USX - Earnings call transcript Q2 2021 | U.S. Xpress Enterprises Inc

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Operator

Good afternoon, ladies and gentlemen, and welcome to the U.S. Xpress Second Quarter 2021 Earnings Conference Call.

During today’s presentation, all parties will be in a listen-only mode.

Following the presentation, the conference will be opened for questions with instructions to follow at that time.

As a reminder, this conference is being recorded. to Investor call Relations. like Garvie, to now President, Vice would turn over the Matt I Please ahead, go sir.

Matt Garvie

U.S. President We Thank all Xpress appreciate industry. I'm joining you, participation looking over in Garvie, joined to California, in Matt My from an the at name as operator, and software really good quarter such time and afternoon, you future. are Eric second With for Teradata, the our an and Chief Fuller, exciting I company call. I'm President Peterson, Eric I'm Investor Officer. me U.S. your Chief and Relations. of today meeting in everyone. enterprise forward is Xpress earnings and with XXXX coming Officer; Vice Financial based Executive recently here about excited

Cameron to Additionally, are Technologies, Joel President and Variant; Ramsdell, of Gard, Xpress President of answer questions. here

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

We an updated to website on presentation have also discussion at posted accommodate our investor.usxpress.com. today's supplemental

today's referencing We of as part this supplement be portions of will call.

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

A performance. can for a during evaluating be be certain in today's as this additional information measures to believe should we these earnings to not measures, be non-GAAP in with the this non-GAAP the our like Eric I'd useful substitute call The found GAAP. discuss Additionally, comparable U.S. prepared Fuller. measure results presentation accordance will over most in considered reconciliation which can point, in nor call, of turn our release. GAAP of isolation At we to

Eric Fuller

Thank you, second X,XXX overall review tight will then on themes with outperform and financial our with that results review our and there provide review legacy our results outlook. expect second despite in to transformation, quarter we market to in successfully then discuss: This Matt. the grow in Variant, beginning which call, Variant's afternoon, I'll half we fleet. an our continue count Peterson driver will results exiting main On OTR X Eric quarter update the a digital will the more are positively market and First, today's detail, continue year. tractor want I of of our impact the the financial conclude metrics our tractors to I

$XX.X million driver accounts Dedicated to processed its And through our quarter. digitally pricing inflation. more and transactions addressing quarter year-over-year to progress continue this than related in the Technologies, capacity we doubled XX% Xpress Second, approximately second segment, certain make revenue cost to customer Brokerage of lastly, and

quarter tractors or significant the tractors, XXXX by X,XXX with Turning more exiting the that more in with as count pleased grew XX%, progress we the on track than with to tractor fleet. made I in second X,XXX Variant the Variant. to we am remaining the exit quarter

added and our the company forward. incremental As low impact profitability tractor each total fleet positively Eric later, believe will will going a Peterson quarter detail second Variant we total of marked size, the point

decision-making. We XX% was on week, mature positively second X which performing better meaningful Variant, Additionally, as of miles quarter almost the metrics prior have and where grows. second miles Optimizer comparisons our year, were per key into to of Optimizer's contribute we its Variant the year, prioritized revenue of the revenue per per generation in incorporates the per lower revenue prior Variant’s per with per features per quarter increased miles. the and in second total saw freight yield quarter than Variant expect as In tractor with legacy fleet. tractor year. fleet we tractor in week this more Optimizer the the XX% as miles become count the to while the we higher launched quarter compared addition last XX% second mile fewer the Including increased with and to compared $X,XXX Variant’s fleet yield tractor small, is now revenue OTR

per lower to to of an our revenue of continue XXX XXX very bps claims operating estimate than fleet, We is due comprised approximately reduced improvement basis X,XXX week, that improvement bps points which XXX turnover tractor better ratio delivers due to legacy improvement due improved points per and to expense. basis

our Although measure from financial making division's have Variant fleet success. that second that milestone laid perspective, is see my you incredibly Variant the in see results in the due size out consolidated can't overall to continue every we quarter is achieve exciting progress to to to the reduction

tractor we the legacy half year of We growth higher lead OTR margin overtake XXXX. and in exit expect overall attrition to the expansion the count Variant's second and to as

Turning to Brokerage.

