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

Okay. Good afternoon. Thank you, everybody, for coming back after lunch here. I'm Brian Ossenbeck. I cover the transports at JPMorgan. Up next, we have Ryder. And we have John Diez, who's the CFO, who's had a lot of other hats in the past couple of years. So we're going to cover a lot of ground here, not just the financials, but he does have a couple of slides that he's going to start off with. So we'll let him get started, and then we'll go into Q&A. You got mics on the tables. If you want to pick them up and ask a question, feel free to do that throughout. But with that, let me turn it over to John. Thank you.

All right. Good afternoon, everyone. Good to be here. It's actually my first time in the city after COVID. So great weather and glad to be here with you all. Let me give you a little bit of background on Ryder, quick background here. Ryder is a leader in the North American market for logistics and transportation outsourcing. Everything we do, our customers could do for themselves. So if you think about a private fleet, they could go out and purchase and operate their own fleet on their own. Customers can't deliver their product to their customers with their own drivers and trucks or they could execute their logistics, either through warehousing or transportation, on their own as well. What we do is really operate very effectively for our customers, and we're a reliable operator of their logistics functions, and that's why we went. So if you look at our business, we generated about just under $10 billion in revenue in 2021. Half of that revenue, as you see in the bottom left here, fleet management, which is our maintenance and leasing and rental business, accounts for about half. Our supply chain business that manages the inbound and outbound product for our customers through transportation, warehousing and e-commerce solutions accounts for about 1/3. And then the balance there, dedicated transportation, is where customers, not only look to outsource the truck, but also the driver and delivery of their product to their end customer. It's about 15%. We own and manage about 260,000 vehicles, so we do the maintenance on all of those vehicles through our 800 maintenance locations throughout North America, 75 million of square feet that we manage on behalf of our customers, and we hire about just over 40,000 employees. We serve 50,000 customers, which is really a large base of customers that we support and assist throughout our network, and you see they're very diversified portfolio of customers that we support. Just some key highlights about the markets that we serve. They're all big markets that we plan, the smallest being the fleet management market of $60 billion. DTS is about a $400 billion market, and the supply chain market is just over $1 trillion. And again, these are markets of do-it-yourselfers with only about 5% to 25% depending on each of these segments have been outsourced. So plenty of opportunity for us to continue to grow. We have seen secular trends support growth in these markets. The harder it becomes to operate your own network, the better it is for Ryder, and they look to outsource those activities to us. So we've been talking about dynamic supply chains. Now the buzzword is resilient supply chains with all the disruption we've seen over the last 2 years. So people who are looking to establish stronger supply chains, they look to Ryder. E-commerce took off during COVID. The labor shortages have become even more acute, both on the driver, technician and warehouse front. So all those factors are contributing to our ongoing growth. From a capital allocation perspective, our priorities are clearly to continue to invest in our businesses. Our fleet management business will always require a certain level of capital, about $2 billion a year. We deploy into that business each year. We're looking to accelerate growth in our higher-return supply chain and dedicated businesses, and then we'll look to add acquisitions that create added capabilities, especially supporting our supply chain business in the areas of e-commerce and last mile. And then with what we've done with the balance sheet, we've really given us tremendous flexibility now to not only invest in acquisition opportunities but also return capital to our shareholders by either increasing dividends or doing share buybacks. So with Ryder, we've been on a journey the last couple of years to really improve the overall returns of the business, really focused on improving our return on equity measure for the business and creating long-term value. So one of the things we did was really accelerated the growth in SCS and DTS and kind of diversified the portfolio. Fleet management, which you saw earlier, is about 50% of our business. A couple of years ago, that represent about 60%. So done a lot of good work there to diversify our business mix. We've really focused on the FMS side to improve overall returns. We've done that in our lease pricing, as well as derisking the lease pricing by reducing residuals. We've also implemented a multiyear maintenance cost savings initiative, which has delivered, and it's on target to deliver and exceed our original target of $100 million. And then we are also looking at other opportunities to really deploy capital where we get the best return. And we're looking at exiting the U.K., which has been a challenged business for a number of years, and we're engaged in that exercise with our employees over there in the U.K. to exit here in the next 12 to 18 months. Obviously, good work around each of these has positioned us well. What we've done is we've raised our targets for return on equity from mid-teens over the cycles to high teens over the cycle. We also raised our FMS target returns in doing so. So key takeaways for you all around Ryder before we get into the Q&A is the value prop for growth in each of our business segment remains strong. We've made tremendous progress over the last couple of years to improve the overall returns profile of the business. And clearly, we are looking at acquisitions and positioning the business for success in the future by accelerating the growth in our supply chain and dedicated businesses. So with that...

