Good morning. My name is Steven, and I will be your conference facilitator today. I would like to welcome everyone to the UPS Investor Relations First Quarter 2022 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. Ken Cook, Investor Relations Officer. Sir, the floor is yours.

Good morning, and welcome to the UPS First Quarter 2022 Earnings Call. Joining me today are Carol Tome, our CEO; and Brian Newman, our CFO. Before we begin, I want to remind you that some of the comments we'll make today are forward-looking statements within the federal securities laws and address our expectation for the future performance or operating results of our company. These statements are subject to risks and uncertainties, which are described in our 2021 Form 10-K 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 first quarter of 2022, GAAP results include a net charge of $19 million or $0.02 per diluted share, comprised of after-tax transformation and other charges of $43 million offset by an after-tax gain of $24 million resulting from the curtailment of benefits in a Canadian retirement plan. Unless stated otherwise, our comments will refer to adjusted results, which exclude pension adjustments 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 and then zero on your phone to enter the queue. Please ask only one question so that we may allow as many as possible to participate. You may rejoin the queue for the opportunity to ask an additional question. And now I'll turn the call over to Carol.

Thank you, Ken, and good morning. This is my eighth earnings call at UPS. Since I joined the company, we faced a pandemic, social unrest, political unrest, the fallout from Brexit and now a war. Through it all I continue to be so impressed by the resiliency of UPSers and their commitment to moving our world forward by delivering what matters. I want to thank our team for their hard work and efforts in serving the needs of our customers each other and our communities during these most trying times. Before I discuss our results, I'd like to address our situation in Ukraine. Our hearts are with the people of Ukraine, who are feeling the effects of this tragedy firsthand. We have suspended all commercial operations in Ukraine, Belarus and Russia, where we can – we are supporting humanitarian relief efforts and our focus is on the safety of our people. Putting the issues in Eastern Europe aside, as we discussed in February, we expected the macro environment to be dynamic and it was. Our average daily volume fell short of our plan due to several external factors that Brian will detail, but we remain focused on controlling what we can control. And looking at the first quarter, we were pleased with our results. Consolidated revenue rose 6.4% from last year to $24.4 billion and operating profit grew 12.1% from last year to $3.3 billion. Consolidated operating margin expanded to 13.6%, which was 70 basis points above last year. All of our business segments delivered operating profit growth. Of note our Supply Chain Solutions businesses generated record operating profit of $481 million with a record operating margin of 11% driven by strength and forwarding in healthcare. We continue to pivot toward opportunity. We've made tremendous progress over the last two…

Thanks Carol and good morning. In my comments, I'll cover four areas, starting with the macro environment, then our first quarter results. Next, I'll cover cash and shareowner returns. And lastly, I'll provide an update on our financial outlook for 2022. As Carol mentioned, external factors resulted in a challenging operating environment in the first quarter. Early in January, Omicron negatively impacted retail sales and pressured volumes. The impact of Omicron subsided in February and volume growth turned slightly positive. Then late in the quarter, the combination of record high inflation, a surge energy prices, COVID-19 lockdowns in Asia and geopolitical uncertainty resulted in our consolidated volume growth rates turning negative. Despite these external factors, we remain agile and delivered strong first quarter results by continuing to execute our strategy and quickly adjusting our network to match capacity with the needs of our customers. In the first quarter, consolidated revenue increased 6.4% to $24.4 billion. Consolidated operating profit totaled $3.3 billion, 12.1% higher than last year. Consolidated operating margin expanded to 13.6%, which was 70 basis points above last year. For the first quarter, diluted earnings per share was $3.05 up 10.1% from the same period last year. Now let's look at our business segments, U.S. domestic delivered strong first quarter results. Our success was driven by continued gains in revenue quality and by leveraging the agility of our network to control costs. We had planned for volume to be down slightly in the first quarter, based on volume projections from a few of our largest customers, we expected to fill this gap with other enterprise volume, but market conditions did not support. And our volume was lower than planned. Total average daily volume in the U.S. was down 3% or 611,000 packages per day versus the first quarter of…

Thank you. Our first question will come from the line of Amit Mehrotra of Deutsche Bank. Please go ahead.

