Yellow Corp (YELL) 2014 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to the YRCW third quarter earnings call. (Operator Instructions) Thank you. I would now like to turn the call over to Stephanie Fisher, Vice President and Controller. You may begin.

Thank you. Good afternoon, everyone, and thank you for joining us for the YRC Worldwide third quarter 2014 earnings call. James Welch, Chief Executive Officer of YRC Worldwide; Jamie Pierson, CFO of YRC Worldwide; and Darren Hawkins, President of YRC Freight, will provide comments this afternoon. James, Jamie and Darren will be available to answer questions following our comments.

Now for our disclaimers. 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, thus, actual results may differ materially. This includes statements regarding the Company's expectations, assumptions of future events and intentions on strategies regarding the future. The format of this call does not allow us to fully discuss all of those risk factors. For a full discussion of the risk factors that could cause the 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.

Additionally, please see today's release for a reconciliation of operating income, loss to adjusted EBITDA, and the reconciliation of adjusted EBITDA to net cash flow from operating activities and adjusted free cash flow deficit. During this call we may refer to the non-GAAP measure of adjusted EBITDA simply as EBITDA.

I'll now turn the call over to James to provide comments on our third quarter results.

Thank you, Stephanie.

We appreciate the opportunity to talk to all of you about our third quarter results. I'll make a few comments before turning the call over to Jamie for the financial update, and then Darren will provide some further remarks about the performance of YRC Freight.

To begin with, I am pleased with the overall progress that the YRCW operating companies made throughout the third quarter. The number one priority at each of our four operating companies for the quarter was pricing and volume improvement, which drove profitability. Certainly the freight environment is healthy and our sales force has done a good job of selling our value proposition to obtain higher pricing and revenue per shipment. And it's encouraging to see that the yield trends continue to improve across the operating companies in October as well.

At YRC Freight they were able to improve sequentially throughout the third quarter in several important areas, including yield. Yield improved every month in the quarter and we continue to see that trend in October. Revenue per shipment was up 3.5% in the quarter. And as you saw in the press release, revenue per hundredweight improved 3.3%.

Proactively managing the mix of business in the YRC Freight network has been a challenge and after some starts and stops over the past couple of years they were able to make some definitive progress during the quarter. Their network operation and service was consistent, which decreased local terminal cartage costs for the quarter as well. So as a result, the operating ratio for YRC Freight improved every month of the third quarter with September delivering one of the best operating ratios since mid-2008.

At the Regional carriers, Holland, Reddaway and New Penn continue to turn in solid performances. The Regional carriers provided outstanding service with excellent quality during the quarter. They were also focused on improving their yield as their revenue per shipment was up 3.6% with revenue per hundredweight up 2.1%. Their pricing results and trends continued to be favorable in October as well. We believe our Regional carriers are uniquely positioned in the market areas they serve as the customers have come to depend on the value that Holland, Reddaway and New Penn deliver and are willing to adjust prices in order to utilize these carriers.

In summary, the YRCW operating companies remain focused on delivering a fair value proposition in the marketplace that allows us to be fairly compensated for the services that we provide. You will see us continue to work on the mix of our business in a very diligent way to make certain that we can favorably adjust our prices moving forward. And as I have stated before, while we want to grow our business over time, our priority and focus is growing the right freight at the right price.

Additionally, we will continue to invest in the business and bring new equipment on line. Over the next 6 months we expect to replace over 600 tractors and 2,000 trailers within the fleet as a part of this investment. In addition, we are in the process of rolling out the dimensioners we have discussed previously and we're very satisfied with the early returns from this investment.

As we said last quarter, we are also upgrading technology for our line-haul planning system at YRC Freight. We also have been analyzing in-cab safety technologies and will soon roll out a pilot program so that we can take another important step toward improving safety. All of our operating companies are investing more in training, especially with drivers, and we now have more driver recruiters than we've ever had before.

We fully expect to continue improving our operating results as we move forward and I believe that we're in a better place than any other time in our recent history.

With that, I'll turn the call over to Jamie.

Thanks, James, and good afternoon, everyone.

For the third quarter of 2014 we reported revenue of $1.3 billion, an increase of $70 million over 3Q 2013 from top-line growth at both YRC Freight and the Regional carriers. The increase in revenue was due to the tonnage and pricing increases at both segments which allowed us to report consolidated operating income of $26.7 million, a $20.9 million increase when compared to 3Q 2013, and adjusted EBITDA of $81.6 million, a $19.7 million increase for the quarter.

