Werner Enterprises, Inc. (NASDAQ:WERN) Q4 2023 Earnings Call Transcript

Werner Enterprises, Inc. (NASDAQ:WERN) Q4 2023 Earnings Call Transcript February 6, 2024

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Operator: Good afternoon. And welcome to the Werner Enterprises Fourth Quarter and Full Year 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Chris Neil, SVP of Pricing and Strategic Planning. Please go ahead.

Chris Neil: Good afternoon, everyone. Earlier today, we issued our earnings release with our fourth quarter and full year 2023 results. Release and a supplemental presentation are available in the Investor Section of our website at werner.com. Today’s webcast is being recorded and will be available for replay later today. Please see the disclosure statement on slide two of the presentation, as well as the disclaimers in our earnings release related to forward-looking statements. Today’s remarks contain forward-looking statements that may involve risks, uncertainties and other factors that could cause actual results to differ materially. The company reports results using non-GAAP measures, which we believe provides additional information for investors to help facilitate the comparison of past and present performance.

A reconciliation to the most directly comparable GAAP measures is included in the tables attached to the earnings release and in the appendix of the slide presentation. On today’s call with me are Derek Leathers, Chairman and CEO; and Chris Wikoff, Executive Vice President, Treasurer and CFO. Derek will provide an update on our 2023 accomplishments relative to our Drive strategy, highlights of our fourth quarter results and a market outlook. Chris will cover our financial results in more detail, including the 2023 achievement of our cost savings program and provide 2024 guidance for key financial and operating metrics. I’ll now turn the call over to Derek.

Derek Leathers: Thank you, Chris, and good afternoon, everyone. We appreciate all of you joining the call today. Clearly, 2023 was a prolonged and challenging operating environment. Our earnings were down and did not meet our expectations. However, we made structural improvements that will set us up for future success as normalization returns. Our Dedicated business proved to be durable and resilient. Our One-Way Trucking business rate per mile decline was more favorable than industry benchmarks, and our Logistics business generated full year volume and revenue growth. Despite the backdrop, our leadership team and nearly 14,000 talented Werner team members stayed the course, executing on our strategy, upholding the Werner brand and reputation, making safety our top priority and providing superior service to our highly valued customers.

Let’s turn to slide five to highlight some of our accomplishments in 2023 that created optimism for 2024 and beyond. Our Drive strategy continues to help inform our decisions and lead to acceleration across our core businesses. In 2023, our Dedicated business performed as expected, showing durability and resiliency in one of the most challenging operating environments that I’ve witnessed in my 30-plus years in the industry. We grew Dedicated revenue per truck for the ninth year out of the last decade. And despite the market backdrop, Dedicated performed within our TTS operating margin target for the year and we expect to see margin expansion when normalization returns. On our results, in addition to Logistics growth and operational excellence within One-Way to mitigate rate per mile decline, we executed on structural cost changes, realizing $43 million of savings.

We also leaned into greater network optimization, engineering and improved productivity, which helped to offset rate pressure, cost inflation and declining resale values of equipment. Separately, operating cash flow margin remained solid and supported reinvestment in the business. We lowered the average age of our fleet, reduced debt and returned capital to our shareholders through an 8% dividend increase in 2023. We made disciplined investments towards our continued pursuit and industry leadership of innovation. Our fleet remains modern, safe, reliable and fuel-efficient. We also made significant advancements in our technology stack by transitioning Truckload Brokerage, including Reed and Intermodal business to our new cloud-based EDGE TMS solution.

In 2024, we are transitioning our One-Way business to the Werner EDGE platform. This continues to be a journey, but we remain excited about the long-term value. By channeling all freight through Werner EDGE, we are committed to a better customer experience and lower cost of execution through improved visibility and optimization across all of Werner. Our core values guide our decisions and behavior every day as we keep America moving. With integrity as our foundation, safety and service is ultimately what Werner stands for, built on the pillars of inclusion, community, innovation and leadership. We are proud to be recognized in 2023 as one of America’s greatest workplaces for diversity, parents and families. We realized a 19-year low in our preventable accident rate due to the hard work of our drivers, mechanics and safety associates working together.

