Ryder System, Inc. (R) Earnings Call Transcript & Summary

Hi. Good afternoon. Thank you for joining our discussion with Ryder's CFO, Scott Parker. I'm Brian Ossenbeck, I cover transports and logistics for JPMorgan. We're excited to have Scott here to kick off the transports track this afternoon with Industrials Conference. So he'll cover a few slides to get us started. And then I'll rejoin for the Q&A. If you have any questions along the way, please feel free to use the conference website to submit them, and I'll try to work to get them into the conversation. So thanks again for joining us, Scott. Let me turn it over to you to get us started.

Thanks, Brian. Thanks for hosting us. Good afternoon, everyone. Today, I'll provide you with a brief overview of Ryder as well as some key messages regarding our strategy and our actions to increase returns. Before we begin, if you go to Slide 2, our presentation includes forward-looking statements. These statements are based on our current expectation and are subject to uncertainty and changes in circumstances, including the risk factors set forth in our 10-K and 10-Q. If you turn to Page 3, this provides a quick overview of Ryder. We are a leading provider of outsourced logistics and transportation solutions for commercial customers. Last year, our 39,000 employees generated $8.4 billion in revenue. We managed to maintain nearly 280,000 vehicles through our network of approximately 800 maintenance shops, manage around 63 million square feet of warehouse space, and the majority of our revenue is supported by multiyear contracts. We report our business in 3 segments: our largest segment is Fleet Management Solutions, which provides vehicles, maintenance and related services. Nearly 2/3 of this segment's revenues is from contractual lease and maintenance agreements with an average term of around 6 years. We also provide short-term truck capacity through our commercial rental fleet, sell vehicles after their initial life with Ryder, primarily through our network of around 60 retail centers. In Supply Chain Solutions, we provide a wide range of logistics services that include dedicated transportation, inbound and outbound distribution, warehouse management and transportation management. Our capabilities also include e-fulfillment services and last mile delivery for big and bulky goods, and these areas are benefiting from the strong growth trends we're seeing in e-commerce. In Dedicated Transportation Solutions, customers outsource not only their fleet of trucks, but also their drivers and the services around their drivers. We employ over 8,000 commercial truck drivers, and our ability to recruit and retain drivers is how we drive value for customers in this segment. If you turn to Slide 4, just want to introduce the key messages we want to cover today. All 3 of our business segments operate in large addressable markets with secular trends that favor the outsourcing decision. We have a disciplined capital allocation and balanced growth strategy that we believe will generate positive free cash flow over the cycle and increase returns. We're making strategic investments focused on leveraging disruptive trends in the transportation sector in order to provide long-term growth and return opportunities for Ryder. And last, I'll discuss our roadmap for reaching our adjusted ROE target, and we'll update you on the progress we're making towards achieving it. If you turn to Page 5, the market trends shown on Page 5, our 3 segments operate in large markets where the services that Ryder provides are largely performed by companies themselves. These large addressable markets provide Ryder with a significant opportunity for growth. Ongoing secular trends make it challenging and costly for companies to perform logistics and transportation services on their own. This creates growth opportunities for Ryder. In addition, certain secular trends are accelerating as a result of the pandemic, which we will believe -- which we believe creates additional outsourcing opportunities, particularly for our supply chain business through increased e-commerce and last mile delivery activity as well as for potential on-shoring and near-shoring of manufacturing operations, all create demand for the services that Ryder provides. Slide 6 shows our capital allocation strategy. As laid out in late 2019, we continue to execute on our strategy to achieve long-term ROE target of 15% and to generate positive free cash flow over the cycle. Our strategy focused on accelerating growth and our higher ROE, supply chain and dedicated businesses with moderate growth in our capital-intensive FMS business. We remain committed to the dividend, subject to Board approval, and plan to continue to reduce leverage to improve balance sheet flexibility for strategic opportunities and/or future share buybacks. We also plan to continue to invest in capabilities that will provide long-term revenue and earnings growth opportunities for Ryder and leverage disruptive technologies in our industry. These capabilities may develop organically through acquisitions or via strategic partnerships and investments. Slide 7 illustrates some of the key strategic initiatives and investments in technology that we expect to enhance the customer experience and provide long-term revenue and earnings growth. I'll just highlight a few. RyderShare, our visibility and collaborative logistics platform launched in the second quarter of 2020, is an example of an innovative technology demanded by customers in order to enhance their operational efficiency. RyderShare has already proven to be a strategic differentiator, enabling us to win more business and larger deals. We're continuing to invest in technology to enhance our e-commerce capabilities, which utilize 3 strategically located e-fulfillment sites and last mile facilities capable of reaching 95% of U.S. consumers in 2 days or less. We also launched an exciting brand awareness campaign late last year that highlights Ryder's broad range of logistics capabilities. We're encouraged by the increase in sales leads and traffic to ryder.com following the campaign, which we will continue to run in 2021. We're continuing to invest in our multiyear maintenance cost savings initiative, which has already generated annualized savings of $50 million, with an additional $30 million forecasted in 2021. Included in this initiative are procurement actions and shop productivity improvements, which are expected to lower maintenance costs and improve the customer experience. Turning to Slide 8, you'll see the path we have established for achieving our long-term target of adjusted -- our adjusted ROE of 15%. As we discussed on the February earnings call, we expect to approach our internal target of around 11% in 2021. We expect to make continued progress towards our target as we move past higher levels of depreciation impact related to our prior residual value estimate changes. In 2021, we're expecting about a $220 million year-over-year earnings benefit from lower depreciation expense impact. Improved used vehicle market conditions and our expanded retail sales capacity are also expected to benefit performance and returns in 2021. A continued cyclical recovery in rental is expected to provide earnings and returns benefits as well. In 2021, we're planning to increase the size of our rental fleet to capture higher expected demand, driven by a strong e-commerce and freight environment. Full year 2021 rental pricing and utilization are expected to improve versus last year. The remaining improvement needed to reach our ROE target is expected to come primarily from initiatives that include lease pricing increases that are more targeted to certain applications and customer segments; cost actions, including our multiyear maintenance cost savings initiative; and accelerating the growth in our supply chain and dedicated businesses, supported by some of the strategic investments I just discussed. We continue to see strong trends that support logistics and transportation outsourcing and believe we are well positioned to leverage these compelling opportunities. With that, Brian, let me turn it back over to you. Brian, you're on mute.

