Schneider National (SNDR) 1 Feb 182017 Q4 Earnings call transcript

Company Profile

Participants

Pat Costello	SVP of Investor Relations
Christopher Lofgren	President, Chief Executive Officer
Mark Rourke	Executive Vice President, Chief Operating Officer
Lori Lutey	Executive Vice President, Chief Financial Officer
Ravi Shanker	Morgan Stanley
Tom Wadewitz	UBS
Allison Landry	Credit Suisse
Chris Wetherbee	Citi
Ken Hoexter	Merrill Lynch
Scott Group	Wolfe Research
Brian Ossenbeck	JPMorgan
Ben Hartford	Robert W. Baird
Todd Fowler	KeyBanc Capital Markets

Call transcript

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Operator

Greetings, and welcome to the Schneider National 2017 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. President, Vice Senior Costello, Investor Relations. Pat

Pat Costello

better anticipate operator. joining our you, our to We Good to will your evening, for you change currently received the in worked a results. the release call. morning, for evening copy thank and fourth out an the our now, quarter call. By call an evening have with of practice quarter. our worked remain everyone, flexibility Thank that Thank for you you company's XXXX call but - this should have earnings

a do not one you our If on website. have copy, is available

Additionally, I the Tuesday, quarterly highlight press in announcing $X.XX. to release would from like to dividend increase a XX% a

Chief Officer. are our call on Joining Operating Lofgren, me and our today Chris Chief Lori Lutey, Chief Executive Financial our the Officer; Officer; Rourke, Mark

and we These would I the are made SEC. on that to financial filings with are call, you statements forward-looking in subject including comments the remind guidance, begin, Before our risks those including described uncertainties, today's the comments. company's some of like to

actual from during call. those may materially Our the described differ results

over most Chris? call call like the - would I comparable and revised any and financial now tables GAAP to are today, forward-looking reconciled not our discussed to based made this any as turn circumstances to press release. directly CEO, addition, the non-GAAP attached company I In forward-looking does are statements and our undertake new upon statements expectations. the update measures all to Also, Chris in the or like to are would of during measures Lofgren.

Christopher Lofgren

to demand strong businesses Logistics and aspects: price in well from contract, volatility was spot. capacity with capacity. the Price out saw our network our premiums quarter responding these The our and across significant evening. Good and Thank performance you, Pat. seasonal strong played quarter as where pivoted, We all consistent expectations of customer availability. segments supply business for-hire as regarding fourth

responsive throughout in to and be portfolio incumbent can in during volumes of to for price and while XXXX third times growing customer levels truckload revenue exercising providing and transit to us to to the our across particularly network up choice e-commerce seen This customer in be realized was commitments allowed drive respond the enhance significant service growth of infrastructure. us made platform drivers will stretched earnings to which deliver quarter our the capacity, most to in investments in alternatives Final the us to to our growing fixed-cost net Quest the Our in The fourth segments. allowed while quarter. be the services sector. also our upon First for We realized Logistics volumes Intermodal XXXX Mile the and It this quarter.

to price from allow year. our notable -- focus the and minus growing between change to We have range the us have of at into should annual the views the this In capacity top contract that the guidance, an the in customer net levels. for a too the price, necessary of in by This e-tailers in are both improving the costs difference margins throughout first of planned driver-related increases bottom fleet defined quarter will intensive intense the and us be business. pipeline achieve area

are the industry We on side from capacity the resulting the impact within front available seeing enforcement. the of to ELD

the that will These business year. significant drivers to mandate in and dynamics is the flight from performance pay and structure result into bottom both carriers of throughout the recruiting process. availability could the the the still the have already ELD with compliant the both line impact early top Additionally, cost and of

it emerging our believe over environment. position to operate and our us now Rourke. to of Quest platform the looking forward to this favorably turn portfolio optimistic safety, and Mark are in We commitment I services will

Mark Rourke

in services. market in mentioned, market compared of Thank portions to supply the for-hire a evening, the Truckload, the Intermodal further change tightening minus transitioning and to Logistics. robustness for-hire as November. demand seeking quarter I'll you, few Truckload segment market both customers tightening a of in demand spot our of quarter The a before a our offer business increase and business year daily nearly in were in brokerage increase in evidenced increased truck the as a ago market capacity function Intermodal support turndowns attribute economic of impacts. is The period Truckload as of by acute number a Chris XX% threefold be the as healthy price continued observations We ELD the driver-related and momentum order specifics within well expenses, Chris, its network-based our throughout the a and to in with the the especially Net conditions into an price, offering. by service compounded peak condition from supply change good in positive and month everyone. mandate general robust

X% QX was per price per QX QX cycle, year-over-year to is segment, Now the productivity was quadrant compared flat of X.X% XXX revenue X.X% of quadrants over excluding a experienced of truck XXXX. fuel the sequentially driven. and truck few The count truck Dedicated the of slightly week, largest premiums. Truckload. surcharge, in in in 'XX, 'XX, to excluding more the again productivity. XXXX, QX. and contract specifics upgrade remaining tractor fuel combination in for-hire remaining growth out X.X% largest XX% at Most gain in realized within 'XX. standard, the was seasonal driven X.X%, increase of increased gain The surcharge, Truckload, that a period of an a of week, improvement improvement. was specialty as and choice-driven in revenue our average as of price, for-hire with down essentially Average same compared and segment per improved In units QX most X.X% below the and over increase network-based in Price count X.X% of regards per Truckload both that to X.X% over and

more the in available and exercise XXXX in of slower respond in limited change a impacts revenue same options inefficiency dedicated choice general in but start-up per versus XXXX. inflationary in QX Dedicated contract erosion in more are business configurations the resulted do week they configurations New revenue period X% per truck in predictable pressures. streams, cost to