Okay.

Yes.

Great. Thank you, John. So given the nature of Ryder's business, I was wondering if you could just give us some high-level comments on supply chain challenges. Especially with auto, you've got a good chunk of business there. So any insights you're seeing as you look across the different verticals when it comes to where we are in terms of the recovery. The question we keep asking at this conference, we have 2 more panelists on it tomorrow, I don't know if we'll get an answer, but we'd certainly love to hear your perspective.

No. Clearly, in our supply chain business, a good portion of that business supports the auto manufacturers, primarily in North America. That business, about 1/3 of it -- about 1/3 of the supply chain was auto-related. Now with the recent acquisition we've made, we've actually diversified that business mix, and it's about 25%. What we saw last year in the middle of the year, clearly, the semiconductor chip shortage caused tremendous disruption for production at all the plants, almost it seemed like throughout North America. We saw improvements as we got later into the year, and then what we expect is for that to continue to improve as we get into the second half of the year. I think the challenges still exist, clearly some more than others, depending on where you're sourcing product, but I think each of the OEMs have done a great job of stocking inventory, getting their hands on chips as best they can and being prepared for the 2022 year and hopefully getting back to normal levels by the end of the year.

Okay. And when you think just a long-term implication of these disruptions, and you mentioned the do-it-yourselfers. Do you think is the argument that we hit the peak of supply chain pain and then everybody just kind of goes back to what they were doing before? But I would think that you're going to see more outsourcing because of it, so I guess maybe you can talk about the sales cycle and how long it takes for someone to actually make that decision. And would you think that even after things get a little less bad that you would still see a lot of demand for this type of outsourcing?

Yes. We expect the outsourcing trend to continue to accelerate. During COVID, we saw an acceleration, without a doubt, of companies, both because of supply chain disruption as well as e-commerce, which really took off during COVID. Both of those, I think, have been great secular trends to accelerate outsourcing. Our typical sales cycle and decision-making on behalf of customers that look to outsource is usually around 6 months, so you will see a longer tail on the sales cycle for supply chain outsourcing. But I don't expect that to diminish over time, primarily because labor shortages are here with us. Everyone's feeling the impact. Those companies that aren't in tune perhaps as they should be with either warehouse worker shortages or driver shortages, they're going to look for help, and they're going to look for folks like Ryder and others to support them and continue to grow their business and focus on growth.

And have you seen -- I know there's a decent size presence in Mexico for Ryder, but the other aspect of all this is just where do supply chains end up and how do they flex or change. Have you seen anything incremental at least on the nearshoring or reshoring perspective? Are people talking about it? Are you seeing actual dollars behind it? Are you involved in those sorts of conversations? What's your perspective on that?

Yes. So we have a pretty significant business in Mexico, primarily supporting inbound manufacturing into the U.S. What we have seen is continued growth in that Mexico business. It's still a little bit early to see if that acceleration in that business is taking hold and whether that is a function of more and more folks looking to nearshore. I think it's a little bit early for that. But are the conversations being had with many of our customers? The answer is yes. More and more, we're getting request to evaluate solutions that touch on cross-border activity between Mexico and the U.S. specifically, so I do expect that to accelerate. It's a little bit soon. But I think the longer the disruptions last, I think the more -- you're going to see more and more companies look to Mexico to be a source of supply for their manufacturing.

So the other big disruption or one of the other big disruptions going on now is that just fuel prices going up to the roof, and so you know how many trucks you have and how many you operate. But can you just give us a high-level view of how that affects operations, financials? Is there any sort of demand disruption that you'd be worried about or something that's more tied to a little more sensitive to fuel prices, energy going up? Like how does that trickle through in the different aspects of Ryder's business?

Yes. So we participate in a big way in fuel from a volume perspective. We buy and sell quite a bit of diesel fuel through our network of shops, but most of that is a pass-through. So from a financial point of view to Ryder, the impact is really minimal. We do get some spikes in profit or declines in profit from sudden movements in pricing. But over time, it doesn't have a meaningful impact on our profitability. I think the bigger question there is around demand destruction and what that looks like over time, especially for U.S. shippers and consumer demand. Clearly, we've been advising customers to plan for higher fuel prices in the current 2022 year. Clearly, the geopolitical climate has accelerated that. We'll see where things normalize, but I do think it could have a longer-term impact if fuel prices remain at elevated levels. Ultimately, right, the consumer ends up paying for it, so that makes its way through every product that we consume as consumers here in the U.S. So that takes some time for that to navigate through the freight cycle, and I would expect that it will have a negative impact longer term on demand. But it's so volatile. It's hard to say what's going to happen with fuel prices. Is this sustainable? We saw the market kind of snap back here in the last couple of days on fuel prices. So hopefully, that continues, and we get to a more normalized level.

