Journal of Commerce Senior Editor William B. Cassidy interviewed YRC Worldwide CEO James P. Welch and other executives Feb. 21, shortly before the $4.9 billion company released its fourth quarter and full-year financial report for 2011. The interviews at YRC headquarters in Overland Park, Kan., were the basis for the March 26 JOC story “Can James Welch Save YRC Worldwide?” An edited transcript follows.
JOC: You’ve been CEO since last July now. Where in the process of saving YRC Worldwide are you today?
Welch: We are making steady progress. We’re making sequential progress. I’m really pleased with the resiliency that the organization continues to show. Are we where I want to be? No. Am I satisfied? No. Am I happy? No. But I’m encouraged by the changes that we have made and the changes we’re going to make.
JOC: When we talk about saving a company, we talk about goals, such as returning to profit. Everyone wants to know when you’ll get there. But aren’t we actually talking about a process? How is that process unfolding?
Welch: I think so. Go back and think about the transactions and the strategy that the corporation undertook over the last decade and the end result, and it’s not something that can be undone in a couple of months time. One of the reasons I left in 2007 was that I was just categorically opposed to the direction and the strategy that the corporation was on. I felt there had been ill-timed and ill-advised acquisitions and decisions that really were not going to play well for the future.
Related: Can James Welch Save YRC?.
So, coming back and listening to the operating company presidents and customers — it really is a process we are going through here.
One of the things I wanted to do when I came back was to tear down this whole holding company that I felt was way too involved and way too intertwined with the operating companies and was almost a disruptive force. I didn’t want there to be a YRC Worldwide way of doing business. I wanted Holland to go be Holland. It’s a great company. New Penn is a great Northeastern carrier; go be New Penn. Reddaway needs to go be Reddaway. YRC Freight, a combination of Yellow and Roadway that was basically slammed together, was like a rudderless ship. Because when they put the two companies together, some people wanted to do things the Yellow way and others the Roadway way and instead of trying to do things the best way, they let the philosophies of both companies be mish-mashed together without a clear direction on what the heck they wanted the company to be. So the process of undoing the damage … I hadn’t thought about it in that way, to tell the truth, but it is a journey we’re on here.
JOC: How did you kick-start that journey? What did you have to do?
Welch: When I came in, I did a lot of thinking about everything we could do to change course. I did a 100-day plan, put that before the board, and we accomplished virtually everything on that 100-day plan. I just gave the board my personal SWOT review of the company — a report on its strengths, weaknesses, opportunities and threats. If you look at the 11/23 forecast we did (Nov. 23, 2011), we’ve either met it or exceeded its goals for December and January. That’s a good thing, because the company historically has not forecast its performance very well. The 4/1 (April 1, 2011) forecast the restructuring was built on last year was not a great forecast.
JOC: What was wrong with that forecast?
Welch: The 4/1 forecast was unrealistically optimistic. You don’t turn a big ship on a dime. When you looked at the forecast, they didn’t build any seasonality into it — the progress they forecast was all in a straight line. And that wasn’t going to happen. I saw the forecast before I even took the job, and I told the search committee this is not a good forecast.
JOC: So from day one you had to do that over …
Welch: That took a while, but I was very, very fortunate to have hired Jamie Pierson, our CFO. He had been involved in the restructuring over the past three years with Alvarez & Marsal. I was refreshing to him because I came in and said, ‘Let’s just deal with where we’re at. I’m not trying to bump the stock price here, I’m not trying to impress a bunch of shareholders, let’s just be as accurate and honest as we can with this forecast and deal with it.’ He agreed with that, because he knew the 4/1 forecast was basically a joke. So he took the ball and ran with it.
The forecast we now have is still aggressive, but much more realistic. We’re exceeding that 11/23 forecast, though that’s not to be confused with having great results. But even if you look at the last four or five months, look at our actual results, we compare positively month-to-month, which is encouraging. Having a really mild winter has really helped us as well.
JOC: It’s good freight weather.
Welch: Absolutely. I told people when I came here, ‘When you say your nightly prayers, be sure to pray for good weather this winter,’ because that’s one of the things I thought we needed to really gain momentum and be sure that we roll through the rest of 2012 in good fashion. We also needed the economy not to fall into a new recession or a double-dip recession, and we haven’t had that. Those are two of the things that are playing well for us right now.
