Global Business Travel Group, Inc. (NYSE:GBTG) Q4 2022 Earnings Call Transcript

Global Business Travel Group, Inc. (NYSE:GBTG) Q4 2022 Earnings Call Transcript March 9, 2023

Operator: Good morning. And welcome to the American Express Global Business Travel Fourth Quarter and Full Year 2022 Earnings Conference Call. As a reminder, please note today’s call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Barry Sievert. Please go ahead, sir.

Barry Sievert: Hello, and good morning, everyone. Thank you for joining us for our fourth quarter earnings conference call. This morning we issued an earnings press release, which is available on the SEC and our website at investors.amexglobalbusinesstravel.com. A slide presentation, which accompanies today’s prepared remarks, is also available on the Amex GBT Investor Relations web page. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry trends, cost savings and acquisition synergies, among others. All forward looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today’s conference call.

More information on these and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today’s call, we will also be presenting certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, free cash flow and net debt. All references during today’s call to such non-GAAP financial measures have been adjusted to exclude certain items. Definitions of these terms and the most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me on the call today are Paul Abbott, our Chief Executive Officer; and Martine Gerow, our Chief Financial Officer.

Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Head of Global M&A. With that, I will now turn the call over to Paul. Paul?

Paul Abbott: Thank you, Barry. Welcome and thank you for joining our fourth quarter earnings call. I’d like to kick off by reviewing the fourth quarter highlights before turning it over to Martine to take us through the financials. We will then go through our outlook and guidance for 2023. So before I cover Q4 earnings, I would like to address the 8-K we filed on Tuesday. Martine Gerow, our CFO, will step down from her role to take a position outside of the company. Karen Williams, who joined Amex GBT as Deputy CFO in May of last year as part of our succession planning process for the CFO role, will take over effective July 1st. Karen joined us from IHG, as well as prior to that working at Avios, which is part of IAG and also American Express, Karen has held a series of senior financial leadership roles.

Martin is going to be with us until the end of June. So we have plenty of time for a very thoughtful and orderly transition. I do want to extend my sincere thank you to Martine for her leadership and her significant contribution to our business in her five and a half years as CFO. Martine helped navigate the organization through the financial impact of the global pandemic, and of course, was also instrumental in leading the successful listing of the company. So welcome and congratulations to Karen, and of course, Martine. So turning back to the fourth quarter, we reported a strong finish to 2022, driven by continued recovery, record new wins and margin expansion. Our full year revenue and adjusted EBITDA were both ahead of guidance at $1.85 billion and $103 million, respectively.

Revenue recovery for the fourth quarter reached 75% of pro forma 2019 levels and that was up from 72% in the third quarter. Our fourth quarter adjusted EBITDA was $43 million with an 8% adjusted EBITDA margin. Pleased to say we’re also on the path toward positive free cash flow with significantly reduced cash usage in the fourth quarter. Free cash flow usage in the quarter declined significantly to $25 million. We also continue to accelerate our momentum in SME. The SME space, we benefit from offering a choice of market-leading solutions, Amex GBT and Egencia and Ovation, in what is a very large and unconsolidated segment, a segment that has the fastest growth rates and the highest margins in the industry. Our SME transaction recovery reached 82% in Q4 and that was up from 80% in Q3.

Our SME new wins value totaled $2.1 billion in the full year 2022 and that is at the current recovery levels. Now that we have reached what is a meaningful point in the travel recovery, please note that we are reporting our new wins for SME and overall using the current recovery levels instead of the previous 2019 pre-COVID levels. And that’s to make it easier for analysts and investors to model the impact of those new wins on our current volumes. So in addition to the strong SME momentum, I am pleased to report that new wins value and customer satisfaction levels are also both at all-time highs, which I think really demonstrates the value of our industry-leading service and technology and software and savings. Our strong momentum positions us well for continued strong growth ahead.

Transaction recovery reached 72% of pro forma 2019 in the fourth quarter. That was up from 71% in Q3, and importantly, up 26 points year-over-year. Our new wins momentum, I think, it shows that we continue to deliver on the significant organic growth opportunity that we have. Total new wins value for the full year 2022 was $3.5 billion. Again, that’s at current recovery levels. And finally, and obviously, equally importantly, our customer retention rate for the full year remains stable at 95%. So, overall, we exceeded our 2022 guidance for both revenue and adjusted EBITDA. We delivered on the share gains on SME acceleration and exceeded the $25 million synergy target that we had from the Egencia acquisition. And so as we look ahead to 2023, feel that we are well positioned for continued strong growth.

