Q4 2021 USA Truck Inc Earnings Call

Good morning, and welcome to the USA truck fourth quarter 2021 earnings Conference call.

Speaker 1: and welcome to the USA Truck fourth quarter 2021 earnings conference call.

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Speaker 1: I would now like to turn the conference over to Mike Stevens, Senior Vice President, Finance, Strategy and Investor Relations.

I would now like to turn the conference over to Mike Stevens Senior Vice President Finance strategy and Investor Relations. Please go ahead.

Speaker 2: Thank you, Holly. Good morning, and welcome to USAT Capacity Solutions' fourth quarter earnings conference call. Joining us this morning from the company are James Reed, President and CEO , and Zach King, Senior Vice President and CFO . We thank you for joining us today. In order to help you better understand USAT Capacity Solutions and its results, some forward-looking statements could be made during the call. As we all know, forward-looking statements by their very nature are subject to uncertainties and risks.

Thank you Holly good morning, and welcome to USA.

Vascular solutions fourth quarter earnings conference call.

Winning us this morning from the company are James Reed, President and CEO , Zach King Senior Vice President and CFO .

Thank you for joining us today.

In order to help you better understand USA capacity solutions and its results. Some forward looking statements could be made during the call as we all know forward looking statements by their very nature are subject to uncertainties and risks for a more complete discussion of factors that could affect the company's future results. Please refer to the forward looking statements section of the company's earnings press.

Speaker 2: For a more complete discussion of factors that could affect the company's future results, please refer to the forward-looking statements section of the company's earnings press release and the company's most recent SEC public filing.

Release, and the company's most recent SEC public filings.

Speaker 2: In order to provide you more meaningful comparisons, certain information discussed on the conference call could include non-GAAP financial measures as outlined and described in the tables in our earnings press release. I'll now turn the time over to James.

To provide you more meaningful comparisons certain information discussed on the conference call could include non-GAAP financial measures as outlined and described in the tables in our earnings press release, I will now turn the time over to James.

Great. Thanks, Mike and good morning, everyone as of next month USA truck will have gone public 30 years ago, we want to properly frame the magnitude of our fourth quarter 2021 result in the history of this company in the context of that tenure the fourth quarter results represent the best adjusted quarterly operating income and adjusted earnings.

Speaker 3: Great, thanks Mike and good morning everyone. As of next month, USA Truck will have gone public 30 years ago. We want to properly frame the magnitudes of our fourth quarter 2021 result in the history of this company in the context of that tenure. The fourth quarter results represent the best adjusted quarterly operating income and adjusted earnings per share in company history.

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Speaker 3: the highest revenue quarter in the history of USA Truck, our third consecutive record-setting quarterly revenue, and the sixth consecutive quarter of record-setting profitability.

The highest revenue quarter in the history of USA truck, our third consecutive record setting quarterly revenue and the sixth consecutive quarter of record setting profitability.

Speaker 3: Our results represent an important milestone in the maturation of the company. There are still many elements of our self-help story in motion. We continue to refine our network. We are realizing the early benefits of regionalization. We continue to improve our revenue per asset utilization. Driver retention has become a sustained area of strength and differentiation. And our logistics business has become a competitive advantage as we have added expertise and scale to this high priority operation for the company.

Our results represent an important milestone in the maturation of the company. There are still many elements of our self help story in motion. We continue to refine our network. We are realizing the early benefits of regionalization, we continue to improve our revenue per asset utilization driver retention has become a sustained area of strength and differentiation in our logistics business has become a competitive advantage.

Vantage is we have added expertise and scale this high priority operation for the company, but.

Speaker 3: But an inflection point in our business cadence and business approach has occurred. A key message we hope the listener hears today is that this success is by design, has been in motion for several years, and that we expect this to be sustainable and predictable for years to come.

But at an inflection point in our business cadence and business approach has occurred a key message. We hope the listener hears today is that this success is by design has been emotion for several years now we expect this to be sustainable and predictable for years to come.

Speaker 3: During our 2019 investor day held in New York, we laid out a long-term plan that included an introduction of our new brand. While the company is still a USA truck, our go-to-market name was modified to USAT Capacity Solution. That subtle adjustment signaled a big change in how we approached our customers, our jobs, the market, and our comp-

During our 2019 Investor day held in New York, We laid out a long term plan that included an introduction of our new brand.

The company is still USA truck our go to market name was modified to USA capacity solution that subtle adjustments signaled the big change in how we approach our customers our jobs the market and our company the shift to capacity solutions represents a move to being more solutions oriented which in turn facilitates a service.

Speaker 3: The shift to capacity solutions represents a move to being more solutions oriented, which in turn facilitates a service discussion and resultantly mode agnostic approach to solving customers freight challenges. That change alone created a shift internally as well, to develop modal alternatives that do not rely entirely on asset availability, capital investment, or rigid historical constructs. The results have been fantastic.

<unk> and results simply mode agnostic approach to solving customers' freight challenges.

That change alone created a shift internally as well to develop modal alternatives that do not rely entirely on asset availability capital investment our rigid historical construct the results have been fantastic.

Speaker 3: As we applied this creativity and problem solving, we deployed our USAT Connect technology in innovative ways and created our acclaimed driver load board, which won us the CCJ Innovator of the Year award.

As we applied this creativity and problem solving we deployed our USA T connect technology and innovative ways and created our acclaimed driver load Board, which one is the <unk> innovator of the year Award.

Speaker 3: We deployed API pricing tools whereby nearly 21% of our freight is now booked automatically. And we partnered with technology startups to customer engineer AI-enabled optimized freight booking, selection, and scheduling. This same flexibility of thought freed our mindset to find ways to grow capacity even in the toughest of markets.

We deployed API pricing tools, whereby nearly 21% of our freight is now booked automatically and we partnered with technology startups to customer engineered AI enabled optimize freight booking selection and scheduling. This same flexibility of thought freed our mindset to find ways to grow capacity, even in the toughest of markets we were.

Speaker 3: We refined and expanded our power only offering that we call Plus P. We actually grew our owner-operator fleet in 2021 9% year over year. And our logistics business continued its upward trajectory in growing load counts and profits.

Find an expanded our power only offering that we call plus we actually grew our owner operator fleet in 2021, 9% year over year, and our logistics business continued its upward trajectory and growing load counts and profits.

Speaker 3: As a result of the foregoing, roughly 64% of our company's revenues are now derived from non-asset or asset-like businesses, where someone else provides the tractoring capital. That's an important statistic that notably improves our financial and operational metrics. Our company now looks much differently than it once did. We are a solutions provider, or said differently, a logistics provider that also has an available fleet of approximately 1,900 trucks. The benefits of becoming more aspect-

As a result of the foregoing roughly 64% of our company's revenues are now derived from non asset or asset light businesses, where someone else provides the tractor and capital that's an important statistic that notably improves our financial and operational metrics. Our company now looks much differently than it once did we already so.

<unk> provider or said differently, a logistics provider that also has an available fleet of approximately 1900 trucks the benefits are becoming more asset light or many.

Speaker 3: Capital efficiency is improved. Our trailing 12 month ROIC is 11.3%, which is meaningfully higher than our cost of capital.

Capital efficiency has improved our trailing 12 month ROIC is 11, 3%, which is meaningfully higher than our cost of capital cash generation. This focus translates to healthy cash generation to support the ongoing growth of the business a proxy for that is our trailing 12 months adjusted EBITDA of approximately $75 million.

Speaker 3: Cash generation, this focus translates to healthy cash generation to support the ongoing growth of the business. A proxy for that is our trailing 12 months adjusted EBITDA of approximately $75 million.

Speaker 3: Flexibility, our ability to pivot and respond to market dynamics has improved with this model. And margin sustainability provides guardrails against inevitable market cycles. These businesses run on percentage-based purchase transportation constructs that provides even greater margin predictability as the cycles change. This gives us a steady base to rely on in expanding the business while protecting profits in all different sites.

Flexibility, our ability to pivot and respond to market dynamics has improved with this model and margin sustainability provides guardrails against inevitable market cycles. These businesses run on percentage based purchase transportation contracts that provides even greater margin predictability as the cycles change this gives us.

Our steady base to rely on and expanding the business, while protecting profits in all different cycles.

Speaker 3: The bottom line for us is that USA Truck is a totally different company than it was five years ago. And we have affected that transition through thoughtful strategic planning with management and the board, a new brand that signaled a new approach in our go-to-market strategy, consistent execution on our self-help initiatives, and an overhauled culture led by our amazing people. I cannot say enough about this final point. People have made all the difference to our trajectory and success, and it is they who have created these outstanding results.

The bottom line for US is that USA truck has a totally different company than it was five years ago, and we have affected that transition through thoughtful strategic planning with management and the board and new brand that signaled a new approach in our go to market strategy consistent execution on our self help initiatives and an overhauled culture led by our amazing people I can.

And I say enough about this final point people have made all the difference to our trajectory and success and it is they who have created these outstanding results.

Speaker 3: We expect to see upside in 2022 versus 2021 and believe so because we still see a number of opportunities that went unrecognized in the year, specific areas of profit enhancement and even more opportunities to improve our decision processes and execution through all phases of the cycle. We expect that 2022 earnings will keep us ahead of schedule with respect to our 2024 strategic goals of 425 to 450 of earnings per share that we outlined in the second quarter last year.

We expect to see upside in 2022 versus 2021 and belief, though because we still see a number of opportunities that went unrecognized in the year specific areas of profit enhancement and even more opportunities to improve our decision processes and execution through all phases of the cycle. We expect that 2022 earnings will keep US ahead of schedule with respect to our 2020.

Four strategic goals of $4 25 to $4 50 of earnings per share that we outlined in the second quarter last year our.

Speaker 3: Our playbook was largely influenced by the experiences of past trends in the cycle.

Our playbook was largely influenced by the experiences of past turns in the cycle.

Speaker 3: And so we have diversified our business to have more sustained and predictable margins through our logistics, dedicated and asset-like businesses, while continuing to improve and shore up the asset business.

So we have diversified our business to have more sustained and predictable margins through our logistics dedicated and asset light businesses, while continuing to improve and shore up the asset business.

Speaker 3: Our network and pricing relies on high volume and the refinement of profitability architected lanes that we expect will endure the test of time.

Our network and pricing relies on high volume and the refinement of profitability Architected lanes that we expect will endure the test of time, we have used the robust environment to create a network that we think will be enduring. We also made big strides in ESG and technology as we released our first ESG report in the quarter announced the partnership.

Speaker 3: We have used the robust environment to create a network that we think will be enduring.

Speaker 3: We also made big strides in ESG and technologies. We released our first ESG report in the quarter, announced a partnership with Nikola, and a technology partnership and business relationship with Convoy.

With Nikola and a technology partnership and business relationship with convoy. We are moving ahead with the future in mind informed by the lessons of the past and so we see a bright future even beyond 2022.

