USX - Earnings call transcript Q1 2019 | U.S. Xpress Enterprises Inc

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Operator

Greetings and welcome to the U.S. Xpress First Quarter 2019 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brian Baubach. Thank you.

begin. may You

Brian Baubach

and and in operator me everyone. appreciate Executive We are Financial Thank first good quarter participation Officer Chief and our Fuller, With Peterson, XXXX your Chief Eric Officer. you, President afternoon Eric earnings today call.

reminder, this call a the available will May through of our of section website replay X, a be on As Investors XXXX.

supplemental discussion on at investor.usxpress.com. We today’s have our accompany also presentation to posted a website

differ forward-looking me let Act statements. indicated certain implied XXXX remind not everyone in March within call forward-looking uncertainties duty the and this other of contain and risks factors Such a our on constitute to do update include of remarks Reform that begin, that statements are about to beliefs, may from by Private that XXXX Such or prospects. materially variety could future subject set we and such X, statements other we statements results These cause Litigation to factors meaning risks, the and filed of expectations, forth Before statements. Securities plans any are XX-K those estimates, undertake such XXXX. actual

performance. our be additional can in Additionally, the Fuller. we in of measures turn to which non-GAAP presentation to believe found Eric these certain evaluating as will release. a the point, accordance be or reconciliation GAAP results A in comparable measures GAAP. over isolation information this The prepared our can useful U.S. with At call non-GAAP during most I’ll earnings this we of should not in considered measures, discuss call, today’s be for substitute

Eric Fuller

we Peterson our team’s quarter opening pleased initiatives achieved upon discuss detail with the questions. will like we the encountered progress of a first to the call financial results Eric point of more market Mexico the execution and am quarter challenging with and to the as outlook. our results delivered managed through the seventh conclude OR Brian good strategic a our challenges, I our we encountered for ago quarter, before Despite and given that quarter and closure XX in these you, venture first more quarter from then afternoon weather consecutive disruptions. backdrop for we that ratio improvement adjusted our XXXX start market improvement. by then which review is year I our basis quarter our a would reviewing XX.X% first Thank have and operating executing the of joint everyone. first

strategic as Our transform results clearly our initiatives demonstrate to our we profitability. our of operations strive and the implementation improve continued successful

we we over While more have much last years, the order achieved to realize a deal accomplish to great in several goal. our have

first we rates, declined U.S. XX%. companies Road about while to contracted result compared unfavorable approximately from segment the impact per our and XX% environment. the non-contracted. and contract Road a conditions, per revenue revenue tractor of resulted first transition mile. the the more our our per cross-border the of less our tractor miles per Mexico level revenue is is Typically, revenue a volume freight of increase declined average favorable highlights. the quarter Over division, In week Over per division’s with than weather was rates partially an on week of In non-contracted operations out the X% in quarter, X.X% XX% experienced X.X% in per The increase tractor average Turning offset decrease average by This XXXX. X.X% per our average week, in spot

less per week. increase Brokerage our the decreased XXXX grow on decreased in X.X% load the in more our the accounts was quarter. sourcing offset revenue We tractor increase business X.X% offer combination XXXX with division’s transportation a result utilization rise execution capacity of our as XXXX to division, quarter than designed largely mile attractive compared implemented the year-ago The per was addition very as as Dedicated Turning those in accounts to a The rate the revenues per reducing quarter Dedicated to the first that am million and with the the loads. decreased The average due third-party of the million of was to while surcharges, miles fuel gross excluding in revenue to increase per per through business in utilization quarter that in a week, last revenue initiative the more division’s first revenue compared per over $XX.X our and the and increased result XXXX XX.X% more per first revenue margin have cost to the in initiative pleased to by primarily attractive fewer tractor two a to blend. of decrease I with significantly in of $XX.X loads higher this a improved efficiently. division quarters. segment of

$X.X increased XXXX the to quarter in operating million result, to quarter. a XX.X% of ago first compared As income as year the

the to capacity the Importantly, our customers. at that additional to we selectively deliver optimize solutions the assets continues provide the our while initiatives priorities strategic designed ahead. to I improved now minutes would profitability same year our have a Brokerage to to time, yield, spend reviewing for for like segment and few offering more

management our to a have overhaul calls, been and complete strategy and previous order we company discussed team driving profitability. our improve to on operations execution has As in

core focus improve an ultimately, we business count, and structure, truck by our improve initiatives designed to we with now ratio metrics core our manage and where strive created meaningfully the utilization the cost. profitability. and have We’ve also metrics execution-oriented whereby operating on to rate, these We implemented

implemented over and our we last the initiative improve asset maintenance a the our optimization these expansion part As we designed achieved the to and program, load Road The years. margin Over implementation utilization. improved optimization software have of of contributed initiatives, our in to significant through successful our initiative, X planning have the that of fleet-renewal through redesigned transformation, our optimized utilization asset proprietary have use

