Q2 2024 Schneider National Inc Earnings Call

Thank you for standing by. My name is Ian, and I will be your conference operator today. At this time, I would like to welcome everyone to the Schneider Second Quarter 2024 earnings call.

Operator: At this time, I would like to welcome everyone to the Schneider second quarter 2024. All lines have been placed on mute to prevent any background noise.

Operator: I would like to welcome everyone to the Schneider 2nd quarter 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Operator: After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you.

Operator: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. I will now hand the call over to Steve Bindas, Director of Finance, Investor Relations. Thank you, operator. And good morning, everyone.

All lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you.

Steve Bindas: I will now hand the call over to Steve Bindas, Director of Finance, Investor Relations. You may begin your conference.

I will now hand the call over to Steve Bindas, Director of Finance, Investor Relations. You may begin your conference.

Steve Bindas: Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Rourke, President and Chief Executive Officer; Darrell Campbell, Executive Vice President and Chief Financial Officer; and Jim Filter, Executive Vice President and Group President of Transportation and Logistics. Earlier today, the company issued an earnings press release.

Steve Bindas: Joining me on the call today are Mark Rourke, President and Chief Executive Officer, Darrell Campbell, Executive Vice President and Chief Financial Officer, and Jim Filter, Executive Vice President and Group President of Transportation and Logistics. Earlier today, the company issued an earnings press release. This release and an investor presentation are available on the investor relations section of our website at schneider.com. Our call will include remarks about future expectations, forecasts, plans, and prospects for Schneider. These constitute forward-looking statements for the purposes of the safe harbor provisions under applicable federal securities laws.

Steve Bindas: Thank you, Operator, and good morning everyone. Joining me on the call today are Mark Rourke, President and Chief Executive Officer, Darrell Campbell, Executive Vice President and Chief Financial Officer, and Jim Filter, Executive Vice President and Group President of Transportation and Logistics.

Steve Bindas: This release and an investor presentation are available on the Investor Relations section of our website at schneider.com. Our call will include remarks about future expectations, forecasts, plans, and prospects for Schneider. These constitute for looking statements for the purposes of the safe harbor provisions under applicable federal securities laws. For looking statements involved risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties discussed in our SEC filing, including but not limited to our most recent annual report on Form 10-K and those risks identified in today's earnings release.

Speaker Change: Earlier today the company issued an earnings press release. This release and an investor presentation are available on the investor relations section of our website at Schneider.com.

Steve Bindas: Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties discussed in our FEC filings, including, but not limited to, our most recent annual report on Form 10-K and those risks identified in today's earnings release. All forward-looking statements are made as of the date of this call, and Schneider disclaims any duty to update such statements except as required by law.

Our call will include remarks about future expectations, forecasts, plans, and prospects for Schneider. These constitute forward-looking statements for the purposes of the safe harbor provisions under applicable federal securities laws.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations.

The company urges investors to review the risks and uncertainties discussed in our FEC filings, including, but not limited to, our most recent annual report on Form 10-K and those risks identified in today's earnings release.

Steve Bindas: All former-looking statements are made as of the day of this call, and Schneider describes any duty to update such statements except as required by law.

All former looking statements are made as of the date of this call and Schneider disclaims any duty to update such statements except as required by law.

Steve Bindas: In addition, pursuant to Regulation G, a reconciliation of any non-GAAP financial measures referenced during today's call can be found in our earnings release and investor presentations, which includes reconciliation to the most directly comparable GAAP measures.

In addition, pursuant to Regulation G, a reconciliation of any non-GAAP financial measures referenced during today's call can be found in our Earnings Release and Investor Presentation, which includes reconciliations to the most directly comparable GAAP measures.

Steve Bindas: Now, I'd like to turn the call over to our CEO, Mark Rourke.

Steve Bindas: In addition, pursuant to Regulation G, a reconciliation of any non-GAAP financial measures referenced during today's call can be found in our earnings release and investor presentation, which includes reconciliations to the most directly comparable GAAP measures. Now, I'd like to turn the call over to our CEO, Mark Rourke. Thank you, Steve. Hello, everyone.