Speaker 3: We are moving ahead with the future in mind, informed by the lessons of the past. And so we see a bright future even beyond 2022.

Speaker 3: We believe the result this quarter, and in 2021 overall, is the direct outcome of these efforts that has a bit of inevitability to it. We laid out the playbook, stuck to our plan, and now we're performing as we had expected, and as we had communicated to the street, to the industry, and most importantly, to our customers.

We believe the result, this quarter and in 2021 overall is the direct outcome of these efforts that has a bit of inevitability to it we laid out the playbook stuck to our plan and now are performing as we had expected and as we had communicated to the street to the industry and most importantly to our customers. We think this performance warrants a more objective review of <unk>.

Speaker 3: We think this performance warrants a more objective review of USA Trek by all market observers. This is a diversified transportation company with the majority of its revenues and a large percentage of its profits derived from asset light and non-asset avenues that executes consistently and profitably. That is who we are and we hope to garner support for being viewed as such by these and future results.

They tracked by all market observers. This is a diversified transportation company with the majority of its revenues and a large percentage of its profits derived from asset light and non asset avenues that execute consistently and profitably that is who we are and we hope to garner support for being viewed as such by these and future results today, we will offer updates on the market dynamics.

Speaker 3: Today we will offer updates on the market dynamics and segment performance in the quarter and also the outlook. I'll now turn the time over to Zach to discuss the financial results.

And segment performance in the quarter and also the outlook I'll now turn the time over to Zach to discuss the financial results. Thank you James.

Speaker 4: Thank you James, if you'll please turn with me to slide number 3, we'll do a brief review of our financial.

If youll. Please turn with me to slide number three we will do a brief review of our financial results based quarterly revenue, which excludes fuel surcharges was up 21, 9% consolidated quarterly operating revenues came in at $200 9 million, which represents a $26 five increase year over year.

Speaker 4: Base quarterly revenue, which excludes fuel surcharges, was up 21.9%. Consolidated quarterly operating revenues came in at 200.9 million, which represents a 26.5 increase year over year. Consolidated adjusted operating ratio for the quarter was 90.7.

Consolidated adjusted operating ratio for the quarter was 97% down from 93, 2% in the prior year, primarily driven by improvements in our base revenue per mile in our trucking segment and increases in revenue per load and load count and our <unk> logistics segment.

Speaker 4: Down from 93.2% in the prior year, primarily driven by improvements in our base revenue per mile in our trucking segment and increases in revenue per load and load count in our USAT logistics.

Speaker 4: The result of these initiatives generated adjusted earnings per share of a $1.38 for the 4th quarter and $25.4 million in adjusted EBITDA. Our 4th quarter 2021 adjusted earnings per share was positively affected by an IRS deductibility clarification that resulted in a 6 cent increase in 4th quarter EPS.

As a result of these initiatives generated adjusted earnings per share of $1 38 for the fourth quarter and $25 4 million and adjusted EBITDA.

Our fourth quarter 2021, adjusted earnings per share was positively affected by an IRS deductibility clarification that resulted in a 6% increase in fourth quarter EPS.

Speaker 4: Turning to slide number four, trucking operating revenues before intersegment eliminations increase 15.2 million or 14.6% to 119.5 million.

Turning to slide number four trucking operating revenues before intersegment eliminations increased $15 2 million or 14, 6% to $119 5 million base revenues, excluding fuel were up nine 6% to $105 7 million compared to $96 4 million in the fourth quarter of 2020, our trucking segment generated 11.

Speaker 4: Base revenues, excluding fuel were up 9.6% to 105.7 million compared to 96.4 million in the 4th quarter of 2020. Our trucking segment generated 11.9 million in adjusted operating income and an 88.7% adjusted operating ratio. The primary driver of these results was a 50 cent increase in base revenue per loaded mile when compared to the 4th quarter of 2020.

<unk> 9 million and adjusted operating income and an 88, 7% adjusted operating ratio. The primary driver of these results with a 50% increase in base revenue per loaded mile when compared to the fourth quarter of 2020.

Speaker 4: Utilization decreased 106 miles per truck per week, or approximately 7% from the 4th quarter of 2020. This decrease is a direct result of decreased utilization in our owner operator fleet, which represents approximately 30% of our available tractor fleet and our network optimization strategy that optimizes for operating profit and revenue per tractor over miles and other variables.

Utilization decreased 106 miles per truck per week or approximately 7% from the fourth quarter of 2020. This decrease is a direct result of decreased utilization and our owner operator fleet, which represents approximately 30% of our available tractor fleet.

Our network optimization strategy that optimizes for operating profit and revenue per tractor over miles and other variables.

These rate and utilization outcomes positively affected base revenue per available tractor per week, which increased $443 or 11, 5% year over year for the fourth quarter.

Speaker 4: These rate and utilization outcomes positively affected base revenue per available tractor per week, which increased 443 dollars or 11.5% year over year for the 4th quarter. The average available tractor count for the 4th quarter of 2021 was 1875, which is a 1% increase from the 3rd quarter of 2021 and a 1.7% decrease when compared to the 4th quarter of 2020.

The average available tractor count for the fourth quarter of 2021 was 1875, which is a 1% increase from the third quarter of 2021, and a one 7% decrease when compared to the fourth quarter of 2020.

Turning to slide number six will do a review of the results of our USA logistics segment revenue before intersegment eliminations increased 20, $29 3 million from the fourth quarter of 2020, or 44, 9% to $94 6 million, our logistics segment generated $4 9 million and adjusted operating income.

Speaker 4: Turning to slide number 6, we'll do a review of the results of our USAT logistics.

Speaker 4: Revenue before inter-segment eliminations increased 29.3 million from the fourth quarter of 2020, or 44.9% to 94.6 million. Our logistics segment generated 4.9 million in adjusted operating income. Gross margin dollars increased 2.5 million to 11.9 million in the quarter. Gross margin percentage for the fourth quarter was 12.5% versus 14.3% in 2020.

Gross margin dollars increased $2 5 million to $11 9 million in the quarter gross margin percentage for the fourth quarter was 12, 5% versus 14, 3% in 2020.

Speaker 4: Load count increased to approximately 40,300 loads during the fourth quarter from the 32,600 loads in the fourth quarter of 2020. An increase of 23 per

Load count increased to approximately 4300 loads during the fourth quarter from the 32600 loads in the fourth quarter of 2020, an increase of 23%.

Speaker 4: an increase of 9.5% or approximately 3,500 votes.

At an increase of nine 5% or approximately 3500 loads sequentially.

Speaker 4: If you'll turn with me to slide number 7, we'll highlight some key balance sheet and liquidity measures. As of December 31, 2021, total debt and finance lease liabilities were $144.8 million. Net debt was $143.8 million. And our net debt to adjust to the EBITDA for the trailing 12 months ended was 1.9 times.

If youll turn with me to slide number seven will highlight some key balance sheet and liquidity measures as of December 31, 2021, total debt and finance lease liabilities were $144 8 million net debt was $143 8 million and our net debt to adjusted EBITDA for the trailing 12 months ended was one nine times.

Speaker 4: The company had approximately 124.1 million available to borrow under its credit facility as of December 31, 2021.

The company had approximately $124 1 million available to borrow under its credit facility as of December 31, 2021.

Speaker 4: Also, as announced in our 8K we filed last night, we entered into a new $130 million asset backed credit agreement on January 31, 2022. This new structure provides a more predictable equipment valuation and equipment financing arrangements that secure low-cost fixed interest rates and increase capacity.

Also as announced our 8-K, we filed last night, we entered into a new $130 million asset backed credit agreement on January 31, 2022. This new structure provides a more predictable equipment valuation and equipment financing arrangements that secure low cost fixed interest rates and increase capacity.

Speaker 4: Looking forward into 2022, we expect 50 to 60M in net CapEx for the year. A portion of the projected CapEx is rollover CapEx, representing trucks and trailers that were expected to be delivered in 2021, but have been delayed to 2022. New revenue equipment deliveries have been sporadic due to the widely reported OEM supply chain and labor issues.

Looking forward into 2022, we expect $50 million to $60 million and net capex for the year a portion of the projected Capex is rollover capex.

Representing trucks and trailers that were expected to be delivered in 2021, but have been delayed to 2022, new revenue equipment deliveries have been sporadic due to the widely reported OEM supply chain and labor issues. If this continues it could negatively impact our operating cost as our equipment ages. However, we expect to receive our schedule equipment throughout 2022.

Speaker 4: If this continues, it could negatively impact our operating costs as our equipment ages. However, we expect to receive our scheduled equipment throughout 2020.

Speaker 4: With that, I'll now turn the call back over to James to offer more insight into the quarter and are out.

With that I'll now turn the call back over to James to offer more insight into the quarter and our outlook great. Thanks, Zach the quarter was seasonally strong with typical Q4 surge dynamics in play we mentioned last quarter that some customers had entered into longer term agreements to secure capacity and that benefit will continue into 2022.

Speaker 3: Great, thanks, Zach. The quarter was seasonally strong with typical Q4 surge dynamics in play. We mentioned last quarter that some customers had entered into longer term agreements with secure capacity and that benefit will continue into 2022.

One trend that we want to know is the gaining acceptance of our customers to what I'll call mode agnostic capacity, the pandemic and shortage of available capacity has led customers to care less about who is pulling the trailer in favor of having a relationship with the owner of the trailer itself.

Speaker 3: One trend that we want to note is the gaining acceptance of our customers to what I'll call mode agnostic capacity. The pandemic and shortage of available capacity has led customers to care less about who is pulling the trailer in favor of having a relationship with the owner of the trailer itself.

Speaker 3: This broader acceptance has benefited our Plus P program. And because customers have come to broadly accept it, we think it's here to stay. And the good news for our customers and shareholders is USA Truck has been offering a power only solution for more than a decade. And we're very good at it.

It's broader acceptance has benefited our plus program and because customers have come to broadly accepted we think it's here to stay here to stay and the good news for our customers and shareholders is USA truck has been offering and power only solution for more than a decade and we're very good at it industry capacity remains tight and pricing remains strong.

Speaker 3: Industry capacity remains tight and pricing remains strong. We expect 2022 rates will be, on average, up lower double digits year over year when compared to 2021. All the cost pressures of running a fleet remain in play and thus make downside price declines less and less of a risk. Every market participant faces increased recruiting costs, higher truck and trailer costs, higher insurance, and higher fuel prices and that gives some downside protection to capacity providers.

We expect 2022 rates will be on average up lower double digits year over year, when compared to 2021 all of the cost pressures are running a fleet remain in play and thus make downside price declines less and less of a risk every market participant faces increased recruiting costs higher truck and trailer costs higher insurance and higher fuel prices and that gives some downside.

Protection to capacity providers.

