- Earnings call transcript Q3 2022

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Operator

Good afternoon. My name is Devin, and I will be your conference operator today. At this time, I would like to welcome everyone to the U.S. Xpress Enterprises, Inc.

Third Quarter 2022 Earnings Call. placed to been noise. any have lines on prevent mute background All the be will remarks, question-and-answer After there a speakers’ session. [Operator begin Instructions] your may conference. Matt Garvie, you

Matt Garvie

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

information other Our discussion are forward-looking statements. forecasts today that considered and includes

to our results Form While in of outlook, update These current a these We forward-looking subject that actual number most XX-K and are cause risk reflect SEC. to the to our statements. undertake and uncertainties recent statements with U.S. Xpress’ described risks duty they no obligation materially. filed factors can are differ or

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

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

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

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

Eric Fuller

begin the a afternoon, as provide that to everyone. operating the reduce sheet well fourth profitability Eric our also realignment quarter. and At following and announced significant in Since annualized quarter, business plan I’d that to annualized time, realignment business, Peterson million begin will good in designed our we flow, for quarter. across shortly. to on improve out in our to we plan, $X an leverage. financial our out you, as those the balance will Thank see actions we’ll results the on earnings million quarter. provide announced drive cash cost on that already time, commentary I’ll taking costs the Last Peterson’s We’ve the $XX fourth of Eric month, estimated outlook company, the we’ve to high-level those Matt, identified costs Today, like in benefit and an an provide discuss more update reductions. fourth and we detail taken the costs additional of

realignment on basics plan freight to to out Our really in high manner. blocking allowed business. level focusing customers and designed of us has It at a of cost-effective tackling costs allow trucking, and and significant service the a to back to was us our delivering take our get for

spend several coming at is hosted understanding direction our customers Chattanooga. about of and During customers, on value customers we announced company. well. are relationships in to XXX positive, proposition the the of here evolving than their quarter, more time our was people, we our great Xpress. key the partnership was Customer summit in It Feedback and from with person needs Summit including have them U.S. updating deepening with constructive to plan, high resonating Their back-to-basics quarters. is of message our we the Since had our our excited over look forward customer and realignment the sentiment the conversations have we top who

and XX us us or positions service of have the leading consumer economy, for non-durables customer including retail a which our been focused grocery, well industry in current than the These discount our on retail, our segments and companies heavily use years more As more with defensive in top one reminder, is market. mix offerings. customers of

U.S. year, and to new value demonstrate customer Xpress. throughout new customers the logos added partnering successfully support our base with of and proactively has team development business excited the these we’re Our to

net of an revenue rate Turning of was generated fleet. to in from mile increase our combination year-over-year. The $XXX per is increase total fuel Truckload million, of quarter XXXX. the OTR XXX in revenue a growth an primarily XX% tractor and of our in increase of tractors to truckload compared third truckload The we segment, additional

business. also to We growth the our we overall In our of performance. financial the saw importance past, about fleet in our Dedicated growing size spoke improve

size. with mix realignment will improving combined associated tractors, and more current initiatives, However, recent profitability on and takeout we than at our the focused XXX with additional be announcement our cost fleet

our to OTR Turning division.

third As quarter, entire under with brokerage a Services our our division. created we Harness Highway realigned the OTR business operations newly our reminder, Justin during along into

financial increasing hit the the improving focused and truckload turning customers over which OTR the and fleet, his of months the Justin operating running improving new in higher quarter, performing division our the Dedicated around to on for improve previous levels overall was back XX third the more instrumental trucking drivers. getting is In our ground to key included progress which driver made performance driving retaining miles, accountability results. of utilization, basics we our availability, has our lowering service in percentage of and within our role the empty overall

drivers professional to and improve coming ability quarters. our overall our of expect plans has in hold we Our quality size fleet source with drivers the our to to OTR qualified improved, combined steady, professional OTR the

we see need driver further Finally, more to to availability, book improvements in freight utilization. with increased

network successful were more loads in the in mix, contracted we our to of terms quarter. In adding

sequentially. to consistent declined the the up However, not mix of a with fought, per XXXX, our truck keep and has at the quarter. second was OTR count in freight Therefore, their quarter fast overall contract with mile growth enough X.X% pace revenue

received to in expect back-to-basics quarters. coming the to which has business, more continued make and contracted crucial Our customers well we been winning by is sequential progress approach our

margin division are continued to them attractive profile staying current our strong high to level our close where our its careers customers high grow, providing service additional and dedicated maintaining identify with exceptionally our and our for Turning a offerings can opportunities the we drivers. in levels professional at while our in we Dedicated, Dedicated with Interest customers. to quarter execution for service continue