breakeven XX.X%. ratio year-over-year transportation XXX $XX.X term, and Brokerage increased near we and second The revenue improved transactions happy XX% our than the quarter, X/X approximately density grow digitally compared doubled to with to are the as to second of second we a revenues year. network points in processed the proposition million quarter to prior basis In more of In of our build the value customers. its our operating roughly OR quarter solutions demonstrate out the at

note more were committing are more an spot segment. ourselves balanced operational a to pricing. digital within by methodical with Our that growth strategy versus our driven of aggressive results we mix handle combined to as Brokerage our freight contract gains over improved yet we It's important efficiently platform,

a exclusively scale acquisition carriers business locations, providing carrier rapid their key helping service work, compounding efforts our resilient is superior indicative and enablement Concurrently, our our and have ground broker for of to set but of taking carriers, density and a broader segment. strategy. are traditional provide the can provide customized reestablishing is root. as go Over in key preferences operations, not brokerage we've while Brokerage segment our from rapidly both by with that results few efficiency resiliency Significantly hours usual designed technology the X to component our in up our hard last of to We the innovation digital lead we the technology been relationship. our build also for and been The This only success. in freight tool tools that Brokerage network to customers. more the carrier of to our shipper the carrier third-party improved also last these segment service beyond future marketplace our is differentiator of also transactional a freight level not developing utilizing them in network investments so quarters with quarters, growth but foundation our a at out in us benefiting our we a Brokerage only improve model

across customers, enhanced solutions further As can digitally, optimize our our collection relationships. for Brokerage our help will assets and provide transportation freight scales which we deepen

of pricing Dedicated. across increase overall to rate second Turning the accounts, address in team the X%. to continued Through led portfolio the Dedicated quarter, which successfully certain in to an

made have to we is more progress done. Although be work still date, to there

mismatches that Dedicated our our it in Variant move turn doing a but and either too hard of We to review And will by will raising growing in for we we zero those margin, financial Eric value continue underperforming With call we accounts. Variant, past. me from our if the even no results. and Historically, tractors we now on business Dedicated success, didn't longer price or Peterson let demonstrating have can the over was a into be fleet lever to exiting rates maintaining that. address portfolio focused continued

Eric Peterson

good in to quarter division and the fuel the year. and second was as The $X Operating offset you, company's million Thank the partially increase everyone. in for surcharge million, million, $XXX by primarily revenue of of Eric, $XX.X compared prior afternoon, revenues second the an Truckload increase revenue. quarter XXXX Brokerage increased of revenues a increased million $X $XX.X million of was attributable of decrease to

fuel quarter of impact Excluding to million year. quarter of prior surcharges, increased the the or second million of as $XXX.X XX.X% $XX.X the second compared revenue

the at our that was operating second ratio XX.X%, quarter quarter more we financial XX.X% prior was from Looking detail, adjusted second deterioration ratio the Truckload of our the which operating year. a in results achieved in

count Over-the-Road tractor count have been of underperforming the Variant earnings and the last legacy fleet. as over has reduce declining XXX quarter the our compared the tractor down our discussing our we than tractors quarter, year. second As been calls, prior our tractors second more average to as by grow several In was we

Additionally, decline given in more division, our the challenging XXX we Dedicated market. experienced approximate an tractor driver

miles lower, primarily in Lastly, per the to an to quarter per despite we Optimizer per increase utility revenue a unseated tractor successful in tractors tractor due revenue revenue total change in fewer This second Variant our was also addition models. as prioritize that in tractor. was grew in

reduction with the revenue was the spot supply-demand a partially year-over-year of XX.X% revenue year. per increase a per tractor per miles rates in week helped by per offset as in result the Over-the-Road favorable average in Our tractor. XX.X% the division primarily market. X.X% of second experienced increase compared average a mile, quarter average drive This This prior given to by the in higher dynamics

per division. in to compared X.X% our second The and per revenue per primarily was quarter mile as revenue week. the or in prior year. a per excluding to X.X% $XXX tractor the X.X% a result increased miles week, increase of of fuel Dedicated week tractor per Turning increase the per increase Average to surcharges, $X,XXX average revenue

because tractor per tight revenue fewer quarter, division per due tractors total average the the the increased the in second to year-over-year of seated market. decreased While week revenue driver in

million income We XXXX, $X.X to our quarter compares in $XX.X which generated Turning second of the of million operating prior income. second to operating of year. of the the in income quarter operating

result decline year. second to to are year, as in our second was a cost the compared approximately fleet, down in Our tractor quarter second lower was and in Over-the-Road ratio quarter tractors primary XXXX in operating the XX.X% our lower driver of coverage as of XXX the quarter XXX XX.X% fixed Compared the prior for end balance count. consolidated of the of last of we the overall The Dedicated. the