Thanks. Hi, everyone. Brian, what impact did fuel have on RPP in domestic? I know, you said 800 bps fuel plus base rates. Wanted to see if you can just give us – just isolate the fuel piece of that. And Carol, I was hoping you can talk about the recent Amazon Buy with Prime initiative. It seems like that eats into the SMB strategy or potentially eats into the SMB strategy. Just wanted to get your thoughts on that strategy that Amazon is pursuing and the implications for UPS and also UPS’ relationship with Amazon as well?

Hi, Amit. Good morning. Happy to break down the fuel piece. And then I’ll turn it over to Carol for the Amazon question. You saw the 9.5% RPP growth in domestic and think of that as about 80% rate and 20% mix approximately the mix being driven by our continued performance on the SMB side. But the split of the 80% is roughly equal, it’s about half fuel and then half base pricing as you split it out. And Amit, I would just make one comment. As we think about pricing and as we go down further down this journey, fuel is one component of our pricing lever. We have surcharges, we have base rate GRI. So within that it was approximately split between base pricing and fuel. Carol, did you want to take Amazon?

Yes. Happy to take the Amazon question. Thank you, Amit. We have a very good relationship with Amazon. They are our largest customer. And as we talked about at the end of the fourth quarter, we’ve reached agreement with Amazon about the packages that we will take into our network and the packages that they will deliver on their behalf. And it’s a mutually beneficial relationship. As it relates to their latest announcement, we see that as a very clever marketing play by Amazon, but just putting Amazon Prime badge on a SMB website, if the website even exists, doesn’t put that much risk to us, we believe.

Okay. All right. Thank you very much. Appreciate it.

Our next question comes from the line of Tom Wadewitz of UBS. Please go ahead.

Yes. Good morning. I wanted to ask you a little bit – for a little bit more perspective, just on the volume framework. What – I mean, I’m guessing you don’t want to give us a kind of precise month by month. But what did – if you do great, but what did March look like in terms of how much weaker? And then what does April look like? I don’t know if you want to comment on. I mean, I’m asking primarily on domestic package, if you want to offer international thought as well. But just kind of that volume trajectory and how that fits into the overall outlook and expectation for second quarter?

Well, I’ll start. Brian, and then please join in. So Tom, as Brian mentioned, we planned for our U.S. Domestic volumes to decline slightly in the first quarter. We actually missed our plan by about 500,000 pieces per day. And when we started to peel back the layers of the onion to understand what happened because there was a lot of variability in the demand. January was soft because of Omicron and then February came back and was nicely positive and then March turned negative again. And we’re like, why? Well, as we looked at the impact of the stimulus, we found a aha moment. When the stimulus checks hit last year, we saw our average daily volume jump by 400,000 pieces per day. We and our customers thought we could comp that this year, but because of all of the external factors that we’re facing consumers, that proved to be tough. And in fact, if you look at the performance of our SurePost product, last year SurePost grew 35%. This year SurePost declined in the first quarter, 10.5%. And if you look through that, you can see that five customers actually drove more than 60% of the year-over-year decline. And in talking to those customers, they tell us it was just too hard to comp those stimulus checks. So that explains what happens in the quarter. Why do we feel good about the volume going forward? Well, the comparisons get easier. And I can look at what’s happening in April. Our April volume is better than our March volume, so we’re trending in the right direction. And then I look at the volume that’s coming into the network at great revenue quality for deals that we’ve just cut. So over the next several months, we’ve got new volume coming into our business, both from enterprise customers, as well as SMB customers. So we feel very good about the volume projections that are coming into our new network. Just a comment on the international volume, if I could. We thought we’d have export volume growth in the quarter. We did not. It really was because of the COVID rolling lockdowns in Asia. We had flight cancellations it was a tough environment. In fact, we still have people who are sleeping in sleeping bags in the hub. It’s a tough environment there. If you back out the COVID lockdowns and some shift from air to freight, our Asia export business would’ve been up in the quarter. So we’re going to get through this. We are convinced we’re going to get through this and expect the volume to improve internationally. Brian, what would you like to add?

Carol, I think you covered it well. The only thing I would add is one point in international though, we did prove agile with the COVID lockdowns in Asia, as you referenced. We were able to move some of that aircraft and airlift over to Europe. And as I mentioned, the Europe to U.S. air lane was up 10%. So moving the equipment despite the volume softness, I think plays very well in the integrated network.