So on slide six, let’s just take a closer look at the continuing recovery where our performance continued to improve throughout the quarter. Transaction recovery was at 72% in 2019. That was up 1 point sequentially and 25 points versus Q1. And we’re clearly outpacing the broader market. 72% transaction recovery compares to the GBTA January survey that found the recovery of domestic business travel at 67% and international at 54%. So that compares to our 72% transaction recovery and 75% revenue recovery in the fourth quarter, clearly outpacing the broader market. Looking at Q4, December was softer than expected across the industry, but we have seen a significant rebound of transaction volumes in January and February. And as I’m going to discuss in more detail the outlook for business travel demand in 2023 remains strong.

TTV recovery reached 70% in the fourth quarter. That was consistent with Q3 and it was up 31 points versus Q1. And finally, revenue recovery was 75% in Q4, up 3 points from Q3 and up 25 points from the first quarter. So here, we just take a look at the recovery trends in more detail. First of all, you’ll see by customer segment, global multinational customer recovery remained pretty steady in the fourth quarter versus the third quarter, while SME customers continued to lead the recovery. Q4 transactions were 21 percentage points above global multinational and reached 82% of 2019, driven by obviously a faster recovery in that segment, but also by our significant share gains in the SME segment. Air recovery was stable in the fourth quarter at 66% and hotel recovery up 2 points versus Q3.

Hotel transaction recovery was 14 percentage points above air in the fourth quarter and this is an important strategic priority for us. We’re making good progress increasing that ratio of hotel to air bookings and we’re doing that through improved hotel content and hotel displays in both our Egencia and Neo software platforms. And finally, here on a regional basis, both the Americas and EMEA continued to improve in Q4. Within the Americas, if you unpack that, U.S. recovery actually reached 71% in the fourth quarter. Canada was a little slower to recover. EMEA recovered by 2 percentage points versus Q3 and reached 74% of 2019 levels. And now that the travel restrictions have been certainly either relaxed or removed in China and Hong Kong and Singapore, it provides additional opportunity for growth and recovery in Asia in 2023.

So let’s turn to our commercial highlights for the fourth quarter. We delivered record new wins. We received further recognition of our ESG, technology and people leadership. We are the clear leader in a $1.2 trillion industry, with a significant runway for growth and we continue to gain share with $3.5 billion of total new wins value in 2022, again, based on the current recovery levels, and of course, supported by strong customer retention of 95%. Of course, as I mentioned, our biggest growth opportunity is with SME customers. This represents a total opportunity of $950 billion of travel spend. We are already the number one player in managed travel for SME customers, but only 30% of that $950 billion is actually managed, providing us with a significant future growth opportunity.

And you can see here that we’re making good progress, we signed $2.1 billion of SME new wins value in 2022. Approximately 25% of that value of the number of customers is actually from companies whose travel programs were previously unmanaged. So I think it demonstrates we are gaining more and more traction converting this unmanaged customer travel spend into managed spend. We are also recognized as an industry leader in ESG in the quarter. We were awarded Platinum EcoVadis Status. This actually places us in the top 1% of independently assessed companies across the world and I think it demonstrates how we are helping our customers and our partners achieve their sustainability goals. Another sustainability example, we’ve integrated with CHOOOSE climate tech.

This allows us to actually integrate carbon emissions data at the point of sale across all of our channels, whether it’s voice, whether it’s Egencia, Neo. We present our carbon emission data consistently and accurately across all channels so that both travelers and travel managers can track and be more aware of their carbon emissions data. So supporting our technology leadership, Egencia was ranked number one in two categories of the G2 Winter 2023 report, most implementable solution and best results. G2 is the largest and most trusted peer-to-peer review site. It has more than 60 million people viewing. It has many Fortune 500 companies using it to inform their software decisions. In addition, Egencia also ranked as a leader in 15 categories in the G2 study.

