as improvement in our safety staff. Further progress on our remediation efforts will be apparent in Variants turnover, utilization, revenue per truck metrics, and eventually total seated tractor count, which we expect improves sequentially throughout the year.

And with that, operator, we are ready to take questions.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Scott Group with Wolfe Research. You may now go ahead.

Scott Group

Hey, thanks. Afternoon. Eric, you – obviously lots of focus on spot market weakness. And just curious your views. Are you seeing any signs of stabilization rebound in spot and any signs that the weaker spot is starting to have an impact on contractual pricing and just more broadly, anything you want to add on that discussion?

Eric Fuller

Sure. Yes. I mean, obviously, we’ve seen weakness in the spot market almost right there to the week of the Ukrainian invasion was when we started seeing a slide and we’ve been sliding almost from week to week, it’s kind of gotten sequentially a little bit worse each week from a pricing perspective and maybe even a volume perspective, just meaning that there’s not as many loads out there available on the spot market as maybe there was previous.

And so we have seen a good bit of weakness. Now, I think the positive is, I think there’s some real concerns on both the carrier side and the shipper side that the market – this more weaker market that we’re in right now is potentially short-lived. I think we have some real concerns from a capacity standpoint as we get into late summer and early fall.

If we start to see China come back online and start to see shipments hitting the ports. And so I think there’s some real concern that you could see of a lot of tightness. So communication with a lot of the customers is more about concern around making sure that we maintain capacity that there’s still a number of trucks to handle any types of surge or excess demand.

And so at this point, we’re not seeing a lot of pressure on the contract side. And I think that it’s the nature of the cycle and some concerns about the cycle being not as long as previous cycles on the downside that I think customers are being a little bit more mindful in this cycle. And I do believe that there’s a lot of macro conditions that could lead this cycle to be fairly short lived.

Scott Group

And then just along those lines, anything that gives you confidence that sort of that spring uptick May June beverage season, produce season, whatever is going to kick in or not kick in any confidence one way or the other?

Eric Fuller

I mean, we really haven’t seen a big surge in produce season and we should start to have been feeling it by now. I think we may see a little bit of a spike as we get in maybe into beverages. But I think the weakness that’s being caused by the shutdown in China, which really we still haven’t really felt yet. Probably keeps a lid on some of that strength occurring in the front half of the summer.

Scott Group

Okay. And so maybe my last question, what does this mean from a margin standpoint? Should we – do you think we’ll see margin improvement in truckload sequentially from that 99% range in 1Q?

Eric Fuller

Yes. Well, I answer it two ways, Scott. I mean, for us, we’re making some significant improvements in our overall results. We’re growing our truck count and we’ve talked about spreading that cost over more units. And so for us, we feel confident that we can see some improvement in our earnings on a sequential basis. I even think broadly that as long as contract rates are able to sustain that most truckload carriers would probably see more positively flat earnings from into Q2 from Q1.

Scott Group

What are you thinking about – do you think there’s a chance for some year-over-year margin truckload for you this year?

Eric Fuller

We do. Yes. I mean, look, our model was definitely about spreading more costs and our cost infrastructure and we’re really – we’re looking heavily at our costs, seeing where we can take down costs, but also trying to spread that cost over more units. And we’re growing, we’ve actually added an additional 100 seated trucks since the end of the – of Q1. And so really what is it, three weeks or so, no, actually more like five weeks, we’ve been able to add a little bit over 100 trucks. So we feel very confident that we can continue to add and that’s going to help earnings for us as we go into the back half of the year, because we’re going to have a lot more trucks spreading that cost out.

Scott Group

Okay. Thank you for the time. Appreciate it.

Eric Fuller

Thank you.

Operator

Our next question will come from Brian Ossenbeck with JPMorgan. You may now go ahead.

Brian Ossenbeck

Hey, afternoon. Thanks for taking the question. So I wanted to ask more about the turnover and I guess the incremental changes you’re making at Variant, if can you elaborate on what the organization was and changing some of the process flows, because it looked like turnover did spike quite a bit. And then if you can follow-up with just where that’s trending in April, because it does sound like there was some improvement.

Eric Fuller

Yes. So we had – we have a internal process engineering team that we had go and do. So as we made those changes in December of last year with Variant on the – from a management perspective, we had a process engineering team go in. And through an analysis on the workflow and the processes and what we identified was a number – as we had mentioned previously, there was a lack of domain knowledge. And so there was some broken processes. And so we re-engineered a lot of the processes and the workflow went back and kind of changed a little bit of the structure to have these, what we call, community smaller groups, managing a group of trucks, so that we can kind of have some connectivity with the driver connectivity, with the trucks and having a line of accountability.