JOC: You said that when you left YRC back in 2007, you were categorically opposed to the strategies that were being implemented. Which strategies and why?
Welch: Putting together two of the largest LTL carriers in the country was doomed to failure from the beginning. Look at the past. There’s never been a successful or an easy integration of LTL companies of a smaller size, let alone the largest and second- or third-largest companies, whatever they were at the time. Absorbing Carolina Freight darn near put ABF out of business. You can go back to Ryder/PIE … The merger was like putting together the Hatfields and the McCoys. Yellow was a good company, Roadway was a good company, and they took two good companies and made one bad company out of them. And I just didn’t feel like that was a ticket for success. I didn’t think it would work based on my years in the business and watching other companies as they tried the integration thing.
JOC: YRC Worldwide wasn’t the only company that grew by mergers in the 2000s. Even beyond trucking, it was the decade for building global companies.
Welch: Yes, and there were some successes out of that, but a lot of failures. Integrating a company in any business is very difficult. The operational philosophies, the culture, the book of business, the sales strategy, how you go to market, even down to your equipment types and technology, they can be incredibly different. I just didn’t think that strategy would work.
Well, it’s a free country, so I decided to do something different. I never had any intention of coming back. If we had run into each other nine months ago someplace and you had asked me, ‘Are you going to go back to YRC,’ I would have said, ‘Hmm ... do what?’ I had no intention and really wasn’t that interested when they first started talking to me about it. But it’s a good lesson in life to never say ‘never.’
JOC: What hooked you then, if you weren’t that interested when they first approached you?
Welch: I think the heart eventually wins out over the head. I was with Yellow for almost 29 years. I still knew a lot of people here. Trucking is in my blood. Even though I tried to retire and go fish and hunt and golf, I ended back up running Dynamex in Dallas. I love challenges. I’ve always been a builder. Even when I was with Yellow I always seemed to find myself in that part of the country where they needed something a little bit different.
So the challenge was appealing to me. I can honestly say that my main motivation was to come back and see what I could do to save, or be a part of saving, 32,000 jobs. There are 22,000 people that have lost their jobs as a result of the situation this corporation has been in over the last four or five years. Not that I feel I’ve got the ability or the answers to do it myself, but to come back and work with the leaders of the company and see what we can do together.
And I left with a heavy heart. I hadn’t planned to retire. At the time I was 52, and I had a feeling of unfinished business.
JOC: You became CEO of Dynamex, a same-day transportation company. Having gone to a different company, what did that give you in terms of insight and experience that you didn’t have? How did experience change you?
Welch: As I look back, my dad worked for the same company for 41 years, and I’ve always thought there’s something magical, something to be said, about a person who works that many years at a company. So my intent was to do that, but after leaving and then reflecting on what I’ve learned since I left, it was probably the best thing that could have ever happened to me from a management standpoint, an executive standpoint. Dynamex, in particular, was a microcosm of this company. It had too much structure, it had a home office in Toronto, a home office in Dallas, too many divisions, a sales effort that was basically broke.
Dynamex was a smaller company, and I had a chance to be really hands-on in how we turned it around. It had an $8 stock price when I went in, and we sold it to TransForce out of Montreal for $25 a share. I was blessed beyond what I deserved at Dynamex. Just the experience of turning around a company that wasn’t as broke as this one but had many of the same issues was not only fun, it gave me confidence that the decisions that I made there were working. A lot of people might have come into this situation (at YRC Worldwide) feeling overwhelmed, but because I knew the business and because of the experience I had during the time I was gone, I could come in and jump right into things the first week.
Another thing I did was work as a consultant and interim CEO at a company called JHT Holdings, in Wisconsin. JHT was a very distressed company and had been overleveraged a lot, much like this company, but to not to the same extent. I was involved in the turnaround there and learned a lot more about finance than I knew when I left Yellow. I had always been a sales and operations guy, and finance was not my core expertise. I learned a lot during that interim CEO period. So my time at JHT and Dynamex gave me a more well-rounded view of business and a more well-rounded view of myself.
JOC: You mentioned you had a family background in trucking, too.
Welch: My dad worked for a company called ICX, Illinois-California Express. He worked for that company for 41 years, started when he was 14 years old and retired when he was 55. So, I grew up going to the terminal with him. Back in those days they had the draglines on the dock and he’d start the dragline up on a Sunday and I’d ride around in a cart, or he’d start up a tractor in the yard and I’d ride around with him in the yard. It was a different time back then. So I was always enamored with diesel engines and smoke and tractors and trailers. And my son has been in the trucking business for almost eight years. He’s a branch manager for R+L.