So I think it’s just validation that we’re providing excellent software solutions and an excellent experience to our customers. Additionally, in the quarter, Egencia was named a Leader in corporate travel applications by IDC MarketScape. IDC is an independent voice that evaluates travel tech solutions, and again, it’s an important influence over the B2B buying process. IDC specifically recognized and I quote here, our data-led intuitive product experience and our ability to embed machine learning and AI into the user experience. And finally, here, we were voted the number one Business Services company in Forbes’ America’s Best Large Employers report in February of this year. And I would like to extend a sincere thank you to all of my colleagues around the world for their commitment and their leadership that makes this valuable recognition possible.

So moving on to our strategic priorities. When we became a public company, we shared these strategic priorities and I’m pleased to say we are clearly delivering on these priorities and it’s creating strong momentum for 2023. First of all, business travel recovery continues. Q4 revenue recovery reached 75%, up 3 points from Q3 and a dramatic improvement from the start of 2022. Second, our recovery is significantly ahead of the industry due to continued share gains, new wins value $3.5 billion at current recovery levels. Third, we set our focus on winning in the SME segment would accelerate growth and our results show exactly that. Q4 SME transaction recovery reached 82%. We reported SME new wins value of $2.1 billion for the full year, with approximately 25% of those wins coming from unmanaged customers.

Fourth here, we’re clearly delivering on the Egencia synergies. We continue to expect total opportunity of 109 million synergies. In full year 2022, we achieved approximately $45 million of synergies from the Egencia acquisition, which exceeded our target of $25 million. Fifth, our business model is clearly delivering significant operating leverage. In the fourth quarter, we delivered 71% revenue growth, with only 16% growth in adjusted operating expenses. And finally, all these results combined to deliver significant margin expansion. In the fourth quarter, we reported 66% adjusted EBITDA fall-through and an adjusted EBITDA margin of 8% and delivering financial results ahead of guidance. So to sum it up, I think, our fourth quarter performance provides yet another proof point of our continued strategic and commercial and financial progress.

So that completes my review of the Q4 highlights. I’d like to hand it to Martine to discuss the financial results in more detail before we move on to our 2023 outlook.

Martine Gerow: Thank you, Paul, and good morning, good afternoon, everyone. So as you heard from Paul, I’m on page 10, we continue to deliver on our strategic and financial priorities, and we did finish 2022 on a strong note. Our revenue recovery was 75% of 2019 pro forma, which is 3 points above where the third quarter was and it is 3 points above the transaction recovery in the fourth quarter, which was 72%. Our yield, which is measured as revenue over TTV, which is total transaction value was 8.9% in the fourth quarter. We benefited from improved yields across those air and hotels. In fourth quarter, Products and Professional Services revenue were actually up 14% sequentially meaning versus the third quarter, driven by solid growth in Management Fees and particularly Meeting and Events.

Our TTV recovery reached 70% in the fourth quarter. Transaction recovery was 72%. That’s an improvement of 1 percentage point versus the third quarter. On a constant currency basis, TTV recover was actually in line with transaction recovery. And while we did noted a softening of the trends going into the holiday period, we are pleased to report that we are seeing a very strong rebound in January and February volumes, which is in line with our expectation for the first quarter of this year. Now looking at year-over-year results on a pro forma basis, fourth quarter TTV was up 93% to reach $5.9 billion. Our average transaction value was up 19%, now that’s largely driven by the strong recovery in international bookings versus prior year. Our fourth quarter total revenue increased 71% to $5.7 million.

Now within this, travel revenue was up 101% in Q4. Again, revenue yield outperformed other quarters due to very strong end of year air and hotel performance. And traditionally, Q4 is our strongest yield quarter as certain incentives or an annual performance measurement. Product and Professional Services increased 12% year-over-year. And as we shared on previous calls, the growth in this line is more limited when you compare it to 2021 because this revenue component was relatively protected from the reduction in demand in 2021. Our adjusted operating expenses increased only 16% in the quarter, which compares favorably to a 71% increase in revenue in the quarter. And as a result, we delivered $43 million of positive adjusted EBITDA in the fourth quarter, which is an improvement of $145 million year-over-year.

Our adjusted EBITDA margin was 8%, which is 41% improved year-over-year. On page 11, turning to the full year. As Paul mentioned, our 2022 results came ahead of guidance. Our full year revenue came in — on the top of our revenue guidance range, which was $1.8 billion to $1.85 billion and our adjusted EBITDA was above our guidance range, which was $90 million to $100 million. Now versus 2021 pro forma, our TTV was up 187% to approximately $23 billion. Our revenue increased 108% to $1.85 billion, and within that, travel revenue was up 159%. Product and Professional Services revenue increased 23%. Again, more little growth in the line because this revenue component was again relatively more protected from changes in demand in 2021. Our adjusted operating expenses were up 23% for the full year, compared to revenue growth of 108%.