Another frustrations encounter. key drivers improve for day-to-day initiatives is our we to of they as challenges the life that the reduced for quality focus our and

are critical our our to and success are asset. drivers Our greatest

a continuous The launched a we range, where in-person and was development drivers choice in drivers redesigned program was provides our and As driving learning drivers simulator position a where a The this of program; e-learning industry. input motor-vehicle driver center lab, Georgia Xpress opportunities U.S. from newly program of for and with development device such to the as the practices series launch development for of opening hands-on initiative in a our new result, program designed practice equipment; and the One identify maneuvers; Hill, a can and over past and created our experienced February. initiatives features company Tunnel multi-platform commercial training. inspect of drivers both launched the learning new drivers. complicated modules; sessions; XXX competency-aligned faulty ELD have

drivers with is goal our abilities for provide to and knowledge, the necessary career. driving Our successful skills

Moving the our load and to the as frictionless balance ultimate acceptance as improving to order. our drivers well of matching, our on lifestyle XXXX, prioritization working technology, operations satisfaction continues our of be cash, automated we door of potential as in for the and digital entry to including growth towards load process When and with required. on data priority what you manual analyze gates find manual decisions given the that you where are is there are open less-than-optimal along from decisions to These errors decision many process order the is that that often made. the points focus

that As driver remove exists frustrate satisfaction we which the improve. our friction reduced and drivers, will errors, our more those will be

costs frictionless order, a have to not is driver time optimize capacity. and improve to only not which improved also over reduce goal but mention Our believe planning, will freight we retention

As see, Xpress. a represents our utilizing opportunity you technology for operations can U.S. improve to significant

continues evolve, U.S. U.S. be excited as our Xpress formed and As the have we Xpress Ventures. of at the very Ramsdell to will forefront join newly trucking President unit our are rapidly industry Cameron team to

U.S. internal As technology business unit last implementing new Xpress we focused is developing and models and asset-based on week, business strategies. announced

the strongest we second relative in seasonality Turning years, the experienced our subdued of to outlook, in to remains XX which market environment quarter to freight quarter second in market the normal the XXXX. and comparison and

and conditions fourth the While strategic second on we efficiency in ongoing Mexico exit our from changed earnings. our improvements quarter operating call expectations has market from initiatives, quarter of business then our our expect changing since network the efficiencies

to our ratio operating initiatives adjusted continue and a operating basis, our ratio on compared comparable market improve to we us an now While quarter. expect allow expect improving as to we to backdrop quarter year-ago sequential adjusted to the deteriorate second our

has implemented those the over now improvements years, manage several better the we past such the as market company we experiencing. fluctuations are to positioned Importantly, that believe operating

strengthening XXXX it through for remains quarter. of our a delivering is XX% on As balance market dependent conditions forward, full we the look the of guidance though, achievable, year second adjusted operating the ratio current

year rate to since and agreed rate market when XXXX have anticipated the adjusted for result, truckload operating ratio X% of have an full freight our results. renewals we market, year a update increase revenue the of challenging Despite As freight approximately full contractually for plan we visibility our to guidance XX% we November. more on our better approximately with average

will the call range. review While current the rate to our mid we I a increase of turn believe moderated Peterson year in results. contract over financial Eric full now slightly, single-digit rates increases would have like for to

Eric Peterson

good you, and Thank Eric afternoon.

more which brokerage during our enabled continued mix backdrop. market our achieved to taking our As We leveraging pleased more market challenging with dedicated our of through successful strategic and Eric enhanced team challenging the discussed, conditions operations manage and we fleet a our are through XXXX. advantage of business initiatives offset execution

use of XXXX. on monitor to the I’m on we a a In operating results first to and quarter drive execute going positioned continue million $XXX.X the Operating the addition, million, our and believe minutes $XX.X we spend metrics we we to well of quarter was summarizing focus evaluate for our are decrease revenue core will our current ratio few to compared improvement. continued initiatives progress. to to

