RXO, Inc. (RXO) Earnings Call Transcript & Summary

Kicking off the asset-light portion of the transportation content at Laguna, we have RXO and CEO, Drew Wilkerson and Chief Strategy Officer, Jared Weisfeld, Chairman, thanks so much for being here.

Thanks for having us.

Drew, I think everyone wants to know what you're thinking of the cycle right now given that so far, you have been call it the canary, call it the optimist, call it the glass-half-full guy. But you've, again, been able to kind of call the bottom before anybody else. So were you also going to be able to tell us when the up cycle is coming from anybody else?

Yes. So one, take a step back. And if you look towards the end of Q1 last year. That's what started becoming a soft freight market. So there's no question that we're still in a soft freight market as we sit here today. But we have seen some encouraging signs, even since our earnings call, if you look at load-to-truck ratio, we've seen that increase this earnings call. It was under 2, now it's sitting around 3. Now typically, we start to see the spot loads kick in whenever it goes around 6:7:1. Tender rejections were almost 0% for almost a year. Now they're sitting somewhere in that 5% to 6% range. So you're starting to see carriers push back on rates at this point. The third thing that I'd point to is that you're seeing capacity exit the market. It's not doing it at, what I would call, a fast rate. But when you look at what carriers did with their balance sheet during 2020 and 2021, they built up a strong balance sheet. So it's lasted a little bit longer than what maybe we thought or anybody else thought in this market. And the last thing that I'd point to is inventory levels. So the one, we've got a lot of retail and e-commerce customers. And the one thing that they're telling us is their inventory levels are in a good position, night and day from where they were last year. What we don't know is what's going to happen with consumer demand, which will ultimately drive if we're going to have a peak season or not.

Got it. So just on that -- I mean, I'm not asking you to answer for your customers, but that inventory level is in a good position but the consumer kind of hasn't materially changed from maybe 6 months or 12 months ago. And we've been destocking this whole time. So if -- that logically means that we are continuing to destock with inventories being okay, which means inventories get low pretty soon, right? I mean do they get that trajectory kind of are they telling you that we're getting to a point where you begin to start restocking?

Our customers understand that the transformation market can flip very, very fast. Like if you think back to the early parts of COVID, you saw the capacity become extremely loose in Q1 of 2020. There wasn't a lot of freight. But by Q2, there was a lot of freight. So the inventory levels were going up and down. And as you started to head into 2022, you saw capacity fall off fairly quickly and become that soft freight environment. So our customers have been around the block, and they understand that demand can change very, very quickly and then they have to be prepared for that.

Got it. You guys are historically and you continue to be a very contract exposed broker, but kind of how are you thinking about the relationship in the spot and the contract market right now kind of, a, has -- have both of them been weaker than you thought they would be and be kind of -- is that relationship sort of maybe structurally changing a little bit?

Well, I'd say, one, we don't view it as exposed, right? Like we view it as we don't even get the opportunity to get the spot loads if we don't have the contractual relationship. So for us, we grew our contractual business by 19% on a year-over-year basis last quarter. And what that speaks to is the relationships that we have with our customers. Our customers, they come back to us year after year, and they're not coming back to us in a bid saying, "Hey, we want to renew what we did with you last year." They're coming back to us and say, you've got great service, you've got good technology. We trust the relationships that we've built with your team, you're providing us with solutions. What else can you do? And one of the ways that we've seen that from some of our largest customers is they've actually started to give us either a portion or outsourcing their LTL freight to us. We're servicing the truckload freight so well with these large customers that they're giving us a piece of the LTL as well.

Got it. I'll come to LTL in a second. Just to maybe push you a little bit kind of is there a temptation at all to maybe tactically go after spot when the market is this low and it's pretty obvious that the next move is probably going to be on the way up. I mean who knows when that's going to happen. But again, you said you really go after contract, you want to fulfill that first, but would you tactically go after spot market as well?

Yes. Let me be clear, we go after both and you don't get the spot without the contract. So what we believe is that when the market inflects and load-to-truck ratio starts to hit that 6:7:1, we're going to be the first place that customers come for that spot freight environment, and we're very confident in that. If you go back to 2020 and 2021, whenever you saw the market inflect on the way up, that's whenever we're growing volumes by mid-20s, 30-plus percent on a year-over-year basis because we're moving the ball forward contractually, but we're also the first place that they come for spot loads, for projects, for mini bids.

