Jack Atkins : Yes. Got it. But I mean, would you say that you’re starting to see some indications that the markets getting close to being back in balance, I mean, whether it’s because capacity is active. Are you — as you look at the tea leaves in your business, are you starting to see some of those signs that we’re at a point where things could change quickly if we get a little bit of help on the demand side?
Tripp Grant : Yes. Yes. I think that they are. I mean, I think Paul’s comments about maybe some of the conversations we’re having with customers on rate expectations. I mean, if there wasn’t an overall feeling in the environment that it’s going to change in the near future. I think, we would be talking about some pretty difficult conversations with customers across the board. And I think customers have started kind of accepting the fact that we’re kind of on the tail end of this thing. I mean if you just think about it logically, and I — there’s a lot of things that are illogical about our business. But we’ve continued to watch capacity exit the market. We keep talking about it in at some point, it’s got to happen where it’s going to kind of flip the fundamental.
And I think we’re closer to that than ever. And — our whole business model is based on creating value for our customers who create value for us, and we want to make sure it goes both ways. And we were fair to customers when the market was good, and they’ve been fair to us when the market is bad. And when it flips, we’re going to continue that relationship is going to continue. But I do think that we’re closer to ever just based on the tea leaves and based on the conversations we’re having and based on the data that we’re observing that I don’t think it’s going to be an immediate light switch type of thing, but I think that it’s going to be a dimmer switch, Jack. It’s going to be — they’re going to just gradually turn the lights on, so…
Jack Atkins : Okay.
Paul Bunn: It’s going to be probably a U-shape recovery. And Jack, as we’ve said before, where you’ve got specialty drivers, specialty certifications on drivers, specialty equipment, really engineered networks, customer-facing product is less sensitive than stuff that any broker in America could haul. And that’s where the pressure is at is the broker world, really.
Jack Atkins : Okay. Okay. No, that’s helpful. I guess a couple of last questions, and I’ll turn it over. But when we think about your TEL joint venture that’s below the operating income line, what’s your outlook for that in 2024? There’s a lot of concern about the used equipment market out there. Just sort of curious how that would impact that piece of your business?
Tripp Grant : Yes. I don’t see it materially changing. I don’t see it growing from what it achieved in 2023. But that team has worked hard to grow a big or to grow their business in a quality way with credit quality customers who need those leases in a long-term manner. And yes, they’re — just like everybody else, they’re impacted by the equipment market and the freight environment. And — but at the same time, they’ve got a good foundational base business that is poised for growth long-term. I do think that they’ll maybe take a step backwards slightly. But I don’t think in terms of materiality to covenant, it’s not hugely material, but with increased interest costs and the year-over-year impact of that and the debt that they carry, they’re going to have some kind of — some hits, I think, on that front and maybe a full year effect of a softer equipment market.
But again, it’s just — that’s part of their business model, and I don’t expect them to tank. And if you look — I like to focus on the long term with them because it’s a nice graph upwards and how they performed, there is some year-over-year volatility, but I think we’re just as excited today about the long-term prospects of tail than we’ve ever been.
David Parke: Jack, I’ll echo Tripp’s comments. They took the big reset this last year, and it was pretty much on gains on sale. They were getting some really big gains on sale, and we’re opportunistic in ’21 and ’22 — primarily ’22. And we know that — just like a lot of the truckers took a rate reset in ’23, they took a gain on sale reset. But to Tripp’s point materially there, I expect ’24 to look a lot like ’23 from an earnings standpoint. And they have done a lot from a people standpoint, from a sales standpoint, from a succession standpoint. I mean it’s — they’re looking to the future and looking to continue to grow and invest, not get to where they were the last two years and just sit there.
Jack Atkins: Okay. That’s great. And then I guess last question just on cash flow, your use of cash. I mean you guys pulled forward some CapEx into the fourth quarter opportunistically. You should have some pretty strong free cash flow in 2024 based on the CapEx numbers you guys just outlined. I guess, is the priority for that — for that cash flow is going to be for paying down debt or just given where the stock is trading here at a substantial discount to peers, I mean, would you look to accelerate the repurchase program?
Tripp Grant: Yes. I completely agree with your point about, we’re going to have some pretty nice free cash flow in 2024. If you look at our 2022 capital plan, we — it is in 2023, it is, without a doubt clunky is the only word that comes to mind because we were — we had a strategic plan of converting operating leases in 2022 to owned equipment. We exited that, took a hit on charges to get out of those leases because they were underperforming. We bought new equipment to replace that, then we’re trying to get the — as equipment has become available, we’ve been able to bring down the average age of our trucks from — I think it peaked at 29 months. Now we’re down to 19 months. And so, we bought just in 2023 alone, we bought about 1,200 tractors, which is over half of our fleet.
And so when we — look, what that means for 2024 is from a maintenance CapEx perspective, you’re probably looking at $40 million to $45 million and I’ll just use round numbers of $140 million of EBITDA, I’ll call it. And that’s going to produce some options for us. Right now, we’re about two times levered, and we can use that to pay down debt or it gives us options for other capital allocation opportunities that we’ve exercised in the past, whether that’s stock repurchases or M&A activity or increased dividends or any of those things. We’re not committed to one of them or — but we may do one or both or all. So like I said, that’s just one of the things I focus on cash a lot, and I’m excited about kind of watching some of that cash come in next year.
Jack Atkins: Well, it’s great to have options. So, that’s great to hear. Thanks very much for the time guys. Take care guys. Thank you.
David Parker: Thanks Jack.
Operator: Our next question comes from Michael Vermut from Newland Capital. Please state your question.
Michael Vermut: Hey guys, how are you doing today?