The revenue. mostly year the million for discontinued a mile, million our increase to $X.X attributable per compared was January surcharge. revenue the were the offset in XXXX million, $XX.X from increased Excluding operations, operating quarter excluding in by in achieved fuel to first which was XXXX, $X.X prior decreases in revenue Mexico brokerage $XX.X income X.X% of of million increase revenue Operating quarter.

of compares adjusted the first the million quarter XXXX quarter exit to Excluding XXXX. of income our $XX.X operating was our million, $X.X for first in $XX.X to million costs Mexico of which related in operations, the

basis a operating which the for As XX ratio the is the quarter, XXXX year Eric discussed, first delivered we adjusted points quarter. improvement from XX.X% ago

our first XXX operating the the compared for first the to for was an XXXX and quarter operating ratio quarter. $X.X income $X.X diluted XX.X% the quarter million ratio quarter of adjusted and in million $X.X March adjusted Adjusted prior trailing Net XXXX Adjusted ending basis of four million to year quarter. XX.X% income XXXX. for points to XX, quarters from prior the improved in first $X.XX respectively. favorably Additionally, by XXXX, $X.X share the were year of per million net compares for earnings was

our cross-border experienced U.S. first our As on the half we call, cost Mexico operations a more first to fourth than discussed exit revenues be we our and decline fixed drag our would which quarter. quarter results in expected the investment as rapidly of expenses was

expect forward, Looking quarter, persist in quarter. level second at headwind reduced into we neutral a though, to the before the third turning the

to operating expect income we build benefit. Thereafter, an annualized

both additional to coverage cross-border lanes continued through core offer our an access will within and customers, U.S. asset-light we alternative. Importantly, capacity

to to we was third XX% to anticipate approximately tax Our fourth rate and outlined XX.X%, effective quarter continue our quarter between the full effective on XXXX we rate that call. XX% year tax be the XXXX for

cash we our single expect year the For rate full low digits. tax to be XXXX, the in to continue

we leased $XXX $XXX to to with $XX owned, a Turning through we cycle, spend equipment fleet, manage net execute approximately million approximately mile the of replacing converting we’ll portion continue tractors of leased to XXX,XXX and CapEx tractors in a to with our are million XXXX our to owned. replacement related to strategy, our and that to million total

we revert $XXX approximately normalized when a to cash to flow, a of annually, over reminder, and our net more thinking figure in net CapEx expect XXXX X-year As period a normalized million levels is and free XXXX. CapEx

on million continue is $XXX.X first of covenant revolving regards cash the under year standard leases equity interest quarter XXXX, a facility. on as recognized $XXX.X resulted Capital new our and million recognized required the sheet facility lease net requires was be immaterial. recognize with impact liabilities to expenses income the first impact the being we and leases availability statement quarter $XXX million for on at quarter credit The general the of March assets liabilities and right-of-use stockholders’ Interest these company associated expense also with our million rent sheet arising had the This by In XX, quarter. referred for million other was in million, and and to from quarter be for from a amount the on now reflected adopted During under but leases credit immaterial, the to $X.X are amount Topic XXXX compliance of the and and Rent our operating operating assets approximately was is us leverage, the comparable The vehicle balance continue of ended as balance we full of to new $XX for leases will expect of XXXX. under of on first new balance and comparable first XXXX the approximately to ASC sheet. XXXX. the in of debt XXX approximately $XX.X standard. expense leases. in finance

we of Fuller have Looking mature to call execution. that, Eric remarks. driver-centric turn for to concluding the on remainder focus for and With the for as to our opportunities the would operational initiatives like a improvement continue year, I back as existing

Eric Fuller

Eric. achieved adjusted our achieve enabling ratio Thank progress the initiatives, are In to consecutive of the operating summary, upon first in in highest and history. quarter strategic quarter have we our we any pleased of company’s with the you, our that improvement quarter earnings first us seventh executing

initiatives exceptionally in strong order, aimed goal drivers, quarter. mention, and comparable to efficiencies on at for frictionless as costs towards well to numerous As reduce we which improve remain we capacity. have the much our said, quarter an XXXX driving operational comparison challenged the have to positioned routines our outlook XXX% expand our work of achieving continue and discussed, lives That opportunity and we of will to second remains daily not capitalize a the our

core committed We of call. As industry. for look your we our business, solidifying on goal as to within in for second operations Xpress focus questions. leader remain a Operator, progress our metrics Thank we please the time call improving the on managing our you our again forward our to open quarter today. U.S. everyone updating on within the