As always, safety remains our top priority and is demonstrated by our team members every day, one mile at a time. Relative to ESG, notable milestones include naming a Lead Independent Director for our Board of directors, increasing our Blue Brigade volunteer hours to over 3,300 hours and doubling driver training hours to bring awareness to human trafficking. These and other accomplishments are described in more detail in our Third Corporate Social Responsibility Report released in November. Before we move on, I want to acknowledge the appointment of Nathan Meisgeier as the next President of Werner Enterprises. On January 5th, the Board unanimously approved, at my recommendation, the promotion of Nathan. I could not be more excited about this progression in our company’s history.

Nathan has been our Chief Legal Officer and a transformative executive leader for nearly two decades at Werner. While his background is impressive, including being a Harvard Law School graduate, what stands out to me the most is Nathan’s integrity, servant leadership, vision and embodiment of the Werner culture. And to be clear, I’m not going anywhere. I’m excited about our future and partnering more with Nathan going forward. Let’s move on to slide six and highlight our fourth quarter results. During the quarter, revenues and net of fuel surcharges decreased nearly 2% versus the prior year. Adjusted EPS was $0.39. Adjusted operating margin was 4.8%. Adjusted TTS operating margin was 7.5% net of fuel surcharges. Dedicated remained solid and resilient, delivering another quarter of strong customer retention and revenue per truck growth, a stable fleet in the second half of the year and double-digit adjusted operating margins for all of 2023.

As we anticipated heading into the quarter, One-Way Truckload remained challenged by ongoing pricing pressure. We remained focused on long-term pricing discipline and continued our positive utilization trend. Miles per truck increased by nearly 9% in the quarter, the third consecutive quarter of improvement as we further engineered the fleet. Within Logistics, fourth quarter volume was strong and revenue grew over 6% year-over-year, extending the 13 straight quarters of year-over-year growth. In short, freight conditions remained challenging in the fourth quarter with lower rates despite stable customer demand and slightly better than expected peak volume. In spite of this, our results continue to reflect a business model that is durable, diversified and resilient.

Moving to slide seven to highlight our current view of the market, we expect a challenging freight market to continue through the first half of 2024. While data points suggest capacity should exit at an accelerated pace, the reality is that it continues to be modest, leaving excess supply. Inventory levels have normalized and destocking appears largely complete, although we are not seeing broad restocking. The go-forward trend in consumer demand will be the focal point to normal replenishment. And while consumer sentiment has improved, mixed data points and themes impacting near-term spending leave us remaining cautious. Spot freight rates remain low and are not expected to improve until the second quarter. A more balanced supply and demand environment in the second half will benefit us as we lock in more contractual freight at improving rates.

The Dedicated environment is steady and we perform well in this space, but it is increasingly more competitive. Normal customer turnover exists, but pipeline opportunities remain healthy and we continue to achieve over 93% client retention rate. The One-Way operating environment continues to be challenging, with low rates and some customers seeking cost improvement while they can. We expect ongoing pricing pressure during the early part of the 2024 bid season, although moderating later in the year. Within Logistics, the marketplace remains competitive and margins will continue to be pressured, although we are proud of the growth in Logistics, our portfolio of customers, and our deep network of qualified carriers. With that, let me turn it over to Chris to go through our fourth quarter results in more detail.

Chris Wikoff: Thank you, Derek. Let’s continue on slide nine. Fourth quarter total revenue was $822 million, down 5% versus prior year. Net of fuel surcharges total revenue was down by 2%. Adjusted operating income was $39.2 million and adjusted operating margin was 4.8%, a decrease of 56% and 560 basis points versus prior year. Adjusted EPS of $0.39 was down $0.60 year-over-year, with over 90% of the variance driven by lower equipment gains and the macro freight environment weighing down rate per mile in One-Way and margin pressure in Logistics. Turning to slide 10. Truckload Transportation Services total revenue for the fourth quarter was $580 million, down 9%. Revenues net of fuel surcharges fell 6% to $495 million. TTS adjusted operating income was $37.2 million and adjusted operating margin was 7.5%, a year-over-year decrease of 55% or 830 basis points, driven by compressed pricing in One-Way and lower equipment gains.

