Good morning. My name is Steven. I will be your conference facilitator today. I would like to welcome everyone to the UPS Investor Relations Third Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise and after the speakers’ remarks there will be a question-and-answer period. [Operator Instructions] It is now my pleasure to turn the floor over to your host Mr. Scott Childress, Investor Relations Officer. Sir, the floor is yours.

Good morning and welcome to the UPS third quarter 2020 earnings call. Joining me today are Carol Tomé, our CEO; and Brian Newman, our CFO. Before we begin, I want to remind you that some of the comments we'll make today are forward-looking statements within the federal securities laws and address our expectations for the future performance for operating results of our company. These statements are subject to risk and uncertainty, which are described in detail in our 2019 Form 10-K, subsequently filed Form 10-Qs and other reports we file with the Securities and Exchange Commission. These reports, when filed, are available on the UPS Investor Relations website and from the SEC. During the quarter, GAAP results included a pretax charge of $44 million, equivalent to $0.04 on an earnings per share basis. The charge resulted from transformation-related activities, primarily in the International and U.S. Domestic segments. In the prior year period, GAAP results included a pretax charge for transformation cost of $63 million, equivalent to $0.06 on diluted earnings per share. Unless stated otherwise, our comments will refer to adjusted results, which excludes transformation cost. The webcast of today's call, along with the reconciliation of non-GAAP financial measures, are available on the UPS Investor Relations website. Following our prepared remarks, we will take questions from those joining via the teleconference. [Operator Instructions] Please ask only one question, so that we may allow as many as possible to participate. You may rejoin the queue for the opportunity to ask an additional question. And now, I'll turn the call over to Carol. Carol Tomé: Thank you, Scott. We are moving quickly and operationalizing our strategy under the better, not bigger framework. We're leaning in on the wildly important areas of our business and tackling challenges head on. This morning, I'm pleased…

Thanks Carol and good morning. Overall we are pleased with our results in the quarter. As I share the details you'll see early indications that our actions are having a positive impact on our operating performance and financial returns. I'll also share the trends we are seeing as we approach year-end. Starting with the macro environment. The global economy continue to feel the effects of the coronavirus pandemic. Global trade has generally improved with Asia outbound leading other geographies. However both global and U.S. real GDP growth rates in the third quarter are estimated to be down 3.7%. In the U.S. consumer confidence has held up well. However industrial production remains mixed. Auto manufacturing has fully recovered, but it will take more time for all industrial production to return to pre-COVID levels. So what does this mean for our business? We see no signs that the structural market shift to e-commerce will slow anytime soon. In fact forecasters estimate the e-commerce share of retail has been advanced by two to three years due to the pandemic. And at the same time, we expect the commercial side of our business to face continued softness extending into 2021. During the quarter, we adjusted our network and took deliberate actions to better position UPS for the future. Three key items underscored our performance. First, both the International and Supply Chain and Freight segments delivered record profits. We executed extremely well within a tight capacity market and we're able to meet high demand out of Asia. Next in the U.S. SMB growth accelerated and our revenue quality actions began yielding results. And lastly, we faced both planned and unplanned expense pressures in the U.S. Domestic segment. For the quarter consolidated revenue increased 15.9% to $21.2 billion. Operating profit totaled $2.4 billion or 9.9% higher…

Thank you. We will now conduct a question-and-answer session. [Operator Instructions] And our first question will come from the line of Amit Mehrotra. Please go ahead.

-- the call and to ask the question. Carol I think it's still early days with respect to transform -- transfer -- the Transformation 2.0, 3.0. But the facts as it relates to the third quarter the profits in the domestic business were down over $100 million from the prior period revenues were up almost $2 billion. When does that equation could shift? And when do you think you'll be able to maybe report more positive operating leverage and margin expansion in the business? Carol Tomé: Well, Amit, thank you very much for your question and let's just unpack the performance on the expense line a little bit more than Brian did. Brian called out three drivers of deleverage in the U.S. business in the third quarter the first of which was our decision to speed up our fastest ground ever initiative. That decision cost us $179 million in the quarter. It was the right thing to do because you saw the market share gains that we enjoyed with our SMB business. So, it was the right thing to do but it certainly puts some pressure on the expense line. If you back that out our expenses -- our operating profit would have grown year-on-year. The other line item that was a deleverage in the quarter was productivity below our expectations. And here we have a real opportunity as we turn that around looking past the fourth quarter of this year and into 2021 and 2022. One reason for the decline in productivity is the fact that we had 40,000 new UPSers and higher turnover this year than we did last year. Turnover is a function of many things including COVID candidly. But when you have a lot of new people in your operations, sadly we just weren't as productive as we should have been. We have a new leader over our U.S. Domestic small package business. Nando is all over this and productivity is going to be a laser focus of Transformation 3.0. And it's not just about putting more packages through our facilities on a per hour basis. It's about how we get better at running the business better at keeping our people, so we lower our cost of turnover; better at keeping our people safe, so we lower our casualty reserves. There's a real opportunity here to just get better in running the business without a lot of investment actually. So, we are building our 2021 financial plan as we speak. We're road mapping three years and once that plan is finalized, we will share with you our actions that we are taking to grow the operating margin in the U.S. small package business.

