Good morning, and welcome to Ryder System, Inc.'s Fourth Quarter 2016 Earnings Release Conference Call. All lines are in a listen-only mode until after the presentation. Today's call is being recorded. And if you have any objections, please disconnect at this time. I would like to introduce Mr. Bob Brunn, Vice President Corporate Strategy and Investor Relations for Ryder. Mr. Brunn, you may begin.

Thanks very much. Good morning, and welcome to Ryder's fourth quarter 2016 earnings and 2017 forecast conference call. I'd like to remind you that during this presentation you'll hear some forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in economic, business, competitive, market, political and regulatory factors. More detailed information about these factors is contained in this morning's earnings release and in Ryder's filings with the Securities and Exchange Commission. Presenting on today's call are Robert Sanchez, Chairman and Chief Executive Officer; and Art Garcia, Executive Vice President and Chief Financial Officer. Additionally, Dennis Cooke, President of Global Fleet Management Solutions; John Diez, President of Dedicated Transportation Solutions; and Steve Sensing, President of Global Supply Chain Solutions are on the call today and available for questions following the presentation. With that, let me turn it over to Robert.

Thanks, Bob. Good morning, everyone, and thanks for joining us. This morning we'll recap our fourth quarter 2016 results, review the asset management area and discuss our outlook and forecast for 2017. Then we'll open the call for questions. With that let's turn to an overview of our fourth quarter results. Comparable earnings per share from continuing operations were $1.07 for the fourth quarter 2016. Down 36% from $1.66 in the prior year, driven primarily by used vehicle sales results and to a lesser extent, lower commercial rental performance. Comparable results were below our forecast range of $1.35 to $1.50 as the used vehicle market proved to be more challenging than expected while the other areas of our business performed in line with expectations. Lower used vehicle results including a $0.35 impact from inventory valuation adjustments and accelerated depreciation, negatively affected earnings in the quarter. We also increased our use of the wholesale channel in order to move our used vehicle inventory levels closer to target. Based on our view that challenging conditions in the used vehicle market will continue, over the next 18 months, we took some actions during the fourth quarter. We increased valuation adjustments for vehicles currently being held for sale in order to better align inventory values for the fourth quarter pricing and our expectations for further decline in 2017. In addition, we accelerated depreciation for vehicles we expect to make available for sale through mid-2018 to reflect a lower expected pricing environment. These actions negatively impacted the fourth quarter results by $0.35. Although these actions negatively impacted the fourth quarter results and resulted in earnings well below our forecast, we believe they are appropriate given our outlook is for the used vehicle market challenges to persist through mid-2018. Additionally, we believe these actions better position…

Thanks, Robert. Turning to page 10, full year gross capital expenditures were $1.8 billion down over $900 million from the prior year. This decrease primarily reflects lower planned lease fleet growth and the redeployment of used vehicles to fulfill these contracts. And also, lower planned investments in our rental fleet. We realized proceeds primarily from the sale of revenue earning equipment of $421 million, that's flat with the prior year. Full year proceeds reflect lower used vehicle pricing, offset by higher number of vehicles sold. Turning to the next page, we generated cash from operating activities of $1.6 billion for 2016. It's up over 10% for the prior year. The increase was driven primarily by higher cash based earnings and lower working capital needs partially offset by the timing of pension contributions. We generated $2.1 billion of total cash during the year, up by around $160 million versus the prior year. Cash payments for capital expenditures decreased by about $760 million to $1.9 billion. Free cash flow for 2016 was positive $194 million, versus the prior year of negative $728 million reflecting lower capital expenditures and higher operating cash flow. Page 12 addresses our debt-to-equity position. Total debt of approximately $5.4 billion decreased by around $100 million from year end 2015 due to improved free cash flow. Debt to equity at the end of 2016 decreased to 263% down from 277% at the end of 2015 and is now within our target range of 225% to 275%. Leverage decreased primarily from higher earnings and improved free cash flow, partially offset by foreign exchange and pension which collectively raised leverage by 14 percentage points. Our accumulated pension equity charge increased this year as the impact from a lower discount rate more than offset favorable asset returns. Equity at the end of the quarter was around $2.1 billion, up $65 million from year end 2015 primarily due to earnings, partially offset by foreign exchange, dividends and pension. At this point I'll hand the call back over to Robert to provide a used vehicle sales update.