occur. progress offering's be on months, performance the nature that margins improvement segment operates margin less to not and measured expect more Final last continue the X a will full-load in time offerings. the to cost fixed achieve quarter over quarter than price as average We renewals the our noted and targeted quarters as First make performance Mile in quarters our to to next We line Truckload's load national network full drag a than was in over

higher as order However, XXXX. the over scales current contribution drive new margins volume will network the growth customers incremental and existing with --

transition Let's Intermodal. to

freight, The offset versus order a less of X% an contribution despite order speeds growth of length and price-focused excellent Our volume freight transcon segment an X% Intermodal haul, led and in of longer on delivered train of resulting assessment quarter. growth basket dray X% in to improved year-over-year [ph] productivity count. in efficient an containers container slower

minimal operating owned less fleet solid and with the company higher execution fully increase enjoying with need We dray chassis that are are and the costly in performance the company the resources. count. XXXX low levels fielded program in third-party a throughout And mitigated associated to We the of costs now use tractor dray grew reliable change. dray

experienced grew fuel in XX% points company a highly executed improving order percent per coverage period a increased net brokerage Truckload freight of fact, XXXX, market year-over-year X.X% revenues, Lori in of the surcharge margin, period the chassis in to the you it the over first X.X% rental time our cover from that, of record our and our basis turn I'll Accelerated synergistic quarter, basis volume cost of Furthermore, order, XX.X%. up of experienced of achieved to And a orders growth same by revenues. sequentially operating dray over million finally, QX. excluding ratio Logistics the up capacity-constrained more QX on enabled to XXXX. to duplicate our year Logistics of is X.X compared per revenue ago growth The as with revenue X% more to XX XXX from XX% was capture Logistics as year-over-year Intermodal segment for the in of of and XX% In points XXXX. revenue order And summary of customers' financial segment And Intermodal same revenue of a needs. if consider segment with and percent within metrics.

Lori Lutey

you, Thank Mark.

while due fleet in increased revenue, result XXXX. driver the as quarter to efforts the on to and for $X.X third XX% to the to $X.X fuel improved year-over-year This and the billion, operating the market was recruiting for increased full Enterprise larger surcharge, the during of fourth quarter quarter. conditions billion. fourth revenue XX% results excluding a year of Now

million, X.X% to the in of adjusting year, fourth increased was the quarter revenue full For operations of after for increase Enterprise fuel compared from surcharge quarter X.X%. and X% an income quarter enterprise increase revenues enterprise and to experienced have of Adjusted XXXX the increased $XX fourth throughout and million, improved by Mark $XXX This fourth was XXXX. income the operations compared Chris discussed. of of price driven quarter, was XX% primarily as an from productivity XXXX.

adjusted X.X% on basis, income a For and and the from full respectively. decreased enterprise GAAP an operations year, X.X%

recent tax income the the quarter tax to XX% deferred the reform, tax million by federal due liability of the in the Following revaluing balances at net its the reduced enacted newly company rate. fourth tax $XXX deferred

in XXXX XX.X%. the effective the Act, tax the impact rate of the Before fourth of quarter was

rate anticipate forward, XX%. and Going XX% we between tax a

fourth million was $X.XX diluted million, the result, which a increased of basis, from per share, in the per year IPO at net On share an share. count compared adjusted the $X.XX, As includes as $X.XX the fourth to per XXXX recent quarter $X.XX of ago. $XXX impact a quarter $XX or was EPS share in estimated and diluted income

per EBITDA For $X.XX. for the the fourth quarter X% per to the diluted increase share earnings $XXX was Adjusted full adjusted share of while was earnings of compared an $X.XX, million, XXXX. quarter was diluted year,

basis basis sequentially Adjusted adjusted and points EBITDA year, XXXX. full quarter compared of improved to relatively XX XX.X% adjusted improved increased of the $XXX to basis XX ratio million million in points basis in compared operating $XXX third year-over-year to XXXX. points the an was flat ratio XX.X%. to XXX fourth on the quarter For Operating

of our segment, $XX the to quarter rate revenue, XX.X%. our perspective. from results segment of an turning Truckload surcharge, growth X%, income of and Now million reported with excluding an OR a In operating a fuel $XXX million, fourth of

fuel $XXX.X For billion, and operating segment, the million. in surcharge was was $X.X excluding Truckload our year, revenue full income

in Difficulty] the XX.X% the operating segment. with reported income of quarter, fourth implementation. Intermodal chassis $XX In and our operating we revenue million the an for to [Technical of of adjusting ratio Turning before million $XXX

For million. the million, Intermodal revenue was $XX income full year, $XXX was and operating

million, Finally, our quarter, Logistics revenue $XXX income and segment. million within reported $XX fourth In with of operating an an we OR the of XX.X%. of

full and million, the operating was $XX year, For million. revenue income $XXX was

on had outstanding $XXX December end XXXX. compared as a of of XX, December various As million debt total of instruments the $XXX XXXX, Schneider of to million

Given in the that increase $XXX the IPO The debt compared debt free compared IPO our million cash without to increased In equivalents and cash million positive net due cash cash of XXXX, cash decided and was to the penalties. equivalents to utilize the repay prepayment free proceeds from December to million offset increase the primarily XXXX. of $XXX of combination end XXXX. cash flow flow partially of December $XXX million an our $XX by repayment. cash company's proceeds free in incurring we we XX, to and XXXX, could On at flow, totaled all

lowest base customer quarters. adjusted Lastly, and year, We providing into recognize impact year long we earnings history tax that guidance how you earnings account of share in second company the across for full net our takes earnings quarter. did The diluted of represents range price, We of per a Chris are operating of the $X.XX of and have be the anticipate discussed services in portfolio to and increase to year-over-year. our $X.XX. the performed with in XXXX more typically that earnings quarter diverse with first reform midpoint XX% our the half the have as typically this not guidance the XXXX being I from earlier. the a

our $XXX Quest million. now relates telematics call an it we tech investment turn to XXXX growth $XXX XXXX capital growing driver increase anticipate of for capital support expenditures, our as platform. Essentially, continued to to will as our development upgrades a that, As replace I'll similar in of support in Chris. spend back the Intermodal to to key range and With and our chassis. business includes growth to million capital The well XXXX

Christopher Lofgren

you, Thank Lori.