rates. conditions, earnings driver underperforming basis points compared a of supplement, fleet, we Variant transition per mile, in market We over. from fewer our turnover annual spread that a result per expense market. fleet our tractors to significant fleet Dedicated to claims of Despite was we unit areas part in our months. to increase per fixed of our tractor Over-the-Road our of our grew we by fixed as Optimizer, cost tight generate driven a to incremental costs estimate excluding fleet, reduction additional driver basis. equipment also this over improved insurance base unit count successfully to reduction to in While our margin we And the on XXX accident a is more last tractors $X.XX. revenue by tractors $XX,XXX lower than legacy design overall Variant lower the the income this have X,XXX Variant sequentially tractors about primarily of XX legacy with due experienced caused our the by This Over-the-Road or see as in will operating $X.XX The from and you reduction as our cost due means approximately miles

X,XXX have addition, estimates accretive fewer Variant its also our we these division P&L. the to impacts with and cost earnings. continue management, begins tractor approximately interventions Based fleet incremental tractors, In to each positively on which to becomes cover manual at

echo per average to too per fixed which X,XXX For tractor mile. mile in cost below cost At of $X.XX our our the was these confidence is in strategy. of reasons, Eric's tractors, mile expect the historical quarter per cost This fleet, an fixed is temporary, scales, drop high. dynamic I as legacy structure we Variant count our and approximately simply

as the Variant long maturity. to Variant near-term invest As to fleet as will we reverse headwinds continue will results financial because the in approach our we grows,

lower during fuel fuel other combined million $X.X expense In the more increase $X of an items, in terms multi-quarter of the of diesel fuel to our the market. higher due lag significant net year normal and the compared surcharge adjustment premiums. in meaningful of mechanism increased These claims costs than in of quarter resulted despite recruiting with quarter, a second second the trend with in cost million price the increase and prior the approximately offset insurance tight factors continuation driver approximate

income. Turning $X.X income XXXX the million year. prior second million quarter Net second the to was in the of $XX.X compared net of for quarter to

Excluding in adjusted the share the compared the the the investment, second to the quarter second earnings year. year. gain Earnings adjusted the XXXX the adjusted million and a share, net TuSimple on of $XX.X excludes million $X.XX unrealized our were $X.XX income for on prior both TuSimple which was per second and $X.X gain diluted our $X.X per quarter in in $X.XX of investment, which were GAAP quarter compares quarter prior diluted to million, second for basis

and of defined as cash liquidity plus with pleased we revolving facility. had X.Xx our availability very that year. the sheet. balance and equivalents of the I continued our to end second under compared the decline, debt the $XXX $XXX cash to our prior continue debt of debt defined EBITDA at have to quarter net $XXX of progress at net XX-month million second ending and million net of quarter quarter million and X.Xx of be liquidity made trailing to for leverage to and Turning credit the ratio XXXX We the as

that, concluding $XXX second capital expect like year-to-date turn year. back we through million full for net and $XX.X Fuller Finally, of the million Eric totaled million CapEx And for to to remarks. with to for I'd XXXX, of $XXX expenditures the call the to net continue quarter

Eric Fuller

you, Thank Eric.

overall As of tractor XXX the orientation June our where expectations buildup that are OTR and and the in outpace increased Variant seated will point fleet the our hit pipeline half of by intentional year. now have the continues grow. of We to second we of our tractor balance will that believe first the count for and legacy of the our for point the year, total count we attrition fleet grow the for our at a since low week of units, tractor seated

second committed believe and our should to make in scaling Variant result, fixed continue our fleet as mile per cost we a the our next half margin expect continue improvement We and XXs, sight operating and to address ratio exiting X years. our bottom-performing the to line have the a progress the doubling sequential we As to Dedicated revenue the year with in accounts, that of of we lower decrease, Truckload over year. we remain

economic continued first freight given demand of broader expect with Government a as a on combined We to this Federal our had strong year. in package, half impact which the notable tailwinds the operations the stimulus remain result recovery, the of

remainder excess which to renewal to the market lid in side, are challenging, supply the hit the rates improved keep rates supply. Xpress we to conclude, These contract believe are is To a U.S. on through as is continue initiatives point we for forward. digital the strengthening drivers and to our XXXX helping within to this professional we conditions exciting results very expected time continue and On contract a remains we look have at environment of a to spot set in. which and market see support inflection as participate

