United Rentals Inc. (URI) Q2 2020 Earnings Call Transcript

United Rentals Inc. (NYSE: URI) Q2 2020 earnings call dated July 30, 2020

Corporate Participants:

Matthew J. Flannery — President and Chief Executive Officer

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Analysts:

David Raso — Evercore ISI Research — Analyst

Joe O’Dea — Vertical Research Partners LLC — Analyst

Mircea Dobre — Robert W. Baird & Co. — Analyst

Rob Wertheimer — Melius Research LLC — Analyst

Seth Weber — RBC Capital Markets — Analyst

Steven Fisher — UBS Investment Research — Analyst

Jerry Revich — Goldman Sachs — Analyst

Ross Gilardi — Bank of America Merrill Lynch — Analyst

Courtney Yakavonis — Morgan Stanley — Analyst

Steven Ramsey — Thompson Research Group — Analyst

Presentation:

Operator

Welcome to the United Rentals Investor Conference Call. [Operator Instructions]

Before we begin, note that the Company’s press release, comments made on today’s call and responses to your question contain forward-looking statements. The Company’s business and operations are subject to a variety of risks and uncertainties, many of which are beyond its control and consequently, actual results ultimately differ materially from those projected. A summary of these uncertainties is included in the safe harbor statement contained in the Company’s press release. For a more complete description of these and other possible risks, please refer to the Company’s annual report on Form 10-K for the year ended December 31, 2019, as well as to subsequent filings with the SEC. You can access these filings on the Company’s website at www.unitedrentals.com.

Please note that United Rentals has no obligation and makes no commitment to update or publicly release any revisions to forward-looking statements in order to reflect new information or subsequent events, circumstances or changes in expectations. You should also note that the Company’s press release and today’s call include references to non-GAAP terms, such as free cash flow, adjusted EPS, EBITDA and adjusted EBITDA. Please refer to the back of the Company’s recent investor presentation to see the reconciliation from each non-GAAP financial measure to the most comparable GAAP financial measure.

Speaking today for United Rentals is Matt Flannery, President and Chief Executive Officer; and Jessica Graziano, Chief Financial Officer.

I will now turn the call over to Mr. Flannery. Mr. Flannery, you may begin.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Jonathan, and good morning, everyone. Thanks for joining our call. I’ll begin with the statement that sums up our position on 2020. We believe, we weathered the worst of the economic impact from the pandemic. And while the shape of the recovery remains unclear, the wholesale shutdown of the macro has started to lift. Visibility is still somewhat limited, but near-term indicators suggests that activity in the second half of 2020 may continue to track with seasonal patterns, which is something that we saw in June and July.

The COVID response plan we shared with you in April is working. We can point to tangible gains from executing that plan. Most notably, a strong second quarter performance. More than anything, our results confirm the flexibility and resiliency of our operating model. It’s one of the reasons we feel comfortable reintroducing full year.

I want to start with a few metrics from the second quarter and after that, Jess will take you through the results and the guidance in detail, and then, we’ll go to Q&A. One highlight of the quarter is OEC-on-Rent. I’m happy to report that rental volumes in all of our geographic regions finished the quarter above the trough they had in April. And for the company as a whole, that low point came on April 9th. From that date through June 30th, fleet on rent show fairly steady improvement, rebounding by almost 14%. This translates to over a $1 billion of incremental fleet on rent.

The biggest takeaways from the quarter has to do with the five work streams we introduced in April. And to remind you, they are ensuring employee safety, supporting the needs of our customers, showing discipline with both our capex and our operating expenditures, and proactively managing our balance sheet. I’ll first speak to the cost management. This was very evident in our results. We aggressively flexed our operating expenses to mitigate the revenue loss, resulting in a decline of just 50 basis points in adjusted EBITDA margin. Our margin in the quarter was 46.4%, implying a strong flow-through of about 50%. I see proof of our cost vigilance every day in our spend on things like third-party services and over time. And while certain costs will return with volume, the team has gone above and beyond to run a lean ship.

Turning to capex, we’re now guiding to a range of $800 million to $900 million for 2020. This is significantly low [Technical Issues] billion of gross capex we spent last year. Our primary focus this year is to serve customers with the fleet that we already owned. And when we do make selective investments, we’re targeted to specific opportunities. And as a result of this cost and capital discipline, our free cash flow generation in the quarter was a very strong $817 million. This is a year-over-year increase of almost 300%. I’m particularly pleased we achieve these numbers without compromising our capacity for the future. This means no branch closures, no COVID-related layoffs.

We thought long and hard about this playbook for years and it came together quickly in March. We’re taking a measured response that serves the near and long-term interest of the company. Just a lot more to say about the financial impacts of the work streams, but I wanted to do to understand just how well our field organization is rising some challenge and it was a huge ask them to provide essential services during such a difficult time and they’re doing a great job. Not only did the team embraced the health and safety protocols in our COVID plan, but they did it safely with another recordable rate below 1.

The work streams also gives you a bird’s eye view of how we’re maintaining our competitive advantages. In short, we’re managing the business in a way that leverages our value proposition. Customers see us as a business partner capable of delivering value across all of their needs and under all conditions. And throughout this pandemic, we’ve been determined to meet this expectation and I’m happy to say we’re succeeding.

Now, a few comments on the operating environment. It’s certainly been a turbulent few months. Industrial activity has deteriorated more than construction and that’s not surprising given the dominant effect of COVID on different parts of the industrial economy. For example, as people stayed at home, the decline in demand for gasoline and jet fuel significantly impacted our petrochem customers. And on the construction side, non-res is a very broad category that covers a lot of different market dynamics and some of the verticals have stayed busy throughout the pandemic, like power and data center builds and others are obviously more challenged, like retail and hospitality. And now with states’ reopening, we see the same COVID news you do about areas that are struggling to avoid spikes in the infection rates. And so far, it hasn’t had any additional impact on our business. Our focus is on monitoring market conditions that could be triggered by infection rates, like state and provincial construction restrictions. So we’ll continue to keep a close eye on that.