And it's such an important point, Ravi, if you -- that Drew is making, when you think about the fact that the relationships with our customers are very sticky, right? Our top 20 customers have been with us for 14 years, and we service them across cycle. So to Drew's point, we're adding sticky volume. And when the market inflects, we've serviced that freight so well during the contractual -- from a contractual standpoint, we're thinking to get rewarded with the spot projects, the mini bids, the special projects. And we've done that time and time again, and we've been able to really move the needle on that contract versus spot mix pretty quickly. If you think about it right now, probably at the higher end of that range, at about 79% last quarter. But when market flips pretty quickly, we'll still service that same contractual freight but then we'll go ahead and be rewarded that spot volume. In some cases, you've seen that move as quickly as 1,000 basis points in any given quarter in terms of how quickly we can pivot the business.

Got it. Sounds good. Just lastly on this topic. Peak season, like is there going to be one -- kind of is it going to be similar to last year, better or worse? What are you [ gaining ] so far?

Well, it's going to be hard to be worse than last year. Last year, there was no peak season. So it would be hard to be worse. As we sit here today, again, inventory levels are in a good position. It really comes down to what is the consumer going to do? Are they going to spend their money on travel? Are they going to hold on to their money? Are they going to spend it on Christmas presents? I don't think that's something that's known yet today. But whenever you look at it on a year-over-year basis, it's hard to imagine peak season being more muted than what it was last.

Got it. So yes, let's see -- let's hope there's some bounce or the other going forward. Your new business pipeline, kind of what's the current state of the new business pipeline kind of when you think of the opportunities coming down the pipe and kind of the contract business coming your way, customers are willing to kind of come to you and give you their transportation spend. Again, a, is that something that actually accelerates in a downturn because customers can actually focus on this and be kind of -- what are they telling you in terms of long-term planning with their long-term supply chain plan.

Well, the first part of your question, does it accelerate during the downturn, you're absolutely seeing that it's accelerating during the downturn. Customers are reducing the number of carriers that they're working with, and we're a beneficiary of that. As you saw last quarter, we grew volume 10% on a year-over-year basis. What that means is, whether it's asset based or whether it's broker, how are you considered a core strategic provider for these customers, and we're in a very good position. Between XPO and RXO, I've been here for almost 12 years now, and I have never been more excited about where our relationships are, where our sales pipeline is, the relationships that we built than what I am right now.

And Ravi, on that point, our brokerage pipeline last quarter was up 118% on a 2-year stack. So you just think about the momentum that we've had in the business and the focus post spin that we've had as an organization entirely focused on asset-light transportation dialed in with our customers in a way, to Drew's point, that we haven't -- we're always with our customers. But if you think about the intensity at which we're approaching it right now, it's translating into real results in that pipeline.

Can you elaborate that a little bit? Kind of is this you guys just putting in more effort here because you have more resources as you're a stand-alone company now? Or is it more awareness of RXO as an independent entity or customers are coming to you? Like what's driving that? I mean that's not a normal number. What's driving that massive increase.

Well, I think it's 3 things. One, like if I go back to the early part of XPO, we were more selling a vision than the service that we were providing. So now the -- we are more of a known commodity as we go into customers. So we've built up a strong reputation in the marketplace. And if it's a new customer, we can actually point them to an existing customer that's in the same vertical as them to talk about the success that we've created in their supply chain. The second thing would be that yes, we are more focused than what we were whenever we were one company. If you think about when our outside sales folks went into a customer, 2 years ago, they were charged with selling supply chain, an asset-based LTL piece as well as a non-asset piece of the load. And so for us, being able to walk into a customer and focus clearly on what RXO does has been a winning solution for us. And even for myself and within my own time, I got so much from a leadership development from my comment XPO and being able to sit in on LTL monthly operating reviews and European transportation monthly operating reviews, but now there wasn't a lot left to gain. There was more for me to be able to gain by spending my time within RXO. So for us, the relationships have never been stronger. The pipeline is in a great position, and we position ourselves very, very well that when the market does turn, we know that we're going to be large winners in that market.

Got it. You guys have been pretty open about the fact that obviously the up cycle is going to be great for you, but there may be a slightly painful transition as spot rates go up and the contract rates kind of don't commensurately reset given your high contract exposure, but spot rates have not gone up. So does that mean the pricing outlook in 3Q is better than you initially thought?