And that got started, the first fleet got rolled out in February, but we had a number of them that got rolled out in April and – or I’m sorry, in March. And in March, we had a good bit of our employees in training to be in training for the new workflow and the new processes that we were implementing. And so what that meant was that we had a lot of people off the floor. We saw a spike in our call wait time. We saw a spike in a number of other metrics that we look at, because we had less people on the floor. And I think we can attribute a good part of that increase in turnover to that situation. As we’ve gotten into April now we have all those communities rolled out. Everybody’s trained.

We’re seeing a good significant improvement in our turnover in April relative to March. And we feel confident that as this new structure has further time to kind of bake we’ll see even better improvements, because that one community that we rolled out in February, we’re seeing substantial improvement in their statistics across the board, whether it be utilization, whether it be deadhead, turnover, really everything that we look at looks positive in that community relative to everything else. And I think as we get more time under our belt with the rest of the communities, we’ll see some similar results.

Brian Ossenbeck

So it sounds like the reason for the turnover on the driver’s side was maybe they just didn’t want to go through the training or they’re doing things differently. Maybe I just put a finer point on that, like, we’re getting more efficient, cause them to leave.

Eric Fuller

Yes. So it was more about in March, we had people off the floor. And so there was some frustration for the drivers, because, let’s say, we average answered a phone call within 30 seconds. Well, when we had a good portion of our people off the floor, so they were training for this new workflow that call wait time spiked up and drivers were getting more frustrated easier and quicker. And so we had drivers leaving, because they weren’t satisfied with their day to day interaction with our fleet. Now that we have the – everybody back in not in training back on the floor and working under this new structure, we think we’re going to see some significant improvements and we’ve already seen it in the early side of it.

Brian Ossenbeck

Okay. Got it. And then just on the breakeven point and where you think you can get there, how many trucks? Has that changed the number of seated trucks in terms of where you need to hit before you get to that breakeven point? And if it has changed, what are some of the dynamics that have come into that fixed cost structure? Do you think you can have a good chance of pulling out rather than just spreading it out over more trucks?

Eric Peterson

Yes. I think that fixed cost inflection point, Brian, is where we talked about it before, and I’d like to guide you to Slide 6 in our supplement, where in the fourth quarter we said, our fixed cost as a percentage of revenue were just too high, and that was a 30% number. And we basically guided that for every 250 trucks we added, it would drop between 1.5% and 2%. Our fixed cost as a percentage of revenue and what you saw happen in the first quarter is we increased our average seated tractors by 170, and they dropped by 1%.

And so what – that’s the proof point for you that we were at that inflection breakeven point, where the extra volumes are going to contribute to earnings on the bottom line. So we’re continuing to grow in the quarter. And so we still have a similar trajectory of growth. And so we should – you can watch that line, that’s our success. As you see our seated tractors grow that we talk about on every quarter, that’s where you’ll see the margin expansion.

Brian Ossenbeck

Okay. And then just one quick follow-up, if I could. Just on – can you give some update on load growth trends within brokerage came in a little bit weaker than at least we were expecting and seems like a pretty good time to be a broker. So an update on that and where you see that going throughout the rest of the year. And so anything, maybe hit crimped that volume growth starting off here in the first quarter. Thank you.

Eric Fuller

Yes. So volumes were flat in Q1 relative to the previous year. We intend – how we manage our brokerage obviously is a component of it is trying to maximize the selectivity for our trucks. And so as we get into cycles where maybe we’re not getting the full volume from our customers, we may have to dip a little bit into that brokerage volume. So there could be some headwinds there on an overall volume perspective and brokerage as we try to maximize the utilization and the selectivity for our assets, first and foremost. But with that said, we are moving into a much more favorable market. We are seeing opportunity to source capacity much easier than what we had seen really up until probably March. And so we anticipate being in positive territory for the rest of the year in our brokerage division.

Brian Ossenbeck

Okay, guys. Thanks for the time. Appreciate it.

Operator

Our next question will come from Ravi Shanker from Morgan Stanley. You may now go ahead.

Christyne McGarvey

Hey guys. This is Christyne McGarvey on for Ravi. Thanks for taking my question. Just wanted to circle back to one of your comments earlier in the call about your kind of thoughts that there might be a fairly short lived kind of down cycle here. Hoping you can unpack that for us a little bit more? Maybe with a particular eye to capacity, I think, traditional wisdom is that in a down cycle, some of that long tail goes away, but we also haven’t seen an influx of capacity in the up cycle. So how are you guys thinking about that playing out?