During the quarter, consolidated gains on sale of equipment totaled $3.1 million, a decline of 22.8 million or 88% versus prior year. While we sold 11% fewer tractors and over 60% more trailers compared to prior year period, average price and gains were significantly lower. Net of fuel surcharges and equipment gains, TTS adjusted operating expenses declined modestly, but were more than offset by TTS trucking revenue rate per mile decline during the quarter of 5% and a smaller fleet size. One-Way rate per total mile during the quarter decreased 8.6% year-over-year, combined with a smaller fleet, but benefiting from nearly 9% improvement in miles per truck. This marks the third consecutive quarter of production improvement. One-Way rate per total mile was flat from Q3 to Q4.

We saw improvements in the quarter in various TTS expense categories offset with year-over-year inflation in other categories. For example, insurance and claims were down 24% versus the prior year and full year was down 7%. Operating supplies and maintenance expense continued a favorable trend and was down versus prior year. Driver pay continues to moderate and was down slightly year-over-year, with now two consecutive quarters of a year-over-year decrease, excluding fringe benefits. Benefit expense in the quarter was up over $9 million versus prior year, driven from favorable workers’ comp reserve adjustments in the fourth quarter of 2022. In summary, given the unique and challenging operating environment, TTS operating margin for the year was below our long-range target of 12% to 17%, largely driven by One-Way.

Dedicated remained steady and durable, generating double-digit operating margins. We are encouraged to see sequential improvement in core Dedicated operating income, excluding fuel and equipment gains, for each of the last three quarters in 2023. We remain confident in returning to our target TTS operating margin towards the end of the year. Now turning to slide 11 to review our fleet metrics. TTS average truck count was 8,168 during the quarter or down just over 6% versus prior year. We ended the quarter with the TTS fleet down 1% sequentially and down 70% year-over-year. Our TTS segment revenue per truck per week net of fuel grew during the quarter by 0.2% and has grown year-over-year 19 of the last 24 quarters. These results further emphasize the resiliency of this business and our position in the marketplace.

Within TTS for the fourth quarter, Dedicated revenue was $309 million, down 2%. Dedicated represented 64% of segment revenue net of fuel, compared to 62% at the end of 2022. Dedicated average truck count decreased 3% to 5,239 trucks. At quarter end, Dedicated represented 66% of the TTS fleet. Dedicated revenue per truck per week increased 0.9% year-over-year during the quarter and 1.5% for the year, achieving growth for seven straight years and nine out of the last 10 years, growing steady across all economic conditions. In our One-Way business for the fourth quarter, trucking revenue was $178 million, a decrease of 12% versus prior year. Average truck count was down 11% to 2,929 trucks. Revenue per truck per week was down less than 1% year-over-year.

Turning now to our Logistics segment on slide 12. In the fourth quarter, Logistics segment revenue was up more than $13 million or 6%, representing 28% of total fourth quarter Werner revenues. Truckload Logistics continued to lead with double-digit year-over-year revenue and volume growth in the quarter. Shipments declined sequentially as we worked to improve revenue quality. Our Power Only solution represented a growing portion of the Truckload Logistics volume during the quarter. Intermodal revenues, which make up approximately 12% of segment revenue, declined year-over-year due to a decrease in both shipments and revenue per shipment. Intermodal volumes have been up sequentially for three consecutive quarters. Final Mile continued to show strong growth, reporting a 6% year-over-year revenue increase during the quarter, despite a softer market for discretionary spending on big and bulky products.

Fourth quarter Logistics adjusted operating income was $3 million and adjusted operating margin was 1.3%, down 250 basis points year-over-year and down 10 basis points sequentially, driven by rate and gross margin compression. We remain encouraged about the mid- and long-term benefits of our Logistics business. Given a strong customer portfolio and growing contract business, particularly in food and beverage, our growing Power Only solution, progress towards advancing our technology strategy, and long-term opportunity for growing Final Mile and Intermodal. We expect Brokerage margins will remain challenged in the near-term, while expanding operating margin later in the year from cost savings and integration. On slide 13, we provide an update on our cost savings program.

In 2023, we achieved $43 million of in-year savings as an offset to rate and inflationary pressures and low equipment gains. Majority of the 2023 savings were structural and sustainable. Cost savings will be key to expanding margin and earnings in 2024, given a freight market that will continue to be challenging in the near-term, combined with further year-over-year decline in equipment gains. We are laser-focused on a 2024 program totaling over $40 million in incremental in-year savings. Less than 15% of the 2024 program is carryover from 2023 to get to a full-year run rate on initiatives that we actioned during the year. Over 85% of the 2024 program are new initiatives that are, again, largely structural and sustainable. Let’s look at our cash flow on slide 14.

