Good morning. My name is Steven and I will be your facilitator today. I would like to welcome everyone to the UPS Investor Relations Fourth Quarter 2021 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 our host, Mr. Scott Childress, Investor Relations Officer. Sir, the floor is yours.

Good morning, and welcome to the UPS Fourth Quarter 2021 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 security laws and address our expectation for the future performance or operating results of our company. These statements are subject to risk and uncertainties which are described in our 2020 Form 10-K, subsequently filed Form 10-Qs and other reports we file with or furnished to the Securities and Exchange Commission. These reports, when filed, are available on the UPS Investor Relations website and from the SEC. For the fourth quarter of 2021, GAAP results included a non-cash after-tax mark-to-market pension charge of $14 million and after-tax transformation and other charges of $45 million. The after-tax total for these items is $59 million, an impact to fourth quarter 2021 EPS of $0.07 per diluted share. The mark-to-market pension charge of $14 million represents losses recognized outside of 10% corridor on company sponsored pension and post retirement plans. Additional detail regarding year-end pension charges are included in the appendix of our fourth quarter 2021 earnings presentation that will be posted to the UPS Investor Relations website later today. Unless stated otherwise, our comments will refer to adjusted results, which exclude year-end pension charges and transformation and other charges. The webcast of today's call, along with the reconciliation of non-GAAP financial measures, is available on the UPS Investor Relations website. Following our prepared remarks, we will take questions from those joining us via the teleconference. If you wish to ask a question, press one then zero on your phone to enter the queue. Please ask only one question so that we may allow as many as…

Thanks, Carol. And good morning. In my comments I'll cover three areas, starting with our fourth quarter results, then I'll cover our full year 2021 results, including cash and share owner returns, and lastly, I'll share our financial outlook for 2022. In the fourth quarter, supply chain challenges and the emergence of the Omicron COVID-19 variant weighed on global economic growth. In fact, the U.S. December retail sales report came in lower than forecasted and the inventory to sales ratio remained at historic lows. Despite these factors, our financial performance was better than we expected as the progress we've made executing our strategy continues to deliver strong results. Consolidated revenue increased 11.5% to $27.8 billion. Consolidated operating profit totaled $4 billion, 37.7% higher than last year. Consolidated operating margin expanded to 14.2%, which was 270 basis points above last year. For the fourth quarter diluted earnings per share was $3.59, up 35% from the same period last year. And full year EPS was $12.13 per diluted share an increase of 47.4% year-over-year. Now let's look at our business segments. U.S. Domestic delivered outstanding fourth quarter results. Our success was driven by gains in revenue quality and productivity, as well as our ability to quickly adjust our network to match capacity with the needs of our customers while providing industry-leading service. Average daily volume increased by 39,000 packages per day or a 0.2% year-over-year to a total of 25.2 million packages per day. This was below our expectations due to the soft retail environment in December. Regarding revenue quality, the impact of our better not bigger approach is continuing to drive improvement in customer mix. In fact, SMB average daily volume, including platforms grew 8.4% outpacing the market. And in the fourth quarter, SMBs made up 25.8 of U.S. domestic volume,…

Thank you. Our first question will come from the line of Jordan Alliger of Goldman Sachs. Please go ahead.

Hi. Good morning. Obviously, you have done a really good job on domestic profit per package in the fourth quarter and you gave some good color for 2022. Can you talk a little bit more about how you're thinking about the revenue per fees, cost per base and maybe what some of the key drivers are in 2022 around productivity? Thanks.

Hi, Jordan, thanks for the questions. So, in 2022, we're thinking ADV, it will probably be in the low single digits, 1.5%. Revenue, we're expecting to be 5.5. As we think about that, SMB mix will continue to grow probably about 150 basis points. So slightly lower than the growth trajectory we saw in 2021, but continue to push, and that drives benefit on the revenue side. Demand surcharges are likely to be fairly flattish, and then fuel is going to be likely not as high as we saw in 2021. The rate, as you know, most of our contracts are locked in for multi-year contracts, so those rates are in place driving the 5.5% revenue growth. On the productivity side, we're going to build on the momentum we saw in Q4. Carol talked about the pieces per hour productivity over 1.5%, very, very favorable. We'll continue those trends and continue to take non-op cost out of the business. So, we feel good about the margin expansion of 50 basis points in the 2022. Carol Tomé: Maybe just a little more color on the productivity initiatives. Nando is doing – and team are doing a great job there. He's identified 10 key productivity initiatives in 2022, running anywhere from improving cube utilization, and we've already seen some good movement there, but we've got more to do, to basically making sure that we are adhering to our operating standards across the network. Further, we've got more non-ops cost reductions, don't we, and that's all part of our productivity initiatives. So, we feel very good about our ability to leverage expenses as we move into 2022.