I knew that was going to happen. Yes, got to ease into it. Thank you. All right, so let's try that again. If you have any questions, feel free to put them in the chat box. We'll go ahead and get them to you. All right. So now that you can hear me, we'll stick with maybe a short-term one to begin with. There's probably some additional cost and loss activity with auto production slowdown, the weather. I recognize you don't give mid-quarter updates, but is there anything you can talk around like what's deferred versus what's maybe lost potentially from that perspective?

Yes, Brian, I think as we mentioned on the earnings call, at least from the auto business perspective, the auto segment, we have seen some sporadic shutdowns to certain lines, certain vehicle types because of the shortfall, but all those were incorporated into our forecast. And I think the commentary we've heard is that the expectation is any lost production would just be kind of put into later in the year, similar to what you saw when we -- last year in the second quarter when we had some of the impacts related to the pandemic. On the weather side, historically, weather, because most of our business is contractual, it really kind of comes down to some impacts on the rental side in regards to some of that temporary slowdown. Again, our expectation is that, that kind of resumed after the weather impact. You have a little bit of impact on cost of some of the weather impacts, whether it be snow and some other things. But overall, historically, it's not been a major issue for us.

Got it. So maybe past the weather clearing up, which is already starting to in some areas, you mentioned a few of the end markets, you're seeing some strength. What are some of the best opportunities you feel like are out there now and throughout the rest of the year? And do you think it's a little early and you're seeing signs of the economic reopening start to progress in some of the areas you had expected?

Yes, generally, I think as we laid it out, we expect a positive business environment. We do expect that the recovery will kind of be strong in the second half of the year, especially for us, as we talked about some of those dynamics we can go through. So the 2 big areas that we see that have increased activity is really around kind of the manufacturing, consumer packaged goods and distribution. They really were impacted by the pandemic and the supply chain disruption because of the increased demand surge. So that's an area that, clearly, they're looking for expertise like Ryder can provide around how to address that, look at different ways of doing that and improving around that and outsourcing that activity. And then the second area that I'm sure you heard a lot about and we'll continue to talk about a lot is around the e-commerce. Clearly, it was something where it accelerated. I think it's -- because of the long nature of that, it has become -- for a lot of people, has become a part of life and kind of how they will do that. So we do think it is an area that is going to continue to be strong, and companies are starting to really need to position their businesses for that e-commerce environment that consumers are expecting they can deliver. So we'll talk about it, I think, a little bit later. But we're really well positioned on that, both with our e-fulfillment capabilities as well as our last mile capabilities for big and bulky that have seen significant increase in regards to activity as people are getting comfortable kind of with exercise equipment, appliances and furniture kind of deliveries to their home.