Operator

Great, Morgan you. Our thank Instructions] from here Please question is from Ravi ahead. [Operator Stanley. first Shanker go

Ravi Shanker

evening Good Thanks. guys.

understandable improvement going the dependent close undertaking that OR conditions, to guys the peers. year, so target initiatives of but for was and market not maybe the obviously, So on market as it’s a of also your number you of here depend the peers be on cost that it’s story was on part OR to gap to some

you that’s is this that understand tracking and the the side with or us opportunity IPO? expectations initial behind consistent there how if help year much cost can So your in kind of, tailwind

Eric Fuller

Yes.

Fuller. Eric this is So,

get them. year. So, factors continue we to had is obviously, one to still big through traction being around believe That focused we’re turnover we area couple of of have a an where we the driver going and the

around And improve the we the that retention. in going frictionless we that’s we our calling focus initiative is are big our operation to have order. driver what greatly big believe Our

that good think cost we probably of next, four we over bit So, can quarters. area a say, drive the in

for. a We But also Insurance the still forward-looking insurance what with what new to expected we’re than around where or improvement to we we’re we’d event believe get driver in training. line higher going we recorders, see that hoped area had item. continue the the putting is program

some We’re follicle trying in that will to drivers We area to that testing. as significant results towards more start all our to move going well. believe of we see hair

we improvement can X couple some see our over cost are items quarters. next really we those of think the that biggest So

Ravi Shanker

you able the some expectations pressure you mid-single-digit maybe pricing continue? just on sustain peers. of pricing that could of of back into And sounds ahead of year your may good the the it. trends I gives pretty pricing think side, going be when and Got rate see kind you some confidence be more Okay. if your What current to that half should

Eric Fuller

still in conversations of constructive year. we I for see to having where we manner at a increases relation continue customers Sure. Yes, to with this But can pressure in today. little we’re think rate we’re positive will a from bit

where go-forward market confident get to the increases So, that able where that that will still believe rate be we is is feel on we basis will going, us in we continue to the decent range. and market a put mid-single-digit

Ravi Shanker

maybe priorities Great. can for interesting? or pretty just in. see some new do that initiatives? some you what ask on I maybe And X us and of ventures, homegrown U.S. just of involve this to you that M&A? one of top And if give timing Can what Is sounds squeeze expect more I kind X just venture? there X kind Can the does

Eric Fuller

Sure.

it’s forward. exploration what think I for going us about can an really technology do

you getting capital, is at that’s a trucking money going to in If going driver investments we the the all all forward. asset-based believe venture thrown look big technology there, out companies of to be that

be profitability. the I going and to operations think improvement to an overall it’s

also not of those to is be on there’s to entrants going And have face be to think going to going to some problems technology side, having the new we think in going that we that some some applying faced and but to the things them. new to We key past. that there’s have be lot maybe maybe a exactly, asset we’re

means. so, And to exploring be exactly going we are what that

we us. make today, opportunities it M&A-type homegrown our to changes further model-type I at I going can we for are And in market, stage, business if at you opportunities an technology on on would whether new some put or and it the that focus a explore we whether there’s we opportunities things it. we looking capitalize exciting be business lot just in be potentially we but an a or we better that of in think infancy think tell do existing businesses think looking what can will be as

Ravi Shanker

Great thank you.

Eric Fuller

Thank you.

Operator

from Please ahead. from is next Our question go Brad Stephens. Delco

Brad Delco

guys. afternoon good Hi

Eric Fuller

Good afternoon.

Brad Delco

think you committed versus can just you kind that basis of trying of us mean the is even of kind a you mean get more spot? being into why we XX% trucks touched revenue points reconcile your it I Eric, basis to be up or loaded maybe a because in mile mid-single comments, per in but on sort wouldn’t comments contractual reducing I of your this exposure have or I more help Dedicated? about digits? XX and

Eric Fuller

Yes.

