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

Great. And I think the last transportation content of what has been a long and very fruitful day. We saved the best for last with RXO, and very happy to have with us CEO, Drew Wilkerson and Jared Weisfeld, Chief Strategy Officer. Gentlemen, thanks so much for being here again. Lots of questions, obviously, on the demand side and everything else. But obviously, kind of center stage would be the Coyote transaction, Jared, I think you wanted to kind of kick off with a little bit of an opening statement.

Yes. Just a quick disclaimer for everyone. During this presentation, the company may make certain forward-looking statements within the meaning of federal securities laws, which, by their nature, involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those in the forward-looking statements. A discussion of factors that could cause actual results to differ materially is contained in the company's SEC filings as well as in its earnings release. You should refer to a copy of the company's earnings release in Investors Relations section on the website for additional important information regarding forward-looking statements and disclosures and reconciliations of non-GAAP financial measures that the company uses when discussing its results. All right.

That was impressive. That was really impressive.

Record timing.

Yes. So let's start with Coyote, right? Obviously, a transformative deal for you guys. Again, for those who unfamiliar with the story and unfamiliar with the transaction kind of, can you give us a little bit of history here on how did it come about? Obviously, it was a transaction that kind of went up for sale. Like when did you guys decide that it was right for you? And why was it right for you?

Coyote is obviously somebody that we've always paid attention to in the marketplace. If you look at when they started in 2006, they're were one of the hottest names in transportation for 10 years. So we knew that they had deep relationships with customers. We always had a ton of respect for what they were doing out in the industry. And for us, whenever we went and looked at it and we said, okay, what's the customer overlap? Very little customer overlap. Within our top 25 customers, there was only 3 customers where there was any overlap. Then we looked at what's the carrier overlap? There wasn't a lot of carrier overlap either, and we saw that as a huge opportunity for us to be able to pull down purchase transportation. And I think that will probably end up being the biggest synergy for us out of the deal. And then the third thing is, we looked at it and we said, look at where we are in the cycle. This is going to dream come true for us to be able to buy us a scaled asset at the bottom of the cycle to position ourselves even stronger for the inflection, we feel like we're in a really good spot.

Got it. So is their product offering, is their business offering, is their targeted segmentation like materially different from yours? I mean does that greatly expand your go-to-market?

They service all verticals just as we do. But if you look at what our core verticals have been, and our strongest verticals have been retail and e-commerce and industrial and manufacturing. Coyote has been food and beverage and transportation, and I don't think it's any secret that UPS is a large piece of the transportation business. So when you look at it, again, that shows there wasn't a lot of overlap. Some of the lanes that we've got coming out of the deal are going to make our power lanes even stronger, but it's in different verticals from where we are today.

Okay. Got it. Talk to me about the purchase transportation synergy. Obviously, you're referring to the scale that you will have kind of once you combine the 2 entities. How many carriers do you expect to have kind of once you're combined? And kind of where would you rank in the industry?

Yes. It will be over 150,000 carriers, Ravi. But like for me, that's not a metric that is important. I think that a few years ago, everybody got caught up with it. We're at 70, we're at 80, we're at 90, we're at 100, and it's really more of a vanity metric than it is anything else because nobody has enough freight at this point to keep 100,000 carriers moving every single day. For us, we want to focus on the carriers that we're doing business with every day and how often are they coming back to us? And that number is strong. If you look at the carriers who come on to our platform, RXO Connect, they're coming back to the platform within a week, 75% of the time. So for us, it's more about knowing who we do business with because we get to monitor the service. We get to monitor how well they communicate, what's the tracking like through the life cycle of order. And for us, it just creates a better experience for our customers if we have really good, strong relationships with the carriers that we're using.

Do you know why they're coming back? Kind of is it that experience? Is it the fact that they're getting the freight? And the reason I ask is, are you confident that you'll be able to convert that into the Coyote base as well?