JOC: Is there a point that you can see where you’ll be able to say, ‘We’ve recovered from the great collapse, the previous decade’s troubles, and what’s happening now basically has to do with the market today, and how we’re working in it’?
Welch: I don’t think there’s a specific point in time where I’ll be able to make that claim. What I’m looking at is what is happening with the fundamentals of the business at all four operating companies. We are increasing shipments at all four operating companies; our volume is returning. We’re starting to see more shipments from existing customers who had taken some of their business away from us, and we’re starting to see more new business come on board. We just secured a $4 million account today at YRC Freight. I’m trying to compare that to how we’re doing against the total market, and I think we’re at least maintaining or starting to gain some share in the total space. So I’m looking at that as an indicator. When I first came back and I’d be in front of customers, I’d try to determine whether they want us to stay in business simply because if we go out their capacity shrinks and rates go high, or if they saw a real need for this company. After a number of sales calls, I came to the personal conclusion that shippers would like to see this company stay in business because of the diversity we do bring to the market with the different operating companies. We can offer either next-day or five-day delivery within this portfolio of companies. YRC Freight still has a lot of capacity and covers a lot of geography in this country; we’ve got a lot of facilities and a lot of trailers. I think our capacity is still wanted and appreciated by a lot of customers out there.
JOC: So, from a shipper’s perspective, why should YRC be saved? Why does the market need a two- to five-day long-haul LTL carrier?
Welch: If you look at how a lot of LTL carriers have attacked the marketplace recently, they’ve all become very regionally focused, and there’s not a lot of pure-play long-haul carriers out there. I still think there is room for that two- to five-day length-of-haul carrier, as well as our regional coverage. This whole economy is interesting to look at, the supply chain distribution process and how it has evolved and yet may be evolving again. If the manufacturing base of the country ever changes a little more than it’s changed lately, that could throw a different feel to the supply chain distribution process.
We intend to give our existing and potential customers a reason to use us by giving a consistent and more competitive service than this company did in the past, and we’re addressing that with the change of operations at YRC Freight that’s going to be implemented April 8. I’ve been in front of a lot of customers lately, and I feel there’s a certain percentage of shippers out there that are actually pulling for us to stay in business. Maybe it’s pulling for the underdog, because Lord knows there was a big effort to try to get this company out of business by our competitors during its darkest hours, and, in fact, those companies ended up hurting themselves. It took them a long time to recover and some of them are still trying to recover.
The competition is sensing there is a need for us in the marketplace, too, and people are starting to act a little more rationally about pricing.
JOC: Do you think the landscape for LTL trucking is changing?
Welch: Well one of the things that is totally different than when I left is the explosive growth of 3PLs. And maybe more so the ‘rate reseller.’ They seem to be a lot more predominant than they were when I left. The relationship with 3PLs is an interesting one, because today they’re your customer, tomorrow they’re your competitor, and the next day they may be providing out-of-network service for you. It’s a relationship that’s very intertwined, and I think carriers are starting to view 3PLs as a commodity — using the 3PL to help balance their network or fill empty lanes or complement the things they’re trying to do. And the 3PLs desperately need the LTL carriers to execute the business they’re getting from shippers. So that’s one thing. For another ... it seemed at one point customers were just looking for speed, speed, speed, speed. Now there’s a certain customer that’s just looking for consistency. Consistency is a big name of the game today, along with speed in certain channels. But it’s still the trucking business, it’s still a people business, and you either have to compete in the marketplace or pack your bags and go home and cry. One thing I’ve always been steadfast on is that the marketplace is going to win. I don’t care if it’s the banking business, the retail business, the lumber business, the marketplace is going to win. You have to learn to compete in your market.
JOC: Many of the carriers that have released earnings reports did very well in the fourth quarter, including the competitors you noted hurt themselves trying to take out YRC Worldwide. How do you see the market today?
Welch: It appears to me that LTL carriers are more rational from a pricing and a yield standpoint than they’ve been in a long time. That’s helpful to a company like ours that’s trying to get righted and turned around. Other carriers are sensing that we’re not going to go away, and they need to protect their profitability by focusing on yield management instead of cutting prices to try and force us out of business.