Lori's opening up in questions. was She's her becoming the a made lead we of tremendous replacement. dynamic will me new I'm grateful her and Before for traded company. her bridging to asset blessings to Lori call, contributions life's up over transition into take to of starts upcoming minute like And finding life. personally. to the to past would greatest the now to she all enterprise publicly and support retirement that commitment, driven want for open call a from has quarter. the her. I professionally to recognize in changes phase her wish years, I her loyalty the Operator, as the the miss this been the to of I the incredible business performance Schneider earlier helping announced X we've a

Operator

first with Stanley. [Operator from Ravi Morgan Please question. of your comes Instructions] Shanker question Our proceed

Ravi Shanker

everyone. the sense now? evening, double-digit pricing thinking of potential in pricing? trucking talk first XXXX, us frame Can other just XXXX next for you year. the bull XXXX case Good XXXX We heard right would you're than TL day a think give you another How were to bear I Thanks. speak low and terms. what about you in rather CEO Chris, the terms of

Christopher Lofgren

that a out QX of have just Well, in work we also improvement. Ravi, sort then about that I the of we think some the price cycle kind backwards we adjustments the with seen look X% saw things of we've customers if on kind but marketplace, at of done that and

see come As continued we January, into we up. pressure

trending that to first was closer we towards for the date more into X the XXXX aspect if little that So and probably as enforcement. to price the I far pick pushes frame. how we're bit on a the I We'll alone, time mandate think quarter get April see

Ravi Shanker

also little it, or Mark this a understood. give quarter order, trucks see I kind have a And talking with Got placing put release while up the Tesla you of that time? have you last about relationship have of going and of what thinking over testing guys you've -- your on kind guys you Can you press summary you, what what in that quarter done, a you just that bit ordered. was us them where

Christopher Lofgren

that take Mark, why don't you one?

Mark Rourke

Sure. Thanks, Ravi.

engineering not product it. We've with the with any simpler of upon cost the field of And done performance certainly, operation. certainly that material the the the driver associated around community haven't We componentry. testing. materially and promise the very overall based been mechanical and the of acceptance from bullish diesel savings around the only components but performance electronic versus We're

additional charging battery discussed and the scale on get and it very, the build So range, infrastructure some position stuff. a and deliver obviously, be the there things to to certainly, may point and got what certainly range on that and then were and exciting the to the offering we -- but that they we've pricing can on scale that questions can the as relates very

Ravi Shanker

you. Thank

Operator

question proceed comes from UBS. with Tom question. Our of Please next your Wadewitz

Tom Wadewitz

We about wish before, Yes, afternoon. think And Lori, know -- good the I've this. I just best you in I again, talked retirement. say this but said

Let's see.

strength the Truckload so had thought that On of in just have got I in Intermodal Truckload, would mean, and of some the margin. and would maybe contract -- know through market really I I strong you've more business performance on had you terms Logistics. progression play look repricing in have the see in But expansion -- headwind come margin you you if guidance on and Truckload assumption I might your think terms in on you thoughts year that some XXXX, your mile wanted the give margin of business. out and as from through some how in you last could to truck. what's spot the

Christopher Lofgren

think. Mark? him. dying question, Mark's in I to answer behind come this I'll

Mark Rourke

not that's margin Thomas, on me and I'm let just but sure approach. comment quarter description, the maybe fourth the the

segments specialty solid at pretty revenue price for-hire special seen in both the to look And movement our would certainly week, a taking for-hire. opportunities standard our in is our market most for-hire of they movement and to existed or with responsive be there. segments, which associated truck where per be that you've per relative would our you If pricing the some Intermodal,

do and volume. It have otherwise. volume, with largely that we we year-round just when cover customers, our with We that's do -- offers that. special additional generally Now typical pricing XPLs spot against to it's not our contract put transactional but not

portion we've -- not solid portion conditions and a seen solid of that, current as has a we get go So and to in a which progress to the configurations, lag bit approach to not is portfolio and the our but to bit lag portion our There a renewals. of think that's good I a generally -- adjust some we of chance some good dedicated relative a relative there. and how

And we're margin truck so relates that it. there, per But portfolio. adding additional it Mile and that's revenue as a Final and the where based margin cost us being think opportunity that to while volume dedicated as not additional into to we compression then positioned. And higher a prepared we're portion upon saw the both incremental get of on cost per on week additional volume deal without to a XXXX, we business, against infrastructure will per great of well a putting much we take be order some

the as I into guidance here wouldn't Chris And fourth in to question. that's I time And cycle offered than Chris characterize initial get out frame. offer we So both really as additional and seeing of movement we're cycle mentioned, how the really quarter. would any additional XXXX the

Christopher Lofgren

driver that relative little is that. pressures of moved we But business, on the those too they've dedicated that that the customers. to cost, fleets isn't those certainly came the be while given contract that to And move conscious contracts a follow-on of it sizable with bit percentage want to tend a a maybe play slow. Tom, have largest our And role slower. just we

have are and going where to to discussions renew in pretty of go. We a as be recognition particularly things costs some these the driver forward-thinking

The other that because you'll environments fleet. thing like access some equipment cost does in in some those and that come quarter fourth happen the see higher cases, the incrementally saw drivers, of to to in is we

here be it's those so our agenda them have we as the and up front to And Many have started on year. addressed. of been,

Tom Wadewitz

Okay.

