Knight-Swift Transportation (KNX) 22 Jan 252024 Q4 Earnings call transcript

Company Profile

Participants

Brad Stewart	executive
Adam Miller	executive
Andrew Hess	executive
Thomas Wadewitz	analyst
Ken Hoexter	analyst
Ravi Shanker	analyst
Scott Group	analyst
Christian Wetherbee	analyst
Jonathan Chappell	analyst
Daniel Imbro	analyst
David Hicks	analyst
Brian Ossenbeck	analyst
Bascome Majors	analyst

Call transcript

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Operator

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

Brad Stewart

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

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

Our scheduled last hour. X to is call

per participants Following participant. questions to get order these topics. our In the commentary, we limit as will as many answer to we questions X related to possible, to

a If feel to have please you second free get question, queue. the back in

answer on may company We I you begin, If your assumptions directed X contain XX-K the and future presentation X Slide presentation a affect risks, may company's to the involve following. the many questions will not to by disclosures XXX-XXXX. To (XXX) will as of conference forward-looking allows. the first questions as or get of and call the restrictions, Part made report and call to note of are information difficult we're SEC States company's United may XA, with refer Factors, risks discussion Item time operating Form due on differ. you the the statements that This time to the able results. in results annual Actual may to that Investors Risk that are filed the uncertainties for predict. contained to

hand to into the Before for over results, opening will call we get remarks. the I quarterly some Adam

Adam Miller

Thanks, Brad, and good afternoon, everyone.

more freight a has another on from the transportation seasonal the also prolonged second more of X stabilization that and half very the are in on a we return gave of indications the on a and difficult year, cooling brought the marketplace for approaching of was close conviction in a that but balance XXXX nearly of it cost inflation year. patterns, pricing, book that finally cycle we XXXX, we sector as more have years. So down moving weighed

drop the lows, extended up freight has margins. produce inflation much stiff waiting of to the unusual our to have cycle While to for next we business over been years X margins in significantly higher past not alongside prepare rates taken the

for We acquisitions improvement have Truckload margin more both in runway deployed strategically LTL. and and to growth create via capital

businesses diligently trimmed pressure mitigate costs margin have We in our the to trough. in

sustained have our both will develop to efficient be opportunities responsive by to We and a created challenges efforts technologies cycle. help that and new business more

organic to And path lines a We on advantage the drive enhance expansion have synergies. worked more network to developing taken unique opportunities we collaboration our to have our across of more offering. and service nationwide our opportunities LTL capture service accelerate of valuable to

an customer be and truckload our market, needs a leading in service loose particularly truckload the to more we one-way but offerings scale, believe an become will in can market. markets, in the outside offer an most because efforts service position be during become beneficiary of dynamic capacity improving we exposure acute us these arguably and valuable industry-leading increasingly most are tighter commoditized diverse market, our improving As some

Please turn to Slide X.

we success. have key will our levers drive help XXXX, identified for perspective, the near-term this with So following that

Truckload, our proposition. leverage and network to order enhance services, For we over-the-road capacity flexible our will scale, suite intentionally of in trailer value

and maximizing agility more solving this our For customers, means capacity complex and our problems. towards larger creatively

[ that are less market opportunities means For us, captured distinct commoditized. kept are ] more solutions and this in-house and

better shipment period price cost maintaining months drive pivot expansion count our the to while a while gains LTL, expand growing freight margin in focus absorption past investment been of have XXXX For through efficiency to to discipline. revenue the operational growth, mix XX network, will upgrades, significant and

the we in XXXX. opportunities the about of ahead be positioned has couldn't well, and excited team Our us business more

business and organic on the and regarding our returns XXXX we network We fit drive right, expect we opportunistic to existing is continue to in more strategic will while be opportunities grow selective where investment. be the inorganic but to

spent For much we technology down of Logistics, the platform. cycle harmonizing our

As our we our affords opportunities stronger with in to returns to we the capacity It we enhance be to carriers buy how the and our to trailer value we it complement leverage service. enhance execute augments through This our us asset better freight how to power-only will a business sharpen the market. and of this and our opportunities business, ability market in also weaker as capabilities it great platform a improve a market transactions. continues to augments efficiency utilize to assets how engage recovers,

balance we environment. have in pricing volumes, on our have and diversification improving For and been made Intermodal, a weak network grinding customer progress cost structure, meaningful

our customers, brands truckload we trailer XXXX, will a networks projects network. capabilities continue solve bid focus share developing to a and market challenges freight our balance ability will the With through For have asset we gaining efficiency leveraging with our on profitability. enhance network season on to and several acute and needs. be to support improve unique capacity, path And path by large the to across unique for national capacity towards service our

turn our also of and the are opportunities is great over Brad to conviction as full as ever on been. leverage our both capabilities off refining to has national in I'll truckload LTL now to to our the our it customers, just kick the And quarter. support We offering it and synergy overview