Okay. The other big one that we're wondering about normalization is used truck pricing. I think you guys have been pretty clear that you expect it to at least plateau and then maybe start to decelerate in the back half of the year, and we'll just have to wait and see. But correct me if I'm wrong, but I don't remember the last time used truck pricing was above new. And I guess you can't get new, and that's why it's higher. So maybe that's not even relevant. You just need a truck, and it's going to cost you this much. But from your perspective, do you have a lot of -- do you have any concern, rather, from a demand disruption perspective, again because you have owner/operators buying trucks that are getting more and more expensive? And are you seeing any of that pushback from that perspective at least?

Yes. So we are one of the largest retailers of used trucks in North America. And clearly, we've seen a ramp-up. It's been amazing to see. We went from a low -- 20-year low of -- in summer of 2020 to a record high in the numbers we just posted in Q4 2021. So with that said, we are seeing prices become elevated. There are number of instances where that used truck, and in our case, they're usually 7-year-old used trucks, are selling above new vehicle prices, which is incredible to think of that, just in the rollercoaster we've been through. Do I think there's going to be long-term lingering impact on demand disruption? The answer is no. Typically, in the used vehicle market, it's a matter of supply/demand imbalance that dictates a lot of the pricing there. I do expect as demand activity kind of normalizes and more importantly as the capacity starts coming online for new trucks, we will see things kind of normalize. We expect that as we signaled in the second half. We think Q4 is going to be down year-over-year. But overall, for the full year, we expect pricing actually to be up in '22.

Okay. So from a financial modeling perspective, I think you guys were helpful to give us a little bit of -- this is obviously unprecedented in terms of pricing, so this is maybe a $2.5, $3 decline from a normalization perspective. So I think it's a helpful starting point, but I just wanted to see if you could provide a little bit more context in terms of like the assumptions that go into that because we see record -- pricing record gains. And the deceleration, I think, is a little hard for investors to really think through the math of it. So I know you guys put that out there, so maybe a little more context behind coming up with that.

Yes. So what we did in 2021, where we had a record earnings year, we also enjoyed record level of gains. So we -- our gains that we posted was $257 million. The previous high was in the low $100 million mark, so that gives you the order of magnitude of how significant the gains were in '21. And then we signaled 2022 EPS guidance. We gave a high end of the range of $12, and then what we try to do for everyone to kind of anchor around what our more normalized levels is we adjusted for 2 factors. One is used vehicle gains going from the $250 million, over $200 million level, down to $75 million to $100 million. And then the second factor was around our rental, which is our transactional business. Utilization in that business in Q4 was 85%. That business typically operates in the high 70s. So what we try to do for everyone is to say, "Look, with normalized demand and normalized used truck pricing, what can you expect the business to deliver?" And that's where we walked it back from the $12 to $9.50, from $9 to $9.50 was the range that we gave. What that tries to do is say, "Look, once we get past these cyclical impacts and outsized impacts, that's where the business is behaving." I think it's important to put in context, our previous EPS high was $6.10. So underpinning all that is really the improvements we've made in the underlying business. And really, clearly, that's what we want to demonstrate going forward, which is our lease pricing is much improved, our maintenance cost savings initiatives are delivering, and then the ongoing repricing of that lease portfolio will continue to provide even incremental benefits above the $9 to $9.50 going forward.

Okay. That's helpful. In terms of the other aspects of labor and challenges to kind of get through the rest of the Ryder ecosystem, I guess, supply chain is mostly passed through, mostly cost plus. But if you can just talk about supply chain first, and then we get to dedicated, just how is this labor-intensive to get some of these businesses up and running? But how do you protect Ryder and kind of secure the margins in this type of environment where labor is a challenge, as you mentioned, just about anywhere, including warehouses?

