Good morning and welcome to Ryder System, Inc.'s First Quarter 2017 Earnings Release Conference Call. All lines are in a listen-only mode until after the presentation. Today's call is being recorded. 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 first quarter 2017 earnings 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. This conference call also includes certain non-GAAP financial measures. You will find reconciliations of each non-GAAP measure to the nearest GAAP measure in the written presentation accompanying this call, which is available on our website at investors.ryder.com. 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.

Good morning, everyone, and thanks for joining us. This morning we'll recap our first quarter 2017 results, review the asset management area, and discuss the current outlook for our business. Then we'll open the call for questions. With that, let's turn to an overview of our first quarter results. Comparable earnings per share from continuing operations were $0.82 for the first quarter 2017, down 27%, or $0.30, from the prior year. Market conditions in used vehicle sales and commercial rental continue to be challenging and negatively impacted the results by $0.44. The decline in these transactional businesses was partially offset by growth in our contractual businesses and cost management actions. First quarter 2017 comparable results excluded $0.08 of non-operating pension cost and an operating tax adjustment of $0.03. Last year's comparable earnings excluded $0.07 of non-operating pension costs. Results for the first quarter were at the low end of our comparable forecast range of $0.82 to $0.92, primarily reflecting weaker-than-expected commercial rental demand and, to a lesser extent, used vehicle pricing driven by soft market environment. Operating revenue, which excludes fuel and subcontracted transportation revenue, increased by 3% to a record $1.4 billion for the first quarter, reflecting higher ChoiceLease, dedicated and supply chain revenue, partially offset by lower commercial rental revenue, and foreign exchange. Excluding the impact of foreign exchange, operating revenue increased by 4%. Total revenue increased by 7% and benefited from higher operating revenue, subcontracted transportation from new business, and fuel cost pass-through to customers. Page 5 includes some additional financial information for the first quarter. The average number of diluted shares outstanding for the quarter was unchanged versus last year at 53.4 million shares. We began repurchasing shares under the current 2 million share anti-dilutive repurchase program in the second quarter of 2016. The plan allows…

Thanks, Robert. Turning to page 9, gross capital expenditures for the quarter totaled $436 million, down about $60 million from the prior year. This decrease primarily reflects lower planned investments in the lease fleet, partially offset by planned investments to refresh the rental fleet. We realized proceeds primarily from the sale of revenue-earning equipment of $97 million, down $24 million from the prior year. The decrease primarily reflects lower used vehicle pricing. Net capital expenditures decreased by $37 million to $340 million. Turning to the next page, we generated cash from operating activities of $331 million for the quarter, down 10%, or $37 million. The decrease was driven primarily by increased working capital requirements, partially offset by lower pension contributions. We generated $444 million of total cash for the quarter, down $70 million from the prior year, primarily reflecting lower operating cash and sales proceeds. Cash payments for capital expenditures decreased over $200 million to around $360 million for the quarter. The company's free cash flow was positive $83 million for the quarter versus the prior year of negative $61 million, reflecting lower payments for capital expenditures. Our current forecast for full year free cash flow remains unchanged at $250 million. Page 11 addresses our debt to equity position. Total debt of $5.3 billion is slightly down from year-end 2016. Debt to equity at the end of the first quarter decreased to 256% from 263% at the end of 2016, and is well within our target range of 225% to 275%. Our current forecast for year-end balance sheet leverage remains unchanged at 240%. Equity at the end of the quarter was just under $2.1 billion, up $28 million from year-end 2016, primarily due to earnings and foreign exchange, partially offset by dividends and net share repurchase. At this point, I'll hand the call back over to Robert to provide a used vehicle sales update.

Thanks, Art. Page 13 summarizes key results for global used vehicle sales. Used vehicle inventory held for sale was 6,700 vehicles at quarter end. This exclude the elevated number of vehicles being prepared for sale that I mentioned earlier. Including these vehicles for a more relevant comparison results in a used vehicle inventory of approximately 8,400 units, down 300 vehicles sequentially. As planned, we continue to steadily move our used vehicle inventory down from last year's peak of around 9,000 vehicles and are approaching the top-end of our normal target range of 6,000 to 8,000 vehicles. We sold 4,500 used vehicles during the quarter, down by 4% from the prior year, but the same volume as last quarter. Proceeds per vehicle sold were down 16% for tractors and down 20% for trucks compared to a year ago. From a sequential standpoint, tractor pricing was up 1% and truck pricing was down 2%, which was modestly below our expectation when considering the younger age of units sold this quarter. As compared to peak prices realized in the second quarter of 2015, tractor pricing was down 25% and truck pricing was down 18%. During the quarter, we increased our use of the wholesale channel versus the first quarter of 2016. For the full year 2017, we expect the mix of wholesaling to be consistent with last year, as we focus on maximizing sales proceeds while moving inventory levels to the midpoint of our typical target range. I'll turn now to page 15 to cover our outlook. During the first quarter, we continued to focus on mitigating the impact of a challenging environment in rental and used vehicle sales, while growing our contractual businesses and managing overhead costs. We were pleased with 5% revenue growth in ChoiceLease and 12% growth in Supply Chain…