Brad Stewart

$X.XX. by Revenue, year-over-year. earnings compares on for diluted consolidated decreased surcharge, was EPS per $XX.X of quarter quarter Thanks, adjusted results share X.X%, were revenue Slide our earnings X and and by our or our adjusted fourth Adam. slightly income the charts XXXX year-over-year fourth The GAAP basis. $X.XX, a on excluding million fuel and improved XXX% operating

sequentially. operating Our ratio prior better points consolidated XXX basis year adjusted which XX.X%, was flat the was and essentially than

the year. sale a year-over-year. impact $X.X operating third-party partially increase quarter a positively Our gain in business positive $XX.X on in fourth the offset the on interest were the a quarter, business of in by loss million and our by prior million basis this net closure a results was expense as impacted $X.X generated first decrease of year-over-year insurance in million This

our non-GAAP Also, upon tax than year-over-year. results than previously realizing tax fourth discrete rate lower our state projected, result in effective favorable benefits effective rate for the greater percentage the primarily X.X and of The points results previously apportionment as quarter decreased came filing on a returns more estimated.

obligations million ]. [ adjustment of GAAP our are $X.X the mark-to-market included which Additionally, U.S with purchase an for acquisition Xpress, associated results a both $XX.X million to a results our charge benefit impairment price non-GAAP related certain of from excluded and

income LTL in cost first Helene headwinds expected. the Truckload quarter. Overall, played largely the AAA X segments fourth revenue The segments for our U.S Milton slowdown quarter our our and the half the model particularly for our Slide to on Southeast. Other from based the and Hurricanes Truckload market showed the for brands improvements of illustrates Logistics and offset business Cooper the for in quarter our out disrupted of in X. sequential Moving expansion integration Slide in segment. and the each Segments and benefits fourth October, as Xpress our seasonal All system of significant adjusted the and operating as in diversified volumes freight LTL

activities truckload Friday through project in seasonal services and wound down Black generally demand and pockets occurred some mid-December. this, from of Aside incremental for

January in erosion aligns is We weather early responses more the across conditions various improved bid disruptions our freight capacity that healthier. that marketplace signs fourth for quarter market and market brought far customer that a Truckload to outlook further regions activity brands, rate not spot but across thus early seasonal balanced. getting sentiment, season of have or been rate the is signs the noted are more progression, contractual our with improvement. growing Also, further consistent

a levels demand for recent industrial pricing strong, some production has general LTL bit months, held though market trends While in time. in the faded languished

LTL and the this steady XX% volume continues in achieve Our growing extend the to our capture with represent volumes, we our as growth reach segment quarter. improvement business new network of revenues of to rate and

turn Adam I'll discuss X. Truckload Now Slide segment our on over it to to

Adam Miller

excluding Brad. miles and declined excluding loaded Truckload fourth as declined a year-over-year per X.X% basis, quarter, you, revenue X.X% loaded fuel our surcharge X.X%. for by On Thank decreased the slightly revenue, surcharge, fuel mile,

X a tractor excluding tractor surcharge. in XXX loaded sorry, excluding businesses year-over-year per truckload operating XXX basis mile, improvement in to fuel initiatives fuel excluding cost-cutting However, per initiatives, XXX U.S point as miles in per consecutive our year-over-year our basis progress coupled loaded miles at gains improvement increased surcharge to point ratio. On XXX the improvement the per in led surcharge quarters improvement revenue X.X%, improvement decline revenue legacy mile utilization of basis this fuel marks in rate per in a This slight point opportunities. basis, The with seasonal X.X% utilization, a by asset led adjusted improvement overcame year-over-year -- metric. basis ratio improved adjusted sequential a grew operating The and in cost-cutting on X.X% project and and a point revenue driven Xpress. tractor in in our sequential each improvement

contractual Our the average third rate our quarter, spot remained consistent spot and our than exposure relatively rates. remained with higher average

X, our quarter, than supportive the market Slide demand less saw Truckload Now to on trends slightly for segment. we X. though On strong. trends fourth held cover pricing Slide LTL LTL The

existing on shipment still new partly network our more us to and expanding in by increases steady experiencing that allows We customers. to growth services are our aided and our rate business, offer lanes

as year-over-year acquisition per business fuel Our increased increased shipments our includes year-over-year. DHE. X.X% XX.X%, revenue, surcharge, surcharge, day per XX.X% of fuel grew which Revenue hundredweight, excluding LTL excluding

but shipment per positively weight inflected Our compared declined X.X% QX in to year-over-year, QX.

start-up wanted sought our early-stage as initiative operations we result and volume The DHE for adjusted and XX roughly operating service importance the the as to in recently to particularly, our network faster integrate our ratio California, cost months for cost which following this the XX.X%, to case similar operating acquisition transition as and complete took year-over-year avoid and in XX.X% acquisition. adjusted a and of over in to completed facilities, and speed disruption It the was strategic systems of months with at costs adding to higher the due income we The the the the do to coverage. just and which complete due we our system Southwest to a integration much efforts transition. DHE declined MME well XXXX, to this opened the network after X into integration, were

on over greater anticipated, over of alone, equipment ramps. growth to as we and change. and headwind revenue and the locations doors the a drag With largely has also XXXX in the over locations costs XX% added in margin, is XX% year. expansion facility, The of due positioning scale before margin staffing represents XX in growth start-up, X,XXX all for pace doors this occur than Our proven

as well is coverage growth marketplace network desire service the of areas XX volume as in the as our opportunities function to unique to bids attain past extend are significant properties in as a of order the the to corresponding to as able the offering conducted. we rate our reach Our over soon months, pursue in were

Further, came customers a of integration some of the investment margin expansion DHE network customer as service bid ongoing a of priority on with levels the put maintaining opportunities an during satisfaction and toward as form as the onboarding we in and new headwind eye we grow.