And on the result, our adjusted EBITDA reached an inflection point and turned and stayed positive beginning in the second quarter of 2022. For the full year, adjusted EBITDA again was $103 million. That is a very significant year-over-year improvement of $623 million and our adjusted EBITDA margin of 6% increased 64 percentage points as compared to 2021. We maintained a very high level of fall-through with an adjusted EBITDA fall-through of 65% for the full year, which demonstrates our very strong operating leverage, as well as the execution of our cost savings program in delivering on Egencia synergies. Now turning to cash flow. On page 12, as you just heard from Paul, and as we had shared with you on previous calls and as we expected, our cash consumption significantly eased in the fourth quarter.

Our free cash flow usage was $25 million in the quarter. That is an $87 million improvement from the third quarter and it was driven by a lower build in working capital. As we shared on previous calls, we do expect to reach positive free cash flow during 2023 as EBITDA will continue to recover meaningfully and as a working capital build continue to normalize. As of December 31, 2022, we had an unrestricted cash balance of $303 million and our net debt was $99 million. Finally, we have a very strong liquidity position, our total available liquidity is approximately $500 million. That is pro forma for the additional term loan and revolver expansion, which we completed in January this year. And the proceeds of the additional financing rates will be used for general corporate purposes, which include completing the Egencia integration, accelerating growth in SME and driving further efficiency.

And I will now turn it back to Paul to share how we are thinking about 2023.

Paul Abbott: Okay. Thank you, Martine. Let’s talk about 2023. As we said last quarter, there are several tailwinds that set us up for growth in 2023. First of all, the business travel recovery continues and the outlook remains positive with our customers. Industry experts predict business travel spend will continue to grow and capacity will continue to increase all supporting continued growth in 2023. Secondly, as we predicted, distributed teams and hybrid work are clearly creating new business travel, Meetings and Event demand, and we see this, particularly in our Meetings and Events results. Third, airline capacity is expected to improve throughout 2023 and this incremental supply will, of course, support increased demand.

And fourth, our sales pipeline leads us to be confident in continued share gains in the year ahead with specifically continued momentum in the SME segment. So, all in all, I think, these results in expectations for strong revenue and earnings growth in 2023. Now I think importantly, these tailwinds and our expectations for the year ahead are supported by data from customers and data from suppliers and data from across the industry. According to GBTA’s Q1 2023 Business Travel Outlook Poll, this was published at the end of January. Domestic and international bookings are currently at 67% and 54% at 2019 levels and this is up from 63% and 50% in October. So industry momentum continues and you can see that we are clearly outpacing the industry with Q4 revenue recovery at 75%.

Turning to customers, 78% of travel managers expect more or a lot more trips in 2023 versus 2022. 86% of travel suppliers are expecting higher spending from corporate customers in 2023 and that’s an improvement versus 80% in the survey in October, finance, insurance, professional services, consulting other sectors where we’re seeing the strongest growth trends for the year ahead. So GBTA expects total business travel spending to grow by 24% in 2023 to reach over $1 trillion. This expected increase in demand will be met by increased supply. IATA expects capacity growth of 18% globally. This looks a little different by region. You’ve got 5.5% increase in North America, 6.1% in Europe and then 48% growth in capacity in Asia-Pacific, largely driven by the opening of China.

So you can see here that there is strong evidence from customers, from suppliers, from industry experts, supporting our confidence in solid industry growth for the year ahead. And of course, very importantly, we expect to augment these tailwinds with further share gains driven by our industry-leading software and services. So let’s just go through our strategic priorities again and really highlight how they are positioning us to deliver strong growth in 2023. So, as I just said, business travel recovery continues. GBTA survey found 78% of travel managers expect more business trips in 2023 and I also expect more capacity across all regions. Share gains. We reported $3.5 billion of total new wins in 2022 and we expect to continue this strong growth in 2023, and we have a pipeline to support that strong growth.