Thank you. We'll go first to David Ross of Stifel. David Ross - Stifel, Nicolaus & Co., Inc.: Good morning, gentlemen.

Good morning, David. David Ross - Stifel, Nicolaus & Co., Inc.: First question on the rental side. It contribute a positive, I guess, net before tax earnings number to FMS in the quarter?

The rental product line? David Ross - Stifel, Nicolaus & Co., Inc.: Yes.

Yes, absolutely. Yeah, it's just – it was just below what we had expected. But it – yeah, it absolutely contributes to the bottom line. David Ross - Stifel, Nicolaus & Co., Inc.: Okay. And given then continued weakness in the rental market and the used truck pricing issues, is there anything that we've seen last couple of quarters that changes your three-year outlook? About a year ago, you laid out the base case EPS CAGR of 13% or so through 2019, talked about a long-term target EVA spread moving up from 100 to 150 basis points to 150 to 200. Is that something that we should think about as still the case and just push back a little bit further, or is there something that you've seen the last few quarters that changes that?

Yeah. I don't think there's anything we've seen the last few quarters to change that. I think, obviously, the timing of getting there is getting pushed out, because with this type of headwind, in the short-term you're starting from a much lower base. So we've got to work our way back up. Obviously, we're trying to do everything in our power to get this downturn of the transactional businesses behind us, and the things that we're doing to right size the rental fleets, to right size the inventory of used trucks, to the value them properly, to accelerate depreciation on them, all of those things are really intended to try to get this thing behind us. But clearly, it's lasted a little longer than what we would have expected. But the important thing is that we're continuing to really see the growth in the contractual parts of the business, which I think are really the long-term drivers of earnings, which really are what drive the numbers that you saw at the Investor Day conference last year. David Ross - Stifel, Nicolaus & Co., Inc.: Those are my few questions, so thank you.

Thank you, David.

We'll go next to Todd Fowler, KeyBanc Capital Markets.

Great. Thanks. Good morning, everyone.

Hey, Todd.

Robert, I know – good morning. I know you gave some comments at the end of the prepared remarks, but maybe if you can help quantify the reduction of full year guidance to $0.85. Can you give us an order of magnitude, how much of that is rental versus used vehicle versus maybe some of the other areas that you talked about?

Yeah, I would tell you rental is the largest component by far. And between rental – I would tell you, the transactional parts of the business probably make up about 75%...

Okay.

...of the challenge, so it's the vast majority of it. The rest of it is all the – is the other items that I mentioned, Dedicated maybe being a little bit off what we'd originally expected, and then maintenance costs and some of the older vehicles maybe costing us a little bit more. But really the key drivers are – the key driver is rental, and then UVS being a little bit weaker.

And not to put too fine of a point on it, but is rental more than 50% then?

Yes, yes.

Okay. Okay, thank you. And then just as a follow-up, I can't remember a time where we've seen as big of a divergence in your model between what you're seeing with the rental fleet and what you're seeing with the lease fleet. And I'm curious if you have any thoughts. I always think about that there's a natural relationship between the two, as the rental fleet grows, your rent – or, excuse me, as the lease fleet grows, your rental customers are using – are using rental, gosh, as some additional flex capacity. Are you seeing something different with your lease customers now that they're not depending as much on rental? And I would think that that also changes the return mix of your business, just given the difference in the margin profile. So I'm just curious as to why it seems like that there is a disconnect right now between the growth in the leasing business and the softness on the rental side.

