Knight-Swift Transportation (KNX) 24 Apr 242024 Q1 Earnings call transcript

Good afternoon. My name is John, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation First Quarter 2024 Earnings Call. [Operator Instructions] Speakers from today's call will be Adam Miller, Chief Executive Officer; Andrew Hess, Chief Financial Officer; Brad Stewart, Treasurer and Senior Vice President of Investor Relations. Mr. now is meeting the yours. Miller,

related and Thank conditions you we and everyone, of topics thank our earnings afternoon, joining you, plan quarter, our market discuss Today, John, for call. first and earnings results good quarter current the to guidance. to the XXXX

posted We are call, have website. investor this accompany our slides to which on

get participants to Our we will commentary, possible, call following these In the X And topics. our questions is many scheduled per hour. to to order limit we participant. to questions as last related as X to answer

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continued the AAA our the efforts the in Xpress in efforts VP started of X with has slides, introduce Hess Stewart. roles, me when Knight financial X years of into leading finance prior CFO, to is first significant and January for oversight joining be Brad newly jump a gentlemen Andrew Andrew with acquisitions. Cooper, for including will M&A. the the Andrew appointed want at the served to been call several on today M&A in MME Andrew XXXX. our just played and has closing was last beginning our time: company And the then I we the before XXXX, on of role at and Swift, that the Andrew in Finance Hess Now led he U.S. along CFO. becoming

to Andrew want to So the call. welcome we

to years over has leading welcome Andrew businesses Swift Brad both and company the Treasurer XX and activity Investor for past Relations Brad for be call. Brad leadership with years, held Knight as and past And the our I'm then the familiar Brad in excited now. our with Stewart has been many several has finance is the been roles to year. various the he and may you of

call over with And that, I Brad. now to the turn will

you, contained results on the the To Commission call and made This the risks on Exchange company's first are I may you assumptions Thank X and of of XA Form to that following. note that risks, the conference the involve may the by United directed filed difficult refer statements predict. the forward-looking operating company or disclosures the X contain information begin, future presentation will of discussion and Investors with uncertainties Adam. in Part a annual to to differ. the Actual that company's Factors presentation Slide report may results. Item Securities XX-K States Risk and for affect are

$X.XX, and capacity the Now results our Revenue, the year-over-year Slide overview diluted in while EPS fuel income demand I on a a and soft of quarter excess will loss XX.X%. first business compare our persist LTL revenue operating XX%, $X.XX. to first adjusted on per adjusted in charts quarter XXXX Slide increased of the consolidated conditions space. X. our earnings GAAP while our by share and excluding X on earnings to Market surcharge, basis. declined was for continue turn The solid, was be truckload

with adjusted loss negatively ceased include EPS insurance our insurance million results in $XX.X The end quarter. and third-party loss of These by a our at $X.XX. operating business the operations impacted the GAAP

been insurance have the Excluding EPS on business, adjusted our $X.XX. loss would the

per or approximately a Our net $X.XX interest an negatively share. results increase year-over-year million on impacted $XX were expense basis by in also

a supportive segment Logistics general, to the do. the Intermodal Now our continues and on illustrates X next market experience of more much segments Slide Truckload, to for In the the revenue and adjusted slide. each income operating LTL segments. than

operating our winter weather average all of quarter than first saw The which impacted segments. greater disruption, negatively

and In business LTL more in environment addition, first the proven the than quarter. demand anticipated all we pricing our of challenging has for

to environment the in inflation with challenging And the business the continues in U.S. logistics of the pricing more ongoing to and Xpress and combination on during cost disruption, U.S. cost weighed contractual make on on margin business. Logistics Truckload gap, business across weather progress quarter. The quarter. the close for margin Xpress bid our operating gross operating and businesses results continues legacy our performing line the

to on X. Slide Now

quarter. as ongoing capacity cost on truckload seasonal plague from ability segment, was to enough or did in inflation see March, preventing we costs improvement poor start but Loose volumes and the attain January overcome well the continues the our recovery disruption equipment. market, to the to Truckload some the some the following appropriate impact levels the For recover to weather operating neither as to utilization negative

pressure are contractual Combined to shippers were changes the rates. in on thus far led positions per the The to X.X% This lost view push some market market on and as capacity concessions in unsustainable further revenue rates creates allocated willing because down of was utilization as rates but have per in rates mile In commit to resulted which in stable the Truckload to when near XXXX. our part contractual we though more contract react still greater-than-expected market, revenue are does not inflect. the being down loaded we term, sequentially, volumes of further pressure on some the we spot freight to season largely our to bid what capacity further. trying to mile cases, early

allowed Xpress. overcome Truckload quarter. operating ratio an losses business fuel basis, this U.S. Xpress dedicated XX% business disruption a XX%, from in largely weather and U.S. further legacy contractual increased some the of and stay inclusion to reflecting revenue, flat made on on Truckload surcharge, to fourth excluding On to our year-over-year bids, decline the costs progress the the through prior rates business which

our overall reduce the or tractor X% Revenue in businesses earlier reduce cost. X% legacy year-over-year by X% before or unseated increased Xpress. per Xpress, U.S. loaded to of mile of fell U.S. in Miles the our decision including inclusion to number XX% largely driven tractors order before per

quarters trailer our down improve. when and cost sacrifice as but intentionally the market over far in to flex We does trimming our cycle, the few improve so past fleets the tractor to ability without through structure cutting to have our order been