in track year. on and the of We As our return Variant company year point we the exit end. total we've reached in our expect on inflection X,XXX believe positively discussed have growth now impact having to scale by to to financial remain beginning this results third goal our our an has We quarter. as to fleet we Variant fleet fleet achieve tractors

tech-enabled in the Variant’s believe fleet. set we our we digital scale results of to XX% we engine will address for to Xpress which platform significant brokerage handled quarter. continue to continues. a over this which year transactions positive several We tractors earnings our have with profit we to accounts work continue is growth add We in powerful Variant pricing to deliver Dedicated U.S. as And of platform having our yield believe

able a you please time color the add of and questions President the will on segment Variant; Thank again as Xpress needed. to be on call, Gard, to As President, are and open Operator, Cameron for Ramsdell, call questions. for your our Joel reminder, Technologies Brokerage Variant today.

Operator

[Operator instructions].

with Our Shanker Stanley. Ravi first is question Morgan from

Ravi Shanker

Eric, considered was more you as [XX give that little investors and also are a us if each have separate Variant a that, segment disclosure segment? of you Eric the kind separate Variant confirm doing you reporting just an give of OR]? would on comfort to be reported saying And Could and today, it more direction segment?

Eric Fuller

And income the really fleet is points basis before. that's basis. where points legacy relative operating unit X,XXX on basis X,XXX was The a per to

as results. allocation don't down in want to up a separate one Now, That's I as we're and now, a think operation game it's carrying longer do something be the little, term. separate far reporting right that are meaningful. company, as building there an But and it'd we

the And gets we right Variant. pure, doing so down Over-The-Road plan we're which in but now the we legacy scaled it's that's want convert as standing it’s definitely as middle Variant of up, Once on taking something report to up on. and

Ravi Shanker

got is higher tractor How the encouraging is legacy, Okay, now that see cycle of but and look I is Variant mean, do I rates it per the just it. than that the per are at to higher? because much much week chart? XXXX stronger kind it's revenue

Eric Fuller

improvement, I at the that's the on the goes congestion really for that the there's even hot increase too focus down, your what utility utility miles, look would we've a when our When go driver pieces And other the up. seen is, really significant and significant actually more on that market basis. we're to turnover, basis doing because that a And argue disclose trying fundamental continue to Variant that's that improvement No. we in you we point how basis to that's to eat well. our everyone that to division to increase I margin contribution focus get as over serve a plus where safety X,XXX per up in relative unit And high like And and and on we to were going that doing. increase it’s -- cost. fixed as hold time, what it's really

Ravi Shanker

it. Got Okay.

earnings for that says X of big in Xpress the slide, turn over. earnings had within Just On And logistics? range? X if is operating within What more it consecutive intended is that quarters the how intended you've also Technologies, me range. I

Joel Gard

The is a reported Yes. Hi, a of model back Eric job Joel. us segment capability Ravi, this logistics which kind for future. Xpress as the as explaining building did combination of good as well Technologies is Brokerage our represents entirety as business pre-existing investing in the better of our of

said of referencing we've the we've holding [shape] business organization we've scale a here, breakeven the of there, been we're the operating forward. while moving income at our we'll slight an revenues pretty that's growth there in to supplement as in the to direction growing job prior last line. And imperative X quarters, the are, We seeking that profitability as line good over done to and support to as calls aggressively broader in kind maintaining what continue

Ravi Shanker

or the just you built is end a the profitability what we've and we platform enough what do But pivot mean to okay, strategy? game point kind now of there? then what's I long-term say, guys big at

Joel Gard

obviously, upon predicated long-term strategy business. is value and creation running a Yes. profitable Well,

level plan, of critical an over revenues next a sort that investments that we the be in that seeking call next of we now we X- will the be today, X-year disclosed even to inner to And of XX% I have calls the previously aggregated think, that expect through or to of windfall making and a we Brokerage will X years share X maturity. years. the has size we double expectation the in as as prior the Eric expect We've us at mass, we're kind give about of to that reach pie. and mentioned

Operator

Atkins next from with Our Jack question is Stephens.

