United Parcel Service Inc Q4 FY2025 Earnings Call

Good morning. My name is Matthew, and I will be your facilitator today. I would like to welcome everyone to the UPS Fourth Quarter 2025 Earnings Conference Call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question and answer period. Any analyst that would like to ask a question, now is the time to press star, then one, on your telephone keypad. It is now my pleasure to turn the floor over to your host, Mr. P.J. Guido, Investor Relations Officer. Sir, the floor is yours.

2025 earning results of our Securities and Exchange Commission on the UPS Investor Relations website.

130 UPSers around the globe for their exceptional dedication. Industry leader. Our results exceeded our expectations and contributed to our outperformance. With U.S. domestic and supply chain solutions delivering year-over-year operating margin expansion, an international small package reporting record revenue with the highest fourth quarter revenue. In the fourth quarter, consolidated revenue was $24.5 billion. Consolidated operating profit was $2.9 billion, and consolidated operating margin. In 2025, significant change in global trade policies and increasing geopolitical concerns. 2025, as we took action to strengthen our revenue savings from our network reconfiguration and efficiency reimagined 93 buildings in the U.S. We're revenue 25% year-over-year, 42.3%, a 250 basis point, and importantly, next-gen brokerage capaces nearly 90% digitally, including in the U.S., where we saw more than a 300% increase in daily customs entries compared to last year. We completed our acquisitions of Frigo Trans and Ann Lauer Healthcare Group, $1.2 billion in revenue, the number one complex healthcare logistics provider in the world. Our UPS digital business, which includes roadie and happy returns, saw revenue grow by 24%. Package smart facility, 500 UPS store locations, and completed installing RFID $5 billion in cash from operations and returning $6.4 billion to share owners in the form of dividends in share repurchases. 2025. One year ago, we announced our Amazon Accelerated Glide Down Plan for the actions we plan to take that would drive future operating margin expansion and greater operational agility. Specifically, we set out to reduce the amount of 50% over an 18-month period. In the year 2026, we intend to glide down another million pieces per day while continuing to reconfigure our network. Given the success of our GlideDown and cost-to-work reconfiguration plans, without impeding our ability to apply the details of our Amazon GlideDown plans in a moment, reducing hours, at least shrinking a network is a daunting task. Discipline planning, flexibility, and efficiency that's coming from deploying state-of-the-art technology and automation across a smaller and nimbler network to increase the percentage of U.S. volume we process through automated facilities to 68% by the end of the year. Up from 66.5 years, we've taken a systematic programmatic approach to modernizing our global air fleet. We made the decision to accelerate much of that capacity. Now let's move to the end of the fourth quarter. We formalized a new relationship. We'll continue to increase the flow of ground saver volume to the USPS, which will be delivered by UPS. Beside the US is slated to open towards the end of 2026. And our expansion in Hong Kong is on track to open in 2028. Faster time in transit and the trade lanes that are growing in Asia. Now let me move to our 2026 outlook. In the U.S. small package market, excluding Amazon, is expected to be up low single digits. Now looking at UPS in two or six months of the year, we will be working through the revenue and operating margin impacts of completing the Amazon glide down, the outsourcing of ground saver to the USPS, and adjustments to our international business in response to trade policy changes. For the full year 2026, we expect to generate consolidated revenue of approximately $89.7 billion, and it consolidated on the shape of the year, focusing specifically on the revenue to be flat at the first half of the year due to sequentially increasing in the will recognize benefits for transition to the U.S. The expect to return to operating profit growth in the second half of the year is like a bathtub effect. The haves will look different. It's at 2026 with a leaner, more agile U.S. network, one that's built for growth out of our team and the progress we've made in executing our strategy. June of 2026 will be the inflection point. Our strategy is not a shrink-the-company strategy. in the best parts of the market, including enterprise, SMB, B2B, healthcare, and international. Our strategy is about delivering differentiated value to our customers, improving the long-term profitability of our company, and delivering value for our shareholders through effective capital allocation. So with that, thank you for listening. And now I'll turn the call over to Brian.