Before we get into the different verticals from the asset side, how many medium-duty trucks are already in the, I guess, the lease in the rental fleet tied to e-commerce? And if this growth continues, do you think that would have an impact on like overall FMS margins and the CapEx profile?

Yes. On the lease side, the e-commerce, it's more on the FMS side, it's more over on the rental. And we talked about that on the rental side, we -- part of our modest growth that we're doing in the fleet, we're expecting to increase the fleet about 10%. A big piece of that is to address kind of trucks and light-duty vehicles to meet the demand for e-commerce as well as just the overall freight market activity that we saw kind of in the fourth quarter coming into 2021.

So on the e-fulfillment side, I think you said you have 3 facilities on that.

We have 3 facilities.

Can you just give us a sense as to what it is you do for the customers in that space? What other opportunities there are? How far are those facilities? What types of customers? Because I don't think we've really got a great sense as to what you do there and what's potentially because, clearly, that's going to be one of your growth drivers?

Yes. I think if you look at the 3 centers are really kind of multiclient facilities, we have 1 in California, Texas and Pennsylvania. As we've mentioned, this allows us to service customers within 2 days. So as we look at these, these are for customers that do not have their current capabilities, don't have the capabilities or they're using other providers to do that, and they're looking for a solution that they can get their products efficiently to the end customer, and it's one that continues to kind of grow in regards to the demand for that. But if you think about it, as the customer has some product there, we're able to -- when orders come in, we're able to pick, pack and kind of shift those most efficiently to the end customer. In addition, with the Ryder Last Mile capabilities around big and bulky, it's really just based on the increased volume with our customers, where it's how do we get that -- all those purchases to the end customer as quickly as possible working through those locations. So we have many facilities throughout the United States. And between those 2, we're able to really kind of get the density that we need to really get the operating leverage that you'd want from an e-fulfillment kind of capability.

Got it. So you mentioned the last mile, the big and bulky. What sort of post-COVID environment are you anticipating there? Clearly, there's a big surge and a lot of different types of products that were being purchased online and for home delivery. Maybe that changes, maybe some of it doesn't, but are there any geographies, other densities that you feel like you need to add to this network? Or can you scale up and down with whatever comes next, much like you did this year?

Yes. I think the -- clearly, COVID accelerated the density of the locations that we have. We're continuing to invest in salespeople as well as technology in the Last Mile business to keep the customer interface there. I think in regards, we still see strong momentum there, Brian. And given the facilities we have, we feel that we have capacity to growing that. And if need be, we'll have to look at potentially adding some capacity if trends continue kind of at the levels we saw in 2020.

Got it. So you mentioned the outsourcing and some of that's going to be triggered by the pandemic. Have you seen any new industry verticals or customers really kind of come back and this was the key point that they made the decision to outsource? Are you able to get a sense as to this has been a catalyst for triggering that? Or is it just kind of the more steady long sales cycles and some come and some go, and this wasn't necessarily an impact for them?

No. I think it did open. It's creating -- we expect it to create opportunities for more companies to make a decision to outsource. So to your point is the lead time and the cycle for doing that between kind of the decision and when it actually happens could be over the next 6, 12 months, but we are seeing more customers based on that. With that, as we talked about a little bit with RyderShare, a lot of the customers are looking for more data and visibility, technology investments that we can spread over a larger base than you could if you're doing it yourself. Those are areas that give us an opportunity to win new business as well as retain customers. So it has been, as I mentioned in the opening, it has been a differentiator. Customers see the value of that and how it helps them with regards to gaining efficiency and customer satisfaction in their business models.

Okay. And then I'm sure the pipelines are starting to rebuild in SCS and DTS. When you think of just the resources, obviously, there's a lot of disjointed nature of the supply chains now. This labor market is really tight in some areas. How do you feel in terms of standing up new contracts for drivers, for labor, for warehouses? Can you get -- if there's demand, can you fill it? Or is there a little bit of a mismatch when you get the resources lined up?