Thank you.

Our next question comes from the line of Amit Mehrotra of Deutsche Bank. Please go ahead.

Thanks operator and everybody. Congrats on the results. I guess I had a two-parter, if I could. Just talking about productivity, Carol, in the domestic business to the lens of packages per direct labor hour, everybody is trying to figure out where the endpoint – or not the endpoint, what the potential is for domestic margins. And if we look at it through the number of packages per direct labor hour, where are you on that metric? How much further improvement do you think that's there through the CapEx that you're allocating to technology? Just give us a little bit – that may give us a little bit of a hint into what the further margin opportunities in 2022. And just as a follow-up, I was hoping you can also update us on the Amazon exposure as you typically do when you close out the year. Thank you. Carol Tomé: Sure. Well, I'm super excited about the productivity opportunities we have inside of our business. We're pretty good at what we do, but we can be even better. I think at the third quarter earnings call, we talked a lot about inside operations and how we're going about automating our inside operations. We have about 140,000 people inside of our operations. And through automatic bagging, automatic label application, robotic induction into the small sorts, there is a way to really drive productivity inside of the buildings. We also have an opportunity with the RFID project that we've just kicked off, smart package, smart facility. You can imagine our pre-loaders are manually scanning every package. That's 20 million-plus packages a day that are being manually scanned. That manual scan will disappear with the smart package, smart facilities. So, the opportunities are endless in many ways. To your question about where will the U.S. margin go? We have told you our goal is 12%. Let us get there. We'll ring the bell and then we'll reset it. As it relates to Amazon, as we talked to you at the end of the third quarter, Amazon's revenue surged with us during 2020 as a result of the pandemic. At the third quarter, their revenue as a percent of our total is trending more like what we experienced in 2019. And that's held true for the entire year. Amazon's revenue as a percent of our total for the year was 11.7% compared to 11.6% in 2019.

Okay, thank you very much.

Our next question comes from the line of Allison Poliniak of Wells Fargo. Please go ahead.

Hi, good morning. I want to ask a little bit about international, a lot of moving parts there right now. You did talk about some SMB opportunity growth, and I know there's some white space that you're going after. Your margin for 2022 is certainly trending above that sort of 2023 target. Could you maybe help us understand the evolution of the international business? I know the surcharges come off potentially and – through that revenue quality focus versus that white space opportunity that you have there? Carol Tomé: Well, we're thrilled with our International business, and it's been challenging there because of COVID and they've done a masterful job of working through that. And the profitability is, as you point out, Allison, above where we thought we would be when we put together our three-year target. So, as we look to 2022, we anticipate that the ADV will actually grow faster than the revenue because of geo and mix changes. The team is really leaning into transborder Europe, excited about what we can do there. We do that, as you know, in an asset-light fashion, which is very value nutritive for our company. We're also liking the business – the opportunity to grow our Asian flights. And as you know, we added to new large freighters to help grow that space. Brian, anything you want to add?

Well, I think, as we think about growing faster than the market, Carol, the DRS we see is remaining elevated. There's been a lot of challenges on the passenger side with the Asia lane. So, we expect, Allison, those surcharges to remain elevated this year. So, while there's an 80 basis point decline in margin year-over-year, 23.6 is actually ahead of where we thought we'd be in terms of the journey here. So, team is doing a terrific job. Carol Tomé: And I was remiss in not mentioning DAP. We've had such success with the DAP here in the United States, and we're taking our DAP platform outside the United States, which will be a driver of growth.

Great, thank you.

Our next question comes from the line of Ken Hoexter of Bank of America. Please go ahead.

Hi, good morning, Carol and Brian, obviously a great quarter and great job in following through on the better not bigger. So, my question is just on the pricing. Brian, you mentioned kind of most are locked into contracts. It sounded like it's a multiyear contract. Maybe dig into the sustainability of pricing growth. You hit 10% of domestic. You start lapping those double-digit growth levels as we entered 2022. Maybe talk about your thoughts there. And then just to wrap that up, peak was just so different this year. Is there something we should think about in the year ahead just because maybe costs were better because the network was flatter? So how should we think about the impact for next year?

