Q1 2023 Schneider National Inc. Earnings Call
Being most impacted as we work our way through the trough of this rate cycle.
Our initial guidance assumed the resumption of more typical seasonality in the fourth quarter characterized by higher volumes, along with promotional and project opportunities.
Our updated guidance retains this expectation, although at a slightly lower level.
Overall, our portfolio was performing well, especially given the operating backdrop.
And while we always feel like we have room for improvement.
There has been a fair amount of progress achieved and we feel well positioned to achieve profitable growth.
And deliver shareholder returns over the long term.
We continue to make investments in our equipment and technology and have the cash flows and balance sheet to do so throughout freight cycles.
Our guidance for 2023, net capex remains at a range of $525 million to $575 million.
And at this point, we're trending towards the upper end of that range as we implement new dedicated business Awards.
So with that we'll now open up the call for your questions.
Thank you.
At this time, we'll be conducting a question and answer session.
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<unk> using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.
Our first question comes from Jack Atkins with Stephens. Please proceed with your question.
Okay, great. Good morning, and thank you for taking my questions.
You bet.
Hey.
First of all I really appreciate the color and context in terms of like what's changing.
In your outlook.
As you think about.
A potential for a recovery in fundamentals or inflection in fundamentals. However, you want to kind of think about it on a phrase it.
In the fourth quarter around peak season.
Maybe you can provide some context in terms of what your customers are telling you about their anticipated rate blows. Our plans later on this year that gives you confidence that we may see that I think there's just a lot of uncertainty out there in terms of what we could see in the second half of the year and it's obviously nobody has a crystal ball, but would just be curious to get a feel for.
Or what your customers are telling you about their plans.
Great. Thanks for the question Jack.
I would say in general.
I think most of our customers are feeling.
They're making progress certainly against some of the overhang that they had on inventories.
And probably are doing so within the pace that they expected I think some of the.
Uncertainty and there is certainly I think having an increased amount of uncertainty is around that replenishment cycle and when things.
To pick up I would say in general, though there is cautious optimism.
But.
I guess, we're looking to see more proof points.
Versus just cautious optimism and I would say those comments reflect across multiple segments and verticals that we serve so.
And part of our caution as we look forward. It's things are certainly in the first quarter and the start here in the second quarter to be a bit delayed in our original expectations, we outlined in our opening comments.
Okay, no that makes sense.
That mark and I guess from a follow up question.
As you've gone through bid season here.
Over the last few months.
Any sort of update in terms of what you're expecting from Mike right.
Rate realization perspective on contractual renewals.
Whether it's in the for hire market or in dedicated it feels like shippers are getting increasingly competitive bid season has or increasingly aggressive rather.
<unk> bid season has gone on but would just be curious to get your thoughts on that.
Yes, the second quarter is a big quarter for us relative to renewals and so we've got some work to do to have a full view of that.
But certainly it's a highly competitive market.
Our dedicated business, we're really encouraged by not only in the context of what we've closed upon on what will be implementing yet through this calendar year, but our pipeline remains really strong our execution is really strong and it's as we laid out in our strategic intent.
A much more durable and consistent earnings and revenue stream and all of those things Jack from our perspective are playing.
That really leaves us to the network businesses, which I think are a bit more challenged.
As we discussed our intermodal business is highly correlated to imports and we need to see some increased import activity, which is driven by the replenishment cycle.
But as you looked at our revenue per order that's hanging in there pretty well.
And the real challenge for US right now is getting a handle around where we're going to land.
Ultimately on the price point on our network truck business and <unk>.
That's where we're the most competitive condition exists.
Okay. Thank you for the time guys really appreciate it.
Our next question is from Ravi Shanker with Morgan Stanley . Please proceed with your question.
Thank you good morning, Mark and Steve.
Maybe starting out with Mark you said in your prepared remarks that your dedicated business is at historic highs.
Does that tell us about where we are in the cycle and how your customers are thinking of maybe the potential up cycle.
Is that a sign that there is one more stability and visibility of their supply chain is that a sign that there'd be more defensive.
What can we take away from that.