to it So this I guidance, like sense. could as set what would momentum you function like more margin you in the where have you don't some mean, improvement about your get we give year-over-year sounds within right. less responses maybe you specific something that the timing would XXX -- It XXX, you repriced, than Truckload you get like that. see more earnings mean, could ballpark, of level margin Is your Truckload a a sounds it's I a are in of makes a points that it like business your want up develop then assumption? you is XXX. that on but What basis, I seems that? 'XX if guidance It Maybe understand on than like in get assuming XXXX? lot OR basis on if It

truck? terms on of guidance what's any in just So in comments improving OR your on

Christopher Lofgren

access going do terms of doing full a Well, gross give opportunity relative that go clearly there. the are we I that thought guidance, know I to help dynamics as away Tom, we tried level. I our you're think We But We're what really margin the a And to is about at going employment what in don't good understand was of occur in drivers. is to economy. can I to kind that think you and guidance try. to

when some start I about is trying group the time lot what that the We of yet week, looks not it, things that seeing people of an that's hits drivers that like, seen lot one carriers have price understand. us that leaving we're operate that's could become, every of going mean, constraint going to -- to spending awful and become business can net And that those and function concerned look ELD-compliant have things. what -- of we're to when tell mobile like. how a that

that most as done the of to so lot will going a as Truckload business. business going there our work And dedicated result out as for the of there renew course, a and that that really will a we be And at adjust improving contracts, started particularly of price of was that that we're the plays where the result margins place But us see contracts, will to in level. forward. budget is in planning, need

at play. bookends. Think I also end, some acquisition might be about we driver the cost kind And of fleet looking acquisition driver net the and that upon that start the just in the the on what role would would price in So and cost. what's more the the of consider that, at depending there of assumptions growth could we're

So places, the to. would I direct be you those guess, I would

Tom Wadewitz

makes That Okay. sense.

Christopher Lofgren

that Did help?

Tom Wadewitz

Yes, helps, Thanks. that yes, yes.

Christopher Lofgren

Okay.

Operator

comes Suisse. Allison Landry question of from next Credit question. Please with Our proceed your

Allison Landry

about Intermodal Good West? experiencing for the and I do to of obviously, ask conversion taking is -- Thanks profitability benefit. the But quarter? are issues had comment and derivative margins rail East one, West there. could question. a in chassis. you with there's mean, service improved the the differences anything the had on or I any the of curious, if margins the from the the afternoon. if And between number impact That the just any in specifically wanted that and the you you've either to East my

Christopher Lofgren

into cost Allison. trying understand Sure, was ownership lot to that leasing the the what And last in to a conversion really it. owning chassis it we our plans put into that just was year. part easy of from was easy, factored of There the -- impact about and difference the

of we of friction good tend street year was got a further drivers, turning further and the productivity that I saw into the in just had of productivity we the benefits the we to them, it. and the costs, in think part to as of refer much a frankly belief given fourth and and we just on the execution as quarter, equipment, terms very

dynamics even train if cost I the versus to capture we worked like time -- and to. think the street and general in transcon and try to the is there West would more can that hard the and on and time the between pretty different on Mark comment the and the And East dynamics then the then on that. of

we're make appropriate the throughout each take sure the network dynamics trying parts. into of So to returns those that the are on and account

getting we're how I to better think that managed maybe the I that, we to think fourth at But and results in So like certainly you'd the in the was of quarter. a part led that on Mark, fill that. network

Mark Rourke

fluidity street of that it load. on -- and efficiency freight the putting have back but get can revenue-producing we rail the the network efficiencies Yes. certainly due of But have probably we could great similar down on not the effectiveness team the have managed the the to the slightly could of we productivity. the turned just platform, effectively as containers deal And the box of QX, that freight, did we X,XXX loads speeds emphasis impact. get QX on price have just believe The had orders of in productivity terrific if a done despite an our between in just another did to across to the dwell the and so being asset. network moving another train job of a the and time Intermodal minimize around We managing we also, did also,

We management is driver the I just our would together the And quarter just more productive. solid professional coming plan and of were put to network incredibly characterize about in go network capacity. force margin-eroding so XXX additional happen year revenue dray then avoid drivers increase into out the market able in into very minimal we And with count. tractor with the third-party that in our impacts to that this

playing so world. growth the out increase, going than with our XXX basis dray percentage, third-party even network order we company orange the bit, year-over-year and points still growth slowdown the and on a put more or the [ph] in And on

So were quarter. key pretty just those of solid drivers the a

Allison Landry

Okay. -- And a then question. follow-up so

you the the freight to earnings how As or to selection way a you've do for we the much for optimal better-than-expected contributed Quest ability and think the about And about talking is platform us been numbers? that that, that quarter? some this see there time, quantify the in for in this think

Mark Rourke

that selection the customer-facing think focus to see freight best the proxy and I for in which which way our prevalent, is our efforts of groups, for-hire guidance and it's on those where to for-hire, around best is is centers most quantify specialty our sales and contribution, areas the configurations standard then which Logistics has It less locations dedicated to on because that. side be and and in the not Intermodal then of quadrant. network those choice our buy/sell bit we're impact the and playing where that's those directly, our our a or around configurations Truckload tends as

at freight trying optimization truck the relative per when both sequentially we're to what heart to per in those selection that's configurations. year-over-year, and of look revenue and improvements at you So week do