Now I'll to the call turn over Andrew Slide our discuss on to X. business LTL

market than Thanks, our benefits much supportive diversification as Truckload. of out remain to Brad. The continue stand LTL more in industry the in conditions

charge, Our nearly grew fuel revenue, LTL business year-over-year. XX% excluding

day excluding per surcharge, shipments per revenue increased X% year-over-year. And fuel Our increased X%. hundredweight,

the severe network our With LTL concentrated costs our during weather quarter, disruptions were particularly LTL segment. operating activities exposed to for to the our the regions and in impactful

costs normalize and than to as as our higher reach scale maintenance were volumes facilities. costs while growing anticipate we should extend volumes addition, staffing In and labor We new locations. stretched normal cover these and we revenue growing in into new

quarter declining The a operating operating ratio cost year-over-year. the over for and pressures income adjusted adjusted XX% XX% by to contributed

level after While to quarter. our to and in in thus the not back improve expectations bottoming the January for we're each it online expectations of to and be this margin is continues second performance, with quarter track up month or recent our did progress on far,

XX held in January, leases After per acquired as Since recovered February we have and acquiring steady volumes shipments Cooper properties. well over into being disruptions additional January MME or by impacted assumed increased on March. in AAA day the and in nearly X% weather XXXX, average

we and to first locations We have more during brought prior XX X XXXX, online quarter. the opened

to expect XX We by the another of end open terminals XXXX.

our impacting locations meaningfully from planned a reach the regional us to the and the XXXX, a service and truckload will support out capacity. to network. XX% to XX find our XXXX freight opportunities in our door Overall, in end ultimately further super our a will short to existing increasing offering enable of the density count us Filling open network of with represent increase term allow national and more the to in customers participate of LTL creating network

and to Acting remains geographically expand footprint opportunities our LTL within a priority us. the market inorganic strategic on for key organic

Logistics for assets our partner room one Being our us margins, relief. while service many provide it find struggled regardless Now rates an been purchased if be as allows brokers challenge margins asset-based provider volume have or customers seamless compressed carriers. is to market of a Slide own X. our on and little transportation and have continues offered to logistics enough to to on

both of of activity. this, losses and Because This load at search allows to weather-induced remains our to and help set by was capacity bid and Overall year-over-year to capacity provide us and drop pool down through asset XX%. revenue per divert though Logistics X% scale. service committed contractual margins us crunch our declined decision count January load business improved profitable, business by and division trailer the the hook X% as to in squeezed loads revenue were

and to legacy and continues businesses with business the margin operating logistics make quarter. for gross Logistics on U.S. The in line Xpress margin performed our progress

with decreased Slide load driven the drove was largely year-over-year, XX% negatively and prior X% line to revenue fourth quarter. decline the The X. the year decrease Intermodal moving in in largely from Now load and nearly In a business, decrease revenue a which count. XX% load adjusted per in in the decline revenue revenue project our in per by operating impacted ratio,

to is the in which And on referred of we activities. thus to the anticipate far services better nonreportable and second insurance, rentals, illustrates warehousing and sequentially, as out volume typical carriers, X based support All includes as growth to equipment such X% quarter, Slide X. declined quarter Slide count equipment formerly season. segments. third-party our progression fourth into the coming customers, provided Other Load segments sequential moving category our and than progress sales seasonal independent and contractors our leasing This bid maintenance,

during a the revenue $XX down largely insurance the of All legal, segments quarter The operations as loss business, this as the winding category. operating third-party insurance $XX.X well quarter, charges at our $X.X XX% within in end operating as third-party is ceased and impairment million driven Other within business declined accrual primarily by which the the the of of year-over-year, For million our recorded quarter. result loss million severance,

the of ongoing of operating executed during the the the transaction included reduce of a to potential adverse the to the business volatility risk we further in for development transaction quarter. the insurance third-party loss The transfer another majority of are claims income of insurance statement risk quarter this program, from the of cost to order company. insurance In the