JOC: Or trying to become the biggest LTL player on the planet.
Welch: That’s right.
JOC: Are customers changing the way they approach LTL and shipping?
Welch: I think customers are gaining awareness and appreciation of what it takes to provide consistent service from an LTL carrier’s perspective. They’re reacting favorably to the capacity levels of the industry. I don’t think there are a lot of customers out there that think carriers are going to aggressively price their business, so I think the general awareness is pretty good right now. Carrier-customer partnerships are important. The 3PLs are creating a different type of relationship there at times, but, knock on wood, things are pretty stable right now.
JOC: What kind of window do 3PLs have into the YRC companies? How much of your business involves 3PLs at this point?
Welch: Well, we’re certainly a major player or a big player with the major 3PLs, and I think our capacity is both needed and appreciated. We certainly work to have good relationships with the 3PLs, but we are trying to be certain that how we interact with them is beneficial to our company while at the same time trying to meet their needs. It’s a different kind of relationship than we’ve had in the past with the 3PLs, but it’s working good.
JOC: I’ve heard various estimates quoted to me — one being that 15 to 20 percent of the business comes through 3PLs, and if you want to be in that market, you work with them …
Welch: And I think more carriers are viewing 3PLs, if not as a commodity, as a resource to help balance or complement their network.
JOC: Is it getting harder to tell where asset-based carrier networks end and their non-asset network begins?
Welch: It is; it’s kind of blurred. It will be interesting to see what happens with the 3PLs and even the companies that are basically just rate resellers. I’m not a fortune teller, but one thing I’ve learned over my years in this business is that things won’t always stay the same. We want to be sure we’re staying in front of our customers and trying to meet their needs and dealing with what’s happening in the marketplace.
JOC: So since returning, what would you say are your major accomplishments?
Welch: Gosh, we’ve done a lot. Just reducing YRC Worldwide back to being a more traditional holding company. I eliminated the chief marketing officer position, the chief administrative officer position, chief operating officer position. I eliminated the position of president of the Enterprise Services group. We’ve tried to narrow the focus of the holding company to just being a holding company and then push autonomy out to the operating companies. That may sound like it’s a one-day job, but it’s taken us a while to get that done. The Enterprise Services group was involved in everything from operations to sales and marketing, every aspect of our business and all the different companies. That’s been the biggest accomplishment, and the operating companies are embracing it. They’re wildly enthusiastic about it.
The other things we’ve done involve making the tough decisions. We didn’t need a home office in Akron and a home office in Overland Park. And while I lost sleep and grieved over having to hurt some people in the process, the right thing to do is to have one home office, and that’s here in Overland Park. The fact that we’ve got excess properties that we’re trying to sell through an auction; it’s costing me $4 million a year to maintain those properties. Facilities are not like fine wine; they don’t get better with age.
JOC: What’s the reaction been like from your employees?
Welch: Just getting morale built back has been not only fun, but rewarding. When I’m out traveling and meeting employees, I’ll ask them, ‘Do you want to keep acting like a fighter against the ropes, getting pummeled, or do you want to get off the mat, pull up your bootstraps and compete?’ We’ve got a lot of great employees. Just the process of building back morale has been a good accomplishment, and it will be key to our success going forward. We can’t be successful unless we have all 32,000 people rolling in the same direction, and I think we’re making progress there.
JOC: The Teamsters kept this company alive over the past several years, and now you’re asking for a change of operations from them. How is that relationship?
Welch: The relationship we have forged with the union over the last seven months is an improved relationship and it’s becoming more of a two-way dialogue and partnership. There’s a lot of power in that. When I talk with union employees, I ask them what other Fortune 500 company in the country they know of where the union owns a portion of the company and can be a part of a successful turnaround?
There’s a lot of discussion today around how unions are anti-business or not friendly to management or not looking out for the best interest of companies. The Teamsters here have a chance to do something very spectacular within the union world. They can lay claim to being part of turning around what was once a sick company, and I challenge them to step up to the plate and be a part of that.
JOC: So what are the main things keeping you awake at night now?
Welch: Certainly, one of the things keeping me awake is making certain that we manage the liquidity of our corporation every day. Because our lending group has been very supportive, but I don’t operate under any pretenses that they’re not in this deal to make money themselves. And we’ve been given a decent amount of runway to get the company turned around, but it’s important that we focus and manage on our liquidity on an ongoing consistent basis to ensure we have that runway out there the way we need.