Yes, Robert I mean, maybe behind your question is perhaps at this part of the cycle you might expect less interest in dedicated might might be what youre driving at there correct I think a couple yes.
Yes, I think a couple of things is first.
Dedicated that we're focused on.
Is less aligned to just capacity generation solutions.
And more around.
Something that we're providing either extremely high intense volume service.
<unk>.
Which the increasing demands even in retail DC to store operations fit that description.
Our for us more increasingly something more specialized in nature that isn't just.
Quote unquote more in the commodity or generic portion of the market and so I think our effort our sales resources and our approach to that.
As reflected in the numbers that I shared so it is not.
Perhaps maybe 10 years ago more of a direct correlation between network condition and a dedicated conditional we've kind of separated from that.
Not completely separated of course, but I think largely it's.
The type of dedicated operations that we are pursuing and customers.
<unk> high reliability, and a strong balance sheet to invest in that equipment, particularly in the specialty area.
And so this is a multiyear effort for us to get to the kind of traction that we are at now.
Both commercially operationally and in the markets that we're targeting so I would separate those things just a little bit.
For maybe a historical context.
That's helpful and then kind of exactly what I was looking for maybe as a follow up maybe a longer term question on the intermodal side, obviously, we know how to speaking with you again.
Okay. So <unk>.
And we have the new service with CN UPN, Grupo Mexico, I am sure that third West Coast railway is not going to sit back and wait to see how the other two play out what's the three year outlook in the intermodal space.
We can finally deliver the kind of truck conversion that are many of these players have been wanting to do over the last several years do you think it's going to be more of an intra rail competitor thing taking share from each other and how does that play out.
Well I think it was that a comment or question more to the CPE Casey or just in general in your model.
As a general.
The competitive environment within intermodal as a whole again after you were to choose to allocate in the follow up to <unk>, just as a whole for the industry.
Great. Thanks for the clarity.
So.
This is Jim I'll start broadly and then I'll jump more specific way into Mexico.
Youre absolutely right. There is surplus has been something that has held back to intermodal over the last couple of years. There has been a share loss from over the road.
From intermodal to over the road as well as being.
Having competitive pricing and there was a little bit of a switch from west coast ports to east coast ports, which hasn't had an impact.
I would expect to see some improvement we've already seen experienced improvement in service levels. A rail to know that we have to be competitive from a pricing standpoint, and so there's opportunities to convert there specifically in Mexico with this change to the CPE Casey.
It's a pretty dramatic opportunity here because.
Previously if you look at the service issues from Mexico. There were really two number one the number of interchanges that you would experience moving freight from Mexico into the U S. In each one of those interchanges.
Potential fault of failure and what the CP Casey has created is a single rail delivery going from our <unk> III ramps in Mexico on directly up to the Midwest as well as the opportunity to improve the service level with the former case, yes. This was an area that struggled with service.
And we have lot of faith in the curve.
Okay.
So we would expect to see a pretty dramatic improvement on the former case Tcs.
Your line there and the reason why we're focused on that is that's.
A part of the network when you look at similar length of haul you would expect much higher conversion to intermodal.
And so we see that as an opportunity for growth.
Very helpful. Thank you.
Okay.
Our next question is from Bert <unk> with Stifel. Please proceed with your question Hey, Good morning, and thank you for the question.
Sorry can you hear me.
Yes, now we can.
Thanks.
Maybe a near term question on the intermodal side.
Something you've talked about as your container turns and how those have been sort of.
Running well below where they've been historically how are you thinking about that flipping back to normalized levels. I think you had talked last quarter about.
Getting back to a one seven ish range at some point within the year is that moved out and is that just really been driven by what we're seeing on the import side.
Yes. This is Jim <unk>.
Absolutely. So there is a ramp up 15% of our containers are stacked right now it creates an opportunity for us to be here.
From a growth.
Thing that's holding us back at this point is demand.
So it's a combination of what we're seeing from west coast imports as well as overall economic activity.
Okay Alright.
Thank you.
We have the opportunity to grow our.
Volumes in our earnings without adding additional containers and so.