Speaker 3: Driver and new truck availability remains significant headwinds, as Zach mentioned. We received just under half of our 2021 truck order by the end of the year. We continue to receive new trucks, but all the OEMs are having parts sourcing challenges. And so we are receiving, and mostly in servicing, new trucks that are missing components that we will need to retrofit later. The OEMs are largely taking a FIFO approach to resolving these issues. So we've decided to keep receiving trucks to reduce the age of fleet and get in line for these parts once they become available.

Driver in new truck availability remains significant headwinds as Zach mentioned, we received just under half of our 2021 truck order by the end of the year, we continue to receive new trucks, but all the Oems are having parts sourcing challenges and so we are receiving and mostly in servicing new trucks that are missing components that we will need to retrofit layer.

BMS are largely taken a FIFO approach to resolving these issues. So we've decided to keep receiving trucks to reduce the age of fleet and get in line for these parts once they come available.

Speaker 3: The average age of our fleet was 2.9 years at the end of the year.

The average age of our fleet was two nine years at the end of the year.

I'll now talk about segment results.

Speaker 3: I'll now talk about segment results. The headline for our trucking segment is we got to a sub 90 OR in the quarter, delivering an 88.7% adjusted operating ratio. On the combined effect of a strong market equally strong execution by our team, that reflects the year-over-year improvement of 440 basis points and 660 basis points sequentially. I'd like to highlight just a few of the executional efforts that led to the continued good and improving results here at the company.

Headlines for our trucking segment is we got to a sub 90 or in the quarter delivering an 88, 7% adjusted operating ratio on the combined effect of a strong market equally strong execution by our team that reflects a year over year improvement of 440 basis points from 660 basis points sequentially I'd like to highlight just a few of the execution efforts led to the.

Continuing good and improving results here at the company are owner operators have grown 9% year over year. This group performs at a predictably low 90% or in almost any market condition, our ability to grow. This business has been the direct result of great recruitment efforts, great partnering relationships with outside lessors, who help drive drivers getting trucks.

Speaker 3: Our owner operators have grown 9% year over year. This group performs at a predictably low 90s OR in almost any market condition. Our ability to grow this business has been the direct result of great recruitment efforts, great partnering relationships with outside lessors who help drivers get in trucks, a market leading and innovative load board platform that allows independent drivers access to freight selection on their own, and offering ancillary services that make it easy to do business with.

Market, leading and innovative load board platform that allows independent drivers access to freight selection on their own and offering ancillary services that make it easy to do business with us. It is historically difficult to retain owner operators and robust markets and we believe our ability to do so it will be even more of an advantage when conditions change because independent owner operators retreat to the safer.

Speaker 3: It is historically difficult to retain owner-operators in robust markets, and we believe our ability to do so will be even more of an advantage when conditions change, because independent owner-operators retreat to the safety of large company relationships and freight when the markets soften up. This business is defensible because it requires thoughtful and prolonged intentional design, which we have done well.

We have large company relationships and freight when the market soften up this business is defensible because it requires thoughtful and prolonged intentional design, which we have done well driver.

Speaker 3: Driver retention has become a strength that allows our team to become even better operators as we season associates who know our business. We get out of constant training mode and into a constant productivity mode. In a tough environment, we've been able to effectively retain our drivers, which eases the burden on new recruitment. Despite a tough recruiting environment, we did increase truck availability sequentially from 1,857 up to 1,875 in a quarter.

Driver retention has become a strength that allows our team to become even better operators as we season associates, who know our business, we get out of constant training mode and into a constant productivity mode in a tough environment, we've been able to effectively retain our drivers, which eases the burden on new recruitment. Despite a tough recruiting environment we did.

We did increased truck availability sequentially from 857 up to 1875 in the quarter.

Speaker 3: The next topic is fleet mix shift to more and more consistent margin constructs. We think it's vitally important this quarter to help people understand the mix shift that has occurred in the company in terms of our fleet composition and what the implications are for the long-term health and direction of the company. The trucking segment is composed of two interoperable and interdependent components of the trucking business. Traditional irregular route truckload and are dedicated and quasi-dedicated.

The next topic is fleet mix shift to more and more consistent margin contracts. We think it's vitally important this quarter to help people understand the mix shift that has occurred in the company in terms of our fleet composition and what the implications are for the long term health and direction of the company. The trucking segment is composed of two interoperable and entered.

Dependent components of the trucking business traditional irregular route truckload and our dedicated and quasi dedicated business. The traditional truckload business accounted for approximately 60% of our trucks in this segment in the quarter, while the dedicated and quasi dedicated account for the remainder.

Speaker 3: The traditional truck business accounted for approximately 60% of our trucks in this segment in the quarter while the dedicated and quasi dedicated accounts for the remainder.

Speaker 3: Our strategy is to get our asset business to be 50-50 traditional irregular out truck load and the remainder dedicated. It is important for investors to realize that this dedicated portion has predictable, repeatable performance dynamics that contribute a high 80s to low 90s OR year in and year out owing to the long term nature of these business agreements.

Our strategy is to get our asset business to be 50, 50 traditional irregular route truckload and the remainder dedicated it is important for investors to realize that this dedicated portion has predictable repeatable performance dynamics that contributed high <unk> to low ninety's or year end, a year out owing to the long term nature of these business agreements.

Speaker 3: Our average weighted length of dedicated relationship when accounting for Evergreen and automatic renewals is targeted between two to three years. The duration of these relationships is intentionally designed to sustain both our customers and the company through the duration of cycles both high and low to great predictability on both sides of the transaction.

Our average weighted length of dedicated relationship when accounting for evergreen and automatic renewals is targeted between two to three years. The duration of these relationships is intentionally designed to sustain both our customers and the company through the duration of cycles, both high and low to great predictability on both sides of the transaction.

Speaker 3: We had struggled to get the dedicated OR in line the last 18 months. And we were open about the cost of start-up, the experience curve of becoming a better and better dedicated partner and operator. And frankly, our ability to manage the business in a super dynamic world. We are happy to report that over the last five months, the dedicated business profitability has come in line with our expectations. We have grown 15.9% year-to-year in the number of active trucks, even as we secured 16% contractual rate increase.

We had struggled to get the dedicated or in line. The last 18 months and we were open about the cost of start up the experience curve of becoming a better and better dedicated partner and operator, and frankly, our ability to manage the business in a super dynamic World. We're happy to report that over the last five months the dedicated business profitability has come in line with our expectations.

We have grown 15, 9% year over year in the number of active trucks, even as we secured 16% contractual rate increases during the fourth quarter. The dedicated portion of our business performed right around 90 or exactly where it should be.

Speaker 3: During the fourth quarter, the dedicated portion of our business performed right around a 90 OR, exactly where it should be. Finally, I want to talk about...

Finally, I want to talk about network improvements.

Speaker 3: A big contributor to our success over the last several years has been our tireless focus on developing a sustainable, repeatable network strategy and design that ensures improving profits and a competitive, service-oriented offering for our customers.

A big contributor to our success over the last several years has been our tireless focus on developing a sustainable repeatable network strategy and design that ensures improving profits and a competitive service oriented offering for our customers. We believe we are closer to that now than at any time in our company's history. Some basic internal metrics that help us.

Speaker 3: We believe we are closer to that now than at any time in our company's history.

Speaker 3: Some basic internal metrics that help us understand our network help demonstrate the incredible progress that has been made here. The first metric is spot rate percentage.

Understand our network helped demonstrate the incredible progress that has been made here.

First metric as spot rate percentage the spot rate percentage in the quarter was just over 10% our spot percentage in the quarter was the lowest it has been in the last four quarters not with one would expect the opportunity to pursue spot price freight was there, but we chose to play the long game.

Speaker 3: The spot rate percentage in the quarter was just over 10%. Our spot percentage in the quarter was the lowest it has been in the last four quarters, not what one would expect. The opportunity to pursue spot price rate was there, but we chose to play the long game.

Speaker 3: Even as our capacity develops into more asset-like capacity with the owner operator base, our network refinements keep us in the network with a bias for servicing contracted freight. One of the most staggering data points for me is that our owner operators, so many think about as capacity that follows the rate available in the spot market, they actually operate about 75% of their production on in-network contracted business.

Even as our capacity develops into more asset light capacity with the owner operator base our network refinements keep us in the network with a bias for servicing contracted freight one of the most staggering data points for me is that our owner operators. So many think about as capacity that follows the rate available in the spot market. They actually operate about 70.

5% of their production on in network contracted business.

Speaker 3: Recall that we have a proprietary USAT Connect technology solution that affords owner-operators visitability into both contract and spot opportunities, and they are largely choosing contract freight. This bodes extremely well for the future. Asset-like capacity with predictable and consistent OR performance, fantastic ROIC characteristics, and scalability is supporting our network design by virtue of the choices they are making as free agents.

Call that we have a proprietary USA key connect technology solution that affords owner operators visibility into both contract and spot opportunities and they are largely choosing contract freight this bodes extremely well for the future asset light capacity with predictable and consistent outperformance fantastic ROIC characteristics.

And scalability is supporting our network designed by virtue of the choices. They are making this free agents.

Speaker 3: The next data point is network density. A measure of loads per lane per week has become a bit surreal. Lane density is up 28% over the last eight quarters and well over 100% in the last five years. This only comes to the refinement process of thoughtfully and theoretically designing the network first, bidding the freight consistently over the course of several years and then effectively servicing set freight. So customers have space and confidence in other performance and allow us to keep that freight and subsequent bid cycles.

The next data point is network density a measure loads per lane per week has become a bit surreal lane density is up 28% over the last eight quarters and well over 100% in the last five years. This only comes through the refinement process of thoughtfully and theoretically designing the network one bidding the freight consistently over the course of several years.

And then effectively servicing set freight so customers have faith and confidence in our performance and allow us to keep that freight and subsequent bid cycles. This is a symbiotic reality that has emerged due to thoughtful design good execution and a commitment to the process.

Speaker 3: This is a symbiotic reality that is emerged due to thoughtful design, good execution, and a commitment to the process. Next.

Next is tier one length.

Speaker 3: These are the lanes where we move freight from network hub to network hub or terminal to terminal. Our absolute best operational and most profitable lanes are the focus of our network design. We optimize with an objective function for profitability. Even with these improvements, we only have just over 43% of our freight in these lanes with a theoretical possibility approaching 80%. We still have a lot of runway here to refine and improve the network even further.

These are the lanes, where we move freight from network hub to network hub, our terminal to terminal our absolute best operational and most profitable lines. So the focus of our network design, we optimize with an objective function for profitability even with these improvements we only have just over 43% of our freight and these lanes with a theoretical possibility.

Approaching 80%, we still have a lot of runway here to refine and improve the network. Even further we just hope that our constituents understand that because of our network approach and great execution, we're being differentiated from our competitors and creating highly profitable opportunities for our business.

