U.S. Xpress Enterprises (USX) 22 Oct 212021 Q3 Earnings call transcript

Company Profile

Participants

Matt Garvie	Vice President, Investor Relations
Eric Fuller	President and Chief Executive Officer
Eric Peterson	Chief Financial Officer
Joel Guard	President, Xpress Technologies
Cameron Ramsdell	President, Variant
Ken Hoexter	Bank of America
Christyne McGarvey	Morgan Stanley
Scott Group	Wolfe Research
Jack Atkins	Stephens
Brian Ossenbeck	JPMorgan
Felix Boeschen	Raymond James

Call transcript

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Operator

Good afternoon, ladies and gentlemen and welcome to the U.S. Xpress Third Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Matt Garvie, Vice President, Investor Relations. Please go ahead, sir.

Matt Garvie

good and operator you, afternoon everyone. Thank the to U.S. Welcome Xpress XXXX call. third earnings quarter U.S. Fuller, Eric financial. President our CFO, Peterson, our lead CEO, who today, discuss Xpress’ will Eric call and followed by will our

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

today discussions forward-looking and include information forecasts that Our considered are other statements.

and for or SEC duty expected the ended described September and several the most our materially. in filed SEC cause next no be could actual undertake XX-K obligation to is differ which reflect current subject the to quarter statements days. the that they these Form We are Xpress’ a the uncertainties to in update risk in factors XX-Q filed XX, our with are These to with While recent statements. outlook number U.S. of risks results XXXX, forward-looking

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

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

investor.usxpress.com. have posted presentation at We available website an to supplemental accompany updated is also our today’s discussion, on which

And with Eric would portions be to referencing I of this today’s supplement that, will call. part to We call a turn as like Fuller. over the of

Eric Fuller

On five to that update third on want afternoon today’s afternoon, transformation. our will provide This I discuss. an everyone. results Thank and digital are I quarter main there call, good you, Matt themes review our and

attrition a grew tractors. the count Variant the with we quarter, in fleet The in foremost, outpaced exited remainder key Variant and in the our which our truck fleet. of as point growth OTR inflection is sequentially quarter First overall X,XXX

provide for ability capacity full of our progress tremendous quarter demonstrating in provide re-pricing in revenue investing grew profitable higher years. our improved customers. Brokerage to portfolio the committed to our we on doubling company next the year-over-year, Variant solutions QX Xpress made segment remain revenue to to X expect XX% dedicated and margins. position for focus expanded long-term rates over its Our growth We and Technologies We as QX in

growth grow Variant quarter, Turning X,XXX third attrition exiting to what XXXX continue was more tractors, count our growth fleet on our Tractor XXX% represent that of am fleet we Variant, out exit pleased I report to the coming overall represents or expected in XX% second the approximately growth remain Variant remainder we fleet, approximately tractor quarter. to Variant which to QX of and outpaced grew sequentially, with our truck with during year-over-year. fleet would in OTR and X,XXX in the which we the track tractors sequentially, the and which

have we As exiting business we to environment X navigating given have Variant. been to Since third a this approximately with reminder, X launched and remarkable end close the an Variant of those tractors to years we additional QX. that a annual run-rate the accomplishment added the $XXX just XXX is macro years. grown the of X ago million believe over revenue have We trucks quarter, under

Variant OTR has Variant’s the legacy OTR tractor the stats, improvement tractor growth is in which compared we safety fleet. our to fleet. incremental Importantly, We expect now of as return to while our margin to key in growth have the remainder outpaced our contraction operating added maintaining sequential our of a to count total part

rates to I to majority Dedicated been of portfolio across mismatches in price-to-value that the addressing in of business. of which the last Dedicated, quarter. pleased led am portfolio have those addressed to overall mismatches third vast Turning discussed say our And quarter, X% the we an within increase

rates improvement to levels beginning were our to to to rate provide see exiting sequentially that from the that professional drivers These X% our we to service have price pay expect income our wages up increases was in come operating necessary closer us. the competitive benefit and QX Our fourth quarter. customers expect

Looking steady growth ahead modest expect from we opportunities a as truck Variant growth of in in lie for future XXXX believe truck business, truckload the count this perspective. quarter our years fourth hold to during with we

steadily both operating discipline experience improve cost We the the driver expect long-term Dedicated. as the as our professional improve business in margin as in to well we

Turning to to $XX year-over-year our Brokerage approximately million. Xpress XX% revenue grew Technologies segment,

was margin the up to gross of importantly, XXXX. points basis quarter third compared XXX More

In addition, the the platform percentage quarter. in XX% to increased of digital loads processed on our

We realized. are business, but enables to establish innovation our digital a is our Brokerage growth model of our so as marketplace. value transformation shipper of partners. to responsible engagement shippers not these and and in of our creates resolute an segment continue for a network the carrier We differentiated will and we believe operational work adjacent more entire In within our as revenue loan only scalable deeper doing growth foundation with early business freight innings to initiatives, proposition we and prioritize demonstrate pursuit carriers into to expanded

in discuss operational business resilience to to call I out near-term. would Xpress target to financial breakeven our at like continue U.S. to this a partners, growing in continue OR we our that, to results more roughly With ensure to our As the for network build turn Peterson Eric we help density detail. and the broader

