Schneider National, Inc. (SNDR) Earnings Call Transcript & Summary

Great. Good afternoon, everybody. Thank you for joining our virtual day of our 29th Annual BofA Transportation, Airlines and Industrials Conference. Happy to be here on. I'm Ken Hoexter, BofA's Airfreight & Surface Transportation and Marine Shipping analyst. Next up we welcome Schneider National, and from Schneider we welcome Steve Bruffett, CFO, for his fifth time at our BofA conference, including way back in 2010 at his prior firm. This is Schneider National's ninth time joining us in the 21 years we've hosted going back to 2003 when they were still private. So we thank Steve and Schneider for their continued commitment to the conference. Steve, welcome. Good afternoon. Let me start by turning it over to you for an intro on to Schneider, an update now that we're midway through the second quarter, and what message do you want us to leave here with today.

Okay. Great, Ken. Thanks, and thanks for having us here. It's a pleasure to be back at the conference here and it's -- I think somewhere nestled in there is that you and I have been doing this a long time. So part of what we love about this space is that there's always something interesting going on. And that's certainly the case as we sit here today. So I think we've got plenty of good stuff to talk about. And just backing up to your comments there, it's what I want to leave you with and so on as far as the overall messaging, last month was the 5th anniversary of Schneider's IPO. And when we -- this gives us an opportunity to reflect upon the path that we've traveled, and in that course of time and the different company that we are today versus when we went public. We've done a lot of great things over that time period. As we sit here today, of our 3 operating segments of Truckload, Intermodal, and Logistics, we take Intermodal and Logistics added together are asset light components of our portfolio. They represent now over 60% of our revenue and half of our earnings. And that's completely different than it was 5 years ago. They've become a much more prominent part of our overall offering. And within our Truckload segment, well over half of our trucks are in dedicated configurations and that's way different than it was several years ago. So all these have been purposeful adjustments as we've gone through time. Underlying all of that-- behind all of that is our capital allocation disciplines as we adjust the dials and strategically steer the company to become this multimodal platform that we've constructed. And I think with our strong balance sheet and the portfolio of services that we have in place are complementary to each other, and the technology that we have behind all that, decision science that supports how we run our operations, I think we're just really well positioned to become an increasingly growth story on top of being increasingly resilient as we go through freight or economic cycles or whatever that gets thrown at us. I think we're very well positioned to adapt and adjust and thrive as we go forward. We feel really well positioned. It's easy to get caught up in big news of the moment, and we've certainly got some stuff that's come out in the last couple of days. I'm sure we'll talk about it a bit here. But if you look at the longer perspective, I think that the company is in a great spot and performing well, and in a position for a lot of good things to come.

Perfect. Appreciate that intro. So, yes, let's jump right into that and maybe talk about the state of the freight economy from your perspective. You noted you expected constructive conditions to remain intact throughout '22. Has anything changed? Obviously, news yesterday from Walmart, Target was a bit -- and the day before was a bit divergent. Maybe what's your read on the consumer demand side of the equation. Obviously, you and I have talked a bunch given our truck shipper survey started to show some deceleration. Really, as we went through earnings, it seemed like most of the carriers on the trucking side kept saying like, as you mentioned, it's constructive to continue, and we're seeing that demand. So has anything changed? Or do you still see that strength from your perspective?

Yes. And you're referring to comments we made on our earnings call, which was 3 weeks ago from today. And so inside the company, as we monitor things, things largely look the same as they did 3 weeks ago. And so I think our characterization of our expectations really haven't changed in that period of time despite some macro news coming out in the retail space. Our tender volumes and acceptances and all that have continued to trend on the same trajectory. It's always a little difficult to say what next month or next quarter is going to look like exactly. But I think that if you step back and assess what's going on, people talk about inflation and observing inflation and it's real. We experience it and it's rippling through in retail prices and so on. But if you rewind the clock, there was trillions of dollars injected into the economy. And at some point it's not surprising that, that becomes inflation here. So as we move forward in time, there's likely to be some unevenness in both the economic patterns and in the freight patterns. That doesn't necessarily mean that everything is just going to come grinding to a halt either. So I think we remain constructive on how this year is going to play out. This may not be a completely smooth road, maybe some bumps in that road. But I think overall, I think the freight environment will remain constructive.