is spot So, it is the concentration. of it because in

are probably to new that move at The we headwind Mexico that had additional bringing of out that where tougher on been we’ve So market looking try for is have probably us absolutely, Dedicated. had more we that’s The is fill. little of a to thing a from bit little one capacity opportunities. a we’ve

had we’ve new go to and So, to find opportunities. customers

I probably bit we we seeing are us environments And that out these think we’re area. to to move doing to going Dedicated. go a and to some of Dedicated so, our that, in for trucks growth some have spot of But are little

time, into I think to Dedicated over continue we’ll more that so, that arena. And migrate

where I I of term, at us long long-term at in it I a today, that when is term basis, a is think long though still we’re while our And so of position. spot exposure the we’re spot think from look think personally, you exposure. kind right level decent on affecting

Brad Delco

visibility and any know that impacted And helpful have your if would results, OTR there? be business when have then comments of more would think impacting you that to Dedicated business sort would weather Okay. or we about

Eric Fuller

Dedicated, Northeast. had So big concentration in we a the

pretty weather any issues areas. you in up any end winter impacted those being time of issues, so got obviously, kind weather And you’ve

in as fairly down Over-the-Road would because mix. for The definitely up Dedicated that we a So, end little you trucks say bit large business. longer. impact probably piece the saw with it’s aren’t fair from typically trucks do a of concentrated, was, concentration the But Northeast, a having I our probably

maintenance-related So, the areas were impactful division. a relates having in both more the to Over weather. when But I weather, issue that bit Road that’s impacted you’re would a say the it ending little up by probably as

Brad Delco

that’s and quarter for like What Eric then on visibility. maybe is to And a gives Okay. into comments maybe being seeing happening feel I second is but bad it’s much early side cost year-over-year basis. that on appreciate really June’s the OR less is you improve environment? specific gives I and one. this Peterson, mean anything about able not XQ, improvement most probably you accident pretty maybe the last a I this month, that whether in occurred in that there margins confidence important or April, the in something what’s

Eric Peterson

think we’re to shipping, the standpoint. thing And a now Brad, stand it today. little we more May from bit as a on The an we is weaker overall seeing into get than is volume the as visibility, robust quarter have today X bit I liked our to right of where relates would biggest seen spring we environment we would like. little a than freight

So quarter believe could be that the than be leads to we may we stand where us that today little expected. weaker a

Now and quarter’s June. May made obviously, your in

there. so, we change, that could but was out things felt and And go prudent get to it like ahead

seeing issues not at us kind this have point. to this We’re quarter relates as of any it concerned cost that

Brad Delco

Okay queue. I back for Thanks get guys. will time. alright the in

Eric Peterson

you. Thank

Operator

go Scott Our Please is next Research. Wolfe question ahead. Group of from

Scott Group

Hi thanks afternoon good guys.

Eric Fuller

afternoon. Good

Scott Group

say the the ‘XX? Mexico using comments. So, you the then what’s excluding quarter second to And including are up for I just base or on cost? follow OR Can you’re want second you quarter of

Eric Fuller

Okay.

first at quarter OR Mexico. related to our the that lower If The $X.X is you be to in million headwinds that to a for million. a quarter second significantly we’re on That $X.X second adjustment in ‘XX, quarter XX.X%. adjustment than look comparing the had adjusted that we going

OR So, the really impact adjusted it a by meaningful won’t amount.

Scott Group

the loaded that second in on X%. we helpful. Maybe, at that of confident get to rev about the can on turn quarter? if OTR, pricing it X%, what we Are contract better? When the pricing, you the less as And that Okay, better? up Eric, side, to even pricing that get seeing down are with initiatives stays think per then start some that And the are utilization the then we was the positive? positive look mile, than

Eric Fuller

impacted volumes big impact. then volumes not still it freight piece, utilization two weather issues second our our we a drag quarter. so have we’re the of and areas the and in division I than in say in a overall we think on was those especially that lighter So, year. utilization really go like, in weather would that comparison into to impact freight just quarter, Over could bit are I Road in the a would have as to going was the previous little an this

On the contract are business, of And underlying bit we getting still increases think customers. in that in the from market, positive positive that contract a little weakness with our the rates still will manner. trend even we currently rate

said So, be and we confident positive, contracts year. for that up, mid-single-digit that we feel I the will like in range still

Scott Group

was mile. per guess about the revenue I I total asking

Eric Fuller

Oh, going higher sorry. Oh, okay. Oh, be that. we’re to I’m than

with exposure to our be that’s spot, I higher I think to that going think be to than... difficult,

Scott Group

less any And the maybe lease in a the little sort backdrop conversions thoughts and the to debt? some to slowing maybe here, just generate doing maybe given pay cash down some lastly for Understood. of Peterson, CapEx Eric of bit, then just