We’re also seeing demand continue for our Specialty segment, which is holding up very well. Our strategic investments in specialty are making helpful contributions to the segment revenue this year. Another positive has been the strength of the used equipment market. So far, retail demand has remained solid. And we view this as a leading indicator, meaning contract is expect to need equipment for their upcoming projects and we’ve been able to leverage that demand to recover more than half of our original investment on equipment which is over seven years old.

Big picture, we know that our end markets will recover at different speeds in different areas, fluctuations like this allow us to leverage our strength, our flexibility, diversification and scale. We have a deep fleet of fungible assets that we can shift between construction and industrial sectors and across geographies and verticals. Even in this environment, our flexibility helps to mitigate the pressure on revenue. We can also pivot to new opportunities that may arise from COVID. For example, the idea of repurposing large commercial properties has been floated by some construction analysts. This could create some incremental demand in the construction space.

So that gives you some color. Our customers are still working their way out of the tunnel and it’s our job to be the partner that helps them get there. And what we’re hearing from our customers is that they have the same feeling we do about 2020, reasonable near-term visibility with current work and backlogs and less visibility in late ’20 and ’21. In the meantime, we are on course with our plan and making good progress. All things considered, we delivered a strong second quarter with solid fundamentals for profitability. The things that we told you we could control, we did control and we move fast in a very volatile environment.

The guidance we provided reflects our best estimates on what we can achieve barring some significant change to the operating environment. And the ranges are a bit broader than we typically provide at mid-year, but that’s the reality of the times we’re operating in. And under any scenario, we expect to generate significant free cash flow this year. And if the economic impacts COVID linger on, we have additional flexibility and we can leverage in our business model to remain resilient.

I’ll wrap up with something I talked about last quarter. When I stated that the value we preserve now will be the foundation for the value we create in the future. A big part of that value is our commitment to being first call for customers under all market conditions. We’ve been putting our best efforts in delivering on that commitment. And our Q2 results showed that our best efforts and our business model are more than up to the task. Not only we preserving value, we’re doing it strategically, in ways that will drive returns today and in the future.

Now, with that, I’ll hand the call over to Jess to cover the numbers. Jess?

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Thanks, Matt, and good morning, everyone. I’ll cover the highlights of the second quarter, which were, of course, significantly impacted by COVID-19. I’ll also share an update to our debt structure and finish with some comments on our 2020 guidance before we move to Q&A and there’s a lot to cover, so let’s jump in.

Rental revenue for the second quarter was $1.64 billion, which is down $318 million or 16.2% year-over-year. Within rental revenue, OER decreased $264 million or 15.8%. In that, fleet productivity was down 13.6% or $226 million, as primarily reflecting the decline in volume we experienced during the quarter due to the pandemic. Inflation of about 1.5% costs us another $26 million and a 0.7% drop in the average size of the fleet was a $12 million headwind to revenue. Rounding out the decline in rental revenue for the quarter was $46 million in lower ancillary revenues and $8 million in lower re-rent, which together were a 40 basis point headwind to revenue.

Let’s move to used sales. Used sales revenue was down 10.7% or $21 million year-over-year, which is almost entirely due to less used fleet sold to OEMs in trade packages. The retail used market remains quite strong. OEC sold at retail was up 17% year-over-year despite a slow start at the beginning of the quarter. Used margins in the quarter were healthy as well. Adjusted gross margin on used sales was 46%, while that’s down from 49.2% in Q2 last year, it’s up 30 basis points sequentially from Q1. Retail pricing was down about 6% of last year’s peak, but consistent with what we saw in the first quarter this year. Finally, proceeds as a percentage of OEC were a robust 54% and that’s on fleet sold that was on average over seven years old.

Taking a look at EBITDA. Adjusted EBITDA for the quarter was $899 million, down $174 million or 16.2% year-over-year. And here’s a bridge on the dollar change. The impact from rental was a drag of $197 million, OER was a headwind of $179 million, with ancillary and re-rents down a combined $18 million. The used sales impact on EBITDA was a headwind of $16 million. Year-over-year, SG&A was better by $48 million, with the majority of that benefit coming from lower discretionary costs, including T&E. To a lesser extent, we also had lower commissions and bonus accruals versus Q2 last year.

Our adjusted EBITDA margin was a highlight in the quarter, coming in at 46.4% and while that’s down 50 basis points year-over-year, our margin clearly reflected our commitment to aggressively manage costs, particularly in the early part of the second quarter when volumes were most depressed and restrictions were still in effect. Our focus on cost is also evident in adjusted EBITDA flow through of 50%. And through the second quarter, we continue to action reduced over time [Technical Issues] in-house to reduce the use of third-parties and canceled or delayed discretionary spend, mostly in G&A.

The second quarter flow through benefited from the flexibility we have in our business models to respond quickly on cost. Cost control remains a major focus for us, especially for discretionary spending. But a good portion of our costs will continue to flex with volume. For example, spend on delivery, if necessary. As volume increases through the season and we need to reposition fleet to service our customers and those expectations are included in our guidance.

Back to the second quarter results and adjusted EPS, which was $3.68 and includes $0.30 of benefit from discrete tax items that compares with $4.74 in Q2 last year and the year-over-year decline is primarily due to lower net income from lower revenue in Q2 this year. Let’s move to capex. Year-to-date through the end of Q2, we brought in $353 million in gross rental capex, while proceeds from sales of used equipment have been $384 million, resulting in negative net capex of $31 million and together these results reflect our continuing focus on capital discipline.

Turning to free cash flow, another highlight through the end of the quarter. We generated over $1.4 billion in the first half of the year, an increase of $643 million. Our ROIC remained strong, coming in at 9.6% for the second quarter and that continues to meaningfully exceed our weighted average cost of capital, which continues to run south of 8%. Year-over-year, ROIC was down 120 basis points, due in large part to the decline in revenue this year.

Looking at the balance sheet and our capital structure. Our balance sheet continues to be the strongest it’s ever been. Net debt at June 30 was $10.3 billion, which is down $1.3 billion year-over-year and down $800 million quarter-over-quarter. Leverage at June 30 was just under 2.5 times, which is flat sequentially and down three-tenths of a turn versus the second quarter of 2019. Our current $500 million share repurchase program is still on pause. As a reminder, we had purchased $257 million of stock on that program before we paused it in March.