Yes, I appreciate that Carol. But I mean just to make sure that I understand your comment. Are you saying that starting in the fourth quarter because of some of the idiosyncratic cost in the third quarter that the business will return to positive operating leverage in the fourth quarter and that will extend into 2021? Is that what you're saying if I'm understanding you correctly? Carol Tomé: That is not what I'm saying. The turn won't happen until 2021 because of expense pressures that Brian carefully called out in the fourth quarter. And Brian you might just want to remind Amit what those expense pressures are in the fourth quarter.

Yes. As we look forward to the fourth quarter Amit, we do have the underlying benefits as Carol said of optimizing volume and improving pricing. But there are three in particular, that Q4 headwinds. We've got the seasonality, which you know, year-over-year we normally go about down 200 basis points on a sequential Q3 to Q4 standpoint because of peak, so there's that natural seasonality impact. We've got benefits, ranging in $150 million to $200 million that will be impacting Q4. And then, we're lapping last year, we had some legislation around alternative fuel tax as well as a low management incentive number last year. Together, those are about $150 million lap. So those combined with the fastest ground ever that we'll finish off in Q4 investments that's going to put pressure on the fourth quarter as we look forward.

Okay. Carol Tomé: Now, at the end of the second quarter, we said that we thought that the operating margin for the back half of the year could be 100 basis points lower than the operating margin in the first half of the year. Because of our outperformance in the third quarter and because of the revenue quality that we are enjoying in the U.S. business, we now think the operating margin in the back half of the year will be higher than the first half of the year. So hopefully, that's helpful to you as you build your models.

That’s very helpful. Thank you, Carol. Thank you, Brian. Appreciate it.

Thanks, Amit.

We have a question from the line of Chris Wetherbee of Citi. Please go ahead.

Hey. Thanks and good morning. Carol, you talked about CapEx on the call, and I thought that was kind of interesting. I think the comment was significantly lower than 2020, which I think is running just under -- or maybe I guess $5.6 billion. Can you talk with a little bit more specificity about, what that significantly means and sort of where you potentially see that savings? It seems like there's a lot of growth out there, so I want to get a sense of kind of the order of magnitude we might be talking about. Carol Tomé: Well, we are finalizing our capital plans as we speak. But for modeling purposes, I would use $4 billion. So that's a significant reduction from what we're running today, and it's really a reduction across all major categories of our capital. As we've unpeeled the layers of the onion, we've discovered an opportunity to sweat our assets in a more efficient way. We have over 500 hub sorting facilities in our U.S. business over 1,000 delivery facilities. And as I look at the capacity utilization in those facilities, we've got opportunities. Now clearly we need to work with our customers to optimize the fixed investments that we've made, but we clearly have opportunities here to sweat the assets. The same is true with the airlines. As we think about where the demand is going for next-day air in the United States versus where the demand is exploding outside of the United States, we have an opportunity to optimize our aircraft globally. So, that's enabling us to take our capital down. Brian, any color you want to add there?

Yeah, just a little bit. Chris, as you shape next year and we think about pulling the buildings, buildings represent about 50% of our CapEx we spend. We've made those investments in capacity, so you'd expect to see that come down, the airline to likely come down. And it's this pivot to international healthcare digital that's where, we're pivoting the capital spend.

Great, thank you very much. Appreciate.

We have a question from the line of Allison Poliniak, Wells Fargo. Please go ahead.