We incremental margins see turnover. responsible continue opportunity truckload accretive in in our Dedicated, dedicated improvement to improve to add modestly to be tractor and driver to earnings. growth, utilization which lower to see We opportunities count overall modest would in

brokerage. to Turning

Our The the count segment out quarter of revenue a broker in primarily of due revenue was to prioritizing year-over-year decline freight. load allocation XXXX. $XX and of million to third overall fleet, compared decrease generated freight asset-based XX% Brokerage less due consequently to to our lower

from market margins. to to a benefited plus However, XX% gross capacity this acquisition quarter which consecutive again segment the contributed conditions, of once costs lower due soft second

flat to our be add volume overall to brokerage growth, we that brokerage. fleet are it the will sequential network, to Given to targeting we line want accretive in if our top segment. grow continue more We

a profitable Eric the and target only we call OR to this However, we to continue that, quarters that do I going are over in will a with manner, And in in business Peterson. turn mid-XXs to ahead. the

Eric Peterson

Thank you, Eric third I everyone. and well quarter Eric, guidance and performance as outlook. market discuss provide in to allocation This some good call as to would financial priorities the provide afternoon, like capital before afternoon, back to our the our financial turning

by in truckload million, revenue partially decrease excluding quarter. performance of the our year-over-year. revenues to Increased increase of third Turning We brokerage offset an fuel $XX.X of segment of a generated revenue, $XXX.X million million. $XX.X X.X% surcharge in were

high a the importance was a Turning recently adjusted second comparisons. which on of stated calls, once all We’ve I third and recent to sequentially decrease improvement a sequential sequential record prior prior focus two adjusted Overshadowing XXXX from will with plan, primarily the and $XX of commentary unexpected that accidents, operating progress was $XX.X and again on in years. my from in realignment $XX.X due the announced expense, adverse in million quarter. claims loss quarter decrease developments million, loss. occurred from which claims we of made operating quarter Total the was million large to our of the

have settlements during the were accelerated in started pandemic In which the addition, delayed backlog clear. cases of to have claim

previous improve still basis operating levels. In that expenses preventable third of second our our general, insurance of quarter eight-quarter on was these are the quarter. mile Positive the XXXX Truckload has safety expense with dedicated from overall premiums claims third XXXX increase the unexpected income In as our million, and the our to XXXX. of across and rates. in our record operating Despite claims a fleet eight than contributions and per $XX.X overall adverse sequential in remainder XX% an adjusted our Over lower developments, continues accidents $XX.X the quarter, to per quarter million growth fleet over increased quarters, were average. $XX.X insurance consistent our expense compared to million averaged and segment included

rates, in first and offset this equipment market the progress from these the third contracted adding of loads OTR positive modestly declined could per mile maintenance-related were revenue to the spot sequentially overall continued made Partially from quarter to improving progress inflation. second approximately $X.XX in which mile. the OTR contributions the decline $X.XX approximately of total not $X.XX for offsetting the a While per quarter division and utilization, decline and second the

spot exposure with a vast rising of fuel As a as our fuel loads surcharge reminder, in an this have has mechanism also the our expense the to a associated on service adverse due spot majority fuel market net environment, it. we don’t impact

in $X.X miscellaneous million Atlanta related which our $XXX,XXX to terminate our also severance-related in million expenses. realignment $X.X charges unusual included We expenses, including lease plan, in and incurred to

negatively $XXX,XXX additional prior severance no quarter. in in write-off total, reductions receivable, by an bankrupt in we to $X.X collect. quarters. which from incurred workforce certain In million expenses customer of initiatives a operating also And expect a We million expenses the $X related third these adjusted impacted longer

from As we million and million vendor-related of annualized estate of These and general buckets: into to out with million, said real costs a September, related impact did plan million. main in expenses a experience $XX our business. call in of other, more the have primarily fourth salary which three pull third realignment are meaningful of divided related but $X see action are to beginning Consistent Eric $X in already $XX and mentioned we wage costs contribution the earlier, taken on reduction expect early what quarter. quarter to not material initiatives our the continue cost in we

to getting better we of of previous operating and part the flow. as to earlier, basics, back levels As of drive Eric restore must levels materially said cash income utilization