Jack Atkins

Okay. Great.

doing look love back matching, basis, well. within versus XX% as on load, go on get to a Brokerage Xpress of expenses this I'd for moment. but you're operating at up And a to per your lot Technologies, comments more they're we digital I the input a But year-over-year XX% to Just kind when think XX%. the Joel,

with I'm going trouble revenue. such operating on, there's significant a just So following matching -- leverage flow through more more that I much are digital increase having not on in there? seeing why profit more we why

Eric Fuller

Sure. the No, Yes. I appreciate question.

to business. of So here establish we're I improved already. in is days you rather as the this to digitizing has associated marginal year. right? the layers in of of the early incumbent last workforce tell the automation early investment the our to with about cycle there think legacy very seen what's productivity still tune XXX% amongst supplement, of benefit the I much key transparently we've here, some disclosed management can there's We've compared time

in we're the to So the investment, where operating create focused you're totality. next more little we've in days, or leverage over been seeing already early the of we there expect Still on a desired while. precision seeing an and benefit what perspective from referencing benefit

Jack Atkins

Okay. All right.

a So there's to sort the necessary doesn't you're technology, operating office, back cetera, et but mean, breakeven is model. we of scale necessarily have growing be you could in It as revenue. it revenue as this more for be been platform the brokerage here leverage I'm to create -- there growth, I rapidly from in investment correctly, understanding if Joel,

Joel Gard

allow I that to of margins in prior elements, foundational was brokerage comment mean root. us the of investment correct. ensuring robust healthy expand think of to that's takes be I a Yes, the over able really as crux fundamentals are this time to model the traditional and sort rooted

on technology revenue some If the we've of done you and challenges pre-existing we from our growth investment. were perspective limiting us remedy that as year-on-year, look at mix to sort a work a layered profitability lot of

those not itself, in for want strategy some we room growth on of next we if early take course. We're will start a here the seeking root quarters. due realistic to there few in we're and sub-optimize be over here ourselves long-term to expectations And elements strategy and breakeven present pretty to what setting to end, days in breathe. our our believe just to absolutely positive margin constraining accretive to So opportunities that

Jack Atkins

Okay.

business I pivoting Okay. a back and sense. a the towards step That And taking maybe for trucking makes guess kind moment. of

seeing think tipping are that, like with costs it the Why scaling point, beginning And sounds to everyone can't of to are associated some Like you amount sort sort significant we're operating now. improvement at to of leverage which great, is in that at time? of is you're related we going we're the growth I future, understands a on this a profitable bearing fleet and say, that the Variant guys more out in start-up legacy Variant. the just we up given profitability market important the scale. more Like while engine when the will aren't out that's we year. why now? that's show and half picture year both for this of about very Obviously, entire the second a be several last robust the to year versus, legacy the rate Variant? guess think significant environment the we have strong But why and I But of fleet. have right bigger kind next trucks quarters, into same there right see there

Eric Fuller

a Yes. I things. mean so of -- couple

we the incremental we of in businesses, proportion of big to quarter, obviously, look get Dedicated On that the there mean, improvement wanted, we a are the things a saw getting next aligned. better but go on getting need perspective. some from the Dedicated, we we accounts those And be that legacy we'll rate side, this momentum some to ways I And bit is accounts set that a proper some little that there still of believe manner at to in those have we that. up Dedicated --

down process in kind the side, of future. Variant. basis focusing really a are on ourselves for legacy set really we mean, we're bringing quarter-by-quarter And OTR that the decisions On on I the of up making to and

appropriate so up instead market, we on is, build there's long-term but we're long-term that, us to obviously, -- to that build, set going focused believe, really for take now in future. performance if opportunity the in we're advantage of of trying and to And the the

a throw and to propping that's the so energy be will we money And focus and do the say of over resources, in want is. what And would spending where that main is couple ultimately quarters. what bad good exiting is next time division of I we after a up don't lot

Operator

Our next question Wolfe is with Research. from Scott Group

Scott Group

if over not quarters, right, over we if at still trucks trucks the getting are point getting the legacy rid inflection fleet the X,XXX of overall I'm we're the next X,XXX few sure how I'm fleet? in Over-The-Road this there's but in

Eric Fuller

rest we at there's the a desire getting that little results of healthy for want -- we the incredibly are that X,XXX and So over that look are that X,XXX, bit of fleet. the

And what if X,XXX so get we look kind at point. less than replaced, probably of it's this needs to at trucks

in basis over Variant. start things: as continual couple as And we seeing couple so the net should next start of growth -- quarters, that, a a of It should inflecting well on positive

So and tractor the perspective, that's from see of down a lot than has net fixed will to positive And math attrition of in reasons in size in where is of legacy fact to units, fleet obviously start growth start out cost we'll because so X our count. the last tractor couple more the spread will at in of growth have for two, our happened net could to we're over positive Variant; we'll a attrition our it tractors. see more off but going that quarters slower, trucks happened based a we that grow and are pace over part what's attrit of jut the we to a faster

Scott Group

for a third realistic target the What's in fleet growth quarter? net

Eric Fuller

count, know we that it's think but We've if we don't we're in I momentum. really believe XXX? putting growth targets for there net have grown, I out tractor

Eric Peterson

XXX.