SME acceleration, we have moved to a new global segment-driven operating model and structure for the company and that is going to intensify our focus on scaling the SME business around the world. Our segment with the fastest growth and the highest margins and represents by far the largest addressable opportunity for us and we are now taking a much more consistent and even greater focused approach to capturing this opportunity around the world. On Egencia synergies, in 2023, we plan to deliver additional synergies through exiting additional TSAs, realizing additional technology and real estate savings. And on operating leverage, we are going to continue to operate our business with really strong focus on operating leverage. We expect single-digit operating expense growth in 2023 and that is going to drive strong margin expansion with 17% to 20% revenue growth.

And finally, these efficiencies, of course, lead to continued strong margin expansion in the year ahead. So this will result in full year 2023 expectations. As you can see here, 17% to 20% revenue growth, 220% to 259% adjusted EBITDA growth, with approximately 10 percentage points of adjusted EBITDA margin expansion. Importantly, as growth continues beyond 2023, when we look at the financial and commercial drivers of the business, we remain on track to deliver pre-COVID adjusted EBITDA of approximately $500 million at the 86% revenue recovery level or achievement of $2.4 billion in revenue. So I’m now going to turn it over to Martine to go over our 2023 guidance in more detail. Martine, over to you.

Martine Gerow: Thank you, Paul. So on page 17, in 2023, we expect to deliver double-digit revenue growth and margin expansion and we project to turn free cash flow positive during the year and actually come within our target net leverage of 2 times to 3 times adjusted EBITDA. Now Let me review with you what are the key drivers for our 2023 guidance in which we assume a measured view of the macro environment this year. So starting with the components of our expected 17% to 20% revenue growth, 12 points of that growth really results from carrying forward the fourth quarter run rate and another 5 points to 8 points of additional growth is expected to come from a combination of share gains and organic growth. We project an overall revenue recovery of 77% to 79% in 2023.

That’s about 2 points above where we project transaction recovery. On the cost side, as you heard from Paul, we expect single-digit growth in operating expenses as we improve operational efficiencies, fully realized cost synergies and achieve benefits from the reorganization we announced in January. Now in 2022, particularly in the second half and that impacted the fourth quarter as well, our operational productivity was negatively impacted, really a consequence of having to recruit and train a number of — significant number of new agents, travel agents and a consequence of the travel disruptions as the industry was facing very similar challenges. Now in 2023, we expect to achieve significant productivity gains as we improve our operating metrics from where they were in the fourth quarter.

And as a result, we expect to continue to deliver high operating leverage with an adjusted EBITDA fall-through of about 70% in 2023 and a margin expansion of 9 points to 11 points. As previously mentioned, we anticipate reaching positive free cash flow during the year. We expect this to take place in the second half of the year given the seasonality of our working capital. And finally, we expect to execute 2023 with a leverage ratio that will be at the high end of our 2 times to 3 times long-term leverage target. The assumption I just shared with you results in the following full year 2023 guidance. So revenue comprised between $2.17 billion and $2.22 billion. That equates to revenue growth of 17% to 20% year-over-year and adjusted EBITDA between $330 million to $370 million.

That equates to an adjusted EBITDA margin of 15% to 16% and a margin expansion of 9 percentage points to 11 percentage points as compared to 2022. Now let’s turn to the first quarter guidance and the key driver is our underlying this first quarter guidance. As you would expect, we anticipate a much higher rate of growth in the first quarter as we overlap the first quarter of 2021, which had a lower recovery because of Omicron. Before the first quarter, we expect a transaction recovery in the mid-70%s and TTV recovery to be a couple of points below transaction recovery, very consistent with what we have seen in the previous quarters. And our quarter-to-date transaction recovery through January and February is trend being in line with our expectation for the quarter.

We expect our revenue recovery to be six weeks ahead of volume recovery in the first quarter, which is above what we project on a full year basis and this is really driven by a quarterly phasing of revenue in the 2019 baseline, which is different from what we expected to be in 2023. Because if you think about our revenue yield, our revenue yield, sorry, in the first quarter is actually largely in line with our full year expectations. So much more a function of the 2019 baseline than our trend. Moving to expenses, we anticipate operating expenses to be flat to the fourth quarter of 2022 as the cost to support the first quarter volume really ramps up in the fourth quarter of last year and as we achieve higher productivity in our operation as I mentioned.