XX. to Now Slide over for I Adam will the turn call

Andrew. you, Thank right. All

our measured the to through strategic long-term navigate for flows slides, the freight drive manage businesses to ability next are talk the cash and the company positioned to are few how we and our capital profits our each as a that model intent and we and of we our generate environment, Over how value against to cyclical structure plan stakeholders. of

up ever felt. we Slide with cost performing on It's of the truckload secret We to no razor for run continues the staying be interest when even the has are resulted of that pricing a it segment the significant such inflation XX. is has led and during both And Truckload in industry. deepest is challenge, best one significantly. our in has This and some will recessions tight economy to cost rest start in labor that and our the pressures comes industry and of freight companies margins time thin losses a are well rates

on the lows heels however, highs to the pandemic that best comes and one environment. the during margins. experienced record many the This where industry market the ever of led It's has of our clear current earnings have seen, in environment, the

accustomed cyclical a in the we market. to changes As industry, are

compare current this were we cycle what average we seen achieved. are When during we cycle and cycles, have much very performance over much that the similar has previous cycle been experiencing. to margin margin have lower, while found typically We never higher low streams highs is the our our these this current have we to currently

at business have as Given operating that, are positioned of conditions significant we to business We are our the benefit operating believe improve. performance ever seen. levels from lowest we may leverage

market cash to we of change market improve business to to endure any and timing performance we to a we our similar be change have the dynamics, experience when margins an flow cycles. previous the can't rapidly While difficult in our in prepared to believe inflection begin positioned and we in market

position as segment peers. Truckload a our in to unique have We compared

brands. We view have basis. U.S. and market large several market several determine one between demand read a changes happening the other Xpress daily a and to in result markets able to if our the smaller and brands on and to brands what provide We're of changes us Swift of specific Knight, network to a is each are trends or of of supply that

solutions automation We to can the brands. leveraging provides believe to and all this and of insight has most market connect to the customers shifts of before find technology to visibility. leverage industry We our

us quickly level have that service. at of solve high problems a We to scale enables large and

service, majority over market. customers the of the very have a way which in in capacity one We valuable freight road our becomes truckload to our favorable maintained

different versus managed cycle value to contractual intentionally the for We our business. our create order for spot and in customers phases exposure through in

Although we can industry-leading and throughout allows discipline costs, further reach maintain a of levels markets. we both we us cost improve good have margins in areas where cycles, of to culture which difficult

acquired right fleets better perform had the margin than Xpress, rigors to our Now positioned and gap expect have management, and the have market. more have this at we Xpress U.S. and when we is we within believe significantly that levels and to a around legacy time U.S. legacy we business cost Swift close establish favorable to Knight revenue

enable significant growth, that us other investment high-return of we improve, margins opportunities as across flow and cash M&A invest free -- improves margins our organic segments. to generate in As amounts

converted Slide we a the us in if through nationwide to from investment meaningfully Cooper the further Southeast towards building generated Truckload XX cash in MME increasing service have work business to platform, free We invest put identified capital market to providing to a make XX. LTL in The and out We to to seamless Northwest. by and terminals footprint opportunities one purchased flow to significant turn AAA our XXXX additional our leverage. expand Now meaningful allowed network. without them the

the LTL Southwest desire plan that regions. a growth, the provide organic in continue path to down Northeast of foothold We acquire also and but maintain will to a companies

goal the with nationwide opportunities truckload freight this term improved to which will synergies should annual billion revenue. nationwide over network customers, We existing $X new lead in our believe to and access and network Our is create a achieve to with developing medium network. provide additional margins more with

nature reduce also earnings the provide stable of network larger volatilities A the company with cyclical nationwide of of will should that Truckload base come segment. income the more LTL a that the

that up business we Truckload and as scalable at believe cycle, power-only solutions. our differentiated our grow also through Logistics business it We in will our pace the a rapid provides next complements value

we continue business, developing in partnerships a while we customer and in We build And with lastly, business to this diverse our to believe earnings West, partners to our returning Intermodal X back our in alternative coupled services. profitability while offering and cash our complements Truckload will these customers with lead Performing can strategic Mexico. both improved rail to base build truckload flow. sustainable our a that segments, the business we in East significantly historical margins,

Now from path strategy on and capital to structure We how our to cash drive prudent our Slide XX. slides, to long-term disciplined generate value. previous strong the with capital outlined flow allocation combined

balance valued in always flexibility industry. us a cyclical strong We have a to sheet provide

of what cost We of EBITDA. our are optimizing weighted of also of average target is mindful We leverage capital. we optimal position our to believe X.Xx X

XXXX. can for opportunities. level leverage this Xpress preserve flow M&A, this XXXX in free to and to pursuing up, then navigating reduce to in And on we Cooper execute U.S. we AAA or flex use acquire back flexibility cash cycles leverage additional as such As when we

We organic will we believe cycles. where generate in we can our of also returns double-digit investing growth prioritize businesses throughout

acting successful is Knight-Swift, LTL the had large Currently, several in focus. truckload is invest organization. we improves, that At we priority building LTL we our we capacity Organic value with successfully network. our near-term out and can as expansion on we are in opportunities for opportunistic market grow. believe our additional have drive willing remain terminals But where to our acquisitions, M&A

generate LTL. strengthen we remain core M&A margins flow, of we additional types our cash to of will of balance the to free outside additional improve our open As sheet, businesses

our the to flow. X flexible have for our dividend committed repurchase remain basis our sheet free opportunistically the it we increased share per and return dividend policy best believe a years A also regular on when us option quarterly We shares cash to also $X.XX balance reviewing for consecutive now. ability our is gives

a In capital significant through outsized newly of acquired company flow deploying summary, of improving earnings increase our our both of free through capital driving for approach successive and generating by legacy runway we leveraging the the compelled disciplined ahead to power cash cycles further and to us businesses, are cycles.

