Union Pacific Corporation (UNP) Earnings Call Transcript & Summary

So good morning, again. It's Tom Wadewitz from UBS. I'm moderating the fireside chat with Union Pacific. We have the CFO, Jennifer Hamann on the line. And Brad is with us as well from the IR team, leading the IR team. And so what we're going to do, Jennifer has some comments to start with, and then we're going to go to the fireside chat. I will be checking for questions. If you want to submit any questions through the conference website, you're welcome to do that. I'll try to work those in. Jennifer and Brad, thank you so much for joining us. We appreciate you spending time with us and being at the conference. And let me turn it over to you for your initial comments.

Thanks, Tom, and good morning to everyone who's listening in. Before I do start, I want to remind everyone that I will be making some forward-looking statements. And of course, those statements are subject to risks and uncertainties. So please refer to our website and SEC filings for additional information about Union Pacific's risk factors. Also, although I'm not giving any kind of a formal presentation today, I do want to call everyone's attention to our updated pitchbook, which is out on our Investors web page, and the link to that is next to the web link for this webcast. And those may be materials that we refer to during our discussion. Before we jump into the Q&A, just a couple of comments. I know everyone is well aware of our first quarter performance, and we're sitting here now with just a month left in the second quarter. But as a way of recap, in the first quarter, volume was down 7%. With strong mix and our positive pricing actions, our revenue only declined 3%. We were more than volume variable in the quarter with operating expenses down 10%, and that led us to generate strong growth in operating income as well as net income and earnings per share improved 11% to $2.15. We delivered an industry best quarterly operating ratio in the first quarter of 59%, and that included core margin improvement of about 3.8 points. So we really feel like that's a very strong foundation for us. Strong productivity in the quarter, $220 million. And we as a team have great confidence and great optimism about how the railroad is running. You saw that all of our key performance indicators in the first quarter had improved on a year-over-year basis. And we just feel the table really is set for Union Pacific once we move beyond what's happening in the current economic environment with the pandemic. Also on the earnings call back in April, I have walked through our liquidity position, and I want to reiterate that, that remains very strong today. Current cash balance is in excess of $2.5 billion. And we continue to have all the additional levers available to us that we had back in April. So the bond market is open to us. We still have not drawn anything on our $2 billion credit revolver, and we also have not drawn any further on our receivables securitization facility, that's still about 50% drawn. And so that leaves an additional up to $400 million available to us. In terms of how the business is playing out here in the second quarter, volumes are currently down about 23%. As we talked back in April, we said down 25% or so. So I'd say we're right in the ballpark there. If you break that out, there are very few categories that are showing growth. We've seen declines in most major areas. Our bulk business is down about 19%. That includes coal and renewables, down 27%; fertilizers, down 5%. The one area of positive that we have within the bulk line is grain. Our grain volume is up about 8%, and that's really being facilitated by export grain, and in particular, starting to see some draw from China. On the industrial side, those volumes are down about 17%. The primary factor impacting the industrial line is what's happened with crude oil prices and the drop in petroleum products. Our petroleum products business is down 43% in the quarter. So far, forest products are down about 14%. Plastics are also down about 6%, but we would say that trend is improving just a tiny bit. And then the one group that is showing growth year-over-year is with our stone and gravel, up about 3%, although we are watching that area very closely. We are seeing some demand softening there. Major highway projects are continuing, but we're seeing some cancellations or delays in the residential and nonresidential sectors there. From a premium standpoint, our premium volumes are down about 30%. Obviously, the auto plants shutting down were a significant driver in that, down 85% or so. But we are seeing that start to come back as the volumes have come back. If I look at the weekly volumes that we published week 20, our volumes -- carload volumes on the automotive side was around 2,000. This week that we just put out yesterday jumped to 4,800 or so. So that is a positive sign for us, and we're going to continue to watch that. Ultimately, obviously, that's going to be driven by how the consumers [Audio Gap] economy and if folks start coming out and purchasing cars to further drive production. Intermodal continues to be down about 16%. International and domestic are both up substantially. The bright spot there is in parcel, and that's the e-commerce. I also think it's important to reiterate that although the current economic conditions are certainly very soft, it has not deterred the work that Kenny and his team have been doing to go out and win new business for us. It's difficult to see some of those wins with the current environment. But we feel very positive about the dynamics that this is setting up for us as we are leveraging the very enhanced service product facilitated by Unified Plan 2020 as well as the reduced cost structure that's really opening up new markets for us. And we've seen wins in a number of business lines. I'll reference tomato paste, sweeteners, steel, pipe and recycled glass. And we've also made wins on the auto parts as well as the international and domestic intermodal. If you look at April, we've put out the KPIs relative to our April performance. And again, strong performance across the board. The one exception is workforce productivity. And that really is indicative of how quickly volumes have fallen off. We've certainly taken actions, continue to take actions to rightsize the workforce, but that is a headwind for us. I want to close by just reiterating the guidance that we updated back in April. We are no longer providing full year guidance for 2020 volume, head count, operating ratio or share repurchases. As I mentioned, we're looking at second quarter volumes down 25% or so. We are continuing to manage our cost structure. But with that volume outlook, it's very tough to make operating ratio improvement at this point. On a full year basis, we're continuing to see pricing gains in excess of our inflation dollars. We did widen our range of expectations relative to productivity, $400 million to $500 million, where prior we had been saying at least $500 million. Feel very, very good about our ability to generate, though, solid free cash flow after dividends under a number of scenarios. We have trimmed back our 2020 CapEx by $150 million to $200 million. We have suspended the share repurchase program. But we do absolutely plan to maintain the dividend. And in fact, we just made our second quarter declaration here a couple of weeks ago and kept the dividend flat. So as I mentioned at the start, we feel very good about the long-term prospects of our company, feel like we have done a large amount of great work to set us up to be in a great position. And we just look forward to leveraging that and being able to deliver what we think will be very strong results for our shareholders as we move forward. So with that, Tom, I'll turn it back to you and then open it up for your questions.