Eric Fuller

Yes. I mean, typically, what it takes from peak the trough, it’s about six quarters or so. And typically, it’s supply driven, so you have the supply starting to bleed out of the market and it kind of takes that amount of time. I think we have some interesting dynamics this cycle. One, a lot of the new entrants that came in came at a very high price point. So they were buying tractors maybe off the used market, maybe a few in the new market, but most likely the used market, but still buying at premiums. So, locking in equipment cost and both on the truck and trailer side at a very high point. They’re also paying very high fuel rates right now and they’re seeing depressed rates in the spot market.

And I think that most new entrants probably don’t know how to weather that in this scenario. And I think that they’re seeing a higher cost point than what we’ve seen in prior cycles relative to the spot rates. And so I think – one, I think you’ll probably see capacity start to matriculate out quicker than what you’ve seen in prior cycles. I think right now, there’s still a strong used truck market. So you may see people take advantage of that and try to put trucks back out into the used truck market quicker, to walk in, those prices and not be as exposed to the market.

So we anticipate from a supply perspective that supply could come out much, much quicker. Now, demand, I think is the big question mark, but we do think that as we see China come back online and maybe shipments starting to hit the U.S., maybe August or early September, we could start to see kind of that pendulum swing, where there’s pent-up demand because there hasn’t been a number of things that haven’t been shipped start to hit the shore. And so you start to see demand spike. So that’s where we kind of see, there could be a little bit of a perfect storm that flips this market relatively quickly.

Christyne McGarvey

Got it. That’s really helpful. And maybe you can ask one more just about kind of the fixed cost as a percentage of revenue dynamic. Is there a scenario where slightly looser market, if we do enter that kind of actually helps on that front, because seating tractors becomes easier, getting tractors becomes easier? Or will any sort of softer backdrop push that part of the story out as well.

Eric Peterson

Yes. You’re exactly right. To the extent, we can accelerate our growth that makes our fixed cost on a per unit basis that we have to clear lower. And so as much as that worked against us when the market was so tough and we dropped 900 seated tractors over a period of a year, where it worked against us a softer market would actually be very favorable for this purpose.

Christyne McGarvey

Got it. Really appreciate the time. I will leave it there.

Eric Fuller

Thank you.

Operator

[Operator Instructions] Our next question will come from Adam Roszkowski with Bank of America. You may now go ahead.

Adam Roszkowski

Hey, this is Adam Roszkowski on for Ken Hoexter. Thanks for taking my question. You mentioned on the brokerage business, you expect breakeven for the rest of the year. But that there’s upside for low growth. So I guess, the question is what is it going to take – to get this business to get some leverage in this business. And then another one is just can you remind us what percentage of the over the road truckload business is tied to spot?

Eric Fuller

Yes. So on the brokerage fees, we’re focused on driving profitability in that business unit. And so I feel confident that we can drive profitability and potentially, greatly improved profitability from where we’re at. Now there’s obviously we were hire – from a volume perspective, because we are prioritizing our trucks, first and foremost, and we are seeing a little bit of pressure there from a volume perspective relative to where we were last year.

And so we’re – like again, I think we’ll be profitable. I think we have a line of sight to maybe being even further improved than what we’re – maybe what we’re anticipating today, but we’re working through those items and hopefully over the next couple quarters, we can see some significant improvement in that brokerage profitability. As it relates to spot as a percentage of our overall revenues, I think we typically run in that 10% to 15% range. But as a percentage of our OTR, it’s more like 25% then sometimes can spike up towards 30%.

Adam Roszkowski

Got your. And then just following up on the brokerage question, but basically, break even operating ratio for the rest of the year, but positive volume momentum kind of from here on half of the back half, is that the right way to reach…

Eric Fuller

I think positive momentum as it relates to profitability. I think there’s some constraints around volumes. Potentially, as we, like I said, prioritize our assets. And so I think there could be some headwinds as it relates to overall volumes and brokerage, but I think profitability, we feel very, very confident that we can drive profitability through the rest of the year in our brokerage division. And I think there’s some opportunity to further improve upon that.

Adam Roszkowski

Okay. Thank you.

Eric Fuller

Thank you.

Operator

That concludes our question-and-answer session. I would now like to turn it over to Matt –pardon me, Eric Fuller for closing remarks.

Eric Fuller

Thank you everyone for your participation today. Before we close, I want to reiterate that these internal improvements we’re making in Variant are well within our control, and we’ve seen significant improvements in our key metrics in April, and we feel very confident that we are going to drive the type of results that we are focused on. We are focused on making the right changes and focused on driving the right metrics and we are as a team very dialed into what we need to deliver going forward. We thank you for your support and we look forward to providing a progress update on our second quarter call. Thanks you so much.

Operator

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

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