last Now earnings on Slide for our guidance. our XX to

of We won't stated existing this guidance of we've March an which thus of also detail the what our all incorporating are but especially I not and to in has have earnings predict through are for and we rather purposes similar plan far. assumptions continuation in a to slide, outlined market forecasts key conditions timing them basing expected in to in market cycle, great ranges during this to are in release. the these our the felt the inflection on read difficult conditions these because April proven seasonality inflection

will Based on in third expect adjusted the $X.XX EPS be these adjusted the range range to second quarter will assumptions, quarter of the $X.XX our to $X.XX. our for the we of $X.XX be in for and EPS

market on beliefs, LTL Our differ. and and assumptions EPS may management, results conditions, ranges recent are actual of current expected the current Truckload, and expectations based trends general the adjusted and

Now question line prepared And I remarks. for John, just the it it that participant. open our we can before want questions. everyone And to now over concludes remind questions, to turn for one per to keep I

Your Shanker question line from from Morgan comes the of first Instructions] Stanley. [Operator Ravi

like? look the about normalized Xpress? thing for do think on next how Brad levels Congratulations historical what to U.S. well, Adam, how you as of that's And interesting. margins good respective EPS for think a being in normalized that? commentary your kind same with cycle Adam, obviously mid-cycle you average on new your the Or Andrew where and benchmark was in think of earnings margins positions. we line the beyond Do and

think good think not feel some that's use maybe now. It we gap, as like do one the performance the believe I we same Ravi. lows I highs be gauge and across in might to the trying COVID just in to experiencing cycle. not I that saw that close certainly the a will it to what are probably cycle, currently we great long do to with don't make right up the I terms And next cycle right be or a I question, their the pandemic begin of first take will performance but won't that's may and second think goalpost hoping the the cycle. business the Knight Yes, Swift. see align we the that for in here Xpress first up U.S. we progress but when be in

I we about think laid again, business. think our midterm of we've that we be will the do business improve of to the And get expectation that would in getting billion can the on also quickly out on want And how we earnings targets. a another look we in $X opportunity to LTL to to there margin at here. there's move potential scale, because certainly, X or the before you when and may performance believe depending cycle M&A continue that

a we're operating a expand network, us those think gives but that I the other nationwide certainly margins. companies performing opportunity than now are there mid-XXs much ratio, to having targeting I better and there out think,

of there's I that in potential I kind may reset think that with as should U.S. in really how perform I believe good and probably Truckload, cycle, portfolio well. we're with what Swift the Knight of do look gauge customers. of we be. Xpress Logistics I layering Logistics at with And And capabilities Intermodal that's a on kind segment the margin diverse the that have a mid-cycle Logistics more up business of as But think at building up better next when we and

from the Your next Wadewitz Tom of line UBS. from question comes

a bigger be to perspective if about unusual in kind and wanted ELD some time, step-up it you of that I to the is up? cycles, see gives it appreciate with do guess that case seems how of the like amplitude pretty big up big rates to I will then you base hard cycles. of find think know do could up? in prior Do I catalyst XXXX offer being COVID, in obviously, has X the slow likely ahead grind outcome -- the step of that you think its thoughts like another you but been on, up. kind on even I Because a guess, should step mean, think or I that it's -- the you a think ends

lower And ask because it's I is as base. point a guess I reason we you the -- out, just kind of

And takes margin, get that to so seems but maybe to seems you it a it about long to. reasonably like time like getting back get think also that to mid-cycle you that,

So I so not know, don't my Adam. now, ball right crystal is clear

how could to offer I was on kind we of more some wondering that So perspective you if get mid-cycle?

know better kind kicked ball yours, about than unique had few Yes. I they've them the all think that that cycles, I When of don't Tom. any I think a have my catalyst last crystal is off.

kind I of to think think, of tough strong was to, event a And pressure margins. caught with capacity that XXXX, very a where been we've of off weather early carrier, out and long the was that on was. up think of finally healthy of I been market sudden, very to all increases of a period kick in demand led had And kind rate and and the I that the truck. it a 'XX, severe find somewhat of it coming

think you Knight largely the was had referenced I as 'XX, we obviously, kicked huge that COVID, when ELD off, right in attributed and market then that was saw to And merger, Swift and off And then the that take late mandate. closed demand. the we we

about track of the can't know been what's catalyst authorities time be market kind a of going hard and long of Clearly, today. in make the coming what out it's here. see DOT just when companies for we we to anecdotal through the and So hear period we it of failures have capacity that business dynamics of the then in the market changes to kind

out going where that's demand is. balance the to It's to be finally side enough to know hard when

and a industry eventually, go combination an going improve destocking this now in line beginning to falling. inventory while they'll no -- think may what top motion probably greater off any that And inventories and be in one. object of and demand are as customers replenishing to longer an And a to that stays you balance. a on rates. one I rarely focus they'll for it's motion, bit grow sales, in are it's like will is most have point At we raise likely time, stays demand just know kick opportunity have

you know, It's We progress what I cost because available side what the that a side. where the on be really recession To of just challenges be. degree? haven't cost some don't lead Tom. that in more hard had spot made to try been could the freight maybe ourselves that typically economic just other to little this find to to there's has not overall in a because estimate relief may on