Eric Fuller

bottom say, we've grown the and off bottom that. the from tractors June XXX in and time mid-, frame of was that

well. quarter And momentum maintain the the as quarter of that we we through this believe and so that of can I level probably through think rest fourth

Scott Group

the think by quarter? said, should you the for mid-XXs get low the how thoughts much in third? should in XXs Should third we Any Eric, we And the to see we be a of I the would be OR in improvement end for on Truckload Truckload. year

Eric Fuller

see can improvement. we think I some

So we we're will be it, is the still difference, again, would necessarily -- splitting earnings over probably count probably but environment -- from depressed the improve the of our earnings where little we're better moving into incrementally -- out grow profile a QX. But those in to it's operating need a we're of not it we truck next couple quarters. as

Scott Group

last and with I utilization guess me. mixing at as a just I that, lower thought it is utilization, then towards more up I higher. taken still legacy would Variant the down look When of sequentially going the And mix mix have would we're Okay. that have X Over-the-Road couple Variant? Why was more it for of percent.

Eric Fuller

Yes. the because look what amount tractors tractors we mean have unseated unseated more transition, than you typically. we've if I of at had that had of

that from -- count and -- has truck standpoint, created that's the truck utilization. you're we hit big we from bottom the so in kind QX where of because a count And impact seated a seeing --

Operator

And our next with JPMorgan. question is from Brian Ossenbeck

Brian Ossenbeck

you it I of Are is guess, you there that question here. this that quarters, maybe getting and becoming wanted it's finding it do last yet. the but to is contracts it that issues, not is tighter to I better, we've sounds supposed the a Dedicated are confidence pricing think on like quite couple bigger the be market heard I sounds like. driver bigger gets problem? is margin, It these like go have a for back to the these contained? minute also

least can't comment can't little me you can as that. but pricing, seated. get you a quite then maybe to quite that on the also And at confusing just tractor the get you So

price getting strong, thought seems if like you're that or you get would of tractor the the pretty mutually things not but seated. be like So I exclusive, kind pricing, the are it

So appreciate that, you on it. can I elaborate if would

Eric Fuller

Yes.

this reprice we're Dedicated it process started as go piece, a We through and that I takes lot the you mean, On QX. lot of time. business, of in a

wasn't perspective. started And QX, some a more into of we of why get would little see the takes quarter we that of entire more than QX. bit coming And of some probably a maybe We'll that but QX into seeing longer from layered pricing that for that's like. it

our attractive at a worse operation looking in, you're progressively it. operations. I portion So I in I from of Dedicated if call, gotten driver has ratio situation accounts. an what of Dedicated less types of some that's standpoint, mean, or operating markets our portion a are mean Unfortunately, of the

to different more difficult driver of those capacity as been in so a it's And accounts. little source

had created little and days And as certain increases the relates where headwinds we in driver a and created back say, a still we've last, to let’s that's to so headwind XX bit that's and of customer. some have to go cost, it some to even back in give get accounts, the

the of combination performance confident as a rates it's that get needed but we think will we're the be that looking X, move get into to to that our I feel the in QX, that for. order we we we So area in

Brian Ossenbeck

Okay.

sense type So do to point, are got of this a now. be of you them you've feel good could as getting like ahead to at and what affected you contracts actively

by up the do you to later? it's contained? bit to and here like of the a get now just catching thing feel So nature trying back of think you still it little Or there's

Eric Fuller

as progress real have It's that perspective, always but there things to there's would from -- repricing in that say time. make sure a where always market, I fluidly is in driver a little things in there's market -- that we're we this moving contained, bit it's

around pricing also the we've individual accounts. feel of to at so get but got that And that eye We as our we these we we're one need will confident driver the not look ball our situation each the arms off very take going it. in we