Great. I guess, Steve, let me just stick with near term for a minute and then we'll kind of maybe talk on each segment and maybe bigger picture. But with near term, just looking at 2Q, we normally see a 200 basis-point sequential improvement in operating ratio from 1Q to 2Q. Not asking you to put a number on paper, but coming out of 1Q, that was a bit better than seasonal norms. I'm just asking, is there anything from your perspective as CFO, whether or fuel, anything else that would shift from a normal sequential improvement from 1Q to 2Q in terms of moving from just your [ 89 8 ] ex-fuel overall down into the -- down better?

Yes. I almost chuckle these days when the word normal gets used or seasonality, because I don't know what normal is anymore over the last couple of years, and seasonality has really had very little bearing in terms of a historical pattern than what we would normally expect, and that may continue to be the case as we go through this year. So I would say that in terms of our performance, I would expect continued good margin performance. Will it exactly follow historical seasonal trends, it's difficult to say exactly. And in the transportation space over the last couple of years, equipment gains and the amount and timing that fall in a given quarter can influence those margins and comparative points as well. In our particular case, we had very minimal equipment gains in the first quarter and expect only modest ones in the second. So it shouldn't be a big part of our story. It's more in the second half of the year that we would expect those. But I think as we get further in the conversations, start talking about our target margin ranges that we've provided publicly for each of our segments, that maybe provides some additional annual context for expectations around margins, which is generally where we like to keep the conversation in the annual space.

Yes, certainly. And by the way, I forgot to mention for those listening online, if you have -- investors, if you have any questions, I think on the screen there, there is a question button that you can send them over to us. So, Steve, let's move over to pricing. Again staying overall before we go into the segments. How do you -- how was bid season? Whether truckload, dedicated, Intermodal, we're now what about 2/3 of the way or more than that almost on. Obviously, given the rolling of spot, yet contract rates still seem to be up year-over-year because the spot rates really seem to have run up after the contract season was done last year. So maybe just your perspective on how contract season or bid season progressed?

Yes. We're well over 50% across our book of business in Truckload and Intermodal. And it's been a very constructive renewal season. Those allocation events have gone well. We've been pleased with the outcomes and the awards -- the fulfillment of those awards post event, we've been satisfied with and reciprocating that with strong tender acceptance. So I think that's all playing out quite nicely. We've gotten commensurate price increases helping us deal with the cost inflation and fuel and drivers and well-documented cost items in the transportation space. So I think that will continue as we go forward. And to your point, the comps to last year become more and more difficult on a year-over-year basis as we move through the year. So the rate of contractual increase may not be as large as it has been so far this year, but still expect a constructive contractual pricing environment.

Steve, from your perspective, why do we see such a difference in spot rate where it's actually rolled and now moved below contract rates? Is it just a time delay? And so as you mentioned, as we go through the year, yet you still expect positive despite that trucks.com, or whoever you pick, the AT spot rates moving below where the theoretical contract is? Is it really different for the larger carriers relative to the overall market that we're seeing on load boards and things?

Yes, the spot market can -- it's obviously more volatile and tells you some things, but it doesn't tell you everything, and it's orders of magnitude about how the spot and contract compare to each other. And they're reasonably close at this juncture in time. But compared to some prior freight cycles, I think there's a couple of key differences that should be noted as you think about the spot market in particular and those rates, one of which is different this time around is that equipment is somewhat constrained. In prior cycles, getting new equipment until it was readily available, and that's been constrained over the past year or so, which I think raises the floor for where spot prices could go. And I think another element that's different from prior cycles is incremental capacity that's come into the market with small carriers and individuals and so on. I think their point of entry is at a higher cost point for them, the equipment that they've acquired is at a more expensive point, fuel is expensive. In a normal, if there is such a normal thing in an economic cycle like we're in right now, fuel prices would be dropping probably. The oil would be relatively cheap. But it's not because of global events. So we've got compounding factors going on top of what's going on domestically. So the point is, I think those elements elevate the floor for the spot market, and I think we'll see some stabilization. And what we've seen to date, I would characterize as normalization as the contract players have said, all right, these contract prices make sense, and our acceptance rate of the tenders is much higher than it was a year ago. I think that will continue throughout this year.