So back I all think when won't to rate. you get be it margins,

I but obviously I there's some here I it, industry of large that historic help to to needs cost margins. think portion will back a be think think really get that our those

what do it when. happen. But could know be. is when it's And hard been to of we now, matter a right It's just that will predict really

just make that to And strategy so not not -- let's is, try our prediction. let's

did when of you have than control we'll ourselves grind move better something in position anyone know Let's try Andrew, control segments does quicker add? what to that all and can in the we turn, space. I our to out margins don't it and

which just Adam Maybe agree of thoughts to shared, with. a I couple add

rates now higher been. we volume we've also deeper at But for. we're we're say the I yes, ever been impactful. impactful obviously, leverage right If would of it's equally getting on to ever but our have than at, than been been truly look So incredibly has is in margins, position terms operating

as of really with kind we where in we're we've costs, performing the past. So at variable our been look in line

absorption which to up. a on the cost there's a volume, slower here, back ramp way, with grow costs are In significant means our play fixed going

because So lost as that down volume. north move to that well it's see going gone is quickly that as curve of leverage

you we've working gives and as encouragement volume of it maybe together. we that, could kind faster that get little back think So some the rate can modeled us a than path if be

always that rare move pretty It's Yes. on It's we've seen it rapid just and linearly. the up you the a market change, the see and down. ever

but And we're any watching Tom. again, see move when occur. signs, So we'll those of the we -- all changes quickly

price. consider It's as the a to good as volume and lever utilization the point well

So you that for as thank point Andrew. well, yes,

from question next comes Mehrotra Amit from line Bank. of the Your Deutsche

was around probably small you signing of more think us of of it the March, terms load that the past. in carry we contracts uncertain company it in was of than any you're maybe Easter up or some if over timing there maybe Can one life actually boards I and that real. have I was update you signs for saw like assume you something think you April? And participating the end the as was progress obviously fell but when I through of so aren't the reasons into Adam, depth that of give an just on for the decline is because in

to the just And pivot in you about has participate implication what could so And the be. talk means for is market you load spot market gives and today participate it the ability spot concentration if that the in history anything and company for to the to maybe relative your with? an what obviously if what could boards that

your Amit, name, there. I'll questions best that works. pronouncement I to was, that the operator And of your so three credit Okay. answer in think, the one,

going a and about think analysts. mentioned, That we've end. we've our April. of end, we've of some of short I as first a time. in that you markets quarter a few think, And through there or quarter April projects talked Easter. have with it in bit volume in this, a you was lived few first little the the in that lull especially I to time you it's really change weeks seen some usually So I the We with believe, in little preannouncement, here in and and certain hit then March, a yes, quite get the was aligned and really seasonality did you bit really see as and it's that quarter a at you end seen And --

But so seeing some those And of of some we that's volume -- come are normal. back. that

Now additional pricing, led volume. has it led it has but premium to to

and there is markets. we so in again, slack the there's uptick see we're just there individual think encouragement of brands And we of to in of between little there. see that think when there supply what getting not all we can as And watch much and is a the capacity supply closer and demand And was. to that very read-through in I our certain an a shifts. bit as happens I each And start balance different once chain closely market, demand and eat up some

very And when weekly, clearly, And a are have we'll are sometimes the heating markets firmed and there demand. of And the between beverage have But of as I into daily. seasonality dynamic is produce when up, that that same we'd expect supply you where up as heats the sometimes lift. that think you closely and some consuming here and again pay we're will get some country, to middle that's those lot when And of be some up. telling attention moving those are more see see up. a you seasonal pick weather May

to freight probably near were were there's of some takes, on pricing implemented gave and bids. places more us. at But others been the where we able we in probably about the and increases of in some the a where flat. part We're early support gone willing we a we've we we And network, rate the to been through take XX%. where have level negotiation not or bids or of XX% so where get just our others maybe where to of and premium little and have there's some some to able customer bit there's the some And about our been were rate starting new capacity not just puts term, want we've go

hopes some we've can return for weren't their return are trying and who they who we just -- right are there's market maybe weren't rates limited get time. they some this smaller make they've seen companies with who on. to what where is in dynamic And just taken sustainable. large where losses than a type of public of wider that and public that carriers to doors to there's we that -- they the on that private can shareholders, you the a some rate open bit commit to little have can expectations right have survive up have do quite a now And the And when the inflection couldn't keep gap now

our we we so their a responsibility costs have to have just business. get return customers budget and like their manage a to And to -- responsibility our

not good just decide so it's opportunities to try And fit. where nimble we'll support just our there's other find to that and network. maybe And a and places we work be