Your original question, we peaked at about I think one eight several years ago. We don't know were going to get quite back to that but we can get dramatically better.
Our company Dray resources again the customer.
Dwell time has improved the rail time has improved so very much looking forward to exercising of the assets that we have.
Got it okay. Thanks, Thanks Mark.
Follow up on the logistics side.
Sales, there declined pretty materially year over year, but actually.
To be a little better than what your peers are seeing would you say, that's mainly driven by power only just sort of growing within within the offering or is that a function of how you run your brokerage business just less of an overflow model.
Yes, good question Bert.
As.
A comparison point I guess, we are volumes contracted somewhere in the 7% range I believe on an order volume count that's fairly consistent.
Between the offerings.
And I would characterize that is exactly what you mentioned there that we don't simply exists.
As an overflow model.
We certainly look for all of the opportunities to collaborate and leverage the ability to do that and we had great success.
Last couple of years of executing that way.
But when the market does turn.
<unk> investments in our capability to generate demand within our brokerage offering allows us I think to be a bit more resilient and which is.
Part and parcel to our strategy.
Thanks, Mark and thanks, Jim.
Okay.
Our next question is from Tom White.
With UBS. Please proceed with your question.
Yeah.
Hi, yes, good morning.
Let's see.
I wanted to ask a little more I know you've had some kind of comments on rates.
I wanted to drill down a little bit on competitive behaviour in intermodal.
I think theres been a lot of capacity added in terms of boxes, you mentioned, you've got some stacked up in <unk>.
Improving rail efficiency supports capacity as well.
How are you thinking about the kind of.
Discipline or pressure in the market do you think that.
There'll be less pressure on intermodal contract rates than truckload rates I think we've kind of heard that and that would be I think constructive on the margin or are you concerned that that may be.
This capacity sitting their desire to grow by.
Some of the biggest intermodal players might put further pressure on the market. So just really some I guess some thoughts around competitive dynamic in intermodal. Thank you.
I will speak.
Thanks for the question I'll speak to our thoughts relative to us as opposed to others, but we believe that there is ample opportunity for conversion.
It's unusual that we went the other way in the last couple of years, we're hosting a series of reasons that we've talked about and so before we get into the dynamic between competitors. There is just a great opportunity for the industry itself.
To growth of getting back to what should be moving on the rail.
Today, and so again why we're excited about the arrangement that we just announced because we think Mexico is going to be a winner and a whole series of ways.
Sure.
Economically for where freight will originate from an intermodal has a great opportunity.
Play there, but we really would characterize that virtually every market that we're in in the east.
As well as in the regional West that we can get more conversion.
Just whats moving over the road. So that's how I would kind of frame the opportunity and what we're focused on.
If you looked at our revenue per order I think we contracted 2% year over year. So I think that would suggest the market is a bit more.
Our resilient from a pricing and value standpoint, and now it's about getting the right freight movement on the train versus over the road.
The price decrease was overall what was still a very strong Q1 last year. So that's a relatively small decline year over year I think the other thing you have to consider is that.
Once you stack your containers.
There really isn't a great deal of costs, there. So theres nothing pushing I'm, saying you just have to get this volume to be able to.
So it's not a huge cost.
A point I was going to make this is Steve is that right.
We'd much rather retain the discipline in this keep container stack rather than move it non compensatory rates just doesn't make sense and were return on capital focus like we emphasize.
That goes into the equation.
I think youll see.
Disciplined behaviors, we go through this period of time.
Okay, Yeah, that's great. It sounds like there is.
Recognizing cyclical pressures there some some discipline.
Final question I have was just Steve as we think about the financials and how the lower contract rates, let's say in truckload flow through did you see much of an impact on the margin from from low rates in <unk> or is that you haven't really seen much of an impact yet.
It will be a much greater impact as you look forward just trying to think about how the.
Timing of that.
On the margins for lower contract and truck. Thank you.
Sure we did try to craft our prepared comments in a way that reflected.
<unk>.