Great. Thank you.

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

[Indiscernible] (32:20) talk a little bit more in detail. I think you mentioned productivity levers a few times. If you need to be agile depending on what happens with overall demand. Can you maybe hit on a couple of those fine points and how you could flex the network if need be to get to your targets. Thanks.

Sure. Happy to Jordan. Good morning. We do have cost inflation and pressures like everyone else out there and obviously payroll and benefits and fuel are the two biggest in our system. But we are driving productivity, as we think about it. We’re leveraging automated facilities. We’re bringing two automated hubs online this year, one in Pennsylvania, one in California and that will allow us to leverage automated bagging, label applications, et cetera. Carol’s talked before about the smart package, smart facility. We’re rolling that out in 2022. And so that will be a further driver of productivity this year as we think about it. And then within the quarter, ADV was actually down 3% as we mentioned, but hours per day were down 3%. So pieces per hour were basically flat. And then lastly, one of the things that the team is doing very effectively in the U.S., Jordan is the cube utilization, leveraging data to cube out the trucks. It reduced our loads per day better than the volume decline or outpaced it.

And I just want to give a shout out to our operators in the U.S. for managing through this very choppy volume environment to have pieces per hour flat when volumes up and down in a quarter is, is just as a sign of agility. And as to your question about levers, we are able to manage hours very well. If there were to be sustained volume down and we’re not counting on that. But if that were the case, then we would actually take head cut out. But now we’re just managing the hours and doing a matchable job of it.

Thank you.

Thanks, Jordan.

Our next question will come from the line of Todd Fowler of KeyBanc Capital Markets. Please go ahead.

Hey, great. Thanks and good morning. So I wanted to ask on the cadence of U.S. Domestic margins throughout the year. I think Brian previously you had given some guidance for first half versus second half. And I’m just curious with the change in the volume expectations with what you’re seeing on the pricing front. If that pushes out kind of the cadence of how we see U.S. Domestic volumes trend throughout the year? Or are we going to be kind of in a more steady state and kind of reducing some of that seasonality, like you’ve talked about in the past? Thanks.

Thanks, Todd. Yes, happy to talk about domestic margin. We’re sticking with the guidance I had given previously, which was 11.6% domestically for the full year. And it was pretty balanced, pretty close to that the first half and second half. We printed an 11.3% in the first quarter. We’re still holding to that 11.6% for the first half and we think the second half will look similar. So net-net up 90 bps in the first quarter, but looking for a 60 basis point improvement in the first half.

Thank you.

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

Thanks. Good morning. Can you just talk about – I think you said that the volumes would be better or positive in the second half of the year. What changes first half or second half? Is that just a comp? And then if are in a period of more sustained volume pressure, what’s the ability to maintain this level of pricing improvement and margin improvement if the volumes, I guess, stay negative for longer?

So in terms of our confidence of the volume and getting better, the comparisons do get easier, Scott, for sure. But we also are winning in the marketplace because of the service we provide. And I'm super proud of our sales team, who are out there knocking on doors, bringing back customers, some of which candidly had left us but they love the service that we provide, they're coming in a great revenue quality and that's very important too. So we have – we feel very good about what we see coming into the network. And I just want to go back and talk a moment about DAP. Our DAP revenue grew over 50% and in the first quarter that – that platform is on fire and we're taking it outside of the United States now, which is very exciting and in our case looking forward to having DAP come to Europe. So we're well on our way to get to that $2 billion DAP target by the end of this year. In terms of sustained pricing, pricing is really a function of demand and supply, and there still is a demand and supply imbalance, particularly in certain geos around the world, where for whatever reason be it COVID, or labor shortages, or just challenges, the service levels are there. We price for the service that we provide and are not seeing any pressure on the pricing environment right now.

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

Hi, good morning. Thank you, operator. So, Carol, as you look out in the back half of the year, can you talk to kind of what's embedded in the guide with respect to mix? And whether you're seeing any sort of pickup in B2B traction, given the fact that the FedEx ground network seems to be running at service levels, we probably haven't seen in, I don't know, 20-some-odd years?

Well, Brian, perhaps you want to talk more about the guidance?