Yeah. I think that the growth in the lease business is clearly being driven by the outsourcing trend, right? We've got more customers that are coming to us, because they want to outsource – they used to be in ownership and now they want to outsource. I think if it wasn't for that, you would see probably a more consistent historical relationship between a decline in rental and you'd have more of a decline in lease. So I think it really just highlights the point that we are in a great position as it relates to growing that contractual part of the business. I think when rental – when the freight environment improves and you see rental come back, then you're going to have both of them really growing, and I would say you probably – you're going to see an acceleration on the lease side too, because you'll have customers who are currently leasing, they're going to need more vehicles, and that's the part that we're not seeing. We're basically just seeing customers that are at the end of their ownership life cycle and they're having to replace those vehicles and instead of buying them, they're coming and they're leasing them.

Okay. So it sounds like that the secular part of the business is maybe carrying the day on the lease side, and you're not getting the cyclical strength that you would typically expect.

Correct.

Okay. Okay, that helps. Good luck. Thanks for the time.

Thanks, Scott.

Thank you.

We'll go to Ben Hartford of Baird. Ben J. Hartford - Robert W. Baird & Co., Inc.: Hi. Good morning, guys.

Hey, Ben. Ben J. Hartford - Robert W. Baird & Co., Inc.: Not to belabor the point here, but I'm just trying to understand really what changed from late January's 2017 guidance. You talked about more than half of the reduction incrementally coming from rental. And I think, Robert, you had said that it was more a demand issue than price. But then you'd also mentioned during your prepared remarks that full year rental pricing is now expected to be down 2% versus up previously. So I'm having a little bit of difficulty reconciling that. I mean, I understand the cyclicality here. But what really – what changed? Was it really February's weakness that set rental utilizations bar lower and you've seen normal seasonality since, but that puts you into a hole? And then the demand comment, so in the context of reducing the full year rental pricing outlook as well, I'm having a difficult time bridging. So if you could provide some context there, that would be helpful.

Sure. I'll tell you what – to put it in a little broader context. If you remember, in the fourth quarter we said we had seen demand stabilize. So third and fourth quarter rental demand seemed to be stabilizing, even if you take out seasonality. So based on that, we said, okay, well, maybe we're at a point now where rental demand is maybe bottoming out a bit and we're going to see it bump along the bottom in 2017. First couple of weeks of January seemed to be behaving as they normally do. It really was the tail end of January and then February that we saw a bigger drop-off, not what we would have expected in the first quarter. The drop-off we saw in the first quarter from the fourth was the largest drop-off that we've seen in five years. So it gives you an idea of what it was. So with that, we have seen in the last – at the end of March and in April, we're seeing the seasonal uptick that we would normally expect. So that's good. But as we looked at the balance of the year, I think we looked at what we think we could get in pricing in an environment where clearly there's going to be more trucks out there than there's going to be demand. So that's what we expect right now. We felt it was more prudent to assume pricing down a bit as opposed to it continuing to be up, even though it was up, you're right, in the first quarter. So that's basically our assumption. I mean, we are – we have not built any uptick in the freight environment for the balance of the year. As I pointed out earlier, we're trying to get this thing…

Ben, this is Art. Yeah. A couple – you have a lot of questions in there. But I think if you think about our business, UVS, where we started in 2015, we were over $100 million plus in results. Now we're going to be down slightly for the full year. So those are levels that last time we would have seen that would have been in the 2009 time period. So you're probably getting close to where we were in the 2009 time period from a used vehicle perspective. On rental, if you look back, prior cycles during the freight recession of 2005-2006 timeframe, we were probably down a little bit more than where we are so far. Early 2000s, there was the dotcom and the 9/11 stuff, we would have been down around the same level. So we're kind of at those points from a rental perspective. We're not at the level we saw in 2009, though, in the Great Recession, would have been another drop to go there. So if you're kind of comping that out, you would look at it and say rental is kind of trending near there and UVS is kind of in that same spot.

But if you're trying to figure out the snapback, if you will, the comeback on rental, I can tell you that if you look back at the 2001 recession, we were down probably 17% to 18%, so during a three-year period. The next year after that, we were up 16% in demand and then up 11% in demand. So you do get that comeback. If you look at after the Great Recession, we were up in demand. Rental in 2010 was up 18% and 17% the next year. So there is a comeback. If you look at what we're forecasting now over the last year and this year we're probably somewhere in that 15% to 16%. That is consistent with the declines that we've seen in demand during the normalized recession periods. So at some point, as it's done in the past, that will come back and you'll see the return in demand. Ben J. Hartford - Robert W. Baird & Co., Inc.: Okay. And just to clarify, it does sound like throughout 2008-2009, you look at prior cycles, what we've seen over the past two years and where we are today, what you have forecasted for 2017 appears effectively consistent with troughs in the prior cycles cyclically. Is that fair?