Maturity and realization of this year's bid cycle as we go through time, the first quarter definitely had some downward pressure reflected in it if we don't feel like it's the full force of this particular cycle, yet and Thats why we signaled second quarter third quarter could be a bit more challenged as we get.
Book of business.
Contractual renewals.
<unk>.
When we start to see some some.
Balance or lift as we get a little later in Europe after that.
Okay, great. Thanks for the time.
Thanks, Tom.
Our next question is from Jason Seidl with TD Cowen. Please proceed with your question.
Thank you operator, gentlemen, appreciate you let me ask a question here.
Wanted to stay on intermodal a bit here, how should we think about.
Or sort of revenue per unit as that CP Casey business begins to develop is that going to expand because there's going to be a longer length of haul attached to it.
Yeah.
That became a larger percentage of our total it could have an impact but at the same time as Mark was just saying we expect that there is a lot of conversion opportunities on the rest of our networks. So I believe that.
Not expecting a major change in terms of the overall split across our network at this point.
Okay Fair enough, let me switch back a little bit to the dedicated side I believe mark in your comments you talked about.
How there is a couple of hundred more.
Additions coming on between now and the end of the year, how should we expect that to flow sequentially between <unk> and <unk>.
Yes.
Laid out in the in the opening comments we have.
Sure.
Closed on implementations for late second quarter and into the third quarter. So most of those.
For a full impact will be in the second half of the year, which is good because we have to overcome.
Some of the startup impacts of.
That level of activity in some of the longer we can get those into the calendar year. The more we can.
Get through that initial startup phase so.
If youre just thinking about year, it's more of a second half because let's close in the first quarter. It takes some time to from.
From the equipment to get here to get it positioned to get it started and so we arent talking late second quarter for the.
The largest share of that.
And then I believe you said you had record sort of book of business waiting for you to potentially.
When some bids on so I would imagine that there could be more after this between now and before the end of <unk>.
Our pipeline is that is maintaining its historical high level that we've experienced the last couple of years.
A year ago, we had an acquisition of about 900 units at about 800 units of organic growth.
We're not yet predicting all of that to be a repeat but our pipeline would suggest that.
We are well positioned to keep capitalizing on one of those key strategic growth areas.
So feel really good about where we are in.
Now, we've just got to see how it plays out.
I appreciate the color as always.
Thank you.
Our next question is from Scott Group with Wolfe Research. Please proceed with your question.
Hey, Thanks. Good morning, just first Frank I, just wanted to clarify did you guys share what gains on sale were and then can you <unk>.
Sure.
What percentage of your.
Intermodal volume is.
Mexico Cross border.
I'll tackle the first part of.
This is Steve.
We did didn't have it in our earnings releases it wasn't.
Significant value.
In this particular quarter.
But we did experience a $12 million of gains in the first quarter.
Three.
But in a broader context of our.
Our full year earnings per share guidance.
We're still consistent with where we initially guided.
We'll leave our comments were along the lines of we expect full year 2023 equipment gains to be.
Close to the level that they were in 2022, which was around $27 million.
That's still.
The bandwidth.
Boundaries that we're in for this year.
Okay.
The question was around Mexico.
Cross border, we do really across all of our services are constantly just takes truckload and intermodal.
A breakout geographically by segment, it's an important part of what we do but we think more of the growth is in front of us than currently exist in our portfolio today.
Okay, and then I know you guys don't break out over the road versus dedicated margin one of your peers, Doug I thought maybe it'd just be helpful like can.
Can you just give some color directionally our over the road margins versus dedicated margins year over year, what percentage of the earnings now in truckload or over the road versus dedicated I thought maybe it'd be helpful to give some context in terms of how much bigger dedicated is as a percentage of the business.
Yes, I think what we've normally shared there Scott.
The last couple of years that those <unk>.
Services have operated close to on par together.
Obviously, one has a bit more based upon where you are on your growth curve. What it takes to get something started up can be a short term drag on that but.
Historically and expectation wise, we think both of those.
Form.
Par at any given part of the cycle any given part of the quarter. It can be different just based upon the individual nuances, but I think as we think.
Positioning and long term, we don't expect to see.
A great deal of difference in margin performance.