Liquidity remains extremely strong. We finished the second quarter with over $3.8 billion in total liquidity. That’s made up of ABL capacity of just over $3.6 billion and availability on our AR facility of $56 million. We also had $127 million in cash. Yesterday, we announced we will redeem our $800 million, 5.5% senior notes due 2025. Our decision to do so includes our views of continuing strength in liquidity given our expectations of free cash flow for the year, which is reflected in our guidance.

And speaking of our guidance, I’ll close with a few comments. Of course, no one knows the ultimate impact from the pandemic on 2020 or beyond. We continue to run numerous scenarios, each with varying levels of revenue expectations and related actions to arrive at adjusted EBITDA taking into consideration the six months behind us and the visibility we have to the rest of the year. Our guidance represents what we think of as our most likely range of possibilities, and to be clear, this guidance does not contemplate a shutdown of the economy, like we experienced earlier in the year. Our capex guidance has been refined as we balance our fleet mix in response to customer demand and continue to focus on fleet productivity and better fleet absorption. Finally, and notably, our free cash flow update is a clear indicator of the strength and resiliency of our business model as we plan to generate over $2 billion in free cash flow this year, paying down debt with the vast majority of it.

And with that, let’s move on to your questions. Jonathan, would you please open the line?

Questions and Answers:

Operator

Certainly. [Operator Instructions] Our first question comes from the line of David Raso from Evercore ISI. Your question please.

David Raso — Evercore ISI Research — Analyst

Hi, good morning. Jess, you just mentioned the outlook, the potential ranges does not include a shutdown of the entire economy, but can you help us at least on the lower end kind of how you’re thinking about some of the key states, the Florida, the Texas, and parts of Southern California? A, are you seeing any reaction negatively by customers for projects, equipment demand related to the uptick in the virus? And again, sort of what’s baked into the low end of the range? Just we have a sense of — if there is any cushion at all from the virus or is it just pure assuming no virus impact for the rest of the year?

Matthew J. Flannery — President and Chief Executive Officer

Sure, David. This is Matt. So first to answer your question about the states, kind of tried to cover that in the script. We are seeing all the spike up, specifically in four or five pretty large states and large for us as well. When we went back to look at the data, it’s not impacting our business at this point. So what would, would be closures construction restrictions that hadn’t manifested similar to what happened early on in the Boston area and the New York and the Bay area with the most specific ones back in, in the beginning. So we’re not seeing that. What’s embedded in our guidance is more of a normal seasonal build that we would expect. Although, we’re not going to — we don’t plan on back filling, the gap that was created from COVID in the beginning of the — the end of the first quarter and the beginning of the second quarter, we do expect to see normal seasonal build. As far as cushion, the fourth quarter is a little bit less clear today than what we see in Q3. We think the backlogs and the work that’s ongoing in Q3 is much more predictable from our perspective. And then where we fall within that range that we gave really depends on do we get any acceleration or deceleration of the demand in Q4 and that’s how we’re thinking about it. None of it comprehends — all five of those states doing a major shutdown, right. I don’t — that’s not really the way we ran about it nor do we think that’s going to happen. I think that people have been pretty obvious of their intent to continue to make sure they drive the economy and that’s kind of how we’re planning and how we guided.

David Raso — Evercore ISI Research — Analyst

Any change in tone on — at this time of the year, you have some visibility into the following year with larger projects, had do you heard any tone change in those customers about ’21 or even just a sense of where you sort of [Technical Issue] size a book backlog is today, for next year versus at this time last year for ’20?

Matthew J. Flannery — President and Chief Executive Officer

So if you think about the macro data that everybody looks at that we look at as well, you could see that incrementally some of the negatives got less negative. If you want to think about that at a positive momentum, whether it’s backlogs of ABC, contractor backlog is down about — it’s up to about eight months now, right. ABL, ABI rather is not quite as bad as it was, but still doesn’t denote growth. So I’d call those indicators bouncing off the bottom, but I wouldn’t call them positive yet. And I think even our own customer confidence index improved sequentially, but still not to the levels of what we’d expect. And I think it’s because the lack of visibility that we talked about. It’s just not there right now for people to get comfort. The experience of being better today than we were in April has given everybody somewhat confidence, but just not enough to predict ’21 yet.

David Raso — Evercore ISI Research — Analyst

And last question, obviously, just mathematically, if you get back on to the normal seasonal trend though from a lower level that April obviously got hit, time you want to improve again till April, right, just the neutral math of it, the time you would still stay negative. But when we think…

Matthew J. Flannery — President and Chief Executive Officer

Yeah.

David Raso — Evercore ISI Research — Analyst

About that normal seasonal, also, please. I was going to ask a capex question related, but do you have a comment about the seasonality?

Matthew J. Flannery — President and Chief Executive Officer

No, no, no, please. Go — no, please go ahead. Sorry to interrupt.

David Raso — Evercore ISI Research — Analyst

But if that’s the math, I’m just curious when we think about cash flow and I know it’s been particularly strong. But for capex next year, if I told you the seasonal trend just going to continue, right, no catch up, but no debt. How should we just, I know, Jess doesn’t want to give a capex number for next year yet, but just so we get some sense of the spending below replacement this year, but if you’re back on a seasonal pattern just to gauge a bit the cash flow impact from capex changes, can you just give us a, at least a framework to think about if we’re back on seasonal pattern?

Matthew J. Flannery — President and Chief Executive Officer

So it would really depend on two issues. How this exit rate of this year comes out, right. So how do we do with the absorption of the fleet and how much is fleet productivity improved sequentially throughout the balance of this year to give us our exit rate and then what is the demand look like going forward. If you thought that demand would return to ’19 like levels, that’s what you mean by normal seasonality, then you could think about ’19 capex. I’m not sure that that’s visibility that anybody or in anybody’s calculus quite yet. But if we get a vaccine, if the world starts opening up, people start traveling again, certainly, that would be a thought that we’d be looking towards, but it’s way early for us to even get close to thinking definitively. And by the end of the year, we’ll try to get there to what our guide would be. But the reality is, we won’t really have to make those capex decisions until we start building in the spring of ’21 is when we’d really have to start spending money.