Thanks, Art. Page 14 summarizes key results for used vehicle sales. Used vehicle inventory held for sale was 7,500 vehicles at quarter end. As we discussed on the third quarter call, this excludes the increased number of vehicles being prepared for sale. Including these vehicles for a more appropriate comparison, leaves our used vehicle inventory at approximately 8,700 vehicles which is up 700 vehicles year-over-year but down 300 vehicles sequentially. This adjusted year-end inventory remains above our target range of 6,000 to 8,000 vehicles. We sold 4,500 used vehicles during the quarter consistent with the prior year but up 13% sequentially which moved our inventory closer to target. For the full year, we sold 18,300 vehicles, up 2% from 2015. During the quarter, both retail and wholesale, used vehicle pricing was down reflecting market declines. Sales proceeds were also negatively impacted as a larger percentage of vehicles were sold through the wholesale channel. Proceeds per vehicle sold were down 17% for tractors, and down 12% for trucks compared to a year ago. From a sequential standpoint, tractor pricing was down 12% and truck pricing was down 15%. Compared to peak prices realized in the second quarter of 2015, tractor proceeds were down 26% and truck proceeds were down 17%. These comparisons partially reflect the impact of higher levels of wholesaling during the quarter as retail prices were down but to a lesser extent. Down 18% for tractors and down 8% for trucks versus the peak. I'll turn now to page 16 and cover our outlook for 2017. Page 16 and 17 highlight some of the key assumptions we've made in the development of our 2017 earnings forecast. We're forecasting earnings to be flat to down in 2017 primarily due to an anticipated further decline in used vehicle market pricing. The…

Thanks, Robert. Turning to page 21, we're forecasting total gross capital spending of nearly $2 billion, up about $200 million from last year, primarily due to higher spending in rental. Lease capital is forecasted to be up slightly. Rental capital spending will be up this year, following spending in 2016 that was well below a replacement level. We're planning a total of $260 million in rental spending for 2017 up by around $175 million in order to refresh the fleet. Proceeds from used vehicle sales are forecast to decrease by about 7% to $390 million. Higher sales volumes are expected to be more than offset by lower pricing. As a result, net capital expenditures are forecast at around $1.6 billion. This represents an increase of around $200 million from 2016. Free cash flow is forecast at a positive $250 million, up by nearly $60 million from the prior year. Reflecting higher cash from operations, partially offset by higher capital spending. With higher expected free cash flow, the business will continue to de-lever and we expect debt to equity to come down to 240% at year end. Below the midpoint of our target leverage range. This will provide us with additional balance sheet flexibility going forward. We've talked in recent years about the impacts that higher growth capital spending has on the business. Page 22 highlights the amount of growth capital we've invested by year driven from both fleet growth and higher vehicle investment costs per unit and its impact on cash flow. For 2017 we expect to spend $520 million in growth capital, all of which is for contracted lease growth. The box on the right-hand side of the page breaks out the growth investment in lease. Growth in the number of leased vehicles of 3,500 units will require $275 million of capital. While higher per unit costs on vehicles being replaced will require an additional $245 million. All of this capital drives higher future revenue and earnings in lease over the average six-year life of these vehicles. Free cash flow benefits from higher operating cash flow, partially offset by lower vehicle proceeds. The bottom line on the page highlights how operating cash flow has increased over time as a result of the growth capital investment. Operating cash flow is project to be $1.7 billion this year, up over $700 million or 70% since 2009. At this point let me turn the call back over to Robert to recap our EPS forecast.

Thanks, Art. Turning to page 23, we're forecasting EPS of $5.10 to $5.40 versus a comparable $5.42 last year. This includes a $0.13 negative impact from a higher tax rate and foreign exchange. We're also providing a first quarter EPS forecast of $0.82 to $0.92 versus a comparable prior year EPS of $1.12. The first quarter forecast reflects the most difficult quarterly comparison for the year with both used vehicle sales headwinds and softer rental performance in the early part of the year. The first quarter range is a bit wider than usual reflecting a number of items including the used vehicle environment and the timing of when vehicles are made available for sale. We're also finalizing the timing of related valuation and depreciation adjustments. That concludes our prepared remarks this morning. We had a lot of material to cover today with both our fourth quarter results and 2017 outlook. As a result, I'd ask that you limit yourself to one question each. If you have additional questions, you're welcome to get back in the queue and we'll take as many questions as we can in the time allotted. At this time I'll turn it over to the operator to open up the line for questions.