Eric Peterson

quarter afternoon the third generated everyone. of you, XX.X% Eric operating we XXXX. good and revenue quarter, an million, In of $XXX.X from Thank of the third increase

pleased helped a in second division competitive important already surcharge, our to I an receiving full were increase increasing tractor rate exiting fuel approximately in highlight in average and increases in helped increased of rate ahead to prioritization to in an is in increase revenue. was This Dedicated in increases were division, Optimizer average the really our year-over-year. to cost by truckload combination rate both impact rates In had quarter, weeks we through our as per over-the-road This an portfolio, quarter for driven rate progress professional which increase revenue prioritizing of a mile, the the which keep X.X% the X% $X,XXX, across rates am Variant’s the week, in mind year-over-year quarter, yields, per compared increases a to revenue Dedicated that and XX.X% and rate made rate X.X% tractor our of revenue against quarter up increase the customers. of resulted reduction of back-end utilization. year-over-year. brokerage in per week now is million up the in the X.X% netted drive whereas XX.X% was we $XXX.X of per the per loaded XX.X% utilization. our drivers increase from it’s wages paying XX Excluding

expect truckload We fourth our operating in these quarter. impact increases on beginning rate to a more margin the have noticeable

larger current X to our our ratio of primarily operating adjusted our deteriorated ratio ratio, decision revenue to result quarter to the operating year third double XX.X% in much years its to next XX.X% support Adjusted XX.X% operating build XX.X% and Turning in truckload of The ratio deteriorated the the compared that operating fleet compared to prior to fleet the can foundation in size. than quarter third a is in in company deterioration the XXXX. the over quarter. quarter a conscious the of

this ahead fixed result, the high growth, count building during cost the be of a our transition too relative will As infrastructure of truck to out volumes. period temporarily our current

will fixed in infrastructure, As costs believe operating of size we decline to and as of the model. revenue leverage fleet our our our continue that we ultimately Variant grow our percentage into a the show

guidance, as other highlight our for reiterate of year a few with to points. a help QX to well I wanted the assumptions modeling, and Turning as full to changes couple in

of surpassed fourth quarter, growth the expect total in as fleet. Variant truck the reduction remaining overall has our over-the-road growth terms In count in modest count we now sequential the in truck in

expect flat than to sequentially We as alone. yield utilization continues optimize Variant to rather utilization for be

up anticipated fourth in expect sequentially exceed cost X% modestly X% and We be to rates inflation to the quarter. truckload

XX% continue items. year XX% before expect a full any rate effective tax We discrete to to of

expect approximately We million. continue the $XXX net and for expect we expenditures now to of million $XX full year interest be to capital to $XXX million expense

an volatile autonomous we and quarterly company, As basis can trucking mark-to-market a which have at equity an times. be a investment in we this on reminder,

because We results, indicative will With that, our turn continue adjust it our Fuller to performance. operating of it’s this unrealized adjusted not or back Eric loss for gain like would out to final comments. to of I

Eric Fuller

Thanks, Eric.

next the minutes want as take years. we our to call we of the couple over we discuss success of a revenue years, think doubling open long-term our you against how next Before should our goal we to and evaluate how few are outlook Q&A, over measuring to progress execute I the X

the First years have we while that is trucking to and company next disruption over believe the moving it, and industry several the towards are we about for closer foremost, course we our the excited extremely progress and the consolidation. only industries traditional its into make as such freight a and has matter capital driverless of it alternative before way We brokerage, adjacent venture time asset-based technologies is believe been flowing that into trucking. fuels charted

to focus we our remains solve using Technologies. Variant inception to the is Metrics industry Therefore, in the recruited, fleet, inherent platforms digital important our metric our in digitally how managed been focus and wise, Xpress on Variant will is follow scalability planned, that its and artificial success believe Someone naval gauge truck a and dispatched have since building intelligence most is and in do it. on issues which our and investing count.

continue Keep fleet each annual that compared $XX,XXX grow mind, to business. long Variant towards of As in incremental our to the will as fleet. to income to legacy tractor capital we adds that approximately added continues allocate operating the

while million stats indicator. long-term count accidents to is expectations. safety keeping Preventable with their miles, Variant to add our continue we per Next, fleet our in a line truck leading

improve in to that for actions ability a in as extremely benefit quarters expectations market Turnover our scale in and fewer extremely Variant, future expect particularly competitive. confident to remain claims drivers but as will professional tail. it quarter-to-quarter is our more important long remains us for profitability. So, We turnover may long-term the business our today have swing

more growth for is prepare in its focused turnover we driver expectations. Variant experience, achieving which maintaining XXXX, is on to longer our term As critical

attention Variant. in per week pay to metrics, truck the per on revenue Finally,

orders is why combinatorial are to generates for plan etcetera. problem let our uniquely for including count, potential is constraints, We alone locations instead loads monetize best are many the our trucks, takers, a to Variant given able sets the is drivers, solution freight are in to solve how various available which we that network This using algorithms which people. of trailers, the magnitude our given rate of calculate, in holiday optimizer industry. fragmentation too of The schedules, to humans

legacy increasing of by Variant Looking where XXXX, on revenue we result to have Technologies. continuing continues take Variant as growth are to load to OTR in which sequential fleet questions. grow and driver and reached total focused the ahead success weeks continuing the the few With ultimately truck results. position the outpace company will the growth tipping fleet count coming shown, over the count will of that, we the to quarters. contraction the be financial believe in long-term last operator, will And have we point finally, grow, believe ready to for Xpress we Variant’s net We improved in are and

Operator

question Please of first Hoexter America. with from Instructions] your is Our Bank from [Operator question. Ken proceed

Eric Fuller

Ken?