Sure, so happy to. Look, in the first quarter, our resi B2C was 57% of the mix and commercial was 43%. We had guided for the full year to a 60:40 spread and we still think that's a pretty good number. As we think about mix changes in the business, we're looking for SMB to actually grow about 150 basis points improved from a mix perspective. We saw 140 in the first quarter, so we think that 150 is a good number. So Dave, I think as you split the year, a 60:40 on the resi to comm and about 150 improvement in the SMB is probably good – still stands.

I would say, interestingly in the SMB space, it's now split 50:50, commercial-residential. And we saw our commercial business grow almost 4% in the first quarter. So we're going to take every opportunity to win in that space as well because service matters to that customer base.

And do you have any thoughts on where that long-term mix like what are you kind of designing the network to be for, say, three years out? Is it that 60:40 going to hold? Or like how do you think about what you want this business to look like in three years?

We want the business to be the best of our context as that meets the needs of the customers. And so, we haven't declared what that mix should be, but that's actually a pretty interesting challenge for us as team at our June strategy meeting to think about what – where – what do we want declare that mix to be.

All right. Thank you guys for the time.

Thank you.

Thank you.

Our next question will come from the line of Brian Ossenbeck of J.P. Morgan. Please go ahead.

Hi, good morning. Thanks for taking the question. So Carol, maybe to follow up on that last one. Can you just give us an update on where you think that the market sizing is when you look at the small – the short zone rather in the long and mid-zone? Last time I think the update was in the Investor Day in 2021. Has that really changed at all given all the various puts and takes and dynamics that we've seen here unfold in the last couple of quarters? And then maybe for Brian, have you seen any price sensitivity with fuel going up so much? If customers started to trade down and make other adjustments, given how much those prices will run up? Thank you.

So we haven't updated the market sizing in any material way since our June Investor Day. And when we do, we will certainly share that with you.

And just on the – Brian, the price sensitivity comment, no, I think, as Carol mentioned, probably the most important piece is the service we provide and with the service numbers we're printing not getting a lot of pushback on that because I think we're – from delivering good service. Also when you think about the pricing, there is a split, as I mentioned, between fuel and the base rate. So we're managing holistically, but I think the pricing holding firm is probably the guide.

Yes. If I could just give a quick reminder to limit the questions to one, and then you can jump back in queue for follow up opportunities.

Our next question will come from the line of Chris Wetherbee of Citi. Please go ahead.

Yes. Great. Thank you. I guess when you're thinking about the B2B, B2C mix, and I think you saw a 7% decline in residential, B2B was up for the quarter. I know 64 is sort of what you're looking for, for the full year. I'm guessing in the interim, it's probably more likely that we're seeing B2B grow faster than residential. And does that provide you any sort of margin tailwind when you think about sort of the outlook for the full year on the domestic side, 11.6? Are we expecting any sort of tailwind that you could get from pickup in B2B? And then maybe, Carol, just a little bit more finer point and sort of what you're seeing from the consumer. Just kind of curious, I know you mentioned the stimulus last year being part of that impact on volume. But are you seeing sort of anything else that might suggest either a pivot from goods to services or other deceleration in the consumer end market?

So we don't have direct insight to the consumer behavior. It's more from what we're hearing from our customers, who are telling us there has been a bit of a shift from goods to services. And you're probably experiencing that if you've gone on vacations, it seems like the hotels are full, all the planes are full, and people are going out to eat. And gosh I was in Washington, D.C. last week, and the bar was hoping at midnight. So people are spending money differently than they would. But as it relates to the guidance that we've given and we feel good about the volume that's coming back into our network and the guidance that we've laid out.

Yes. And I just pick up one point on the commercial. Certainly, the B2B from a density standpoint is better than the resi, so we like that. But you have to remember, SurePost was down 10%, so that's impacting the mix as well.

Our next question will come from the line of Helane Becker of Cowen. Please go ahead.

[indiscernible] (0:43:15):

Yes, Helane, happy to address the CapEx. We are holding at the $5.5 billion for the year, so not coming off that. There's a little bit of timing noise in the first quarter, so it looked like we understand, but that was simply timing. As far as where we're investing, certainly putting into automation that – that's the one area we're trying to double down in. On the technology side, some of those are OpEx versus CapEx investments. So in terms of splitting the type of investments we're making, but certainly we are – we have two large automated hubs going in this year. We're looking at the smart package, smart facilities, so we're investing there. Whatever we can do to drive more automation is a positive thing from a cost expense standpoint.