Thank you, sir. All right, and our first question comes from Ben Hartford with Baird. Ben J. Hartford - Robert W. Baird & Co., Inc.: Hey. Good morning, guys. So one question. So, I guess, Robert, I'll just ask you from a high level perspective a lot of detail here in 2017. Obviously used equipment prices are weaker here for longer than kind of typical prior cycles, but if I go back to the March – the May 2016 Investor Day and your long-term outlook for 10% to 15% EPS growth, you're growing – you're hitting on a number of the growth elements. So as we lap now this kind of mid-2018 headwind from used equipment prices, how confident are you that that 10% to 15% EPS growth profile is still in play for the company?

Yeah, Ben, I still feel good about that. I think obviously in the forecast that we gave, we did not have this type of a cyclical downturn in used trucks as we're experiencing but I think once we get past this down cycle and at least it just becomes flat, then we're back to a point where the contractual parts of the business really continue to generate earnings. And can get us to that double-digit growth rate. Ben J. Hartford - Robert W. Baird & Co., Inc.: Okay. Thanks.

Thank you, Ben.

All right. Next from Stephens we have Justin Long.

Thanks, and good morning.

Hey, Justin.

Hey. Your 2017 assumption is that used truck pricing is down 15% to 20% as you commented in the prepared remarks. But can you give us a sense of how much of that is due to the negative impact of more wholesale volumes? I'm just trying to get a sense for your view on the underlying market and maybe your expectation for retail pricing in 2017.

Yeah, I think, if you look at tractors without getting too deep into the data, but if you look at tractors I think it's – what we're looking at for the retail and the overall market is probably in that range of 15% to 20% year-over-year. If you look at trucks, we're probably looking at something – If you just looked at retail only, it's probably high single digit decline, that 5% to 10% range. And that's just again, adjusting for the change in mix between wholesale and retail.

Okay. Great. I'll leave it at one. I appreciate the time.

Thanks, Justin.

Next we'll move to David Ross with Stifel. David Ross - Stifel, Nicolaus & Co., Inc.: Yes. Good morning, everyone.

Hey, David.

Good morning. David Ross - Stifel, Nicolaus & Co., Inc.: The question I have is just on the accelerated depreciation. It's a change from prior practice. Why did you choose to accelerate depreciation based on an assumption for low prices through 2018 versus the rolling five-year average method that you've used for a long, long time? And if you thought that used truck values were going climb in 18 months would you pull that benefit forward down the road?

Yeah, David, this is Art. Really not changing how we've handled this. If you think back into – during the Great Recession where we went through a trough in pricing, we accelerated depreciation during that time period. So typically, if we see vehicles coming in at a point where we're going to be at net losses on at the time they're held for sale that kind of triggers a requirement to try to accelerate. That's really what we're doing now. We're going to continue to do our standard depreciation policy which is really a longer-term outlook for the fleet. We would use, accelerated depreciation comes in during periods of soft markets if you will. And obviously to your point, if we think that we see a sudden turnaround, public would adjust those estimates going forward. But we'll probably need to wait to see that. David Ross - Stifel, Nicolaus & Co., Inc.: I guess, I always thought you only did 12 months out, not 18 months out.

It varies. I think, it's our view as to how long we think this soft market's going be here. And as we sat down as a team we came on to 18 months. Back when we did it the last time, we probably used an 18-month cycle also. So it's typically going be a year to two years – 12 months to 24 months typically. David Ross - Stifel, Nicolaus & Co., Inc.: Okay. Thanks.

Next from Wolfe Research we'll hear from Scott Group.

Hey. Thanks. Good morning, guys.

Good morning, Scott.

So all the depreciation changes and fair value adjustment, does that show up on gains on sale line this quarter?

The valuation adjustments do around $21 million of that is in the gains line, and then there's another $10 million of accelerated depreciation which is in the cost of lease and rental line, because it's really...

Okay.

Depreciation in the product lines.

Okay. So – okay. That's helpful. And just, my question is, so if I kind of normalize for the gains on sales or kind of strip out the headwind from gains on sales, we still see a pretty kind of meaningful drop-off in just FMS earnings. Sequentially, FMS earnings down year-over-year. Is something beyond just the used vehicle market, is something changing on some of the contractual parts of the business too?