Yes, Ken, happy to talk about the revenue quality. It's been a hallmark of our success and I think underpinning the better not bigger. Look, I think Carol said at the investor conference, if we did one thing, which was get the SMB mix up to 30% that would basically deliver our 12% domestic margin. We were at 26.8% at the close of last year. We have plans to grow that by 150 basis points. We're investing in capability. We're very confident in our ability to do that. So, I like the sustainability from an SMB mix perspective. As you think about rate in the contracts, we're pushing around 60% in terms of renegotiating contracts. So, there is still mileage there to go from a sustainability standpoint. So overall, demand surcharges were elevated last year. So, we're not counting in the plan too much from an increase there. So, I think we feel not only is 2022 in good shape, but we've got room to run in 2023 and beyond. Carol Tomé: And the small package market is expected to grow about 5% in 2022. There is additional capacity being added, but not enough that's going to create surplus. So, the environment supports the firm pricing as we look to 2022.

Todd Fowler of KeyBanc Capital Markets. Please go ahead.

Great. Thanks, and good morning and congratulations on the strong results. Brian, I was curious if maybe you would share some of the shape of your expectations, particularly for U.S. domestic. I know that the comparisons are difficult in the first half of the year. But is the expectation that you're going to see that low single-digit volume growth pretty consistently and any directional comments on the expectations for that 50 basis points of margin improvement? Thanks.

Yes, Todd, happy to. So, as we think about the volume, revenue and profit in the domestic business for 1H and 2H, I would tell you that revenue is going to be fairly balanced, maybe a little bit higher than the 5.5 in the second half right around or slightly lower. So, you can count on 5.5-ish as a good metric for the first and the second half in terms of growth rates. And actually, the operating margin of 11.6, I think that's a good number for you to hold for 1H and 2H because that's – from a planning perspective, we're also fairly balanced, might be a little bit softer volume in the first half of the year as we came out of the low retail sales report coming in December. Omicron obviously had a little bit of impact going into January. But overall, low single digit for the full year, we feel good about. Carol Tomé: And Brian, I feel terrible. We didn't answer Ben's [ph] questions about peak expectations. We just talked about pricing. So maybe we should talk a little bit about peak because I don't want to lose the opportunity to just give a shout-out to the team for operating in such a really interesting environment, where our volume was higher at the beginning of the quarter than we expected and lower at the end. Our team showed incredible agility to adjust to the market demands. And that's what you should expect going forward, incredible agility. We have built technology that's surpassed in the industry that allows us to react day by day to what we're seeing in the marketplace. We also have a different attitude, I think. So, we're not going to just keep vehicles and planes and people in place, hoping that the volume will come. We're going to react to the market and that really drove productivity. The other aspect of peak this year as we look forward that may not materialize next year, we don't think it will, is the slowdown in December retail sales. That was a function of Omicron and the low inventory to sales ratio and so many other factors. We would expect peak next year from a revenue mix to be more like what we've seen in the past, which is more enterprise business. So hopefully, those two dynamics are helpful as you think about peak of 2022.

Ravi Shanker of Morgan Stanley please go ahead.

Thank you. Good morning, everyone. So, it looks like compensation and benefits as a percentage of revenue dropped about 45%, which is your lowest level in a while. I know some of that is obviously a benefit from your recent automation initiatives, but also, we are in a very inflationary labor environment. So would love your view on how that trends into 2022 and 2023. Thank you.

Yes, let me please Carol. Carol Tomé: Go ahead.

Ravi, look, the trends on comp and benefit we don't see anything extraordinary. Obviously, from a management compensation standpoint, delivering the targets, et cetera, will fluctuate in terms of the stock comp, et cetera. But we're looking to manage from a management compensation. Carol talked about agility. We're trying to think through from a field perspective manage the labor cost. We have a good handle on the union piece in terms of contractual rates and then we're pulsing MRAs as needed. Carol Tomé: And there are just a couple of nuances in the quarter when you look at the year-over-year performance. Remember last year, we had an impairment because of freight. So that was on the different line that was on the other expense line. But up on the comp and benefit line. freight had a $245 million impact year-on-year, didn't it? So, you've got to back the freight noise out to understand the real performance and comp and benefits.

Thank you.