Right. So from a labor perspective, we have 3 large labor pools. We have warehouse workers, we have professional commercial drivers, and we have technicians. The most acute impact has been felt in the driver space, so we employ about 10,000 professional drivers across DTS and SCS. As you mentioned, on the supply chain side, about 40% of that business is cost plus. And really where we felt the impact on supply chain has been in the auto space, where we do quite a bit of transportation and we got to hire drivers. So that activity impacted us there. I think the largest impact from a labor perspective, broadly speaking, is around our dedicated business where the driver is the key element in delivering that service. What we saw there was that our contracts contemplated a level of inflation that we become accustomed to in that 2% to 3%, and it did not contemplate the wage inflation that we saw of double digits. So we saw across the board high single digits to low double digits. In certain markets, it was as much as 20%, which we had to go back to customers with and reset pricing. So learning from that, what we've done is we've done a few things. One is we've introduced to our contracts new indexed inflationary pricing and index to a wage inflation measure as opposed to a broad CPI inflationary measure. That will protect us for escalating wages, especially in the driver space, being that the driver component is a significant part of our cost in delivering that service. And then secondarily is we've had to go to a large majority of our clients. About half of the portfolio was underperforming as a result of that. We've navigated through about half of that piece last year. We've got good rate increases, and we still got about 1/4 of the portfolio still to go here in the first half. And we expect -- these are market conditions. Everyone understands they want great service. They want to continue to deliver and deliver to their end customer the product that they worked hard for. So we're going to -- we should get through it and then position the business long term for success with the contract changes we've made.

Okay. But it seems like, so far, they're maybe not happy, but you can point to the market conditions to the customers, and they're willing to work with you on whatever is left to finish.

Yes. The receptivity has been great. Obviously, difficult conversations. These aren't easy conversations, but I think we all understand the impact. And then the alternative as they look at other options, whether it's going in the spot market for transportation or even putting it out to bid, I think they're seeing the same thing across the board. So those market conditions will continue to dictate the pace and increases we see going forward.

And when you think about dedicated in terms of -- I think you talked about this in the past in terms of just getting a bigger platform, bigger footprint maybe to scale a little bit differently or to at least utilize the trucks differently. So correct me if I'm wrong, but I think Ryder has a lot of at least a decent amount of CVS trucks for someone who is just a one way. Is that still part of the potential to expand dedicated to really get more of like a regional dynamic, where you can actually blend and balance a little bit? How hard is it to really get to that level?

Yes. So our dedicated business, by and large, is specialized delivery, whereby our drivers help unload the product and deliver that product. What we're looking at is piloting a few fleet expansion opportunities where we can leverage density and leverage pools of drivers and pools of trucks that are doing more of your dock door to dock door delivery and leveraging that opportunity in this pretty strong truckload market to help us with our dedicated services. That's easier said than done because our business is not set up that way. Some of our competitors kind of evolved from truckload space into the dedicated market, and their customer base lends itself better to that. But we are looking at those opportunities to see if we could scale that, and then over time, hopefully, improve the overall returns in the business.

And in terms of what you see in the pipeline, what type of, I guess, visibility do you have in terms of the growth coming forward? And do you -- similarly from the -- I don't think you mentioned this, so it's maybe not a big deal. But do you need people to execute these fleets into really manage these contracts when you go forward? Are those in short supply as well?

Yes. We're seeing labor shortages across the board, whether it's on the management side or on the front line. Clearly, we had record-level growth in '21 for both supply chain and dedicated. So every one of those contracts require logistics managers, requires dispatchers, requires individuals that are coordinating moves across the networks. That -- we have found that, that is less acute from a shortage perspective than still the front line, and wages haven't scaled up there as much as what we've seen on the warehouse side and on the driver side. So broadly speaking, is it a challenge? Yes. Broadly speaking, is it as acute as what we've seen on the warehouse side and drivers? Not at the same level.

Okay. And then in terms of the pipeline, what types of customers -- are you seeing new customers, still the same sort of mix that you've seen in the past, like repeats, new to the business, first-timers? And I guess any changes in fleet size that are interesting to think about when you look at just what's coming and who's potentially going to be a Ryder customer, who's potentially going to be a bigger Ryder customer?

Yes. First, on the dedicated side, about half of the growth that we saw last year from contract wins. We're upselling our fleet management customers where we today service their fleet. They came to us and said, "Look, I want to get out of the transportation space," and we saw a record level of sales activity in '21. We expect another strong year in '22. So a good number of those is expansion of services from fleet management, equipment activity to a full dedicated solution. We are seeing a number of new clients come on board, which was exciting, which created a lot of momentum for us. We expect to continue to grow with those clients next year. They're looking for the same solution. They're struggling to find drivers. They're struggling to execute deliveries, and they're coming to Ryder to help them with that. I do think the truck capacity shortage is also favorably impacting dedicated. A number of them can't expand their business because they can't find trucks, so they're looking at a provider like Ryder that can provide a full solution, both on the driver and equipment side.