For the year-over-year third quarter stats, YRC Freight's tonnage per day was up 1.2% and Regional tonnage per day was up 3.5%. YRC Freight's revenue per shipment was up 3.5%, which included an increase of 3.3% in revenue per hundredweight and an increase in its weight per shipment of 0.2%. The Regional carriers, on the other hand, increased their revenue per shipment by 3.6%, their weight per shipment increased by 1.5%, and their revenue per hundredweight increased by 2.1%.

On a segment basis, for the third quarter of 2014 YRC Freight reported operating income of $8.8 million, an $18.5 million improvement over the prior year, which translates into an operating ratio of 99%, an improvement of 220 basis points over last year's comparable quarter. Further, Freight reported adjusted EBITDA of $38 million, a $13.8 million increase from the third quarter of 2013, primarily due to increases in revenue per hundredweight, somewhat offset by increases in SWIB, over-the-road purchase transportation and cargo claims.

Our Regional segment reported operating income of $24.4 million, an increase of $4.4 million over 3Q 2013, and an operating ratio of 94.9%. On an adjusted EBITDA basis, the segment reported $43.2 million, which was an increase of $4.9 million over the third quarter of last year. Not too dissimilar from Freight, the increase is driven by additional shipments, as well as improved pricing due to tight capacity and the strong disciplined pricing environment, and was partially offset by increases in SWIB, local terminal cartage and vehicle rents as we continue to enter into operating leases for our new tractors and trailers.

In terms of liquidity, at the end of the third quarter of 2014 our cash and cash equivalents and amounts able to be drawn under our ABL facility remained relatively consistent at $213 million, up slightly from the $209 million at the end of our second quarter.

In closing, well, I'd like to say a few things. One, we continued and will continue investing in technology as we are seeing the biggest bang for our buck in this area. Two, despite an increase in short-term rental expense, the Regional segment still posted a respectable 9% EBITDA margin for the quarter while balancing tonnage and pricing growth. Three, and just as a reminder, the Regional segment will have four less working days in the fourth quarter of 2014 versus the fourth quarter of 2013. And fourth and finally, I am pleased with the rate environment and our company's ability to take advantage of it and believe there is still room to improve from even our current levels.

I would also like to say that YRC Freight operated much better this quarter, both on a year-over-year and a sequential basis, but we'll let Darren walk you through some of the things they did this quarter and some the things they expect to do going forward. Darren?

Thanks. And good afternoon, everyone.

I am pleased to see the network investments from earlier this year in additional drivers, terminal capacity, sales resources and operational initiatives driving good results in Q3. YRC Freight results gained momentum as the quarter progressed from an operating and yield standpoint. The industry is still fairly balanced from a supply and demand perspective as our negotiations on contract renewals are producing solid results. We have completed over 80% of those renewals for the calendar year and expect that trend to remain consistent. As the results show, increased pricing power and steady volume combined to produce better performance at YRC Freight.

From an operational standpoint, the three terminals we converted to distribution centers in Q3 are all running smoothly and are making a positive contribution to our service and capacity commitments to our customers. Recruiting and hiring efforts were successful throughout the quarter and set the stage for significant local terminal cartage reduction that we realized in August and September.

The revenue pipeline remained steady and our gatekeeping efforts to improve revenue quality on new business is benefiting our overall mix and targeted lane volume, which is a nice complement to our national line-haul network and should continue to create efficiency opportunities for us going forward.

As previously mentioned, our dimensioner additions are certainly contributing to our profitability. As of today we have installed 37 of 42 planned dimensioners at YRC Freight and are on track to have all 42 installed by the end of the year.

And while we improved in our strategic pillars of safety, service and efficiency during the third quarter, there's still upside in the following areas: pricing, distribution center operations, technology and network planning and efficiency. In terms of timing on these, as you would expect, it follows a short-, mid- and longer-term timeline. We anticipate being able to see more immediate benefits from a couple of these items, like pricing and distribution center operations, while others like technology and network planning will gain traction in segments over several quarters.

In closing I would say that two tough numbers to move quickly in the right direction in LTL are yield and the onboarding of drivers. YRC Freight accomplished both in Q3 and that trend continues today. I can tell you first hand that the YRC Freight team is focused on the customer and we have the network, capacity and talent to guarantee our confidence delivered brand promise to the marketplace.