Well, not necessarily better than what we initially thought because we didn't bake in the recovery for 3Q. But what I would say is, as you look at what happened during Q2, you saw that our gross profit per load came down each month. That's partly because we were in [ pro ] season and what was going on in the market. But as you start to see that load-to-truck ratio rise, you should see a little bit of a squeeze on gross profit per load. But as we get to the other side of that and you start to see load-to-truck ratio in 6:7:1, you'll see that our spot gross profit per load will more than offset the diminish that has happened on our contractual gross profit per load.

Got it. And kind of how does that kind of hand off through the cycle and then when spot rates go up, the profit per load also come down? Or how do we think about that?

The profit per load will go up because typically, the spot gross profit per load more than offsets what's come off of the contractual gross profit per load.

Okay. Got it. That sounds good. And just kind of maybe more of a structural or strategic question. When customers are coming to you saying, "Hey, I want someone to partner with -- not someone who's tactically looking for the lowest price for the next available truck." Is that pricing discussion kind of easier because they're not looking at a DAT spot rate number and saying, "I want that price?" And kind of what does that mean in terms of the pricing you get relative to maybe some of your peers who maybe don't have that long-term strategic relationship?

Yes. So for us, it's never been in our DNA to lead on price, like we just -- we don't view that as a long-term healthy business model because whenever a customer lets you at on price, they'll throw you out on price. Our goal is to go in right at where market price is. So -- and typically, that's set by an asset-based carrier because if you look at it, while brokers have taken significant share from asset-based carriers over the last decade, now make up 21%, 22% of the overall market. Asset-based shares make up the rest. So if you think of your large asset-based carriers, they typically set for a run what is going to be close to market. Our goal is to come in right in line with that, work with a smaller carrier and be able to create a margin off of it.

Got it. Let's talk about competitive dynamics in the space. Obviously, there's a large incumbent player. There's a group of kind of new -- I don't want to call them digital entrants because you're very digital as well, but new players...

And I don't think I'd say new...

Not even new. That's fair. So we need to cover the term for them. I'm talking about. And then you have the long tail of mom-and-pops, right? So how are you seeing each of those kind of 4 entities active in the marketplace right now? Kind of is one more aggressive or less aggressive than the other and have a long-term question for you as well.

Well, I'll break it up maybe a little bit different. There are 4 types of brokers in my mind. One is you have large traditional brokers that have been around for a long time, and they're great operators. They understand the market very, very well. They've got deep relationships with our customers, we see them on a lot of our Tier 1 bids, but now they're trying to put technology into the business. And sometimes that can be a little bit different to operate under. The second is we heard a lot of talk about technology entering into the marketplace. But when you look at what we've done for customers, for carriers and employees, we think it's unmatched at anything that's going on. And we've seen more folks lead on price rather than technology. And I just talked about the reasons why I don't think that's the right model for us. The third is you have large asset-based carriers that have developed to brokerage. And for me, on an upturn, they performed very, very well. And on a downturn, you typically see that their volumes suffer a little bit because they're doing what you would want them to do as a stock owner, they're protecting the asset and making sure that the asset stays loaded. And then the fourth is one like us that was really built from the ground up with technology and operations. We never prioritized one over the other. We've taken great operators, and we partnered them with the best technologists in the world. Now I'll use our pricing algorithm as an example for that. When you look at our pricing algorithm, I don't have 1 person that leads to, I have 2. One of them is a strong operator that has been in the brokers industry for more than 20 years. He's known and seen every single market and knows how to react within that. And the person that he's partnered with is somebody who develop pricing algorithms within the hotel industry and disrupt it, he has written multiple books on pricing algorithm. So a great technologist with a great operator has always been the way that we've built the business.

Got it. I'll come back to your technology, I got a bunch of questions on that, but just kind of the second group that you mentioned, the guys who have traditionally been aggressive with pricing and trying to kind of buy market share. Are they backing off now, given what's happened to rates? Are they kind of being more active now because the market is really low? Kind of when do you see them be the most -- I don't want to use the word predatory, but when do you see them making the most impact? Is it an up-cycle or a down-cycle?

There's 17,000 brokers and a couple of those sit inside the top 10. I don't know that there's anything that is different in the way that they're acting except for maybe they're being a little bit more responsible, but I still would not say that the pricing is in line with market at this point.