company the In a our that drive taking realignment made a spoke plan, our growing the will business. model. disciplined We recently anticipated to With by about importance revenue we to in rightsizing announced we business costs continue the volumes fixed projects operating in leverage infrastructure quarters, capital the to previous out our back forward. of have good start into and targeting in manner, our structure cost demonstrate will of allocate

period same primarily period capital trailers, year-to-date, XXXX. was increase capital of million compared the to net due CapEx expenditures, and used which The $XXX.X $XX.X year-over-year Turning million sale lower expenditures net of to to were same the XXXX. from the primarily net relate of in to compared to for equipment tractors proceeds

realignment plan anticipated $XXX we on initiative equipment in is CapEx following: the call As the in in mainly million year-over-year little are two, cycle fourth deliveries one, stated September, than more of our The to in number conservative predicated and quarter. XXXX. less no expecting trade unexpected of reduction in we net our for XXXX; execution delays

In addition, annualized through Incremental $XX of reduced of are plan. estate real an reductions part costs basis million our IT already we possible by net holdings. our have CapEx noncore on divestitures realignment development as

with allow third tractor age conservative and quarter XXXX. XXXX. our cycle maintenance combination of quarter, the years us our two allowing the basis impacting maintenance and materially end remain age of on will fleet approximately of as the trade years program exit average we under more was young the average consistent third of a program strong cost to a the to preventative execute of fleet of per the our at which mile without The X.X fleet was Our end

fleet Additionally, the incremental mind a increase of than manner. in new per higher aging mile are that keep per disciplined in in equipment the our significantly mile costs cost cost maintenance

and past, we the a loan combination financing fund trailer of in leases tractor stated and acquisitions. have we agreements to use our As

allocation that drive business return canceling will forward, deprioritizing and capital focused other terms delaying in have projects either which forward adequate going allocating quarters by projects respective to timeframes In project. or we no capital the of on are the the longer coming

at current quarter, which to including at balances, was net the of define to million XXXX. long-term $XXX.X the of we third the cash million debt, debt, net Turning as debt, maturities end less compared $XXX.X end

Over leverage decrease overall divestitures the next improving our capital from non-core allocation a assets. year, to earnings, we expect approach disciplined our of and

non-core the company’s we flow we which end cash generated cash improve operations lower the quarter, availability for plus liquidity, Turning IT-related and year. facility credit first and to nine of $XX.X $XXX.X proceeds to of revolving liquidity, CapEx the we at from expect of months million, liquidity define third from the flow and In XXXX, the assets. the of cash under as million was from divestitures

Our to our on fund quarter ample entering the our remains current initiatives. fourth overall strong, liquidity liquidity and with position us execute providing business

As operations our and we from while our financing cash together lease day-to-day revolver, arrangements acquisitions. fleet reminder, our use to loan operations, to agreements fund a generated fund using separate with

to blended for to down approximately rates increase rates approximately up models, full full with the guidance, for your mile, rate XX% and the truckload For percent XXXX, Turning average a with expect the we year. assist year contract spot in XX% low year following: double-digit per the full OTR

on sequential Modest truckload truck in benefits to the in utilization creation year-over-year. our focus with from XX% approximately improving we increase Highway improvement as count and quarter sequential discipline structure continue that to our as gain rates dedicated expect Services the has profitability. the recent additional instituted division. we Flat been segment We overall fourth of

In and net year, before XX% and any expect the discrete expenditures approximately of million. full between million; effective tax addition, expense rate interest capital the following: of approximately XX% $XX we an items; $XXX for

With $X the cost to quarter are respect sequential third decline of in the that, wages, and the plan, mind that P&L turn in wages our majority expense outlook. sequentially Eric with Fuller currently million overall quarter. Finally, mileage-based. back item call increase which line a as savings approximately to realignment will from to salaries, office compared fourth are benefits as wages the Keep I for our that in of we targeting may comprise driver

Eric Fuller

Thank you, Eric.

of a are the season compared for In despite peak remains opportunities end two continues moderate to market the demand increasing a terms as and capacity years of small experiencing to in spot excess market, cost carriers. we fewer and combination the market overall non-existent especially an overall structure, last

capacity, of coming the to quarters fuel the due of we costs. continue in In spot the exit maintenance opportunities also less to expect we terms haven’t delivery a as are declining profitable, related to only higher rate, in result but equipment, rates, not evidence but and smaller costs, carriers insurance spot increased as seen market market including

addition, in extent In as equipment market, likely prices we headwinds this is market. new from To would the discourage market which dynamic plays carriers out used decline these well, will entering happening. the the anticipate already to

have an professional time to qualified the easier continue drivers in we Finally, sourcing market.