Yes. Well, so let's look at first what the bases are. We built our base off of small carriers, think 1 to 10 trucks. Coyote was working with larger carriers and private fleets. Private fleet is something that brokerages have always tried to break into, but Coyote had an early head start, and they are well ahead of where we were from that standpoint. So being able to get different carriers onto the platform, yes, we'll absolutely be able to do that. I think your second question was why on the purchase transformation do we believe that we'll see it. We've been deep into the data. And some of it is still in the clean room, but you can go in and see that there are lanes that Coyote buys significantly better than what we do. We can see that there are lanes that we buy significantly better than what Coyote does. So whenever you start pulling that together, and you say, we've got an opportunity to share capacity and pull down purchase transportation, you should be talking about stronger margins at that point. So for us, what we're going to do, starting on day 1 is we're going to benchmark and say, this is where the market is performing at. This is where RXO was buying capacity. This is where Coyote was buying capacity. How well do we pull that down to buy as one now?

Sorry, I was going to through some numbers behind that, Ravi. I mean the combined entity will have $5 billion to $6 billion of a pool of purchase transportation spend. We are going to buy better as a combined entity, and the ability to go ahead and realize those synergies, to Drew's point earlier, could be significant. We think that has the opportunity to be the largest synergy bucket, and that's incremental above and beyond the at least $25 million of cost synergies that we've already identified.

Got it. Why would one buy materially different over the other kind of given that you're like -- it's not like your size is like hugely different, right? So is it a market intelligence thing? Is it a freight-density thing? Is it a size thing? What's the difference there?

Typically, it's a freight-density thing in a specific lane. So if we've got a Laguna going back to Charlotte, North Carolina, and we're hauling that load 10 times a day, we should have a good Rolodex of carriers that is doing that. And Coyote may have the opposite. Maybe they've got the Charlotte to Laguna where they've got the Rolodex. So it's being able to pull off of each other's Rolodex to pull down. Maybe that Charlotte to Laguna, maybe we're only hauling about once a day, Coyote is hauling it 10, we should be able to -- at 11 loads, we're going to buy better than what we were at 1.

Got it. What's the customer reaction been to the announced transaction? And kind of how do you think that evolves?

It's been overwhelmingly positive. I spend a lot of time with customers. The thing that I hear back from customers is they're extremely excited about the capacity that is going to get added in there for them. So when you start to look at it, typically, what happens for our customer in those instances is they're going to see the benefit of scale. It will bleed over into a customer, whether that's having capacity into lanes that they didn't have a stronger capacity from us or vice versa, they didn't have a stronger capacity from Coyote, but Coyote will be leveraging the capacity that we're bringing to the table for a customer. So there's a lot of excitement. I think the one thing at the core of both businesses that we've always been focused on is what's our service? What's our solutions? What are we doing on the technology from an innovation side? And what is the relationship? And as long as we keep those 4 things at the core focus of who we are, I expect the customer reaction to be very strong.

Understood. Just from a housekeeping standpoint, you funded the transaction, but it's not closed yet. Kind of what are the next steps here?

Yes. If you break down the funding on Monday, we announced the equity offering to complete the funding for the acquisition of Coyote, and pleased to announce that demand was incredibly strong to the point where we were able to upsize the offering by more than 40%. So with that done, we've now have $500 million from that offering, plus $75 million in the green shoot, combined with $550 million, which we closed in a private transaction about a month ago from our 2 largest shareholders. So in aggregate, we have all the financing complete. We cleared HSR on August 1, and we announced on Monday that we intend to complete the acquisition before next Friday. So we will complete the acquisition next week.

Got it. That sounds great. Maybe kind of shifting gears a little bit, and kind of talking about the rest of the core industry, the exciting business you are talking about. But you guys have kind of long been viewed as having your finger on the pulse of what's going on in the marketplace. So what are you seeing out there? And obviously, there have been some signs of some seasonal improvement in 2Q. Kind of has that continued into 3Q? And kind of how do you think this evolves?

Yes. So we're still in a soft rate environment. And I think we said that on our earnings call, that what everybody was looking to see was what's the tightness that you saw in Q2, was that driven by produce season, beverage season kicking off? Or was it something bigger in the market? Our filled-in, and it hasn't changed, is that we're still in a soft freight environment, load-to-truck ratio sitting around 3.5:1 right now and tender rejection sitting at like 4% to 5%. Load-to-truck ratio needs to move to 6:1 and tender rejection needs to get in the high single digits, low double digits for us to start seeing spot freight. But for us, we don't view that as a bad thing. We think like being down at the bottom part of the cycle, gave us the chance to do the acquisition like Coyote. So taking advantage of where we are in the market is what we're focused on.

Got it. What have you seen for peak season? Obviously, we just did back-to-school. Kind of how has that kind of compared to what you would expect to be normal?