With these comments, we are ready to take your questions.

(Operator Instructions) Thom Albrecht, BB&T.

Hey, guys. Really nice to see the progress here. I have a variety of questions. So refresh my memory on rail service. I was just trying to think, anything that might go wrong that we haven't given thought to? What percentage are you allowed to put on the rails and what are you actually doing? What's been your experiences given their problems?

Good afternoon, Thom. This is Darren.

Hey, Darren.

Our percentage is 26% combined between over-the-road purchase transportation and rail. 6% of that can be over-the-road purchase transportation. Now, we do bump up against the top of that on the rail side from about a 21% actual number. And we're having right now to utilize certain days of the week and reduce our exposure to rail in certain lanes due to the service that we've been getting.

Okay. And then -- I want to make sure I'm thinking about the fourth quarter correct. There's four less working days, as Jamie mentioned, so would that mean that you would expect the EBITDA to be similar in the fourth quarter or -- I mean I was thinking it could be a little bit more. But not knowing how to weight these days, I'm sort of thinking that the turnaround might trump seasonality. So if I could get some thoughts on how we should look at EBITDA from Q3 into Q4.

Hey, Thom, it's Jamie. Yes. Just to be clear, that four days is only at the Regional segment, not at Freight. And it's going to be a little bit easier for you guys doing your models because, obviously, the Regional segment's been more stable than has been Freight. So I would just look at the third quarter of 2013 and do your extrapolation that way based on the number of days.

Okay. But what about EBITDA, just so you guys can set expectations accordingly while you're working hard to make this turnaround happen.

Yes. We still don't give guidance on EBITDA just yet, Thom.

Okay. And then maybe, James, for you at Freight. So September's tonnage per day was basically about flat. You mentioned favorable trends in October. What was that and why is the long-haul tonnage flattening out? Is it because of your pricing initiatives or is it because now we're back to the same challenge where the long-haul market generally has not been growing for a long time?

Well, Thom, this is James. Good question. Our priority over the last really four or five months has been finally getting our freight mix and pricing in the position where we like it. Coming off of the MOU and refinancing and severe winter weather, and just trying to get the Company back moving again after the stress it went though during the fourth and first quarter of last year it took us a while to get the momentum the way we wanted it. And we've really seen pricing pick up these last several months much better than it did the first five or six months of the year. And so that's really our priority. We think we have a chance with the way that the freight environment is right now to finally fix that freight mix first and then we'll set our sights on growing. But clearly, our number one priority is improving our yield and putting ourselves in the position that we can take advantage of the freight market.

So would October yields, what you've seen so far, have accelerated versus September, the rate of increase, just like we -- you saw in the press release?

Well, I can't give you specifics but I'll just tell you that that trend has improved from July, August and September on into October, but I can't give you the specific number.

Okay. I'll jump back in the queue. Thanks.

Thanks, Thom.

Rob Salmon, Deutsche Bank.

Hey, good afternoon, guys.

Hi, Rob.

How you doing?

Pretty good, thanks. You guys highlighted kind of the sequential improvement in yields at both of the segments. How much of that do you guys attribute to the installation of the dimensioners versus kind of getting the service back to where you guys have wanted it at Freight in particular, but any additional comments you've got on Regional would be helpful, too.

We don't think it's highly attributed to the dimensioners just yet. Obviously we've been rolling out those machines for the last several months. And as Darren said, we still have a little ways to go. We like the early returns that we're getting and how it looks for the future, but I think it's a little too early to say that it was a significant piece of the yield improvement.

Okay. And then we've had a lot of competitors who have announced general rate increases. I haven't seen one out from either Freight or Regional. How are you guys thinking about the GRI? And any sort of commentary you have on magnitude and timing, that would also be helpful.

You'll see YRC Freight go with a 5.9% increase December 1st and the regionals are just fine-tuning their GRI and we'll know that shortly.

Okay, that's helpful. And perhaps, Jamie, you could give us a little bit of color in terms of the BIPD and the cargo claim in both of Freight and Regional. It sounded like the claim's a little bit of a headwind. Any sort of additional color you could have would be helpful.

Yes, sure. So in terms of BIPD, I don't group BIPD and cargo claims together. It's more of a workers comp and BIPD. And what I would say on a quarter-over-quarter basis, they basically offset each other. So it was pretty muted for the quarter and I think that's pretty much what I had expected last quarter when we were on this call. That's not the same for cargo claims. Cargo claims is still trending up a little bit more than what we would like. But in terms of the magnitude, probably a little bit higher at Freight than at the Regional companies, but nothing significant.