Thank you, Carol, and good morning, everyone. Recognize and remember those affected by the crash of UPS Flight 2976. And I'd like to thank our team at Whirlport for their steadfast commitment to the community, their teammates, and our customers. Now let's move to our performance for our full-year 2025 results, including cash and shareholder returns. Next, I'll discuss the Amazon glide down and our network reconfiguration and cost-out efforts. Lastly, I'll close with our financial outlook for 2026. $5 billion and operating profit was $2.9 billion. 11th week, integrated network to seamlessly operate through peak season. Strong performance in the fourth quarter, driven by the combination of revenue quality and great transformational effects from the additional automation and network reconfiguration we made throughout the year, during their busiest time of the year, and provided industry-leading service during peak for the eighth consecutive year on 2.4 million pieces, or 10.8%, our deliberate actions to remove lower-yielding e-commerce volume from our network. Total air average daily volume was down 11.9%, 10.6% in the quarter of 2024. We're going to find 27.7%, mainly due to our revenue quality. 2% of total basis points compared to the fourth quarter. Increased 1.6% year-over-year. 1% of our U.S. volume in 2024. And was the highest fourth quarter B2B penetration we've seen in six years. 13.8% compared to the fourth quarter of 2024. What we are making is we shift our U.S. mix to more premium volume. Revenue per piece growth rate we've seen in four years. Peace improvement, 40 basis points, 8 by 320 basis points, down 3.3%. The decline in total expense was primarily driven by our actions to remove hours and operational positions to align with volume. 9% year-over-year, with the insourcing of ground MD-11 fleet. $1 billion in operating was 10.2%. Change in the de minimis exemption, West import lanes, $188 million. 2024, $6 million.

It was 88.7% operating margin was 10.6%.

initiatives. The savings came from three buckets in 2025. Approximately 25 million hours. Approximately 9.6 2025. The second point of our strategy was great in the mid-singles and in the beginning of the year. Third financial algorithm in 2026. Continue to drive changes in trade lane mix in 2025. Submission of $1.3 billion. Expansion.

Thank you. We will now conduct a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset, if listening on speakerphone, to provide optimum sound quality. We do ask that participants please ask one question, then re-enter the queue. Once again, if you have any questions or comments, please press star one on your phone. Our first question comes from the line of David Vernon from Bernstein. Your line is live.

Hey, good morning, guys, and thanks for taking the question. So, I guess, Brian, maybe just a big-picture question in terms of what's embedded in the guidance and sort of the exit rate as we're leaving 2026. I think you mentioned full-year domestic margins expected to be flat. Can you kind of give us a sense for what the second half or the exit rate margin should be? And then as far as kind of what's embedded in the domestic cost outlook, is there any sort of numbers you can put around costs from the retirement of the MD-11s or additional stuff maybe that we didn't know before the earnings release today. Yeah, great. Good morning, and thank you, Dave. So let me first just address the MD-11. I think in the fourth quarter, including our results, was about $50 million of incremental lease costs that we incurred to replace the capacity. It will be about double that in 2026. It's included in the guidance. The seventh is the course of the year with five in the first half and ten in the second half, and then we'll have three in 2027 so so that's it if we think about the shape of the year there's there's a couple really important things to to think about all as we went through 2025 and carol mentioned in her in her remarks there's a timing lag between um us taking the cost out and realizing the uh the benefits in the pnl along with the volume so as we go through the first quarter we're going to have a step down in the amazon volume in the in the in the first quarter We're taking actions in order to right-size the variable costs, semi-variable costs, and fixed costs, but there will be a lag in that that will hit the second quarter. So you do see pressure from three things in the first quarter, the drawdown of the Amazon volume and the timing of the cost out, the transition cost of moving ground saver back to the USPS that will go through the first half of the year. We'll see benefit come through in the second half of the year, and then, as I mentioned before, this incremental MD-11 cost. That's going to put margin pressure on domestic in the first half. The way to think about it is really about 100 basis points of pressure in the first half that relieves in the second half, most of that pressure coming in the first quarter. You have a similar dynamic, right, where we've got from de minimis in the third quarter and fourth quarter, that's going to roll into Q1. Additionally, as I mentioned in my prepared remarks, we had a lot of pull forward in the first quarter of 2025, so we've got a really tough comp. So that's not only going to put pressure on the margin, as we saw in the fourth quarter, but also push down a profit in international, where we expect profit to be down about 30% in the first quarter and then recover as we go throughout the year. And then, look, I think in the second half, we will look at it like a very different business, as I articulated. SMB and enterprise will be growing mid-single digits. We'll be in a much more efficient cost structure. We'll still be driving good mid-single-digit rep-per-piece improvement through our pricing. And our cost-per-piece will normalize as we right-size the driver staffing, realize the benefits of automation, and we'll be exiting at a healthy double-digit margin that will take us into 2027.