I think it depends on customer by customer. Encouragingly, the retail inventory positions are the cleanest they've been in 5 years. If you look at the largest retailers in North America, day sales of inventory are now below 2019 levels. I think that's really encouraging as we think about the potential for restocking into peak season, as we think about the pre-staging. But I still think it also is going to ultimately depend on will the consumers show up. There are clearly some encouraging signs year-to-date port volume strength at the Big 3 here on the West Coast up 20% year-to-date. So I think ultimately, it depends on customer by customer. We're telling our -- we're having conversations with customers, as you'd expect, daily. Some customers are expecting really large peak seasons. Some are expecting no peak season at all, right? So I think we clearly haven't had one in a couple of years. So the bar is low, but we're certainly hearing, I think, some encouraging things from customers and inventories are in a really good position.

Do you feel like it's legitimately different customers are going to see different peak seasons? Or do you feel like one side is wrong and the other side is like right sort of thing?

You saw it last year. Last year, I can think of 2 customers that told me they were going to have a peak season. They did. They had a peak season. But they typically sell at a discount to what some of the other retailers do. So when you think about where the end consumer is spending their money is something to keep in their mind. And I think right now it's still a little bit too early to call on whether they're right or wrong, which is what the second part of your question is. I think as we get into late September, early October is when we'll have a better feel for that.

Understood. What are you seeing on the capacity side of the equation here, both in terms of truck capacity as well as broker capacity? Like are you also seeing an acceleration in exits of small brokers?

Yes. So I'll take the first part. When you think about carrier authorities, we've had net monthly exits since October of 2022. So clearly, capacity continues to get removed from the market, but not at the pace that needs to restore supply-demand equilibrium. So if you...

At the current level of demand.

At the current level. I mean if you look at 2023, about 450 carrier authorities per week were exiting. That number is down to 250 per week this year. But on the other side of this, let's be balanced from the standpoint of not the greatest metric because not all carrier authorities are created equal. If you look at the exits that are occurring this year, it's actually larger authorities that are going under, even just this week, there was a carrier operation that had 500 power units that went out. So I think it's emblematic of the fact that we're still in a really difficult freight environment. And carriers, when you look at their operating cost relative to spot rates, it's unsustainable to the point of $0.25, $0.30 a mile in the whole. So I think that's working itself out, and ultimately, either carriers need to accelerate from an exit standpoint or demand needs to pick up in order to restore supply-demand equilibrium. On the second part of your question, it's really interesting, if you look on a 2-year stack from a brokerage industry standpoint, 20% of the industry has -- 20% of brokers have left, right? There are 20,000 brokers in the industry, and you had some capacity that came in during COVID. But that long tail of brokers that's out there right now, they're getting squeezed on both sides. If you're a small to mid broker, your carriers are likely going out of business and your shippers, our customers, are likely consolidating or calling the carriers that they want to do business with. So it's really difficult for the small to medium broker in this environment. So that's happening right now. That's the cyclical aspect of it. Longer term, also, the top 10 brokers represent 50% of the market. After we close Coyote next week, the top 9 will represent 50% of the market. Longer term, we expect that market structure to be winner take most from the standpoint of you need to be able to invest in technology, invest in customer relationships, service the freight, and we think the larger brokers are going to be able to do that best.

Got it. Just going back to your point of the 150,000 carriers potentially, but that's like not really a relevant metric. What would you want that size of the kind of -- you said 75% of your carriers keep coming back over and over again. Is 75% of that number the right number? I'm asking because as the bar gets higher for mom-and-pop truckers, right, in terms of service levels, insurance costs going through the roof, clearing house, like are you better off focusing on a smaller and smaller contingent of mom-and-pop truckers out there?

Yes. So for us, I'm not going to get too worked up if the number comes down to 65% or if it goes up to 85%. I think we're in the right range because we'll always be bringing on new customers -- new carriers who want to do business with RXO and who can potentially become into that same group of what the 75% is that comes back week after week after week to do business with. So yes, I think that we're in the right range, and I won't get too worked up if it moves one way or the other, within 5, 10 percentage points.

Got it. You guys are pretty big in the LTL space as well, and we've seen the LTL market kind of go through a pretty major upheaval. What are you seeing out there? Obviously, there's some questions about whether there's too much capacity, kind of whether kind of the post-Yellow dynamics are what people expected. Maybe you're in the sweet spot because you don't care because you don't have the assets. So how do you see that playing out?