Yes. What I've asked the team to do is to tell me how fast they can go because the – the capital is not going to get in the way of speed here. Automation is critically important to deliver service for our customers as well as drive productivity. Of the automation activities we have underway, be it automated label application or automated bagging or robotic sort induction, it's a head count opportunity this year alone of 1,200 people inside our buildings and that's going to double next year and continue to take off. So we're not going to let perfection get in the way, good enough here. We're going to go fast. As it relates to cybersecurity, that's the one budget I will not touch. We continue to invest in cyber. It's a scary time for all of us, but we are leaning in from a cyber perspective. Clearly, if you think about the challenges coming out of Eastern Europe, we have taken every system down. So we're at no risk there. But of course, we could – we have attacks on our company every day, but our cyber team does a masterful job awarding off those attacks. And we're spending a lot of money to ensure that we protect our customer data, our personal information of our people and all the incredible pricing information that we have that gives us a competitive advantage. So knock on wood, of course, because every company is vulnerable here, but we're certainly investing in protection.

That's very helpful. Thank you very much.

Thank you.

Thanks, Helane.

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

Great. Good morning. Just to clarify, Carol, Brian, if you see volumes more negative in the near-term, is then there a bigger push on pricing or mix gains to get to those same margin and revenue targets? And then, I guess just a follow-up on CapEx, you only spent, I guess, $0.5 billion in the first quarter yet you kept the CapEx at $5.5 billion. Is there increased confidence you can get, the targets by year end or maybe just talk about your CapEx target a bit?

So Ken, on the CapEx, I mentioned a minute ago that it was more timing related in terms of the year-over-year. I think it was about $300 million decline year-over-year in the first quarter. So that basically was just timing. So that won't impact us. We'll come back in the middle of the year and re-look the full year number, but as of now holding to the $5.5 billion in CapEx.

We freed up some capacity in our network to allow us to go out and win, where in the past couple of years, it was harder because of peak gating, there's only so much volume a company like UPS can take into the network during peak. You only have so many doors for cars, you only have so many buildings, but because we've freed up some capacity, we can actually give our customers more peak availability that's allowing us to win with great revenue quality. So right now, we don't view that the revenue quality is at risk. And remember there is still a demand/supply imbalance, and it's exasperated in certain parts of the country. So we are winning because of the SurePost.

Great. Thank you.

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

Hey, good morning everyone. And thank you for taking my question. I want to come back to the fuel issue because it looks like you guys have adjusted your fuel surcharge, maybe three or four times in the better part of the past year. Is there any risk that if fuel prices were to materially come down from here that that's potentially a margin or profit headwind? Can you just tell us why adjusting surcharge still frequently is the right way to go?

So if we look at our fuel surcharge, as Brian mentioned is just part of our overall pricing algorithm and yes, it does move off of the weekly change in the PPG index. But to that, we add a pricing modifier. So think of it known differently than a demand surcharge or a network surcharge or just a plain price. And people are willing to pay for this because of the service we provide. If we look at the impact to our business in the first quarter for the domestic business alone, 55% of the fuel benefit came from changes in the PPG index. 45% of the benefit came from actions that we took from a pricing perspective. We are always thoughtful about changes in pricing of course. We price for the services we provide. Many of our published prices, as you know, are also discounted. So I think that's something you need to keep in mind too, as you think about, are you adjusting too frequently? We price for the services we provide and then we also will discount, but just on a discounting, if I could, we mentioned the new tool that we just introduced to, which we call bill manager. And this is providing pricing analytics to our sales team as they go about negotiating deals. And in fact, as we looked at our pilots, 41% of our volume one and our volume rate wins or volume wins have increased from where they were trending. The discounting is lower in 41% of the volume wins than it had been using our old pricing science. So science rules in many ways, when it comes to pricing, you ask a lot of questions here about elasticity and what are you doing with pricing, science really rules here as we think about providing the best overall equation for our customers.

Thank you.