Ken Hoexter

Hello. Yes.

Eric Fuller

Ken. Hey,

Ken Hoexter

Eric. Hey, are Eric How you? and

Eric Fuller

good. We are doing

Ken Hoexter

provide at move to you can your just later and talk until faster beginning that bit countering driver – saw increases. with more especially in good pay period, raising a capacity. carriers Can rate you on at but to to the their afternoon, that aggressive start – yet this waited bit We maybe a environment do you noted the about to you of little obviously

the doing you or – another Should environment are up rates overhang expect you now? are pay just just given raising catching new what So, we this again? again, are

Eric Fuller

not we to there can our look, compensate drivers. little Ken. and order an bit And a that that and the mean, at No. get a previous was how and properly area performed where needed in – did back I catch-up admittedly we rate quarters look effect, was we we we of go always our

And increases now But effect, did rate we increases a are And increases maintaining see comfortable. point a end that on like so an from relation where some out that increases in that we small improvements. those we we while there and additional some are be shouldn’t that cost driver at here from up to rate rate would go giving didn’t timely increases was get as prior perspective that getting we as rate some we should feel area and those in rate like. are we to

Ken Hoexter

are driver I So the... – more said increases on am you rate rate there small increases so or pay – still that sorry,

Eric Fuller

marginal real is in that increases some is to I won’t it’s happened – always environment, time. increases mean, there there will any this maintain the that in have I rate pay and say be cost But next – significant able be the that in going really rate any there I quarter. mean, we into forward area. pay and be what the and there both don’t happening in think is And to will sufficient we margins

Ken Hoexter

to rate the here It into does move end I XXs? from go seeing upward like what in – this through you weighted, now that now be valued are we these quarter, back take next do So mid-XXs if so year a of you it should great mean, XX? OR, you’ve far are environment, around out if seems where

Eric Fuller

think we are two It comfortable took would are a than perspective. quarters mean, are a longer mean, perspective, I dedicated rate we where I very us we from I from we there. probably like.

here from So to and like for current necessarily place. that we a a going tweak but little environment the There always part, a that feel perspective, us few there be for get we’re longer, there, most with comfortable dedicated accounts we’re have rates in. in it rates we the may the not the is where but thrilled tweaked, There’s are. took and

Ken Hoexter

is that just I’m kind enough sorry. And XXs? you Or incremental? thoughts? you did of Is out OR get on hit want this upper to of this moving Okay. to the

Eric Fuller

I improve. think going it’s to

You our the it in makes rest of or XX% Dedicated, about about look revenues is of what the growth. at It up so organization.

count. we right we’re it track. strategy. key story believe daily right a continues be almost we earnings. to to feel that know modeling, next we the count to that going key in and then in good So our We and where basis exactly as we to want We think that’s the couple And their we’re we’re strategy. to in truck Variant ratio add years. it’s the within continuing We focus that operating we continue on be And the really as grow. and improvement, prove that’s And the on our And growth our about long – truck the future. we’re of Variant fleet, to our our on the believe to still it’s out and

Ken Hoexter

if One I may. more

still walk understand Just other on seen you how this we’ve to for surprisingly, a anticipated, the brokerage. strength the through just understand gain growth. you given post on missed I that. they could in massive growth, market. don’t companies I a want quarter. just looking the just Maybe were larger environment, thoughts talking earning spot Yet rate of gains than about us you your post had ever

Eric Fuller

going Yes, one. I’m Gaurd Joel that Ken, to answer let

Joel Guard

straightforward as Thanks. Joel here. to I Thanks be for as mean possible. the question.

similar contract mix of business, proactively improvement and sides gross both that’s the the and reflected I We see performance the the is the in phase. numbers think for level our continue quarter. the for the of in on at to be biggest margin significant but future continued to that here in investment invest we sort freight

we the honestly, certainly eye a environment where the so over now long advantage but on with going towards also So, doing it’s took an right that run. future, are great of, we

Ken Hoexter

Thanks, it. Appreciate that for guys. Eric, Thanks insight Great. Eric, Joel.

Eric Fuller

you. Thank

Operator

proceed your question Ravi is next with Stanley. from Shanker Morgan from Please Our question.

Christyne McGarvey

McGarvey How Hey, this you on is guys Ravi. Christyne are for doing?