Okay. Thank you.
Our next question from Jon Chapell with Evercore ISI. Please proceed with your question.
Thank you and good morning.
But Mike to together in one question, starting with you Mark you talked about inorganic opportunities a little bit.
In relation to dedicated looking at some opportunities there, but given the pain points and some other segments, maybe ones that <unk> been deemphasizing, a little bit traditional logistics or brokerage or <unk>.
Network truckload.
Do certain things get so attractive from a bottom of the cycle perspective that you may actually look outside of the core competencies of where you really want to target your inorganic growth and then secondarily to Steve as you get started on this new buyback program. How do you think about the capital you're willing to deploy there.
The M&A opportunities that are out there.
So the first part of that.
I think we maintain a healthy dose of intellectual curiosity or things that may sit directly outside of what we traditionally outlined as our strategic growth priorities.
At this juncture, though we haven't found anything that would knock us off our current path.
And we get opportunities to see things and explore things on a regular basis, but we really have phoned in particularly on the truck side, where we believe.
The inorganic growth can be most valuable to our shareholder around the specialty truck location and I would maybe correct, yes, just one.
Part of your question is that we have not deemphasizing logistics.
And third party growth at all we're talking more about our newer service called power only but thats not.
De emphasizing a more traditional brokerage of third party support for our customers just in concert with that so.
So yes, we remain open but at this juncture what we have.
Pursued is consistent with that specialty truck and I think in the short term I think it's certainly through 2023 of where we are.
That should be the expectation.
And this is Steve I'll tackle the second part of your question, there, which was how do we think about capital allocation between share repurchases and M&A opportunities.
I guess a high level comment would be is.
A great position to be in to come at this from.
Our position of strength.
Once she capability and capacity.
So we do have quite a bit of flexibility there.
Our general.
Approach to the repurchase program at this point.
Envisions.
Steady.
Amount of repurchase activity as we move through time, and then potentially some some opportunistic.
Activity on top of that.
Yes.
Part of that opportunistic activity.
Activity in the buyback space could be.
Dialed upward dialed down depending on the number of <unk>.
Acquisitive opportunities that we see.
So there is an interplay.
And your question and we'll manage as we go through time.
But in the scheme of our overall capital structure.
Cash flow generation balance sheet capacity all of that the $150 million repurchase program fits comfortably inside of our capabilities. So.
We feel good about our overall positioning with capital allocation.
Look forward to carrying that out over the next couple of years.
Alright, I appreciate that thanks, Steve Thanks, Mark.
Thank you.
Our next question comes from Jordan Alegar with Goldman Sachs. Please proceed with your question.
Yes, hi, good morning.
I'm sort of curious you mentioned, an expectation that loads would look better where volumes would look better at a latter part of 2023. When you think about your three segments, excluding dedicated network intermodal and logistics.
Or is it a uniform confidence or is there one versus the other that you may feel better about is you had closer towards peak season in terms of thinking about that thanks.
We as we've.
Looked at this and talk to our customers assess with.
The carrier and the capacity condition through.
Several different lenses.
We do obviously I think there is an interplay to some level of capacity correction, which needs to occur and is occurring in our view.
Which I think serves as a bit of a catalyst.
But we also believe.
That the inventory correction will largely be behind at some point here in the second early third quarter for most of our customers that we are aligned with and it does come down to.
What is the replenishment cycle.
How confident are our customers to get back to buying more and so.
So that combination we think both of those are alright.
Instructive. They both happened I think occur in concert to to have a full recovery.
And we think the conditions are increasingly moving that direction on here, yet, but increasingly moving that direction.
Okay. Thank you.
Okay.
Our next question is from Brian Awesome back with J P. Morgan. Please proceed with your question.
Hey, good morning, Thanks for taking the question.
I wanted to ask maybe for Jim <unk>.
To give some comments about your confidence or maybe visibility into converting.
Truckload freight off the highway.
Or do you see any of that baked into the bids youre, having real conversations event.
More than you maybe were.
Couple of quarters ago.
It seems like there is certainly some excess capacity as you pointed out the spreads.