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

Hi, thanks for taking my question. I just wanted to dig a little deeper on international. I think the original guidance for Jan, Feb was that intra-Europe volumes will improve. And we did see that kind of coming below expectations in the first quarter. So what are you thinking right now on that?

So from a intra-Europe perspective obviously there's been a lot of dislocation with the conflict over there and – but as Carol mentioned at the top of the call, we had actually planned for volume growth internationally and it came down. So we continue to monitor the COVID situation lockdowns in Asia, the European geopolitical conflict and will continue to manage from a volume perspective. But we anticipate the second quarter to look somewhat like the first quarter from a volume perspective.

So would you – is the plan to offset the volume lesser – lower volume with mix or price?

Well, I think we did that in the first quarter, we were down 70 basis points on a margin perspective. And I think the full year guide was for down 60 basis points. So we were basically trending in line with our full year guide in the first quarter to do exactly what you just said.

Okay, great. Thank you.

Thank you.

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

Thanks very much. Good morning. Carol, in this inflationary environment, obviously managing costs is important. I know it's a big folks years, now that we're about a third of the way through the year. Any update on how you're progressing on the $500 million of cost savings, managing the discussion of a little bit more in depth on how the RFIDs improving there and cube utilization package selection time, any metrics there? Are you – and is there upside opportunity there with presumably an enhanced focus? Thanks.

So the $500 million cost out target related to what we call non-ops or overhead and we initially had $1 billion target in which we delivered $500 million last year, we're going to do it again this year. So that's tracking as we laid out, very proud of the team for that. When you introduce technology, it can free up a lot of manual activities. And we're really all about putting our resources where we can get the highest return. As it relates to the RFID technology, boy, we were worried about putting it in this year because of supply chain jams, but we were able to procure all the batteries and labels that we need. So we will get it up this year before peak and a hundred of our centers. And what this will do long-term for us, it looks pretty powerful, wave one alone. It will eliminate all the manual scans done by our pre-loaders. If that doesn't drive productivity, I don't know what will, and it will avoid all the miss sorts, when a package gets miss sorted and it goes into the wrong package car, that's not a very good experience for our customer and it actually just a drag on productivity. So really excited about where that's going to take us long-term and the project is on tech. Nando is also driving what he calls total service, which is running this network, which was designed for perfection at perfection. We haven't been there for lots of reasons, COVID and all kinds of reasons, but it's pretty powerful because if you think about just delays and traffic or delays leaving the package centers, it can cost a hundred of millions of dollars that relate. So running the network for the way it was designed is powerful and Nando just kicked this off. And will bringing you up to speed along this initiative as we go along.

Hey, Steven, we have time for one more question.

Our final question will come from the line of Ravi Shanker of Morgan Stanley. Please go ahead.

Hey everyone. This is Christyne McGarvey on for Ravi. Thanks for sweeping me in here at the end. Maybe I'll just going back to some of the B2C, B2B commentary from earlier in the call, but maybe I can ask it in a slightly different way. I think last week there was a Wall Street Journal article about e-commerce gains, kind of that we saw through the pandemic, at least as a percentage of overall, retail had been normalizing pretty sharply. I'd be curious if you guys are seeing something similar. And if not, maybe you can just touch on your thoughts on how much of those e-commerce gains, you think will be permanent versus kind of reverting to trend line?

Well, look, I applaud the retail stores who are doing a masterful job of offering buy online pickup in a store, buy online return in store, come to my store, come to my store, come to my store because if they don't get traffic into their store, well, they'll deleverage that fixed cost. And then we'll have to close stores. So I admire what they're doing, but there's still been a permanent shift in customer preferences. Customers want to shop when, where, and how they want to shop. And they want their packages delivered to them when, where, and how they want them. It might be inside of the store. It might be at their home or at their workplace or at a consolidated pickup point. So we're not going to see the kind of growth that we experience during COVID clearly, but e-commerce sales will continue to grow. We want to serve that customer, but we also want to serve the commercial customer because that's a very good customer for us. So while we may have said a 60/40 mix, the mix is going to go where the volume is, and we will lean into that growth appropriately.

Excellent.

I would now like to turn the conference back over to our host, Mr. Ken Cook.

Excellent. Thanks everybody for joining today and have a great day.