David Raso — Evercore ISI Research — Analyst

All right. Thank you for the time. Appreciate it.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Dave. Jonathan?

Operator

And our next question comes from the line of Joe O’Dea from Vertical Research.

Matthew J. Flannery — President and Chief Executive Officer

Hi, Joe.

Joe O’Dea — Vertical Research Partners LLC — Analyst

Hi. Good morning, everyone.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Hi, Joe.

Joe O’Dea — Vertical Research Partners LLC — Analyst

First on the implied kind of back half of the year guide when we look at equipment rental revenue that was down 16% in the second quarter and the guide implies something similar in the back half of the year. So even as you go through the second quarter and you see a parts of the country that were shutdown and coming back online, but we don’t see kind of sequential improvement into the back half of the year on the decline rate. Can you talk about what’s gotten better and maybe what’s softened a little bit? And then the degree to which it’s just — there’s a low visibility in Q4?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. I think, your last comment hit out at the most, Joe, is that lack of visibility in Q4. So when we think about our GAAP on the year-over-year perspective, we think it’s going to grew slightly and that’s — that 15% versus 16% rent revenue decline in Q2, but we don’t think that that’s going to compress. Right now, if that pipeline of demand starts to increase, if work — if pent-up demand for some work to get done or people get through better through Q3 than we expected then we’ll accelerate that. But when we think about the places that we just really don’t see changing for the better in the back half, it would be first and foremost, upstream. We’re not counting on upstream and I don’t think — I don’t even think the folks in that space are counting on improvement there.

When we think about, the one big variable that we didn’t expect in a normal recession that we are seeing in this pandemic is the petrochem, right. Specifically, a downstream business that just only needs the product. So people start traveling again that would be a pick-up. That’s probably more of a 2021 event than a Q4 event. So these are the reasons why we think, — and then, non-res will be choppy. So we think that the steady — I don’t want anchor too much on the mid-point, but the steady about 15% down year-over-year would imply a steady seasonal build of the whole that was already created, that’s the way we’re thinking about it.

Joe O’Dea — Vertical Research Partners LLC — Analyst

Got it. And then on the replacement capex front, pre-COVID, you’re talking about roughly $1.9 billion and you’re shrinking the fleet this year. So that goes down a little bit. But the question is the cushion to continue aging the fleet, if you find yourself in sort of a protracted slow demand kind of environment. So can you talk about where you are on fleet age? Where you’re comfortable going? How much cushion that gives you to continue buying at this kind of pace versus navigating back to replacement?

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Hey, Joe. I’ll start on that one. So based on what we’re seeing kind of going out to the end of the year will likely lead to the fleet, somewhere between five and six months, right. And so we’ve talked a lot with you guys and with investors about having at least a year of headroom in our back classes to be able to age out the fleet in down cycles like this one and not have any real discernible impact on increased R&M or had any urgent need to replace. So as we even think forward into 2021, there still is some opportunity and some headwind. If we needed to age the fleet out a little bit more, we could without any real impact.

Joe O’Dea — Vertical Research Partners LLC — Analyst

That’s great.

Matthew J. Flannery — President and Chief Executive Officer

Not that we’re trying to speak that into our future in any way, Joe.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Yeah. No, not at all.

Joe O’Dea — Vertical Research Partners LLC — Analyst

Yeah. Appreciate it. Thank you.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Joe.

Operator

Thank you. Our next question comes from the line of Mig Dobre from Baird. Your question please.

Mircea Dobre — Robert W. Baird & Co. — Analyst

Yes. Thank you for taking my question. Good morning, Matt and Jessica.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Good morning, Mig.

Mircea Dobre — Robert W. Baird & Co. — Analyst

Yes. I guess, I’m going back to the Q1 call and I think at the time you provided some good insight on April you — my recollection is that you called out fleet on rent being down 15% and obviously you told us that the improvement here was pretty significant, you’re up 14% from that level and I’m trying to juxtapose that against the 4% decline in the fleet in the quarter. What I’m getting at here, I’m trying to understand is you’re into the third quarter here, where are you on a year-over-year basis in terms of fleet on rent? And what is the implication here for the fleet productivity metric?

Matthew J. Flannery — President and Chief Executive Officer

Sure. So we don’t give that fleet on rent number, but you see where we’re guiding to and we talked about the 15% that we were down in Q1. Now, what you’re seeing is just a normal seasonal build off of that. So even though we’re sequentially and did through Q1, sequentially saw improvement. You have to think about the fleet productivity is measure in that year-over-year gap and we don’t talk about the individual components, but we certainly shared color that come in end of the year, we thought our biggest opportunity was absorption. You can imagine that was exacerbated by COVID. So as we continue to manage the denominator of that calculation, we’re expecting to see sequential improvement, but we’re not expecting to see positive fleet productivity unfortunately until we get past these comps probably in the Q2 to second half of ’21 and we’ll continue to dependent on what kind of demand environment we’re in manage that inflow, right. We’ll manage the denominator as well as the numerator depending on what demand says. So that’s the way we’re looking at it and that’s how we’re going to focus on driving higher fleet productivity.

Mircea Dobre — Robert W. Baird & Co. — Analyst

I appreciate that. Thank you. And I guess my follow up, maybe trying to get a little bit of color from your perspective in terms of how this downturn compares to some of the prior ones that you’ve seen. Obviously, your cost flexibility has been evident. But I’m more thinking from the standpoint of competitive dynamics in the industry, the way you’re seeing customers react and frankly maybe some opportunities that you see for the industry coming out of COVID. Thank you.

Matthew J. Flannery — President and Chief Executive Officer

Sure. So this was certainly in the handful of downturns I’ve seen in my — now in my 30th year in this business. So this was unique. I think anybody, didn’t went through the Spanish flu, right. So this is a very, very unique creation of this dislocation and it made us move really fast. It made our customers move really fast. So we went from almost panic when you really think about it out there too. Now people starting to feel a little bit better, but still very cautious. So that’s how people are managing their business as well. I mean, when you see that flow through that we had in Q2, it was part of that things immediately shutdown. So that gave us a bit of a cost advantage and it was, I think you saw that in a lot of businesses.