DHE the of our bid costs We make realized quarter margin to so beyond the the as we reducing to drag the progress season second not results. in integration be the expect from that extend in quarter network fourth expansion begins will the begin do progress majority

begun opportunities to of of excited already have about are the We us, ahead materialize. some which

Andrew to Now Slide over I'll turn X. it for

Andrew Hess

XX.X% Thanks, Adam. revenue build And contractual the generally put This per quarter on year-over-year, rates this tightening saw port margins advance but in hurricane of strength pressure market early with load improvements. improve disruptions. and the pricing sustained Logistics improvement strike the seasonal was the of through corresponding quarter. a with that in gross in drove market spot

revenues income in a We load third over offset decrease XX% as Revenue improved revenue ratio pricing, XX.X% sequentially. operating the in adjusted load the op XX our disciplined approach The maintained growing increased basis per increase points quarter. count. while of adjusted XX.X% to X.X% year-over-year, and X.X%

with have trend our we more providers. a collaboration truckload our the market see And number asset-based Historically, the quarter, improves. to of discussed business shippers businesses. market the experience truckload that seen business Logistics outsized XXXX market we expect as particularly tightens, as allocating -- growth, the last of continue as asset-based into logistics to due to to their As market contractual continues

a build We diversified capabilities to power leverage broader complement business, the continue to and only returns our to our enhance on asset capital freight more and assets. our portfolio

to on Slide Now X.

in ratio Our decrease per to X.X%, Intermodal year-over-year operating count, costs in load a Revenue basis XX.X% a in in improve the revenue and in second X.X% year-over-year. for per load increased row. improvement in driven XXX progress the business a posted increase increase a by by overcame in operating decrease year-over-year. revenue The partially quarter revenue the load volume by points offset

to volumes held diversifying getting Epi our with We start the business recent the density, off volumes of on reducing up monthly than of year. reducing cost. hurricanes our negatively and early remain [ After in building focused progression the strategy previous ] quarter, in rough mix, a impacting moves executing the better

expect progress should XXXX. ongoing areas business in We these this make in profitable

insurance category and XX equipment to such equipment as contractors our on includes maintenance. Slide illustrates This Now activities, support services to Slide carriers, customers, and Other provided warehousing XX. independent sales and All Segments. leasing, third-party rentals,

revenue our down a in quarter, third-party our million business the driven a operating and year-over-year, the income operating sequential patterns XX.X% of within quarter. basis, Other $XX.X our On primarily seasonal insurance in by winding typical as amortization in decline The revenue All For declined and the loss reflected the business. first largely a associated is warehousing the also intangible includes warehousing business. loss Segments with result

transferred risk transaction operating cost the the insurance is included first remaining business we executed from in similar the third-party Additionally, to these the in quarter, we to the The transaction another in insurance quarter. this of results. company, successfully

expected in EPS and and market we've from are market assumptions, adjusted we key our a a Slide reflect seasonality guidance expectations. ranges improvement these earnings in results in steady On release. may also in recovery outlined Because Actual stated XX, anticipate existing the our differ conditions conditions. gradual XXXX, which

key expect the range adjusted to second quarter of the our will the but our in on EPS $X.XX are slide, of we this will assumptions, be XXXX EPS that I detail. on of guidance this $X.XX quarter of adjusted The the underpinning Based $X.XX, these for first in be XXXX $X.XX. cover range and won't for in listed assumptions to

will decline we first through seasonality, sequentially activity. normal operating In decline keeping that though to mitigated contractual degree quarter by be income Truckload the bid improvements project with summary, into we pricing anticipate in of the

in progress Truckload Thereafter, and we lift in expect as improvement as quarter. well earnings the the season will utilization, through bid volumes seasonal second rate

growing the and we trends For LTL, quarter. for point full this system volumes a the in margin further in and expectations our in Segments the bring to I progress All we lead out we in improvement the our a profile previously the reflecting earnings that lack earnings costs should sequential quarter. of year. of a Other the while expect to in earnings seasonal improvement allocation and drive Seasonal integration revenue first which warehouse projected, in income earnings to the second in want in also a smoother will across change is lower and of than cadence guide what are business, quarterly growth

participant. X it our over want I question keep concludes turn to before to per it And remarks. for everyone remind to I This prepared questions,

Brad Stewart

Thank you, Andrew.

open now the will We line questions. for

Operator

from from Wadewitz UBS. is question first Your Tom

Thomas Wadewitz

on more contract maybe a XQ the in and I up pretty I the rates? on more traction perspective XQ. fall kind of XQ? of versus pricing just terms more what's to lift do little LTL a It's in meaningful out? XQ XQ guess of key much is assumptions. of if some there think Yes. that could move Or view assumed just in the versus more how on expect really perspective XQ how I then because you wanted from you greater offer in much So costs see Is guide. the some And on