And now shifting to FMS. I know you mentioned earlier you've got a good chunk of the book that's still to be repriced. Obviously, a strong market, so that helps. But I think in the past, you've talked about being a little -- using data a little bit more into drill down and like be a little more discrete or segments in the market a bit. So I guess maybe you can talk a little bit more about that. And then just a similar question on pricing, do you -- assuming customers get it, but are you seeing any pushback for these higher rates when you come back with these contract renewals?

Yes. So obviously, with our scale, we have an abundance of data available to us. We serve 50,000 customers in that fleet management business. So we do have the opportunity to look through data, especially around pricing, to segment the market and really optimize the performance of that portfolio. We began raising prices for our lease portfolio back in 2019, following adjusting residuals down and our residual assumptions in that pricing. We've been able to, in '19, '20 and '21, get the higher returns that we've targeted. So I get this question quite a bit. In 2020, before the OEM disruptions came into being, we saw good acceptance from customers as we were raising prices. And then in 2021, as we've seen a shortage of vehicle production, clearly, that's made market conditions even more acceptable for the price increases that we're looking at. That's through '21. The exciting thing for us is we sold out of deliveries in '22 already, so we're selling now into '23. So as we talked about the 40% that's been repriced as we cut over the year, we're sitting here with the '22-year already sold and priced at that higher level. So we're looking at, going forward, about 40% of the portfolio is still to go. And we think market conditions are still pretty favorable for us to continue to demand higher prices with our service.

So on the other aspect of diversifying away from some of the lease that we just talked about, but I thought Whiplash was a pretty interesting acquisition. You got Midwest as well in there from like a multi-tenant warehouse. So if you can just maybe talk through the strategic rationale to getting both of those and if this is building a bigger e-com fulfillment segment or if it's just getting a bit of diversification and kind of seeing how it goes and what the customers want. How are you approaching that expansion? And what are the expectations going forward?

Yes. So each of those acquisitions are in our supply chain business. On the Midwest acquisition, which was the first in Q4 last year, that gave us the capability of multi-client warehousing, which we don't do in the U.S. That's serving the CPG market. But more importantly, I think with e-commerce taking off, we are going to be looking to do more multi-client warehousing. So that gives us that capability that we didn't have in a really strong market, certainly with some great blue chip customers that came over with that business. I think on the Whiplash side, that's more of a strategic acquisition for us in that we do see e-commerce accelerating. It is still a small part of retail activity, but it's a growing component of the retail sector. Getting an opportunity to bring on a company like Whiplash with -- they have a great technology platform, as well as an operating platform that is able to provide us kind of a platform for growth there. It's going to be accretive for us day 1, which makes it exciting. But more exciting for us, it's an early cycle acquisition that we think that, over time, will deliver tremendous returns and growth opportunities for the business. And at the same time, we've been able to balance that supply chain business, rebalance it, I should say, a little bit away from automotive and really give us a shot in the arm around retail and what's happening in the retail sector.

I think the other area where it sounds like you're seeing some growth and some success with is RyderShare in terms of building out the platform. So maybe you can give the folks a little bit of 101 in terms of what that is and then also what the customers are seeing. Because, at least from my perspective, it's always challenging to get people to work together to have more visibility. So how do you facilitate that? And what sort of wins and acceptance that you're seeing from customers looking at that platform and joining in?

Yes. So RyderShare for us is -- it's been development for 3 years, and we've deployed it over the last couple of years. And what it provides is end-to-end visibility for shippers through their transportation network. What's really exciting and differentiated on our platform is not only do you have visibility, but you have the ability to collaborate on a particular shipment, send notices to both the end customer, to the shipper, us as the 3PL or the carrier in and of itself so that everyone is in tune with what's happening with that shipment. So what does it do? It improves overall labor productivity for our customers. It improves customer service for their end customer around timing and delivery windows. And then as important, it's really been a differentiator for us in winning business for Ryder and expanding our dedicated and supply chain business. We just announced that we're going to take the visibility, not only from end-to-end visibility on the transportation side, but also incorporate that into our warehouse solution. So we are going to be the first to provide end-to-end visibility from the 4 walls of a warehouse to the endpoint of a distribution network through transportation. Obviously, that's something that does not exist today. The platform is agnostic, so you could connect in warehouse management systems, TMS systems, transportation management systems, and gives the customers the flexibility they need to plug in and get that end-to-end visibility that they may not enjoy today either internally through their own systems or with another party.