Now people are starting to think about what the future brings. Some of the things that we’re learning in a post-COVID environment are what end markets you’re going to do better. We believe it or not, it’s hard to see in our — within our numbers, but even within our current fleet productivity, we actually have some asset classes that are up year-over-year. And it’s hard to imagine, but that’s about shifting to where the opportunities are and that’s always what’s our business model has been about that infungibility of our assets, so that we can move them to where we need to move them to.

So that’s the way we’re moving. I’m sure many customers are doing the same. Customers are going to need to find different ways to drive revenue, different ways to create value for their clients and we’ll continue to do that. We also think technology and safety are both going to, they were important already, I think they’re going to be more top of mind in our space and for our customers and we think that’s inherent to the large players that have the scale to invest in some of these and we’ll continue to use that as a future post-COVID opportunity as well.

Mircea Dobre — Robert W. Baird & Co. — Analyst

Just to clarify, are you seeing better industry discipline around a both fleet and call it pricing?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. I think you’ll hear it right. So many of the OEMs reported in this week as well. I think you’ll see and you already have seen what they’re need to do to react to our rental industry, very positive reaction of shutting off the capex ticket. As obviously, you’ve seen it not just play through a note report, but you’re seeing it played through in the OEMs production and lack thereof. So we think that’s the right way to manage through this and I’m very pleased with the data that we see, the industry remains disciplined.

Mircea Dobre — Robert W. Baird & Co. — Analyst

Thank you. Good luck.

Matthew J. Flannery — President and Chief Executive Officer

Thanks.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from the line of Rob Wertheimer from Melius Research. Your question please.

Rob Wertheimer — Melius Research LLC — Analyst

Hey, good morning, everybody.

Matthew J. Flannery — President and Chief Executive Officer

Hey, Rob.

Rob Wertheimer — Melius Research LLC — Analyst

So your downside volatility to earnings has been less than some of the rest of the group. And I think that probably speaks more in natural variability and the cost structure than it does to any strong one-off actions you took. So could you just kind of outline whether it’s re-rent or outside haul or what are the kind of the improvements that allowed cost of flex down so abruptly, I don’t think you did a bunch of big salary cuts or lay-offs or closures? And then, I suppose, some of those things are still in reserve as the economy does get a whole lot worse, but can you just sort of talk about that variability cost structure? Thanks.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Sure. Hey, Rob. It’s Jess. So, yeah, I mean our team did a great job in managing through the second quarter. The — some of the costs that we’ve called out have been focused on reducing over time, right. And really focusing on the capacity that we have in-housed by in-sourcing delivery and repair and maintenance that in part had been outsourced to third-parties, right, bringing that in using our capacity and saving what’s premium cost, right in using those third-party services. We’ve also — as Matt mentioned, the beginning of the second quarter, especially as we were all adjusting to restrictions in place, we very quickly shutdown our discretionary costs, right. You saw that in the SG&A year-over-year benefit that we called out this quarter where T&E, of course, right, that’s an easy one to kind of think through as both stopped traveling immediately. But also, discretionary costs that we were able to cancel or delay as a result of trying to keep only business critical needs in the cost structure.

Rob Wertheimer — Melius Research LLC — Analyst

Okay. Thank you. And I wonder sometime if you ever quantify some of outside haul and some of the other things would be a little bit interesting to see how big an impact each was, but against those competitive issues. Just you have a lot of cash flow going through the company right now as you reduced fleet and so forth. Can you just give us the guide points on when you might — well, what you intend to do with that as the year progresses? If nothing really dramatically bad happens in the economy, you’ll have a lot of cash to do something there and what drives the decisions there? Thank you. I’ll stop.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Sure. No. Great question. Thank you. Yeah, our focus right now is to use that free cash flow to pay down debt, right. We’re not out of the woods yet as far as the COVID impact and liquidity is going to continue to be a major focus for us. So, we’ll use that excess free cash flow to pay down debt. And well, it happen just kind of in the normal course, right. As we do our 2021 plan and we look at the kind of cash that we expect to generate next year as well, we’ll have that conversation with our Board and make a decision is to whether or not we want to use some of the excess cash to finish the share repurchase program for example. But right now it’s steady on continuing to reduce the leverage and take out the debt.

Rob Wertheimer — Melius Research LLC — Analyst

Thanks, Jess.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Sure. Thanks, Rob.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Rob.

Operator

Thank you. Our next question comes from the line of Seth Weber from RBC Capital Markets. Your question please.

Seth Weber — RBC Capital Markets — Analyst

Hi. Good morning, everybody.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Good morning.

Matthew J. Flannery — President and Chief Executive Officer

Hey, Seth.

Seth Weber — RBC Capital Markets — Analyst

Hey, Jess. I just wanted to follow up on Rob’s question. I know you guys always discourage kind of using the midpoint anchors for the guidance for the decrementals. But just kind of going back to the cost discussion, I mean your second half decremental does — guidance does suggests the decrementals are worse than higher than what they were in the second quarter. So can you just kind of walk through a little bit more detail, like what’s coming back on, I know there is variable commissions and things like that, but is there anything else that we should be thinking about there? Thanks.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Yeah. Thanks, Seth. Yeah, I think the first thing that I would do before I get into some detail is that caution on the midpoint, right. I mean, we’re really thinking about this guidance as a range of possibilities. And so…

Seth Weber — RBC Capital Markets — Analyst

Yeah.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Probably, easiest for me to frame that in terms of flow through for the back half, right, where it’s — where we land is really going to depend on how that going to sets up first and foremost, right. And then, if you think about it from a cost perspective, as I mentioned in my prepared remarks, there may be some variable cost that come back into the business, as we — the flex with the volume, right, so if you even just think of a seasonal trend as we work out to the October peak, you may have some — we may see some additional delivery costs right and repositioning even over time, right, where we normally will use over time to flex for labor needs instead of bringing in full time head. So we could see some of that come back in depending on how the volume trends. Discretionary costs, we’re going to continue to keep a tight handle on, but we could see a situation where if things do start to open up, we do start to have folks spending some T&E, meeting with customers, right. Some of those costs to come back into the business as well, at a rate a little higher than the way we were able to pull back on them in the second quarter.