Mark Rourke: Thank you, Steve, and hello, everyone. Thank you for joining the Schneider call this morning. I will start by offering my perspective on our second quarter results in the context with the current business and freight cycle trends and how we are positioning the strengths of our multimodal platform on the path towards going revenue and financial returns for our shareholders.

Mark Rourke: Thank you for joining the Schneider call this morning. I will start by offering my perspective on our second quarter results in the context of the current business and freight cycle trends and how we are positioning the strengths of our multimodal platform on the path towards growing revenue and financial returns for our shareholders. I will then turn it over to Darrell for his commentary on the second quarter results and free cash generation and the setup for the second half of the year regarding capital allocation and earnings per share guidance.

Speaker Change: Now I'd like to turn the call over to our CEO , Mark Rourke.

Mark Rourke: Thank you, Steve. Hello, everyone. Thank you for joining the Schneider Call this morning. I will start by offering my perspective on our second quarter results in the context with the current business and freight cycle trends and how we are positioning the strengths of our multimodal platform on the path towards growing revenue and financial returns for our shareholders.

Mark Rourke: I will then turn it over to Dale for his commentary on the second quarter results and free cash generation and the setup for the second half of the year regarding capital allocation and earnings per share guidance. First, I want to thank all the Schneider associates, especially our professional drivers, for their contributions to the progress we made in the second quarter. In the second quarter, we delivered solid sequential improvement in earnings and margins across our three primary segments of truckload, intermodal logistics by remaining diligently focused on four areas we have the most control. First, delivering an effortless customer experience, which we know resonated based upon the number of customer recognition awards that we recently received.

Darrell: I will then turn it over to Darrell for his commentary on the second quarter results and free cash generation and the setup for the second half of the year regarding capital allocation and earnings per share guidance.

Mark Rourke: First, I want to thank all the Schneider Associates, especially our professional drivers, for their contributions to the progress we made in the quarter. In the second quarter, we delivered solid sequential improvement in earnings and margins across our three primary segments of truckload, intermodal, and logistics by remaining diligently focused on four areas we have the most control over. First, delivering an effortless customer experience, which we know resonated based upon the number of customer recognition awards that we recently received.

Speaker Change: First, I want to thank all the Schneider Associates.

especially our professional drivers for their contributions to the progress we made in the quarter.

Darrell: In the second quarter, we delivered solid sequential improvement in earnings and margins across our three primary segments of truckload, intermodal, and logistics by remaining diligently focused on four areas we have the most control.

Speaker Change: First, delivering an effortless customer experience, which we know resonated based upon the number of customer recognition awards that we recently received.

Mark Rourke: Second, navigating the 2024 shipper freight allocation season with purpose and discipline; third, optimizing capital allocation opportunities across our tractor rolling stock, chiefly and dedicated intermodal by increasing the ratio of drivers to trucks; and fourth, containing costs across all expense cadres.

Mark Rourke: Navigating the 2024 Shipper Freight Allocation Season with Purpose and Discipline. Third, optimizing capital allocation opportunities across our tractor rolling stock, chiefly in dedicated intermodal, by increasing the ratio of drivers to trucks. And fourth, containing costs across all expense categories.

Speaker Change: Second, navigating the 2024 Shipper Freight Allocation season with purpose and discipline.

Speaker Change: Third, optimizing capital allocation opportunities across our tractor rolling stock, chiefly in dedicated intermodal, by increasing the ratio of drivers to trucks. And fourth, containing costs across all expense categories.

Mark Rourke: Laboratories. These actions will continue to drive enterprise value, allowing us to seize the opportunities ahead and answer returns as the freight market recovers. Our commercial philosophy is to be mode agnostic across our multi-modal platform and offer customers the best combination of service, cost, emission reduction, and transit performance that meets their needs. While our offerings are constructed to compete and function independently, based upon the unique value propositions, there is considerable enterprise commercial leverage, which is evident in 46 of our top 50 customers purchasing services in all three segments. It is clear that our value is resonating with customers.