Eric Fuller

Good. Christyne. Hi,

Christyne McGarvey

the kind can in only little this a couple different ask taking Maybe clearly Variant it margin X,XXX, truck point, has count, flow-through hundred on question. but for a track question slightly for Thanks been way. the of now OR bit away a follow-up at elusive. my that’s I on The or

fixed helpful how kind kind thinking be that of discussed kind quarter we might how inflection about that? are of percentage dedicated it have cost the that So parse guys to beyond And the happening as the And that’s the target this dynamic about out impact there. should beyond a of X,XXX? guys maybe think you you versus

Eric Peterson

on your Hi, we’re this longer we question. to to is is term. one, focused Eric Peterson make answer wanted the that, point One

We’re investing right now.

focused We’re next on earnings, the pad, is that which where our as we’re means days working our on as XX are headed. not quarterly we landing

However, increases. dedicated far these of said, with impact price that the as as

to sequential in from at If percent, couple it second quarter, quarter. on the a our we’re you third quarter X% up look actually second entering where were we’re on up basis where fourth the a to increases rate but compared close the we’re we to

we constant. a – all than than so that a think we’ll And OR, some us will greater better things that XX have of zero, number help

we contribution count two go we grew had third we the quarter, Variant at our the the in first in and and quarters. from only looking tractors, into by the truck as XXX quarter, you’re Variant grown XXX If fourth by approximately

of quarter So really growth. benefit we get didn’t in third a the lot from Variant

that said, with weighted end the our already the third end the Now quarter. XXX at quarter, dedicated Variant. was since we’ve grown increases of in growth back And that price the just like at approximately our so end of trucks were

higher it have count weeks growth than overall something that’s transformation our Variant to last on slow accelerate. it’s impact to but X earnings. meaningful XX% down say it right then truck I has accelerate. in to was slope, that straight it’s our line, where a would overall more the left a accelerate, going a Variant I going at And percentage we’re earnings, then our revenue, And of you’re less a So started to during the going same it as seeing still wish of becomes to see

on going we’re Variant. been to through feel point We’re down of rates it fleet of sequential our truckload see more legacy growth over-the-road hard as the becomes about is tear And it’s the it. that the losing now a of percentage to we’ve – We improve where revenues, basis. earnings compared extremely a our excited like meaningful the

basis we’re the fleet XXXX. carrying than quarter of shown second the down sequential more legacy in growing since and we’re fleet. quarterly what a truck So trucks Variant we count in haven’t over-the-road our on And

quarter X And the inflection point so couple we’re but we not this times the about in of good next just and is next think come, over quarters, the excited to years. the

Christyne McGarvey

think expect ask That’s in year. through. about you you contract I it. to actually year, think next could exceed noted follow-up interesting next deck, you heading as helpful If comment think kind to very Got I of a through into spot rates the

curious what you there? expect confidence rates early can what’s giving be to any on contract And Just for read ‘XX? on we in

Eric Fuller

Yes. I continue. We where environment the see to we’re mean we really expect from this changing at don’t all today. that environment much

for where experiences when even part, things that demand up to situation probably index to conditions, slowing and I’d we think at has a away goes If months. the see on an but concern over there’s end issues do really the always X ‘XX, – half ‘XX, well consumer bit demand first And some and But that. more will chain second most we macro strong end just supply to a little down, on half up COVID like that altogether, the stay you X demand a whether of of down. really don’t at least restocking level we inventory look a into happen the there is about situation bit leads where say for people significant we of another in increased little slows

So slowing really down. see we don’t demand really

want serious can’t equipment trailers. have is We and and within it enough – On extent, enough about industry. it’s and to we do job. side, And with don’t drivers. We that people the find trucks the the really, all a to drivers. headwinds issue an driver creating have supply further But is about that it’s

see would I that the to across change industry. that that. And struggle continuing see entire We’re significantly any catalyst don’t

anything I So situation. until what get see driver be of a to recession. that’s were would significantly believe to to we think I change global more I going that truly don’t

us that going leads to this believe stay strong. to is And market so that

robust, a year to a majority, we So basis, fairly for year. probably in as a entire are regards big contract premium, percentage as rates last on to relative what to a maybe healthy saw not rates, stay if the spot the healthy premium still but premium not going year rates next

been so this X% both contract. that side, contract anticipate that being to equipment, have some still in cost things the that creep, pay On other from single-digits, XX% We there’s think high occurred in range pretty a year. on we significant driver

also on And that we really think it’s XXXX. to see the and contract given that we necessary market for X% a increase so conditions rate XX%

Christyne McGarvey

That sense. lot it. Got of a the Really Thank for you helpful. time. makes

Eric Fuller

be Yes. Thank in. you. He Scott? should

you Scott, you I to what If apologize. Operator? know so, I I ask Are think Hey, there? can operator. happened don’t a our question. Okay. Hello?

for a think we’ve second. lost I operator our

– you in – please it you’re know to that and So before, has of know we’re those I’m never in were able that – holding about. questions trying you or ahead or to And we at not. are figure if – but time, then next go so holding out for to is system looks this question, of we if answer But not queue still because to think Hold the on. queue there items can don’t if we’ve allows quick happened Alright. guess, other of kind there, Scott and with anybody lost other talk kind I the can I trying we’re I questions the with Well, our move operator. don’t this real like there’s that this forward. Group, the talk

end the like still of remarks said our still the the supplement in would is like that Variant think in track. mention to year. over We the thing we prepared I believe going I around is that one X,XXX to we trucks by plan we’re be on – or the –

that. are for pace on We

of While QX, few slowdown related bit in little a have a we to a did items.

driver Obviously, situation has worse. gotten macro some conditions. were there So progressively this

added bit Since we that our little slowdown nearly did Variant. XXX of drivers growth. create so a a to have in quarter, the end And the of

nearly over XXX at added trucks. we’ve if X time weeks’ frame, so you And look

right Variant We net the over of weeks. on to and X adding holidays, we in rate can now we’re X hopefully. range, last, run think absent something that say, trucks continue So XX that a

a so growth we going trajectory And in that should QX Variant we – into really for we balance X,XXX, will put year the of the us and pretty end a give year the over over in by think trucks where well X,XXX the also entire believe hopefully, on of the continue us XXXX.