Seth Weber — RBC Capital Markets — Analyst

Okay. That’s structurally is like a 60% number the right way to think about decrementals do you think just in general for United?

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Yeah. I’m skittish to give a number, because again for us, it’s extremely fluid based on the way that the third quarter and really the fourth quarter, right, where we have a little less visibility plays out. So I’ll let you do the math on what you think is the right number, how’s that.

Seth Weber — RBC Capital Markets — Analyst

Okay. And then just really quick, just the specialty business continues to perform really well. Can you just talk about cold starts there and how you’re thinking about allocating capital to the specialty business? Thanks.

Matthew J. Flannery — President and Chief Executive Officer

Sure. Seth. We — you’re right, we continue to be very pleased and even with the lower revenue, specialty did a good job of driving increased margins based on some of the in-sourcing getting rid of third-party services and really a good team effort across the board. So we’ll continue to invest in those. We’ve done about 10 cold starts year-to-date and we plan on do another five in the back half of the year. So we’re still leaning into specialty. We’ll continue to put capital in there and our Power segment, for example, is one of the regions that actually is up year-over-year. So there are opportunities during COVID that we’ll continue to find.

Seth Weber — RBC Capital Markets — Analyst

Super. Okay. Thank you very much, guys. Stay safe.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Seth.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Thanks, Seth.

Operator

Thank you. Our next question comes from the line of Steven Fisher from UBS. Your question please.

Steven Fisher — UBS Investment Research — Analyst

Thanks, good morning. Just to follow up on the cost question. Again, it sounds like for the most part the efforts have really been focused on the third-party services and over time and you’re just saying that some of the variable cost might come back in, but let’s say you want to look for the next area of costs to actually take out if things were to be a little bit softer in the demand side. What are those next areas of cost that you would look to tackle? I think, Matt, you said in your prepared remarks that there haven’t been any COVID layoffs yet, is that where we would go? Would you start looking at actual kind of whole branch closures, how would you think about the hierarchy as of where we go in the cost structure to take the next round out?

Matthew J. Flannery — President and Chief Executive Officer

Sure, Steven. And this is something that we thought about a lot and are very intentional about how we’ve responded so far. So let me just talk about — forget about the numerical values. So I think we’ve covered that strategically. Coming out of ’09 and having experience that downturn and what we did and had to do and what I would want to do differently, and what we’d want to do differently. We’ve built a strategy to make sure we didn’t have to do a couple of things. Number one, we didn’t want to unnecessarily take out or damage our capacity to get ready when we got through the other side and that — so we’ve structurally work towards that during this pandemic, which is why we’re very pleased that we used in-sourcing to keep our labor force busy as opposed to layoffs. And that was very intentional on it and you can see from the flow through that work. When we think about store closures, we intentionally did not want to go there.

Now we went this into a full recession, 2009 type recession, which I don’t think anybody is predicting right now, but if it happens, we have that playbook. We know what to do. A couple of things that we are going to limit. We’re not going to fire sell equipment. We don’t need to. We have great liquidity, strong balance sheet, maturities out to adjust 2025, right. So we don’t have that angle hanging over us. So we don’t need to fire sell equipment and we don’t need to make rash decisions to make sure we make payroll. We don’t have a liquidity issue. So this balance sheet allows us to react a little bit differently. We’ll still protect margin, I think we just proved that, but we’re not going to damage the business long-term, but there is more flexibility to make sure we remain resilient and will utilize it.

Steven Fisher — UBS Investment Research — Analyst

Okay, that’s helpful. And then maybe on the flip side of that, I’m just curious how you think about potentially going on offense. I mean, as a industry leader when you go through the downturn, might expect that you should be able to gain some share. When do you think is the right time to start being more active in trying to gain some share? And where would you look to do it and how would you go about it?

Matthew J. Flannery — President and Chief Executive Officer

So that’s something that we talked about actively, right. There is — that balance sheet can be used defensively and it can be used offensively and we want to make sure we’ve used it defensively and appropriately so and we are turning our mind to offense. So when we think about where are these other opportunities, some could ask why you guys spending another at the midpoint about $500 million of capex, because it is offensive opportunities. There is products and end markets and verticals are still going to support and that’s the way we’re looking at it. And as more post-COVID opportunities arise, we will use that balance sheet. We’ll go use our scale and our leverage to make sure that we can play some offense.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

So, if I can just add one thing, the flexibility that we have is also something that we’ll lean into as opportunity presents itself and we can lean into a recovery and into the market, right. So we’ll be ready to spend when we need to based on being able to flex that model up as necessary.

Steven Fisher — UBS Investment Research — Analyst

Great. Thank you.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Steve.

Operator

Thank you. Our next question comes from the line of Jerry Revich from Goldman Sachs. Your question please.

Jerry Revich — Goldman Sachs — Analyst

Yes, hi. Good morning, everyone. You folks have been on a continual journey to improve the logistics and we’re seeing some of that with in-sourcing here. I’m wondering based on your experience going through this environment, is there an opportunity to — on the other side of it to have higher fleet availability, could this be an opportunity through touchless pickups and all having a standard process in place can we come out of this with higher fleet available across your business?

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Jerry for the question. Absolutely. So, I had a note from a customer early on during COVID when we created this touchless system that they said a nice, very nice note thanking us. So they had the best rental experience ever. They pull their truck up. Everything was done digitally about ordering the equipment and confirmations and when they pulled up, we hook the trailer up, had to skid steer behind it, anyone office way said it was the fastest, most painless transaction he has ever had in the rental business. So, there you go, necessity is the mother of invention once again. And we’ll continue to take those learnings. And when we think about our labor headcount models and one thing — one of the ways that we did retain our labor as we talked about earlier was in-sourcing. When we get to the flex upside in a more stable environment, not necessarily back half of this year, I don’t think adding heads right now makes sense. But maybe having more heads and eliminating some of the more expensive variable costs we have like overtime, like outsourcing, logistics when we meet capacity, are some of the things that we’ll be investigating to make sure that we can continue to drive efficiency in our model.