Mark Rourke: These actions will continue to drive enterprise value, allowing us to seize the opportunities ahead and enhance returns as the freight market recovers. Our commercial philosophy is to be mode-agnostic across our multimodal platform and offer customers the best combination of service, cost, emission reduction, and transit performance that meets their needs. Additionally, our offerings are constructed to compete and function independently based upon their unique value proposition.

Speaker Change: While our offerings are constructed to compete and function independently, based upon their unique value propositions, there is considerable enterprise commercial leverage, which is evident in 46 of our top 50 customers purchasing services in all three segments.

Mark Rourke: There is considerable enterprise commercial leverage, which is evident in 46 of our top 50 customers purchasing services in all three segments. It is clear that our value is responding to customers. In the quarter, we received five recognition awards, including Carrier of the Year and Partnership in Sustainability. We are continuously collaborating with our customers both during and outside allocation events to ensure that we have a full understanding of their diverse supply chain needs, and we are aligned with what they see ahead. We've been hearing more frequently from customers that they are seeking to secure asset-based capacity and balance their brokerage mix. We are now approximately three quarters through the 2024 shipper freight allocation season.

Mark Rourke: In the quarter, we receive five recognition awards, including Carrier of the Year, in partnership and sustainability. We are continuously collaborating with our customers, both during and outside allocation events, to ensure that we have a full understanding across our diverse supply chain needs, and we are aligned with what they see ahead. We've been hearing more frequently from customers that they are seeking to secure asset-based capacity and balance the brokerage mix.

Speaker Change: We've been hearing more frequently from customers that they are seeking to secure asset-based capacity and balance their brokerage mix.

Mark Rourke: We are now approximately three quarters through the 2024 Shepard-Frey allocation season, so let me offer second quarter highlights that I believe are instructive for the forward positioning of our multi-modal platform, starting with truckload. In our truckload network, we achieve another quarter of modest contractual price gains, and for the first time in two years, spot price in June exceeded contract price. Importantly, Spot remained above contract for the full month of July as well. However, we are behind a tempo that we expected in our prior guidance; therefore, shifting out the timing of the pricing recovery. In dedicated truck counts are up 12% year-over-year through a combination of organic and inquisitive growth.

Speaker Change: We are now approximately three quarters through the 2024 shipper freight allocation season, so let me offer second quarter highlights that I believe are instructive for the forward positioning of our multimodal platform starting with truckload.

Mark Rourke: So let me offer second quarter highlights that I believe are instructive for the forward positioning of our multimodal platform, starting with truck. In our truckload network, we achieved another quarter of modest contractual price gains, and for the first time in two years, the spot price in June exceeded the contract price. Importantly, SPOT remained above contract for the full month of July as well.

Speaker Change: In our truckload network, we achieved another quarter of modest contractual price gains, and for the first time in two years, spot price in June exceeded contract price.

Mark Rourke: However, we are behind the tempo that we expected in our prior guidance, therefore shifting out the timing of the pricing recovery. In dedicated, truck counts are up 12% year over year through a combination of organic and inquisitive growth. Dedicated represents 63% of the total tractors we deploy in truckload.

Speaker Change: Importantly, SPOT remained above contract for the full month of July as well.

Speaker Change: However, we are behind the tempo that we expected in our prior guidance, therefore shifting out the timing of the pricing recovery.

Speaker Change: And dedicated truck counts are up 12% year over year through a combination of organic and inquisitive growth.

Mark Rourke: Dedicated represents 63% of the total tractors we deploy in truckload. Sequentially, dedicated truck count was down 1%, as new business implementations and existing account growth were offset with targeted asset efficiency actions, as well as moderate account churn. Overall, truckload segment margins improved 290 basis points sequentially from the first quarter, and we expect further margin improvement for the second half of the year. Moving to our fully asset-based intermodal segment, water counts were slightly up year-over-year and up 3% sequentially. Growth in Transcon, Mexico, and the West was offset by shrink and yeast against a highly competitive truck alternative.

Speaker Change: Dedicated represents 63% of the total tractors we deploy in truckload.