So we’re We is are still right way forward in things and our and think strategy on line. that anticipated hoped. we moving have path the the

questions know mentioned, also there’s division. And as about We Joel – been I Xpress well. Technologies in as pace our on there Brokerage we’re

in are We investment an phase.

continuing questions. our invest and right and direction. We’re our to focused a business, in ahead. I we’re in of X-year the invest in got growth, that moving on Go we’re couple build,

Operator

This is We technical the for do difficulties. apologize Robert.

Our Group Research. question Wolfe is coming from next from Scott

is now live. Your line

Scott Group

you me Can hear guys. Hey, now?

Eric Fuller

got We Scott. you, Yes.

Sorry about that.

Scott Group

Okay. Cool.

to basis – you So points – sequential or it just expectations margin more it? it. sure XXX just I talked about around about Is less just help know few put some just improvement. a how I’m times the think you maybe Can not

Eric Peterson

I we’re all Yes. when as that this we can runs. rate And it’s mean tractors, that we’re this where a they’re give for model, Right with to basis and if management grow fixed points – the increases, percentage that on up, that now, It’s alone. on. XX%, plus a team, dedicated volume probably hear XX-day we looking scale. at rate could because a I a really doing guidance improvement ending of as with think just give our to XXX it’s focused really things – on those revenue, count I have your going to play then to tough down come as landing those And Scott, increases constant, it’s XXX points to from pad know, you cost foundation us these those it’s me there’s of XXX you, scorecards heading you’re what in too basis high. varying

keeping scorecard than So with we’ll this the our but on focus others, and of safety industry have on that transformation, we we’re is low our than more are and growing disappointing wanted, going the at take Keeping than more turnover on have a in people truck turnover XX-day we’ll are Variant scorecard lower experience relatively term numbers basis, And care significantly the stats sequential longer quarters the to the focused that’s looking this count. perceived driver that themselves. average. the

Scott Group

that on Variant, mix Variant between and down? Okay. versus Just to obviously going is the trucks? legacy but still Are because it’s is utilization utilization we more still the seeing big more going delta not

Eric Fuller

Yes.

We’re per the week. per revenue really measuring truck

it so per And see we’re to optimize per we revenue that truck continuing for as week delta margin. to as relates

in the per feel right still like our we moving I so in fleet the we’re fleet, And said, our in truck. Variant direction to truck regards to legacy older and regards revenue

is going freight best give watching. that, So in right Obviously, that’s today we’re the to really is component right that’s the being that’s we’re for. the us a manner item utilization that the where of result. but optimizing also able And priced optimize to

Scott Group

Okay.

in trucking quarter. was what’s The going last other second revenue from lot Any there? color year’s on on up a

Eric Fuller

components – we of Scott. – don’t that a That’s break the individual revenue. out But

truckload So necessarily to operations. are direct just revenues yes, that miscellaneous related increasing, not it’s

Scott Group

a sure that – just new Is run-rate continue? so... I’m within what’s does segment, this not even I’m – this

Eric Fuller

lease not will run as continue. program types And that think more that independent Yes, It’s continue. revenues truckload tractor to is per an rate of percentage revenue overall that those But rate bucket, what’s in expect I our revenue yes, miscellaneous and can our run revenue, those week. you from are revenues. in stats, per our contractor

Scott Group

– the on the thing, side. last then driver And just Okay.

you’ve any mandate will just think your and some marry respond is how in in up I you like that sounds things it not vaccine a pick of with improvement driver there kind bit or may the market? So little Do And you seen last weeks. may to? few thoughts then on

Eric Fuller

Yes. Yes.

talk the peers that has gotten the first of we mean the better. not the has people, especially private market on to environment better. of a lot gotten with I’m I of peers, So lot hearing part don’t think and question benchmark I and a

keep But somehow point the improving that loosened in regards and I in hiring are that not where don’t think done on up seeing that that ruling. Now the also So OSHA because reason driver I – this put and issues the are and from we some things growth. some hearing us, or the plans our have waiting vaccine we’re some next at to so. a some it’s we’ve week condition is In things helping imminent improving processes that’s believe that we’re of mandate, our I we together others. the some over are think market we is individual business hearing attrition situation place

are that see want not vaccine have out I love the that a know drivers see. do feeling truck mandate. truck going anticipating We of a this We carved would I out, drivers had carve-out. be we are to something being mandate. to Canada And but not carved were get that I drivers to believe

mandate the So the we’re we yes, we’re concerned. suspect, out if goes way waiting and anticipating

in those I want reason that by this a this told is of of do, amount of to to think personality they the don’t are drivers and their industry there’s kind and items. be a necessarily the of to of kind is one migrate way fair by they nature nature what

to What’s okay, pushback so What from put at out, fair it’s set working what to And significant up? that know test this guess, process? nervous think don’t definitely we we’re to will we’re but how we on I And probably something you, figure of But the are at Scott, it’s would going on I kind going we see And we’re way the basis, trying population. answer, going of if about, do? are point, it. the a to the to I to tell a I point – I weekly you’re pretty it. driver so have

to that deal we it driver large it, as a in able and be handle order we pretty forward. the it think way go will up come population with but on have to I with a impact could

Scott Group

supply thing now? are right what And maybe what if just government quick. hours is And How anything, chain? about are of you trying hearing, – given you do to then the last real service

Eric Fuller

people for or Secretary made coming at a decided. some Yes, know couple even believe bit into of regard. aware substantive the that’s there’s talk of been a that Transportation I of driver I And – not relaxation point of set this industry. has little of in been I that of requirements the hours of service or comments either anything am relaxation about

at the there all I been go that’s everybody just anything we either get So, really think that has see of don’t Secretary if announced or even point, into have from does really And waiting is to effect. And something and note. heard. believe it’s I dialogue this point this is at ATA

Scott Group

you, appreciate Thank Okay. guys. I it.