Christopher Lofgren

add kind and Allison, where shift we bidding and carriers emphasis opportunities set the truckload A maybe the up of we lane have relationships the a way Mark's if pretty that will of spot. really substantial I through number to that process lot can response. of just into is the business their have

at -- Our comes probably more -- exercising choice. probably our company this in goes of terms

operate think clearly, that the businesses. how going So of relations got. within there, but we're year more just from. then markets, today customers we about all factor contract basket at we've how that capacity time look opportunities opportunities project we're And we continuing network in do manage tightens, with us for-hire this out where willing of into to flows of not it be are across in particularly taking to but to what the those what the rates And as to as freight and are are, Quest those those choose that allows offer more will that's against premiums

year spot doesn't service they percentage, somebody our us then and third-party of go that pursue may to can't been the things were because else to typical given while lot, brokered offered have to them. kinds a So they spot in this point, not up have lanes at opportunities we

the is gives every what lets into an of which us we choice against it at look then out opportunity essentially understand So it that, in we're it project that do the network higher realized us load future today, price. lets us within fits the and the given exercise fits how Quest how impacts to network

as a certainly come at attributes we So in opportunity the of lot on noted. upturn. we think It play Those we us downturn, same of as nice environment. have the look you a to had this shift helped kinds and

Allison Landry

That’s you. was Thank helpful. great. Okay,

Operator

question comes with Citi. Please your question. from next Chris Our of proceed Wetherbee

Chris Wetherbee

that Thanks. course to And part sense of the price, interesting forward-looking you XXXX, of September you quarter try the the quarter to and maybe you're the early a think on on to Good of of of call, and to up fourth for the kind that. of that kind give it progression in to a size your just it I us could seeing. I wanted net continued fourth helpful some over afternoon. of to expectation if headwinds sort be of first the bit little maintained But would turned the the relative some the quarter, and you about I cost ask last positive like think had suggested of metric.

Christopher Lofgren

move you lot us half reaction challenging afternoon, Factored into about our back are and that this I up is guess, Certainly, join to for in saw of Again, to it's get December, that the natural continue to this, of to some quarter Chris. net get of the we through that a as that into we the coming moved trained new drivers see company. through quarter. internally price is net there. talk Good nomenclature we dynamics price the as just

you'll so start time done clearly costs of were terms point to that price. going of net And obviously increases a see rate recruiting And get stay in helps some of attempt aloft, to things we've which go contract we bunch those done. at to and if in work the that in

which different high-demand what price. cases, in tailed a in in got we our quarter price. some So of things said was. the the had half third of improving plan we we will And work did do the then bit of into quarter, towards little bit, And this a net all fleet a December. factor the net position tailed saw needed really the off off back those was to fleet And we to and level as it that recruiting little fourth we that

happen -- truck, the I then some to first operate -- more looking going these see these again, -- but going is that's to got sure are to he's to are lot are going be can enforcement have -- be becoming construction might have says a to looking on they that an face in side the more we and don't for work ELD on to think drivers nothing that important job, the in they both pressure not And and a is at. thing competitors? we of tend to he to be driving make going we that. are all, have systems? fleet of in gross and what to come of half starting year to -- one jobs they of that of quality of is tell equipment number me, price who appropriately I that opportunities. desire we're the in the if emerge what's of company to add awful like to back to forward, terms given terms us going that's Whereas the sized what the what that's as whether might industry the or It's some local work our available, go disciplined construction Mark, what in leave recruiting our us impacts we're under drivers expenses? a of a do do will and And the

Chris Wetherbee

a a helpful and comprehensive was answer. That

guess just I trying appreciate of I the So quick kind the and and the that to Intermodal a that. set-up coming to improvement. back timing of maybe follow-up on the understand just side,

returns You productivity get these quarter on fleet to the in talked really margins. fourth about a lot and the solid and

a want opportunity XXXX just you about a there? some -- seeing perspective the productivity is there I to sort maybe yet how terms in and into there is a rail more come out forward think of much of more for you to and As get segment? of from sense capacity the be may pressures you look of from think perspective, you pricing

Mark Rourke

Mark. That truck expect growth is a and have we This And capacity to that tighten Sure. opportunity. tightening, execution believe we is it further. product gives we do an as excellent us

And so our be the will mentioned, offering XXXX. CapEx boxes, additional intention of some chassis and -- and our Intermodal Lori as to tractors put tractor, dray into in

customer execution advantage and market. so So tightening our valuable market that bear the will tractor platform to -- to confident we're take the of be and community that the will

long bit sit seeing as -- not a along we're a a condition still when really, robust the clicking look a nice January, quite we're you still demand space period in opportunities and of January we So and pace. still over here at in very Intermodal typical as in that seeing historical

gives this to talking relative confidence capital we're that us more growth So that about.

Chris Wetherbee

much. Okay. I helpful. appreciate Thanks it That’s very guys.

Operator

Please from comes proceed your question. of question Merrill next Our Hoexter Lynch. Ken with

Ken Hoexter

is this Great. Hey, your And Mark, guess little Pat, bit appreciated. luck. for morning. back all a moving thanks thoughts. you maybe since through driver good more and coming your call Chris, for IPO or Chris to just I -- guess the from the That pay, thank help I and the away Lori,

investments already in the in recover in the your expect incurred to you noted and XXXX. you release those -- make hope XXXX, You to driver

cover consideration a mentioned renegotiate So to that to are increase? you Is into your contracts already pace the -- certain then you you And looking taking you of driver increased work at pay with as that, now? costs already those pricing.