Speaker 3: We just hope that our constituents understand that because of our network approach and great execution, we are being differentiated from our competitors in creating highly profitable opportunities for our business. Let's now talk.

Now talk about the logistics segment.

Speaker 3: Logistics had a record fourth quarter in both revenue and profits. It is a significant contributor to our business and now makes up 44.1% of total revenues before eliminations and this quarter accounted for 29.2% of consolidated adjusted operating income.

Logistics had a record fourth quarter in both revenue and profits. It is a significant contributor to our business and now makes up 44, 1% of total revenues before eliminations and this quarter accounted for 29, 2% of consolidated adjusted operating income.

Speaker 3: Our logistics segment generated $323.4 million in revenues in the year and $14.7 million in operating income over that same time period, a fact we think is often lost on outside observers. This business adds significant value to our company that we believe is not properly recognized.

Logistics segment generated $323 4 million in revenues in the year and $14 7 million in operating income over that same time period. In fact, we think is often lost on outside observers. This business adds significant value to our company that we believe is not properly recognized.

Speaker 3: One of the things we like about logistics is that the margins are reasonably predictable across market conditions. And so, being able to crank significant volumes through the business, think the supermarket model, becomes the highest priority as an insulation against retreating markets. Watch for us to add capability and investment in some of the traditionally strong freight hubs in 2022. Chicago, Dallas, and the West are all areas where we think we could add even more business in short order.

One of the things we like about logistics is that the margins are reasonably predictable across market condition, and so being able to crank significant volume through the business I think the supermarket model becomes a highest priority as an insulation against retreating markets.

<unk> for us to add capability and investment in some of the traditionally strong freight hubs in 2022, Chicago Dallas and the West are all areas, where we think we can add even more business in short order.

Speaker 3: I'd like to add some emphasis to a few noteworthy efficiency gains that continue through the quarter. Low count in volume.

Like to add some emphasis to a few noteworthy efficiency gains to continue through the quarter load count.

Load count and volume.

Speaker 3: Our load count continues to be strong. Q4 volumes were up 9.5% sequentially and up 23.4% year over year. This is critically important in any market condition. If margin compression is real and it may be long term, having the throughput to harvest profits is critically important.

<unk> count continues to be strong Q4 volumes were up nine 5% sequentially and up 23, 4% year over year. This is critically important in any market condition. If margin compression is real and it may be long term, having the throughput to harvest profits is critically important.

Speaker 3: USAT logistics revenue per employee is up 33.1% year over year. We continue to emphasize this because it is simply astounding.

USA logistics revenue per employee is up 33, 1% year over year, we continue to emphasize this because it is simply astounding.

Speaker 3: The last five quarters year over year growth by quarter have been starting in Q4 2020 up. 136.3% up 85.6% up 99.6% up 47.4% and now up 33.1% even against tough prior comp.

The last five quarters year over year growth by quarter have been starting in Q4 of 2020 up 136, 3% up 85, 6% up 99, 6% up 47, 4% and now up 33, 1% even against tough prior comps.

Margin dollars per employee as yet another improving statistics, our logistics team produced over $126000 and gross margin dollars per employee in the quarter. This represents an $18000 increase per employee year over year or 16, 5% improvement year over year again against tough comps and finally USA logistics.

Speaker 3: Margin dollars per employee is yet another improving statistics. Our logistics team produced over $126,000 in gross margin dollars per employee in the quarter. This represents an $18,000 increase per employee year over year or 16.5% improvement year over year. Again, against tough costs.

Speaker 3: And finally, USAT logistics loads per employee is up 13.4% year over year. Going back to Q4 of 2019, our logistics load count per employee is up over 74%. Our people, processes, and tools are all getting better and better each quarter.

Loads per employee is up 13, 4% year over year going back to Q4 of 2019, our logistics load count per employee is up 74% our people processes and tools are all getting better and better each quarter.

Speaker 3: The logistics story is really straightforward. Higher revenue per load is being pushed by the market at large, but the team continues to set records in terms of revenue, load count, and margin per employee. Even with the high throughput of volume, the team found a way to expand margins year over year. That's a winning formula that we expect to see in the coming quarters and years.

The logistics story is really straightforward higher revenue per load is being pushed by the market at large but the team continues to set records in terms of revenue load count in margin per employee even with the high throughput of volume the team found a way to expand margins year over year, that's a winning formula that we expect to see in the coming quarters and years.

Speaker 3: We think about logistics as a high growth, tip of the spear business that allows us to enter new markets with low or no capital investment, predictable profits and nearly unlimited upside. We continue to take share in this marketplace for businesses like ours, typically garners significant multiples.

Think about logistics as a high growth tip of the spear business that allows us to enter new markets with low or no capital investment predictable profits and nearly unlimited upside we continue to take share in this marketplace for businesses like ours typically garner significant multiples. This is a big time brokerage business that is among the top 30 in annual revenues among all third part.

Speaker 3: This is a big-time broker's business that is among the top 30 in annual revenues among all third-party truckload logistics companies in the industry. And while we're not sure the market hears us, we have been unabashed and unapologetic about the great underlying business asset that this is. It is our aim to be world-class, and we are definitely performing that way.

Truckload logistics companies in the industry and while we're not sure the market hears us we have been unabashed, an unapologetic about the great underlying business asset that this is it is our aim to be world class and we are definitely performing that way.

I'd like to shift to talking about the outlook the business environment remains healthy in both segments of our business. The toughest headwind remains finding qualified drivers to join our team, but our retention has gone from being a perennial weakness to an undeniable strength pricing is healthy and customers are more interested than ever in finding innovative solutions that address their cost headwinds while allowing.

Speaker 3: The business environment remains healthy in both segments of our business. The toughest headwind remains finding qualified drivers to join our team, but our retention has gone from being a parental weakness to an undeniable strength. Pricing is healthy and customers are more interested than ever in finding innovative solutions that address their cost headwinds while allowing us to optimize our network.

To optimize our network.

Speaker 3: The point that we hope everyone will take note of is that this business is poised to take advantage of market conditions irrespective of the phase of the cycle.

The point that we hope everyone will take note of is that this business is poised to take advantage of market conditions irrespective of the face of the cycle with 64% of our revenues coming from asset light and non asset businesses about a third of our asset business coming from highly predictable highly profitable and defensible dedicated businesses in a thoughtful and successful net.

Speaker 3: With 64% of our revenues coming from asset light and non-asset businesses, about a third of our asset business coming from highly predictable, highly profitable, and defensible dedicated businesses, and a thoughtful and successful network strategy, the outlook for USA Truck is more predictable margins by virtue of our architected mix, more consistent results owing to our great execution, and a platform that now provides a solid base from which to expand and grow.

<unk> strategy the outlook for USA truck is more predictable margins by virtue of our Architected mix more consistent results owing to our great execution and a platform that now provides a solid base from which to expand and grow now referring to slide eight we will just update everyone on our 2021 touchdowns that were introduced last <unk>.

Speaker 3: Now, referring to slide eight, we'll just update everyone on our 2021 touchstones that were introduced last last quarter.

Last quarter.

Speaker 3: Excuse me, they were introduced last year. This will be the last time we report back on the 2021 milestones. And as we approach our 2024 strategic timelines, we will begin to focus on only reporting on progress toward 2024 in our future calls, as we talk about key company focus areas.

Excuse me they were introduced last year. This will be the last time, we report back on the 2021 milestones and as we approach our 2024 strategic timelines, we will begin to focus on only reporting on progress towards 2024, and our future calls as we talked about key company focus areas.

Trucking segment or we are ahead of plan on this measure logistics load count growth, our target was 10% annualized profitable load count growth and we've had 17, 4% dedicated growth, 15% truck count or more dedicated up 16, 1% year over year and we expect this success to continue the employer of choice we <unk>.

Speaker 3: Trucking segment OR, we're ahead of plan on this measure, with just the load count growth, our target was 10% annualized profit of the load count growth, and we've had 17.4%. Dedicated growth, 15% truck count, or more, dedicates up 16.1% year-to-year, and we expect this success to continue. The employer of choice, we expect to improve our driver turnover by 10% or more in the year. Our fourth quarter result in year-to-date turnover is under 80%, which significant we outperforms the goal. Now moving to our strategic.ross, all of your prioritize. Now moving to our strategic.

To improve our driver turnover by 10% or more in the year, our fourth quarter results and year to date turnover is under 80%, which significantly outperforms. The goal now moving to our strategic update during the second quarter of last year. The leadership team undertook a comprehensive review of the company's strategy and alternative growth opportunities with the output being a thoughtful analytically.

Speaker 3: During the second quarter of last year, the leadership team undertook a comprehensive review of the company's strategy and alternative growth opportunities, with the output being a thoughtful, analytically robust, and well-vetted path forward. The conclusion of that exercise led to three specific strategic priorities going forward that we discussed last quarter. Number one, expand and densify our asset business east of I-35.

Robust and well vetted path forward the conclusion of that exercise led to three specific strategic priorities going forward that we discussed last quarter number one expand and densify our asset business East of I 35 by further densify. Our network, we will continue to leverage existing cost infrastructure leverage existing recruiting and customer presence in <unk>.

Speaker 3: By further densifying our network, we will continue to leverage existing cost infrastructure, leverage existing recruiting and customer presence, improve our yield on freight through an optimized and architected network, and expand our dedicated and terminal network.

Our yield on freight through an optimized and Architected network and expand our dedicated and terminal network. We expect this to result in an asset based business that consistently performance between the 90% 92 operating ratio by the end of 2024. We are ahead of schedule on our densification measures and or progress at this point in the strategy rollout the one area of risk we see.

Speaker 3: We expect this to result in an asset-based business that consistently performs between a 90 to 92 operating ratio by the end of 2024. We are ahead of schedule on our dedication measures and our progress at this point in the strategy rollout. The 1 area of risk we see here is in continuing to add capacity through owner operators and some fleet expansion in terms of trucks. But these are mostly operational risk.

Here is continuing to add capacity through owner operators and some fleet expansion in terms of trucks, but these are mostly operational risks.

Speaker 3: Two, double the logistics business. We have strong momentum in what we believe is one of the best logistics businesses in North America. And that by doubling our revenues, we can add significant earnings growth with little corresponding capital investment.

<unk> doubled the logistics business, we have strong momentum in what we believe is one of the best logistics businesses in North America and that by doubling our revenues, we can add significant earnings growth with little corresponding capital investment. This is a high ROIC investment stream and we expect the logistics business to grow to $400 million in top line revenues by 2020 for this goal.

Speaker 3: This is a high ROIT investment stream and we expect the logistics business to grow to 400 million in top line revenues by 2024. This goal is well ahead of plan. In year 1 of our plan, we were up over 50% and there's a distinct possibility that this strategic goal may be accomplished 2 years early.

<unk> is well ahead of plan in year, one of our plan, we were up over 50% and there is a distinct possibility that this strategic goal may be accomplished two years early and finally, the third leg of the stool is to reduce the asset fleet age. There is a meaningful operating income impact from a younger fleet.