And is that one of the areas where you see as being a big opportunity in terms of coming down over time as you get your work force kind of ramped up with regard to the cargo claims?

We think so, Rob. This is James. And if Darren wants to jump in there he can. But it's all part of moving the Company forward after we cleared the MOU in the first quarter and the surge in volume in the second quarter and the number of new hires in casual that we've hired in all the companies. But we certainly think that we're positioned well to drive that number down.

Darren, is there anything you want to talk about there?

Yes. And the only thing I would add, and it's in addition to James' opening comments around that training cycle, as we see it mature then claims come down.

Yes.

Is there any sort of quantification you guys could provide in terms of the magnitude that cargo claims could turn into a tailwind in 2015 if you guys continue the performance you guys are showing in Q3?

Really, I don't think it's that material. If you think about what we spent in terms of expenses this quarter, being about, what, $1.3 billion, it's not going to be a significant piece of that.

Okay, that's helpful. I'll jump back in the queue.

Thanks, Rob.

Scott Group, Wolfe Research.

Hey, guys. Afternoon.

Hey, Scott. How you doing?

Good. So James, I know you're not giving a number, but I just want to make sure I understood what you were saying about yields in October. You're saying that they're up more than 3.9%, but you're not giving a number.

You're good, Scott. Yes, that's what I'm saying.

Okay. I just wasn't sure I understood correctly. Okay.

Yes.

And then did you say -- did you give any color on October tonnage?

No, we don't give any guidance in that area just yet.

Okay. You mentioned the monthly operating ratios got better as the quarter progressed. I don't know if you can maybe give us a sense on where September finished and do you feel comfortable saying do you think Freight will be profitable or not in the fourth quarter?

Obviously, what I meant by that was that the operating ratio did improve from July and August into September. September was the best month of the quarter by far. We like what's happening at Freight. The key to their success in the future is going to continue to get their freight mix the way we want it and we think we've made a lot of progress there. We've got some initiatives underway on the planning side to make our line-haul network more efficient. We're looking at some other things to really operate better in these DCs.

So I like what YRC Freight is doing. They had operating income for the third quarter that we liked, but certainly was better in September and we think that that's going to bode well for us going into the fourth quarter. But obviously, I won't predict whether -- or what the number will be for the fourth quarter, but we like the direction they're headed.

Okay. That makes sense. Jamie, can you -- you talked about good bang for the buck on the technology and some spending. What's a good CapEx run rate going forward? I don't know if you guys have given that yet.

No, we're not. What I would do, Scott, is we spent about $75 million last year in CapEx, and that's true GAAP CapEx. We took on the equivalent value of another $75 million in equipment, so that's about $150 million, if you include those two together. We've been pretty consistent about saying that we've got to start addressing the delinquent spend. I think we're going to do that this quarter, which probably is one of the highest quarters. If I went back in the last probably two or three years in terms of our CapEx I think we spent around $22 million, $23 million. I wouldn't just take what we did last year. Know that that trend's going to continue on and you kind of look at this quarter as a barometer.

Okay, that's helpful. And just one last quick thing. What percent of the business is impacted by the GRI?

Hey, Scott, this is Darren. It is 20% to 25%.

That's Freight. And it's about that or a little bit more at the regionals.

Okay, great. Thank you, guys.

You bet.

David Ross, Stifel.

Yes, good afternoon, gentlemen and Stephanie.

Hey, Dave, I was hoping to say at my opening remarks that we're broadcasting live from the home of the World Champion Kansas City Royals, but I wasn't able to make that happen for you there, buddy.

I know, I know. The Orioles tried to let you win but -- anyway, tough loss. It was a good--.

Yes.

Season all around.

Yes. Yes.

A question first on the regionals. And Jamie, you may have answered part of this in your opening comments. Just wonder why the OR wasn't better. I guess with the tonnage gains and yield gains we were expecting a little bit more. You mentioned short-term rental expense, but was that really the only issue or was there something else there we're missing?