All right. Thanks, guys.

Thank you. Your next question is coming from Tom Wadewitz from UBS. Your line is live.

Yeah, good morning. I wanted to see if you could give some thoughts on just kind of like the algorithm post the glide down with Amazon. Do we think about it as, for domestic package, so do we think about it as kind of low single digits revenue growth? Would that be kind of what you would aim for? And, you know, what kind of pace of margin improvement can you consider? I know, obviously, macro matters, so there are a lot of, you know, things you don't necessarily know, but maybe high level how you think about that. And then I guess within that, if we look into 26, 27, I think you've talked about maybe like 400 to 500 million of EBIT headwind in 25 from the insourcing of SurePost. So now that you're handing that back to Postal, I don't know if you get that fully back and if that's kind of like half of a benefit in second half of this year and then, you know, half of it in 27. So just some, I guess, some thoughts on kind of that overall domestic PAC margin and how to look at it.

Yeah, yeah, thanks, Tom, for the algorithm. As I mentioned, look, we expect to see kind of mid-single piece will normalize because some of the mixed benefits that we've seen is the Amazon volume has come down, the base rate increases that have been continuing. So I would think about a couple percent on the base rate. Per piece will normalize as well, right? And we expect to see cost per piece come down below rev per piece, so we're driving unit cost improvement as we have prior to the Amazon glide down, and that will drive kind of structural long-term margin improvement as we go forward. Half the year as we're exiting with, you know, non-Amazon volume and revenue growth and margin improvement will be the go-forward algorithm. On the USPS cost, so we will be transitioning a portion of our ground saver delivery back to the USPS through the first half of this year. We do expect that we'll see benefits start to materialize in the second half. It will look slightly different than what we had before because obviously we're going back at a different rate than what we had before with the USPS, but that will translate into savings in the second half this year and going forward. It also helps us with aligning our product strategy with how we want to think about an economy product as a holistic part of our product portfolio.

Do you think you get back the full $400 million to $500 million that you gave up in 25 or maybe not?

Or then, yes, over time, I think we'll get that back. And we have to right-size the position levels commensurate with the new delivery stop levels.

I wouldn't expect to see that full done.

Okay, thank you.

Thank you. Your next question is coming from Ken Hoekster from Bank of America. Your line is live.

Hey, Greg, good morning. I threw out some costs pretty quickly there, Brian. I just want to clarify. Did you throw out the cost in the first quarter on the drive route and the postal service costs impact that margin? But my question is just on the rate increases for both domestic and international. I think you threw out there that it was going to be low single digit for domestic. Your thought on how this should trend for core rate, both domestic and international?

For peace for the year, Ken, it's about 4.5%, right, for peace growth. But you're going to be – look, in the fourth quarter, we saw a 340 basis point improvement. in base rates. We've been seeing kind of around this 300 basis for improvement in base rates. I would expect that as you think about going forward. Related to the driver buyout, we didn't give a number because we have not yet to launch the program. It's too early to make an estimate. Look, this is a tactical move that we did something similar last year in order to help us to right-size the position levels and the network infrastructure with the new volume and delivery levels, right, because it includes the change in the ground saver stops as well. We'll keep you updated with that as we go through the course of this year.

Your next question is coming from Ari Rosa from Citigroup. Your line is live.

Hi, good morning. So I wanted to dig a little bit further into the cost per piece trends. Obviously, it was elevated a bit in fourth quarter, but you talked, Brian, about that normalizing on a go-forward basis. Maybe you could separate those things out. Just like if we think about normalized CPP run rate, how we should think about that. And then as we think about the improvement in revenue quality and the kind of shift in mix, does that assume kind of a higher cost per piece to handle that business? Or can we get that back to kind of that low single digit run rate more in line with inflation? That cost per piece profile, again, it's going to trend down as we go through the year, right? It'll look similar in the first quarter as it did to last year, but by the time we get through the year and we transition ground saver with the execution of the network reconfiguration, deploying additional automation that will go online through network of the future, yes, we will see the cost per piece normalized to that kind of normal inflation level. And with a 3% rep per piece growth rate and a lower cost per piece, we'll be able to get back to that kind of 100 basis point separation that we see to drive unit cost and margin improvement as we grow.