Well, I would say, one, we weren't really impacted by Yellow. Like there were some other brokerages who saw freight off of what happened with Yellow. But if you look at where we were winning business, we're winning business from our large truckload customers. These are customers who know our platform, who have seen our service, that we've got a relationship with. So it was a unique way for us to win business, and probably not how we thought we were going to start growing LTL when we first started doing it. Typically, you're thinking of smaller customers in a transactional way. These are large customers who are saying, we've got $100 million of transportation spend. Of that, $5 million is in LTL. And I'm spending more time on the $5 million than I am on the $95 million because of claims, damages, lost shipments, dealing with multiple carriers. Can you take the $5 million and run that as an outsource for us? And our brokerage has been able to do a really good job of that. And it's something that I still expect, and we said in the last earnings call, we expect that to continue to see significant growth.

What's the ideal mix of TL and LTL?

Right now, we're at 17%. I would love to see that get up well over 30% over time.

Okay. Got it. I want to shift gears a little bit and I'll come back to kind of margins and costs in a second. But obviously, you guys are really focused on productivity and cost out and technology. So let's take those 3 things serially. Just in terms of productivity initiatives, like what do you have in the pipeline? Kind of how quickly does that materialize? And what does the Coyote acquisition kind of do to what do you have in the pipeline right now?

From a productivity standpoint, we talked about last quarter that over the last 12 months, productivity as measured by loads per person per day was up 18%. And that's a really strong metric. But when we look at the headroom that we still have from a productivity standpoint, we think that it's significant. So I think that's one of the more important metrics that we look at. And when we look at the ability to go ahead and leverage a combined technology platform of RXO plus Coyote, we think that we have the ability to significantly advance the ball on productivity. So as you know, when we think about -- the beautiful part about the brokerage business, it's incredibly scalable. So when we got the ability to pump more volume through the -- through our cost structure and leverage our people, leverage our costs more efficiently, that's going to be quite accretive to margins.

Ravi, it's really simple. Like whenever I started in brokerage, I would take 5 to 6 minutes to build an order and that was the less time that I was spending talking to customers, that was less time I was building relationships, coming up with solutions for people. So we focus on, in our technology, what reduces the keystrokes, what reduces the clicks of a mouse that we've got, so that we can allow our brokers to go out there and say, we're going to spend time on relationships. We're going to spend time on solutions. We know that things come up, so we've got time for exception management, but we're not going to spend an inordinate amount of time on mundane task.

Got it. On that point, kind of obviously, you've been spending a lot on technology. So can you talk about kind of what the latest tools are in your tech arsenal? Obviously, you hosted a call last year on the -- on your AI initiatives as well. So what is in the pipeline?

Sure. So we've invested hundreds of millions of dollars in the platform over the last decade when we were part of XPO and I think the intention is to ensure that we're continually spending to ensure that the platform is competitive and best of breed. So last quarter, in particular, we talked about a couple of initiatives, one on the LTL side, where we continue to increase the automation capabilities of the LTL platform, and that's significant. We continue to invest incrementally within cross-border functionality as well. And we continue to ensure that -- when we think about technology spend, we think about it across 3 main cohorts. Our people, so our employees, our carriers and our shippers and effectively deploying resources across all 3 of those verticals. The other thing to think about is we believe that we've got the best pricing algorithms that's out there. So our pricing suite of products, and we talked about this on our AI Day last year, they're paying hundreds of thousands of times per day. So we're moving the dial faster than anyone in the industry, we have the ability to react quickly to market conditions. We think that's a significant competitive advantage.

Got it. Forgive me for this question but is coming from a point of ignorance. How -- not commoditized, but is this something that every major broker can replicate? Or is this like really hard to do and like there's a real secret sauce here?

The data is unique to us, right? Like they don't have the same data set that they are pulling from. They don't have the same algorithm that goes into how much are we putting a weighting on our internal, how much are we putting on external data that we're pulling. A lot of them -- some of them do not all -- less than a handful have a managed transportation group that has $3 billion of FUM that they're also adding in from that. So when you look at it, it's having access to a lot of data is the first step. The second step is knowing how to use the data. And we've shown that we know how to use the data. Even if you go back to the second quarter of 2022, that's whatever the market started to fall, was Q2 of 2022. You saw that we had contractual rates in place, but we pulled down purchase transportation faster than anybody else in the industry. And the reason that we did that is exactly what Jared's talking about, the thousands -- hundreds of thousands of things that our platform is doing on a daily basis telling us to move the pricing in real time.