financial focused Xpress, the believe capital continued improve As in allocation drive to profitability executing for drive U.S. we control at are prioritizing cost back our serving on what we improvement on continued high initiatives level, and to our basics, reduction program can will business namely a forward. customers projects getting we to results, the sequential which disciplined our our

business to focus Our model. these of our demonstrating potential efforts areas key in operating are the leverage

we questions. are However, that, operator, fleet. results OTR with key to utilization the ready our improved to in remains operating And increasing take

Operator

comes Hoexter of with question Ken first America. Bank from Our

Ken Hoexter

rates something with to down just that you be XX%? say Hey, clarify, difference? expect there. you I want contract you’re Is spot numbers on a afternoon. dedicated expecting while the did going got XX% just such up was to I great. to I sure negotiations factor make a Good right of that want

Eric Peterson

Those based, Ken, year-over-year. Most Yes. is number this Peterson. is are that Eric of

for approximately to rate dedicated saying the be we’re XXXX basically, higher XX% than So XXXX. that is going

is consistency saying we’ll and compared fourth third. we that what of rate in basically quarters the to three dedicated saw So the baked quarter in see and

Eric Fuller

here. sequential see increase wouldn’t a dedicated We from of in Yes. lot

Ken Hoexter

was that, goalpost So then, guess, my post-IPO clarifying question delever. I obviously to guess the I for so thanks

the You’ve in increased past $XXX year. that million

flow, fleet. cases these focus can rapidly you thoughts what cash Obviously, on the no legal turn the unknown more about do. expanding You’re obviously that loss. now Maybe into talking on else

assets I threw there, you non-core bit you sell. think in you those. Maybe some about there a could can talk are

and amounts we’ve Just obviously, coming going it of obviously, rates the are debt rates keep more increasing to expensive so up, got in. spot gets

I actions you’re So can that working what deteriorating in be want environment see to taken on. just

Eric Fuller

Ken. Yes,

age shape a from really equipment I think One, in is an our we’ve lot good perspective. got opportunities. of

there’s as of I some forward. so opportunities lowering go we And think there look some CapEx our to at real

estate. also I some have real we think opportunities in

that We to our debt as looking lower real we’re help and opportunities that us some estate at have can well.

and there’s can of I a be that number. taken taken lower And so think be number will that to actions help net debt overall

Ken Hoexter

of there behind just that we shut versus you other Was systems what out look when got to something in less the specifically to anything opportunities I specific U.S. in threw you Is that. want down? you’ve Were Xpress? business the non-core? core to addressing variance understand should there

Eric Fuller

Yes, have are building And in amount that we it have of. to a on property value of it. we decent divest specifically, looking a we a – some has

And so that – that what specifically. that’s is referencing would

Ken Hoexter

you for as you your that little you next me, bid no how a And to you Is kind things enter peak. lastly as macro then expand – are of mentioned just view, year. stretch on season? Maybe up want there shaping thoughts into on

Eric Fuller

really I Yes, last that, of been is rates and over weak. I two at low. an all-time think up We’ve think the cost the I now decently, spot years. we we’ve are that that rates holding seen the mechanism contract is think environment market a I of that kind do mean, right think

years. of and everything parts So cost we’ve or items, the and seen significant over pay in went up inflation two be and whether tires driver really, number a it equipment last

it fairly is in that market. was the previously. And a correction so leads than what the cost we And believe quick significantly basis different to

little a with market think we supply – next next we quarters of or to maybe turn later start mainly have as – see of to so. bit with midpoint the start firmness some year, coming out But with slow into go market. get to start the probably two we’re think year, the to I another I we probably into

Ken Hoexter

Great. Great. and Thanks Eric. it. Appreciate for the Eric time

Eric Fuller

you. Thank

Operator

JPMorgan. Our comes next with Ossenbeck question from Brian

Brian Ossenbeck

question. taking guys. Hey, Thanks for the

insurance for This was another that back up. give a us the another a higher, to Eric time of the thought kind you but the amount decent Just claims popped claim period to there second. is average. go eight-quarter where had can you Peterson, I of

can lot these continue? that cleared cost us expect especially backlog the just ongoing we come you maybe of context down And of the part gets kind some maybe business, doing some of and as just of these pipe. a to should So you that give mentioned more of instances

of and going should of what And make you’re so more expecting these guess we I that forward.