Hi, guys. Good morning. Just turning to the SMB initiatives, clearly gaining some share there. There's a lot of expense noise in the quarter. But when you put that aside, is the incremental pull-through from those volumes that you're getting on SMB, where you thought they'd be at this point of the cycle, the investment cycle for you? Are they better? Any color on that? Carol Tomé: Yeah, happy to give you some color on the SMB volume. We were so pleased to see 18.7% growth, the highest in 16 years. If I think about SMB, as a percentage of our total business in the United States, it's grown from 23% last year to now 24% this year. So we're shifting the penetration, which is really about how we want to drive revenue quality in our business. If you unpeel the layer of the onions for our SMB business in the quarter, we see that they're figuring it out. The commercial side of SMB was down, call it, 7% in the quarter, but the residential piece of SMB was up 62%. So they're figuring out how to go to market and they're using our end-to-end network to drive that. So if you then say, Okay. Carol is that flowing down to the bottom line? Well, we were very pleased with what we saw in that regard too. So, we will continue to invest in this customer segment. You've heard us talk about fastest ground ever. It doesn't just stop with that. I think last time, I talked about how we break apart our customer segments within SMB, and I told you it was D1 through D4, and I didn't really know what that meant. Well, the team has done a really great job of defining what it means. So now when you think about our SMB customers think of them as medium, small, micro and platform. And when you think of those customers, think of it like a pyramid. So, at the top of the pyramid are our medium-sized customers and those are several thousands of accounts. And as you go down the pyramid, the customer base will expand dramatically. From a revenue perspective, flip the pyramid upside down. So the bulk of the revenue is at the top and the smallest piece of the business is at the bottom. But interestingly, when we looked at the performance of SMBs across all four of those segments, we saw each of them grow. And the growth came from our medium-sized businesses as well as our platform businesses. And within platform or the platform segment that's where GAAP falls. And yes, GAAP is small, but it's growing. In fact, we expect our revenue on our GAAP accounts to grow 400% this year, and that is a very profitable segment for us.

Great. Thanks for the color.

We have a question from the line of David Ross of Stifel. Please go ahead.

Yes. Good morning, Carol. Good morning, Brian.

Good morning.

Carol you made a comment in one of your interviews about green dots and red dots and coming in and looking at initiatives to see what you should stop doing and what were wildly important. Could you just add some more color specifically mainly around some of the red dots that you guys came up with? Carol Tomé: Yeah. So – well, thanks for the question. It was such an interesting exercise because when we started it all the green dots went up, but it was really hard to put red dots up, because initiatives you love them, you fall in love with them you find themselves they sound like they're really value creating but the truth is not so much. So I can give you an example of one. We have this initiative called UPS Next and UPS Next was all about driving innovation in the company. Well, when we looked at what the UPS Next team was working on, they were working on exactly the same projects as other groups within the company, so we put the red dot on UPS Next. And all those people who were working on that project, well, they are either gone or they'd be reassigned to additional work. So that gives you a sense of what we mean by stopping work. We are so opportunity rich. Let me give you another example. We haven't stopped this yet but we're going to. So I asked Nando. I said, Nando how many reports do we ask our operators to work every week? Because I had familiarity with this in my previous line where we tend to put too much work on our operators and they couldn't focus on things like productivity. So Nando came back and said, Carol we send 462 reports to our operators every week to work. So you can appreciate what that means. It means none of that is being worked. That's work that's going to stop. And think about the overhead here at the UPS headquarter that's producing those reports. So that's all being streamlined to those widely important metrics that matter for the customer experience for productivity and the rest is just going to get stopped.

Thank you. Carol Tomé: You're welcome.

We have a question from the line of David Vernon of Bernstein. Please go ahead.

Hey, Carol. Thanks for the time. I just wanted to, kind of, maybe talk about a similar thing. As you think about changing those behaviors inside of the company and stopping those activities, you're coming into the CEO seat from the Board level, what surprised you about that transition? And how long do you think it will be before those changes you're making concern into the tangible operating leverage that the Street is so desperately looking for inside of the domestic business? Carol Tomé: Well, as a Board member, I was always so very impressed by how UPSers respond to a crisis. In many ways UPSers are first responder. They're always there to help the communities and customers that we serve. Coming into the company I was blown away by our reaction to COVID. UPSers are essential workers and I'm just so proud of them for what they do every day. They actually -- we all work, but they're actually going to work. They're putting on uniforms and they're flying planes and driving package cars and delivering packages and sorting packages and I'm just so proud of them. What I didn't understand is how we went about what we do. UPS is a 113-year old company and many 113-year old companies they layer in bureaucracy and processes that are fine but actually slow you down. So -- what I didn't know when I came on board is that we had 21 committees that were meeting to make decisions about the business. 21 committees take -- just the amount of calendaring time to meet and discuss and recommendations would be held until the committee meeting occurred. And that's not a way to run the business or effect change quickly. So we took those 21 committees down to six. And the fantastic thing is that the UPSers are -- they're energized by this. I was really worried about being rejected. That's not happened. The UPSers are embracing me. They're embracing change. They're excited about what we can do together as a company. And what this allows us to do actually is to without debate or controversy talk about the real opportunities to move and to get movement on the U.S. operating margin. And part of that is about controlling our own destiny by improving the revenue quality in our business, working with our customers to enable that to happen to look at the root cause of why we've been deleveraging and going after that in a meaningful way. In the past, we did it by increments. We're now doing it in a meaningful way, in a meaningful way. So if I told you that our casualty reserves that are driven by both workers' comp and either all the liability, Brian they stand at how much?