Great. Thank you, Jennifer. That's a really good rundown of what's happening in the market and kind of framework of how you're looking at things in the quarter and the year. Can you give us more thoughts on the broader bottoming in volume framework? And I think that at a different conference, a competitor conference a couple of weeks ago, you kind of talked about and the rails, in general, talked about blank sailings, weakness in international intermodal as being a risk to the framework of bottoming in volumes in May and improvement that -- the improvement in auto might be offset by some weakness in international. Do you still think that, that's the case? Or do you -- are you a little more optimistic on the international intermodal that maybe that won't be -- deter a kind of bottoming in volumes and improvement?

Yes, Tom, I would say we are maybe feeling just a tad more optimistic. It's hard to feel real optimistic when you still are facing volumes down 23%. But it does feel like things have maybe bottomed a little bit. It's hard to call the bottom, though, because I think there's still a fair amount of uncertainty in terms of how the reopening is going. Will there be another resurgence of outbreak with the coronavirus? And how do people engage in the economy again? And what's the trajectory relative to unemployment? So a lot of question marks out there that still need to be answered. But the last couple of weeks with the auto manufacturers opening back up, I would say the trend is looking a little bit better and is making everyone feel maybe just a little bit more confident that we're on the right path there.

What about the frame in terms of port activity? Are you starting to see less in terms of blank sailings and a little more optimistic on the volume outlook related to the ports? Or is that kind of the same way you looked at it a couple of weeks ago?

It's looking perhaps a tiny bit better. Again, everything is somewhat relative. But I would say, we feel a little bit better on the port outlook as well.

Okay. With respect to automotive, I mean, you talked about the carload number this week versus the last, that there is sequential improvement. How do you think that production restart is going? Is that something where there are challenges to getting the parts and getting things slowing? Or do you think that you're going to see those numbers ramp up pretty quickly in terms of your transport of finished vehicles related to the production plants and assembly plants going back online?

Yes. I have not heard of any disruptions relative to there being a lack of supply or parts for any of our manufacturers that we serve. As you know, whenever they restart a line, they usually go through kind of a batch and hold process and make sure that the quality is at the levels that they want before they start shipping the finished vehicles. But I think we're coming through that period and would look for that to start moving here. And some have started moving already, I believe.

Okay. So anticipating a further ramp-up in the auto side seems pretty reasonable. What -- if you think about maybe the most likely segments to show improvements in the next several months, which segments would you put in that bucket? And then which segments would you put in the bucket of kind of least likely to improve in the next several months or if you want to say, in second half, whatever kind of -- however you want to position the time frame?