No. Scott, I think obviously rental has been a headwind year-over-year. So we're – we've right-sized the fleet so we've really minimized the negative pull-through of that. But we're still dealing with year-over-year headwind on earnings from rental. So those two pieces are the big ones. If you look at our contractual business, it's really delivered on the earnings estimates that we had set out at the beginning of the year, if you remember the waterfall from the beginning of the year. So if we look at the results at the end, we saw those earnings really come in for the most part during the year.

Okay. Maybe I'll follow-up offline with you – yeah.

I don't know if you're picking up the accelerated depreciation too, because that's also a part of it.

Okay.

$10 million, Scott, is going to be in those FMS comps also.

Right. Okay. All right. Thank you, guys.

Next, from KeyBanc Capital Markets, we have Todd Fowler.

Great. Thanks. Good morning, everyone.

Good morning, Todd.

I think the – good morning, Robert. I think that maybe to the previous question you gave some help with this, but what I'm trying to figure out is you have $0.28 of headwinds from used vehicle sales and accelerated depreciation in your waterfall chart. I've got $0.16 of that being the accelerated depreciation. So I'm trying to get a sense, the $0.12 headwind from lower used vehicle sales, does that imply you're going to have losses on used vehicle sales during 2017? And if so, what's the cadence? Are you expecting losses in the first half of the year and then gains into the back half of the year? That's just what I'm trying to figure out with the guidance.

Yeah, I think that affects mainly – we would contemplate items in the second half of the year, like the last – more on the last three quarters, Scott – Todd.

Okay, Art. So it's basically there would be used vehicle sales losses in 1Q, and then it starts to ramp-up or improve from the first quarter level?

Right, we're...

I guess...

Yeah, year-over-year, we're expecting it to be lower than it was. So expect some of that deficit to be in each of the periods starting in Q3. Obviously a big delta in Q1.

Right.

But then that additional amount you're going to see in Q2, Q3 and Q4.

Yeah, it gets a little confusing because it's not the P&L line item, it's the year-over-year comparison that we're showing here.

Yeah.

So if you remember, we actually had gains in the P&L in the first quarter. So we're not forecasting gains in each of the quarters anymore.

Well, let me ask it that way I guess. So what are you – are you expecting losses in, on a quarterly basis for used vehicle sales?

Yeah, we're expecting more flattish results I would say maybe – let me correct that. More flattish results in the last three quarters. Your biggest variance is going be in Q1 as we sit here today.

Okay.

And that drives most of that delta you're talking about.

Okay. And in the fourth quarter, we'd have to adjust for what's really the accelerated – or the write-downs in the fourth quarter gain number I guess?

Yeah.

Okay. Okay. And then if I could just ask another high-level one. I mean, I guess just thinking about the used vehicle market, the adjustments here and kind of the change, was there something specific that happened in the fourth quarter? This just seems like a bigger stepdown than as we were talking about the market during the year, and I'm just curious if there was some sort of experience that you had with equipment or vintage that you were trying to move, or why kind of this sudden shift late in the year versus how things have been trending? I know things were soft during the year, but what you saw during the fourth quarter that prompted this?

Yeah, It's a good question, Todd. Remember in the third quarter, our pricing was kind of in-line with what we expected, but we didn't get the volume that we needed. So we were running short on volume that we were selling which was telling me at the pricing we're at, we don't seem to be getting the volume that we need. So in the fourth quarter, we had talked about, look, if we don't get the volume, we're going to start to wholesale some more. So we really kind of tested those markets in terms of what was it going to take to wholesale some of these units, what was it going to take to move them. We saw retail come down and we also saw wholesale much lower than what we had expected. So with that, I think, we kind of got a better read on what the market is for the vehicles that we have in inventory and that's really what drove this. We then looked at the overall, talked to our used truck organization. Remember, we're the largest independent reseller of used trucks. So we're out there in the markets and our guys are telling me that there's still a lot of inventory out there in the marketplace. So with all that inventory, it's hard to justify saying that pricing is going to be flat or up. So this forecasting is not an exact science when you try to forecast these cyclical downturns, but we feel that the actions that we took and what we did in Q4, plus what we built into this plan, really help us take a big bite of the apple around these used truck challenges. So doesn't mean we're out of the woods but I think we feel that we took a big step towards reflecting the potential downside risk that we see in 2017. Market will tell ultimately what the pricing is, but that was it. It was really as we got into the fourth quarter, there was a down – there was a stepdown in the retail market, but we also saw more significant downturn in wholesale as we tried to move more units to the wholesale channel.