Yes, it's definitely an interesting look into the market, right? There's so many different things going on. Same thing within Truckload. Let's jump to Truckload, some of the segment details. You set a long-term margin target of 12% to 16%, which was up from your prior 11% to 13% target. You've really shifted within this category. As you mentioned, I think, upfront, dedicated now, is it, 56% of your fleet, up from 43% a year ago given your MLS acquisition and some other the moves you've made. Maybe talk about your long-term target, both fleet makeup, how it aligns with those targets? And is that -- was there something else fundamental in terms of the margin target shift? Or is that really the driving factor, the shift of mix?

Well, we're really driving -- we're return on capital oriented, so we're driving toward a similar return on capital and margin profiles in both our network and dedicated business. It's just that there can be greater volatility over the course of time, higher highs and lower lows in the network business historically than in dedicated. So we have been purposefully, as part of our resilience theme, increasing their percentage and invest in growth capital in dedicated. And I think you'll continue to see us do that. Over the longer term we'll continue to evaluate how we want to position things proportionately within our business, but in the nearer term I think you would expect us to try to -- we'd like to normalize the size of the network to be around 4,500 to 5,000 trucks. It remains an important component and strategic to us in our portfolio, but we'll put growth capital and have a great sales pipeline in the dedicated space and don't want to limit how much we can grow in there by putting a number on it. But I think we'll continue to grow our dedicated operations as we go through time, both organically and as we've done recently inorganically if the right opportunities come our way. So we feel well positioned there. And I think it's just our overall performance that led us to basically raise our margin targets more so than the shift in mix between dedicated and truck and the network business.

So question coming in just, how do you -- sticking within the Truckload side, how do you think about retail companies such as Target now discussing destocking of inventories for the next few quarters for the first time really since COVID began which is very different than what we were thinking. Before everybody kept talking about how low inventories were, and we needed this wave of freight particularly trying to reopen because everything had to be restocked. And now we're hearing from some of the biggest retailers they actually need to destock. What's your thought on that commentary?

Well, in one way I don't find it overly surprising that there would be some slack in the rope at some point in time given the path traveled over the past numerous quarters where the rope has been stretched super-tight. That's not a sustainable condition over the longer term, so at some point there will be air pockets. But I think it's company by company or retailer by retailer specific. I don't think it'll be across the board, everyone hits a same type of dynamic at the same time, which I think helps provide some buffering effect to that. And if you truly have a global supply chain and trying to deal with all those dynamics over the last couple of years, there's probably some conservatism that's been built-in into those inventory levels and probably for some companies it would be a bit of excess that they need to work through. At the same time, there's things like the DIY season got delayed a bit this year because of weather in a lot of parts of the country, and I think there still will be some spending going on and some pull through in that side of thing. Other retail spaces continue to be quite robust and need those inventory replenishments. So I think overall the underlying economy -- freight economy and the condition remains pretty healthy.

Thanks for that. Shifting to Intermodal, just shy of a quarter of revenues now as you mentioned it. And rail service, you noted an expectation for fluidity and labor conditions to improve. Maybe just talk about what are you seeing at this point, more or less optimistic, Obviously, all the rails hold in front of the STB couple weeks ago to talk about their service issues. And then what residual impacts do you have from BN given you've provided a year notice that now that you're going to be moving to UP and obviously there's startup over there, does that impact your service and the quality of service you're getting from them at this point?

There's numerous questions in there. I think overall our expectations around real fluidity and service, I think we will largely because of the labor dynamic, I think that will start to address itself a bit as we move through the year hopefully. And it's because of that. But I think that fluidity and service would improve a bit. To date nothing's really changed from our comments 3 weeks ago. I they're experiencing the same level of -- levels of service that we've been receiving prior to that. And there could be, again, there's not necessarily a fluid flow of inbound containers from Asia either. So that creates lumpiness, especially in the west and how they're trying to deal with box repositioning and so on. I think that will continue. So that can be disruptive to fluidity when you don't have a steady inflow in repositioning. But overall, I think we'll start to see some relief at the ports, at the ramps, at our customer locations, and all the things that we deal with in between those points with our dray operations. I think as we get in -- deep into the summer, I think that will start to even out a little bit.

So at Knight, when they made the move ahead of you, right, a year ahead, saw their turns, their volumes really materially decline during the transition to UP. Are there things you're working with UP ahead of that to avoid that scenario, or are they always growing pains just because it's a cutover on a specific date?