Eric Fuller

Thanks.

Operator

you. Thank

from Stephens. today question next coming Our Atkins Jack from is

Your live. line now is

Jack Atkins

and Thanks great. afternoon. good Okay,

Eric Fuller

Good afternoon, Jack.

Jack Atkins

transition, us stack walk the to third And and report So, have I it X-year X% the Is just you Can about When per of improvement just stack ‘XX, basis? OTR a mid-teens. up question my with understand to quarter headwind? last X-year benefit truck takes year I I XQ think week first maybe teens, not on a of the to there revenue that type the out. sort there, a revenue we are trying little per guys puts take through per miles segment. are or seen you the understand guess in look versus kind per maybe utilization some a of the we do week growth volatility other there. sort in per seeing of X-year truck of stack why in folks it’s aren’t having is the truck rate of of more rate seeing the at of I terms why

Eric Peterson

fair Eric is Peterson, question. this Jack, Yes, a

This you look think at versus over student organic remember I no of we When with Team of more feeding a longer feeding the you are today get need creation was going a our transformation on division to drivers. you it road years student run ago, that with drivers, the that we if think are X the Truck. where I overall division division is basis. that weekly miles to

that on don’t it’s by as super truck where design going it’s on what as industry basis. team the part more is Number have is in doing and it’s we making miles is, students answer generating not it But comps solo intentional and teams, relates fewer significantly asset in the right. our fleet. like – and look we have two a the for you our weekly the exactly of what’s utility, So, to if much are like those improvement of you Variant have there a

our most hey, And Variant yield. best If the the doing can at not week. the create you optimizer look rate. both on the now combination it’s of saying, and miles miles in It’s fleet can we get it’s what you is this that’s go truck this hey, the a saying, how

of qualitative doing rate probably as you as that when our shows think I mile, will comparisons, far up those of so instead some quantitative my see answer. this where per And

see per have what on increases spend offset You mile rate months outperforming X-year to utility. our the probably and done is that will over on XX they

Eric Fuller

truck the have keep net we building count in down growing that come And component had in our over last process has year. ceded the back. and But too, we are mind, of

number that’s well. as on And so an effect having that

Jack Atkins

you by walk faster XXX brokerage of would are you I you the you business? that an And Okay. that. when quarter. saw business sort I years understand a that’s level it growth? taking volume? in how Can more am invest have the exactly as trying growth there, I guess of what mean that as with we growth you about question that? investing breakeven – a house. follow-up for kind say am just the going scale have invest that guess, what for at to keeping Got I And a the look OR couple of Is side maybe would Joel you for means OR, of it. the little doing call bit is exactly do What on growth because talked mean mean, us – to I next, through you a expected, breakeven over mean I we I than that volume phase for

Joel Guard

A couple Jack. Yes. things, of Sure.

acknowledging brokerage sense, it from. I thing been maturing business is think some with historical sort the In competency a start the historical biggest leading the of of the that a has just to business. for context that hasn’t been always

underlying of for work right. had do had in fit with scale, so a it get operating really model the – to some to order it we And kind

health the to-date the portfolio, of to bringing the So, refactoring operating like in kind like been some that of a better of things of really has a transition so in grow had model, we things some fundamentals the underlying freight investment mix, level into. to foundation

in really on to team and headcount building that growth about A and be three enhancements in is as is proprietary think quarters and a sales lot or our go-forward growth carriers in to stay dedicated within and as the the enhancement investment able products for or the in we over well of technology technology quarters. basis proactive of the anticipate years the our last layered we that of what’s shippers, been front come. four our group As employees to to operations and this

really are of right. high those So, kind the notes,

going volume we up front just So, level the future out the for things proactive in we believe been last quarters. year, from investment of X.X at over take perspective that then sort the sort yield root doing setting getting in additional of of in have through of years, we will have been and transformation an And to foundation a that operating started underlying improvement scale. as

the the function are last is of a where So, is unhealthy course of foundation now into. over that volume really quarters. in to we comp trading place the winning ready business some [ph] And a few be

Jack Atkins

next drop And brokerage, subsidiaries scaling you truckload carriers think their scale thinking last operations operation next couple of that business, really XX have to we the hear. over of Okay. I the as opportunity couple that some power hook years sort with brokerage the and years? over great seen and guess you only about your for months. That’s of other about How or are

Joel Guard

drive being nexus to for the it’s think Variant. I truthfully, to selectivity able additional Well, Yes.