Christopher Lofgren

until But cross order first the yes, over Chris. continued, to appropriate point we're we carried positive make to made, to into about needs the the it you lot September to of I'll year, generating referred And pressures take driver. given quick, that just a And we is price that of the put XX,XXX-foot turn this the expense frankly, I into think to of it a this Ken, on kind Mark. at and we it and continue price. half that just took have returns. would in sure that's as net what into

is I of no as we this future to And think pricing our going move to continue opportunities. have doubt us year. to drivers that market the into that we the share with there's give will

compete to we -- just we're it's -- all like we with mean, very look for our -- what And at drivers freight we something we compete I this do. So going competitors. to need closely for is of

at mile. like And where us. how would end, for rate just also It's do that is income ultimately, drivers they're We of that tell is not thing it's keep we their to the W-X we the freight work part we again, we bring look that have these that them -- the it's pick important. it's people the moving to so to that per because great home professional able families

that's place in like we choice. can environment this, another So an where exercise

base per some mile But the with that mile experienced but driver. in the that on markets as accessorial, also then productivity it's we or puts choice well and it that its the there it's on per that's So cost as the we share rate load into. that it

we're terms a signing our factoring do pay in but think Oftentimes, we position to of which, term. are kinds things pay that, things tight not where systemic our these we've how we'd like really in become important into for to So good in those mind, things of of drivers. increases is those got long thing. all be bonuses times, about And what

pay. of going to a incremental frankly, we're work, -- in done take to So lot We've 'XX.

in us. pressures industry having I we're So that the on from But to we off. think just way will continue the don't feel like push best the come drivers that

intense, of Mark sales applied the run ripple be. I understand to where to gets things so it. fast that that -- and to do we that's pretty it that is but be still says back sophistication It's the that, This think So trucks pretty safe. the force Ken, organization nuanced, how amount you it. I thing into is And the have yes tuned quickly think to is

Ken Hoexter

I appreciate And you Mark that. Great, off easy let here.

I on of CapEx. just So Lori, kind if can follow up

that you talked bring down high about, are about to cost was you quarter. in can the What And then as in equipment the of it Is keeping mentioned in You the used a terms away. do decent you also, fleet? stable, of sale market goes more you Maybe on keeping are looking gain the chassis high? anticipation selling capital? talk even CapEx average the of to had age the aiming truck

Lori Lutey

Okay.

going with our business. chassis I capital On there's is spend the spend to on for year-over-year there in Intermodal some Intermodal also tax our Ken, really CapEx, to the really and our will the increase more in growth platform. the some additional replaced forward, look would chassis -- CapEx tractors to spend in at improvements telematics related way the a upgrades be support containers, Then Quest in and

chassis Because in used -- It's I strategy that. our replacement our really to really you by year-over-year. we address pretty equipment don't on is are capital. growth like would relatively being commented So market, replaced I that look that? flat would capital think the the Then at increase, terms replacement of it, your Mark,

Mark Rourke

appropriate Yes, was Truckload. year-over-year, year I and one. that And probably gain is fourth quarter -- less, it a stable predominance than being is $X.X We ago. I think your then million the about sale characterization certainly it an of guess this of in on Ken, have less

it's in fleet. but change the year out due big the ago, keeping we're certainly really and while of fleet, per in gain doing we're a not up the a And getting So back of so a less year. of it stabilized things unit half to age than

Ken Hoexter

the the Great. for everybody. insight Appreciate you Thank time.

Operator

question comes proceed your Wolfe Our with next of Scott question. Research. Group from Please

Scott Group

Hey, thanks. Afternoon.

driver then your is pricing expectations So year? I you you yet questions numbers don't been know Can the had inflation pay maybe. price. that what are know share a any gross expect the there that on year? heard what And for of bunch this I I've

Mark Rourke

apple. this number driver out-of-cycle condition Scott. condition is space. for-hire not so bite getting this really, the And of the perhaps that on in again, our is in again, I'd haven't year. given but of X%. increases the improvement tell haven't increasingly continue We've really we'll fourth the quarter, and And specific in in we standpoint line going the the success, perfect what about exactly events in the Yes, a you expect would that around throughout so to did and some centered that what that, to a a on that just we mostly the be an we're just we having is, that bridge see procurement the seen the single -- the We January, to more improvement price community. far here bow put month a And and confident. market we're view, be will at communication of

not multiple-round base our nimble. and season. effort, customer we're preparing be a a may to preparing And organization we're this bid just So our just be single

Scott Group

February is? Can the sort upcoming pay driver effective what Okay. you driver with increase of pay say, increase, the

Mark Rourke

You're referencing?

Scott Group

pay doing think guys February driver are like a XX. I increase, you

Mark Rourke

over-the-road board. we're it of centered our in configurations and Again, our network our are in that for-hire fleet. by by the those we'll work fleet. and That's at one to these almost configurations, none be continue exclusively will some. that And -- look van, is targeted across route, running business Yes, doing our regular geography. around -- are over-the-road That

Scott Group

think questions margins Intermodal that low sustainable? of Intermodal so, if points an are sort that there know this do you use Okay. which to start And taking a were then on few of margins. had quarter, one. Do remarkable. one you teens opportunity as But share? just And is Hunt I last been better significant than XXX basis guys you amounts

Mark Rourke

of the or the with the certainly, slant and quarter, to Well, offering, X so bit Intermodal particularly Scott. no have of pleased last year, we're a more does And There's our very during doubt. any retail very it. proud months import

part the transcon about it than economy import it's at I time just network. in sector. the our which a time of of first of that a the business grew And eastern grew think health so the was X%, And faster the and the reflection rate some

But that heavily That's believe grow lift why at pretty some And attractive containers phenomenon. returns. get sweating We and think so our with think the a assets -- we well right additional positioned. now. so in business we do associated do we quarter again, with running we're the we're we very fourth can we're still

bullish Intermodal the the a intent it that continue on being trucks going precious, there, the that to market consideration think top, And remain Intermodal. will our things be I we we're doing. be with so to alternative being do to And we're to and obviously,

Christopher Lofgren

market with we execution to we're going relative that is of we can that with I be compete doubt. and and pleased the competitor Scott, do. are don't out other manage I have there a And but these of customers sense we've It's a them we've business competitors chassis huge And equipment to notable thing ability, a to to of us to know that to with play tremendous and platform business that the that for it factors it Quest other to have. that's the mindful network our productivity change size good have we just And positioned to what where with business the very, how way makes we into network share to we gain I business get that have think hard. that good think, that take do really and a a we're create service without given been that. good, the do we have do well. is just lot and leveraging very We're to And been the to trying not do understand try to we that grow the that where go run can in a value, that the competitor that there, and price it's that. share We're way this this going a run position grow abilities where very to run we of able the by the in work. value. really how a go we're to game. can we playing simply delighted delighted paid we how for But can We're and to a say, going

to us So I don't game. market share think you grab should essentially look to play a