Jerry Revich — Goldman Sachs — Analyst

And then from an end market standpoint, a lot of folks thus include are concerned about non-resi to next year for a good reason. But on the flip side, a lot of your industrial markets are really in the only — early stages of recovery. Can you just talk about your fleet on rent for some of your industrial verticals? I know you’re not going to want to provide a ton of specificity, but just a broad range color on where we are in the restart and fleet on rent to those deployments it would be helpful.

Matthew J. Flannery — President and Chief Executive Officer

Yeah. So I won’t give you the fleet on rent stats, but I will share with you and as I did in my prepared remarks, the petrochem industry is really challenged. That market for us is down 35%. That’s a big portion of what we’ve heading during post-COVID. You can look at both sides of that. You can look at as the world opens back up that’s one of the opportunities to get back to normal type volume. So we think that’s an opportunity for us. Industrial overall if you take that out, if you take out petrochem industry it’s a little more like construction overall, right, not really a big deal. But when you look at data centers, power as a segment, infrastructure, there are opportunities that we can lean into and whether we add additional products to the mix which we’ve been doing or whether we just enhance some of the offerings that we already have to make sure we’re being a one-stop shop solution for all these end markets, that’s really how we’re looking going forward. And I think the industrial markets will recover at the same pace and maybe even a little faster because of the petrochem drop once we get on the other side of COVID.

Jerry Revich — Goldman Sachs — Analyst

And Matt, in your prepared remarks, you said you’re monitoring the coronavirus from here, but you haven’t seen any impact so far. So is it fair to say that the fleet on rent momentum has continued into July by those comments because there concerns by one of your suppliers put up today that there were some slowdown in parts of the country in July and getting fleet back on rent because of the COVID. So can you just comment on that please?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. And what I referred to — so we are seeing the seasonal build, but what I referred to specifically is, because we went look and saying, wow, look at these spikes in these states that we all see all over the news. So we went and look at those states on our volume and some of them are big state for us and we’re not seeing it. So the data is not showing a correlation to our fleet on rent, our revenues, our activity in those states that would match a negative correlation to the infection rates and that’s really what we meant. We’ll keep an eye on it if that pivot. As always we’ll let everybody know, but we actually haven’t seen that. I think that’s commitment, a lot of these communities that they got to keep run it, right. The world has got to keep on. So we will continue you to see the seasonal build and that’s what our guidance implies.

Jerry Revich — Goldman Sachs — Analyst

And that’s a common through July, just for clarification?

Matthew J. Flannery — President and Chief Executive Officer

Yeah.

Jerry Revich — Goldman Sachs — Analyst

Okay. Thank you.

Operator

Thank you. Our next question comes from the line of Ross Gilardi from Bank of America. Your question please.

Ross Gilardi — Bank of America Merrill Lynch — Analyst

Hey, good morning, guys.

Matthew J. Flannery — President and Chief Executive Officer

Hi, Ross.

Ross Gilardi — Bank of America Merrill Lynch — Analyst

I just had a question on specialty. I mean you had strong margin performance, 80 basis point increase, but your revenue is down 11%. And always hard to know if this is all apples-to-apples, it just feels like some of your competitors are posting stronger growth in what they label as a specialty rental businesses. I’m just wondering, are you seeing increased competition in any of those specialty markets, particularly in areas like climate control, parts of power gen, which have been very, very hot markets as the core general rental markets are depressed?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. No, we aren’t seen any competitive change in the landscape and you hit on the right one, power has been growing for us and I’m sure others have been growing as part of an emergency response. When you think about all the temporary, whether it’s shelters, businesses, people putting tents out in their parking lot so that they can feed people outdoors, right. There is there so much opportunity for power to grow. So we’ve been seeing that growth as well. But I don’t think we’re losing share there in any way, shape or form. We’re pleased with what we’re doing there. As far as specialty as some of our competitors, we all different companies categorize it differently, for us how we look at our specialty business. It’s products that have more of a unique fully embedded engineered solutions so to speak, right. So it’s not just dropping off the generator. It’s cabling, it’s putting step down transform, is making sure we’re creating a solution and that’s how we look at our specialty and I won’t comment on others. It’s just I understand there are some products that are in other specialties that are not launched. So we’re not seeing any change in the competitive dynamic there.

Ross Gilardi — Bank of America Merrill Lynch — Analyst

So then, Matt, can you just talk a little bit more about why your revenue is down 11% then? And I suspect some of it’s in the fluid solutions business that’d be — I’d be curious what kind of growth you’re seeing ex-fluid solutions, was trench up this quarter or did it behaves more like a gen rent type business at least in terms of demand trajectory? Thanks.

Matthew J. Flannery — President and Chief Executive Officer

Sure. We don’t really get down to breaking all those segments down, but you’re hitting on the head here, right. Think about pumps and tanks and how much in the petrochem space we are penetrated with those products and we’re even with the Baker acquisition, right. So they’re certainly faring worse, more in line with how our gen rent areas are faring in those marketplaces. So that would be a drag on the overall specialty growth. Trends are slightly better than the average, but not at a positive, we’re calling out power, because power is unique. I don’t think people would think that any business unit would be positive. So power, our reliable onsite business, although small is seen positives as well. But I think you hit ahead that fluid certainly is having challenges as we’re going through COVID here, that’s big part of what’s driving the negative growth.

Ross Gilardi — Bank of America Merrill Lynch — Analyst

Got it, okay. Thank you.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, Ross.

Operator

Thank you. Our next question comes from the line of Courtney Yakavonis from Morgan Stanley. Your question please.

Courtney Yakavonis — Morgan Stanley — Analyst

Hi, good morning, guys.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Good morning.

Matthew J. Flannery — President and Chief Executive Officer

Hey, good morning.

Courtney Yakavonis — Morgan Stanley — Analyst

Just curious, you guys have kind of during the upturn talked a lot about the outsourcing that you did and that was kind of pressuring margins. Can you just quantify maybe how much of your repair and maintenance was outsourced and kind of help us understand how much the opportunity is and kind of — at what point would you have to start outsourcing again as sales do recover? And then, maybe just same situation on the overtime, how much overtime had you added over the past couple of years and when would we expect to see that increase?