No. Dave, if you look at just the Regional segment, I mean, good balance; I'd say pricing and tonnage growth, SWIB increase, but not as much so there's good operating leverage there. The biggest area is the vehicle rents and I'd say that's really in two particular buckets, because I mean that's kind of a very encompassing statement. One, that's where our leases go through. So in terms of our operating leases, that's what's coming through and I've been pretty consistent about that pressuring margins. But also, because of the increase in shipments late -- or I guess earlier in the year, that we've actually held onto in that segment, we've had more short-term rentals than we would have otherwise and so that hit us there as well. So I'd say vehicle rents was a headwind for us. And again, a little bit of cargo claims and a little bit of local cartage, but that's about it.

Okay. And then the 600 new tractors that are going to be brought in, are those going to go to YRC Freight, to the regionals, spread throughout? How do you break those up?

It'll be a mixture, Dave. The regionals are probably getting the biggest percentage on this round, but as we move forward YRC Freight will catch up. I'd say YRC Freight's getting the most trailers, however, and the regionals are probably getting a little greater percentage of tractors.

Okay. And have the regionals gotten the greatest percentage of tractors so far as well?

In terms of 2014 they have, yes.

Alright. Because you mentioned that the leases were an impact on Regional. I just wanted to know if they were an impact on national as much.

Not as much. In the national group, or YRC Freight -- God, blasphemy -- YRC Freight hasn't historically leased as much. I'm saying the regionals haven't leased as much so it would have a disproportionate impact on their margins.

And then -- and to follow-up on Tom's earlier question about length of haul mix at YRC Freight, was there a move up or down in length of haul and can you talk about what that might have been in the quarter, impacting yield?

Dave, it was flat.

Excellent. And then, Darren, on the driver recruiting side you mentioned that I guess we're adding drivers, maybe some dockworkers. Was it just at the new DCs? Was there a need for more drivers because some were retiring? Because volumes weren't up that much so I wouldn't think you would have had to add too many folks.

Yes, absolutely. It was a mix between land haul and pickup and delivery. And even though you're correct, our attrition is very low single digits, it still represents a nice amount of hiring to meet the demand coming out of the second quarter and also with that small attrition that we've had. So it represented over 1,300 drivers year to date that we've hired.

That's probably more than anybody else could say.

Yes, absolutely. That compares to about half that last year for the entire year.

And then on the service levels, can you comment on where they are at both YRC Freight and the Regional group and then where you want them to be?

Dave, from a YRC Freight perspective, we've been in cycle since July. We're reliable and consistent. Service levels aren't negatively contributing to our business so that's a very positive impact. And I'm pleased with where our network is and I feel like we're well positioned going into Q4.

Yes, Dave, this is James. We don't typically talk about what our service percentages are, but it's not an issue.

Okay. And then a last question just on the sales force at YRC. Is that growing at all or is it the same guys going out there hitting the accounts? And then the second part of that is the new business or the tonnage gains you're getting and the yield gains, is that from replacing low-margin business with higher-margin business, or is that from actually going into existing customers and getting their yields up?

From a total perspective, Dave, it's the fact that our sales reps are doing a really good job of selling our value proposition. And they are getting rate increases. Our customer-specific negotiated rate increases are much better the second half of the year than they were the first. Certainly as we have worked on the freight mix management we've exited some business and have been fortunate enough to gain some business that I think works better for us. And the managing of that mix will continue at all four operating companies as we move forward. So it's a little bit of what you described in each category.

But the sales force generally has been flat?

The numbers of sales force -- the number of salespeople, yes, is relatively flat amongst all four companies.

Thank you very much.

You bet.

Thom Albrecht, BB&T.

Yes. So just kind of delving into Regional a little bit more, even though it had a decent year-over-year improvement in the OR despite the short-term rentals and other things Jamie described, it does feel like for the last 2, 2.5 years it's kind of stalled out. We really haven't had a breakthrough and seen like a 93% or a 93.5% OR. We've seen a number of quarters sub-95%. What do you think is holding Regional back from really rejuvenating its margin story?

Thom, this is James. If you go back over the last couple of years, we've had several situations or instances of cost scenarios that have hurt us. Work comp has been a drag at times at all three of those companies. The short-term rentals certainly a drag at one of them in particular. And they're both -- or they're all three kind of confined to that service area that they serve. It's not like they're expanding their service territories. And their priority has been freight mix management and improving yield. But a couple of categories have really hurt them in that work comp, BIPD area and short-term rentals has really nicked them up more than you might think.

Okay. And then on the equipment that was described, what's the timing on that again? Did you say in the fourth quarter or over the next two quarters? I didn't hear that clearly.

Yes, next six months.

Okay.