Eric Peterson

say the severity over been I would Yes. standpoint, from a fortunate. we’ve very four-plus last years,

If that’s you And right, line we you put and limits our quarter go back a over basis. have up difference of loads you and of good can claims you’re with deliver the or think, retention that or insurance of you our expense, nature, I be happen that it that deductibles. and our on industry spikes. our on bad these where quarter, Is a two the one the quarter-by-quarter, incidents monthly XXX,XXX

of so our And program. safety effort a put – into lot we

record has safety improved over incredible the amount last years. by Our three an

mean over doesn’t accidents But can’t have down preventable are one. you XX%. Our that a bad

when And I happen if really spikes, so quarter an definitely look you ones, not they our those anomaly. record, you’ve predictable. we at this think But do do. they And anticipate when don’t bad having seen is the track but that’s

Brian Ossenbeck

rate when and to think kind insurance? it of your has run will this do affect go-forward comes costs And premiums – it affected you

Eric Peterson

overall of if million. deductible I Yes, it’s you $X the think premiums, truly an look at

really on up the the hook we’re for $X claims million. majority of So our to

would not future – impact quarter So we having significant on our a premiums. that this have anticipate

Brian Ossenbeck

fleet. margins path Fuller, get your get the the Eric for one clear about increasing is just utilization talking especially Then right. to improving, on OTR to to goals All

It environment like helps But of So a be in market? weaker can couple sounds seems difficult get better that chasing it bit a to maybe going a a you drivers, volume bit. a little you’re different of softer got so that measures. availability little like into by

to confidence there’ll growth is if And especially you it be get in to just lately. being had So pivot a because maybe service to that, – sized or challenges want to more to some chance able dedicated there you’ve what there some decent well. like thought seems as had see

you are expecting you does cost here? how pivot grow So Dedicated? And to what to And come can it at?

Eric Fuller

Yes.

the softer on this market, is your is growing and a utility it So like difficult. market in

very incremental slow but are so And expect of heroic would expect think improvement, that. improvement. but I sequential cognizant don’t I we some I growth, an

that – to were got availability things when I the Eric we managing level December of identified when driver down we back that our in One year to. and last needed to we of that the we Atlanta was not

being matter X,XXX at the right? around you it that was We months. got and a front basis by manage of how look a And utility end the couple in managed, our metric not points over arms so we change of of

now And that miles. so have is to drivers I have to the advantage more available point The with the it. don’t run there we revenue is take problem that freight of

going we’re it improvements, starts market bit. make to and so incremental to firm improvements incremental And will the small until utility in slow, a be little

to our side we of as As are this term it same Dedicated, we we’re to a the make opportunities able – level we comment would utility. kind improvement. require the point, dedicated truck of growth. about the At continue level more going But to your bring over-the-road we’re that fleet grow our we’ll degree. able for change be in continue significantly flat. to really prioritizing turn to count significant Switching market total contract keeping down business, we market a makes we’re our probably to overall We the some to our sense of dedicated in at is are think infrastructure to get

opportunities dedicated we today. available in don’t competitiveness a issue are think margins that more to the need little coming market this go in bit down dedicated the dedicated are there’s I we opportunities seeing, opportunities. chase is and And are

grow growth through I next continue to do to but that I the an it’s and year mean But or opportunities stay we the important terms with two. see that opportunities. we growth, to sense in, if see I our want disciplined of not we so grow. we the And we on to see to And but area will to opportunities grow, is some need Dedicated grow make – business. think it And think to for chase we anticipate do need we’ll we it’s Dedicated. actually, continue margins to

Brian Ossenbeck

consider One-Way Where And think back the do based fleet? you’re of if on you you were that would you at have? size things cutting to you it get now the the where need on footprint softer, kind

Eric Fuller

Yes, trucks over I think tough. We to it’s and dedicated like road. for the would trade

we that’s that move Over we bring So is truck if count we truck how could the Road forward. fleet we we and But maintain current continue our if Equipment down. need into at over-the-road going to our infrastructure think then look would our count Dedicated, the footprint, to our that

Brian Ossenbeck

Okay, understood. you for time. the Thank

Eric Fuller

Thank you.