And perhaps we just just comment on how are we driving this productivity. One way is through automation. We have 127 buildings that are automated. We are adding another 24 in 2026. the cost per piece in these automated buildings is $28,000. And then we're just getting better from a capacity perspective and a production perspective. And, Nana, maybe you want to comment on that.

Yeah, sure. So I think the first six months next year will be, we've already started optimizing some of the closures of sorts and buildings. Because we didn't stop automating until December 31st. Thank you.

Your next question is coming from Chris Weatherby from Wells Fargo. Your line is live.

Hey, thanks. Good morning, guys.

Maybe if we could touch a little bit on the international segment, make sure we just sort of move through the, run through the moving pieces there. Obviously, we talked a lot about the domestic side, but just get a sense of some of the pressure there. Maybe we can sort of break out some of the individual costs or diminished pressures as we go through first quarter specifically, but also first half.

It's all in the quarter in 2025. That was really, there was a lot of pressure both from Canada and Mexico as well as continued decline in our China and U.S. planes, and really, you know, all of our U.S. inbound lanes. That's going to roll over into the first quarter as well. Look, I think what we expect to see evolve in the international business is we are going to see extreme weakness in the first quarter that kind of gradually recover. What's going on? One is the first is volume, right? So volume, we will lap the tariff impact in May and start to see positive growth from that, and then we'll relapse the de minimis impact in September. And that's driving a margin headwind. Look, we make double-digit margin on all of our U.S. inbound lanes, but the ones that are growing, right, are, I'll call it, mid-teens versus the, you know, high double-digit margins that we've got and, you know, 20%, 30% margins that we have in the China-U.S. lanes. So while we're seeing some offsetting volume growth, We are seeing margin pressure as a result of that. What we expect to see not only margin improve as we go through the year, and look, and I think the revenue quality actions that we're taking in international have helped to offset the volume declines in the third quarter and will continue to help drive revenue growth as we go through Q2, Q3, and Q4 of next year.

Okay, but the EBIT decline, that's year-over-year or sequential that you noted before?

Year-over-year.

Thank you.

We've got some tough comparisons, but we'll manage through it. And Kate's doing a really nice job of managing the network so that we can serve our customers because there is growth in parts of the world. Maybe you want to talk, Kate, about where you're seeing growth. Yeah, absolutely. We mentioned before years ago when we first saw the China lockdown, we invested heavily in Asia diversification, and it has really unlocked growth. We're in Vietnam in the new air hub, and it's already 80% full for a five-year plan. So we've actually got double-digit growth going out of a lot of the Asian countries, but they're going to Europe and India. And so we shifted with the trade. So while we do that, you have to pull down the block hours, and we have shown that over the last couple of years that that is what we do. So we are seeing good growth, and we're helping our customers to understand the shift as well, whether it be by lane or by mode, package to forwarding or the reverse. So proud of the team. Last year with the tariff and de minimis, haven't seen anything like it in 36 years. And proud to say that we delivered, for instance, in the fourth quarter, the 18% margin.

Thank you. Your next question is coming from Jordan Allager from Goldman Sachs. Your line is live.

Yeah, hi, morning. Question for you. Can you maybe talk a little bit more what underpins? I think you said mid-single-digit type of package growth in the second half. Is it inventories in better shape so that we can see business-to-business grow again? Is there some expectation that the tax benefits or refunds, which are higher this year, will help the consumer and demand?

And assuming that type of volume happens, I mean, talk about your confidence level and the revised network and headcount moving the goods.

Well, just from a map projected to grow in the low single digits, so we carry policy changes should support this growth. Further, the outlook for manufacturing is that we can grow into that space as well. And then the one thing I would ask you to remember, candidly, growth is a reflection of year-over-year comparisons, and we are going to anniversary the decisions that we made to exit not just some of the Amazon volume, but also Chinese e-commerce volume. So you just naturally get some growth from a year-over-year comparison.