Adam Miller

contractual and QX, I from on I add, from Brad the just bit won't have rate normal a market. think favorable detail I we're I'll to to little to business QX more anything But Tom. think free a seasonality into in from in that. lift go be think Truckload here. momentum And on the it's great jump Andrew season when standpoint. Yes. the bid just feel about if the to building QX and to Sure, we here. touch And expecting QX

in And that to businesses. translate our improvement those of and operating increases in of ratio so the across rate Truckload to implemented we'd should expect be all QX, begin to some an

build LTL -- be haul hit LTL and cost some fleet putting will count, But And also momentum through DHE as it the expect to QX us. our the we're of the largely you we're front. bid building we to kind line volume improved then of which integration margins. well season expanded facilities, more behind because on newer should our on optimization lead density shipment in greater for greater also

business. to a for we're so step LTL in QX up QX margins seeing think And the I from

then QX start about lift from maybe Logistics QX. from stable the from margin Intermodal, And we QX, turn we And expectation to And then a that our a in is really, be positive path see standpoint profitability to seeing to revenue Intermodal. relatively standpoint. to talked a in

of in all think to step I QX, So the QX from are to Tom. earnings those up contributing

Thomas Wadewitz

stronger So seasonality like and normal Logistics, Truckload for in but a than maybe seasonality that of sounds understanding? Is LTL. fair normal kind it

Adam Miller

Yes.

some I growing our from integrated now the having of and also to because on expectation DHE think what self-help volume of markets. the leveraging network California our can the newer really access in come facilities, into having front LTL there's but

Thomas Wadewitz

Right.

All right. Great. Okay.

Operator

question Hoexter from Bank from America. of Ken Your is next

Ken Hoexter

the both structural those of maybe you many just bid taking? kind season, about is kind delve the season, bids just the earlier confidence. talking side? cost it. early? sounds of Maybe lot it Are giving into -- dig some maybe Truckload. were early It moving that's bid you you like here, ends come of and Adam, even steps is -- it in Can you a talk benefits like of seeing was into -- are parts maybe but sounds you're an about on it the more there maybe seeing you Or kind of

Adam Miller

not going be across Ken. X It's bullet all to improvement areas, those of here. really There's silver

the season, its noting just is seeing following most or up. what that on the I sooner think I understand normal wins pattern. indications moving I touch our don't that than -- normally customers would it are the heading it's really likely seeing was is I any early it's I just bid would. rates we're early we're season the As on think from bid

the that we've might Some rates positive. trending there from the been that maybe view. a be few received, have disagree -- But with awards

Last conference to maybe up thought build the mid-single mid-single low- then bid mid- single-digit rates that be at the season call, as we progresses, digits, mentioned to high our the in start would would digits could the to range. end

I think bid a X at maybe of lower their point, so this a and brands to be point -- least mid-single-digit have of transitioning or standpoint. them that from than starting we're at that's And now, ask few a that. higher ask even at we kind our may of

some come a making just or quarter gaining So there, some it's margin feel cost and to progression a wanting on rate incremental we then large in our the talked cost are last year-over-year terms improvement, business. grind a progress I momentum maintain basis. just It be about on going of progress mile will it's to or discipline slow meaningful inflection. a and going We making like but be per to from just just not operating in of the a kind keeping

and of some productivity that's come come of market inflation you a areas from in could better to offset have equipment. just the as you've areas that driver that you And but improving, may from so on business can improvements that, if other got pay, such have

from further we in we to begin is and But to a that achieve to got half able the it's what of intact, host hoping year. again, to expect improvement be believe even of be to to QX back improve But in do that the it QX seasonality we're achieve. to areas

have I something may think, add? Andrew, you to

Andrew Hess

Hey, Ken.

half I seeing variable the made the quarter, would here, We've -- in cost. leverage fairly both of We're as say that the us give on been for XXXX. look that margins, costs. in in fixed our to and we've So XXXX, progress our leave into year some here and we're that we real I really on we in guide encouraged going working hard good think back QX our some you're as that's

flow-through of has our out lot year-over-year about a terms in row. We we've been X made or talked in utilization That's So to sequentially year-over-year, playing our of a better cost. really quarters progress. better the

are equipment that the really, progress encouraged So pretty quicker. going in are That's our in as to maintenance costs we've and wages, help really to and margin we our be able our we're down. costs 'XX -- into substantially go costs fuel made us by and expand our overhead

our we to do into the of the So confidence contributes to give XXXX forward that cost going work been it that think carry is we've us expansion. doing margin

Operator

question Stanley. Morgan from Ravi Next is Shanker from

Ravi Shanker

than to So in think index the very the seen better or guys it's reflecting of January, I data seasonality. clear like our guidance much in December normal that with into ramp points, ] the But you pointing I truck think some [ you've it's the seems are whether November, it's rates -- seasonality. it TLFI spot

is seen to than a that of -- So guys kind the enough strength weeks so sustainable can maybe to? you reason tariff-related seasonal X strength up this you do to actually think not this some did? of expect print there's or of you you've -- guiding can kind wind put a the seasonal continue not extra guys Or prebuy? better kind that like last of is down? are That there and And do that X, you in you and believe

Adam Miller

Yes.