Scott Group

Thank Okay. guys. you,

Christopher Lofgren

you. Thank

Operator

Please your JPMorgan. with Our of next from question. question comes Brian Ossenbeck proceed

Brian Ossenbeck

my Hi, for Thanks good question. taking evening.

additions. said Just a build-out. multi-quarter First said turn that to until want you to working be to also event you're around. back the quarter, Final go going some And it's through you Last to Mile to starts

sort I next and getting mile was like some out. it think quarter, getting the density, you're middle first volume of as seemed it now Last some So referencing steps. sorted

step is you now an and update year. back will where right on the just if that give So throughout us you can head where think it and

Mark Rourke

a I from solidified. you, nimble relative as Mile more as we to we -- question. some a LTL do Great. market, the Thank excuse we're across address network, e-retailer more to of think First And had the we've about Brian, things -- to the the national And transitioned our Final a as BXB we've 'XX. of do mentioned, to network And configuration as it's reduction from be BXC me, a have our believe for now to full-load in of a cost building schedules. you just offerings. to in had typical setup in we scale, average out nationally we our And XX% because transit part fixed network believe we've to transit run the more getting that that of than place the did our network

in in so of there's down running lot on generally as it had very a hatches. not fluid are well. executing customers the quarter, And we everyone a fourth the battened And change consumer decisions We're fashion. around

margin against in that contribution then fixed make And additional much comes prevalent -- to a the first -- additional it's changes as higher so volume to much that And customers cost changes space. volume make that here place just some more then relief our And incremental against quarter. some that. at intent are to

volume So executing get some well through now, running our let's more machine.

Brian Ossenbeck

capital of or that built the pretty towards well growth any Okay. out? investment much pretty going you're Is

Mark Rourke

overall, as But the in a here. space, that's that more, on there do But in we the and have element from it's gets. capacity be Lori think an of to bit a applied of think first I some -- we why as scale. mentioned mostly we're the on mile tech Certainly, will mode replacement investments -- the large growth focused

Brian Ossenbeck

network. it you're add across more to the about comments it's specific the could Okay, to if And starting great. ELD some you if seeing color or in made veins gradual markets just just tightness, if the entire be or

Mark Rourke

changes as to and base community. in our bet. -- the small You are feedback aligned I'll brokerage which carrier ELD much seeing frame carrier is the guess, more we I

busy difference we've the have But of seen time at -- we bit, with And questioned we as now here you and that that. notable liked carriers that and I'm that at January to to juncture, in, about so end which notable And a a difference. in mile, a a XXX be haul seen it's had used here ran interested assuming XXX change this they do, length weather what try to we to right little sit season. into day of in

board the length And the brokerage can cover more haul so both our We're hours the and of more mile model Logistics our in in and discussion XXX with a that's in difference interest to our of get community noticing freight the to big XXX carrier outsourced a much band in done. much where our Logistics harder across -- they service sellers.

hard that what's and think is made a difference that in there's I that so possible probably really this then enforcement. business behavior to in there's an what the have And to until awakening, and relative no we adjustments doubt some think, model. change get advance been And they that's I haven't their again, of to those approach

our to and on relative seeing we So it incredibly which we're certainly customer higher how relates cost same to models, on cost the to it nimble community. as seeing those to it that carrier pass be requires us in

Brian Ossenbeck

time. Thanks great. the Okay, for

Operator

Hartford Our next Please from with comes of Baird. Ben proceed question. Robert question W. your

Ben Hartford

to guys Chris growth parallels market obviously, 'XX. kind portfolio quick, volume the bit. the you'd the real mentioned maybe markets And turning a just for was of the quarter brokerage XX%, the -- spot in Thanks Mark, 'XX, changed taking to in Quest had now. the time. But you have obviously almost tight. The of

healthy type right brokerage and to about to very growth approach the a how volume spot is is the But it to an focus approach and market opportunity to volume for this the as sustainable growth the brokerage bid, leverage be when kind of 'XX, some drive is So accounting year? you sustainably assets of able XX%, XX%-plus think number it now?

Mark Rourke

so, I Ben. think

to things various and to and be Schneider It's I certainly of that a think -- chance here. cover segments that can our brokerage in to a part a a service between of We we quarter. lot additional of then our take benefit portfolio, we offerings a modes. make synergies certainly fourth multiple and to volume couple our there of And customer support in across customer it is access get that on has saw the certainly business needs. the easier

carrier costing now. demand I going there. is bit be right flux the level think to the a is Certainly, of in

contract did minimize in condition the to more to on significant But make timely But have enough we nimble with We're of make and sure order. that fourth we're we pretty period. the in maximize quarter. large those see revenue the fourth seeing and a we which versus and the so that sure it ability tails some occurring. changes decision can expansion did we're large loss per technology, deal to net a could gains had we continue more in to quarter, trends to period be volatile invest well same into But volatile those brokerage losses for relative that of volatile here XXXX. more be spot of market our We to a do a we the were does our here seem in We periods on our loads market expect good support and January. was and continuing the model enhanced

Ben Hartford

acquisitions? First -- of Chris, X and the and in to then XXXX, IPO up to the have deals open does done Final way final integrated. platform And for offering out window the Mile You obviously Okay. the begin

aggressively time So at more point you do evaluate to acquisitions? start what in