That's fair. Ben J. Hartford - Robert W. Baird & Co., Inc.: Okay. Thank you.

We'll go next to Scott Group of Wolfe Research.

Hey. Thanks. Morning, guys. So...

Hey, Scott.

I want to try and drill into the second quarter guidance a little bit, because I'm struggling to get there. So if I look at first quarter to second quarter and the sequential earnings growth you guys are expecting, you got to go back to second quarter 1999 to find a year where you grew earnings less sequentially. So maybe just help kind of talk about some of the assumptions, specific like pre-tax margins or whatever you guys are assuming to get there. And then just to add a little bit to the question, like I'm just a little confused, because it sounded like in one of the earlier comments that February was the issue and April you're kind of seeing more normal seasonality. So why would the sequential 1Q to 2Q just be so bad if the issue was more February than April?

I think if you look at what the year – the Q1 to Q2 deltas over the last several years and we compare it to what we're assuming here, the biggest driver is used vehicle sales. I mean, on the used vehicle sales side, we're certainly not expecting a pickup as we have had in other years, with the exception of last year. We're actually expecting a decline from the first quarter to the second, so that's a big driver. And then certainly some of the other areas – we had some benefits in overheads in the first quarter that we are not expecting to recur in the second quarter. So between those two, I would tell you, that's probably the biggest explanation as to why the seasonality is different. And then, as Art just mentioned, yeah, Supply Chain also had a really bang up quarter this quarter. And as some of the deals that we've done have kind of caught their tail, we shouldn't see that type of beat, if you will, in the second quarter.

Okay. So it's not been about rental doing worse than normal sequentially?

No. No, it's not.

Okay. And then I think in the past, Robert, you've given us kind of rental demand on a year-over-year basis by month. Is it possible to give us that throughout the first quarter and for April? And maybe any directional commentary of how that rental demand is doing with your for-hire carriers and maybe if there's any end markets on the private fleets that are doing particularly bad within the pressure that you're seeing?

These guys – Dennis and the team are looking at the month-to-month. We can give you those. In terms of end markets, clearly, transport has continued to be a difficult spot in terms of rental. You're just not seeing the demand that we would normally see from that group. But it really – I think if you look at February and March, it was really across the board. There was just – I think it's an indication of that you've got a pretty heavy fleet out there in general and the freight volumes aren't really growing. If you look at the freight tonnage indexes, they're kind of flattish. So with no growth in demand and a bit of an over-fleeting situation, you aren't needing rental trucks as much as you otherwise would. So now, the good and the bad news is this thing can change quickly. So that situation could change. If you look at some of the FTR utilization – if you look at the FTR utilization number that's out there, that's showing an improvement in truck utilization. That usually bodes well for rental once it hits certain points. We haven't seen it yet, but if that continues to go down that path, we should see some improvement. Dennis, you got the monthly numbers?

Yeah. I do. Scott, did you want Q1 or Q2? What were you interested in?

If you have the months for Q1, and then, I guess, what you're seeing so far in April.

Yeah, sure. So in Q1, year-over-year for power, demand is down 13% for February – I'm sorry – that was for January; for February, down year-over-year 15%; and for March, year-over-year 12%. I think what may be more interesting actually is the sequential changes, from December to January, 15% down; February from January, 14% down; and then in March from February, up 14%. That kind of gives you a sense for what we're seeing.

And do you have any kind of preliminary April trends?

Yeah. April is behaving as we would expect it to behave seasonally. So certainly coming up from the first quarter, and that's it. I mean, that's kind of what we're seeing. That's kind of we've used to build our forecast.

Okay. Thank you, guys.

Thank you.

We'll go to Jeff Kauffman, Aegis Capital.

Thank you very much. Hey, guys. Did I hear correctly, you were keeping your free cash flow forecast the same as previous, even though we were taking down the earnings guidance?

Yes, yes. I mean, it's – I mean, the earnings piece is a little bit of an effect on it, right? We're going to get some effect, but it's just still in our range so we were comfortable still at the $250 million.

Yeah. We're not really making any adjustments – much adjustment to CapEx, because we're – the rental buy was primarily – was actually completely a replacement buy that we still need to do. And then lease is still going strong, so free cash flow is about the same.