Yes. Got it. Just last question on productivity here. Do you have any targets or benchmarks on load to head count or PT to revenues? Kind of what's -- what are they and how do you get there?

We haven't put anything out there publicly. We absolutely have things internally that we're looking for. What I would say externally is we just announced that we were growing loads per head per day by 18% on a rolling 12 month. We're still in the early, early innings of where productivity can go. If you think of -- and Ravi, you've been on our brokerage floor. Some of our top brokers are doing 150, 200 loads a day. That's not the average right now. And so like not even close to average right now. So we need to be able to pull everybody's productivity up to what our top people are able to do.

What distinguishes someone good from someone bad? Is it just experience? Is it just knowledge of tools? Is it...

Technology adoption is one thing. The other thing is how well they can get their customers and their carriers to adopt the technology. If you think of somebody that's working with 10 to 15 carriers and they don't have to make 10 to 15 calls right away in the early parts of the morning to compete over capacity. They have a carrier that can pick up their cell phone, book a load, negotiate and do all of that with no human interaction, and they get to follow up with the carrier later and say, "Hey, these are some projects that I've got coming up. This is where we're hoping that you're starting to lane your capacity over the next 2 or 3 weeks because we're seeing something in this market." You get to work with them in a different way versus a transactional tactical load-by-load basis.

Got it. Understood. Maybe last one for me before I turn over to the audience here. Your biggest competitor kind of is going through a few internal kind of initiatives and technology initiatives, go-to-market kind of restructuring. Have you seen a change in how they're operating in the marketplace?

No. I mean, Robinson is a great competitor. I've said that every time that you and I've ever talked, we've talked about they are a strong competitor. They're #1 in the marketplace. And they've got great relationships with their customers. They're good operators. We've got a lot of respect for them, and we're pulling for them. That's probably unusual for a competitor to say, but the better that they perform, the better it is for the industry. And so like that's -- when I go home at night, I got a Dave Bozeman fan club T-shirt that I wear. So we're pulling for them.

I want to see a picture of the T-shirt. I don't believe that for a second. Any questions in the room?

Maybe you can just talk a little bit about priorities for cash kind of post the acquisition. Obviously, a decent amount equity-funded. So it doesn't add too much risk to the balance sheet, but leverage has kind of creeped up. So maybe just talk a little bit about kind of balance sheet and cash priorities going forward.

Well, I would say check the deal now because if you look at it, our leverage was sitting at 3.2x and post deal, we're more than doubling our brokerage size and leverage is going to be at 1.6x. So leverage is actually coming down off of doing the deal, which is very unique for what we're doing from that standpoint. So I think leverage is in a phenomenal spot of doubling the brokerage and being at 1.6x. The priority for cash hasn't changed. We're going to continue to invest into the business. We're going to look at opportunities to return to shareholders, whether it's share buybacks or something like that. And then we're going to continue to look at strategic M&A. If we can find the right M&A at this point in the cycle in brokerage, we'd be crazy not to look at it. If there was something out there in managed transportation, we would absolutely look at it. If there's something that helped us expand the mode within brokers like LTL, flatbed, refrigerated, that's something that we would take a look at as well.

You obviously issued a bunch of equity to fund the transaction. Does that mean buybacks kind of go up your ranking of cash deployment just to kind of offset that a little bit?

Be opportunistic and look at what makes the most sense at the right time.

Got it. Any more questions in the room? Maybe just a couple of big-picture ones to kind of close it here. So in the previous cycle, you did about $1 of mid-cycle EPS. Your peak EPS was about like $1.50 or $1.60 or so. Right now, obviously, you're well below that as reflected by the state of the cycle. Coyote aside, so without the synergy, the combination EPS, do you think we can get back to that $1 of EPS or so in a normal cycle?