Brian Ossenbeck

on that's in it's can if perspective, that market. what to a doesn't can cost of how safer a seem maybe but clarity and if about looks this of easier acquisition that terms get drivers, in cost expensive are driver, tight hindering you there the higher experience growth, talk they're like because it drivers of hard scale? some especially are there trend from give just it's getting hold like still been as It still drivers? maybe ones the Is fleet Also you Variant trending just

Eric Fuller

Yes.

driver I very It's highly from down. difficult. acquisition seen an drivers, come competitive. that haven't think Variant we situation for necessarily The the to cost is

have We market. new a out also brand the in

ourselves talking but market we you're a X,XXX so are market the of kind over introducing to that have And of in drivers. with trucks, truck about now still of millions driver process we the

issue an for still is recognition name us. getting so And

important in well. the in And a as so getting of out big the reputation our but the is our market portion costly name there of the out part and strategy also strategy, market a

hit would And not we've say so I where on are seeing a a point we to cost recruiting. benefit

that get and think But as net a give strategies definitely I our we current relative our around will tractors as we reduction net cost costs happens spend. there few multilevel recruiting think mean I can get And benefit fleet some we there. we the us can a not we're probably size. more that decrease get have a what a other typically go forward. to thousand at we we recruiting in significant where we in think things that, probably and we

Brian Ossenbeck

to got the it point that the cost Peterson. the have talk it pull whole When is tear just miles? that All it this maybe down Or maybe point, at Last too, you've structure. not well? getting more Eric question just do volume business more you or duplicative to point where repurposing the really just right. miles? repurpose levers some Is and is Or some really right but word, the really you on structure, about Is you right-size to the about kind tractors, visibility can maybe for there is more as of just cost costs?

Eric Peterson

just just from we've we're -- getting perspective, more say size has the just of and shoulders to of just getting thousand Yes. several of the getting biggest do have, piece foundation more organization, before this handle that cost it. we biggest is it I it is piece would it a tractors we biggest the fixed of very is not now our to having built terminals believe, of number broad piece

of And infrastructure scale a $X.XX encouraged then even up, going truck and fixed where mile per mile on our we'll really count we to lower basis, more long basis points into as going the we're trends -- up to Variant way get we've a been legacy $X.XX just we so size over $X.XX than cost we're can to grow as is that, to think a it basis about back the that if you the earnings a $X.XX that. before. every XXX from points, once And mile XXX mile think is

get we and at there, So like keep accelerate can to minimum, scaling and Variant then that. we know a we'd on of top

So the we it's just that footprint have into today. growing

You maybe But to and back footprint nonsensical. only up landing have that going. right quarters looking our some we're these months we're with in really to where we're match pad, that -- we're through we're down, build why can't as as long could now that's revenue And to do I is just the to ideal aren't as where down excited it XX so relative to take heading what earnings market. of the the on build focused about speak, that

Operator

Instructions]. [Operator

question is Ken of with America. next Our from Hoexter Bank

Ken Hoexter

a decelerating Just wonder at pace Variant.

you're if targeting target? you're targeting to It raise seems that up are the Or in now at the you to first So you about X,XXX second. added over X,XXX. in X,XXX like prepared tractors, half, XXX XXX

Eric Fuller

that a we setting but mean, I will will but it, lotter that, and I those. hit I X,XXX, that confident confident there I raising wouldn't for we're we public outrun markets, But we saying feel say outrun very think goal feel for than we're that Internally, have the out goals very, very we'll it. still we're we that that.

Ken Hoexter

That's guess, the road, just I over decline Irrespective the separate. right? in of, the completely

Eric Fuller

Yes.

Kenneth Hoexter

Yes.

gives Eric what get you to to basis -- the there just right? on it to Peterson, I'll ahead. then fully X,XXX move I you've we guess wage allocate to look the you visibility put So on about talked on -- if confidence that overhead to you when cost allocation points stop at now Go you that, in then and the differential, that? Variant, a we'll how to got the question. take get talked what on So And following about well, do I'll

Eric Peterson

Yes.

think historically. unit on asset what more bit costs know confident, per over I'm they're was tractors. exercise, these if fixed I we're of feel contribution putting to basis unit a per there's able we know basis there while what and a Variant constant, that I and of on we are And of a some shoulder $XX,XXX our

tractors we're able As to we X,XXX to very to Variant to grow earnings. X,XXX that's tractors maintain cost, tractors be to from X,XXX going tractors X,XXX fixed accretive and that to

earnings the next equates segment the that from Truckload as components think additional over our as which billion double where reminder, as unit going going a what that target years, that's the are we and sudden, revenue and we individual we down overall make and X of a with with that that tractors to building. superior today, scale and I on to our over it's revenues cost revenues. to to that's we're X,XXX all is per overhead, a said a broke smaller $X percentage smaller, of an and was smaller, size what And basis, on much of fixed do