Okay. Okay, Robert. Thanks a lot for the time. That makes sense and good luck.

Thanks, Todd.

Moving on, we have Jeff Kauffman with Aegis Capital.

Thank you very much. Hey, guys.

Hey, Jeff.

Real quick. I apologize, I had two conference calls at the same time this morning so got on a little late. Can you talk a little bit about pension and what's going on there? Because I didn't see that anywhere in the slide discussion, and it seems like with the rates going up a little later in the end of the year, depending on the measurement date that pension is going be a tailwind for a change in 2017 as opposed to a headwind. Did you discuss that and if not, could you, please?

Yeah, we have and I'll let – Art is getting you the numbers. But our measurement date is December 31, so we did make an adjustment and I think if you look at even though interest rates have gone up during the middle – since – from the middle of the year, if you go point to point from the last measurement date we took in December 31 of 2015, they were actually still down a little bit. But I'll let Art give you...

Right. Yeah, Jeff, he's – Robert's spot on with that. So rates did rise there in the fourth quarter; however, they had dipped very low mid-year. So actually from a discount rate perspective, the discount rate actually is dropping from 2015 to 2016, so that has an adverse effect on your 2017 costs. And that really is offsetting any benefit you get from better than expected returns during 2016. So overall, we kind of have the pension number flattish year-over-year.

Okay. That's helpful. And so I guess safe to say that you guys are taking the big bite at the apple here based on what you see and if the market turns out to be a little bit better than you'd feared, would we potentially be looking at a reversal of say 4Q a year from now? Or your view is this is what we think it's going to be?

Yeah. No. Look, I think, the duration of it through the full year is probably – we're pretty confident that that – it's going to last a little longer. We look at this versus – we haven't seen a downturn like this in tractors since probably in the last 15 years. So, this goes away – back to the 1999, 2002 downturn, and I think in that type of an environment, it tends to linger. So I think the duration we know; the depth of it is harder to forecast. So we think we took a somewhat conservative view on this but it's hard to tell. And if it comes in better you'll start to see it in better gains in the back half of the year.

Okay. Guys, thank you very much, and congratulations.

Thanks, Jeff.

Next from JPMorgan we'll take a question from Brian Ossenbeck.

Hey. Good morning, guys.

Hey, Brian.

So I was wondering if you could just give us some sense as to what type of labor market you're expecting in 2017. I know we talked about drivers and technicians a lot, so an update on those two would be helpful, but also just from the SCS business as you take on more contracts and awards, what you're seeing in those areas as you try to hire people for those types of projects as well?

All right. I'll let Steve answer the second half of that. But I think overall we're expecting a similar labor market to what we saw this year. Obviously unemployment is down. Wages have been coming up, but we think they're still certainly going to be within ranges that we've seen in the last 12 months. Maybe a little bit of inflation there. I'll let Steve answer on in terms of supply chain what we're seeing as we open up new distribution centers.

Yeah, Brian, as we look at these, obviously it changes by ZIP code. Ryder, we're spread across the country. But we have seen rates go up slightly. But as we price these into deals with our customers during contracting. So still seeing good attraction rates and retention rates. And we'll keep our eye on it.

Okay. When you say you price it into contracts, do you have escalators in there as well? Or re-openers?

Yeah. That's one thing that we've been working on with our customers, because a lot of these increases are driven by state regulation. So we're working those into contracts with most of our customers.

Okay. Thanks. That helps. Just a bigger-picture question with all the change and I guess uncertainty coming out of DC with the new administration, can you just give us some thoughts on how you think your business and those of your customers could be impacted by the House GOP tax plan as it's written? So the big things in there obviously the interest expensing, immediate depreciation, lower tax rate of course, and then the border adjusted, which seems to be the most contentious part of that. So given all that you see and touch, and the customers that you serve, we'd be interested in your thoughts on if that plays out, how it would affect Ryder and your customers? Thanks.