We ended the year with $62 million in cash and cash equivalents. Operating cash flow remained strong at $118 million for the quarter or 14% of total revenue. Full year operating cash flow was also 14% of revenue, and a company record at $474 million, a year-over-year increase of 26 million or 6%, and 80 basis points of margin improvement, driven largely by DSO reduction during the year. Net CapEx in the fourth quarter was $34.5 million and totaled $409 million for the year, up 29%. Free cash flow was $84 million for the fourth quarter and $66 million for the year or 2% of total revenues, down 50% versus prior year and reflecting an elevated level of net capex. Our total liquidity at quarter end was strong at $526 million, including cash and availability on our revolver.

As shown on slide 15, our net CapEx for 2023 of $409 million was below our most recent guidance range. Certain deliveries expected in the fourth quarter were moved to first quarter of 2024 and is now reflected in this year’s guidance. 2023 was an elevated CapEx year, reflecting lower year-over-year gains and a greater pace of reinvestment in the business. Our 2024 CapEx guidance is a range of $260 million to $310 million. This is within historical ranges in dollar terms, although expected to be lower as a percent of revenue as growth in our asset-light business continues to outpace truckload growth. Moving to slide 16, we ended the quarter with $649 million in debt, down $45 million or 6% compared to a year earlier. Our debt structure is primarily long-term and provides ample credit capacity for growth, with 86% not maturing until the end of 2027.

As of year-end, 57% of our debt is effectively fixed. We remain pleased with our low leverage, healthy balance sheet and long-term access to capital to fund growth and investments to expand earnings. On slide 17, let’s recap our capital allocation priorities. We will continue to prioritize strategic reinvestment in the business, remain disciplined in returning capital to shareholders and seek opportunities outside of Werner that will drive long-term shareholder value. A strong balance sheet and low leverage provides us with financial flexibility to achieve our capital deployment goals. Let’s turn to slide 18 for an introduction to our 2024 guidance. Our truck fleet guidance for full year is a range of down 3% to flat year-over-year, with the potential for growth and Dedicated in the second half.

Net CapEx guidance is a range of $260 million to $310 million. Dedicated revenue per truck per week full year guidance range is flat to positive 3%. One-Way Truckload revenue per total mile guidance for the first half of the year is down 6% to down 3%. For the used truck market, we expect continued low demand with moderating pricing and equipment gains through the first half of 2024. We reach $42.4 million in equipment gains for 2023 and 2024 gains are expected between $10 million and $30 million. We expect net interest expense this year will be flat to $10 million higher than 2023, driven by repricing our term loan that is maturing in the second quarter, interest rate swaps that are expiring and uncertainty on the timing of Fed easing, offset with debt reduction during the year.

Our effective tax rate for full year 2023 was 24%. Guidance range for 2024 is 24.5% to 25.5%. The average age of our truck and trailer fleet at year-end 2023 was 2.1 years and 4.9 years, compared to 2.3 years and five years, respectively, at the end of 2022. We anticipate staying near two years and five years through 2024. I’ll now turn it back to Derek.

Derek Leathers: Thank you, Chris. 2023 was a very challenging year for Werner, but we took measured steps to improve our operations, lower the average age of our fleet, improve safety, reduce costs and reduce debt. As we strategized for 2024 and met with the senior leaders across the company, we identified three primary pillars to generate earnings power and drive value creation this year. First is driving growth in core businesses, which is comprised of returning our TTS adjusted operating income margin to within our long-term range, growing Dedicated fleet and total revenue on a year-over-year basis in the back half of the year, expanding One-Way utility, Power Only and Mexico cross-border, and continuing to generate double-digit revenue growth in Logistics while getting back to mid-single-digit operating margin percentage entering 2025.

Second is operational excellence as a core competency, which we will deliver through maintaining resolute focus on safety, our number one priority at Werner, advancing our technology roadmap through the transition of our One-Way businesses to our cloud-based EDGE TMS and executing on our 2024 cost savings program. Lastly is focusing on driving capital efficiency through process optimization. This includes streamlining business processes, maintaining strong operating cash flow and optimizing working capital, and expanding free cash flow generation and margin through disciplined CapEx and equipment fleet sales. We are 100% committed to executing on these objectives and believe with high conviction that they are the right actions to generate margin and earnings improvement during the year.