Got it. The big incumbent competitor that you have is going through some changes. They have a new management team. They have a new approach, kind of we met with them recently and kind of they are looking to, a, become more nimble internally, but also try to increase their scale even more. A, what's your response to that? Do you think kind of it causes any more changes in the marketplace? Or do you think there's enough room for everybody to grow?

Well, we're pulling for them, right? Like they're the leader in the industry. We've got a lot of respect for them. When you look at the size that they are, the better they do, the more that they're going to be able to increase the multiple. So we're their biggest fans outside of their own management team. Second, we've got a ton of respect for them. We do see them on every single bid that is out there. So respect them as a competitor. Third, for their own internal strategy. All I know is what I've read from the likes of yourself and the other analysts that have been out there to report it. But for us, we built the business to where we're constantly evaluating what we're doing. We're constantly looking at how can we run the business more efficiently and what we're doing it today. It's not -- for us, it's not something that we've done just post spin, it's something that has been going on for the last decade plus.

Got it. I thought -- let's just talk about the technology angle for a second. And I thought your example of using a dual-pronged strategy of ops guy and a tech guy was really good. Is that your approach to kind of every part of the business, whether it's dispute resolution or billing or anything where you're like I need a human who knows what he's doing and I need a tech system together kind of do you think that's important?

I mean it's the fundamental philosophy of RXO, right? How do we go ahead and leverage the best-in-class technology that we've developed from the ground up with the best operators, and that transcends across the entire organization, right? It's what we call the intersection of technology and human capital, right? How do we enable our people with the best technology that's out there. So I think you hit it right on where you think about how this organization is built and some of the attributes that we have and we've got an outside sales organization that is entirely focused on making strategic calls to our largest customers, and they have those deep relationships. It's why our top 20 customers have been with us for 14 years, but they're also paired with the best technology to ensure that they've got the resources to go ahead and be able to deliver to our customers. So I think hands down. It's part of the DNA of the organization. And I think it's why we've been so successful over the last decade.

To add on to what Jared said, one of the metrics that we measure in the business that we can really see the impacts of technology is with our employees. And it's loads per day per head. And so if you go from 2021, as we ended 2021, you take a 5-year look back, we grew volume at nearly 3x the rate that we grew headcount. So you can start to see that the loads per head per day are going up. Since 2021 and 2022 and the early parts of 2023, we continue to increase productivity through technology. And the second piece, just to touch on your back office, the more automation that we can create to your back office, it is the more bills that they're able to send out per day. It's the more AR that they're able to process per day, and it becomes more exception management than the mundane task that they may have been doing 5, 6, 7 years ago.

Got it. On that 3x number kind of is that a target? Like, is that something you aim for like or is it higher, lower?

Well, I think it's a moving target, right? Like it's not always going to be 3x whenever your loads per day continues to go up as well, right? Like you may be able to increase productivity at the same rate, but it may be 2x over the next 5 years. And that may actually be a better number than what the 3x was 5 years ago. So it's not necessarily 3x as a moving target within the business of internally, where are we expecting our loads per head per day to go to.

I think the point is it's a highly leverageable model in terms of if you think about the growth of volume and head count, right? We don't expect that to be linear. So as we think about just making our people more productive, getting more volume into the system with less heads coming in at higher contribution margins. That's how we think about the business over the long term.

Got it. This has traditionally been viewed as a very traditional business where kind of technology is not necessarily welcome and that may be the case of the long tails, certainly, not for you guys. I think you were the first company in this space to actually come out and talk about the things you're doing with AI in this industry. And I don't think it's just hype, I think stuff you're really doing. So maybe for those who are not on your call, give us a little bit of summary of kind of how you're actually using that.