We've got really detailed plans that we've put together by location and working directly with the UP team, and there's technology involved and a lot of investments are being made. So I feel really good about how that transition is going and will go once more significant volumes are flowing through it. I think in a lot of ways, the additional volumes that we will bring will enhance their operations. The way we run our dray operations, it fits hand in glove with PSR. We do things on scheduled basis and automate things where possible, and it's very -- we add to the efficiency of the overall rail operation by being a dray partner. So I would expect that. It won't be perfect. But I think it will be well executed right out of the gate.

Yes. So talk about the underlying demand that you expect from container fleet growth, container term perspective, ignoring the shift that's coming up. But what do you view as your underlying growth in that sector? Obviously, Class 1 railcar loads are off about 4%, so 4% quarter to date, which I think goes back to your employee and labor congestion issues that you talked about before. But what's your underlying and fleet growth and term perspective?

Yes. We still continue to see growth opportunities even this year within our Intermodal operation and for the most part have the containers to support it. And I think that as we get some incremental box turns and fluidity going with the rails, that don't just help support that, but I think coming out of the allocation events that we've already been through feel pretty optimistic that we'll continue to grow the underlying volumes that we're handling and also while adding several thousand containers to the overall fleet as we go this year. So I think it sets up for a continued good story in the Intermodal space for us.

So with that, you talked about Intermodal margin targets about 10% to 14%. That was up from your prior 10% to 12%. You've averaged slightly above that the last 3 quarters. I think you've outpaced your other peer within the -- J.B. Hunt within the sector. Can you talk about what's going on here with that despite the lingering rail service and congestion issues? Assuming conditions become more fluid, do we then switch to a period where you lose the accessorials, and that becomes a weight against results or do you think you can keep accelerating from these levels?

Well, at some point, we're always trying to grow revenue and improve margins, regardless of what we're doing. So that's like an easy statement and an obvious one. But the emphasis you place on one versus the other depends on where you are in time. And given the margin profile that we've been able to achieve in Intermodal, I think maintenance of that margin while growing the top line gets a little -- starts to get a little more emphasis there. So that's how we view that. Our long-term margin targets are intended to capture roughly 8 out of 10 years. So there may be some periods of time where you operate above the high-end or perhaps briefly below the low end, and this may be one of those years where we're bumping around the upper end of that range, which is a good thing. But, again, back to emphasizing, getting greater volume growth going through Intermodal and we see opportunities to do that. And there was another part of your question that I'm trying to recall.

No, I think you're nailing it right because you aim to double the Intermodal business by 2030, right? So I think it's all wrapping up together. And I would have imagined at this point where you've seen such high oil prices, typically that's a huge truck-to-rail conversion story. Yet as we talked about the rail service issues, it sounds like you're still pretty confident in terms of focusing on that growth over a period of time. Maybe even in the near term I think you threw out there maybe you still see some strength in the near term.

Yes. I think given the strong ESG story and as we get some improved fluidity in the rails, I think there is conversion opportunity, as we go forward, that could be of some size. So we look forward to getting to that space. I think you were -- the other part of your question that you were talking about was accessorial charges and does that become a headwind or something like that. As we look at it, I think the improved fluidity comes with improved efficiency and that has a financial benefit to us that I would much rather operate in that space than the assessorial space. So we would view that as all good.

Okay. Yes. No, that's a that's a great wrap-up, too. All right, let's jump over to Logistics, right? So here Logistics actually now 38% of revenues. First quarter was the first time Logistics income, as Mark pointed out, surpassed Intermodal, fueled by growth in the FreightPower only, so -- FreightPower or Power Only. Maybe talk about, one, talk about the business and how you scale it, what are you hearing about it from customers, and why we're hearing such a big emphasis from carriers about this and the potential here. So maybe just walk us through as a CFO why it's enhancing the business and makes so much sense to grow.