The orders are already in and we're just going to be taking delivery of them as we kind of get in queue.

So I mean that feels like a good down payment. I mean, ultimately, how many pieces of equipment have you identified that you want to replace, let's say over a 3 or 4-year period?

Yes. Given the size of our fleet, Thom, I mean we have 15,000 tractors and 45,000 trailers. I mean I'm not going to say we've identified the tractor and/or the trailer. We know which one of those particular units are least effective from a maintenance perspective and that's exactly -- we'll start eating it from the bottom up.

Okay. I think that's it. You still don't want to set the EBITDA? I mean, at the end of the day, I think it -- I guess really what I'm asking is would you internally -- do you believe you'll be able to improve the results whether you look at EBITDA, earnings, whatever, sequentially or how should we on the Street be thinking about that?

It's hard to know exactly what's going to happen in November or December, but October is performing the way we want from a yield standpoint and that's our number one priority above growing the business at this time. And we're going to keep the pressure on that side of it. Be curious to see what happens with some of the dot-com business and some of the things that we handled last year to see if that comes through. So it's just too early to really tell exactly what that's going to be. We have our forecast and we'll keep working towards that.

And--.

Sorry I can't get any more specific than that.

Okay. And kind of like Scott's earlier question, within Regional would the October yield improvement be greater than the 3.8 that was listed for them in September?

As we sit here today that's the case.

Okay. Thank you for--.

Hey guys, there's one thing that we'll say about this, is we're 30 days into this quarter. We haven't even closed the month out yet. We're going to take a little bit longer-term view. We try to be responsive to some of the feedback that you guys have given us about giving a little bit more detail and we'll continue to do that, especially as the business stabilizes.

Okay. Thank you for humoring me.

Rob Salmon, Deutsche Bank.

Hey, guys. Can you give us an update in terms of the union contract extension savings that you guys have realized in the third quarter? What's left that you guys can realize as you look out? And perhaps maybe you could talk about some of the headwinds you've experienced because of higher truckload rate, as well as rail service issues, and how that's all kind of bundling out.

Hey, Rob, it's Jamie. We really never gave any particular guidance, and especially in an intra-quarter basis, so I'd shy away from that. But I would say that some of this is hard dollar savings that we got from the contract in terms of the freeze of the wages. There are some things that are more difficult to get in terms of our absenteeism policy in some of the smaller markets. I think the biggest win for us is the ability to run over-the-road transportation at 6%. Given the rail service that everybody's experiencing, not just us, that's been a real win for us. That flexibility is pretty good for us today.

That's definitely helpful. And then, Jamie, two kind of quick follow-up modeling questions. How should we be thinking about the tax rate for the fourth quarter and into next year? There's a little bit more of a tax tailwind than we were anticipating in the third quarter. And secondly, any sort of interest expense fees that flowed through that line item in the third quarter which will be coming out on a go-forward basis in Q4 given the amendments that you guys did?

I don't have the--.

I think it's only a couple million dollars and it--.

Not from the amendment, though. It went through the interest.

Yes. That was (inaudible). Yes, let us follow up with that one, Rob. We've got the numbers. It's not going to be a big one, but I certainly can give you more specifics.

Alright, fair enough. Appreciate it.

Yes.

Scott Group, Wolfe Research.

Hey, thanks for taking my follow up, too. So I guess what Thom's question was trying to get at, I think, consensus and meeting consensus expectation starts to matter more now. So one thing that might be helpful for us at least is thinking about the bridge between reported and adjusted EBITDA. So call it -- there's like $14 million of other add backs on the adjusted EBITDA. Is that a good run rate going forward? Just not sure how to model that.

Hold on one second. So depreciation and amortization. That's been pretty stable. Gains and losses, that's a de minimis amount. Litter Critter expense, that's been pretty stable. Restructuring fee professions, hopefully we're out of that business here in the near future so you can do with that what you wanted to. Permitted dispositions and other, not a big one. Equity-based compensation, not a big one. Amortization and ratification bonus, that's been pretty stable. So I'd say the three biggest buckets, they've been fairly consistent.

Okay, perfect. Thank you.

Yes.

There are currently no further phone questions. I'd like to turn the call back to the presenters for any closing remarks.

That concludes the call for today. Thanks, everyone, for joining us. Please contact me with any follow-up questions you may have.

Victoria, I'm turning the call back over to you.

Thank you. Again, thank you for your participation. This concludes today's call. You may now disconnect.