Speaker 3: And finally, the third leg of the stool is reduced the asset fleet age. There is a meaningful operating income impact from a younger fleet.

Speaker 3: We expect to bring our average age of fleets to two years over the course of our next trade cycle.

We expect to bring our average age of fleet two years over the course of our next trade cycle.

Speaker 3: We exited 2021 at 2.9 years average fleet age.

We exited 2021 at $2 nine Years' average fleet age.

Speaker 3: But expect to get to just over 2 years by the end of 2022 getting there is a risk that is consistent across the industry and not unique to us a truck. We will do all we can to get back on track and partnering with our.

But expect to get to just over two years by the end of 2020 to getting there is a risk that is consistent across the industry and not unique to USA truck. We will do all we can to get back on track and partnering with our Oems. The combined effect of the strategic strategic thrust outlined above is an organization with top line revenues of just over $1 billion.

Speaker 3: The combined effect of the strategic thrust outrun above is an organization with top-run revenues of just over a billion dollars, a blended OR of 93 and 94, and an EPS of 425 to 450 by the end of 2024.

Our blended or of 93 to 94, and an EPS of $4 25 to $4 50 by the end of 2024.

Speaker 3: As we consider this strategic plan in the context of a recent result, we expect to see corresponding value creation for shareholders. In our opinion, USA truck remains one of the best stories in this space.

As we consider this strategic plan in the context of our recent results, we expect to see corresponding value creation for shareholders in our opinion USA truck remains one of the best stories in this space.

Speaker 3: In summary, we are very pleased with the progress of our business. We've improved all facets of our business. Historically, the asset business has been the focus of management. And while we had to fix the asset business, it is not even the majority of our revenues anymore.

In summary, we are very pleased with the progress of our business. We've improved all facets of our business historically the asset business has been the focus of management and while we had to fix the asset business. It is not even the majority of our revenues anymore. We now have a market leading logistics business that generates consistent margins and profits, while requiring little capital we have an asset light.

Speaker 3: We now have a market leading logistics business that generates consistent margins of profits while requiring little capital. We have an asset like business with a large owner operator base that likewise requires relatively low capital in the form of trailers and garners consistent profits in all market conditions.

Business with a large owner operator base that likewise requires relatively low capital in the form of trailers and garners consistent profits in all market conditions. The asset business has a sub 90 or in the quarter and has the ability to flex profits in robust markets in batten down in down markets and about 35% of the business in that segment is highly profitable and highly predictable.

Speaker 3: The asset business has a sub 90 OR in the quarter and has the ability to flex profits in robust markets and batten down in down markets. And about 35% of the business in that segment is highly profitable and highly predictable in dedicated countries.

Dedicated contracts our balance sheet is strong our business is driving we're executing on our strategy, creating record setting financial results and have shifted our mix in such a way that our return on capital is strong USA truck is in a remarkable position to grow and expand from this strong base. So with that Holly I'll turn it back over to you to open it up for <unk>.

Speaker 3: Our balance sheet is strong, our business is thriving, we're executing on our strategy, creating record-setting financial results, and if shifted our mix in such a way that our return on capital is strong, USA truck is in a remarkable position to grow and expand from this strong base. So with that, Holly, I'll turn it back over to you to open it up for questions. Thank you.

Questions. Thank you.

Certainly ladies and gentlemen, the floor is now open for questions.

Speaker 1: Ladies and gentlemen, the floor is now open for questions.

Speaker 1: If you have any questions or comments, please press star 1 on your phone at this time.

You have any questions or comments. Please press star one on your phone at this time.

We ask that while posing your question. Please pickup your handset listening on speakerphone.

Speaker 1: We ask that while posing your question, you please pick up your handset, if listening on speakerphone to provide optimum sound quality.

<unk> optimum sound quality please.

Please hold while we poll for questions.

Yeah.

Yes.

Your first question for today is coming from Jack Atkins. Please announce your affiliation then pose your question. Okay. Great. Good morning, guys, Jack Atkins from Stephens, Congrats on a really strong fourth quarter.

Speaker 1: for today is coming from Jack Atkins, please announce your affiliation, then pose your

Speaker 5: Okay, great. Good morning guys. I'm Jack Atkins from Stevens. Congrats on a really strong fourth quarter. Hey, thanks Jack.

Hey, Thanks, Jack extra to hear your voice.

Speaker 5: Good to hear your voice as well, James. So I guess maybe if we could start, you know, James, you talked a lot about the sustainability of the results. And obviously, you know, the freight market has been incredibly strong over the last 18 months. But you guys have been

Good to hear your voice as well James So I guess, maybe if we could start James.

Talk a lot about the sustainability of the results and obviously the freight market has been incredibly strong over the last 18 months, but you guys have been doing a lot to really put the business on the right track regardless of the freight cycle I would just be curious if maybe if we could talk for a minute about as you look out into 2022, we're going to have.

Speaker 5: doing a lot to to really put the business on the right track regardless of the freight cycle. I would just be curious if maybe if we could talk for a minute about as you look out into 2022 we're going to have you know tailwinds at our back from a from a from a cycle perspective that should persist through most if not all of this year.

Tailwind at our back from a promo from a cycle perspective, it should persist through most of about all of this year.

Speaker 5: What are maybe a couple of the key strategic...

Maybe a couple of the key strategic.

Speaker 5: you know, goals for this year, particularly within the asset-based business.

Goals for this year, particularly within the asset based business.

Speaker 5: to further that sustainability goal. What do you think about, you know...

To further that sustainability goal, what do you think about that.

Speaker 5: business longer term? Is it increasing the engine, the engineered lanes, the percentage of the business tied to that increasing dedicated? You know, what are some of the maybe intermediate goals as you think about, you know, again, that that longer term vision of an assay based business that's generating a 90 to 92 or

The business longer term is it increasing the engineered lane as a percentage of the business tied to that increasing dedicated what are some of them maybe intermediate goals as you think about it.

Again that longer term vision.

And assay business, that's generating 92, our through cycle.

Yes, Thanks Jack.

Speaker 3: Yeah, thanks, Jack. I kind of have become my normal practice. I'll be a little bit circuitist, but I will answer your question directly. So, you know,

Has become my normal practice there'll be a little bit circuitous, but I will answer your question directly so.

No.

Speaker 3: We have the same opportunity in 2020 and 2021, like everybody else to go be hogs, right? Everybody knows that the cliche, pigs get fat, hogs get slaughtered. We, we,

We have the same opportunity in 2020 in 2021 like everybody else to go.

The hogs.

Everybody knows the cliche pigs get fat hogs get slaughtered.

We.

Speaker 3: We chose to take a longer view and really architect our network.

We chose to take a longer view and really architect our networks.

Speaker 3: with some intentionality and focus on profitability and sustainability. And so when I talk to my friends in the industry, you know, we all kind of say, look, you know, if you're not taking this opportunity to upgrade the freight, build meaningful, sustainable customer relationships.

With some intentionality and focus on profitability and sustainability and so when I talk to my friends in the industry. We all kind of say look if you're not taking this opportunity to upgrade the freight build meaningful sustainable customer relationships.

Speaker 3: and have something that will stand the test of time then you're really missing the mark. And so rather than, you know, chase spot freight, I mean, as evidenced by the 10% spot number that we had in the quarter, you know, we've been really, really thoughtful. So the first component of that long-term success is network design. The second thing I'd love to mention, and you might remember this, Jack, I talked, I don't know, three or four quarters ago.

And have something that will stand the test of time, then you're really missing the mark and so rather than chase spot freight.

As evidenced by the 10% spot number that we had in the quarter. We've been really really thoughtful. So the first component of that long term success is network design. The second thing I'd Love dimension and you might remember this Jack I talked I don't know three or four quarters ago.

Speaker 3: about 2019 being kind of the prisoner's dilemma of freight. We learned some really important lessons from 2019. We learned that whoever has the freight in a down cycle wins.

2019, being kind of the prisoner's dilemma of freight we learned some really important lessons from 2019, we learned that whoever has the freight in a down cycle win.

Speaker 3: And the reason is, tender acceptance rates go through the roof, service levels go through the roof, and customers have no reason to change providers at that point. So if you don't have the freight,

And the reason is.

Tender acceptance rates go through the roof service levels go through the roof and customers have no reason.

To change providers at that point. So if you don't have the freight you end up.

Speaker 3: you end up trying to convince customers to give you freight in an environment where they have no incentive to do so. And so,

Trying to convince customers.

Customers to give you a frightening environment, where they have no incentive to do so and so we resolved in 2019 that from a margin construct standpoint, we would get more asset light because those pte models. Those all are stay consistent the revenue per load may not but the or the profitability approach.

Speaker 3: We resolved in 2019 that from a margin construct standpoint, we would get more asset light because, you know, those PT models, those OR stay consistent. You know, the revenue per load may not, but the OR, the profitability approach to file stays consistent, that's one.

<unk> consistent that's one two we realized that he who has the freight wins and so we took this opportunity.

Speaker 3: Two, we realized that he who has the freight wins. And so we took this opportunity.

Speaker 3: To get even more volume in our system. You certainly see that in our logistics business in our logistics business

To get even more volume in our system, you certainly see that in our logistics business our logistics business.

Speaker 3: load count over the last five years is up about 40%. That's an incredible number. Over the last two years in our architected network, which would be in our asset business, we've been awarded 25% more freight than we were in 2019. And so we've really taken the lessons of the.

Load count over the last five years is up about 40% that's an incredible number over the last two years and are Architected network, which would be our asset business. We've been awarded 25% more freight than we were in 2019.

So we've really taken the lessons.

The past to heart in building something we will we believe will sustain the test of time and then now to answer. Your question. We don't have I mean, we have a balanced scorecard that we looked at internally that has about 35 to 40 metrics that we're all accountable for when we review those in our staff meeting and the organization is really run off.

Speaker 3: to heart in building something we will, we believe will sustain the test of time. And then now to answer your question, we don't have, I mean, we have a balanced scorecard that we look at internally that has about 35 to 40 metrics that we're all accountable for, and we review those in our staff meeting. The organization's really run on that. It's kind of the clock for the company.

That it is kind of the clock for the company.

Speaker 3: But as a firm, we have three specific goals for the company that we believe are the three most important things that will drive enduring value in the company. The first one is load count. Everybody in this company, if you were to get them on an elevator and ask them the elevator test, would know these three things. Load count's the first one. The second goal is revenue per company tractor.

But as a as a firm.

Firm, we have three specific goals for the company that we believe are the three most important things that will drive enduring value of the company. The first one is load count everybody in this in this company. If you were to get them on an elevator and asking the elevator test with no. These three things load count the first one the second.