Yes. That's a lot of power in there, isn't it? Power only and freight power, but yes, so that's great. And I want to talk about both of those elements as it relates to our Logistics segment because they're really exciting to us, but I also want to note that our traditional brokerage offering and the team involved there, they've done a great job growing that core offering. So that's -- that is part of the story for sure, kind of right there. But then complementary to that core offering is Schneider FreightPower which is our digital connection to the long tail of the market of shippers and it connects carriers on the other side and so that's been really effective we're attack we're connected with over 50,000 carriers today and that number is significantly higher than it was even a year ago so it has been a highly effective tool and will continue to be that way. As a CFO kind of why it's enhancing the business and makes so much sense to grow. That's a lot of power in there, it on freight power. But yes, so that's great. And I want to talk about both of those elements as it relates to our Logistics segment because they're really exciting to us. But I would also want to note that our traditional brokerage offering and the team involved there, they've done a great job growing that core offering. So that is part of the story for sure, right there. But then complementary to that core offering is Schneider FreightPower, which is our digital connection to the long tail of the market of shippers and it connects carriers on the other side. And so that's been really effective. We're connected with over 50,000 carriers today, and that number is significantly higher than it was even a year ago. So it has been a highly effective tool, and we'll continue to be that way. I think it will be a source of growth for us as we move forward. And it's just part of our overall platform concept to be able to have this broader reach in the market as possible, connecting capacity with demand, and serving some of that on our own assets and using third parties to fulfill the rest is the model we're pursuing and the technology and decision science we have underneath it is really powerful. So just being good at those basics has been serving us well. So that's Schneider FreightPower. They're the digital connection with the broader market and the Power Only offering that we've had underway for a while, but really got it launched a couple of years ago in a more earnest way has been very successful. And I think if we're not the largest Power Only provider, we're darn close to it best we can tell from what we've seen. And I'd point out that in our Power Only offering, it's predominantly serving the contractual market. So it's business that we're already doing out of trailer pools and it's just connecting third-party capacity to that business. It's resounded well with our customer base. It's seamless to them and it's just another way to serve our customers. It's been a nice source of growth and return on capital.

So is it -- did something change in the market where all of a sudden that offering of just the Power Only option, having the trailer pools investing in the trailers has shifted over the last cycle that is creating the opportunity to grow that Logistics segment?

I think maybe it's just a mindset or a view of it. As we've gone through all this disruption and lack of capacity in the market and so on, just some someone who can bring a solution to a customer and make it easy for them it has been well received. So I think it's just the path traveled through the pandemic and all the supply chain challenges that someone can bring us practical solution that's easy to implement and execute, I think the receptivity of that type of offering has really expanded.

So within Logistics you set a long-term target 4% to 6%. Again, similarly you've outpaced this one as well quite significantly, almost 100, 200 basis points above it I think is where we're targeting near term. Is that the secular shift to Power Only? Is it, as you're suggesting, on Schneider FreightPower on the brokerage side? Is it just the pricing environment right now? Maybe I'm trying to figure out how we think near medium long term in terms of upside to the targets or where the drivers are coming from or if this is a cyclical effect of the pricing environment?

Yes. I think what we've been going through really has elements of everything you just listed within it. And our traditional brokerage offering that I mentioned earlier which is the biggest portion of the Logistics revenue. They've just done a really effective job of managing net revenue per order and being really dynamic and in touch with the marketplace as we've gone through all these gyration over the past several quarters. So just use of our tools and our decision science capabilities and just a good sense of the market has contributed to those margins. Certainly, Power Only has as it's grown, it's having more meaningful impact as well as some of the ancillary services that we offer in our Logistics segment. As we think about like the course of this year, this may be one of those years where we're operating outside of our range that we've guided to over the longer term, which again is a good thing. And each year as we go through our 3-year planning process and long-term capital planning and so on, we evaluate these margin targets, and in the fall we'll, look at these again and see how we feel about it. Historically, we've had amongst the best and most stable margins in the Logistics space over the past several years, and that range has served us well. But we'll continue to evaluate as we move forward and see if there's an opportunity to bump those up or if we're comfortable where we are.

Let me talk about shift from contract from -- spot to contract within the broker side, right. So obviously this is a period where when you see that peaking out on the spot rate, the rolling over, we tend to see more locking in contracts. Maybe just walk us through what is going on within brokerage, how is that shifting, and talk about that side of the op.

Yes. As we go through freight cycles, we don't use extremes in our brokerage business. So we really have drawn the lines between 60-40, 40-60, depending on what's going on. So it's not like we're swinging all the way from one end of the spectrum to the other. But as we have gone -- even starting in the fourth quarter of last year, we've been dialing back a bit on the spot market participation and enhancing the contractual to get back more toward a 50-50 type of mix. And I think that sets us up well for whatever is coming at us over the remainder of this year.