Sure. Well, I mean, everything has been down across the board. So everything's got an opportunity. Like I said, there's only a few very, very small spots where we have bucked the trend, so to speak, in terms of showing some growth. So I would look for some opportunity across the board. Where I would say we'll probably continue to see the most pressure is going to be on the petroleum side of things because crude oil prices really have not changed meaningfully. And you need to see those spreads widen a bit. And crude probably needs to get over $40 a barrel, so -- before we would see any change in that behavior. I am a little concerned on the grain side. I'm sure you've seen the same headlines that I have that China is maybe talking about or maybe acting to not take some of the soybeans import that they had originally started to take. So if those tensions flare again and that changes, that's certainly been something that's been helping us. And we're seeing some positive growth because of that. And so I would hate to see that change. So that's a question mark that we're watching. Coal, we've got a little bit easier comp because some of those shipments were disrupted a year ago because of flooding. We have had, at least here in the Midwest, up until yesterday, a very cool spring. And so there has not been much burn generated by air conditioning demand, I would say, in a good portion of our served territory. So if we could see the weather turn, coal is not ever going to probably bounce back, but it could at least maybe stabilize and feel a little bit better than it has. The other group that I would point to maybe is -- an area with some positive momentum possibly is on the lumber side. Interest rates have stayed low, clearly, and you see some data points that would say that the housing starts maybe have an opportunity to not stay at these low levels. And as people again reengage, there's an opportunity there. And we have seen a little bit of demand on the center being flat cars and demand for lumber. So we're watching that. All of those things, I would say, are too soon to call a real trend of any kind, but there are some positive things that are happening with the carloads. So we'll see how that plays out over the remainder of the summer.

When you think about the -- you mentioned the work that Kenny and his team are doing. You mentioned the kind of framework of more reliable service and translating that to some growth. Wonder if you could give us some more thoughts about that. I think that we've certainly seen from the fact that, that management team has -- after they did their implementation of PSR over a couple of years, they really have focused on gaining more share with existing customers. And so along the idea of merchandise customers that do 30% rail and they could do 40% or 50% with truck being the other alternative. Is that a similar framework to what you're thinking about and talking about? Or how would you describe the way you're thinking about the service-related opportunities and the work that Kenny and his team are doing?

Sure. Well, first of all, I mean, the one thing that I would like to kind of start with is, we didn't launch into our version of PSR, Unified Plan 2020 with an intention to shrink the business or hold growth back in any way, shape or form. As you're very familiar, Tom, we have, over the last many years put an emphasis on pricing for returns, on making sure that we're moving that business on our network. And because of that, that has impacted our growth to a certain extent, but we think it's been the right decision for our company. It's been the right decision for our margins. And certainly, that's played out in terms of the results that we've produced. So the fact that volumes have been down as we've been going through this effort has not been because we've been real purposeful there. So we've been wanting to grow. We want to grow. The market hasn't necessarily been our friend here in the last while, and certainly has not been our friend here in the second quarter. But we do see opportunities to go out and have -- as you stated, win new business. And I think there's just a lot of opportunities to grow on the Union Pacific in part because we have the capacity to grow. We certainly have available locomotives. We have available freight cars. We have the track infrastructure. We have the terminal networks. But now we really have that service product that we can go out and offer customers a more reliable product that they can count on and that they can put into their cost structure and save money by using us, even while we're charging what we think is the appropriate price to reflect the value that we're giving customers. And that's real. It's tangible. We're building a track record now of showing that performance. And that's helpful, too, because, as you know, there are cycles and customer is not going to say, "Oh, yes, you've been performing well for a couple of weeks, I'm going to switch my business over to you." They want to see that sustained. But you're absolutely on par when you say that customers that we do business with today, they don't ship 100% of their book with Union Pacific in many cases. They may divide it up amongst rails, they may divide it up amongst rail and truck. So we're having those conversations, and we are gaining incremental business. But there's a lot of new customers out there that we're engaging with as well. And that's an opportunity to further widen the pie of business that's available to Union Pacific.

So I mean, you're obviously a big railroad and have a big base of customers in a number of different segments, a lot of different customer segments. What do you think are the kind of sweet spots for the type of business that would offer that share gain opportunity or just new customers? Is it predominantly in the merchandise area? Is it intermodal? Is it primarily versus truck? Or just maybe a little more perspective on where you see the greatest opportunities.