Sure. Well, first off, obviously, we're all for lower taxes and less regulation. I think if you look at our customer base, and I've met with several of our customers, most of our customers are small to mid-sized businesses, especially on the FMS side. On the Supply Chain side it's more the larger companies. But I can tell you the small to midsize folks that we've met with seem to be energized about the prospects of less regulation and the prospects of lower taxes. So I think that could be a very positive thing. The border tax gets a little tricky, because obviously we have some operations in Mexico and primarily supporting plants that feed product into the U.S. So something very dramatic there could be challenging. But I would tell you this, we are a big, big player in the U.S. So manufacturing increasing in the U.S. is a big net positive for Ryder, because that means there's – it's a net positive for trucking. I think it's a net positive for Ryder, because manufacturing tends to need a lot of movement of product. So we would be obviously very encouraged by more manufacturing coming into the U.S.

Brian, let me add one thing. Obviously, don't lose sight of the impact on our financials with any kind of major tax reform, because moving the rates down to 15%, 20% will be a big change for us. It would be a big reduction in our existing deferred taxes, which would impact leverage and all that. We would have to kind of talk that through if that happens. So there would be an impact in our balance sheet from any big tax reform.

Yeah, any one of those plans that has a reduction down to 15% or 20% corporate tax would be a big pickup for us in terms of our P&L and on the deferred taxes also. I also would mention that any type of big infrastructure plan is typically very good for transportation, for trucking. I see that helping our customers and certainly helping Ryder.

Okay. Thanks a lot.

Thanks, Brian.

Next up we have Matt Brooklier with Longbow Research.

Hey. Thanks. Good morning. So a question on on-demand maintenance. I didn't see it in the waterfall chart, but maybe you could talk to your expectations in terms of on-demand maintenance, earnings contribution in 2017?

Sure. I'll let Dennis give you some more details. But I'll tell you this, I think what we've learned with on-demand maintenance, obviously it's taken us a little bit more than we expected to really grow that the way we wanted to as we were on-ramping new customers and getting an understanding of how many times you touch a vehicle, and when things slow down there's less touches. But I'll tell you this, what it has opened up for us is the ability to really expand the service offerings that we have, even within full service lease and contract maintenance. So we can now mix and match some of the on-demand services with preventative maintenance in leases. We can also mix and match it with some of the contract maintenance we provide. So when you saw us roll out ChoiceLease and SelectCare, all of that has been really made possible by our ability to now transact on an on-demand basis. So, I guess the reason I'm saying it is we really probably need to start looking at on-demand maintenance as really a broader enabler of these other products that we're going to be really focusing on here over the next year or so. So, Dennis, have you got some information on on-demand?

Yeah, I would just add, Robert, that the number of units we serviced in the quarter were up 10% year-over-year. And the number of customers that we now have under contract has expanded significantly. We're at over 80 customers and growing. And, Matt, what I'd just add to that is, as Robert said, it's been a door opener. For customers who don't want to go initially into a lease agreement or into a contract maintenance agreement, it really allows us to have a discussion with them about servicing their equipment with a maintenance network of 800 shops across North America, and giving consistency of quality of their maintenance along with a price reduction in many cases. And it's really opening up the doors for those discussions. So it's not growing as fast as we had hoped originally, but it continues to grow.

Yeah, I think what we're expecting next year is in terms of number of vehicles serviced, I think we're looking at about a 25% to 30% increase in vehicles serviced year-over-year. So still growing as a stand-alone but I guess more importantly, enabling us to do these other, to provide these other services.

Okay. That's good color. Thank you.

Thanks.

All right. And next we'll move back and take a follow-up from Ben Hartford with Baird. Ben J. Hartford - Robert W. Baird & Co., Inc.: Hey. Thanks. Robert, I guess you'd made a point earlier about the depth of this used equipment price cycle being as deep as you've seen in 15 years. I'm just interested in some perspective on why it is so deep, and perhaps compare it to that late 1990s period. Obviously, we ordered too many trucks in 2014. Everybody got excited about the temporary tightness there, so that's contributed to it. But maybe in the same vein, is some of the weakness that you're experiencing with regard to wholesaling attributed to a specific make and model year, i.e. the 2012 International trucks? Any perspective on how this cycle compares to previous? And that specific model year issue and how – what role it might be playing would be helpful.