Mark Rourke: sequentially, dedicated truck count was down 1% as new business implementations and existing account growth were offset with targeted asset efficiency actions, as well as moderate account churn. Overall, truckload segment margins improved 290 basis points sequentially from the first quarter. We expect further margin improvement for the second half of the year. Moving to our fully asset-based intermodal segment, order counts were slightly up year over year and up 3% sequentially. Growth in Transcon, Mexico in the West was offset by shrink in the East against a highly competitive truck alternative.

Speaker Change: Sequentially, dedicated truck count was down 1% as new business implementations and existing account growth were offset with targeted asset efficiency actions, as well as moderate account churn.

Speaker Change: Overall truckload segment margins improved 290 basis points sequentially from the first quarter. We expect further margin improvement for the second half of the year.

Speaker Change: Moving to our fully asset-based intermodal segment, quarter counts were slightly up year-over-year and up 3% sequentially.

Speaker Change: Growth in Transcon, Mexico, and the West was offset by shrink in the East against a highly competitive truck alternative.

Mark Rourke: While domestic intermodal has not experienced the full benefit of the higher year-over-year or West Coast import levels, we have started to see increased port-transload activity. Specific to our recent momentum in Mexico cross-border, we recognize double-digit volume growth with the CPKC delivering freight between Mexico and the Midwest at truck-like transit times. We continue to see significant cross-border Mexico growth opportunities as we move forward, driven by ongoing manufacturing investment, automotive production, and shippers continuing to build near-shoring into their supply chains. We recently moved into a new location in Mexico City, reinforcing our commitment to build and grow in our long-standing presence.

Mark Rourke: While domestic intermodal has not experienced the full benefit of the higher year-over-year West Coast import levels, we have started to see increased port transload activity. Specific to our recent momentum in Mexico cross-border, we recognize double-digit volume growth with the CPKC delivering freight between Mexico and the Midwest in truck-like transit. We continue to see significant cross-border Mexico growth opportunities as we move forward. Driven by ongoing manufacturing investment, automotive production, and shippers continuing to build nearshoring into their supply chain, we recently moved into a new location in Mexico City, reinforcing our commitment to build and grow on our longstanding presence, more than three decades, and the expertise that we have in that market.

Speaker Change: While domestic intermodal has not experienced the full benefit of the higher year-over-year West Coast import levels, we have started to see increased port transload activity.

Speaker Change: Specific to our recent momentum in Mexico cross-border, we recognize double digit volume growth with the CPKC delivering freight between Mexico and the Midwest at truck-like transit times.

Speaker Change: We continue to see significant cross-border Mexico growth opportunities as we move forward, driven by ongoing manufacturing investment, automotive production, and shippers continuing to build nearshoring into their supply chains.

Speaker Change: We recently moved into a new location in Mexico City reinforcing our commitment to build and grow in our long-standing presence.

Mark Rourke: Jones, more than three decades' worth, and the expertise that we have in that market. Overall, Intermoral margins improved 300 basis points from the first quarter results, as we continue to heal the network, which reduced friction cost, enabling drape productivity gains and fewer empty repositioning shipments. We've moved more orders year-over-year with 10 percent fewer drape trucks, while maintaining our high ratio of drapes executed by our company and driver fleet. We expect further improvement margin performance in the back half of the year. Finally, logistics margins improved 180 basis points from the first quarter's performance, as we competed effectively in the quarter, especially considering the highly competitive brokerage market.

Mark Rourke: Overall, intermodal margins improved 300 basis points from the first quarter results as we continue to heal the network, which reduces friction costs, enabling great productivity gains and fewer empty repositioning shipments. We move more orders year over year with 10% fewer dray trucks while maintaining our high ratio of drays executed by our company driver fleet. We expect further improvement in margin performance in the back half of the year. Finally, logistics margins improved 180 basis points from the first quarter's performance as we competed effectively in the quarter, especially considering the highly competitive brokerage market.

Speaker Change: More than three decades worth and the expertise that we have in that market.

Speaker Change: Overall intermodal margins improved 300 basis points from the first quarter results as we continue to heal the network, which reduced friction cost enabling great productivity gains and fewer empty repositioning shipments.