Yes. I mean, that's kind of the fun thing right now, Tom. I would say we see opportunities in all of those areas. On the ag side of the world, you've maybe heard us talk about the fact that we had in the past, prior to adopting Unified Plan 2020, really put a priority on unit grain trains and 100 car plus unit grain trains. And in doing that, we were bypassing and effectively de-marketing a lot of the smaller elevators that our rail lines go right by. And now we're reengaging with those customers. We're moving some specialty grains for them. And it's maybe 10, 20, 30 car lots, but we'll either stop the unit train and put the carloads on behind or are running a local already that is -- that we're willing to stop and pick up the car. So that's business that we didn't think fit into our portfolio in the past, and we do now. You have a similar story with some fertilizer customers as well. So that's kind of what you would consider kind of the part of our ag business, but it's a piece that we intentionally hadn't been engaging in for a few years. And now we're reengaging in that, and we're having great success on more of the -- I'll call it, the industrial side of the world. I mentioned some of our business wins with steel, pipe, recycled glass, those are all customers that, for one reason or another, either by their choice or in some cases by ours, we didn't think their business fit for us or they didn't think we fit for them. And now we're reengaging. And the pipe example, in particular, is one where they were prioritizing unit trains, thought unit trains were a very important part of their business and that was something that we had, quite frankly, worked with them on. And then when we decided that a manifest service was a better, more efficient product for us to run, they initially balked at that until we were able to demonstrate how that could impact their cost structure in a favorable manner. And with all of our customers, to the extent that we're using their freight car assets to move the product, the fact that we've been able to increase our velocity so much, we've improved our trip plan compliance or our on-time performance, those are real cost savings for them. And then last but certainly not least is the premium side of the world, the intermodal side. That's the piece of our business that I think people most associate with being truck competitive, although there are truck alternatives across all of those areas that I just talked about. And the truck market is very competitive right now, particularly from a price standpoint. They have excess capacity. They have low fuel prices. But we still think we've got a great opportunity to compete. And as I mentioned, we're seeing wins. And I think Kenny talked about that, too, particularly on the domestic side back in April at our earnings release, that as we're going through the domestic bid season, that we're gaining opportunities to work with customers there. And kind of hard to see with volumes where they're at, but we look very much forward to being able to display that once the economy stabilizes.

Great. If we move on to the -- there's some couple of questions around kind of cost reductions and how we might think about the cost side when volumes improve. The -- how do you think of the -- there are tremendous amount of structural costs that are being taken out and changes at Union Pacific, it's very, very clear and evident. How do you think about when volumes return, what level of costs need to come back? I mean I don't -- I think train starts versus volumes is a simple framework, but really helpful for thinking about leverage. I don't know if you would embrace that as a framework. But if volumes are up 10% in 2021 and train starts to be up 2%, would they be up 5%? Just kind of directionally, how do you think about the need to bring back costs when the volume eventually does improve?

Right. I mean I'm not going to give any specific numbers to it, but you're thinking of it correctly in that as the volumes come back, we don't expect the costs will come back at a one for one. And some of that is because of the structural changes that we've made in terms of rerouting parts of our train plan so that we're not stopping at certain terminals. It's how we've improved our locomotive productivity. All of that good work that the team has done to this point are things that give us the foundation to bring volumes back at a very low incremental cost. And certainly, if you want to just look at train starts, you've heard us talk clearly about what we want to do from a train length perspective, the investments that we're making in sidings to help us further enhance our train length ability. And so that's going to be a very natural thing that we're going to look to do as volumes come back, is, first, can we just build up those volumes into the existing train network, into the existing trains that we're running and build that train line. And I think I didn't mention this previously, but it really is remarkable how the team has managed to increase train length, while at the same time, keeping terminal dwell down and in fact, furthering improvements in terminal dwell and continuing to improve the service product. So that says they're doing a great job with very limited options from a volume standpoint to manage competing interest. It'd be pretty easy to just say I'm not going to move any cars until I get an 8,000-foot train build. Well, you can do that, but you're going to likely increase your dwell time. You may probably impact your freight car velocity negatively and you're for sure going to impact your customer service product. Instead, you're seeing us build the train length while managing through those other things. So as volumes come back, that's going to give us more optionality in terms of how we're running the network. And I think you'll see very good things from us when that happens. What the exact proportions of that will be, it's going to depend on when the volumes come back, how quickly they come back, what the business is, what parts of our network it fits in. But regardless, I think it's going to be a very positive story.

How do you think we should frame or consider incremental margins? I think that -- I guess, the framework I'm considering is 2021 can be similar to 2010, that you see a significant lift in volumes. I think the railroads, including Union Pacific, saw strong incremental margin performance in 2010, it seems but you have a lot more structural cost takeout happening now than you did in '09 that, that might have been more cyclical. So it seems reasonable to think 2021 could be a period of pretty strong incremental margin performance? And if normal incrementals are 50% for railroads, then you're 60%, 70%, 80%. I mean, they can be high, right? So I'm guessing you're not going to want to tell me what the number will be, but is that the right framework? Or if not, what might we be missing?