We have proven our ability to generate earnings power as demand accelerates. This roadmap of our commitment, combined with the resiliency and dedication of all of our associates, will confirm that history does indeed repeat itself. We look forward to providing you with updates on our progress against our 2024 pillars as the year progresses. With that, let us open it up for questions.

Operator: [Operator Instructions] This call will end at 5 p.m. Central following the company’s prepared remarks. The first question today comes from Bruce Chan with Stifel. Please go ahead.

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Q&A Session

Bruce Chan: Yeah. Thank you, Operator, and good afternoon, everyone. Let me just want to start off by leaning into the cost savings a bit. You gave us some good color on where those savings are filtering in from. Is there any overlap between the savings and Werner Bridge or is Bridge more of an opportunity to add revenue and a market recovery on your existing cost base?

Derek Leathers: Yeah. Bruce, thanks for the question. I’ll start on the Werner Bridge part, and then, Chris, may have a color he wants to add. But, Werner Bridge is our digital platform. We’re very excited about what that future looks like, but we’ve got a long ways to go as we continue to develop that out. More specifically, relative to the tech stack, it’s really the transition we’ve already made and worked hard at throughout 2023 relative to getting both Reed, Werner Logistics or Werner Brokerage, I should say, as well as Intermodal on the EDGE TMS platform. That’s sort of the first major milestone in a longer journey that ultimately includes this year focusing on getting One-Way largely on the platform by end of year.

As we start to do that, we start to see opportunities for real savings with expanded visibility, better collaboration to freight across the various sides of the organization. But those are not actually in those cost savings numbers at this point because it’s early innings. What we’re talking about here are tangible programs of diligent cost cutting up and down the P&L through the building in ways that I believe do not impact our ability to respond as the market turns. That’s probably the most important thing. We’re late enough in the cycle that what we don’t want to do is to cut for cutting sake and then end up bringing all of those costs right back on board. That’s why we think they’re structural, they’re sustainable. It just puts us in a better position.

The cost culture here has been one that we’ve needed to address for some time. We’ve worked on it aggressively over the last year. I think we’re finally finding a rhythm and stride toward top to bottom ownership of better cost controls. And I think a crisis like this over the last year’s freight backdrop really puts us in a better position to even execute better moving forward.

Bruce Chan: Okay. That’s super helpful. And then maybe just to follow up on some of your commentary around being late enough in the cycle. We’ve heard from a few carriers now that data and expectations are pointing toward the second half inflection. I imagine your customers are looking at similar outlooks. So just, given that consideration, can you maybe share how your early conversations have been going in terms of renewals? Are we still tracking negative or are we starting to see some firming based on expectations for that recovery?

Derek Leathers: Sure. I’d have to start by just pointing out that, we are — we have less, I mean, then — well, we’re still in the single digits on renewals that are actually closed and kind of at their end date and so it’s early, early in the bid season. Clearly there are customers that are looking to try to take one last bite of the apple. There’s clear pressure, especially on the One-Way side of the network. But our stance is we’ve got to stay disciplined. If you look across especially this earnings season, it’s glaringly obvious that carriers cannot make a re-investable return at current rate levels. So they’re going to be frictional. They’re going to be difficult. We’ve already indicated that we’re willing to shrink the fleet size if need be and we’ve shown that through 2023.

The good news is we also have a lot of stability in the Dedicated portion of the portfolio that continues to do that hard to serve, difficult to kind of dislocate us from the business type of work and that’s going to stand up pretty well. We feel good with those relationships. And on the One-Way side, we’re going to keep focusing on engineering the network better to gain productivity. We’re going to focus on our touchstones of Mexico cross-border, the engineered lanes that we’ve built out and just continue to do what we do really well and lean into that. That puts us in a better position relative to price as well.

Operator: The next question comes from Jon Chappell with Evercore ISI. Please go ahead.

Jon Chappell: Thank you. Good afternoon. Derek, I just want to talk about the fleet for a second as we look at the guide. Zero percent to 3% decline in the truck count. Is this just a continued glide down of One-Way until you see that inflection and there’s still going to be growth in the Dedicated fleet or are you actually pausing the Dedicated fleet as well, which you think of both of them as being relatively static to slightly down again until you see a more favorable backdrop?