Yeah, look I think they're all a little different. I actually remembered the 1999 through 2003 and there was all kinds – we had issues with certain makes and models also, but overall the market was soft. This is very similar. I think, overall, the market is soft. I can point – certainly can point to certain model years and say, these are worse, because I think when it's a buyer's market, the uglier vehicles don't get as much attention and those prices drop more. But I think overall what we're really dealing with is a supply demand imbalance. You've got a lot more trucks in the market. Demand has softened, and that is creating this issue. You also have a relatively weak export market, although a little better than a year ago, but still relatively weak. So I think we're just – we just got to work our way through that imbalance here over the next 12 months to 18 months. And obviously a pickup in demand, some of the things we talked about, if the economy really picks up, it's going to help us flush through it much quicker and help the market flush through it much quicker. But if not it's just going to be a step-by-step process to find our way through this. So what we tried to do was forecast an environment where we thought if you did something, if what happens is something like what we saw in 1999 to 2003, what would that do to pricing over the next year? Which is basically just another equal downturn from what we saw this year. And then how would we then be able – how would we use that in the mix of wholesale and retail, to move those vehicles out next year? And that's really what you have in there. In addition, obviously, the depreciation, the accelerated depreciation we're going to take on pulling forward some of those residual values so that when they get to the UTC we've already got him down. So, Dennis, I don't know if you want some more color around...

Yeah, just one other point. Ben, you mentioned the 2012s, and really it's the 2010s, 2011s and 2012s, a lot of those vehicles now are hitting the second life market or that used vehicle market. And there were some issues with quality with those issues with those trucks when they were first coming out. And so that has put pressure on pricing out in the used vehicle market. Ben J. Hartford - Robert W. Baird & Co., Inc.: Okay. And then I guess an un-related follow-up to Art. As we think about the model, let's say starting in the back half 2018 once we digest all of these headwinds and beyond, has anything changed mechanically that would prevent you guys from recognizing regular gains as you have in prior years going forward? I would imagine as long as truck OEM prices are inflationary, there's nothing that has changed to your accounting that would prevent the recognition of gains kind of back half '18 and beyond, is that right? Maybe some context there would be helpful.

Right. Right. There's been no change in what we're doing that should impact that. It's always going to be driven, remember, just by what's happening in market pricing. So we may never have the $100 million annual type gains again but we would expect to be in a net credit position over time. Ben J. Hartford - Robert W. Baird & Co., Inc.: Okay. Great. Thank you.

And we'll take a follow-up from Scott Group with Wolfe Research.

Hey. Thanks for taking the follow-up. So...

Sure.

I see rental revenue down for 2017 and rental earnings up for 2017. Can you just talk about how we get there?

Right. That's actually pretty straightforward. It's improved utilization, right. We rightsized the fleet this year by the middle of the year. So we're getting a benefit from having the fleet rightsized even in what's been a slower revenue. So next year that catches its tail. We've got the fleet right-size utilization improves and you're going get improvement in margin. So, that's with demand being down. If demand were to go up, let's say the economy really spurs up, then you could see some additional benefits. Typically, that's where we first see it, we first see it in rental. So, we're certainly not assuming a pickup in economic activity. If that does happen we should get some additional benefits there.

And are you seeing that improvement in utilization yet?

Sure. So, while we saw utilization really at the target levels now in the fourth quarter. It was down slightly, but it's really in our target range. So we are where we need to be from a rental fleet-sizing standpoint as we get into this year. Now if we start to see things pickup, then obviously we'll redeploy some more units into rental. At some point we may decide to invest some more in it but initially it will certainly be – if we see improvements then we're going to move some more units into rental and take advantage of that. But two quarters now we've seen what I would call a more stable rental performance, so I think that's a very good thing.

Okay. Thanks. And just one last quick thing. So if the used truck market prices play out like you think, given the accelerated depreciation change, do you think that residual value is a help or hurt or bigger hurt in 2018 than the $0.07 in 2017?

Similar to that.

Yeah, I think, you're probably looking at something similar because your – remember we'll do our – at the end of next year we'll do our normal residual value policy change. And as you drop off a year from five years ago, we had this one, you'll get some pressure there. Yeah.

But a similar kind of fairly small headwind in 2018 like in 2017?

Yeah, we talked about that. 10% drops probably in that $7 million to $10 million range impact for 2018.

Okay. Thank you, guys. Appreciate it.

Okay.

Next from CLSA we have Kristine Kubacki.

Hey. Good morning. Just a question on the full-service lease fleet growth for this year, on the 3,500 vehicles. Can you talk about the cadence of those vehicles and then also is that still conservative? Is that where you have visibility into add right now, if it could be higher if obviously the economy picks up?