Goal is revenue per company tractor it used to be revenue per truckload tractor, but we changed it to include the dedicated business in that as well so revenue per company tractor and then the third one is one that you maybe wouldn't mentioned on an earnings call, but we think it's vitally important to our success and Thats preventable accidents.

Speaker 3: It used to be revenue per truck load tractor, but we changed it to include the dedicated business that Matt as well. So revenue per company tractor. And then the third one is one that you maybe wouldn't mention on an earnings call, but we think it's vitally important to our success. And that's preventable accidents per million.

Per million miles and so we are focused on those three things and we think a business that has load count that has revenue per truck.

Speaker 3: And so we are focused on those 3 things and we think a business that has load count, that has revenue per truck, which is largely supported by the network initiatives that you were alluding to and operates safely is a type of business that can sustain all kinds of market headwinds. I hope that answered your question.

Which is largely supported by the network initiatives that you were alluding to and operate safely is a type of business that can sustain all kinds of market headwinds I hope that answered your question.

Speaker 5: No, it absolutely does. And I guess, just a follow-up question to that, I hate to kind of just jump straight to the balance sheet and cash flow, but I think capital allocation here is an interesting kind of question.

Absolutely does and I guess.

Just a follow up question to that I hate to kind of just jump straight to the balance sheet and cash flow, but I think capital allocation here is.

An interesting kind of question.

As we look forward because to your point the market is not giving you guys a credit that you deserve for the changes that you've made.

And I would just be curious to get.

Your thoughts Zach thoughts.

As we sort of look over the course of this year.

Hey.

Where do you see the debt balance going is that free cash flow going to be allocated towards reducing debt or perhaps do you maybe think about.

Speaker 5: where do you see the debt balance going? Is free cash flow going to be allocated towards reducing debt? Or perhaps do you maybe think about allocating some cash towards buying back stock? I know the float itself isn't probably where you want to be in terms of trading liquidity. But I would think that there's an opportunity here to buy in shares because of the cash flow profile the company

Allocating some cash towards buying back stock I know the float itself.

Probably where you wanted to be in terms of trading liquidity.

I would think that there's an opportunity here to buy in shares.

Because of the cash flow profile of the company is improving the balance sheet certainly has improved quite a bit.

Yes, Jack for Us.

Speaker 4: Yeah, I mean, Jack, for us, you know, we kind of outlayed our 50 to 60 million dollars of capex we expect in 2022. So, you know, with some of that being rollover capex, we do anticipate that a lot of our EBITDA generated this year will go to, you know, essentially

We kind of outlaid, our $50 million to $60 million of Capex, we expect in 2022 so.

Some of that being rollover capex, we do anticipate that a lot of our EBITDA generated this year, we will go to.

Essentially.

Speaker 4: reducing the age of our fleet by trying to, you know, buy down the age of that fleet with newer tractors, selling some of the old ones. The one item that we do have that is beneficial is it's the tight market right now. So as we slackle out some of those older tractors, they are worth a little bit more in the market, which kind of keeps our cap X in line slightly as we're purchasing to reduce the age.

Reducing the age of our fleet by trying to buy down the age of that fleet with newer tractor selling some of the old ones. The one item that we do have that is beneficial as the tight market right now so as we cycle out some of those older tractors. They are worth a little bit more on the market, which kind of keeps our capex in line slightly as well as our purchasing to reduce the age in terms of the share.

Speaker 4: In terms of the share buyback, we look at our investment of our cash through a variety of means. We don't roll anything out at any particular time. We look at the ROI's and our liquidity position and make the best decision that we can at that point.

Buyback.

We look at our investment of our cash.

Through a variety of means we don't rule anything out at any particular time, we look at the Rois and our liquidity position and make the best decision that we can at that point.

Speaker 4: But right now, I mean, we are truly focused on those 3-T initiatives that we outlined. It's reducing the age of the fleet, is our primary goal with our cash.

But right now I mean, we are truly focused on those three those three key initiatives that we outlined is reducing the age of the fleet.

As our primary goal with our cash at this point.

Okay got it and I guess, maybe just a quick follow up on that I would imagine Zach working capital has gone up quite a bit because of.

Speaker 5: Okay, got it. And I guess maybe just a quick follow up on that. I would imagine, you know, Zach working capital has gone up quite a bit because of the additional revenue in broke.

The additional revenue and brokerage.

Speaker 5: uh... you know i would imagine when the market kind of begins to stabilize a bit that could be a cash windfall to you you know maybe helping to uh... to overcome the additional capex this year you know is that something that maybe could be a benefit to cash flow i don't think second half of this year twenty three but uh... i would imagine that you probably carry more working capital than you

I would imagine when the market kind of begins to stabilize a bit that could be a cash windfall to you maybe helping to overcome the additional capex this year.

Is that something that maybe could be a benefit to cash flow I don't know if its the second half of this year of 'twenty, three but I would imagine that you probably care more working capital than you would typically imagine yes, we are.

Speaker 4: Yeah, we are. You know, our, you know, we've been fortunate our DSO has remained around that, you know, low 40s number, you know,

We've been fortunate our DSO has remained around that low 40.

Number over the last I guess.

Speaker 4: I guess, two or three years. So we've been able to maintain our collections. We've got a group of great customers that pay on time and are very reasonable. And then on our logistics side, in terms of our carriers, yeah, we do have a little bit of compression there in terms of DSO and the timing that we pay out. So, I mean, you're absolutely right. As revenues start to stabilize, you'll see that kind of, that windfall start to come in. But as revenues continue to ramp up, you're still going to have that gap.

Two or three years, so we've been able to maintain our collections. We got a group of great customers that that pay on time in a very reasonable and then on our logistics side in terms of our carriers, yes, we do have a little bit of compression there in terms of DSO and the timing that we pay out so I mean youre absolutely right as revenue start to stabilize you will see that kind of.

<unk>.

That windfall start to come in but as revenues continue to ramp up you're still going to have that gap.

Speaker 4: In terms of, you know, your working capital gap, but yeah, cash generation will definitely increase in our logistics business through 2022. But you'll always have that gap a little bit as revenues are increasing.

In terms of your working capital gap, but yes cash generation will definitely increase in our logistics business through 2022.

Youll always have that gap a little bit as revenues are increasing okay. Alright makes sense last question I'll turn it over to somebody else to jump back in queue.

Speaker 5: Okay, all right, makes sense. Last question, I'll turn it over to somebody else and jump back in queue. But I'd love to kind of get your sense on driver recruiting.

I'd love to kind of get your sense on driver recruiting.

And it seems like.

Some carriers are including you guys are beginning to get a little bit of traction.

Speaker 5: Carriers, including you guys, are beginning to get a little bit of traction. Growing fleet, quarter over quarter. You guys have been doing that for the last couple of...

Growing fleet quarter over quarter, you guys have been doing that for the last couple of quarters and you were one of the first ones to do that.

Speaker 5: first ones to do that because of the actions you've been taking. But just would be curious James, you may be coming on, you know, is it maybe a little bit easier to recruit driver today versus maybe three or six months ago? And, you know, what's your expectation for the fleet?

Because of the actions you've been taking but just would be curious James if you could maybe comment on is it maybe a little bit easier to recruit drivers today versus maybe three or six months ago.

And what's your expectation for the fleet, maybe over the course of 2022.

Yes. So fair question. It's funny, we were at your conference and we were talking.

Speaker 3: Yeah, so fair question. It's funny. We were at your conference and we were talking at a table with with another operator, you know, if it was a 10 out of 10 to recruit. Now it's a 9.8. so it's a little, but it's still really hard. I was talking, you know, in preparation for the end of the quarter, we always do deep dive reviews with each of our business leaders and as we went through.

A table with another operator.

It was a 10 out of 10 to recruit now at nine eight.

No.

A little but it's still really hard.

I was talking in preparation for the end of the quarter, we always do deep dive reviews with each of our business leaders and as we went through.

Our recruiting leaders.

Speaker 3: our recruiting leaders, you know, key metrics. You know, I had very much the same question. It's, look, the cost of recruit is up about 16% year over year. So it's more expensive. Part of the issue is they're remain a large contingent of people who are not incentivized to work.

Key metrics I had very much the same question.

Look the cost to recruit is up about 16% year over year. So it's more expensive part of the issue is there remain a large contingent of people who are not incentivized to work.

Speaker 3: And as a result, you know, we're our kind of efficacy and efficiency of hiring. It just takes more leads to get a good hire and it's harder to find highly qualified drivers than at any time in history, maybe just as hard as it was last year. And so with that said, we don't see an ease up in that coming. And so we're really proud.

And as a result.

Where are kind of efficacy and efficiency of hiring it just takes more leads to get a good hire and it's harder to find highly qualified drivers than at any time in history, maybe just as hard as it was last year and so with that said, we don't see an ease up and that coming in so we're really.

Proud.

Speaker 3: of, you know, the sub 80% turnover this company has, you know, four and a half years ago it was over 140%.

Of the sub 80% turnover. This company has $4 five years ago. It was over 140% and so if you were to ask me. If the board were to ask me, which they have give us your cogent actions that have led to those outcomes, it's really difficult to put your finger on it we've gone to regionalization, which allows us to see our.

Speaker 3: And so, if you were to ask me, or if the board were to ask me, which they have, you know, give us, you know, your cogent actions that have led to those outcomes, it's really difficult to put your finger on it. We've gone to regionalization, which allows us to see our drivers more frequently and establish.

Drivers more frequently and establish better long term relationships and people feel accountable I always say that face time creates mutual accountability, we've really invested in our culture as a finance guy used to cringe, when I say that but I believe it with my gut.

Speaker 3: better long-term relationships and people feel accountable. I always say that FaceTime creates mutual accountability.

Speaker 3: We've really invested in our culture. You know, as a finance guy, I used to cringe when I'd say that, but I believe it with my guts. You know, it's made all the difference in the world. And so.

Made all the difference in the world and so.

Speaker 3: The way our people treat each other and the way our drivers kind of step up and represent the brand is just life changing in terms of the health and the lifeblood of our company. I last night after earnings dropped, I was, you know, watching Facebook and and other social media platforms and I had hundreds of drivers.

The way our people treat each other and the way our drivers kind of step up and represent the brand.

Is this life changing in terms of the health and the lifeblood of our company last night after earnings dropped I was.

Watch in Facebook and other social media platforms, and I had hundreds of drivers posting forward in and commenting about the success of the company. They are really proud to be part of a winning company.

Speaker 3: posting forward and commenting about the success of the company. They're really proud to be part of a winning company. And so.

And so.

Speaker 3: I think those ongoing cultural refinements and investment in our people is going to continue to be a competitive advantage for us, particularly in the truckload space with respect to company drivers and owner-operators. And yeah, the environment is still tough. It's really hard. You got to sift through a lot more leads to get to the wheat and cast aside the chaff if you will.

Those ongoing cultural refinements and investment in our people is going to continue to be a competitive advantage for us, particularly in the truckload space with respect to company drivers and owner operators.