Derek Leathers: Well, as we pointed out in the opening remarks, Dedicated performed very well during the course of the year. So we’re not looking to — there’s no intentionality about trying to shrink the Dedicated fleet. But the reality is there, too. It’s a competitive landscape. And so, as we retain — as we remain very price disciplined on Dedicated and return focused, it’s our expectation that there could be some fleet churn in Dedicated in the first half of the year. We already have a very robust pipeline in Dedicated and we’re pricing a considerable amount of opportunities as we speak. But the net of that is that we think that will be flat to maybe slightly up by the end of the first half with back half growth built in.

On the One-Way side, it’s a different story. It’s simply not re-investable right now. We’re not going to grow trucks in One-Way until we see more of an inflection. And as a result, overall TTS fleet numbers will go down, at least in the first half and that’s what we’ve guided to.

Jon Chappell: Okay. Yeah. Thank you. It’s clear. Chris, noticeable insurance and claims down, you’d mentioned, both in the fourth quarter and for the full year, seems somewhat contrary to what we’ve heard across most of the industry. Is that just a function of maybe a distorted comp to 2022 and we should think about some level of renewed inflation in that line item into 2024 or is there something structurally different about the way — I know you’re obviously running a safer overall network, but something structural that would think that insurance and claims that Werner grows at a lower level or a lesser level than the rest of the peer group in 2024?

Chris Wikoff: Hey, Jon. Yeah. I mean, fundamentally, it does come down to safety and that’s our number one priority. But to unpack that, just a minute to address your question. Yes, fourth quarter of last year was a peak year at $44 million in insurance and claims, but it’s not simply just a matter of it being a comp. There have been others in the industry that have been reporting large reserve adjustments in charges and ours is elevated when you look back over the last couple of years. But really that inflection point up really occurred in the first half of really 2022. I think we’re early on, but we’ve seen a recent decline. The — it’s not just in the quarter, which is down 23%. Really, the second half of last year of 2023 was down 17%.

So it’s maybe early to say, but it’s a good trend. It does coincide with our safety metrics that continue to perform very well. We have a declining accident rate. We hit a 19-year record low. So we do think that those are connected.

Operator: The next question comes from Brian Ossenbeck with JPMorgan. Please go ahead.

Brian Ossenbeck: Hey, afternoon. Thanks for taking the questions here. So, Derek, maybe I just wanted to get your thoughts just going back to capacity. If we hear yourselves and other big fleets who are presumably the low cost carriers in the market backing away. Is it just inevitable that the smaller fleets and other capacity is going to exit as well? Is there something that maybe we’re all missing in terms of just how the freight’s flowing? They have more contract exposure than before. They paid down equipment. I just wanted to see if you think that this is really sort of the beginning of the end of the capacity cliff that’s been here for some time.

Derek Leathers: Yeah. Brian, great question. I promised myself I wasn’t going to try to predict a turn on this call, so I’m going to try to steer clear of that. But we’re at week 71 with net deactivations being negative, so more carriers leaving the industry than coming in. Over the last, call it four to five weeks, it’s been very interesting, because new activations have finally kind of really fallen off the cliff. With net deactivations kind of continuing, or I should say, deactivations continuing their trend that we’ve seen for now over a year straight. So we think momentum is gaining and we’re going to see more of that going forward. When it turns, exactly, I don’t know. What I do know is that large, well-capitalized, well-ran fleets like Werner were focused, like never before, on lowering our cost to execute, making sure that we’re grinding through the controllable while not spending too much time trying to speculate on the uncontrollable.

I’m excited about the team’s focus right now. The fact that we’ve identified going into the year 40 million of cost initiatives and we believe we’ll have great success on getting those implemented early and often as we kick off this year is exciting. I’m real excited about the structure of the fleet going into the year, meaning that we’ve got the fleet age where we want it to be. The mix is closer to where we’ve wanted it to be than it has been in a long time, although we’d still lean more toward Dedicated given some of these opportunities close. Logistics is continuing to grow both in volume and revenue, and that’s really an outlier across really the whole industry and gaining share, and we are finding that rhythm of all of this technology investment that we’ve been making.