JOC: Last year, a lot of analysts were concerned liquidity could dry up in 2012 or 2013.
Welch: Our liquidity is as good as we have forecast it to be. In some ways, it’s better than it’s been in several years. It’s something we are mindful of and are constantly looking for ways on the balance sheet to maintain and hold our liquidity, and so far, so good.
JOC: What’s necessary in capex, both from the equipment side and the technology side? There’s a lot of discussion about the age of your equipment.
Welch: One of the good things that came out of slamming Yellow and Roadway together is that the fleet is really in pretty good shape. They were able to start at the bottom and eliminate old trailers and old tractors until they got to the point where they needed the equipment from a resource standpoint. So our line-haul fleet at YRC Freight is actually in pretty decent shape, and our trailers are holding up OK.
But equipment is not like fine wine either, it doesn’t improve with age, so we’re looking at a combination of ways to address the issues as we move forward. We may look at a 50 percent lease scenario and 50 percent purchase scenario. I think we’re in decent shape this year, but by 2013, we’re going to start reinvesting in the fleet. We realize we’ve got to start cycling some new equipment in here. We just leased 233 sleepers from Penske to replace 2008 models. That’s occurring over the next few months. We are spending several million dollars on trailer refurbs, on engine work, trying to extend the life of our equipment and keep it well maintained and productive. It’s not as if we’re not spending anything. Our five-year forecast has us continuing to ramp up our investment. From a technology standpoint, we definitely need to have some investments to make, too. If we continue to perform against the forecast as we are right now, we’ll have more money to invest in technology. It will be a little slower process than I’d like, but still we’ll get to it.
JOC: Technology doesn’t stand still … what areas are you looking at?
Welch: It never will. We need to replace and upgrade our dock technology, and our in-cab technology needs to be upgraded as well. The good thing about it is the devices are cheaper and the communication expenses are cheaper. We’ve also made some investments in the customer relationship management part of our technology.
JOC: What challenges do you see in freight mix and managing profitability? Freight and customer mix are areas analysts touched on last year as needing improvement.
Welch: YRC Freight, especially, has a mix of freight that’s not as conducive to profitability as we want it to be. In our darkest days, we might have ended up taking freight that either other carriers didn’t want to handle or that was a little too price sensitive, so one of the big things on our list at YRC Freight this year is to make sure the mix of freight is improving and contributing toward our return to profitability.
We are implementing a new pricing model, a new costing model in March, that we hope will help us do a better job in improving our mix at YRC Freight. That’s going to be real important to us moving forward in 2012. We’ve got to be sure we’re going to the market with a competitive and quality offering of service. That’s the ante to the poker game, and that’s something that this company was not doing well enough. Just because we want to improve our freight mix doesn’t mean our competitors are going to roll over and allow us to come in and take their business.
This whole piece is not something that’s a short-term fix. We’ve got to be sure we know where we need a different mix of business and then certainly develop plans to over time make improvements there. You’ve got to chart the course, tack to it and stay committed to it. The thing that has me encouraged is that the stability of the pricing market. I think that’s going to allow us to go to the customer and especially existing customers where we probably have lost share, and if they have the kind of freight we want, to ask for more. But until we improved our service, I don’t think we had the right to go in and ask for much more of the business. That’s quickly changed. If you’re asking for milestones, improving service … it may not seem like a lot to take it from 87.5 percent on-time to 93 or 94 percent, but that’s a monumental effort when you’re handling thousands and thousands of shipments and thousands of lanes and multiple trailer combinations.
The regional carriers give 96 percent plus on time performance. We do not have a service problem at the regionals. We’ve talked a lot about YRC Freight issues, but the regional companies are absolutely good companies giving best-in-class service. They have three distinctive geographies, distinctive cultures, three distinctive service offerings. They’re absolutely on the right track. They’ve improved faster than YRC Freight. That gets back to that challenge of trying to integrate two companies.
JOC: How critical is the change of operations to YRC Freight?
Welch: It’s important. I don’t want to say it’s critical, but it’s important because it’s going to reduce the number of touches. Any time you handle freight, you have the chance to damage it, lose it, misroute it, so it will reduce touches or handling of freight, and it’s going to reduce some line-haul miles. It certainly will improve load average. It’s helping us to reset the focus of the network. The news is not that we’re getting out of the next-day market, it’s that we’re resetting our focus on the two- to five-day lanes, because we’ll still handle the next-day freight, it will just be through our normal way of handling next-day, not through some special Velocity hub.