Ken Hoexter

right? it the Okay. focus the I given caution still with just margins for scale, when went Swift the It just we though, guess takes path. what on saw along

the more I that that important the to profits learn not was it's think along scale? way, just right,

Eric Peterson

in we closely but product index. revenue, point, We something watch that's we earnings. call don't that great our what And want and at Yes, Ken, we a this is very think why just that. that's I want don't dilution scale, we want

much We're revenue, that that productivity a and going going revenue Variant, a We're scale to the feel earnings higher confident as at deliver revenue right? but as product well. at stronger. stronger index. basis, superior going deliver plan unit why That's that going record, deliver lower to on at not maintain per grow going we all. XX% safety we're to we're we'll operating We're we not the turnover to that earnings ratio, just to not maturity, And grow so to revenue, maintain as that long and just

Ken Hoexter

why as sequentially as you had we've I where cost? Eric X.X% do a be sorry, I'm given enough? seen of we bit the -- just yields weren't your you I able Fuller, And the guess you the like as do fast just to the spot to up to up just could maybe over looks couple think you was revenues exposure, saw weren't wage X% a adjust. report why think exposure rates others inflation sequentially, adjust market adjust little cost -- you quickly your thought of able given

Eric Fuller

Yes. Yes.

trying It's the -- gone have costs really driver the on up acquisition and to -- based fact I think build. significantly, the that for we're drivers the

the the term, prospects. is you'll said, strategy we towards rate. been cost the little the think more But we have said, But with see, continuing focus long-term in that little that the And could that better lower quarter. near was for were I line mindset on rate. in we this so a bit had our maintained bit have we and a that like And the with kept focused right in about the we and this last -- looking not in the future necessarily We and a like matched basis. And probably really quarter, we're go a really think as we focused forward, us which cost is crucial to in I build, a

Ken Hoexter

finish I a I just that, Eric. guess with could to if follow-up

still and performing getting of OR tractors the XXX rid that about I think the talked worst you were deteriorated. yet

And Jack's during before market, a on tractors. you the Are see anything Variant from do to breakeven the benefits focus it with that we to got plans talked improving XXX are the why gone? performing, at focused taking are we're whole think of market this you you'd the kind in you're question getting going said other on lot if and that. guess but in costs where that underperforming of legacy anymore the IPO, performance, wouldn't were to I that's to come were And the of you -- those what of those rid things rid going I business being not like worst just kind down seems like the of like even that. insurance fix

we have wouldn't wondering saw. legacy why than a outperformed the more bit Just little

Eric Fuller

Yes.

to focus to results safety safety We we line the see item. continue improvement think we that reducing on improved I relates and cost, in cost see to some as start results. it So our will

all of Variant, at but have is we seen due rate. of accident what to run. couple If that of we've A it you the look lot not over last previously than lower months, much a

the shows item lost that in the quarters, think we real start really some the fixed savings and in enough fixed where issue couple the as about And And were spread not QX that's crux so decent we'll enough really of see of but on the a over line model fact with to is it the basis that's this, costs costs we net trucks issue. that the are we would our we But OR and few to much in said, removing trucks hundred then units, our issue. across a believe still rocks improved. improvement painful more process while the it, significant and replace profitable earnings had our it's as forward. them much we're of that backside with our earnings I while we fleet, more If a looked show on And of like will we in trucks. have go the more the right next middle

Operator

turn the over closing the now reached the question-and-answer management for to remarks. of have we call And I'll session. And end the

Eric Fuller

thank very we that of you. we much Thank confident feel forward, something optimistic linear transition and we're it, it's as as attending, this will But a easy transition. as you in know well a for process forward, to headed. painful Well, very look All greater and move the be moving earnings is the I very, middle us we a is we'll where transition right. we're of as necessarily an for quarters. we go into that or couple next we're -- not as into improved we profile

Operator

Thank This you and you time. disconnect your concludes your lines today's this at conference, participation. for may

U.S. Xpress Enterprises (USX) 23 Jul 212021 Q2 Earnings call transcript