Well, I think 2 things. One is, yes, the sales activity is strong as we talked about for both the supply chain and dedicated that our expectation is that we'll be at the high end of the target range of high-single-digit growth in both those businesses in 2021. Your point about -- one of the values and strengths of Ryder is our ability to hire, in particular, drivers and warehouse. It's a big part of our business. We have dedicated resources able to kind of quickly bring resources on for these start-ups that we have, which are consistent, right? We have them continuously, so we don't think that resource availability is kind of a constraint. We've been able to work through those and get the start-ups and get those customers onboarded.

Got it.

So look, as always, we'll continue to look at that, but I think the strength is our size and scale gives us a lot better capabilities than some of the customers that are considering the outsourcing solution.

Okay. So we made it halfway through before we got to the used truck question, so I think that's a good thing, it's an improvement. I think we only have 1 really. I mean we're seeing strong data, everybody has, since February and off the bottom from last year. I think you're pretty close to the mark to avoid any other policy write-downs when you look at trucks and tractors. Is there -- from our perspective and then kind of accounting for your mix and age, is there anything else that we should try to adjust for? Or are we kind of in the right ballpark when we look at being plus 10% on trucks and plus 30% on tractors to avoid any further changes to the policy?

Yes, Brian, I think we -- without kind of getting into the exact things around the mix, but I think what we said is that the trends that we saw in the last 2 quarters, so from perspective, they're not mix adjusted, but they're directionally in the right ballpark. So from a truck perspective, we needed a 10% improvement in the market in order to not have a policy. Market is up 20%, so clearly above kind of where our policy levels are marked at, so that's a good thing on the truck side. And on the tractor, you're right, we said we needed a 30% improvement through -- by the second quarter of 2020 -- 2022, I mean, second quarter of 2022. So based on where we were at the end of the fourth quarter, we were up 24%. So we feel good that we're close to where we needed to be at the end of 2020 for that kind of -- the current trajectory that we kind of anticipate will kind of get us to those levels as we get into -- near that in 2022.

Okay. So the...

So the one thing I would comment on, I think, that we made is that we had a lot of volume this year, right? Third and fourth quarter were very large volume because of the inventory level. So we did call out on the earnings call was the expectation was that pricing would continue to improve, but we would have lower volume than we had in 2020. And so we thought that the 18 million were probably -- is a good proxy for a run rate, but based on those dynamics, the volume versus price, we could be slightly kind of plus or minus that number.

Got it. And that 18 million was a quarterly mark? Or is that for the...

That was the fourth quarter gains that we had.

Right. Okay. So obviously, the lack of -- or I guess, fewer headwinds in terms of the D&A that will help build the bridge you showed to the ROE, you mentioned price, and I think I had 2 questions there, really. The first one, you mentioned the lease fleet is getting a little bit smaller, the growth maybe isn't coming in. How much of that is finding the market in price? And how much is from just what we went through last year? I don't know if you can split the difference between the 2. But the other one on pricing, you came to Ryder with a lot of financial background in leasing as well. So one of the ideas was to maybe look at the stratification of the pricing a little bit differently, which is interesting, and we've seen, I guess, some positive results on price. So maybe you can just walk through both of those in terms of the impact of price on the demand and what you're looking at doing for more of the tools on the portfolio side?

Yes, Brian, thanks. So when we kind of entered 2020, we would talk about raising price, just given the last several years, kind of what was happening in the market conditions and clearly, the returns given the used vehicle market. So as we were doing that, we kind of saw 2020 as kind of a price discovery in regards to those price increases that we were pushing for, then the pandemic and COVID came along. So you kind of think about 2020, it's very hard to bifurcate those, which one, but I think we had -- we did have kind of lower CapEx in sales in 2020. So as we kind of go into 2021, that will be something that we'll kind of be looking at. We've seen strong kind of commitments and momentum on the lease side. So as you -- as we think about that, I think we can give you a little bit more color, but I would say that timing-wise, there was a little bit of -- it was very difficult to kind of pierce the 2 or separate the 2. Back to your first question, really around the data-driven nature, initially, it was kind of -- we need to kind of -- to address the market conditions by kind of a general price increase to -- that we've done over the last couple of years to get the portfolio into position. And as you mentioned, we do have a long history, and we have a lot of data, so we have been using that data to be more surgical and differentiate our pricing by looking through different segmentations, applications, to ensure that the pricing that we're doing is really getting at the -- improving the returns in the part of the portfolio while retaining customers that we don't feel that need the same level of price increases. So I think we've made very good progress. We have a lot more to do. And it has been something that's helped us get the mid single-digit price increases that we've talked about over -- since kind of '19, '20.