to seeing you're a the into to do first out the still well 'XX where can And week we on been last from is this be disruption telling 'XX going referring nice I sometimes think really the weeks the that think the the in hard to. to some that When from just soon I you're weeks. data look to the at of land. quarter, read churn from I Ravi, as the be because feel week market we're first expect we it's which January, have sweeping the of as with weather honest, the saw you several it's that. few some challenges there weather. data through probably conclusions to that last to to third-party Southeast. go draw the saw too of in hard rebound, from then We feeling the

I set on then to 'XX So determine not upside, the to how materialize today. our if guidance what what we banking begins see achievable in on time strength more a we're to if we where think now. to like bit little there's we trying seeing we there's feel And right more is right we're that But now, need see market believe the we're based strength, moment. we see certainly, at continued but than

it's we at From see we And at. you a would look similar our capacity look would I seem industry inflection. that's there different that certainly there. business. call standpoint, any track think load up, But trucks look something to rejections the less meaningful mean, are standpoint, and it soon type does that like out that are all at and available we in too boards when I been an from of you the own data

more data on that get the think market. view we we before to see like need I more our on aggressive sustained

Operator

Group Our is next from Wolfe Research. from question Scott

Scott Group

but approach to third Truckload way nearly $XX If to actually maybe quarter from $XX earnings that So quarter, fourth revenue last you a improved fell million. right? question, different about look, Truckload million

actually go like the that So for that think do means of course But ultimately you trend? where of what how the some year, the strong. over sort really like happen? that's sustainable does that is the like How course obviously, Truckload And how of margins does -- cycle? over can color,

out just then just focused I to for big when yields. I'm think And Adam, Why truckload said to price share. said sure the you industry-leading And 'XX, is about different laid on the the have approaches share? market you maybe understanding. and where market picture just one I about -- priorities one question. make like is X I you want then Intermodal,

Adam Miller

try unpack Scott. you I'll laid out questions X to there, the

here. X me miss So if I forgive

declining just but was I sequentially, think the revenue improving. first margins question

have naturally there's I the occur going the of pieces that. quarter, fourth think Certainly, a that to holidays. of couple you're from in disruptions

Wednesday your So a ideal. on Christmas Thanksgiving, isn't

see periods in you'll time, a productivity step we in to over cost did those fourth, have that that of from we business. see which continue drop improve your to revenue of a from usually a -- a the standpoint. on our there's And of then to side assets period pricing you make over yield so risk there. But -- down third your of leads And progress

so to the And we ultimately, to when But And to grow Truckload. the become to driver the I about that's do more we're be Intermodal, major growing led think We margin. opposed in has don't we an not to we volume, approach, believe think so. profitable versus want certainly what and Truckload our improvement that have to that Truckload. opportunity in

our share certainly costs. and up, for still will. have manage think market there's to But we opportunities I there's up if us going to be pick to rate to to opportunity pick

so on grow margin do to Intermodal better we out volume from to overall we standpoint grow the latent market do compete there have still in a players to market. We an front, turn the the from need our containers standpoint the much with where there. there On capacity share need

I all, business, Truckload Did So be the a lever our each Where cost pricing standpoint. Scott? volume important it's but are I fixed on the disciplines. we while maintain where lever standpoint cost given I stand them still than and competitive side, a all pricing may bigger think of think from bigger we get in really, today for Intermodal from

Scott Group

Adam. you, Thank

Operator

Fargo. from from Your next Wells Wetherbee Chris question is

Christian Wetherbee

that basis. year-over-year pretty looks good Also Maybe on I dynamic a could in looked the of pick it improvement OpEx there on was cost per sort up mile some Truckload like side. It like on sequentially.

'XXs the curious that think you you Obviously, as the well. on. about mile you legacy guess from about the environment at you're lot can or I after, into the think of hopeful But getting hopeful -- about that further I the better as lower opportunity a that quarters seems pretty And that guess the point. I we're meaningfully made in the here revenue business doing that per like where you're XXXX, at to of job revenue how context we were kind It doing get that. or comments a X improve so. good will of a So think, controlling back control, I'm than stuff you're

just to is capturing from you're I'm this cost business what as control opportunity guess I given a through the trying the the we we're margin cycle, make of sure perspective doing? next move So

Adam Miller

any need for if I So the question jump Andrew cost to. your in on Chris, add of part maybe XXXX, the I'll on color have and first can I then

Andrew Hess

-- of here in we've factors There's initiatives there's number driving the involved business. in the a cost been

me lot few. Let view, and improvement put our our this a we side, lot a lot of a we tractor are more a miles than runway address We in doing a assets, to We've on of of trailer us able regard. our were of both believe the ahead made -- lot our on equipment yet in now. utilization there's just the in

of lot utilization That gives there's is the ahead improvement a future what So here. contributor. that? us We confidence well feel us like a sustainability of in major of

so our lower load our in here is that on view. that permanent cost and have not significant increases. through We've see in overhead We've as to starting our that And to fourth you're us in to in reductions tools operate in on and made continue We been way We've put you're see working at to business that. costs. reset that view, and pressure all costs results come allows that are cost. that to and third going fixed productivity, quarter. do starting our our Those increase year, fixed and our to volume a a the processes implemented

like this where become refine into an we've we've margin there's had costs. to our you manage ability so of variable error, And get environment had -- little to when to our