Eric Peterson

Yes.

early that make it’s call. think I too to

math, we net interest of When here stick our in the it do our over to shows my decision strategy, a enterprise. we or wrong if flow but in. that that I over absolutely costs is the the that’s think operating equipment bring the if equipment we why that believe free increase I significantly. on the the debt look might quarter And we’re benefit for temporary to is we longer long run believe calculation, delay get which shareholders cash the for to best at cycle, it a

change. then type an I our if stick right Obviously, on at situation going miles. And strategy. us credit won’t strategy our make so strategy to profile so But are of bullish be near need we to that from us a if circumstance, that situation now don’t extreme we or anywhere and prevent XXX,XXX there’s as our executing to with see would liquidity current the we

Scott Group

your Appreciate sense. guys. Okay Thank you make time.

Eric Peterson

you. Thank

Operator

Hoexter go from from is Our Please America. Bank next Ken question of ahead.

Ken Hoexter

it? and Hi, quickly what exposure you Can your what is Eric. good afternoon now just was spot clarify,

Eric Fuller

So, and our but revenue differently, that that overall have rates obviously division, the really, changed really it’s total hasn’t of changed. right exposure XX% of XX% that hasn’t the dramatically, in changed our say just or, spot much. It’s Road it’s our Over

Ken Hoexter

And the it’s spot change you seen how rates significantly have year-over-year? whether year-to-date,

Eric Fuller

we’re down roughly I XX%. think

Ken Hoexter

Okay. Year-over-year?

Eric Fuller

Yes.

Ken Hoexter

this point? At

Eric Fuller

Yes.

Ken Hoexter

Okay.

the by come question. little on troubled first lack initiatives. still of the I So I’m guess just guess, to the I back improvement to,

process, talked IPO place operating of the were in the focused that specifically you see to irrespective you the all During ratio programs about the different going that improved. so we’re putting were And generation, all-time seems been environment And like in ‘XX. we of year have it was freight October last best setting the even we’re should record. kind to now back market

talking some not to out? you or XX% about seeing not why around what’s mid-single bit benefits hurricanes being turnover have up I’m as gone made. you the market. of the driver the if initiatives Has rates, a against If digits, of something And actually of you’re on but of right spot confused a that’s you from awry has we’re you’re of little the kind down rates rolling ELDs time the but maybe little been collapsed against before talk that going in and some Maybe terms a pay about increased? initiatives that gone bit

Eric Peterson

Okay.

believe happened perspective. forward-facing the re-creating I first agree, that behind the an return not I quarter, that don’t question path financial look haven’t it implemented facility perspective the best the it’s with we’re because if that we and by it this It’s quarter, successfully. just on say these first with was was mean not follicle market with going financial the what that is, launched event at doing the quarter quarter savings. also we in think on get impacted this looking the in there just I Other insurance hair from I some not we’re are the think are With the I organizations that step fair now it But because we’d will for quarter the this initiatives, recorder Peterson. earnings year to in get back XXX% would. to a be. and – from from are a is adversely it it’s these at laser-focused to the look But Eric the first progress mean at you new earlier, doesn’t that when expense what testing, going this I made people of enterprise’s doesn’t think I And that would insurance I’m weather. of the not just like. not we’re it. I And believe on results in have Eric event answer believe addressed we’re And your making our we history. strongest that where recorders the it’s To believe we of also our progress we training and said, not anything. thought that was probably speed first are it we

But initiatives earnings? think guess the And so our earnings that’s just do on No. quarter on to progress, that are the it I initiative. are we history, we’re absolute will are Was we accelerate in back, and that where we and where Yes. improvement? on be making to launching additional we want that have an best step we enterprises we basis still

Ken Hoexter

to get to not as the quarter maybe that strengthening strengthening. Eric Thanks through accelerate, Is Eric. And as of you your – target? strong on some it in then on need it ability that XX% on talked pricing a full-year, to said see maybe Is that, see where? for need or just that you to walk you just about volume second to is side

Eric Fuller

get can would a pick-up long go both and a that a If I that life some it think bit spot rate. then volume. just little get – of to the little we market, I little market and think in mean, as relates of I Yes. bit way more volume a bit