And yes, the environment is still tough its really hard you got to sift through a lot more leads to get to the wheat.

And cast aside the chaff if you will so thanks for the question Jack.

Speaker 5: Thanks for the question, Jack. No, absolutely. I've got a couple additional follow-ups for our job back in Q and headed over to somebody else. All right. Thank you.

I've got a couple of additional follow ups, but I'll jump back in queue and hand, it over to somebody else. Thanks again for the alright. Thank you.

Speaker 1: Your next question is coming from Elliot Alper. Please announce your affiliation, then pose your question.

Your next question is coming from Elliot Alper. Please announce your affiliation then pose your question.

Speaker 6: Great. Thank you. This is Ayapra from Cowen. So I guess first on the logistics side, last quarter you discussed bringing on some new employees to manage some of the load count growth. Can you talk about your expectations for that heading into the new year aligned with some of this new hiring? And then clearly the productivity metrics are impressive. What are some of the factors that are driving that employee margin, especially given some of the elevated wage and benefits we're seeing kind of across the board?

Great. Thank you.

I think also from Cowen.

So I guess first on the logistics side last quarter, you discussed, bringing on some new employees to manage some of the load count growth can you talk about your expectations for that heading into the new year aligned with some of this new hiring and then <unk>.

Good productivity metrics are impressive kind of what are some of the factors that are driving that employee margin, especially given some of the elevated wage and benefit we're seeing kind of across the board.

Yes, So let me just write this down so answer to your question so on the new employees.

Speaker 3: Yeah, so let me just write this down so I answer your question. So

Speaker 3: On the new employees, you know, I think we had, if I remember the number right, 26 new employees in the quarter.

We had if I remember the number right 26, new employees in the quarter.

Speaker 3: And they continue to be in ramp up mode. And so today, while they're ramping quickly and learning our systems, we have a really...

And they continue to be in ramp up mode and so today, while they are ramping quickly and learning our systems, we have a really kind of cool internally developed.

Speaker 3: kind of cool internally developed rotational program where they go through every facet.

<unk> program, where they go through every facet of logistics training and get kind of to co pilot at every stop in the logistics business. They are all just completing that training now and so we expect them to be up and running by mid year. I think you didn't say this in the asking your question, but kind of I think underlie.

Speaker 3: of logistics training and get kind of to co-pilot at every stop in the logistics business. They are all just completing that training now. And so we expect them to be up and running, you know, by mid-year. I think you didn't say this in the asking your question, but kind of I think underlying that question is how are you hiring people in this environment? And it's pretty remarkable.

That question is how are you hiring people.

<unk>.

And it's pretty remarkable.

Speaker 3: You know, one we've got great people that are evangelistic about how they talk about their business and they Garner a lot of excitement and they recruit at the schools where they went to school and they do a great job But the other side of this is you know, Elliot We're able to hire people now that we've never been able to hire before and we we're really proud of the team that we have

One we've got great people that are evangelistic about how they talk about their business and they garner a lot of excitement and they recruited the schools, where they went to school and they do a great job, but the other side of this.

We're able to hire people now that we've never been able to hire before it.

Really proud of the team that we have.

Speaker 3: And yet, we have people knocking on our doors that, you know, wouldn't have knocked on our doors before. An example of that is our safety leader, you know, used to run safety and compliance for, you know, for Walmart's private suite, you know. How do you get an employee of that caliber? We didn't want to muddy our earnings announcement by making a big HR announcement, but next week you'll see that we just hired as our chief people officer.

And yet we are people knocking on our doors that.

We wouldn't have knock on our doors before an example of that is our safety leader use.

It used to run safety and compliance for.

For Walmart's private fleet.

How do you get an employee of that caliber now we didnt want to muddy our earnings announcement by making a big HR announcements next week, you'll see that we just hired as our chief people officer.

Speaker 3: probably the absolute best talent available in the market. You know, somebody that's run a 10,000 truck private fleet for one of our biggest customers.

The absolute best talent available in the market somebody that's run a 10000 trucks private fleet for one of our biggest customers and we have a great great great relationship with that customer, but the point is this is becoming a destination employer and so we continue to have great success, adding to that pool. So those two.

Speaker 3: And we have a great, great, great relationship with that customer, but the point is, this is becoming a destination employer. And so we continue to have great success adding to that pool. So those 26 people that I mentioned earlier, we expect to be productive by kind of Q2. And then, you know, there cohort colleagues that are coming right behind them, we expect to add another, I'm making number up here. I think it was around 50 this year. We're adding a lot of people, is that about right Mike? Yeah, but...

Six people that I mentioned earlier, we expect to be productive by kind of Q2, and then they're cohort colleagues that are coming right behind them.

We expect to add another <unk>.

Make a number up here I think it was around 50. This year, we're adding a lot of people is that about right Mike yes.

Speaker 3: Okay, so it's five to 10 a month that we're adding. So it's just a great pipeline. And so we're really encouraged by long-term aspirations there.

Okay. So it's five to 10, a month that we're adding so there's just a great pipeline and so we're really encouraged by our long term aspirations. There in terms of the factors that are driving the performance.

Speaker 3: in terms of the factors that are driving the performance.

Speaker 3: Some of it's just good old-fashioned grit, right? We've got some great leaders that caught the vision of the company and managed the business cadence very well. That's one. Two is some of the technology tools that we've put in place. We talked several quarters ago. We were one of the pioneering companies to come out with API pricing. We have a considerable portion of our freight, it's about 5% right now, that gets bid.

Some of it is just good old fashion grid right.

We've got some great leaders that caught division of the company and manage the business cadence very well. That's one two is some of the technology tools that we've put in place we've talked several quarters ago. We were one of the pioneering companies to come out with API pricing, we have a considerable portion of our freight it's about 5% right now that.

Getz.

Bid.

Speaker 3: to the customer automatically without human interaction based on market data that we have.

Two the customer automatically without human interaction based on market data that we have it's either accepted or declined by the customer. It subsequently tendered to us by the customer we match capacity to it and there is never a human hand involved in that process and so we're using technology and tools to enable better and faster.

Speaker 3: It's either accepted or declined by the customer. It's subsequently tender to us by the customer. We match capacity to it, and there's never a human hand involved in that process. And so we're using technology and tools.

Ability and then the third thing we've talked about a little bit in the past on some of these calls.

<unk> engaged some partners to do some of the administrative work. So we've found lower cost geographies near shoring to be specific where we have taken some of the kind of day to day tasks that arent, particularly value added for our people and found other avenues to complete those xactly my missing anything there in the industry no. The only thing that I would.

Speaker 4: lower-cost geographies, near-shoring to be specific, where we have taken some of the kind of day-to-day tasks that aren't particularly value-added for our people and found other avenues to complete those. Zach, am I missing anything there? No, the only thing that I would add is, you know, continuing on the training platform that we've built. I mean, that's been an investment that we've made in people and in, you know, and training staff and systems and processes. That way, whenever those individuals that complete that training program within our logistics segment...

AD is continuing on the trading platform that we've built.

Speaker 4: That's been an investment that we've made in people and in, you know, and training staff and systems and processes.

That's been an investment that we've made in people and in.

And training staff and systems and processes that way whenever those individuals' that complete that training program within our logistics segment graduate they're up and running faster than they would have been if you are just.

Speaker 4: That way whenever those individuals that complete that training program within our logistics segment

Speaker 4: graduate, they're up and running faster than they would have been if you were just, you know, hire someone, you know, with a college degree up the street and train them on the job. So the exposure that you can give that individual to the multiple facets, either, you know, in the carrier sales or in the account management. And you can find that right fit quickly for that individual. It just helps them get up and running a lot faster. So.

Hire someone.

A college degree off the street and train them on the job so.

The exposure that you can give that individual to multiple facets either on the carrier sales or in the account management.

And you can find that right fit quickly for that individual that just helps them get up and running a lot faster. So that's been something that I think has been very successful and we will be very successful in 2022.

Speaker 4: That's been something that I think has been very successful and will be very successful.

Okay. That's really helpful. Thank you for that.

Speaker 6: Okay, that's really helpful. Thank you for that. Switching over to the trucking side, really impressive OR in the fourth quarter. I guess, how should we think about the normal seasonality of OR in the first quarter, kind of on top of the strength we're seeing through January ? And then you discussed some of that 50-50 truckload dedicated mix. Did you give a timeline on when that may be?

Switching over to the trucking side really impressive or in the fourth quarter I guess, how should we think about the normal seasonality of or in the first quarter kind of.

On top of the strength that we're seeing through.

Through January .

And then you discussed some of that $50 50 truckload dedicated mix did you give a timeline on when that may be.

Yes, so the 50 50 mix our goal is to be there by the end of 2024, we're right now just over 35% and.

Speaker 3: Yeah, so the 50-50 mix, our goal is to be there by the end of 2024. We're right now at just over 35 percent. And growing that at 15 percent or so a year, we think gets us to the number.

Growing that at 15% or so a year, we think gets us to the number.

Speaker 3: If you look at the seasonality, it's really an interesting question about what we think Q1's gonna be for the asset business. Cause we've got owner operators that are performing around a 90, we've got dedicated performing around a 90, we've got our Davis business, which is quasi-dedicated, but just below 90.

If you look at the seasonality, it's really an interesting question about what we think Q1 is going to be for the asset business. Because we've got owner operators are performing around a 90, we've got dedicated performing around the 90, we got our Davis business, which it is.

Quasi dedicated that's just below 90.

Speaker 3: And you've got this, you know, let's admit it, right, this crazy kind of frothy market that

And you've got this <unk>.

Let's admit it right in this crazy kind of frothy market that.

Speaker 3: that kind of challenges our normal construct about seasonality.

The kind of challenges are our normal construct about seasonality.

Speaker 3: What we expect Elliott is that business to perform in the low 90s and Q1. So that would be a little bit of a back off from where we were in Q4. But I'll tell you, January started kind of slow, but then it went out like a lion.

Expect Elliot is that business to perform in the low <unk> in Q1, so that would be a little bit of a back off from where we were in Q4, but.

I'll tell you January started kind of slow, but then it came out it went out like alliance and as we look at where we are vis via our own inspection and expectations. We're actually slightly ahead of our own expectations. So we think it's low ninety's, but it's still a really great market.

Speaker 3: And as we look at where we are vis-a-vis our own expectations, we're actually slightly ahead of our own expectations. So we think it's low 90s, but it's still a really great market.

Okay, great. Thank you Bob really appreciate it.

Take care.

Your next question is a follow up question coming from Jack Atkins, Jack You're line is live.

Speaker 5: your next question is a follow-up question coming from jack atkins jack your line is life okay great thank you uh... suggest i guess one quick follow-up question and that's you know james go back to your comment on spot as a percentage of your of your uh... at the base mix today i think you said about ten percent you know is there a way to kind of think about where that was

Okay, great. Thank you. So just I guess, one quick follow up question and Thats James going back to your comment on spot as a percentage of your of your asset base mix. Today. I think you said about 10% is there a way to kind of think about where that was.