Okay. Well, that answered my first question. Second question, it may seem a little naïve on my part, but if we're taking such a beating on used vehicle sales and rental, why is it important to refresh that fleet now? Why not age those vehicles, take the maintenance expense, and when the returns justify it, reinvest? A silly question, but I thought I'd ask.

Yeah. It gets to the relationship between our rental business and our lease business. Our rental business is a very important complementary product line for lease. Almost every customer that leases from us also rents from us. So we need those rental trucks to support our lease customers when they have surge capacity. They're going to have some cyclical demand for rental. So last year we almost didn't have a purchase at all. I think we spent $90 million last year. So we already had one year where we allowed the fleet to age. As we got into this year, the vehicles are getting tired and we really needed to refresh them in order to be able to provide our lease customers, especially with good, high quality vehicles that they can – that can support them.

Well, those are my two. Thank you.

Thank you, Jeff.

We'll go next to Brian Ossenbeck of JPMorgan.

Hi. Good morning. Thanks for taking my questions.

Hey, Brian.

So just a question on used vehicles, if you could just give us the mix of tractors, trucks, and trailers that were held in the 8,400 at the end of the quarter. And also where do you expect – just an update on where you expect prices are headed for the rest of this year. I think your earlier commentary said that they were up a bit sequentially, but not quite what you had thought. So I don't know if you're going to frame that from a peak to trough that you had talked about from the second quarter of 2015 again or some context would be helpful there.

All right. Well, let me answer your first one. On the used vehicle mix, 43% tractors, 45% trucks, and the balance trailers, 12% trailers. In terms of pricing and where we expect it to go next, like I said, we're modestly below what we had originally forecasted. So we're probably down another 2%, 3% from the forecast we gave at the beginning of the quarter. So that's just – again, our assumption based on what we saw in the first quarter, first quarter pricing was about that, about 2%, 3% below once you adjust for age. And the good news was the volume was there. So we were able to move the volume we needed, but at slightly lower pricing. So the important thing for us, I think, for the balance of the year is to get as much price as we can, but to make sure that we get our inventories back to the mid-point of our target range.

Okay. And what was the mix of wholesale and retail sales channels for this quarter?

57%, 58% retail versus last year was 65%, I think. So it was – we did a little bit more wholesaling this year than last year, but it's kind of in line with what we expected.

Okay. Thanks. And just one more question on, how do you expect the impact of electronic logging devices on the business, broadly speaking, across the rental fleet? Is that mostly in the Class 8 tractors, you could see some sort of effect? Are you at all worried that smaller fleets might be run out of business, or the economics might not work for them as we hear and put some tractors back on the market, potentially hurting used vehicle prices? And, obviously, the big mandate that's been long awaited and just wanted to hear out what you were thinking about it affecting your business mostly in 2018.

Yeah, look, we haven't built any of that into our 2017 numbers. Obviously, there is still a lot of uncertainty around that even if it's going to happen. But if it's going to happen, what the impact is going to be. I think it would probably create more pressure on the used vehicle sales side, but would be a benefit on the leasing and rental side, as fleets that can digest the ELDs are going to need more trucks in order to absorb whatever is lost on the owner-operator side. So that's not in these numbers, if you will. And we're going to – we're watching that very closely as that plays out here in the second half of this year.

Right. Okay. Thanks a lot for your time.

Thanks, Brian.

We'll go next to Justin Long of Stephens, Inc.

Thanks, and good morning.

Good morning, Justin.

Good morning.

So I was curious if what we're seeing in rental right now is changing your long-term strategy for that business at all. And I'm wondering if we see rental demand snap back at some point down the line, would you consider taking a more conservative approach to growing that fleet and maybe trying to reduce the future earnings volatility of the overall business.

Yeah. Our strategy has been to keep rental in that 20% to 25% of FMS revenue. We feel that's an appropriate level in order to be able to serve our lease customers. And at the same time, also bring in some pure rental customers that can over time convert to lease. I think that mix has served us well over a period of time. It does add – there's no doubt, it adds to the volatility of the earnings story of Ryder. But over the cycle, it does provide good returns and return on capital for the shareholders. So I think we haven't really changed our view that it's going to be in that 20% to 25%. How quickly and how much we invest in that growth when it comes back, I think, is still – will remain to be seen and depend on how we see the environment, but adjusting it's as difficult as this is on the downturn. Certainly, when things come back, we need to have the vehicles ready for our lease customers. And we also do want to use it as a tool to help customers first experience business with Ryder, and then convert to maybe a longer-term relationship on the lease side.