Yes. So what type of freight runs on that platform? Is it going to be SCS? Is it going to be DTS? Does it have to be Ryder-related? Or can you expand this to other parties?

No. So we've been operating there our dedicated business. So all of our dedicated customers, by and large, have access to end-to-end visibility through this platform. We manage for many of the big auto manufacturers inbound transportation into the manufacturing plant. So our customers and supply chain get visibility there. We also have a significant amount of freight that we manage all together, either as a broker, as a transportation management conduit, and we provide that access point to each of our customers, as well as our carriers, to be able to operate in that platform.

So we just had an autonomous trucking panel discussion before this, but you've -- and the business has been approached or involved, I guess, in a couple of different partnerships. Clearly, you've got 800 locations, so that's a big selling point. But how do you see that sort of technology evolving and pairing with it or utilizing it even in some of your various aspects of the business?

Yes. So on autonomous, we've been working with all the technology providers. They've come to us, and we've created strategic alliances. Really, what they're looking for is someone to -- that can help accelerate the deployment of that technology. And clearly, with our size, expertise, we can leverage our maintenance facilities that you mentioned as transfer hubs, our maintenance capabilities to maintain and operate those assets for them. And then clearly, with our asset management and transportation management expertise, they're looking at us to execute these transportation networks, and they could clearly just focus on the technology deployment side of things. So it's evolving. Most of the trial runs that we've been working through are in the southeast and the southern part of the United States, where weather patterns are conducive to autonomous vehicle operation. As that technology evolves, I think you're going to see a broader spread of autonomous, and the use cases are going to expand over time. But the technology works. And clearly, in controlled environments, it works very effectively, and we're just looking to see how we could be a part of that and really, over time, how can we be a network operator on behalf of our customers so we could drive value to their business.

So we're obviously here, in person, things are opening up a bit, hopefully, for an extended period of time. But I thought there was a chunk of Ryder's business that was event-driven, more rental-related that really probably didn't come back. So is that something that you're starting to see the early signs of that type of -- I guess it's more on the rental side, setting up some of those live events? Is that coming back? Do you have visibility to that at this point?

Yes. So in our commercial rental business where we operate over 30,000 vehicles, a lot of that business is in support of these events. The answer is we started seeing a pickup in the second half of last year. Obviously, we're seeing events like marathons and festivals come back. We do expect this Fourth of July is going to be a little bit different than what we've seen in the last couple of years. So we did see a very strong Q4 from a utilization point of view. Some of that was event-driven. One indication for us is always our refrigerated truck assets. They've been sitting for some time, and those assets are going out, and the utilization on those assets is very strong. So that's a clear indication for us that, that event business is coming back, and it's coming back strong. And clearly, as you highlighted, as we get further into the year, you're going to see even more demand from that segment of the market.

And is there a rough size of the business in terms of how much that represents?

Well, for us, we've never given a size of that. But clearly, if you look at our refrigerated market, a good component of that is in support of those events. That still makes up about 20% to 25% of the fleet, so that gives you kind of an indication from a fleet mix perspective how we support that activity. Obviously, we have many other food distributors that we support through our fleet operations. But clearly, that refrigerated space is what's going to take advantage. That's the asset mix they're going to take advantage of for events.

So just to wrap up here, you started off by highlighting some of the changes in terms of the financial metrics, raising the ROE, looking at leverage perhaps differently in the future. But you've got Investor Day coming up, hopefully, in person again, on June 3. What should we kind of have in mind in terms of what to expect when you get up and start to talk about the next year and the next several years at Ryder?

Yes. So we're going to be down The Street here on June 3, as you highlighted. We're excited about just sharing where we've been and where we're going with the business and creating long-term value. I think you're going to hear about the exciting things we're doing on our supply chain business, especially around the e-commerce space and how we see that progressing over time, the continued efforts on accelerating the growth in dedicated. And then on the fleet management side, I think you're going to hear about what can you expect from an earnings performance over time. We've done a lot of great work there to get that business performing at really high levels and give everyone the confidence that this business will continue to perform through the cycles, which is what people are waiting to hear.

There. Okay. Well, we have run out of time, but thank you very much, John, for joining us today. Really appreciate it.

All right. Thank you.

Good seeing you again.

Yes. Great seeing everyone. Thanks.

Thank you.