Some of that may customer be load on boards.

of be other may customers. in Some that just with winning bids

through work bids we where that we so have some our can created -- to And those. been fill have that we have still gaps have to try in many network,

as a work it's fluid season. through bid process dynamic the So pretty and you

I sign a of is opportunity of because freight that a because us, the rejection awarded of the early continue or some gives churn think to a comes that of to award seen up again, carrier positive just these a some repair as to to sign pricing wasn't a and And maybe where pick and there's our some another us of -- that and to failure live us is. an opportunity network. an very sort of we've bid it's bids implement, we one have go been

not what that was we may originally be closer but premium pricing to bid pricing it on. at today, Now

balance. huge, just tell another that not data we're point that so us I consistent think closer getting theme, would real And that, but it's a into been

up at season On the And the maybe churn on spot here. continues the off of complement season. this further depending low talked exposure could high about in out, or levels through late we to creep the in to it into that volume the double contractual digits season were That's pushed rest digits that how XXXX point. the bid Adam up bid the through and then on play bid question, single

Wolfe Your next of line from Research. Scott comes question from Group the

bit. focus just the I guidance little a So to on want

than earnings QX QX QX than QX. higher higher then and So

higher QX is years, worse. Some but some QX, than years

yellow? Or stayed in mid-teens the up here, to rates curious rev just assuming to visibility this to are guidance? of truckload hundredweight once got big understand on then I low side, per higher That's to I'm ultimately, -- order you -- it's your trying get start we that you've increases. So a that, are this in to lap in flat? QX, guess, is rates QX just assuming QX. particularly moving And start lot LTL those And of

of Andrew, Scott, he'll those to right. into some have of kind questions here. All going I'm dive

for the you questions. Thank

we there's at need think look yes, numbers. as the So of kind of of kind I dynamics to a be clear couple sequential that

obviously our perspective. and quarter QX going from LTL our strongest is an be it So certainly It typically in is seasonally to is business.

we in from a But in from So pressure. not from expect it's our as but spot additional QX, perspective, downward going going QX some a rate put participate that's to additional not pressure, significant QX. we significant, generating uplift rate But QX necessarily rates, pressure rates. some to some to maybe primary

so through quarters. any of between at And rate any expecting we're all -- uplift not these either periods,

view So seasonality as capturing are forecast we what market the normal I with experiencing we as would our this now. be to business have characterize for -- conditions we

strengthening And to QX some expecting a pattern we're follow So in will and seasonally May QX. June. just will March -- then similar

lead numbers strengthening into those QX. So in no real

steady from lot I from see think rate what a QX I of there. it's We don't change Scott, very to add would perspective, is a QX.

We're fleet utilization cost from trucks. ratio. tighter kind our efforts. trailer I We're improvement our think some now a be leaning of to of trailer get driven of better out seated our some seeing on detractor will right more the margin

third quarters. the better, initiatives, driven your marginally expecting gets drive But it that to one market QX, And -- better, utilization our thinking just so typically, really gets some months is just really better to that cost not of We're worse. of quarter QX sometimes by know it I change.

Your next of question America. comes from the line of Ken Bank Hoexter from

this What Adam mentioned means? roles. and much is ratio How that? parked guess, what Andrew, if to about online operating Intermodal the costs. back you online out for or of profitability? the right I what back focus We've you What goes do fleet level don't get And this religious the eventually Adam, quarter. for on Andrew, to, this congrats in been flip I is on -- historic that back know hearing now? And I second in years. you sell can't guess, Knight's

I'm get I fixed not here. lost guess on what's leverage. the been just clear I

rid and more containers if do not do is and more costs? rid What get down tractors get just you do on it? So you of of those the industry it bring focus doing to

your is Ken, specifically, Intermodal, question? Yes

Intermodal. first was The part

used part things focus is, really heard can't corporate wondering costs. this focus on other second the you company cost just out to And I the before, that The for to your cycle why with known but in -- just religious do guess, I can I'm Is down pull leverage that? get? there you on be to

Yes.

And as so touch about Brad think well and -- some I and to I'll on Intermodal then Intermodal. first, things hit may have

I it to larger would of we allowed more have longer fairly was customers through term. profitable going in diverse prevented the that that be from a of projects Intermodal challenging to us portfolio were couple more sustainable actually profitability driven the So be building kind we pandemic, have we're believe And market. think that during that and on of a

time than led year, in margins. that we lost that went that of away we expected to so business the and some sooner about last And decline this

business And already we that through kind the bid exited, by were of season. time the

been more that of difficult to it's So kind volume up. build back

team leadership very team, our some of with of success And got amount had team very with recently in pricing experience a a in and great here and the closely May we've good and working been from we've rail new year that last so started perspective, bids. they've sales our

And of and believe get to will so we on footing better back freight this pipeline on a business come there's nice that profitable.

got continue And able once in costs we that But to to we've it in we you to quarter see in so to and volume meantime. we'll really closer believe the there. some in containers the build some breakeven from taken up start stack manage get we've back we bring those fourth and business. third on We're pick just be then anticipating this small to off into profitability the