radar. on absolutely our it’s So,

of things that don’t often majority, credit think seasonally, the we power-only volume. I is we on where the overwhelming segment can XX% our for business make today. that that to between is one anywhere the externally Brokerage daily ourselves of not supporting our XX% give it are extent and enough but the It’s depending up

seeking there to is a are there So, enhance. competency we that actively

in knowledge company, we power-only our some within hired talent go-forward sense product and from have outside but some basis. upon roadmap on of huge part already, a tribal but scale our a a the the We formal of help to absolutely have a industry build from of

Jack Atkins

sort terms you driver the then, Xpress’ hard broader I business turn But comments pool, Okay. vaccine think truckload mean on and market, have mandate. it drivers, in That’s just how Xpress the Obviously, a of sort about would some helpful. it I ramifications over. U.S. mean in guess it your lot can back expect the affect you you I will to do color Any unknowns I of do I particular? that your and would question it’s would for industry. broader know specifically. the to on add? last And think there? of you speak how that your could impact But Eric, of attrition U.S.

Eric Fuller

that the industry to may concerns the there population Well, could enough think the I to X% leave there choose of people XX% number from elsewhere, can testing get driver I to a were some occur the not small that to that If carriers leave those a there larger because meaning them go would structure even vaccinated. maybe they much drivers of steadfast not were that talked with have may as sufficient lose industry accommodate want that may that some And is X% as to absorb excess is that get capacity not carriers. to that there tested. could and or not is

pool of a so everybody. to in our X% affect driver would And fallout XX%

are were to are would do. try point, that, mitigate very area is of think that But that prepared it difficult driver on lose working we something to to occur. It’s of we it I to this of drivers at that. today And don’t some operate think we I industry we have be know area within in. even to that the could that we could and the ways X% already an at an that attrition concern are catastrophic. is how that levels at, absorb fairly the If I be we

Jack Atkins

be really Okay. would And that tough.

time for helpful. really so the guys. That’s Thanks Okay. much

Eric Fuller

Thanks.

Operator

you. Thank

JPMorgan. Ossenbeck Brian today from Our is coming question from next

live. now is line Your

Brian Ossenbeck

guys the bigger a one the for am to sort on question in about just potentially to my industry, or given push Maybe traction up I catastrophic you, the surprised guess potential mandate impact taking hopefully, here. more some weather it vaccine we wrap exemption. just isn’t Thank why I of said get

Canada. You in mentioned one the

the were I out the truckers from exempt came mass earlier. mandate think that

are – Peterson seen you to works confident have that me, something have that So, isn’t but for. pretty you there hope pretty, excuse

on elaborate please. maybe can that, So, just you

Eric Fuller

There I not the very that involved. is concessions not is mean just been some trust out sort are isn’t and to in are involved There a is this going likely. carved that lot at there ATA point No, a feeling to get or of Yes. have with I to say me. try others, scenes that very push the with drivers involved conversations behind to ATA in is trying get all drivers. carve-out others that very many case. for a on Unfortunately,

right. having figure we are now deal to it, so to with how And out

standpoint bit of make top it back have the But of there where are I out say hearing. come – conversations But channel. supply low, back no channel we fairly point to is we some are other and of my carved tomorrow it And occur. with but all be it of trying just me things could would a and real happen. confident that a surprised that everything things that could from am economic an it’s we I – And little with political give back hope and lack at is not hearing So, does the are that chain drivers just being we if standpoint, could fine. we could both confidence a and that given mind, be of would

figuring mandate deal with driver to have are getting the a go it. on ahead So, to of some are And and starting out results we that pretty could, could effect, we population. seismic and into how if have for conversations it preparing

Brian Ossenbeck

Yes.

you there top you had wondering was the all a but felt goal haven’t been there lot or Obviously, going like the just I of So, traction have has I as supply would the a push the industry if much go against surprised this traction? had administration. mind pushing, chain with different that of is on, kind am of much

Eric Fuller

Yes.

Brian Ossenbeck

Okay.

about general, just some on because things just of in can and environment, some happened acquisition are slowed in the it the last if what reaccelerated. you it of progress follow-up maybe quick you quarter the Just elaborate can turnover. look making And a drivers down did talk in good this and maybe costs pretty you Variant like quarter-over-quarter

So, on can if elaborate you that?

Eric Fuller

Yes, answer alright. Brian, I will have Cameron if that, that’s

Cameron Ramsdell

the is Thanks for question. this Hi, Cameron.

definitely we absolutely You to point a that turnover saw right are uptick out the small quarter-over-quarter. in

really in about As $XXX in talked from the exit Atlanta revenue dollars Variant X remarks, from to during a rate. million about grown – we we the zero start-up as to have forward-looking last essentially years earlier in year run on at trying the revenue a

fleet of the lot in think our of report pains our identified had added add in experienced experience. can period eroded that team leadership number growing to quarter. as we of throughout am to really resolve imagine, in I have short drivers seeing them. I nearly X,XXX as tirelessly when a a is are some QX growth accelerated drivers absolutely problems, driver QX that happy almost that’s the So, is these essentially to we and you we the time, entire What what worked same October, And the where you you

I a So, like are behind us. feel lot of those

continued growth the very feel confident it We base But driver of very, are we watching very closely. in now. the

Brian Ossenbeck

you channels retain find Any to them? get these on the folks and Okay. costs acquisition to right comments as

Cameron Ramsdell

Sure.