So our driver fuel processes we years. costs wisely have key maintenance variable and had of than driver and those costs our -- pay, in stronger the our we've managing now

become management so a process, this how sharpened we've more And has on us in fundamentally it. we operate. to our market fundamentally, focus way our is cost caused certainly, focused on even But that

we've initiatives see on will driven any don't So why when those any think reason revert about we XXXX, we us. of

going about -- that down manage expansion our to think expectations us and so we're to our So of costs and gives pressure margin continue business. we the put confidence to

Adam Miller

we asked OR standpoint. many we're moved I our people see the reason can where you best in between have the when why and still most valued. all of the side cycles believe to back of Xpress. truckload can go. from a throughout about Truckload don't regular route capacity, where the be get the that. typically XXs invested over operate from where many can't in performed that Swift can And in U.S is really you're the major That road, upper where is the brands, on peers, kind that's how times, Chris, an away We margins we full Which very in And market of Knight, our

environment, in playing you're Now in the a yet, a more case kind XXs. be I really, XXXX of normalized might difficult that see we think is in that's out. the range. don't cycle market, think normal that in at mid-XXs would mean, in then which how kind we're that of And operating upper I maybe I

that historically. highs this on last just type that's to I -- business getting the the Now much much -- don't And cycle obviously, see higher was how lower. of I kind lows same we've volatility. back But see were to side. Truckload I and expect were see of us this the don't operated

Yes.

done. improvement who On volatile, a to the others their just pass to incremental to we a that be operating just we ratio was lot pick that of year able properties -- also being year grow really the space year, make LTL as an and couldn't us. network in investment is nationwide business up building like opportunity this an don't up It really side, to new right? big gave Our to out XXXX access the were Southwest. for us was see make the have goal but acquisition in after

all good because bid So us over would like real a from nationwide it again long-term that network put we feel do season we it like. on in pressure into going position building margins. But more than has the great solid this and out margin a really standpoint, puts we would a hey,

Operator

is Your ISI. Chappell from Jon Evercore from next question

Jonathan Chappell

and Intermodal overcapacity, Logistics. if how out is just the you've that of laid cycle. of and and can businesses initiatives the just it's of lines like the of different, Andrew control, last types whether Adam Logistics cutthroat see other you X aspiration to type that Thanks further LTL you businesses? step the TL where kind Andrew, you competition the and It Adam it Are lot move you that answer. those think the business through of part the strong see take the the then in you in X of could a can logistics? same are Intermodal same imbalances relates Or those in maybe you as the sounds for done can things the cycle, implementing

Adam Miller

on I'll Well, Logistics. touch

So look much when at complementary business. our Logistics Truckload it's I very business, to our

leverage, of network so to so see the is And to trailer have the and flow our business. with those comes a valued. also route our efficiency very demand irregular standpoint, capacity, trailer is the And when customers from would pools. the strong benefit market from pulling that having much but loads because capacity trailer Logistics third-party we Again, through we in pools when

why as business that's growth. believe, have outsized market to positioned is the so Logistics we the strengthens, And

you have drivers where the becomes volume more and the market Truckload support loosens there's have shift when more than Truckload Now to that supply on where business out of to demand, paycheck. Logistics conversely, or from there the capital assets our we we counting -- business

an being stand-alone logistics asset-based maintain bit would I would. just But comes business always profitability. have than just volatile non-asset part more of a discipline, little So business, and we be we that from and your price

really would We're does that. effectively, more sharing on OR our gives maintain and we Logistics Xpress we well. the opportunities, that And harmonizing lows, continuity the we logistics with of I think to buying continue the platform carriers. between move that all sharing right throughout us vetting environments, done use brands, in the has Now acquisition, business profitability hey, the different And but do that U.S cycles.

bullish we're so And think also on and supports Logistics for us I that when well Truckload really customer. And is bodes our healthy.

a that from it's business On operates different overflow lane, price much the Intermodal to a different bit typically Intermodal a There's because as differently. point. not Truckload front,

a I that we with. partnerships better think, partners we where little enjoy, nimble allow bit markets. us we that's a contracts be work really so business as with have the And navigate And to more rail we

And we were in a tough spot X.X years ago.

that. want a And out quite we're still business. count the per have of get be, standpoint, where had certain from you really the so we've of to right revenue right to the amount not kind of then for to you dig had scale and And and was low to to I that get part a of get earnings load

the both think right I the density fronts, on in the see already progress, and continued as need we've made load. that. follow, on So the market we the per but have rates to to that rates ensuring then you'll we Truckload begin typically to begin progress turns building both And get Intermodal but right improve, containers, we're to revenue see starting

Andrew Hess

better think on set much in will structurally up we've we're we had ever been. a just Intermodal that position I add I -- comment a on than

address in that me of Let couple a ways.

what long-term that us first diversified will provide business XX% the quarter rate, escalation second We the to and grow. pricing growth. and book seeing guided healthy going good pretty -- say, -- really group we've volume of I believe be can our and our that growth you're framework a is we First, growth we would of some customers quarter we've built. but for think to some And slot. a good, growth for about numbers help feel rates, we to think the It's

we network better efficient I the it. to produce bottom now organized, comes margin that volume line are it's think The us second is, a going more network of that and we're to allow that our out allow -- from perspective, to come into

profitability where we've building been but on is We business. in that going industry the not that to that's as margins, in be end. with path. is going we year, our to be this step like a big to towards be XXXX We want So in this feel step Intermodal the best XXXX a forward believe and want first we to