Speaker Change: We move more orders year over year with 10% fewer dray trucks, while maintaining our high ratio of drays executed by our company driver fleet.

Speaker Change: We expect further improvement margin performance in the back half of the year.

Speaker Change: Finally, logistics margins improved 180 basis points from the first quarter's performance as we competed effectively in the quarter, especially considering the highly competitive brokerage market.

Mark Rourke: Brokeage order volumes contracted 4 percent year-over-year, while growing 2 percent sequentially from the first quarter, as asset-based brokers are increasingly favored by shippers at this stage of the freight cycle. Power-only continued its double-digit percentage growth rate, both year-over-year and sequentially, as mid to large shippers prefer the value and flexibility of trailer pulls. Power-only serves to augment the truck globe network needs of our trailer pull shippers, and again, we expect year-over-year volume growth in the back half of the year. We continue to be encouraged by our performance in the brokerage market through these very challenging conditions driven by our execution and differentiated strategy of our freight power platform, standalone freight generation capabilities, and power-only offering.

Mark Rourke: Brokerage order volumes contracted 4% year-over-year while growing 2% sequentially from the first quarter as asset-based brokers are increasingly favored by shippers at this stage of the freight cycle. Power Only continued its double-digit percentage growth rate, both year-over-year and sequentially, as mid-to-large shippers prefer the value and flexibility of trailer ports. Power Only serves to augment the truckload network needs of our trailer pool shippers.

Speaker Change: Brokerage order volumes contracted four percent year-over-year while growing two percent sequentially from the first quarter as asset-based brokers are increasingly favored by shippers at this stage of the freight cycle.

Speaker Change: Power Only continued its double-digit percentage growth rate, both year over year and sequentially, as mid to large shippers prefer the value and flexibility of trailer pulls.

Mark Rourke: Again, we expect year-over-year volume growth in the back half of the year. We continue to be encouraged by our performance in the brokerage market through these very challenging conditions, driven by our execution and differentiated strategy of our freight power platform, stand-alone freight generation capabilities, and power-only offering.

Speaker Change: Power Only serves to augment the truckload network needs of our trailer pool shippers.

Speaker Change: And again, we expect year-over-year volume growth in the back half of the year.

Speaker Change: We continue to be encouraged by our performance in the brokerage market through these very challenging conditions, driven by our execution and differentiated strategy of our freight power platform, standalone freight generation capabilities, and power-only offering.

Mark Rourke: In summary, the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing, and modest contract price gains in our truck load network. Well, we are not calling a market inflection just yet, and the sustainability of these trends is not yet proven. There are signs of market improvement, which we anticipate will present opportunities as we move forward.

Mark Rourke: In summary, the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing, and modest contract price gains in our truckload net. However, we are not calling a market inflection just yet because sustainability of these trends is not yet proven.

Speaker Change: In summary, the quarter saw positive indicators, including seasonal demand, tightening supply during the annual road check event, increased spot pricing, and modest contract price gains in our truckload network.

Speaker Change: Well, we are not calling a market inflection just yet, and the sustainability of these trends is not yet proven. There are signs of market improvement, which we anticipate will present opportunities as we move forward.

Darrell Campbell: There are signs of market improvement which we anticipate will present opportunities as we move forward. So, let me turn over to Darrell for his summary comments on the quarter and a look ahead before we get to your questions. Thank you, Mark. And thanks to each of you for joining us this morning.

Mark Rourke: So let me turn over to Darryl for his summary comments on the quarter and a look ahead before we get to your questions.

Darrell Campbell: Darryl?

Speaker Change: So, let me turn it over to Darrell for his summary comments on the quarter and a look ahead before we get to your questions. Darrell?

Darrell Campbell: Thank you, Mark, and thanks to each of you for joining us this morning. I'll review enterprise and segment financial results and cash rules for the quarter, discuss our capital allocation priorities, and provide context on our refined 2024 EPS and net capping guidance. You can find some reason pages 21 to 26 of our investor presentation included on our Investor Relations section of our website. Our adjusted income from operations was 52 million for the second quarter compared to 107 million a year ago. Adjusted deluded earnings per year for the second quarter was 21 cents compared to 45 cents in a prior year.