Today we're over $1 billion. Carol Tomé: We're over $1 billion in casualty reserves. You get a 10% reduction in that because you have a safer operation that's $100 million. $100 million can move that U.S. operating margin in a meaningful way. If I talk to you about the cost of turnover, which I'm not going to do but the cost of turnover is high for our company. We've got 20% of that. It's another meaningful way to move the operating margin. If we improve delivery density, which we must do we have had ideas on the shelf to do that. We just haven't operationalized though. That's a meaningful way to improve the operating margin. So this is a big company. You just can't pull the band-aid off because you could hurt the customer experience and we don't want to do that. But as we start to pivot into this through the fourth quarter into 2021, we're going to be laying out tangible action plans that will show improvement in the operating margin. And then as we optimize our capital spending this will all translate into higher return on invested capital.

We have a question from the line of Allison Landry of Credit Suisse. Please go ahead.

Good morning. Thanks. So Carol, you've talked about a focus on what customers are willing to pay for and optimizing the volumes that flow through the network. And clearly you're starting to see that with the step-up in SMB growth. But should we also interpret this as a signal that you might de-market some volume from large customers that aren't meeting the return thresholds? And if that's the case, over what timeframe can you drive enough profitable share gains from SMBs that would allow you to walk from some of the lower-margin business? So if you could just speak to how you're balancing this and while at the same time trying to maximize asset utilization? Thank you. Carol Tomé: Yes. So as you know, there is a capacity constraint in the industry. It doesn't matter what supply chain you are there's a capacity constraint in the industry. And if we took all the volume that was available to us we would end up with a customer experience that wouldn't be good for us or our customers and we would end up with what we call chaos costs. So we've actually been controlling the volume since July and we're doing that in a number of different ways. We work with our customers to help them rethink their operations via buy online pick-up in store different timing for their promotions a different availability of their packages so a number of alternatives and options that we've been working through a solution-based approach with our customers. When you have tight capacity, it also means that prices tighten. And as prices tighten there is a shift in certain customers who are more price-sensitive than others. We're okay with that if we're losing non-nutritive sales. We're okay with that. It's not about volume share growth. It's about value share growth. So that's how we'd like you to think about us at least in the short-term value share growth. Now clearly the U.S. small package business is going to grow. It's estimated, I think the volume ADV was something like $58 million in 2019. It should double by 2025. Of course, we're going to be growing to service that growth. But right now it's all about value share.

We have a question from the line of Scott Schneeberger of Oppenheimer. Please go ahead.

Thanks very much. Good morning. I wanted to focus a little bit on international very strong in the quarter acceleration export volume growth third quarter from second quarter. Just wanted to discuss kind of the trends through year end you think. And maybe beyond how sustainable is this strength in international? And Brian -- I missed what you said about -- you said had high teens. I didn't know if that was profit growth or margin in fourth quarter, but if you could elaborate a little bit on sustainability and margin in that segment? Thanks.

Thanks, Scott for the question. So from an international perspective very happy with the Q3 performance. They continue to post double-digit top-line and profit growth and the real strength is coming out of Asia and Europe in particular. I was referencing operating profit growth in the high-teens Scott was what I had commented on. And the operating margin has come in about 23% for the last two quarters. A lot in the international side depends on the international backdrop. So obviously, we're watching that very closely. But the overall business is sound. Carol, I don't know if you have anything to add. Carol Tomé: Well, the one comment I would make on the margin which was outstanding and the profit growth in the third quarter we did have surcharge in the third quarter because the capacity is just so tight. So we've had about $120 million of surcharges in our international business in the third quarter. Whether or not that sustains is really a subject of market demand. Hopefully that's helpful to you.