Chris Wetherbee of Citigroup, please go ahead.

Hey, great, thanks. Good morning. Maybe just a follow-up on pricing if you could just sort of give us an update on where you are in terms of the book of business in terms of domestic repricing? And then maybe how much you think you'll be getting in 2022? And if you can give us some help around the magnitude of some of these rate increases, I think it would be helpful. And then just want to understand also just kind of on the comment about Omicron impacting December volume activity. Is that in the rearview do you feel like you've kind of reaccelerated back to what you'd expect to be somewhat normal levels for this time of the year? Just want to get a sense of how that's playing out.

Yes, happy to comment further on the pricing side. So, as we look at 2022, the composition of the roughly 4% RPP growth rate is going to be about 40% of that. As I think I mentioned, we're about 60% the way through with contract renegotiations, mix will be another 30%, and then fuel will actually contribute about 30%. They're all levers that we pull with respect to revenue management. Carol Tomé: And in terms of current trends, the first week of January, I'm like, where are the customers? Everybody seemed to be net home because of Omicron, but the business has come back roaring. So, we're feeling really good about the guidance that we've just given.

Great. Thank you.

Our next question will come from the line of David Vernon of Bernstein, please go ahead.

You mentioned sixty-forty is the right split for growth to maintenance. How would that split look if we thought about domestic versus international? And just as a follow-up to that, if you could talk a little bit about how you're thinking about growing capacity in the domestic network longer term. I'm just wondering, if we think about a post-COVID world where supply chains are reorganizing, maybe a little bit more B2B growth, is the network ready for that kind of demand?

Yes, David, happy to comment. So, as you think about the CapEx domestically, we're going to have about – of the $1.3 billion increase in CapEx from 2021 to 2022, 75% of that's going to go into car positions, we've got sortation capacity and tech automation, which Carol was referencing earlier, about 25% will be increasing the amount of vehicles and IT investments. So that's a relative split from a largely a domestic point of view. And in terms of capacity going forward, we're not just relying on capital. We're enhancing the weekend service to provide additional cat capacity, smoothing the days of the week. But we are putting 60% of our capital spend in 2022. The $5.5 billion is going towards growth. We're bringing on 30 delivery centers. We actually have 50 coming online, but 30 in the year. And then we've got a big hub – regional hub in Pennsylvania coming on as well. Carol Tomé: And as we think about the future, we really, over the past 18 months, have really worked to optimize our network and feeling good about that. That gives us the confidence in our ability to grow into the future and add capacity that will be nutritive to the return on capital and to the bottom line. But as Brian said, for our plans for 2022, we are well set to handle the volume that will come our way.

All right, thank you guys.

Our next question will come from the line of Tom Wadewitz. Please go ahead.

Yes, good morning. Carol, I think, you said let us hit the 12% margin first, and then we'll kind of get back to you. So, I'm not looking for an update on that target. But I wondered if you could offer some kind of directional thoughts on when you get to 2023, do you shift the mix of focus to more volume growth or more revenue growth and less focus on margin improvement? Or do you think that you continue with what I'd characterize as a pretty balanced approach in terms of revenue growth and margin? And then I guess if I can sneak in another one on the Amazon mix, do you expect that percent of revenue to go down or to be kind of stable? Thank you. Carol Tomé: So, if we think about longer-term margin, I'd really like to get to that 12% number before we talk about longer-term margin. A year ago, we said on this call and we said we would have a double-digit operating margin in the U.S. and the action was, I don't think you are going to do that. Well, we showed that we could. Let us get to the 12% number, and then we'll come back and tell you where we think we're going to take the company. On the Amazon percentage of total revenue, it's totally a function of where the growth comes from. We have a great relationship with Amazon, and we have mutually agreed about the volume that we should take and the volume that they should keep that works best for both companies. And so, as we continue to lean into SMBs, and healthcare and B2B, you're going to see shifting of penetration, and we'll report that out to you as the time goes by.

Great. Thank you.

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

Hey good morning. And thanks for taking my questions. I guess I don't want to focus too much on Amazon, but if I look at your average yield performance throughout the year, up double digits. And I think just back-of-the-envelope math here, your largest customer revenue would have been about flat year-on-year. Is there anything to suggest that maybe there was upwards of like a 10% volume shift to their internal network, Carol, off that last comment there? Carol Tomé: So, I will just tell you that their revenue grew with us in 2021.