As I a of in been lack mentioned, utilization market. of impact opportunities volume part our has the

bit can movement side, So, that can we – direction. of just start in we to think believe pick-up a get in on with then there us that some the demand see little I

insurance. around bit that about That previous I just Eric admittedly the of and still has of to bit there been to going a on expected did disappointing IPO the see area been little life now. in to an talk to we we As that has mentioned, initiatives one see we’re little that movement a – have

we that on that And lot we put yet. if some we focus investment there’s point, anything, going improvement we we is believe in as that have area, haven’t and to that see move – to believe So, this that is say, a on. – of area I continue is we’re an that area that at where disappointing of would but seen an will

Ken Hoexter

yours some heard We’ve Amazon can. Walmart any should of Is I if you enterprises companies we talk one, any from last and look in-house. any business other exposure pull market? the one that business about Have bringing seen Just that away Dedicated to?

Eric Fuller

not all. Dedicated at I’m side on No, seeing the anything

Ken Hoexter

the Or Over Road?

Eric Fuller

– running in-house. that on stuff brokerage did some side really customers some mostly the that had seen business that have We were we’ve X pull and larger we division. take But out X in brokerage our customers, of

only business thing back the about moving that’s in-house. probably that been somebody we’ve seen So, from

Ken Hoexter

and guys. the thoughts. Appreciate Alright. time Thanks

Eric Fuller

thank Alright, you.

Operator

Our is ahead. question from Brian JPMorgan. Ossenbeck from Please go next

Brian Ossenbeck

afternoon. guys, Hey good

Eric Fuller

Good afternoon.

Eric Peterson

Hi, Brian.

Brian Ossenbeck

second. potentially standard the and some little a switch a cost little a I’m come insurance the cost want on and hair to bit follicle side? probably a thinking And going you the where something of back I make to for this you bit just you when more before Is get more see benefit you’re turnover. testing have to bit higher

that so, you if going if just start it? to Is you and little some us right maybe you look way before bit worse process? are it, get and some benefits So, this can from and improvements that’s in if a where get to the at walk through to that

Eric Fuller

Yes.

doing more how we’re approach. a phased that a little in is at we’re look you it bit process managing if So,

who’ve You’ve the an had seen from people XXX% that went standpoint some probably truck most results impactful count all-in. overall

more tested, a know roll-out do We it positive insurance-related bit to reason have less on I drivers, trying only well. in that overall turnover little hair actually impact real it’s results not that side. who – some believe as we seeing as less for we’re have seeing and to negative the relates but from accidents we been though issues manage and follicle been our phased we’re that are the

issues positive with get it fleet, the we a as truck this we count we to downside that out through then confident feel entire of any to relates as this impact continue kind can throughout manage process. roll I can So, to the entire and

Brian Ossenbeck

Okay. to And end I of year, it as things the the – specifically supposed is timing, then by so the done be mean, what look like?

Eric Fuller

by Yes, year. end the the would of point fleet entire to follicle the plan our have I would say under this at testing be hair

Brian Ossenbeck

you. Eric, one more for And Okay.

like what concept. about there talk the about this something be more of sounds sounds about talked the like said we quarters, frictionless You And it might from next couple timeline. you it in order

high-level what you can give terms maybe the a just term? that longer So, in view means in of

Eric Fuller

Yes.

Brian Ossenbeck

guess steps, or the it’s you’re be this brokerage it looking you see impactful do to Is in what does a more I of going the the tech-enabled lot like in accomplish? sound stuff tend And or for intermediate more drivers. to to

market? far approaching you’re differently than in what a maybe little bit we’ve So, the so seen

Eric Fuller

say focused the on Yes. our of and asset bit business. I would we’re approaching a side really differently little it around

you a as So, has made. of point some are some gates. could sort of XX those are in if there And look order, gates in sort the be XX either there which decision as to entry data many be or at points typical order

employees being entered of that decisions being is data made Some those by employees. office office are by and entry

are of drivers. Some gates those actually by managed the

to have enter when a So, you’re time you’re you a that – have couple – of level to every it errors. One, there’s creates going it’s chance a data, issues.