Still constricting. So I just wanted to see how we should think about that in terms of timing and magnitude and what sort of visibility you have on that front.
Yes. Thanks, So one of the things that we're hearing more frequently from customers starting to talk about the environmental impacts of the intermodal and that actually starting to factor in somewhat into their decision, making as well so over the long term.
Expect that we'll see much faster growth with intermodal.
Our overall growth of transportation.
The short term we are.
We're able to demonstrate is particular in the east.
Strong performance of the <unk> is enabling some of the transitions there from over the road to intermodal we have.
Already enabled to win some freight this year that is over the road conversions.
Significant opportunities are still in front of us.
Conversion, so I would expect that we will see more of that as the market starts to tighten up as well.
Okay.
And just for a follow up I guess in terms of the capacity front Mark you gave some good color on that do you think that's it's been a little more durable than I think most of US would have thought at this point, but do you feel like we're really at a tipping point maybe for for lack of better word.
Expect to see accelerated.
Departures from from the market or do you expect this to be.
Little bit more of a slow decline.
How are you thinking about that and have you seen anything sort of accelerate into April .
April as things really haven't seemed to bounce back as seasonally strong as we might have expected.
Alright, Brian , Yes, certainly I would agree with your assessment that it's taken longer than we reasonably think it should have.
And that we've experienced to date, but there are we're looking for what are the leading indicators.
Certainly one that we can get great visibility to is the number of experienced driver.
Candidates that are looking to join the organization and our driver hiring pipeline, which is a direct.
Correlation to difficulty in some other parts of the carrier community we have.
Baselines, we have historical perspectives and when we see some inflections dramatic inflections like we're experiencing today, we think that is.
Aside and that is a more recent sign that's more of a mid first quarter.
Inflection sign.
And then I think things that we should be looking at and we're hearing more.
Signals as the.
Supply base.
And the restricting of credit a bit because of I think we even had a competitor talk about.
Not getting payments on time, and we're seeing and hearing more of that and so yes.
And I think Thats, a direct sign of stress and suppliers are going to have to take corrective action to deal with that which I think can in my opening comments the combination of those could.
Could be an inflection point to hasten the correction that.
Has been delayed.
Okay. So you think it could accelerate from here based on those factors.
I'm optimistic.
Okay. Thank you very much for your time.
Okay.
Our next question is from Chris Wetherbee with Citi. Please proceed with your question.
Hey, Thanks, good morning.
Maybe wanted to touch a little bit on the guidance and just maybe if you could help us think about sort of the cadence for the year. So I know you noted that <unk> and <unk> might be more challenging quarters of the year I guess, if I look at the first quarter and maybe look through the gain the equity gain.
Do you still feel like sequential improvement, which I think is historically normal seasonally normal in <unk> versus <unk> in that respect is possible or is there just going to be incremental weakness that has the potential to offset what would normal seasonality.
Yes. This is Steve.
Well trying to stay away from quarterly guidance.
We're going to stay in the annual space, we were trying to steer things a little bit there to get some additional perspective and insight into how we see things unfolding.
And as in.
In particular like we noted earlier on the call.
We get deeper into the bid renewal cycle and those.
Rates take effect and so on there is some dampening effect on earnings that comes from that and so sequentially you may not see some of the seasonal lift that you might expect ordinarily in second quarter. It may be more flattish.
Sequential trajectory.
Before picking up would be our expectation at this point in time.
We'll have to see how that plays out.
That helps with some additional color that's how we're seeing things.
That's very helpful. I appreciate you gone through that and then.
And then just maybe as you think about.
Fleet size as you go through a year a challenging year like this can you just give us a sense of maybe how you think about managing that.
<unk> steadily drifted down a bit over the last couple of quarters, which just makes sense given the context that we're in should we expect that to be sort of the cadence for the next couple of quarters as we go through but hopefully at the trough of the cycle or.
How do you I guess, just maybe more broadly how do you think about sort of fleet count for next couple of quarters.
Yes, Chris we don't have any specific.
Plans based upon.
The cycle or the condition that we're trying to drive down.