Well, you obviously know us well, Tom. We're not going to give you a number for that. But -- I mean, directionally, you're not thinking incorrectly in terms of if we bring back volumes but don't bring back the cost on a one-for-one basis, that inherently gives you better incremental margins. And using 2008, 2009 time frame as, I guess, what would be the right word, as kind of a comparison point, I think we exited that period at something like 80% cost variability. And so as you know, we were looking at it then in terms of how much did our volumes change versus how much did our cost change and that volume variability piece, which inherently drives into the incremental margins. If you look at what we did in the first quarter, we were over 100% already. So I think that gives you some frame of reference there in terms of confirming what you stated. We're in a much better position today than we were back in 2008, 2009 to drive strong incrementals just because of all the hard work that the team has already done. We were also at, call it, a mid-70s kind of operating ratio at that point versus low 60s today. So all those things collectively, coupled with, I would say, us continuing to be very disciplined on the price side of the world and continuing to drive a very strong service product are what really -- hopefully, you hear from us in terms of great confidence about the future.

Right, right. That all makes sense. Thank you for that. When you think about the progress, I tend to think of, I guess, simple frameworks are useful. I know they're not -- don't describe the road work perfectly, but if you think of PSR as kind of a 3-year program and you're in year 2 this year, and you've made a lot of structural changes, what remains to be done in terms of kind of big things, big opportunities, whether it's related to yard activity or intermodal terminals, whether it's related to train length? You've had pretty big changes in the maintenance facilities and mechanical workforce. So are there kind of, I guess, qualitative comments you can provide on how we should think about where you're at in the PSR program and what are some of the most significant levers left to push on?

Yes. I mean, first, I think it's important to say that I don't know that we think of PSR as a 3-year program. I think we think of it as an evergreen way of life that we've now embarked on. And with each change that we make and with each business win that we have and just changes in the freight that we're hauling, those open up new opportunities and new doors for us to look at things differently. And with that, we can do that with a mindset of cost savings, of service enhancement, of new markets that we can enter and compete in effectively. So that's where, as we look ahead, we see really a great amount of opportunity ahead of us still in terms of changes that we think we have the opportunity to make to our business that will be very beneficial for all our constituents, for our employees, for our shareholders and for our customers and the communities that we operate in. More granularly in terms of just kind of that operational brush, we do have more that we can do on the service product. Train length is a part of that, and we certainly think that we have opportunities to continue to build the train length. Some of it's going to come through network design and come as volumes start to firm up. Some of it's going to come as we finish some of the capital programs that we're working on. You know that we're spending some additional money this year on siding projects. So as those are turned over to operation, those give us additional opportunities. We also have opportunities from a terminal consolidation standpoint on the intermodal side of the world. So you've heard us talk about the changes that we're making in Chicago. We still have not made that final consolidation yet because we're doing a little bit of capital work in G4 to have that -- be able to handle all of the volume that we're bringing to it from G1. So that's still somewhat to be completed, although part of it is in the works. We're also looking at other parts like Houston, like the L.A. basin to see what can be done there to further improve not only our cost structure but also the service products that we're providing to our customers. And then, lastly, I would mention -- and not lastly in terms of it's the last thing that we're working on, but just last thing to mention here is our yard and local network. So most of the changes that we've made up until probably the last few months or so have really been focused on the over-the-road trains and the trains that are kind of origin to destination in terms of the big terminal node and less about that yard and local network. And there's a lot of opportunity within that to look at where are local jobs crossing one another. Where -- if we tweak the day of week products that we're offering to a customer, can that give us an opportunity to consolidate trains to be more efficient with how we're making that first last-mile delivery? That takes a lot of what I'll call pick and shovel work because it is kind of that final customer touch point. And so there's some things that you've got to work out with the customer base to be able to enact some of those changes. So it takes a little bit of work that the team is doing, but that's work that has started and is ongoing that we still have some further opportunities to work through there.

That's helpful. Thank you for mentioning those different buckets. You mentioned Houston and L.A. and kind of compared it to what's happening in Chicago that you already have a clear plan and things are being put in place with some of the investments. Where are the Houston and L.A. terminals at in terms of carload yard consolidation or changes and interval terminal potential changes? Is that early? Or is there already a lot that's taking place?