Operator

next from Inc. Imbro Your question Daniel from is Stephens

Daniel Imbro

to question. follow Maybe strategy on up earlier pricing an

than volume versus shipment you clearly are Yields side, to did. sound or LTL guys you how growth Adam, guess, ex-fuel the you on growing peers. growth? tonnage XX% faster quarter, in need you leverage the I balancing the that like, up almost it but tonnage So does yields were are rooftops

has that at that strike And improving any you do positive how least or balance? you stabilized are there? So seeing all indicators market is growth underlying out

Adam Miller

what And you you're When a XPLs point look yield the facility, trying kind off flow mean, start through strike new because you differently may have but your typically nice terminals. on allows right Yes. to that to business freight starting a business the the start flow markets kind up And may to between always balance start of you is. different yield, API volume right? Again, and to depending you that gives with to volume at connections start, you be from it highest those you need through not terminals. of I those coming to open

start be. have to greater where probably towards and that's work priced kind the to the of you market where build you and get bids, to want national And opportunity density, through an you then as more that's more you business

to look in we I network increases we renewals way mid-single-digit have be is implemented we've trends but still had bids in some just the and that But when indications pricing disciplined second So haven't customers that LTL, at to do think existing late into now the out there. that in they from new we and desire us will can kind implemented remain want get very is have areas. And have that those interested quarter. we already it first that territories the come as our of they're into and yet, been commitments great a quarter serve, we we

DHE the We We had have make sure just slow little was actually to lot done business. of to bit in kind a interest a integration effectively. the of it

to win So we fairly. want discount We we think very our volume. to priced no -- and plans have we to don't we're remain disciplined, pricing

survey, favorable pricing If you our [ look very to most. look at the I ] does think Mastio

of and need pricing gain opened grow new start these really maintain to we start disciplined traction So have an to to optimize we've volume think that and up. the to to opportunity that I terminals we some some

Operator

question James. David Raymond next Hicks Your is from from

David Hicks

region halogen some overlap network. nail among heard want of kind kind existing of Particularly region the as fill in gradually targets make grow expanding Does if on via place some that kind We've of those? own that in acquisition more assets kind you of as with that to into go kind the deal you taking seen divest the regional well. given into your prone a ] M&A were on to [ terminal on expand national expansion after growth select out the kind and region with some platform to around Dependable? of I hit to deals kind the we've their in of a commentary limit of geographies. need Northeast opposed your LTLs of the And of more to to kind and

Adam Miller

go to detail targets. great Look, I on don't Yes. into want we think specific

could and us is pathway certainly -- certainly an we is standpoint at actionable. in take so, options to look least a I completely of a an there that are longer foothold we we believe we option we as at approach M&A to from the There a do Northeast. have an that's in I get there there. explore but the nice think organic to couple probably -- Northeast of could go mean,

we have that world make a a not even growth you tuck partnership beyond you could don't if with gain And of you the from on ideal, to organic if you would then, the think after don't end but overlap be deal, in. may -- of yes, us hey, that overlap. the And us the that some that have strong some or deal -- there there company really out a in foothold smaller still helps do prevent because another a moving isn't it's adjustments I Northeast.

look a pathways you different have of kind couple -- we of that You would for.

now, currently to and then now, do hey, a next several when to we're big pathway we're kind now, But Right we start of we to lot the have building what options we options where Certainly, to on like what exploring right sense Northeast. the makes think have of get could it be, is we DHE have to working take with digesting still and on. so. a the the we'll we area a the we we point But right kind know on that optimizing new feel Northeast facilities. those out

Operator

question is Brian Next from Ossenbeck from JPMorgan.

Brian Ossenbeck

couple from like to businesses afternoon. get just did margins. I it's guys, a U.S but entire Xpress. terms much update part other It an rate maybe wanted you of Adam, good I sequentially of it's on segment, below didn't a Hey, of the it mention sounds improve know the still below in perspective. times, and as market

we So have is some perspective you where a footprint I don't do Is you anything that from outsized when something know, operationally? can do see gains a, recovery? a there else

this a that used it to that, sale, anything adjusting it's understand up and equipment? pricing? gain And Or a The on you're ramping quick just point, also trailers or call doing, that is help on Maybe that into some couple. looks Is -- like the comments helpful. follow-up. be quarter truck next on

Adam Miller

Yes. Yes.

Okay. All right.