Okay, great. That's helpful. And secondly, you provided the EPS bridge at the beginning of the year. But I was wondering if you could provide an update on the year-over-year EPS headwind that you're now assuming within the 2017 guidance for both used and rental. I just wanted to get a sense for what the earnings performance looks like if you strip out those transactional headwinds.

Well, if you – as I mentioned earlier, I'm not going to get into the whole waterfall, but I'll tell you, obviously, rental is meaningfully worse than what we had expected. I said it's more than 50% of the decline in our guidance. And then used vehicle sales is modestly worse. I mentioned 2% to 3% price declines. So those two are really the big drivers of – or the big changes, if you will, the biggest changes, if you will, around the year-over-year number. Dedicated is going to come in a little bit lighter. We're expecting some benefit on the dedicated side that – year-over-year that we're not expecting to get a lot there. We are focused on sales this year, so that we can then build growth into 2018. And then on the FMS side, we also get a little bit of pressure from maintenance cost on these older vehicles being a little bit higher than we had expected.

Okay. And maybe one just quick clarification on that. I know you mentioned tractor pricing is now down 25% from the second quarter 2015 peak. But what does your guidance assume for 2017, the incremental decline in pricing is from here?

Yeah, it's high single digits. We basically are just assuming what he had given in the guidance, which, I think, was on overall trucks we were 15% to 20% down, and now we're 18% to 23% down.

Perfect. That's helpful. I appreciate the time.

All right. Thank you.

Our last question comes from Kevin Sterling of Seaport Global Securities.

Thank you. Good morning, Robert, Art and Bob, and everyone.

Hey. Good morning, Kevin.

Nice talk with you again. Hey, Robert, not to beat a dead horse of commercial rental, but if I remember a few years ago you guys – in commercial rental you went to the wholesale market pretty heavy and sold a bunch of used equipment. And it sounds like you're going to increase your wholesaling activity again this year. So if you do that, how quickly can you get that utilization back up from 6%, 7% level we saw in the first quarter as you kind of right size the fleet and get some margin improvement? Is it a quarter or two do you think? I'm just trying to compare what you did last time, a few years ago.

No, I – remember, we brought our fleet down quite a bit last year, so we're in a relatively good spot to move it down some more. So we're expecting to get back to more target utilization levels in the second half of the year. So think of it in terms of a quarter, maybe a quarter and half to get there.

Okay. That's helpful. Thank you. And last question, in past cycles, too, as you guys have reduced your leverage, you've had an opportunity to do M&A. If I recall, the M&A pipeline may be pretty full. Is that the case this cycle? And when you do M&A, it seems like you do it pretty quick. You do multiple acquisitions and kind of with your leverage ratio haven't ticked down, how does your outlook for M&A look and maybe share those how your pipeline looks for some potential opportunities?

Yeah. I can't really talk about the pipeline, but I can tell you that we're certainly in a position and we have been in a position to do acquisitions when they come available. There just really hasn't been a whole lot that's come to market in the areas that we focus on, roll-ups of FMS-type companies or specialized logistics type companies that can give us some additional capabilities. But we're certainly out there looking in those areas that we feel could really add value. And when we find the right ones, we're ready to act on them.

Okay. Great. Thanks for your time this morning and best of luck.

Thank you, Kevin. Good talking to you.

Thanks.

We'll go to Scott Group of Wolfe Research.

Hey, guys. Thanks for the follow-up, I appreciate it. So...

Sure.

I wanted to just go back to kind of the seasonality question. So if I take the second quarter guidance and assume normal seasonality, assuming second quarter is kind of what you're thinking it's normal seasonality from there, it's actually then all of a sudden really tough to get to even the low end of the full year guidance. So maybe, what are you assuming in the back half of the year in terms of things getting better, if that makes sense, or maybe I'm missing something?

Well, certainly, utilization gets better in the second half, right. Utilization probably continues challenged into this quarter and then improves in the second half. It's seasonally adjusted, if you will. We're assuming used vehicle pricing is going to continue to be challenged throughout the balance of the year and we continue to see lease growth. So I don't know...

Also the prior year, Scott, remember we had a fairly large – you start to catch the tail on some of that accelerated depreciation adjustments, right. They're more front-end loaded than they are in first half of 2017 versus second half. And then also remember the last – second half of last year, especially in the fourth quarter, we had some pretty large valuation adjustments. So that's not the typical thing you should expect from our used vehicle results going forward.