Well, we have good visibility into probably the first 90 days. And it's based on certainly where we saw our sales ending in the fourth quarter which they ended up with a lot of activity. And it still ended up strong. So we've got some of that growth. It's probably – if I looked at it it's probably right now more front-end loaded. So there's an opportunity if sales really were to pick up between now and the middle of the year to improve on that number. But based on what we have visibility to and then some assumptions around what we're going to sell here over the next couple months that's really how we came up with it. So, we feel pretty good about it. As a matter of fact, I would add that we had a strong fourth quarter sales ending and we started off January very strong also. So, pipelines are strong. We inked a lot of deals in January. So we feel good about where we are on the full service lease side. Dennis?

Perfect.

Kristine, I would just add to that, that OEM production is projected to be down again next year. So in the face of that to grow at these levels of 3,500 is a really good number.

Yeah, that's a great point. If you think about it, we – 40% of our growth now came from over 40% from customers that are new to outsourcing. We're obviously counting on that into 2017 because it's not going really be helped from the market itself. So we feel great about where that's headed. We just need to keep that moving.

Great. Thank you very much.

Thank you.

And we will take our final question of the day from Todd Fowler with KeyBanc Capital Markets.

Great. Thanks. Just a follow-up on the last question. If there's any sort of change with tax policy putting in accelerated depreciation benefits for equipment purchases or something like that and I think we've seen that at points in the cycles in the past. How would you expect that to impact your expected lease fleet growth?

Well, it's a good question, Todd. When we've seen it in the past we really haven't seen a big impact from it. You could argue that it sort of encourages ownership as companies like to take advantage of that. But in the past, when we've had similar types of changes, customers are coming to Ryder because of our ability to maintain trucks. The financing obviously is important, we ought to be competitive. But it isn't so much. You're talking about small to midsize companies. It isn't so much a financing vehicle as it is I need an organization that can give me up time and keep my trucks up and running. So that doesn't change and I would argue probably not have a big impact on our sales. I think Art wanted to make a clarification?

Right. Todd, let me – I wanted to go back over that whole UVS question you had because it gets a little confusing when you're talking about 2017 actual or plan versus the year-over-year changes. So we step back, what we're saying is this year we've ended flat on gains on used vehicle sales.

For the full year?

Yeah for the full year it's flat. We're seeing a $0.12 headwind next year. It means it's let's say going to be negative $10 million. We see that negative $10 million being a little bit of income in Q1 and then negative let's say $3 million to $4 million in the last three quarters. Okay? That gets you a negative $10 million for the full year. You then – when you start look year-over-year you're going see wild swings because we may – UVS was a big positive first half of 2016. So you're going to have big negative deltas there. And then obviously Q4 this year of 2016 had a huge negative, which will turn around to give you a favorable. So I would work off the $10 million kind of as more negative than the last three quarters with a little bit of offset positive in Q1.

Yeah, that helps, Art. I'd come up $9 million to $10 million that was the number that I thought it was going to be on a full year basis. And then I think we can probably work on what you just mentioned about how we can think about that as year-over-year quarterly change and that the headwinds would be biggest in the first part of the year and then not as great in the back half of the year.

Right. All right. Thanks, Todd. No. Go ahead.

Okay, guys. I'll follow up later. I was just going to say just on the depreciation question, though, you typically also probably, Robert, don't see people who are leasing today switch to buying a truck just to take advantage of depreciation. It's kind of – in some ways, a leasee they continue to lease and when somebody buys trucks they buy trucks. And so again some sort of potential change in depreciation policy. Your core leasing customers wouldn't all of a sudden start buying trucks, I guess is what I'm asking. You wouldn't expect that.

Correct, yeah, we don't see that as a big threat.

Okay. Okay. Thanks for the time and the follow-up.

Yes. Thanks, Todd.

All right. And, ladies and gentlemen, that does conclude our question-and-answer session. I would like to turn the call back over to Mr. Robert Sanchez for closing remarks.

Okay. Thanks, everyone. We're just over the top of the hour. So I appreciate everybody being on the call and I think we got to all the questions that we had in the queue. So thanks for your continued interest and we look forward to seeing you on the road.

And, ladies and gentlemen, that does conclude today's conference. We appreciate your participation, and you may now disconnect.