JOC: If you look at your competitors, there’s been a lot of change to LTL networks since the recession. Are there things that you see which you think they’re doing well and could be applicable to your business?
Welch: Again, any time you can eliminate handling, that’s a big deal. Some of the regionals and superregionals have done a good job tweaking their networks. When your line-haul or over-the-road expense is one of the most expensive parts of your operation, you’d better make sure it’s as efficient as it can be. When they slammed Yellow and Roadway together, the network was designed for more business than they had going through it, so right there, inefficiency was built in. The changes of operations will improve service, load average, reduce partial trailers and improve our quality. The one thing that both Yellow and Roadway could do well was implement changes of operations, and I think we’ll have a much better network.
JOC: You’ve mentioned monthly sequential increases in freight volume. Where is the freight coming from? Is it from manufacturing? Is it from retail?
Welch: Yes and yes. I think inventory levels have been depleted, so retail seems to be doing pretty well. Manufacturing is stronger than we thought it might be. Holland is just busting at the seams. Of course, they’re right in that industrial and automotive belt. The automotive manufacturing resurgence is helping Holland, but it’s helping YRC Freight as well. I can’t think of any specific vertical that’s driving the market; the freight is coming from a lot of different places.
JOC: Do you see changing supply chain factors driving some of the LTL network redesign, not just at YRC, but throughout the industry?
Welch: A lot of it is the evolution of the ‘I want it now’ syndrome, ‘I want it when I want it.’ People wait until the last minute to order something, and when they order it, they want it next day. That’s driving a lot of changes.
JOC: Are Amazon and other online channels driving that?
Welch: Yeah. At the same-day distribution company I ran in Dallas, that was one of our major customers. We were delivering packages ordered that morning that afternoon. That’s what customers want.
JOC: And free shipping.
Welch: That’s right, the whole culture of the country is changing. Does manufacturing, depending on the political winds, have a resurgence here over time? Is that how we address our unemployment problem or our quality problem?
JOC: If we can find the people who are skilled enough …
Welch: Yes, exactly right. It should be an interesting next few years.
JOC: Earlier, we touched on your drive to return YRC Freight to the core LTL trucking business and either sell or move away from other elements, such as YRC Logistics and Glen Moore. You still own operations in China. Will you keep them, and if so, why are they important?
Welch: We only want to keep assets that help us focus on North American LTL. If you look at how this corporation evolved, it got to the point where ‘freight’ was kind of a dirty word. The emphasis was on transportation management systems and third-party logistics and warehousing and China … but no matter how hard we tried to diversify, 95 percent of our revenue was always freight. And freight is what we do best. Hell, we invented LTL. Roadway and Yellow were two of the companies that invented LTL freight. It’s what our core expertise is; it’s what our foundation was built on, it’s our roots, it’s what we do best. My mission has been to try to clear everything out of the way that’s not involved with that and then go out and be the best group of LTL carriers we can be. That’s what I’m setting about to do. It’s why we sold Glen Moore. We’re not truckload guys, we’re LTL guys, so exiting that helps us. The thing I would say about China is … it’s not a part of our North American LTL strategy.
(YRC Worldwide sold its 65 percent stake in Chinese trucking operator Shanghai Jiayu Logistics in March, after this interview. YRC still has a joint venture partnership with Chinese freight forwarder JHJ International Transportation.)
JOC: Even after the debt-for-equity swap, you still have $1.3 billion in debt. How much did last year’s restructuring do to reduce debt, and what more can you do?
Welch: It’s not been reduced a great deal. The restructuring didn’t reduce the debt like I would have liked to have seen from a typical restructuring. What it gave us was the necessary runway that provides us with the time to get turned around.
If we can move the company forward and make consistent progress, there will be opportunities along the way to convert additional debt to equity. That’s when we will have an opportunity to really deleverage this company and start to build equity and start to attract a different kind of investor. A lot of our lenders right now, they’re traders, they’re in it to make money and that’s OK; that’s the capitalistic way of doing business. But I think over time, if we do what we think we can do, you’ll see additional debt convert to equity. That’s the ticket we’re working on.