Brian, what would you like to add to that? I think also, Jordan, the places where we have been investing, we are seeing wins, right? Healthcare, even in the domestic small package business, S&P Healthcare is a robust growth area for us. Automotive, the air products. So we're seeing the quality volume that we've been shifting to show up in the network, right? In the fourth quarter, we saw heavier weights. We saw longer zones. We saw the highest S&B penetration we've ever had, the highest B2B penetration we've had in four years. So the mid-shift is happening, and we can see that. That enables us to lean in in the places where we've invested, we've got differentiated capabilities, and we want to grow. And that helps support, as Carol said, you know, growth in excess of the market.

And on the differentiating capabilities, perhaps I'll just take a moment to talk about our RFID capability. As you know, we've been talking to you about RFID or our Smart Package, Smart Facility initiative for a few years. And it's really starting to crystallize into three big pillars. The first is what we call Smart Facility, but it's really a smart car, where we've enabled now all of our cars with RFID sensors. So we're moving from a scanning to a sensing network. And what this does, well, it makes us more productive on the car, but also improves the level of misloads. Then by using the RFID labeling, our packages become smarter, which reduces defects. But the more interesting development by delabeling at the point of filament, if you will, in the fourth quarter, by putting RFID labeling at the origin of all of our UPS stores. We have 5,500 UPS stores, as you know. They're processing now 1.3 million packages a day with RFID labeling, and this is allowing us to earn new commercial business. So it's not just the fact that the market is growing and we've got some easier compares. It's we're investing in capabilities that are turning into wins. In fact, the win for domestic business in the fourth quarter, and we sold during peak. The win during the fourth quarter was 25% higher than a year ago.

Thank you. Thank you. Your next question is coming from Ravi Shanker from Morgan Stanley. Your line is live.

Great. Carol, you gave us long-term targets for 2026 at your Investor Day in 2024, and obviously a lot has happened since then. I'm sure you'll have Investor Day early next year. But in the meanwhile, how do you think we should think about that long-term earnings growth trajectory and where normalized EPS is at this time, in your view?

Well, I think it's such a fair question. Clearly, things have changed a lot since 2024, because back then we hadn't planned the properties that you let us get through this year. 2026 is the pivotal year for UPS, and once we get through this year, we'll come back out and give our view on long-range targets.

Understood. Thank you.

Thank you. Our next question comes from Bruce Chan from Stiefel. Your line is live.

Yes, thank you, and good morning, everybody. I don't know if you've discussed it in the past, but I'm just curious if maybe you can talk about the selection process for which facilities were automated in 25 versus what's ahead in 26. I guess what I'm trying to get to is whether there's anything to read from the complexity of the operations that you attacked last year versus what you've got ahead this year.

To accelerate, we went after the more complex, bigger facilities in the middle of our project last year. They will be just as challenging, but we don't see any concerns whatsoever in these centers. And making sure they map so we can help ourselves trade off productivity for cost out for service.

And I'm proud that we have eight years in a row now of leading service. One other observation about how the team is performing in this regard, because I'm super proud of them. At the beginning of last year, we targeted 73 buildings to be closed as related to our Amazon glide down. We actually closed 93. This year, you've targeted 24 buildings. My guess is there will be a few more closures than the 24 you've identified. Yeah, so that's just the first half.

We continually put all of those facilities through a process to make sure that we're not missing anything. We suspect in the range of 24 for sure, first half, that we've got another 60 or 70 worth assessing, and then we'll have a number that comes out. Thank you, Asilika.

That's great.

Thank you. Your next question is coming from Richa Harnain from Deutsche Bank. Your line is live.

Hey, thank you, everyone, and good morning. So just piggybacking off of that question, you know, great stat on the cost per piece being 28% lower, in these automated facilities than your conventional ones, Carol. But you talked about the runway now you have for that to continue. But how does that play into maybe your ability to do more with less? So how can we think about your CapEx plans? Your 2026 CapEx outlook is below 2025. That's despite replacement plans for fleet, which you spoke to. So maybe talk a little bit more about what's underpinning that. And as you adjust to maybe a smaller footprint, a more efficient footprint, how should we think about the long-term CapEx outlook?

Brian, you can jump in. Let's go the way. Of the year-over-year change, on the fleet additions, we're actually financing the aircraft through a burn and bleep structure that, Brian, you might want to describe.