Okay, that’s right. Carol Tomé: Thank you.

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

Hey, thanks. Good morning.

Good morning.

So, I understand you don't want to talk about the U.S. margin targets, but maybe talk consolidated if we're getting there a year early, how you think about 2023. And then – Carol, sorry, I've got some background noise. So, you finished the year with around $10 billion of cash, $9 billion of free cash flow this year, $5 billion of dividend. Why not more buyback?

So, Scott, it's Brian. I'm happy to take that. Our return to shareholders in 2021 was $3.9 billion. If you take the dividend and the buyback, that's going up to $6.2 billion this year. That's a 59% increase, pretty healthy. That said, we've declared the dividend. We told you to put $1 billion in your model for share repo. We do have authorization from the board, and we do have ample cash, should we want to get back into the market. So, I would tell you, take the $1 billion as a placeholder, and we'll update you as we go forward. Carol Tomé: I would say it's the floor. The authorization that's remaining is $4.5 billion.

Thanks Scott

Our next question will come from the line of Duane Pfennigwerth of Evercore ISI. Please go ahead.

Hey good morning. Thank you. I appreciate the detailed segment guidance. But I wanted to get your thoughts on inflation as you look at the balance of the year. Do you expect consistent trends from first half to second half, or should we be thinking about a lower cost per package and lower required revenue per package growth to achieve the same margin expansion outcome at some point this year?

From an inflation standpoint, I think we would look for higher growth in the first half of the year versus the second half of the year. So, as you think about cost per piece in the U.S. in particular, which is sort of 3-plus percent, I would expect that number to be higher in 1H and slightly lower in 2H with a few moving pieces.

Thanks. And I wonder if I could get a second one here on returns, not returns on capital, which are great, but within the context of e-commerce returns. How big of a business is that for you? And can you talk about growth of that service within the context of your biggest enterprise customers? Thanks for taking the question. Carol Tomé: Well, we've been public on our holiday return estimate, $60 million packages and we're well on our way of meeting that number. Broadly speaking, we've got a really great return process for our largest customer, where recipients of packages from that customer can take them to a UPS store and we'll ship them back. It's a great experience. And as you know, we have over 5,000 UPS store locations. Think about the UPS store as just an extension of our network. I'm very excited about what we might be able to do with that asset. It's working for us really well now, but we can do even more with that asset.

Thank you.

Our next question will come from the line of Jeff Kauffman of Vertical Research Partners. Please go ahead.

Thank you very much. Congratulations and again thank you also for all that detail on the division outlooks. Carol, I want to focus a little bit on ESG here. You mentioned $1 billion of CapEx into carbon-neutral investments. You mentioned the 3,700 alternative fuel vehicles that you'll be bringing on next year. Right now, customers are choosing based on scarcity. But eventually, that's going to change and no doubt, the ESG conversations with your customers are picking up as well. Where are you ahead of the curve in terms of where you want to be right now on ESG? And where is there more work needed to be done? Carol Tomé: Well, this is part of our core values and has been part of our core values for a long, long time and we look at – for example, our automotive equipment is a rolling laboratory. We have 13,000 vehicles today that are powered by some sort of an alternative fuel, and we are continuing to invest in that as you heard from Brian. We've set forth measurable goals and milestones along the way to our goal of being carbon neutral by 2050 and some of the investments that we're making today are enabling that. The aircraft, for example that we are buying from Boeing are more energy-efficient. The automobiles that we're buying are more energy efficient and of course, we're moving to all-renewable energy to power our buildings. So, you can get all of these details in our ESG report, and we're committed to reaching that carbon-neutral goal by 2050. As it relates to customer needs, wants and desires it's starting to actually increase particularly outside of the United States. So, this isn't just good for the planet, it's good for business.

Thank you very much. That's the one. Carol Tomé: Thank you.

Our next question will come from the line of Bascome Majors of Susquehanna. Please go ahead.

Yes. Thanks for taking my questions. With the update of the operating target to the pull forward of 2023, I'm not sure how meaningful the three-year cash flow absolute numbers were. And I understand you don't want to guide 2023 early, but can you talk a little bit about anything you have visibility into on either CapEx or cash taxes, pension funding that would impact whatever profit trend that we assume for 2023 as far as the cash flow drop-down? Thank you.