costs. model So, think that the unique it And two we primary One it’s I they variablized. have acquisition very have different is entirely call We Variant. the to to from Variant and very recruit we channels ambassador model. drivers

a it. cost. that’s model This a far over many just recruit where ago. comes little we valid our through very out go So launched we acquisition and to XXXth at drivers. again, hired – have year we week, have that And of driver evangelized a program hired drivers That new a we lower

in took drivers months. that hired about the It And X.X in figure we months So, out to XXX we us how XXXth did our have some first now, nine tremendous get are to we and about seeing acceleration. program. through that

there. that variablized Again, the a Xpress really far broader model, So, their bringing seeing kind acceleration media share to drivers. we U.S. the less traditional some and programmatic on cost industries of of than rely spend lion’s it’s the are it’s in

Brian Ossenbeck

then And question. quick last Okay.

deck. Variant, If that how growing slide you commentary can with I you into benchmarking through tell these some can saw stick just the you managing if are of us and pains

points basis I its OR quarter-over-quarter. think improved XXX

you continue tweak impact the seen externally? the don’t that But that you to measuring the you as benchmark how scale compare optimizer. see have and internally are What do of fleet? we and We those

Eric Fuller

Yes.

say you net two of that X% result to were that something on about right rate over as those lose able those a the levers, factors loss earnings are is cost, points and X%. continue optimizer. to third utility, – basis compared that’s would market. look one-thirds far I to of is X% We to increase. it to forward. comparable and third As increase and get utilization. our overall And various take you the better all quarter XXX The a going we tracking by smarter we There smarter was But in fixed you as that on variable really the the with combination in when that at in where us and rate of it’s result what second that offset two-thirds that cost

accomplishment, macro more of in mirror to that’s consistent issues think issues. our environment. I own that – of that’s so that a a and we And something about on more talk macro always I mere And did me,

Brian Ossenbeck

for it. Thank appreciate time. the I Okay. you

Eric Fuller

Brian. Thanks

Operator

Thanks.

Raymond is from question James. next coming Felix Our Boeschen from

Your is live. now line

Felix Boeschen

everybody. afternoon good Hi,

Eric Fuller

afternoon. Good

Felix Boeschen

really to think last heading these there? I meaning some picture Variant how a just understand been And like investments continue you an cost we should think big close we better the forward? outgrowing maybe how Variant refine that quarter, I the point, should Do case? you inflection have one, is as only base. tech It XXXX fixed just to its about still think model about into the going have seems one. tech around might these but to investments we It’s of want

Eric Fuller

Yes.

inflection some there. And growth, bit right. we difficult us said, macro. are little It’s problem got I a think QX growth environment point. a for and from count kind created to have but it mostly of was have to we was continue just right And And an truck we extent of solved inflection think point, we have it for of figured reasons, issues. like of that number I that stalled on top a an I that the that out out,

necessarily grown And so few didn’t get hoped for hundred the benefit we that had we had more trucks. a we

will like further outdistance in We inflection think we point, QX. we occurred grow, are now that as And which to growing. ourselves we still we from continue feel

will so within of the It’s we see technology. for system be increases. of one most else. this as I model In see so for that’s those start the technology away with run continue. deals the do think that are all incremental always investment, to continue, trying we continue not point one bottom rate But to to QX we go an we rate the run that think go the mean grow, model, regards are iterating There something to might a operating then that will will a we forward. that rate at where building up necessarily is type part, be will is And the we and But to going that investment This have and growth versus forward much. move as that continue. a results line. are inflection and I you further going line and going where out build investment are we small comfortable to to at don’t the at always feel and in IT we where have team, some a again, be move investment occurred to think as that’s start and I continual fall we that move healthy way place we in it point benefit and continue. to we that look to bottom that will forever build And you always run

Felix Boeschen

Okay. That’s helpful.

it all cost the sound doesn’t additions spreading above fixed much side. count that on about So, It’s base that tractor change like cost now?

Eric Fuller

I on be and – the we basis. That’s at. always is increases Cameron to really I to said, a small that’s maybe Yes. be going where have I nothing some – there incremental going could add starts there, here to at mean got dramatic as needle are there a developer have like to but look move

to Our this outrun we cost is, now got cost our a at perspective. where and growth point, it is just from

Felix Boeschen

Helpful. I appreciate it.

Eric Fuller

Felix. Thanks

Operator

to turn reached back management at the of the We I you. end like for any comments. our over to floor session. further Thank question-and-answer or would closing

Eric Fuller

you. Alright. happened. what Well, apologize it. not that. technical That a sticking little everybody issues, thank Hey, bizarre, those exactly through sure but really I But for appreciate got through we was

concerned, So anyway, are far Again, quarter. as as next this are about to recap to talking I forward look pace. on more just we we

strategy perspective, maybe are in but happy results are in our an are growth earnings with we around with we the from happy, happy Variant. We necessarily not where maybe our

about feel And Dedicated us we Technologies, forward. the in we we but are getting maybe strategy around very painful A division. quarters where we very our confident around couple we feel happy now today, our little are are are and in move are where the point rates growth process, next where to as the also of comfortable We division. of Xpress Brokerage happy our our about our

again will to appreciate I the listening so it days. call. we everybody much. And So, XX in Thanks do

Operator

and conclude does That you. webcast. today’s Thank teleconference

a at have We disconnect you You your line time today. may wonderful for your and day. thank this participation

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