And approach how so that's Intermodal. we

so company, We consolidated high it into demand power profitable. and with more such probably that with trailers bit the there's We heavily and On was we in we a cost. little do a invested more came than was needed. overhead this market can more because equipment very only

converted wasn't to changed be for live them, that like freight load market the less savings. on the as the that, And pick we as they load, anticipated sticky was customers found up as and savings from that going that. efficient we to And it to came but live

And need this so we ourselves found than really market. with equipment more we in

where put the So from there's have from profitable. was work the process pandemic trailer the a we but perspective that very during we're even and in lease That's out some to of now we perspective. that leaning tractors opportunity, a most

to freight And when support had back, haven't the have we equipment. come just they that

And the so our market the the solve goal have that. problems. is we've that we -- savings just And And focused teams we'll be our cost on plan come fundamentals, that I got the leading that be we're nice to as core. can't the going from well. some just really, there's think is And can't --

the We the later can of it, cost the side for business. control of And going into not that's relinquish what then get to cost and year. have believe, we help, to here be we're to is the I but on the And markets biggest anything great, what's focus improvement control the us. this going going take we'll to part we drive,

question that operating quarter, basis comment out was will Ken, business, year-over-year Intermodal, quarter. your our was was a back And initial actually Yes. while I on first in it going to that aligned to referring second just add, ratio where we that comment in a get our that then expected not the LTL line back to we the was stated in

to mid-XXs and there out back get similar what Right. last Because factors on said to some to cost little would additional the run were we XX as of facilities, ran we I the then we year. at we a with think bit we weather some have but expect rolled and LTL

comes Your question of from Goldman Jordan line Sachs. next from Alliger the

get a Obviously, get to the sort staffing talk of inflation wage to then of on you how an 'XX And the to rollout these of year. for both of plans there sort pretty the second. and drivers in is head to the for Just of update talking much count next just balance strong the LTL ability people? expansion about terminal maybe terms expect needed And this the folks? go? Can you

a had terminal labor for of there a thus But haven't us. we far, labor that that mean there those maybe for. biggest looking supported hasn't challenge we'd now staffing that locations, and far, the challenge different before those thus been mean, be I obviously Yes. buildings. I was

As we typically, on get locations we labor to kind of a and of put pressure have our operating. business. manage to much costs be the too rollout where But to cost the not you're of in these very some and build want going deliberate some side start-up

we they come in. fill to way. freight territories our have locations start with some we're that shippers see of connected can larger those relationships plug and great needs have ZIP very And we territories and in in, because these codes But those some in would out already quickly,

we've that So we'll can them or we we got believe how get 'XX it's shipping have have online the -- cover those online full I going to up count we'll roll the of to for quickly cost operating and another our that be of and then that year the And to ramp buildings goal in is several what April, certainly think on out. gone are profitable.

early that the or fourth near third done be quarter the And some end of quarter. may of

executing our been so And team this. on has

can And with opportunities as from to. a customers perspective, that or to want and find we see if we right far, slow territories network the we're But grow able market shift we new planned. today anything and serve we challenges in gone cost see existing so it's into down we expand excited And about this now, and to customers. being move don't that if

There's effect and that right into the the at one We costs. we've you build beginning, grow this I really think into be so just kind we can But very helpful the density. these little to of our to stand them as of up I'll can as add we cost. just that size on one other watched we cost can business. facilities LTL perspective might maybe network get

and them later, you integrated same XXXX. early AAA Cooper year system recall, MME we onto XXXX. We acquired so a in So as the about

QX As it's we of and between brands we QX now those look look back of from XXXX, volumes to XXXX at XX%. QX up

what and you adding capture And the get we've been been growing, can volume initially. across we've is is So the into processing once bid get it great. our takes, the you -- but But throughout pace of national some period. that this freight, our network slowdown them facilities adding

that's we the so that's in creating these new this even And further momentum network. kind add own facilities. going of as escalate And just to

momentum about based on a creates opening got thus new our how experience density codes builds we've ZIP far on and conviction itself. adding that So great

Your next JPMorgan. the of line Brian from question Ossenbeck comes from

you of know get your more more one I about. But it's just have bottom as to the that the there's also the has out pay structurally a might there's maybe this coming pools near for we maybe anything for hopefully but be wanted look think truckers on capacity, want and how net that you thoughts more -- can got COVID I But you, things actually at you play just seeing question basis? guaranteed bottom data like get elongating that we Obviously, this earnings on in changed more get Just you talk cycle. can to cycle out there's as data. perspective well. some carryover. of probably Adam, trough that really think not present do this like there, a and about in permanent, more just you up trailer figure of out, on to term, the your here? And the was I are why should

our achieve go typically cycles. I space maybe Yes. that that achieve impair in structural we really Well, I ability see has or maybe different don't through to anything margins changes. think the changed I structurally any -- as we

it but trailer I many trailers a was COVID, players from large did that. who think perspective, during the added really