Matthew J. Flannery — President and Chief Executive Officer

So I don’t have the numbers handy for the past couple of years. But when you think about what Jess was speaking earlier about what’s incurred in the flow through of the midpoint of our second half guidance, you’ll see some of the cost. You’ll see the magnitude of some we’ll start creeping in with whether it’s overtime, which we’re leaning more towards overtime. We want to keep our people busy, first, and that’s been a big part of our COVID response. And then, maybe some logistics and third-party. As far as third-party repairs, we’re not expecting a lot of that. Some of that was for stuff that was really beat up out in the oilfield last year, stuff that needed major repairs and we were already utilizing our capacity, so we outsourced it. And that is always an opportunity, an area to flex. But I think in this — one of the post-COVID learnings, as I talked about earlier, maybe we will in-source more going forward in a more stable environment. So, I don’t have the numbers for you on what that historical trend is, but it’s certainly an opportunity for us going forward.

Courtney Yakavonis — Morgan Stanley — Analyst

Okay, got you. And then I think, last quarter you had talked about $1.5 billion in OEC-on-Rent that it comes offline. It sounds like there’s been a seasonal build of about a $1 billion, so about $500 million that’s still kind of that halt you were talking about. And you’ve also been kind of characterizing it as a very typical seasonal build that’s been happening off of that halt. So can you just help us understand, is that halt all petrochem and the retail and hospitality and special events and those projects just never came back online? Or is it just the seasonal build that you are seeing those projects come back online and it’s typical, but just off a lower base? Just trying to understand, what if there have been projects, they’re just kind of in permanently delayed that you just don’t see and come back carrying that with the comments about the seasonal build?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. You hit on the main point at the end of your statement there about the lower base, right. So it’s really just off a lower base. But unlike what we’ve talked about in the past few years, we are seeing project delays and cancellations, but more delays. For us, right now with the lack of visibility, we’re just counting on the delays as they are not there until they come back. And it’s very spotty, is just think about the major airports. Last year we’re traveling around back when we were traveling. You felt work at just about every major airport that you flew into. And about half of those are continuing on and then half are “paused or delayed” and when those and what would create those coming back is something that will be part of the recovery, but we don’t have the visibility for that right now. And it’s really not even by geography right here in the New York Metropolitan Area, we have LaGuardia it’s going full steam ahead. Yet JFK that’s slowed down and delayed many phases of that project. So we see this is future opportunity, but the difference between now and what we’ve talked about for the past 12 quarters is we are seeing project delays and we do believe, we’ll continue to have a seasonal build off this lower base, but those would all have to come back online for us to raise that patients start to fill that gap.

Courtney Yakavonis — Morgan Stanley — Analyst

Okay. Thank you.

Matthew J. Flannery — President and Chief Executive Officer

Thank you.

Jessica T. Graziano — Executive Vice President and Chief Financial Officer

Thanks, Courtney.

Operator

Thank you. Our next question comes from the line of Steven Ramsey from Thompson Research. Your question please.

Steven Ramsey — Thompson Research Group — Analyst

Everyone. I’d like to dig a little deeper on delays versus cancellation, are the delays happening more on the side of projects that are going, are going to go slower going forward or is it projects that you expected to start are now being pushed out? And then, on the cancellations, even though there — you’re not seeing many of them, is there a trend and what types of projects are being cancelled?

Matthew J. Flannery — President and Chief Executive Officer

Yeah. So as far as the cancellations, and just to clarify, there’s not as many cancellations are they are delays. But in our mind with the uncertainty going on right now, we’re going to treat them fairly similar, because the cancellation could be brought back up as well. So just think about the industries that have been most challenged through COVID. Certainly, anything petrochem-related has been shelve, delayed whatever term you want to use. Travel, right, it’s just a, it’s too different thoughts for us. There are are some airports that are same. We don’t have a lot of activity right now let’s lean in and there are others that are delaying. I would imagine, it has to do with their funding and their confidence going forward on how much volume they will do in those locations.

When you think about entertainment, stadiums, those types of jobs as you can imagine. A little bit of uncertainty of what the future is going to look like. So some of those are being shelved. And then certainly anything in hospitality right, travel and hospitality, we’re seeing a lot of it. So just think about the industries that are more uncertain than others. When you are seeing other things even power builds, I talked about earlier, Power segment is growing for us whether it’s standard power or alternative power. When you think about data centers, those are growing. That’s a growing opportunity. And then, for those who live in the Northeast, as I travel around the Northeast here by car, I’ve seen a road work everywhere. So we expect infrastructure to continue to gain momentum. It’s one of the values of less traffic as people can get this work done more efficiently. So those are some of the puts and takes that we’re seeing and that really inform how we view the balance of this year.

Steven Ramsey — Thompson Research Group — Analyst

Great. And then, just I would be curious to hear your perspective on how a secular shift to rental generally accelerates during challenged markets. Does the secular shift that potentially comes from this current downturn, does it look different? Does it look better with your greater specialty equipment asset base? Thanks.

Matthew J. Flannery — President and Chief Executive Officer

Absolutely. I think really for the industry broad based offering of which we’re leading and penetration overall there are all the downturns in my career, people that had to turn to rental when they previously weren’t looking at it as their number one priority and channel, very rarely almost they’re go away. I think once they get to it, they realize we can — they can rely on us, but the product will be there and I have the right equipment at the right time. So we do expect secular penetration on the other side of this and I think it will be broader to your point, because we have a broader offering. So I think it will be across the board, specialty, new products in gen rent that people weren’t renting before, I think it will be a good thing for the industry overall.

Operator

Thank you. And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Mr. Flannery for any further remarks.

Matthew J. Flannery — President and Chief Executive Officer

Thanks, operator. This — I appreciate the conversation today. This is certainly turning out to be an interesting year for sale lease. And as always, we’ll keep you updated as things evolve. In the meantime, our Q2 investor deck is available online. And as always, Ted is available to answer your questions. With that, please, everyone stay safe, and operator you can now end the call.

Operator

[Operator Closing Remarks]