Okay. Okay. And then the point on rental utilization improving – is that because of the market expectation or you guys reducing the fleet more?

No, really – well, the seasonal pickup, but also us reducing the fleet.

Okay. Okay. Thank you, guys.

Just one other thing, Scott. If the environment improves on the rental side, then, obviously, we wouldn't be reducing it as much and we'd look to capture more of it.

Okay. Thank you.

Right? Thank you, Scott.

We'll go to David Ross of Stifel. David Ross - Stifel, Nicolaus & Co., Inc.: Yes. Wanted to get out of FMS for a second and talk about Dedicated. Can you talk about why the Dedicated fleet is aging? I mean, because you've seen such nice growth, I would expect it to stay fairly flat in terms of an average age. And then also, are these higher operating costs something that's normal in an aging fleet or is there something else going on there?

Yes, David, two things. One is, if you look at the mix of business, as Robert shared, we did see slower sales in the second half of 2016. So we're not seeing the same level of new vehicles coming into the fleet. And then, I think, intentionally, we have deferred going out and doing some replacement activity to really take advantage of the on-ground equipment that we have with our business model from the FMS side. Both of those have picked up our vehicle age about four months from our three-year typical average, so that's what's impacting the numbers. David Ross - Stifel, Nicolaus & Co., Inc.: So is the average dedicated contract a six-year contract? I always thought it was a little bit shorter than that.

It's typically three to five. So we have certain contracts that are five years and then on the short side you're going to see three years. And typically we'll take advantage of on-ground equipment to provide customers with immediate access to vehicles. David Ross - Stifel, Nicolaus & Co., Inc.: So most Dedicated contracts start with a used truck?

It's a combination. Some is with the used truck and others, especially when we're introducing a new fleet, they would start off with a brand new equipment as well. I would say it's about 50%/50% traditionally and now we've taken that down from that to take advantage of the on-ground equipment.

Yes. I think the biggest driver, though, David, if you think about it is just growing – we're growing Dedicated right now at 2%. So you're not getting – as John mentioned, you're not getting the influx of new units that helped kind of keep that age stable. So it has aged out a bit and when it ages out a bit, you do get some pressure on the cost side. David Ross - Stifel, Nicolaus & Co., Inc.: And then on the SCS side, I was surprised to see the strength isn't going to be continuing, because there's nothing in the first quarter comment that made it sound to be one-time. Can you talk a little more about first quarter and why it was so unusual and the strength there won't continue?

Yes, David. This is Steve. If you remember, Robert mentioned some of the big wins that we had late last year, so we're catching the tail of those if you look across the portfolio, mainly in the auto business. The pipeline remains strong and we're seeing good growth across the other. But as you think about our business, there is some lumpiness to it. In auto, we also go through model mix changes. It's some of the plants that we support, so there is some downside there that we've already gotten a number. Just part of the business for us. David Ross - Stifel, Nicolaus & Co., Inc.: Okay. That business win, is it a one quarter phenomenon? It should have a tail to it, so I would expect at least current business levels to stay roughly in line, but maybe with normal seasonality. Or is there something on the profit side where they're more profitable at the beginning?

No. No, I would say the profitability is flat, really, across the relationship or the term of the agreement. But what you have is these – some of these startups are very large in nature. So you get a real big pop over about a three to nine-month implementation cycle, if you can imagine starting up a new plant supporting production, and then that levels out and that's when you catch the tail the next year.

If you think about, these are accounts that were started second quarter of last year or, let's say, third quarter. So you're now catching – the lift in revenue and earnings that you got from those accounts is kind of catching its tail. Now, what Steve mentioned is, good news is sales pipeline is strong. We had a good sales quarter, I think I should mention that, across all businesses. We saw good sales activity. So let's just start building up again for growth in the future, but we're just not going to get it here in the balance of the year. David Ross - Stifel, Nicolaus & Co., Inc.: Okay. Thank you.

Thank you.

At this time there are no additional questions. I will turn the conference back to Mr. Robert Sanchez for closing remarks.

Okay. Thank you, everyone. We're at the top of the hour, so I think we got to all the calls that we had. Again, appreciate everybody getting on the call, appreciate your continued interest as we work our way through this and look forward to seeing you as we hit some road shows and conferences. Thank you.

That concludes today's conference. Thank you for your participation.