we were about hear would as expensive it, were see you were headlines the and extremely small but new guys would tractors so purchasing expensive the well. those And trailers it, around and

think already largely asset the seen And have players. with or who see growth same oversupply. a think So trailers going dip I I an already trailer small maybe was as was players the orders we That to think have orders larger I saw the there the really don't perspective -- large trailer from footprint. a we you're

the think customers over pool trailer a correct I itself will perspective. has lessened time as that demand from seen from we've So

at company question? same what could go of the -- failing, of that's part that but it trucking got other XXX more What lot really from is of a business it's I a have directionally, not trucking you was And just their I because DOTs company companies finding look telling out somewhat fleet. counted from start a and And we know well. a it's have capacity they're DOT but think your you just or number. of hard Sorry, we're probably one exiting shrinking the because what revocation. track can as you to of We

out of yes, to And support them payments. saw business going to keep the smaller their in what's the but in trucks pulling not we that And was that to insurance we because had been our we of may had have we truck the productive count completely, fleets. visibility enough dramatically, that business, in -- because we over the with inability the that of got down saw visibility values the the one just time that happening with of -- few shrinking

tell anything the out that is -- happening So that the us net you what's lot tell internally a demand fully doesn't there just that's But across at. there's isn't it but just of There we revocation really full story. that can look that we at -- give point, what's and a that one of board. capacity we happening really really data data perspective But side. the the look that's a point things other on the

that side is mosaic -- the fast telling is capacity not that shrinking is just you? your And enough it What the perspective is on

lot the added. if of It -- Yes. added and truckers. was during where I a low entries how Yes, was was small much -- rates spot much how you how for how COVID it just look because to the were mean lucrative barriers at was were.

have you because And inventory saw what through. And are fall perspective. lot at demand time, a of an with doing work so from we the off to same customers

supply that both to to So have in we've come line back flip. got demand see this thing and

doesn't a that will it when will best matter see but our of the we -- to react really just can doesn't the manage when hunkered market be. and and margins, our the do eventually down again, And drive of to it to ability And what we're we cost an our that impair returns helps business trying inflection.

the the compared pandemic, an just lot complexion earlier prior of there, share would swelling to add Brian, that that the X capacity, days in -- up to on of made I the and a of of capacity as the the of truck industry of And the swelling outsized X operators pandemic.

next question from the comes of Your Majors line Susquehanna. from Bascome

both been to? services is do and differently and more might a plan to you thank aware you expanding like approach and strategic the management overview, took feels should last pay cyclically is existing there XX to you highlight a much the for has deployment in you of we the the led plan high-level business that focus business. Adam, and If growing versus into night that little feel the how years, it and you'd anything want nuanced run that capital cost you view how traditional how we attention very to portfolio the lead that a

I've the still view truckload I -- an Dave Kevin Knight over very we last be market of think conditions. similarly. very to overarching intact, kind last we strategy -- with things is I've industry XX on over our XX the in the of the regardless And side, look, Well, When think years, the right? with leader about our years. it's market closely strategy been I got worked

of market that. have really off more you again think operating to have have side most times when ball and the the sometimes operating eye the to have time, the best on that times, the there in best of in can can do efficient. areas be couple And be good is be challenging most ratio, the we it's in the easy take a efficient. your business, good And I So and a the we cost to

in And through so always the keep our advantage ensure to we over -- cost disciplined the and to bad that over times industry. have remain good peers we times that

We're the to going to build continue LTL network. out

that, and we can here to organically is we're with very everyone the think process aligned in where speeds we we that do that and going sees think can good I up and the returns. and value get where it

look at opportunity. an will We M&A as

only, I can a We we have do today. fewer we think found that from than we that standpoint, really with Logistics trailers can operate found but we invested that in business. we power it have

to ability rightsizing quite currently And rolling, we're that making want think I our service many to trailer there's we in of power But we asset major opportunity do side. Logistics that's to back of And think that. to cases, that And our giving the bit it's truckload. impairing a a the from to perspective. it's without on adjustments we tractor one is some ratio cases, in to what do business support complement there freight do

that well. have and doing with relationships Now we logistics direct with we customers, as our certainly, like

we of will to confident progress back that profitability sure the have can to some see some feel build time, agreements partners already what profitable. early the about making the And and we business up have we'll and with being underway. but that's Logistics really businesses need of year we bids need there the Intermodal our operated have the pathway then that part this we the ride I create that take and there, do make talked and to And the it in a leadership and our a one with of rail we we're we alignment. in lot wave industry, that the best But truckload to of

again, keep again, unique to position to discipline be really, market leverage cost want to We've as industry and But we got we're the in an to in the leader. able to react the have nimbleness a changes.

And I I our think, has think time here. expired John,

a And later to call (XXX) think you for to those follow call to question. have the to we'll if as So and try return look go conclude call. a the everybody who want talking up, forward as and XXX-XXXX able I weren't or you we'll you we'll your to get I ahead of and can joined call, quick you possible. appreciate who question

everyone. Thanks,

you. Thank

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