Yes, 100%. And I would argue that we'd significantly exceed that based on the actions we've taken over the last 24 months post spin. So if you want to go through it, Coyote aside, and then we can get to that. But the last 2 years, we've taken out $65 million of annualized operating expenses from the model, a large percentage of which are structural in nature and will not come back when the market recovers. That's number one. Number two, within complementary services on last mile, we've taken significant profitability initiatives to be knocking on the doorstep of, call it, mid-single-digit type EBITDA margins. And we committed last quarter to at least $20 million, again, at least of savings that will flow through the P&L, so we'll hit EBITDA in calendar 2025. So when you go through the business in terms of the operating efficiencies that we've enacted with respect to operating expenses on the $65 million, cost of purchase transportation within last mile. The ability for this business to run past prior, I think, is significantly high. And then when you think about where we are in the cycle, last quarter on our full truckload business, we're 30% below our 5-year average in terms of gross profit per load. Even if you take out the peaks and you take out COVID, we're still north of 20% below our 5-year average, then you layer Coyote into the mix in terms of thinking about what that combined pro forma normalized earnings power could be, at least $25 million of cost synergies combined with the synergy potential associated with cost of purchase transportation. The mid-cycle earnings power, I think, is significant. And importantly, the free cash flow generation capabilities of this enterprise are enormous. If you look at RXO stand-alone, $50 million of CapEx, $30 million of interest expense. If you look at Coyote, CapEx at about $20 million pre-synergy. And then you think about every dollar of incremental EBITDA on top of that, we'll hit the balance sheet at about $0.75 on the dollar. There's a significant potential for cash flow generation over the next few years.

Got it. So just on the Coyote side itself, we just did the raw math and what you've told us so far. Our math comes to about $0.27 of addition to that, whatever the base EPS is. But I reckon you believe that there's a lot more opportunity there from the revenue synergy as well.

If you think about prior peak to trough EBITDA at Coyote, it's not too dissimilar from RXO. And then when you combine these entities together, part of the rationale and the strategic merits of this deal, we're going to reaccelerate the volume growth at Coyote across all levers, right? Core enterprise, small, medium business, mid-market, we're going to retain UPS. It's a strong customer. We've got the commercial agreement that extends through January of 2030. The ability to go ahead and have this organization grow quickly with the synergies that we talked about, I think the numbers you're throwing out are going to be low, yes.

Got it. Drew, you mentioned that if there were more acquisition opportunities, you'd take it. Do you think that there is room for another Coyote-size transaction, not necessarily for you, in the industry, like do you think like what you did has kind of set off a few alarm bells in other places that others might look to do something similar?

I think that this has been a long time coming. I don't know if this specific event kicked it off or if there's a string of acquisitions out there, but there's certainly going to be a lot of opportunity. There's a lot of private brokers that are out there today that are built up at size and something will happen with them over the next 12, 24 months. So yes, I think that what I've said in the past is if the top broker -- top 10 brokers make up 50% of the market now, I think as you look out 5 years, it's going to be the top 4 or 5 that make up 60%, 70% of the overall brokerage market.

Got it. We have a little less than a minute left, and now I'm going to ask you about the digitization of the industry, which 5 years ago, would have been like top -- a first 5-minute question, which kind of tells you how much the industry has evolved and kind of what do you guys have done as well in the space. But when you think of the kind of "digital brokers" out there kind of -- and everything they've done and those -- the changes you'll see in that marketplace are with the exit of some key players there. How has that evolved? And kind of how much have they achieved kind of normalized operation in your view versus still having to find kind of stable ground?

Yes. So I think first, the word digital broker...

Sorry, I take that back. A newer broker.

It makes like you cringe and you kind of find your way out of the room because you don't want to be identified as a digital broker because all that means is you're losing money. So that's not something that we're ever really going for. For us, we were one of the first ones to invest in technology. And Jared talked about it, technology that helps us from the customer standpoint, from the carrier standpoint, from an employee productivity standpoint, we'll continue to be focused on that. For us, we never saw a differentiation coming in on the technology side. We did see some folks try to lead with price, but that doesn't help you for the long term. When you lead with price, you have to service the business. And if a customer lets you in on price, they'll throw you out on price. So for us, we can -- we try to focus on 3 things and keep it very simple within our technology, customers, carriers and people.

Got it. And with that, I think we're a little bit over time. So Drew, all we need now is the cycle to definitively show up. It's been a little bit coy. It's there, but I think it's imminent. So...

We're ready for it.

Absolutely. Thank you, sir.

Thank you.