Darrell Campbell: I'll review enterprise and segment financial results and cash flows for the quarter, discuss our capital allocation priorities, and provide context on our refined 2024 EPS and net capital. You can find summaries on pages 21 to 26 of our investor presentation, which is included in our investor relations section of our website. Our adjusted income from operations was $52 million for the second quarter, compared to $107 million a year ago. Adjusted Diluted Earnings Per Share for the second quarter was $0.21, compared to $0.45 in the park.

Darrell: Thank you, Mark. And thanks to each of you for joining us this morning. I'll review enterprise and segment financial results and cash flows for the quarter, discuss our capital allocation priorities, and provide context on our refined 2024 EPS and net capex guidance.

Speaker Change: You can find summaries on pages 21 to 26 of our investor presentation included on our investor relations section of our website.

Speaker Change: Our adjusted income from operations was $52 million for the second quarter, compared to $107 million a year ago.

Speaker Change: Adjusted diluted earnings per share for the second quarter was 21 cents compared to 45 cents in the prior year.

Darrell Campbell: Second quarter 2023 include the higher gains and equipment sales versus the current period, which represented a 4 cent headwind to EPS. As compared to the first quarter of this year, adjusted income from operations increased 22 million, or 74%. Adjusted even though 153 million was also 70% higher than the first quarter. The sequential improvements in adjusted income from operations and adjusted EBITDA perfect results of our continued commercial costs and productivity actions and improving market conditions. From total revenues for the second quarter were slightly up as compared to the same quarter last year.

Darrell Campbell: Second quarter 2023 includes higher gains on equipment sales versus the current period, which represented a 4 cent headwind to. As compared to the first quarter of this year, adjusted income from operations increased $22 million, or $74.5 million. Adjusted EBITDA of $153 million was also 17% higher. Sequential Improvements in Adjusted Income from Operations and Adjusted EBIT reflect the results of our continued commercial costs and productivity actions and Improving Market Conditions. Truckload revenues for the second quarter were slightly up as compared to the same quarter last year.

Speaker Change: Second quarter 2023 included higher gains on equipment sales versus the current period, which represented a 4 cent headwind to EPS.

Speaker Change: As compared to the first quarter of this year, adjusted income from operations increased $22 million, or 74%.

Speaker Change: Adjusted EBITDA of $153 million was also 17% higher than the first quarter.

Speaker Change: The sequential improvements in adjusted income from operations and adjusted EBITDA reflect results of our continued commercial costs and productivity actions and improving market conditions.

Darrell Campbell: last year. Results were driven by a dedicated organic growth and contributions from M&M Transport or most recent acquisition, partially offset by lower network pricing and volumes. Truckload earnings for the second quarter were lower on a year-over-year basis, primarily due to lower pricing and volume in our network business and lower gains on the sale of equipment. Within our truckload network, revenue per truck per week grew sequentially at 3%, which was primarily yield driven. Our dedicated business continued to demonstrate resiliency and delivered solid performance during the quarter. We're excited about our ongoing new account startups, existing account growth, and creative contributions of our acquisitions on a new business pipeline.

Speaker Change: Truckload revenues for the second quarter were slightly up as compared to the same quarter last year.

Darrell Campbell: The results were driven by dedicated organic growth and contributions from M&M Transport, our most recent acquisition, partially offset by lower network pricing. Total earnings for the second quarter were lower on a year-over-year basis, primarily due to lower pricing and volume in our network business and Laura Gaines on the Seal of Equipment.

Speaker Change: Results were driven by a dedicated organic growth and contributions from M&M Transport, our most recent acquisition, partially offset by a lower network pricing and volumes.

Speaker Change: Talk about earnings for the second quarter or lower on a year-over-year basis primarily due to lower pricing of volume in our network business and lower gains on the sale of equipment.

Darrell Campbell: Within our truckload network, revenue per truck per week grew sequentially at 3%, which has primarily yielded Our dedicated business continued to demonstrate resiliency and delivered solid performance during the pandemic. We're excited about our ongoing new account startup and existing account groups. Creative Contributions over Acquisitions on a New Business Pipeline. Dedicated saw 2% year-over-year growth in revenue per truck per week, which was largely due to productivity. In a modal revenue for the second quarter decreased 3% compared to last year, primarily driven by lower revenue.