Right. Okay. And to use just the baseball analogy, early innings, probably on the first, but it seems pretty early, but I just don't know if you could kind of give us some?

I think it's early, and it's going to be something that kind of the [ hit or trip ], right? It's going to be something that as you get through this, we're going to learn more, kind of incorporate that into our models and continue to refine this over time. So I'd say it's early stages of the innings.

Okay. So one of the questions we get a lot and one that's come through already in the chat box here is just on free cash flow. So you're expecting $400 million to $700 million this year, modest decline in the fleet based on the lower sales we just talked about. So I guess the question is really, is this a return of capital and not a return on capital? So this is the whole can you grow through the cycle? Can you generate free cash flow that's positive as well? So do you think you can get to that point? Or are these going to be sort of mutually exclusive, considering, I mean, the truck is expensive, you incur the full cost upfront, then you have to get it back for a multiyear period? So it seems like there's some dynamics that sort of work against that, so is that a possibility? Or are you still trying to figure that out, like you said, where the market is in terms of pricing because the residual values are changing as well, so that makes an impact on the overall price. So where do you think you stand in terms of just trying to figure out that balance, which, obviously, after last year, is a little hard to tell?

Yes. So Brian, I'll try to parse a couple of pieces of that. So overall, I think we provided in the earnings deck, we kind of gave a framework where we got questions a little bit about what was kind of replacement CapEx for both the lease and rental businesses. So if you look at this year, we're a little bit above kind of replacement, as we talked about, on the rental side, to invest in some trucks and light-duty as part of the e-commerce and overall freight environment. On the lease side, we're kind of around the replacement, given some of the nature of the conversation, where kind of volume ends up, sales CapEx comes in. So generally, you look at that, and that kind of gives you kind of a sense of the free cash flow, not what we experienced last year, but also kind of more -- kind of a normalized environment at that replacement. Then you kind of get into -- we believe, as we laid out our capital allocation strategy in late 2019, that a moderate growth of the FMS business as well as kind of investments in supply chain and dedicated would produce over time kind of earnings growth as well as free cash flow through the cycle. So to me, if you look at that framework that we provided, we've talked in the past, Robert has mentioned sometimes, a 3,000 or 4,000 kind of growth rate in the lease portfolio, you can still balance that lease growth with positive cash flow. So it is possible to do both, and it's kind of something that we're focused on. And again, that's -- in each year, you kind of have to kind of look at the dynamics of what's there, but that's kind of the expectation for us going forward. With respect to kind of the free cash flow, you know that we were above our target leverage, so our target leverage was 250% to 300% over the last 18 months. With the depreciation, we're a little bit above that. We're happy to be below that as of the fourth quarter, so we were at kind of the higher end of the range at around 290%, 293%. So historically, we have not done kind of capital returns or share buybacks unless we were at the bottom end of the range. So I think as we get through the year and kind of see how things kind of play out, I think we'll come back and talk a little bit about how leverage is, and our expectations will continue to delever, and we'll kind of talk a little bit about those opportunities as we get a little bit further into the year.

Interesting. Okay. So on the leverage side, you do have a little bit of floating debt. I think it's much lower than normal. It's usually 20% to 40%, now it's 10%, probably weaves into how you're financing trucks and what the activity looks like. So if you can, with interest rates on the rise, if you can just give us a quick sense as to how that affects Ryder?

Yes. You've called it out. So yes, we -- historically, we've had a portion of our kind of debt and kind of a floating rate debt at 20% to 40% that you mentioned. Because of the free cash flow that we had during 2020, we did pay down a lot of our floating rate debt. So most of it is CP that we kind of grow the balance before we kind of term it out in the medium term notes. So given that and expectation for continued kind of free cash flow, the impact from kind of rising short-term rates really won't impact us much from an interest cost perspective, just given the low levels of our commercial paper balances.

Okay. Got it. So I think we have about 10 minutes left. But when we look at the RyderShare platform, I think that is one of the more unique things out there, at least in logistics. You mentioned it earlier, but can you just go back into maybe a little higher level, like what it is, who's asking for it? You have like 2 million shipments or something on there. What do you think scale looks like and what are sort of the benefits when you get there?