Speaker 5: Maybe either in 2018 or going into early 2019 just to kind of compare and contrast maybe where you are today Versus where you were maybe in the last cycle Yeah

Maybe either in 2018 or going into early 2019, just to kind of compare and contrast, maybe where you are today versus where you were maybe in the last cycle.

That's a great question, Jack so and at the end of 2018 I don't have the number in front of me. So I'm working from memory, but I think it'll be really close we were right around 15%, we've never gone above that number and the time that I've been here.

Speaker 3: And at the end of 2018, I don't have the number in front of me. So I'm working for memory, but I think I'll be really close. We were right around 15%. We've never gone above that number in the time that I've been here.

Speaker 3: And the rationale at that point in time was we didn't feel

And the rationale at that point in time was we didn't feel like we were fixing a broken company right. We didn't feel like we were nimble enough to be able to jump into that market and then jump back out of it and sustain our awesome customers, who have supported us so much and so we made a choice at that point to stay.

Speaker 3: We were fixing a broken company, right? We didn't feel like.

Speaker 3: We were nimble enough to be able to jump into that market and then jump back out of it and sustain, you know, our awesome customers who have supported us so much. And so we made a choice at that point.

Speaker 3: to stay kind of low on that. As we got into this part of the cycle in 2021, it was actually a little bit different objective function. We've become very protective of our network. And I mean, we're just math guys, right? Remember, you got three corporate finance guys sitting around the table. We just do the math. Our network guys figure out what the best they'll are is and we have this really kind of consistent cadence where we work with customers to refine out.

Kind of low on that as we've gone at this part of the cycle in 2021, it was actually a little bit different objective function, we've become very protective of our network.

We're just math guys right I remember you got three corporate finance guys sitting around the table. We just do the math our network guys figure out what the best <unk> and we have this really kind of consistent cadence when we work with customers to refine out.

Speaker 3: You know, the portions of the network that don't work for us and don't work for them.

Portions of the network that don't work for us and don't work for them and so.

Speaker 3: You know, we weren't really and we look, we look at our competitors very closely and we've gone and charted everybody's rate over time and you can.

We werent really look we looked at our competitors very closely and we've gone and charted everybody's rate over time and you can absolutely see who's kind of play in the spot market and who is playing the long game. We definitely are playing the long game and so just to be concise in 2018.

Speaker 3: absolutely see who's kind of playing the spot market and who's playing the long game. We definitely are playing the long game and so just to be concise, in 2018, you know, we didn't play in the spot market because we didn't feel like we were nimble enough. In 2021, we didn't play in the spot market because we made a strategic decision to stick to our knitting, which still represented a huge improvement and got us, you know, if you look at the average results, we're right in the middle of the top performers in the industry now.

We didn't play in the spot market because we didn't feel like we were nimble enough in 2021, we didn't play in the spot market because we made a strategic decision to stick to our knitting, which still represented a huge improvement and got US. If you look at the average results were right in the middle of the top performers in the industry now hope that is helpful.

Speaker 5: Hope that's helpful. No, no it is, but still you've got lower spot market exposure, which I think is good.

But still you've got lower spot market exposure, which I think is good going back to the sustainability point from from from earlier in the call.

Speaker 5: Last question is just on brokerage, and again, I'm just trying to compare to where you were in the last cycle. Correct me if I'm wrong, but it feels today like you're obviously, you've seen a lot of maturation within your brokerage business. You were making investments.

Last question just on brokerage and again I'm, just trying to compare to where you were in the last cycle.

Correct me, if I'm wrong, but it feels today like.

Youre, obviously, you've seen a lot of maturation within your brokerage business you were making investments in 2018 to 2019.

Speaker 5: 2018 and 2019, with the vision of what you're beginning to see today, I know that it was kind of a little bit choppy as we went through 2019 for your brokerage business. I guess as you look forward, you sound...

<unk> of what you are beginning to see today.

I know that it was kind of a little bit choppy as we went through 19 for your brokerage business I guess as you look forward you saw.

Speaker 5: pretty confident that you know you can grow you know obviously the top line is going to fluctuate around with revenue per load but but you but you know you can you can you know maintain sort of the momentum that you're seeing there is that is that just because 2019 2018 was a period of investment and now it's a matter of just you know kind of continuing

Confident that you can grow.

Obviously, the top line is going to fluctuate around with revenue per load, but but but.

And you can maintain sort of the momentum that youre seeing there is that just because 2008 2018 was a period of investment right now it's a matter of just kind of continuing.

Speaker 5: to reap the rewards of that? How should we think about differences today versus last cycle to ask it more directly?

To reap the rewards of that I mean, how should we think about differences today versus last cycle I guess to ask it more directly.

Yeah.

Look in 2019.

No.

Speaker 3: You know, I kind of mentioned this a little bit earlier.

<unk> mentioned this a little bit earlier.

<unk>.

We really we've learned some hard lessons in 2019.

Speaker 3: We really, we learned some hard lessons in 2019.

Speaker 3: And one of the things we did as a bit of a post mortem on it is we went and did the math. And I asked a question in a strategic session of guys, you know, I understand that 2019's revenue per load is at an all time low. And it was it's the lowest it's ever been that anybody's ever seen.

And one of the things we did as a bit of a postmortem on it as we went and did the math and I asked the question in a strategic session of guys.

Your stand at 2019 revenue per load is at an all time low and it was it's the lowest it's ever been that anybody has ever seen and when you've got essentially a fixed margin business on a low revenue per load. I mean, you you understand pretty quickly what it takes to have fixed cost coverage in that business. So my question was how much volume would we have.

Speaker 3: And when you've got essentially a fixed margin business on a low revenue per load, I mean, you understand pretty quickly.

what it takes to have fixed cost coverage in that business. So my question was, how much volume would we have had to do to survive the cycle and be profitable through that? And it was a really easy analysis. And we figured out very quickly that we had to have what we've now referred to as a supermarket model where there's just a high throughput engine. And so.

<unk> had to do to survive the cycle and be profitable through that and it was a really easy analysis and we figured out very quickly that we had to have what we have now referred to as the supermarket model, where theres just a high throughput engine and so so much of what we've done it wasn't really market conditions as much as it was our capability and our cost.

So much of what we've done, it wasn't really market conditions as much as it was our capability and our constructs. So as I mentioned earlier in answering Elliot's question, we've put all these tools in place.

<unk> so as I mentioned earlier in answering Elliot's question, we've put all of these tools in place.

You know, kind of offshored some of the more kind of administrative tasks. We've implemented API pricing so we can handle more higher throughput freight more consistently quickly and responsibly to the market demands than we ever could before.

Kind of offshore and some of the more kind of administrative tasks, we've implemented API pricing. So we can handle more higher throughput freight.

Consistently quickly and responsibly to the market demands than we ever could before.

We've worked with these outside technology partners to help us automate some of the capacity matching, you know. I mentioned Convoy by name, but there's a couple others that we've been working with. And people think, geez, you know, aren't they your competitors? Well, in some markets, yes, but in others, absolutely not. So we strategically leverage the capacity capability of our partners in areas where we don't have.

We've worked with these outside technology partners to help us automate some of the capacity matching matching I mentioned convoy by name, but there is a couple of others that we've been working with and people think geez.

Aren't they your competitors well in some markets, yes, but in others, absolutely not so strategically leverage the capacity capability of our partners in areas, where we don't have.

you know, an operating advantage to help us fill in the gaps.

No.

An operating advantage to help us fill in the gaps and so that.

that simple mindset shift and you might remember I used to call it the stag model, the stuff through a goose. But you know it's a supermarket model and so

That simple mindset shift and you might remember I used to call. It the stag model the stuff through a goose, but.

It's the supermarket model and so it's really easy to do the math that if you have enough volume even at depressed revenue per load you can still cover your fixed cost and make a really healthy EBITDA, our op income out of that business and so that was.

it's really easy to do the math that if you have enough volume, even at depressed revenue per load, you can still cover your fixed costs and make a really healthy EBITDA or OP income out of that business.

And so, that was the mindset shift change and, you know, our leader took it by the horns, took it, you know, was personally accountable for the result. And I'm extremely confident that that business will continue to grow and will be a strong contributor through any cycle. Okay, that's great. Thanks again for the.

That was the mindset shift change and our leader by the horns took it personally accountable for the results and.

Extremely confident that that business will continue to grow and it will be a strong contributor through any cycle.

Okay. That's great. Thanks again for the time.

Awesome. Thanks Jack.

There appear to be no further questions in queue. I would now like to turn the floor back over to James for any closing remarks.

There appear to be no further questions in queue I would now like to turn the floor back over to James for any closing comments great. Thanks Holly.

Great, thanks Holly. Earnings releases are a funny thing. By the time we get to share results, we've already moved on to the next quarter, but this quarter and this year were special, and yet they had an air of inevitability.

Earnings releases or funny thing by the time, we get to share results. We've already moved onto the next quarter, but this quarter and this year, we're special and yet they had an air of inevitability. The high school football coach where I graduated into the legend. His name is Ed Fisher is someone made a big hit are scored and then celebrated he'd grabbed him by the face mask and sternly.

The high school football coach, where I graduated is a legend. His name is Ed Fisher. If someone made a big hit or scored and then celebrated, he'd grab them by the face mask and sternly say, act like you've been there before. And that's how our whole team feels about these results. Yes, we had great results, but winners expect to win, and these results are the direct byproduct of our team collectively understanding the task.

Say act like you've been there before and Thats, how our whole team feels about these results. Yes, we had great results, but winter is expect to win in these results are the direct byproduct of our team collectively understanding the task executing well ultimately following our own business processes and overcoming the turnaround accompany that.

executing well, ultimately following our own business processes, and overcoming the odds to turn around a company that, for whatever reason, continues to be underappreciated in the market.

For whatever reason continues to be underappreciated in the market the playbook for winning in this business is not complicated we just run the place of a highly accountable culture and the outcomes are expected to be good. This team has accomplished a lot in a short period of time, we're ahead of schedule to hit our strategic goals and see ample opportunities for additional upside.

The playbook for winning in this business is not complicated. We just run the place, have a highly accountable culture, and the outcomes are expected to be good. This team has accomplished a lot in a short period of time. We're ahead of schedule to hit our strategic goals and see ample opportunities for additional upside. Our job now is to continue to do all we can to earn investor confidence and the confidence of the market in the quarters ahead. What a great way to end our first 30 years of the public company. Thank you and have a great day.

Our job now is to continue to do all we can to earn investor confidence and the confidence of the market in the quarters ahead.

Great way to end, our first 30 years as a public company. Thank you and have a great day.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.

Okay.