We have a question from the line of Ravi Shanker of Morgan Stanley. Please go ahead.

Thanks. Good morning, everyone. Carol, you highlighted big CapEx cuts coming next year. How do you make sure that you are kind of keeping pace with others who are investing significantly to grow their capacity? And kind of going back to what you just mentioned about value share is that something UPS can do by themselves if the rest of the industry is going to try to take share and kind of aggressively grow capacity and pursue that growth? Carol Tomé: So this is all about our better, but not bigger framework, which is a start of pivoting the business to position us for success in the future. Sweating the existing investments that we've made is a really good thing next year. Then we'll look at where we want to grow and how we want to grow. But for next year we're going to sweat the investments that we've made. Brian you might want to talk about that.

Yes. Ravi, it's a good question. If we look backwards first we put over $15 billion in the capacity in the U.S. over the last several years and that was needed. But now 85% or so of our ground volume is going through some sort of automated capacity and hub. So as we're looking at that, those investments I've watched the ROIC actually trend down. A real focus going forward is going to say "How do we lower CapEx, ensure it's driving shorter-term paybacks to get better benefit" and I talked about where we're going to shift to in terms of healthcare some specific to international markets thinking about digital. So it's a different type of spend going forward but I don't want to front-run the investor conference next year. We'll unpack that in more detail. Carol Tomé: And I would comment just on the technology front because that's such an important area of investment for us well for everybody actually. The customer wants a digital experience and so we can't move off of that digital experience. In fact, we need to lean into that. But that isn't necessarily a capital expenditure because software as a service as you know is paid through a license fee. So we're moving away from an internally developed IT solutions to software as a service. So you'll see line items differences happening. The other thing I would ask you to remember is as we grow outside of the United States, our International business tends to have an asset-light profile in most areas of the rest of the world and that asset-light profile will certainly help spur growth and generate higher returns.

Great. Thank you.

Jordan Alliger of Goldman Sachs. Please go ahead.

Yes. Hi, good morning, everyone. I just wanted to come back to the fourth quarter a second. Obviously, you mentioned, some puts and takes on the expense side balanced against sort of the revenue quality. And then you sort of highlighted a normal sequential domestic decline of a couple of hundred basis points. I mean, should we be thinking then in terms of the fourth quarter domestic margin on a base level sort of holding on to that first half margin of around 6.6%, 6.7%? I mean is that – when you put all the puts and takes together is that the baseline we should be thinking about?

Hey, Jordan, it's Brian. Thanks for the question. That's a fair baseline. We had some pressures in the third quarter which we discussed. But as you go forward, thinking about the $8.6 million that we posted in the third quarter, the first half of the year was 6.6%. So as you look to the back half of the year assuming a baseline of 6.6% is a fair assumption. And we're going to do everything we can to beat that. We're seeing improvement on the pricing and the revenue quality side. The challenge are the headwinds I outlined for the fourth quarter. So balancing those two is going to dictate where we land.

Okay. Thanks very much.

Thanks, Jordan.

Jack Atkins of Stephens. Please go ahead.

Good morning and thank you for taking my question. Just curious if you could comment for a moment, given the surge in the virus that we've been seeing in Europe over the last several weeks, if that's had any impact on business trends there. Or just if you could comment broadly on if that's had an impact on the market in Europe Carol Tomé: So our business trends continued to be very strong coming out of our International business. There's a big watch out there because of COVID. We see cases spiking. It's concerning right because if we were to have disruption let's say in our pilots that would be a real problem. And we haven't seen that but we're just watching this very, very closely.

Tom Wadewitz, UBS. Please go ahead. Mr. Wadewitz, your line is open.

Stephen, do you want to move to the next caller?

We will do. Our next question will come from the line of Scott Group of Wolfe Research. Please go ahead.

Hey, thanks. Good morning. So, you said revenue better than volume in the fourth quarter. Is that a sustained inflection or more of a one-off with the record surcharges? And then Carol you made – I had a great line last quarter about the Bs and referring to billions of cost savings. Just directionally should we be thinking $1 billion plus or potentially multiple billions of cost savings here? Thank you.