Finally, we expect operating leverage to result in a very significant improvement in adjusted EBITDA and margin was about 23 points to 24 points year-over-year. So our first quarter 2023 guidance has a revenue that is comprised between $550 million and $570 million. That’s a revenue growth of 57% to 63% year-over-year. We expect adjusted EBITDA to be between $75 million to $90 million. That’s a margin of 15% to 16% and growth in adjusted EBITDA margin of 23 percentage points to 24 percentage points versus prior year. And so in summary, we are delivering on our strategy, we’re delivering our commitments to customers and shareholders, and we are positioned for strong growth in 2023 and beyond. We exceeded our 2022 revenue and adjusted EBITDA guidance.

The business travel recovery has strong momentum. We are delivering on our share gains and SME acceleration. We are executing on the Egencia synergies and delivering high operating leverage. We are positioned for strong revenue and adjusted EBITDA growth in 2023 and we remain on track to deliver an adjusted EBITDA of approximately $500 million, with a revenue recovery of 86%, which equates to approximately $2.4 billion in revenue. So we’re delivering on what we committed to and we are confident in our position for continued momentum ahead. So thank you very much for your interest and we will now open for questions. Operator?

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Q&A Session

Operator: Thank you. We have a first question from Duane Pfennigwerth of Evercore ISI. You may proceed.

Duane Pfennigwerth: Hey. Thank you. Just with respect to your outlook for transaction volume recovery, can you talk about maybe the regions or the geographies where you’re seeing the biggest sequential improvement and understand maybe January wasn’t the hottest month? But maybe mark kind of where we are in the month of March versus the levels that you saw in the fourth quarter?

Martine Gerow: Do you want me to take that one?

Paul Abbott: Sure.

Martine Gerow: I will take that. Sure. I will take that, Duane. So in terms of the geographies, we expect a somewhat higher recovery in the countries that were, I’d say, the slowest to open, so there would be more some of the Southeast Asia, Canada is another market. Outside of those in China, the China is relatively a small impact, because we don’t consolidate, we don’t target China. Outside of those particular geographies, we expect a fairly steady recovery in both Europe and the U.S. And in terms of trends, as I was indicating, actually we — based on what we’re seeing in January and February, we saw an improvement in the recovery, which is consistent with what we expected in the first quarter. So a very strong rebound after the holiday season.

Duane Pfennigwerth: It may be more of a U.S. phenomenon, but I would guess that March is the strongest month of the quarter in terms of corporate travel recovery. Any thoughts on kind of where March stands relative to fourth quarter and no problem if that’s not a level of detail that you want to get into?

Martine Gerow: I’ll comment on January, February, because March is just starting. And again, we’re very encouraged with what we saw in term of February, which saw — which is an improvement over what we saw in the fourth quarter, particularly the exciting to the fourth quarter where we were impacted as the industry with the holiday. So very

Duane Pfennigwerth: Thanks. And then

Martine Gerow: Yeah.

Duane Pfennigwerth: Thank you. Thank you. And

Martine Gerow: And we are — okay.

Duane Pfennigwerth: Just for my follow-up, on the seasonality of working capital, nice improvement in that line over the balance of 2022. But can you help us think about kind of the seasonality of that working capital build around the bookings build here into 2023? And thanks for taking the questions.

Martine Gerow: Sure. So in terms of working capital, we tend to have the working capital build going into the first quarter and the second quarter, because that’s where most of the, let’s say, volume seasonality is. We tend to then get back down in the third quarter. And the fourth quarter result is usually favorable as well from the working capital. That’s usually very low working capital quarter. So we expect it to come up in the first half and then the use going into the fourth quarter.

Duane Pfennigwerth: Okay. Thank you very much.

Operator: Thank you. And we now have of Morgan Stanley.

Unidentified Analyst: Hi. Thanks for taking the question. I just want to kind of come back to the remaining 20% of the permanent cost savings you guys are waiting on. I know you said in the past you expect it to come back on as volumes returned to around 100% and recovery nearing high 70%s in 2023. Just wondering if you could kind of give what you expect for cadence in realizing those savings and could you kind of give approximation of how much you would expect to realize at, say, 8% of pro forma versus 95%?

Martine Gerow: Sure. So we would expect the — that remaining 20%, which is about $40 million. We would expect to start realizing some of that obviously this year, right, we’re in the high 70%s from a recovery standpoint. And then the remaining of that going into 2024 and 2025, as you hear the higher recovery level to be very — to be pretty linear to what the volume recovery is.