Sure. Yes. I mean we hosted an artificial intelligence and machine learning webcast about 2 months ago and it's up on our website, rxo.com if anyone wants to take a look and I hosted it with some of our RXO technologists, including Yoav Amiel, our Chief Information Officer. And I think the point is exactly to your earlier point, Ravi. This is not hype. We -- Mario, when he was CIO of XPO, infused AI/ML into the system before it was talked about on CNBC 10 times a day, right? This is in the DNA of the organization and you think about how we're leveraging that. Drew mentioned it earlier, I think pricing algorithms are a great example. You think about our ability to price in line with the market, leverage our pricing algorithms and our pricing suite of products is paying hundreds of thousands of times per day, right? So moving with the market, knowing our carrier base, knowing our customers to ensure that we're maximizing our profitability. I think that's one great example of how we're leveraging AI and machine learning in real time. If you think about future use cases, I think generative AI is really interesting in some of the potential use cases, especially as we think about bringing on new business. We have 10,000 customers right now. But as we think about attacking small to medium business as our next growth vertical, can we bring on those customers in a pretty efficient way for them, in an efficient way for our organization where we're not having our sales force that are -- sorry, [indiscernible] multiple times per day, but they can leverage generative AI tool and go ahead and move loads from point A to point B and have that fully automated at higher margins. So I think there's a lot of potential use cases and it's something that we're investing in pretty significantly.

And the net result of that will be seen in that 3x number potentially kind of staying 3x even as your volume.

You got it. I mean I think loads per head per day, how do we increase the productivity of our organization. And I think you'll also see it in terms of contribution margin, right, as we bring on that incremental revenue that is more automated, you should see higher incremental EBITDA margins as well.

Got it. Any questions from the audience.

Maybe here we just get a quick update on some of the other segments. It seems like Last Mile has held in pretty well, actually, all things considered. But Forwarding on the other hand, maybe experiencing a bit of normalization following some unusual to say the least dynamics last year. So maybe you can just talk about where you see kind of normalized earning power of those businesses?

Yes, I'll start off and then Jared, you're welcome to add on. We do have 3 complementary lines of business to go with our truck brokerage. It's led by our managed transportation business. That's where there are the most synergies between managed transportation and brokerage. And the reason that managed transportation is such a valuable piece of the business is because you're seeing some of the largest customers in the world come to us and outsource all of their transportation. In essence, we become their transportation department and was working as 1 team. But with that, brokerage and our other lines of business get to be a carrier for managed transportation. So managed transportation is a customer to our other lines of business. You talked about Last Mile and Last Mile is a space where we've been the leader in that space forever, and it starts with the infrastructure that we've set up across the country, we are within 125 miles of 90% of the U.S. population. So if you think of a large retailer e-commerce who is doing big and bulky home deliveries, washers and dryers, refrigerators, stoves, fitness equipment. They start the conversation with us because of the scale, because of the service that we provide, because we've got a history of doing such a strong rate. That's a business that we talked about last year that we honored our commitments to our customers and we help pricing, even though we saw carrier pricing starting to rise, and this year, our customers rewarded us and they didn't just give us the price. They actually gave us more business because of how we handle those pricing discussions and the service that went with it. And the last one that you mentioned is Forwarding. And so for us, Forwarding is a great piece of business that gives us insight into what's going to be hitting the domestic U.S. market from Asia as well as Europe. I'll say that the actual Forwarding piece of the business has started to shrink a little bit, and we put some other complementary pieces in there. So if you think about transloads, you think about cross docks, customs brokerage, all of that lives in our Forwarding business, even though I wouldn't necessarily call it Forwarding, but it's extremely complementary to our truck brokerage business, and our customers are loving the services that we've got there. And now that piece of the business in Forwarding makes up more than half of our profits.

Where are you seeing that Forwarding is shrinking because you're adding all the other stuff?

The other stuff is outgrowing what was happening in Forwarding, that's right.

Okay, got it. And sorry, I have to ask you this, but there was a headline, I think, this morning or last night about Amazon launching a new ship, I don't know if you saw this, but the supply chain with Amazon solution. So basically, Amazon's now an end-to-end transportation company. But again, any thoughts on that? And obviously, the new entrants coming in all the time, but at the same time, just given their scale, it's hard to ignore them.

Absolutely. We always pay attention to them, we got a ton of respect for what they've done in the marketplace, and we'll see how it plays out for them.

Okay. Any more questions from the audience? Maybe switching gears a little bit kind of talk about balance sheet. Obviously, coming out of the spin, kind of you guys are focused on delevering the company and kind of obviously, the growth has continued. But through the next up-cycle, kind of when do you think you hit your leverage targets? When do you think you can kind of pivot to like buying back stock or dividends or other forms of capital.