I believe your questions.
Network based I believe.
So we certainly have seen some additional pressure in the owner operator world.
Because of the combination of rate structures in.
Inflationary cost so that's probably in the entire only.
But we would see within our various mix of capacity.
Why do I think you've seen some of our competitor reports as well that that's.
Probably the area. That's most under stress it is the most likely comparison to a small carrier obviously.
So, but we don't have any specific plans to do that any differently than that.
Again, we would like that to be stabilized and I would also.
Reinforce that our customers feel and see our network offering not only in the network trucks that we bring but that's largely where we serve.
Power only offering as well in logistics that gets reported in logistics, so increasingly power only as part of our.
Network offering from a customer lens.
Obviously, we're using third party power. So we want to make sure we're reporting that appropriately within the various segments that we operate in.
So from a customer perspective, they are seeing a very stable to slightly growing network presence from us.
Okay. That's helpful color I appreciate the time this morning. Thank you.
Our final question is from Ari Rosa with Credit Suisse. Please proceed with your question.
Great. Good morning, Thanks for taking my question. So I wanted to ask go back to Brian's question, a bit you talked about the industry capacity correcting a slower pace than expected maybe you could talk about what accounts for that in your perspective.
Sector has something structurally changed in the market that maybe is getting carriers to stick around longer than they might otherwise.
Gary I understand the question I don't I don't really characterize it as <unk>.
Anything structural per se.
Certainly what has perhaps changed over time as the discovery of information discovery of price.
From a customer in a carrier perspective.
Perhaps some of the activities that we're doing with power only.
Our services help carriers and maybe in a different way than happens structurally before.
But this is still a business you have to cash flow.
And you have.
To have the adequate revenue stream across the asset base and I still think.
That is more challenged in this type of environment clearly in the small under capitalized carrier than it is in the larger well capitalized space. So I don't know if theres massive restructuring obviously theres. Some fluids is there that are different over time, but.
I also think this may or may not be true I don't have anything to.
Prove it to you with but given the strength of the prior couple of years if Europe .
All carrier independent little more staying power you may have built up some cash reserves in that time period, some excess earnings if you will.
That allowed you to last a bit longer.
In an environment like we're in today.
That might be different from past cycles, given just how strong the last couple of years.
Got it that's very helpful. And then just for my last question switching to the intermodal side.
Yeah.
We've seen a lot of headlines.
Railroads, making a big deal of partnering with with you on on the intermodal business I just want to make sure I understand what it is that's actually going on so.
Obviously this year you moved your western business over to the UK and now see PKC is talking about.
The growth.
On their network that they are expecting is there any business from U P that youre actually migrating over to CP Casey or is it just part of a larger pie that you're seeing or kind of where it was that business previously moving that you are moving into the sea PKC network. Let me just make sure I understand that okay.
Okay. Good question. Thank you, yes sure.
Sure. So there was a small amount of the business that we're running on the <unk> that we're migrating over to the CPE Casey.
But also there are some additional lanes that we don't overlap with the <unk> that we're going to be implementing those are wins that we either don't have today or were uncompetitive today. So there's a little bit of an extension of our service network and.
And there was business, we were going directly with the Acs right. So yes.
Got it okay, alright, great helpful. Thanks.
Alright, great well, let me just close by referring you to page 12, our updated.
Investor presentation really outlines our strategy to be disciplined in our deployment of capital.
And we've talked today on this call about those strategic priorities around dedicated intermodal logistics.
Steve did a great job talking about our pristine balance sheet, which we believe does give us the optionality to not only go after the organic growth drivers that we're interested in but also actively seek the right acquisitive opportunities that advance those same our strategic priorities.
In addition, we are going to start executing against our share buyback authorization. Our goal is to have a stable and predictable.
<unk> share count in the neighborhood of $175 million or so shares when we're done.
And while we are operating in this environment with a heightened sense of economic and perhaps freight demand uncertainty we are going to continue to invest in our considerable strengths across our highly diversified portfolio and against several of those which we had a chance to highlight with you today. So in closing I appreciate your time and your attention. Thank you.
This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.