So, Scott I'll take the first piece of this in terms of the pricing. If you look at the underlying health of the price and the quality of overall revenue really it's more than just pricing. But as you look at the second quarter, you'll remember, I peeled out fuel and SurePost to give you a good read at the growth and we were 1.5% positive. That was the first time we saw a positive number there in quite some time. That would equate to 3.6 in the third quarter so you see that sustained momentum. We'd expect to see continued improvement there. The question then comes down to the balance in terms of B2B, B2C and SMB and how we flow through. So we're trying to pivot the business as we walk through. But I think you can look for underlying continued improvement in the RPP ex fuel and SurePost. Carol, do you want to comment on the B? Carol Tomé: Yes. So we've got Transformation 1.0 coming to a close. So we'll turn to Transformation 2.0, which the first wave of Transformation 2.0 was the VSAP that we announced this fall. We offered that VSAP in two waves to over 11,000 UPSers. Thus far we've had about 1,600 people apply. We'll land at something around there or maybe a little less. So you can do the math of what that might translate into savings, that's not $1 billion. That's several hundred million, but it's the first phase of Transformation 2.0. There are more activities that will come. We're just not going to tell you before we tell our people, but there are more activities that will come in Transformation 2.0. When you think about Transformation 2.0, think about that attacking non-operating expense, in other words general overhead. It's going after spans and layers, it's going after labor arbitrage that sort of opportunity. The real money and candidly our non-operating expense is about $6 billion on an annual basis. So the real opportunity to get billions out is in the operating side of our business, and this is all about productivity and going after those big buckets of costs that we need to turn down to add up to $1 billion. We're going to have an investor conference in 2021, when things calm down. I don't know Brian what we're thinking about?

Early June. Carol Tomé: Early June, okay. So, hopefully COVID settled down. We can do a good conference in June of 2021 and then we'll lay this all out for you. I just don't want to get ahead of my skis. It was a downhill race for a long, long time, and if you get ahead of our skis you tumble down the mountain. I just don't want to do that. So we're just going to be very, very thoughtful very planful about this. And then we'll lay that out for you, so that you can hold us accountable to what we said we're going to do.

We have a question from the line of Jairam Nathan of Daiwa. Please go ahead.

Yeah. Thanks for your question. I wanted to -- a bit better than bigger theme. I wanted to understand how you're changing your incentive compensation in -- to align with that. And just one modeling your fuel expense was higher sequentially significantly. And was there anything in there that we should consider?

On the fuel side, Jairam, we saw about $60 million in benefit in the quarter, $30 million of that coming -- roughly half of it coming in domestic and half international. We'd expect that to moderate in the fourth quarter. So, it stepped down from Q2 to Q3 by about 50%. We'd expect that to continue to step down in the fourth quarter. Carol, do you want to… Carol Tomé: One of the widely important initiatives is people. And as we look at the people opportunities incentive compensation is certainly one of those opportunities. The design of our incentive compensation doesn't necessarily tie to the results that we want to achieve. So we're going to be resetting the goals to make that happen, to make them much more return focused. They were two line item focus if that makes any sense. So you get bonus off of revenue per piece. That's an incomplete look at the business, isn't it? Because it doesn't have the cost and it doesn't have the capital. So we'll be re-looking at the elements of both our short-term, which is our annual bonus as well as our long-term. Our long-term incentives do have a return characteristic to them, so that's good. But I really want to work on the short-term incentives. Also, we're going to redo our sales incentives for our sales team. They're so complicated. I tend to think I can understand math. I had a hard time figuring this out. So we're going to simplify this, so it's really easy for people to understand how they get paid and actually tie the incentives to better not bigger.

Stephen, it's Scott. We've got time for one more question if you would.

The last question will come from the line of Tom Wadewitz of UBS. Please go ahead. Tom maybe stuck on mute.

One more question to the next caller please.

Our next question will come from the line of Brandon Oglenski of Barclays. Please go ahead.

Hey, everyone. Thanks for sneaking me on here. Carol, I guess thinking about not wanting to repeat mistakes of the past. If we go back two predecessors ago, CapEx came down a lot. And you do have independent contractor competition effectively doubling your growth rate right now. So how do you balance the need for productivity and growth as well as achieving that higher value with lower CapEx? Carol Tomé: Right. So to your point, it's a balance and we're well aware of the changing competitive environment and the changing customer environment and are thinking through how to best attack those opportunities in ways that are different than what we've done in the past. And that's just a hint of what's to come, but we'll be talking more about that next year.

That concludes our call. And I want to thank everyone for participating on today's call and have a great day. Thank you.