Yeah, and, Risha, as Carol mentioned, we do have financing structures around the aircraft. But I think importantly, look, if you think about the CapEx profile, look, our volumes continue to come down, right? And as Carol mentioned, we've closed facilities. When we look at the asset categories, is where we really have to hold back. We're not buying as many vehicles, right, because we don't need them as we right-size the U.S. network. We continue to invest in our international network through both air hubs, aircraft, and vehicles. But it's bringing down our maintenance expense. It's bringing down our vehicle expense. And, look, I think as we turn and we continue to grow, we'll be kind of around this 3% to 3.5% of revenue is a normalized capex. But we're creating more efficiency. We're creating more flexibility so you don't have to spend CapEx on variable capacity like we used to, and that's going to allow us to run a more capital-efficient network going forward.

That's neat. Thank you.

Thank you. Your next question is coming from Jason Cheadle from TD Cowan. Your line is live.

Thank you, Operator Rob. Good morning, Carol, Brian, and team. Carol, I think you talked a little bit about the technology that's going to redirect parcels to the USPS versus sort of in-house. Can you maybe give us some more color on that in terms of how much of your network is going to be equipped with that by the end of the year and sort of how we should think about that helping margins over the longer term? Because I'm assuming that will help with cost as well as productivity.

Through the network, point one is, look, we continue to, Nando's point, we continue to ramp the volume up in the month of January.

An opportunity that Brian highlighted earlier is really to differentiate our product portfolio because our customers are asking us, one, they want the reliability of the UPS network we can provide, we've demonstrated we can provide, but they also want to make sure they have economical options. So this really gives us an opportunity to both Nando and Carol's point to, one, bring our customers online and get these dual labels so that they can have visibility, but also giving them the right experience along the way with that economic option.

Presented to us a year ago, so we're very excited to be able to use the DDUs That will ensure our service labels stay high.

Appreciate the caller.

Thank you. Your next question is coming from Bascom Majors from Susquehanna. Your line is live.

Thanks for taking my questions. If we go back to the 2023 deal with the Teamsters, you had to absorb a lot of inflation really quick, and then you had three years of fairly moderate labor inflation in the U.S., and then that was scheduled to tick up in the fifth year of the contract. Can you talk a little bit about what the initial plan was to deal with that cadence of high labor inflation, low, and then some moderate increase in the back half? How the Amazon glide down and the network reconfiguration has maybe changed that plan? And ultimately, how do you feel about dealing with that uptick in labor inflation in the U.S. in the second half of next year? ...out of our network, and that work has progressed quite nicely.

We are ahead of where we thought we would be. You couple that with the Amazon glide down and the number of...

And I think Carol hit on the right points, right? When we started out with the labor contract, we knew that we were going to be investing in order to create a lower labor-intensive network, right, with more flexibility that had the ability to scale, right, particularly for PEAK, because we're seeing PEAK be increasingly important. without the need for so much labor. You're seeing that, right? We saw it with and without the Amazon drawdown in 2020, without in 2024, with and without in 2025. We've set up targets for incremental position eliminations that will drive efficiency in 2026. And so as we approach that point, we will be driving down total expense. At the same time, remember, we will have a different characteristic of revenue in the network so that the, you know, incremental cost will not turn customer ORs upside down, right? And so we'll have a less labor-intensive, more nimble, more profitable network that will minimize the impact of the increase. And Matthew, we have one.

Our final question comes from Brandon Oglinski from Barclays. Your line is live.

Hi, Carol, and thanks for taking the question here at the end. I guess can we, you know, maybe summarize all this because it sounds like you guys are really protecting service even though the network is getting smaller here. Does that create any market share opportunities or challenges, especially with where pricing is going up for the industry as well? I appreciate it.

We talked a little bit about RFID, but a lot of other capabilities that we've been investing in that's allowing us to take share. I'll focus us right on our digital access platform. When I joined the company, the revenue in that platform was $139 million. Fast forward to the end of 2025, $4.1 billion. We continue to add more partners to the platform. We're growing it globally, not just in the United States. And that platform is something that small and medium-sized businesses enjoy using for delivery as they're selling through partners like eBay and Shopify and others. So we're going to continue to invest in capabilities that allow us to win new business.

I will now turn the floor back over to your host Mr. PJ Guido.

Thank you Matthew and this concludes our call. Thank you for joining and have a good day.