U.S an and Andrew done think the for on of their touch touch side And continuing may we've there. overhaul hit of With cost I those. Xpress, that Xpress, that's may the I me ongoing some market Let on on initiatives we U.S have network.

haul the went we and rate and easy go hauling of that the that's and so changed we're freight not through pretty And really that's through, type rapidly. that hey, length the to And mile. per of

now have of Xpress XX locations. terminal we So a U.S network,

home a a also ] led we length And to that's and locations can lead it's of few I build job feel lanes good density driving been with but and consistency, shorter but profitable haul, And more drivers, to also a to mile. have good per for revenue we Total higher that well. good more as has time. think [ like trucks, a

have move kind we've the in pricing through to the any that although without help from this gone evolution so of up, market gone rates up through process. ability terms of And

at other to a some U.S bid we than some lower largely we're -- of when start and at the to build so with probably And season starting say brands. our Xpress, going point look momentum, I'd

some we'll shy many percentage where margins. gain than point just because number improving -- But it the some in can improving higher though doing think been in so plan starting where build even of to others to the the That able through And may more with the a be of I increase costs, is. space -- cases, ground to still everything be see team has grind market brands. absolute other target we'll we

the in bit some that we we making but were quarter, here back insurance similar a some in in pickup type there fourth set think I legacy business. some headwinds, us little from progress had the saw cost expense that momentum

parity there between businesses. But Xpress if feel really, you margin us to like the large truckload profile of rest in know want of terms would initiatives eventually nothing in I And prevent still and we becoming touch ongoing? that there's the the of Andrew, I that have some our from U.S don't on cost

Andrew Hess

just understand. you unpack Maybe a bit help kind little of Yes. that to

you that -- at and think about the Dedicated look you So business if is OTR. Logistics,

talk the about business. just let's So OTR

peers business period. So context, in range acquisition in points. a the somewhere in progress the the of probably since have probably in ratio improved same XXX% made XXX lot industry, There's basis the amongst our has of occurred, been ORs the increased in OTR operating

was perspective, cost there of last been the versus of synergy progress saw north number there's $XXX annualized. field, from the a And So lot I a made. million

lot now a are of some costs costs And to progress going that cost. in have There's in put function so structural that a we a going the see because lot place. to -- we're to difficult go more are of of the things of lot those be a more were

look focus the in U.S that business I forward, you go So are things strategy key our at Xpress. I for as on X would

market up market as First, to we're the allows. bring rates going

of a Adam alluded We have lot opportunity there, to. as

well and truck believe opportunity of a that. in there's going we're to seated our to count. Second, for we're We blocks underway lot building terms increase do that, of

legacy operating from an parity an Third dedicated operating OR our our is for opportunity well. dedicated -- to has business that is We perspective. going with on believe is It growth. we And a business we're it that's build fleet.

see to so going we're grow And well. that as

going we're on the to safety Fourth, build culture.

That about couple -- mention operating me ratio point view repeat. had that a quarter. the we impact the XXX quite on Let on will don't reserves that of we as fourth in a basis development had that U.S on their think unusual Xpress quarter, we in

to advantage believe right continue and that around cost. on we real as that the work So a that be we in going to culture safety safety build is

will the be equipment fifth able businesses. through over we And we is carrying CapEx in got price legacy side. on to based apply lot business on to the leases equipment our of model more replace work the equipment with favorable That that is a high-cost time

from So and us be OR to give gap that in all profitable of to strategies the legacy working those guided. close we to confidence together XXXX businesses. We're our start going an perspective

Adam Miller

those. work several been We've tractor out ongoing. of long value ratio. And And inventory trailer lot some little as when on sell healthier that just we've a tooth, bit book trailers big momentum you gains a of the to that's gone Brian, better sale. call the really there's over build quarters. And able some out we've initiative seen to you're to on through these hit kind of to that it that, there, to on question last there. -- able quite We've of And through but last a the pulled a not in pull rightsize our gain some

momentum and a on one think we've factors I the that's little so the And gain of why on more seen bit sale front.

Operator

from is Susquehanna. Bascome Majors Your next from question

Bascome Majors

about network Can acquisitions TL flow plowing or the see you between bit year? that your expectations the what little just a LTL for And talk expanding free buyback? as cash the into or opportunities you opportunistic

Adam Miller

this Brad one the He's into let get We'll money here. guy.

Brad Stewart

Bascome. Hey, Adam. Thanks,

going look, year to includes year. basis there's a guiding earnings we be that So start we tough to the the certainly answer one flow think not steady, stronger to improvement. it's for a for the a says And year. when outlook our But are gradual cash about the free we're question pointing to to

improvements and cash therefore, our our So earnings we in do meaningful improvement meaningful year, free this expect flow. in

You size business. that to saw of the relative this that's we manageable a gave, guide the CapEx number

CapEx. business, facility and I the conservative as real think that the of growth, there. weighted maintenance to. we've all large XX% would made about the assumptions be of XX%, necessarily that that not being There's -- just alluded representing equipment. any -- is estate only But of some LTL It's kind side, some majority basically you largely of on towards

focus But improvement driving it our volume We've as earlier XXXX, talked going off the to the around efficiency in more be business. margin about to in as written XXXX LTL growth LTL plenty to so for further we'll in comments, footprint in largely opportunistic we expansion business. relates to X and be drive the is

to higher buybacks cash So because we is like that to should relates our of leave opportunistic healthier as beyond free carry. flow leverage a it And what for XXXX in tend well. than as amount to a remain deleveraging that, little we

Adam Miller

Okay. Well, time now. seen that I our think we've

you, to call we call call. conclude But get will joined. we your question, Andrew. will to appreciate schedule you. our if Thank Thank and everybody I you XXX-XXXX, able that weren't who's can So back. time And (XXX) you to again,

Andrew Hess

you. Thank

Operator

This today. conference for concludes the

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