Yes. I think the free cash flow, Bascome, is going to dip by about $1.6 billion, $1.7 billion from 2021 to 2022. So, as you think about what's driving that, we had prefunded some of our service costs in 2020. So, if you take that $1.7 billion out, it's relatively flattish and I think for the moment, that's a good placeholder. We're throwing off a lot of cash. We're investing in the business to drive operating margin to improve operating cash flow. I don't see a big spike in CapEx anytime soon. If we increase CapEx, it's likely to be for automation to reduce cost, et cetera. But I don't want to get out ahead of my SKUs in terms of the 2023 guide at this point.

Thank you for that. And with respect to would you be comfortable issuing another long-term outlook now that you've pulled forward the one from last year? Any thoughts? Is that something that we could expect early next year? Or do you think you need to get through the teamsters negotiation to be able to have that level of certainty? Just any thoughts on when we might hear a longer-term update would be helpful? Thank you. Carol Tomé: Yes. It's a very fair question. If you don't know where you're going on any road, we'll get you there. So, we appreciate the need to give longer-term guidance. Let us get to our targets, and then we will come back and talk to you.

Thank you.

Thanks, Bascome.

Our next question will come from the line of Jairam Nathan of Daiwa. Please go ahead.

Hi. Thanks for taking my question. So, I just wanted to kind of – in terms of your better but not bigger strategy, is the company done with most of the areas where you would like to peel back? Or is there more to be done there? Carol Tomé: Oh, there's no finish line. We're just getting started in so many ways. When I think about our approach to enterprise data, I'm so excited about it. Today, we have data held in a number of data pools that aren't particularly clean. We've just kicked off an enterprise data strategy initiative that's going to clean up all that data, put it into eight domains. All the consuming applications will go into the domains. We'll have one version of the truth. That's going to drive productivity like we've never seen in this company. That's just one example of things that we got underway. So, there's just no finish line. Would you agree, Brian?

Yes. No, we're very focused on a handful of wildly important initiatives, and that's sort of running the better not bigger playbook, and yes, there is no finish line, so a perpetual flywheel.

And I was... Carol Tomé: Go ahead, Jairam.

Yes. I'm specifically referring on the revenue side because if I look at your comments, you said Healthcare will be up about $2 billion in 2022 from 2021. I think DAP was about $0.7 billion, and then if I look at your revenue increase; it's about $5 billion. So, it looks like there is some – there's still left – some revenue left or some areas of revenue sources where you would be peeling back and saying, you're kind of getting out of the market. So, I just wanted to understand, is that the right way to think about it? Carol Tomé: So don't – we might have confused the messaging because we had some 2023 numbers and some 2022 numbers. The guide we gave was for 2022 and it may not look as aggressive as you might think. But remember there's freight sales that we are comping in 2021 that will not materialize in 2022 and that's about $1 billion of revenue. So, there's plenty of growth for us to go get plenty.

Thanks.

Steven, we've got time for one more question please.

Our last question will come from the line of Scott Schneeberger of Oppenheimer. Please go ahead.

Thanks very much. I'm going to ask on B2C versus B2B. Brian, how are we comparing now in that mix versus pre-COVID levels? And what's implicit in the guidance over 2022 about how you think each will play in the upcoming year? Thanks.

Yes, Scott, good to hear from you. We finished the fourth quarter at 64% B2C. The guide for 2021 is – we'll be roughly in that 60 – low-60s range as we go forward. So, we see it in kind of a low-60s range. Carol Tomé: Yes. For the full year, it was in the low-60s, wasn't it?

Yes. Carol Tomé: It was 61/39. When I came to the company, the previous year it was more like 50/50. There's been a step change in the mix. I think it's going to stay around this 61/39 period, don't you?

Agree. Agree. Thanks Scott.

Congratulations. Carol Tomé: Thank you.

I will now turn the floor over to Mr. Brian Newman.

Thank you, operator. I'd just like to take a minute as we close our call to announce a change within our Investor Relations group. Scott Childress has done an excellent job leading the IR team over the last six years, and I've asked Scott to take on an exciting new role within the finance team continuing to report to myself. Scott will transition his current IR role to Ken Cook, who most of you already know. Scott and Ken have worked together over the past couple of years to ensure a seamless transition. Scott, I know I speak for the entire executive leadership team when I express our sincere gratitude to you on a job well done. I'd also like to welcome Ken into his new role. So, thanks for dialing in today. We look forward to talking to you all soon, and this concludes our call.