Sure. So we exited last quarter at 1.6x net leverage. And our target is driven between 1 to 2x on a net basis, and we want to have an investment grade-like metrics that continues to be our goal. You'll see that number creep higher here throughout the back half of the year as we cycle through prior peaks on 2022 EBITDA. So I think to your point, that's certainly a consideration when we think about capital allocation, we want to go ahead and maintain our commitment to investment grade like metrics, especially in this market given recent developments. I think that's really important, especially from a customer standpoint. So I think what we're focused on is the long-term free cash flow generation of the business and you think about the targets that we have out there to generate $500 million of EBITDA by 2027, and you look between now and then, right, we'll generate roughly net current prices 1/3 of our market cap and free cash flow. So I think that provides us significant optionality in terms of capital allocation, whether it's paying back the debt, whether it's organic growth, whether it's share repurchases, a lot of ways to think about that.

Got it. Drew, you're one of the first employees of XPO 12 years ago or some years. And obviously, for the first several years, it was a asset-light roll-up strategy. So you're very familiar with that model. I don't expect RXO to become a roll up anytime soon. But how do you think about M&A kind of both in terms of strategic M&A, things like technology, products and kind of other things that -- tools that you need or maybe even something like a [indiscernible] roll up?

Yes. So one, our first strategy is organic growth. We do that really, really well. And if you look at the brokerage industry from 2013 through 2021, it was growing at over a 9% CAGR. And during that same time period, we were growing over 27% CAGR. So when you look at what we've been able to drive organically is a very powerful ROI for our investors. With that said, we're not walking around with blinders in the M&A market. If there was something in the managed transportation piece that we felt like was a cultural fit and we would be able to leverage our other lines of business as a carrier, then we would take a look at it. And if there was a brokerage out there that made strategic sense, the first thing we'd look at is how well do they fit in with the organization culturally and maybe they're helping us add to a mode of transportation that we're still starting to build out because we built the business off a full truckload business. And so if there's somebody out there that had something that we felt like we could scale up on our platform, then we would absolutely do it. I don't know about buying somebody for technology because we felt like we've got the best technology out there. But...

Not another broker, but maybe like somebody has a tech product or like a cool AI platform or something like who do you consider like a pure lead tech?

If we felt like it would create a high ROIC for investors, then we would weigh it against the other things we had internally.

Okay. Got it. And just kind of on that point of M&A, is there even a model where you keep acquiring broker? When you acquire another broker, if you're acquiring a broker, what are you buying? Like what can they bring to the table that you probably couldn't do yourself? Is it a new product? Is it a new region? Kind of what could be additive to you?

Yes. So one would be a mode of transportation that we had [indiscernible] out, right? Like so if you -- if they had something that was in flatbed or refrigerator that allow us to scale that up faster, that would be one. The second would be customer relationships, right? Like if there were customers that we do business right now with, 58 of the Fortune 100 and over 200 of the Fortune 500. So we still got half of the Fortune 500 companies to go after. And if there was long, deep relationships that we didn't feel like we could break through organically, then that may be interesting. And third, could be talent, right? Like if you look at the people and what they would be able to bring to the organization, then we pay attention. But again, our first priority is always...

Yes, got it. Speaking of different modes, obviously, the LTL market has been pretty massively shaken up in the last couple of months. What have you seen there kind of, a, what did that do to your numbers? What did that do to your business? How did you handle it and be kind of has it dust on that settled, kind of how do you see that playing out?

We've seen an uptick in our LTL business. That has performed strong this year. A lot of that is, I think, idiosyncratic to some of the things that we've done because it's not transactional LTL. This is where customers are actually outsourcing entire piece of their business of LTL, whether it's inbound or outbound or they're actually outsourcing all of it because of the service that we provided on the truckload side. So LTL has been a nice growth story for us all year long. I did think that there would probably be more disruption in the truckload space because if you think about long awkward freight and being able to hit the docks, LTL carriers who are disciplined on what's going to hit their docks. A lot of that may not make it over there and would lead over into the truckload market, but we haven't seen that yet.

Has the dust settled, like is it over for now? Or kind of what do you think happens here?

I don't know that the dust has settled yet. I think it's still to be determined because it was so much capacity that was pulled out of the market.

Yes. Got it. No, I think we're out of time. So Drew, Jared, we'll be, again, watching your words very closely to see when the cycle turns. But until then, thanks for joining us.

Thank you. And great to be here.