Operator

with Our comes next Research. Scott Wolfe question from Group

Scott Group

guys afternoon, Good thanks. Hey,

Eric Fuller

Good afternoon.

Scott Group

would I quarter? my the profitable the about, costs do fourth that you in the is you’ve quarter. add truckload in back have been think third if truckload question So two profitable talked I guess, is

Eric Fuller

see like a got No, answer. that’s we’ve saw I quarter. in costs think think we’ll I One, think we tricky don’t I third

were You’re that unique those right, themselves. I situations will repeat think don’t special

rates. downward our volume customers. to are getting can rates in we’re while our see we continuing over-the-road However, our maintain maintaining the if we pressure over-the-road from some And

environment, in I we further harder bit continue that think a where near that becomes deterioration breakeven that’s But little be we can bit if – the rate see to a do. point. little to

Scott Group

about year rates road the think truckload What’s next your for how over rates? or best guess range to truckload best

Eric Fuller

any you say mean I year make is tough. And guess. going wrong, rates right? I to guess I is next anybody’s mean, for would think it’s be I

to I it’s note part of that think side over to year, that the right changed years. front costs contract but on significantly the of I the next there’s in two think important think little a some be going I now, have downward bit really the pressure last

don’t every And lot just item up. so rate give. gone about a the I inflation And to think there’s has line in

amount of from a you’ll that contract next think fair to flip cost bit short a market as into of I that of And think halfway market reduction perspective, come we a out dynamic of see of through supply so on that the and order, help pressure in because I there’s side. of little get see a downward you’ll will and probably – kind But kind the the year.

Scott Group

It’s how the see, we that prevents not come the We guess, rates think been so from they’ve falling. the providing from preventing you are Like costs we the floor up, I said falling. rates lower, that’s hear never – How that not for that rates just the inflation – that a to spot from hear spot is right? from interesting. everybody I come are it not spot? cost

Eric Fuller

broker I to mean think I down Yes, it comes the market.

and like nothing If you that And ever the we have, the the of six years, the or look supply that. that ever stay. I volatility of big brokers the day, creating volatility is brokers we’ve that And volatility, of And they to is the time last see here market. dynamic they at of for before. seen end least a in a that emergence demand the period lot At the on of see – about are think at, gotten at equipment created the have capacity true than what for end over they now part it I the creates can back standpoint. spot the true you front pie not think a something what looking on of brokers necessarily worried can five from just have buy larger really an just costs this

a kind b, they price may small cash, just understand for have revenue, guys. with lot to of of generating or carriers and So basis cost do and lot to stay proposition think is, – that’s a we’ll not the almost a, small losing problem their running there’s that any a keep of that these so at

to capacity. – continue carriers So the and going got of And in guys the you’ve of at And a I and will their almost to out market those broker I I are the newer quicker. creates of probably that got think think business. the own lot even of out market, it’s struggle. think They carriers environment that carriers in market go kind the that those pushes think end day, that I you’ve unsophisticated kill

Scott Group

just And things to makes about we minimum covenants for liquidity us any that just sense. Yes, need should Eric of, remind any be aware maybe just Peterson, we then in keep mind. just just

Eric Peterson

if Thanks place the for structure. have liquidity a very It’s right that we springing a thing now. do the one has have place Yes, XX% We Scott. of drops question, that’s capital a below covenant, facility sustainable availability. overall in in our

quarter, $XXX a liquidity is Right $XX And CapEx. liquidity our fixed that million. of of now, And have one. purchasing springing use drops so charge don’t below at our we of I for end the million, facility the

able relationships have we’re great with. OEM that captive We to do financing with that

we sight covenant million would to below So $XX liquidity dropping not tested. line ever do that have be our of with

that So up not does me that’s keep obviously covenant a perspective. night from at something

Scott Group

you think do CapEx net $XXX million? below And

Eric Peterson

we’re next be CapEx confident Yes, our net year, very year. $XXX will next that below million

Scott Group

there sorry. guys? quick, were real thing sales for quarter Last – any losses there you Were this on

Eric Peterson

fixed it’s I insignificant of in it a gains or of was don’t significant. me, was have It kind mean, market. losses. but not front I it right

Scott Group

this million quarter, went $XX Maybe... quarter. to million Depreciation up from last $XX