Christopher Lofgren

went an an diligence. them, there's Well, acquisition. take do of acquisition it through does and those seen to heavy and you always as things may have once And time lifting find kinds you you energy do not and

a I try think in are forward, position we that accelerate business. to to grow really now

the us Final that, show First strong on would that sustainability. to company that the going for we will resiliency everyone look continue we're look big told customers, get balance and a get be you believe opportunities. a had to continue going that forward. growth We acquisitions would new We vehicle capabilities, Mile But road we to sheet new to and that for that and us for would have

as look don't when energized stop because So hurry. hard. are for in in opportunity right areas, that's right. we're that we up. -- time to that But can a something didn't just looking probably do specialty other comes, down we we that have say things And the it didn't I we than and but back we And get not nothing those the mustn't we will. kind doing slow of us one of those one We that it's of position

build ELD of But will kind out viewpoint do our what interesting is there see we're go that's what So not it. to be opportunities a comes It company operate trying can't and to investments the the assets. customers make available. towards and just to that purchase capabilities and purchase and that not purchase and in to we're where We didn't want growth today. we're going

we're So that's to think it. about how going

Ben Hartford

time. the Okay. Thanks for

Operator

with Fowler proceed KeyBanc your Capital of from Todd Our next Please Markets. question. question comes

Todd Fowler

percent more we weighted half how think first or granular about just But relative prepared understand guessing from to of want going I evening, cadence of as from probably towards earnings EBIT some everyone. being remarks the can or give should get the good parameters half as is in Great, quarterly your XQ back Lori, thanks. a perspective? about don't year. earnings -- you a comments the to had any the of modeling the And a I'm year there how Are too to standpoint. you you on XQ us be overall that to

Lori Lutey

but I giving quarterly be Yes. really going to not to guidance. tried some we're guidance, provide

have provide more other... would Chris, much harder to I it's than you any have. So

Christopher Lofgren

piece -- I and we've do, sitting, you're go further been history you're can where sitting what now -- if what you guess think just I numbers out quarters given the I Todd, and and bear. trying to some you to which appreciate bring

particularly to and I -- work where our retailers think orientation But and -- relative materials that's there we will important are insights, customer segmentation that you look will are our the again, just if particularly to to a we markets I half. just out -- strong with e-tailers that serve kinds So some in play fourth of given very now quarters the always second and been carriers. that and those consumer garner at you we tight it's think help. and things, be though the capacity products, strong of tend as able give that some very, frankly, And because premiums contract are we're of

would year business, cycle. our kind way And that about Logistics also and to play of those Intermodal and of where probably So be mix about best the think will go the and through through the it. particularly

Todd Fowler

I'm what get it year, trying to don't I No, right. expectations I you're what set Chris, I to first of that's but want for think And the the mean, from at. can the part look like what if I we appreciate that. is expect together, couple percent at earnings representative and of we years here of that to of should piece sounds in that the go unrealistic be back 'XX.

Lori Lutey

close. That be will

Todd Fowler

Got it, okay.

Christopher Lofgren

dynamics. and understand the -- then I think

I get good think spot. into you'll a

Todd Fowler

for That follow-up. be for for we could the that things price it that would net biggest But feels to the components, that off what could areas where kind highlight net a into you a just would couple then price be driver some aside I some or margin there from improvement. of understand probably going you margin if into us? 'XX Okay, be of about, opportunity 'XX think of other pick had And good. the potential to like is helps.

Christopher Lofgren

a one Sure. in our interesting, certainly new I'll lot there. that are to seen orientation discussion a Lori runs of orders see and about something We -- out be going competitor. couple been struggle biggest of the I or how there's will at quite of that of if see take those grow. many still that that to things haven't We truck Mark are have kind there.

about Anecdotally, more going it So market. replacement. looks its like the we hear things vocational into it

the might What as think rid really equipment mean equipment to strategies. to exit, you the happen bigger with disciplined, implications that watch -- aged out. is I that are ELD new it. pretty equipment as manage I one cycle might you of part the of start buy we just merely what's essentially people be biggest kind replacement the if to of we dynamic the probably it get of market age-of-fleet gain well, to does the there might and trying that anything happen see But that play. then running the would So just who about or... out enforcement that because in want sale plays not add play Mark, what one we -- how this certainly think used choose consider think to comes on tuned we're and into is to about to how to headwinds going of is you And and think

Mark Rourke

today, Yes, of like that what's which the about tanker offering feedstock our we how of place to going we supporting kind really Intermodal is renaissance a don't we can -- sector both over-the-road tank our bulk generally have some talk some liquid performance and but that specialty some but improvement. that's liquid it's it, We the that with growth I unique business. a on business, really, have a in and addition really continued performing manufacturing like markets, margin there that and business very believe supports and and solid,

would the to question that nature highly customers -- -- customers expanding reach maybe business and because be positioning so large exploit -- might our and get we have one kind and that's interest high of tanker some place the a that that there. to of that expanding not put and further we in to playing asked, back in our would -- regard your competitors are space. And that of specialized look tanker Many so in Ben our of unique

Christopher Lofgren

Lori, anything or...

Lori Lutey

to have I don't anything No, add.

Christopher Lofgren

Okay.

Todd Fowler

time the everybody. for Thanks Okay.

Christopher Lofgren

Have a evening. good

Operator

are Ladies management for call to the questions. I'd to this like some and back At out we point, gentlemen, for time of turn comments. final

Christopher Lofgren

are, was in Appreciate very interesting, Well, we try best interest the of this. schedule, will notable company of we against positive call and a up on thank very morning for this in we're Again, as a typically just, joining in we that evening. everyone's move is it questions. kind butted this more we you, that a environment this to I everybody, which which but very, facing. a interesting the It a do call think, way,

understand company how again itself create the be and has think year to understand customer ways. sustainable value unique this I able needs, to up in we dialed to

It we fast next hard. year. so And we before know look it. forward the be to is actually come here And January, going to we'll and

So good appreciate everybody's have and evening, interest, everyone. time and I a

Operator

teleconference. This concludes today's

your You at disconnect may for Thank time. participation. you lines this your

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