Yes. Well, as I mentioned, we launched it in the second quarter, and it surpassed all of our targets for 2020 from both customer adoption as well as transaction volume. So we did mention that 2 million, and it is really a unique tool and strategic differentiator for Ryder relative to other products that are out there. And so I think when you think about the -- our customers, it really provides that transparency from kind of the beginning destination all the way through the end destination, and it connects all the parties in that -- in the -- that ecosystem to see when there are issues or changes in the kind of the shipment process, how people adapt to that, how do they adjust to that, whether it be traffic or whether it be weather, those type of things. So that visibility has been -- was done traditionally mangled, right? It was a lot of phone calls and trying to get a hold of people. So this -- having that collaboration really has demonstrated efficiencies for our customers, better on time, customer service. So that's where we -- those benefits to that is getting more customers to -- as we have more and more examples, you're able to share that. It is something that more customers are asking for. So we have to continue to invest in it, though. So there's continued to be additional capabilities that customers are looking for that we need to continue to enhance that product offering.

Okay. Great. So we have an autonomous trucking panel tomorrow, so I wanted to get your -- can you weigh on before we sign off here today with the last question probably. So obviously, Ryder has a lot of trucks, a big footprint, so you're probably going to have some say in how this rolls out. So I think one of the things that we've seen already in the news is you're one of the test customers for Ike Robotics. So I don't know how much you can talk about that relationship and how you're addressing AV with them in the future. And then just more generally speaking, how do you view Ryder's footprint and core competencies of leasing and the maintenance, the 800 facilities, how does that all roll together in terms of opportunities and probably some challenges when you look at EV and AV rolling out here in the foreseeable future?

Yes. Thanks for the intro. I think generally, for both AV and EV, is that we want to take a leadership role and more actively engaged with many players, so different players for AV versus EV, right? So on the EV side, the electric side, clearly, the OEMs that we deal with today, there's also some start-up operations. But really, our view is to kind of get insights around the technology, commercialization, how it impacts our customers, how do we leverage our value -- our capabilities and value proposition for both those applications. I think as you mentioned, we really -- from an AV point of view, we really do believe that we have some core capabilities and assets around that, around kind of vehicle maintenance and management. Clearly, our logistics that we've talked about, the visibility technology and also the footprint we have from our 800 locations in order to support kind of how AV kind of continues to roll out. Your question, we don't like to talk about specific kind of relationships, but generally, we are engaging with many of the players that are leading the kind of the push in both those -- the AV and as well as on the EV side. The only point I would make on the EV side, if you don't mind, is what we see is that diesel trucks are not going away. This is something that is -- something that will be a multiyear process, where we definitely are mindful of that transition. And also, the other piece would be is, we see the early applications more on the light-duty, so you look at the kind of the parcel and trucks for some of those deliveries, it's a smaller piece of our portfolio. There's still a lot of work to be done in the medium to heavy-duty in regards to the overall customer value proposition. But it is something, again, we're very active in there, and we'll continue to leverage kind of our relationships to work through kind of the evolution of both technologies.

Okay. Great. I guess we have time for 1 more quick question. So RyderVentures is a newer evolution for maybe finding some of these partners. Last quarter, I think Rob mentioned that you've got the first one, it was like an owner-operator app. But do you feel like that arm can help with this finding and partnering as well? Or is it maybe for some other separate goals?

No. For sure, Brian, I think the announcement -- the number of phone calls after the announcements were overwhelming. So it's really the -- giving kind of Ryder that prominence. We look at this -- there's a lot of -- we've been working with start-ups and we've been working around how they could help us in regards to their products and offering. The big piece that we bring to a lot of these startups are, as we have a huge customer base and we can test some of these different applications, to look at that. As we are thinking through that, with all that work and effort to kind of do that, why wouldn't we want to have a small investment that gives us kind of a leadership position in those companies. And some of these things are going to be the future. So it's more than just a venture fund. It's really to kind of continue the piece that we just talked about with EV and AV. It's the learning process, what is the -- where is the market and disruption going, so that we can kind of learn from that and ensure that we capitalize on it. So we're very happy here, right? We had the first investment that we put out there, and it really is around kind of aggregating freight capacity for small business -- small owners that can't do that themselves that gives them the ability to get the capabilities and the leverage of being a larger operator that we think is a good entry point for kind of where the market is going.

Okay. Great. Well, we are just about out of time. So while I did manage to meet myself to start, I will keep us on track, first one out of the gate. So thank you very much, Scott, for joining. It was great to catch up and hear about what's going on with Ryder. Appreciate your time, and we'll talk to you soon. Thanks, everybody, for joining.

Thanks, Brian.

Take care.