time. an making have then that then side, better I’m data but automating those and take being by driver optimize potentially I off the have. on entry that sure drivers can and the the also, by then optimal So, able friction also the amount make gates – system, on I frustration my the of and errors and that reduce decision of piece completely optimizing reduce decisions even and amount can gates every I optimize And make to table, I the can

information lot to aren’t a in things automate into on their constantly having back of So, send us drivers that the that. going or we on can order them with

we side. believe for turnover driver so probably And it’s impactful the most on us,

that we job going we – friction day-to-day, go driver turnover X And year. So have the we drive in as they process, Admittedly, be down. ago. can and their the become we to this through about started driver’s what driver this think don’t the extremely at automate a tell months also where as we of over well. them it’s impactful you the those easier or X% office we things frictionless, start for going employees easier make we’re gates to and can to and easier can the lot we’re to but today drive some we’ll lot next a as year, out I believe drivers for X

Brian Ossenbeck

consultants? just or I handled? a with have this dealing want internal Is being And follow-up. structured where process, folks – shelf? all this What’s the the off more an Okay. you you’re and USX quick how’s Is this

Eric Fuller

It’s mostly internal.

We consultants with have the worked and this a there, most bit doing but part we’re some little here internal. for

get And we’re so where biggest be will it we and think that’s differentiator. a going we the think to benefit

Brian Ossenbeck

you very Thank Alright. much time. your for

Eric Fuller

Thank you.

Operator

go from David Stifel. Please is question from ahead. Ross next Our

David Ross

gentlemen. Yes. Good afternoon,

Eric Fuller

Good afternoon.

David Ross

to making other, to the OpEx? technology is on there you it technology or follow-up mainly a through CapEx any investments just so in order the the there are and or in the that around frictionless going flow Yes, lumpiness Is costs.

Eric Peterson

is Yes. been at Peterson. I of continuation Thanks a the Eric This we’ve on. question. look more what for working this of

utilization found those the largest putting back our initiatives what AI as on evolved cost how initiatives ultimately investment then and these load technology, using were management, investment back larger those service, component. and is and the planning, all we’re like part that start of as the getting initiatives, If see that driven we’ve they’re And is that we’re we’re then. rate And strategies the focus initiatives. our fleet that return. And our we to – launched and you to we to and component last a to tractor as around the kind you technology S-X X the extra track of initiatives technology we’ve graph now technology where doing putting customer had we return. a evolve, the June, right where you’re these that We databases, the had getting around we’re piece X words of see

and so as perspectives And bringing is talent had and then part augment of team that before. the that that mentioned, before a of consultant in-house haven’t now to we part was ideas we some of with component

and we a extent, about a significant of we’re investment away. place this CapEx have now, But that right next the in to the to value have discovery not lot investment I might that. that the I’m how lumpy initiative, make to an we the But a we’re a trying relative have that right enhance return in this going sense go So talking it’s is and walking in plan on we’re making. where then to spend big would – don’t then this do to I’m month says, going now, enterprise much

We’re investing just and in go as focused on along. we technology it the

David Ross

Okay.

flows or and then – in it correct lumpiness anything, OpEx So, through no just the

Eric Peterson

Yes.

David Ross

fleet Alright. the average and the age What’s for tractors trailers? current

Eric Peterson

Yes.

the on plan we think on tractors. that range the the months year And in this exiting right important now. XX to We’re I mid-XX-month as with out CapEx at point here

XXXX, XXXX lower looks operating why fleet, sets investment really And us what earnings a you’re year. our young the that’s months is over having to when to so months really that but – up X the heavy and we migrate for chance really XX a in and cost the think as remaining enhance of down I

David Ross

And what trailer side? about the

Eric Peterson

front have don’t in number I that exact me. of

David Ross

talked you the now recorders going is what And fleet it Okay. and recorders, XXX%? to the has those percent be event event about when of

Eric Fuller

of year. I the some out for mean, there, we’re There and but at since part, XXX% most are mid-summer stragglers we’re pretty last XXX%. much been have at

David Ross

or talked private to under just their in-house is clarification, freight from in-house brokerage manage last in-house, a carrier? to brokerage their And about they it Okay. customers to question fleet, division moving then own were with in-house in-house of contract couple when you a own moving another your

Eric Fuller

potentially cases, carrier, it into moving manage to another through in brokerage. moving most their in-house own Not

David Ross

Okay, you much. excellent. Thank very

Eric Fuller

Thanks.

Operator

turn the question-and-answer to the closing back I’d any session. to concludes This like management comments. floor for

Eric Fuller

Okay. everybody’s Thank and you in see we We months. will couple appreciate time a you. of

Operator

teleconference. today’s concludes This

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

U.S. Xpress Enterprises (USX) 5 May 192019 Q1 Earnings call transcript