I would put L.A. in the early category. We're still working through plans there and trying to determine what we think might be best. And I would say Houston is in flight, although certainly behind where Chicago is. Settegast and Englewood are both yards that we have that handle intermodal product today. Ultimately, we think it only needs to be one of those. Whichever way we go, it's probably going to require a little bit of capital investments and working through the best way to make that transition.

Right. Okay. There's a question that came in, and this is one which I had on my list as well. How do you think about the potential changes in geographic sourcing? Is -- so the idea that some of the activity that takes place in China or even in broader Asia could come to the North America region. And I think people typically think of going to Mexico. So how do you think of the kind of size of if you lose something coming in from Asia, but you gained something coming up from Mexico. Is -- are you kind of indifferent? And how do you think about based on customer input or the way you think about the world, whether there are likely to be meaningful sourcing changes?

Yes, Tom. I mean, we have gotten that question quite a bit. I think it's still really too early to make a call on what might actually happened there. To your point, Mexico, certainly, we have long felt, and as we look ahead continue to feel, like it's a source of strength for us as a company. We're the only railroad with access at all 6 major border points into and out of Mexico from a rail standpoint. And obviously, you know about our 26% ownership in the FXE. So to the extent the traffic in Mexico grows and that comes to us, that can be certainly a positive for us. It may mean it's a little bit shorter length of haul if that's traffic that we had previously been hauling through the West Coast ports and taking it to one of our eastern gateways. But too soon to see what that might be. If it's absolute growth, it still could very well be a positive for us. If it's traffic that was maybe going through Prince Rupert instead and now shifts into Mexico, that's definitely a gain for us. So those are all factors we're watching and people are also talking about is it possible that more manufacturing might move into the United States itself. And obviously, if that's kind of the, what I'll call, heavy industrial kind of manufacturing and those plants, if we have an opportunity to site them in the Western U.S. where we serve, that may give us a 2-for-1 in terms of being able to haul the inputs in as well as the finished goods out versus today, maybe just hauling it from one of the ports. And we have a team at Union Pacific that dedicated to that kind of activity, working with customers to site them on our rail lines. We also have available real estate assets that we can help facilitate that with. So certainly opportunities that we look forward to discussing with customers, but probably too soon to have a good line of sight to say is that really going to happen and if it does, what does that ultimately mean.

Do you think there are any customer groups where you kind of hear higher level of discussion or might be more likely to make changes? Or is that not yet visible?

Yes. I mean that just hasn't yet been visible to us.

Right. Okay. Let's see. We've got about 2 minutes left. So at the end here, maybe can you offer some thoughts on share buyback? And what's kind of -- what's the framework where you get back on -- reengage with buyback? And what would give you the confidence to do that? And then maybe also just kind of on a multiyear basis CapEx, how you think about the current level and whether that would need to change much in the next couple of years.

Yes. I mean, as you know, Tom, our long-term capital guidance is still that it's going to be 15% less of revenue -- or less than 15% of revenue, I should say. So we still feel good about that. We feel like as we have deployed Unified Plan 2020 and improved our service product but also idled various terminals, parked locomotives, parked freight cars, that gives us a large amount of latent capacity that we think we can deploy, certainly maybe some -- a little bit of incremental capital that we would need to spend as you restart some of those facilities, more locomotives. But feel very good about that position and still feel like we're well capitalized in terms of being able to deploy capital if we need to, to facilitate growth because, ultimately, we want to drive more business across this network that can generate more operating income or more free cash flow. And that's really -- to the last part of your question in terms of driving free cash, that's really the name of the game. As we've had the uncertainty in the markets and seeing our business fall off, we thought it was prudent to put the pause button on the share buyback activity. And we're going to continue to monitor that and watch how business levels change, but we need a little more certainty, I would say, within the current environment before we would look to restart our share repurchase program.

And would that be something that we would see in the weekly volume numbers, that if you kind of have a more favorable trend that develops that, that would be a component of that visibility?

The trend would certainly be important, but it's looking beyond the trend to say what's ahead and what are customers saying, what's happening with consumer demand, what's happening with unemployment and how sustainable is that trend.

Right, right. Okay. Great. Well, Jennifer and Brad, thank you so much for joining us today. We're just a minute over the time frame. So we should wrap things up at this point. But very helpful responses and insights, Jennifer, and we appreciate that and appreciate you joining us at the UBS industrials and transports conference.

Great. Well, thank you, Tom, for hosting us. We appreciate the time together and hope you and your family stay well.

Okay. Thanks. Same to you, Jennifer.

Bye-bye.

Okay. Thanks.