So it's still 50%. That's still I think more than most brokers are still willing to see what changes in the spot market and still have that exposure. So in brokerage, let's stick with that for another second, you grew orders over 20% with a 7% growth in headcount. Maybe talk about the technology piece that's enabling you to drive efficiencies for both you and the customers. What's unique about Schneider's platform and technology that may -- or is that a shift just from old guard phone banks to more digital connection or maybe just walk us through how you're doing on that?

Yes. The digital component of it certainly is contributing to that technology underpinning it at all, and I think we've got more a good path to travel when it comes to that, both growth opportunities within the Logistics space and increased efficiency underneath how we do it. As far as our platform along with several of the other large competitors in the space there, some elements are the same. You just have to be really good at the basics and the fundamentals and be very quick in your decision making and your order acceptance and how you're going to fulfill against those and provide good service levels behind it. And so we certainly are good at that. But our decision science I think is one thing that is some secret sauce for us that really helps us manage through. It really comes and shines I think in periods where things are volatile or disrupted a bit, and it helps as we navigate through. So feel really good about that space, and you noted the growth that we've experienced that it's -- I think that will continue.

Yes, wonderful. All right, let's wrap -- maybe almost wrap up here with CapEx. So you're targeting about $500 million of spend this year. That includes a step-up in the rest of your [indiscernible] for fourth quarters on equipment deliveries. You noted some prioritizing of growth on the call in terms of Intermodal, Logistics on technology. I guess maybe just on the equipment side, how confident are you given what we've seen last year in ability to get the equipment and meet your targets.

Yes. As you might expect, we have ongoing dialog with our key OEM providers. And so our numbers aren't based upon a wish list. It's based off practical conversations with what our providers feel that they can deliver and so we have a pretty high degree of confidence that the factors and trailing equipment that are inherent in our numbers that will in fact get here. The timing may not be exact, maybe a touch of spillover. We'll have to wait and see later in the year if we'll see some spillover or not. But at this point in time, feel pretty confident, absent some other disruption that we haven't encountered to date, but feel pretty good about being able to get that equipment in.

So, Steve, I guess we've got maybe a minute or 2 left here. So I guess I'll wrap up with what I heard and maybe tell me again if I'm missing something. So if I still say you see demand. You talked about inventories, maybe pockets of change, but still demand is still fairly robust. Pricing 50% through midseason. It's staying commensurate with rising costs, so you're still getting those pricing. Obviously, we have the deceleration with tougher comps going forward. Intermodal, focus on growth, you'll give up some margin in exchange for getting that growth. Logistics, obviously, you -- we talked about Power Only, FreightPower, right? So a lot of options to continue that strengthen on that side. And then your shift to, whether it's dedicated or network, continue to focus on those returns given the pricing and volume story that we talked about, despite some of the things that we're seeing externally, still seems like you're seeing things pretty fairly steady. Is that a fair run down? Did I miss anything, any other message you want to provide us?

Yes. That was a great recap. I think the only nuance, or at least as I heard it, is when you were talking about Intermodal, I was trying to say we would rather than forego margin to capture growth, we'd like to maintain margin. So I'll make that one-word difference about maintaining margins and placing emphasis on revenue growth. But yes, I think that it's always hard to predict, but we do feel that the overall freight environment and the overall economic setting while it may moderate a bit, it's still constructive, and we feel good about how we're positioned regardless of what comes at us. Even if things really go off the rails for a period of time, we feel well positioned, as we feel that we've become more agile as an organization and nimble in adapting to changing market conditions. And so we think on a relative basis, we're ready for whatever comes.

I've learned over time, I think they don't like it when we start talking about things going off the rails or explosive growth. They tend to shy away from those things. Let me just throw in one last quick one. Timeframe of visibility, how -- you've got such different parts of whether it's Logistics seeing through brokerage or truckload or kind of Intermodal on the rail side a little bit longer term. Do you get a feeling of timeframe of visibility, how long a timeframe you have to see that cycle shifting? Maybe give investors a feel of the timeframe you'd get that visibility?

We monitor all the things that are available to most people who are interested in this space. We see all those things. We have our own internal metrics. You mentioned Logistics. It's great that we do have a good spot exposure there because we learn a lot in real time just from that being the experience and what's going on with capacity in the market. But do we have some great magic lead time, we're talking weeks, not months.

Wonderful. Steve, that's a great wrap-up. I truly appreciate you joining us here and, once again, your commitment and participation in the conference. Appreciate the insights and great discussion as always. Thank you, Steve.

Always great talking with you. Ken. Thank you very much.