Eric Peterson

equipment loss. on would had some had – our have the charges. think of we – special that the I on losses we gone of special the that Those of Scott, I weren’t the more up, onetime our through necessarily fees sale in that of think write-offs some but some driving

Scott Group

model for forward? what depreciation you do going think So we should

Eric Peterson

consistent have it we’re front going I I our would in Scott. at own to probably of me, versus if lease. have don’t look right you say, fleet,

you look I you. our were just Matt inflation – say we’ve follow average, for average on get I to cap second what coming at us. Yes, have out. our had have So up if if can run back would quarter I rate, below at look and and the depreciation, what’s coming Maybe you the and our $XXX look million, am on a versus to going in the third CapEx tractors quarter by with

X% cash it, face out so run our close. up. see the depreciation and it you increase or the back And from so strip could depreciation think go if modest the of take rate you then – flows from modest, on will the gains in pretty That of I the a losses in call you to a and neighborhood get just

Scott Group

Okay. Thank you.

Eric Peterson

you. Thank

Operator

question comes Shanker Morgan Ravi Stanley. from Your next with

Ravi Shanker

again. Thanks

I cycle come the to or out marketplace, meaning that’s costs one if maybe mean these see sense But or back you to or or who now back? the does costs knows taking are Do previous to follow now. feel that whatever. to do So of come them obviously when do XXXX responsive like XXXX taking need makes like as out you back? kind you’re come like responses the up of structural volumes these capacity

Eric Fuller

really back our No, basics and to we’re performance. no I and performance growth, longer performance, looking there’s and I that the on margins now philosophy don’t. financial getting focused at – I we’re we’re mean, at really right is think looking we’re –

and deviate model healthy no margins And we’re to we’re out right from cost that has come this where going important level now, focus to so not returns. the reason we to and on get go to can to there, – and of going market but even a then we that from it’s back really if that overtime figure kind super

Ravi Shanker

Got it.

kind was in clarify, and exposure think? so your related asset-heavy third what maybe but the XQ just go spot you does where a XXXX, And question, do to quarter? that of And in

Eric Fuller

little – around right our around That of exposure a overall XX% that revenues. right was

be on want But We that bringing are I down. focused don’t to naïve.

in are a We really tough market.

new greatly balancing so little do and trying to business get your deteriorate doesn’t level – the getting at that bit of contract a so is a act. rate And

– we’re And what to through. so trying that’s the that’s navigate

slowly – it can we’ll the anyway. we that not Or say to down turn, and starts would turns. until heroic probably I bring but market So sequentially,

Ravi Shanker

a question can you owner-operator do lastly, maybe you of like kind think drivers truck is again just to your exposure of us a speculation some you of rule XX? what or And does becomes this question, that what Department how remind kind thematic of And recommendations of longer-term if there’s impact kind go through? somewhat national that that with guys the of does Labor

Eric Fuller

total in. we’re fleet. something pretty but industry I obviously, and an isn’t are about from concerned And not we’re less overly we Yes, it’s mean, perspective, concerned a a have owner we’re we’re than heavily invested exposure. that I of it small watching, very our operators our model that. mean, XX% overall

effect ourselves. that And have it’s to a detrimental major so one would not

lot market. amount the big the I think in I think some of long-term could be want that to their own industry. to drivers And that bosses. ramifications of a for it There’s want the negative a it’s that have drivers to be

the that capacity you change if of significantly negatively it as so take And real that the does that’s a opportunity think a us don’t away, I impact think market, company. and But concern. I would

Ravi Shanker

Got it. Thank you.

Eric Fuller

you. Thank

Operator

turn are Eric Mr. at questions the to back Fuller, There I you. time. no this call over further [Operator Instructions]

Eric Fuller

around operating that absolutely Great, thank this the your just time And I for are on focused that think margin, profitability. we’re high getting turned model right know a and We at you today. high on path. we

to do of We’ve had we some get changes quarter through into on But quarter. cost quarter really significant what we quarters, I other quarter with little focused on – of kind cleanup and out would we to items focus the we should and a also we’ve a through things a say bit get take our made is and this This have couple where cost some as items. was headcount kind next subsequent of as been quarters. significantly of

the time I think work to going a some have next to for bear to with. you income But statement fruit that’s I we’re thank few think today. cleaner your going over quarters. And

Operator

for concludes today’s This today’s attending Thank presentation. you conference.

You may now disconnect.

U.S. Xpress Enterprises (USX) 6 Nov 222022 Q3 Earnings call transcript