Speaker Change: Within our truckload network, revenue per truck per week grew sequentially at 3%, which was primarily yield driven.

Speaker Change: Our dedicated business continued to demonstrate resiliency and delivered solid performance during the quarter. We're excited about our ongoing new account startups, existing account growth, the creative contributions of our acquisitions, and our new business pipeline.

Darrell Campbell: Dedicated saw 2% year-over-year growth in revenue per truck per week, which was largely productivity-driven. In Immortal revenues, for the second quarter, decreased 3% compared to last year, primarily driven by lower revenue per order. Second quarter, 2024 volumes were favorable compared to the same period a year ago. In immortal earnings were similarly impacted by lower revenue per order, partially offset by improved free operations, network efficiencies, and cost performance. Volume growth and productivity actions contributed to favorable sequential financial results in the quarter. Logistics revenues for the second quarter decreased 7% compared to the same quarter last year, driven by lower brokerage revenue per order and volumes.

Speaker Change: Dedicated saw 2% year-over-year growth in revenue per truck per week, which was largely productivity driven.

Speaker Change: In a model revenues for the second quarter decreased 3% compared to last year, primarily driven by lower revenue per order.

Darrell Campbell: Second quarter 2024 volumes were favorable compared to the same period, but earnings were similarly impacted by lower revenue per order, partially offset by improved trade operations. Network Efficiencies, and Cost. Volume Growth and Productivity Actions Contributed to Favorable Sequential Financial Results, with Logistics revenues for the second quarter decreasing 7% compared to the same quarter last year. Driven by lower brokerage revenue per order and volume. Logistics income from operations decreased 13% compared to the same quarter in 2023, primarily due to lower brokers' net revenue per order and volume.

Speaker Change: Second quarter 2024 volumes were favorable compared to the same period a year ago.

Speaker Change: Intermodal earnings were similarly impacted by lower revenue per order, partially offset by improved trade operations, network efficiencies and cost performance.

Speaker Change: Volume growth and productivity actions contributed to favorable sequential financial results in the quarter.

Speaker Change: Logistics revenues for the second quarter decreased by 7% compared to the same quarter last year, driven by a lower brokerage revenue per order and volumes.

Darrell Campbell: Logistics income from operations decreased 13%, compared to the same quarter in 2023, primarily due to lower brokerage net revenue per order and volumes. Our strong balance sheet and operating cash flows provide us with the ability to remain committed to our capital allocation strategy. Our asset productivity actions in the first half of the year and capital discipline have facilitated investment in the sectors of our business that yield the highest returns, facing us on a path toward increased ROIC. These efforts have enabled us to be prudent in managing our net cap expand, which was 182 million on a year-to-date basis, and combined with our cost containment initiatives led to a 94 million year-over-year improvement in free cash flow.

Speaker Change: Logistics income from operations decreased 13% compared to the same quarter in 2023, primarily due to lower brokers' net revenue per order and volumes.

Darrell Campbell: The strong balance sheet and operating cash flows provide us with the ability to remain committed to our capital allocation strategy. Our asset productivity actions in the first half of the year at Capital Discipline have facilitated investment in the sectors of our business that yield the highest return, putting us on a path toward increased ROI. These efforts have enabled us to be prudent in managing our Net Cap Expend, which was $182 million on a year-to-day basis, combined with our cost containment initiatives, which led to a $94 million year-over-year improvement in free cash flow.

Speaker Change: Our strong balance sheet and operating cash flows provide us with the ability to remain committed to our capital allocation strategy.

Speaker Change: Our asset productivity actions in the first half of the year and capital discipline have facilitated investment in the sectors of our business that yield the highest returns, facing us on a path toward increased ROIC.

Speaker Change: These efforts have enabled us to be prudent in managing our net cap expend, which was 182 million on a year-to-day basis, and combined with our cost containment initiatives, led to a 94 million year-over-year improvement in free cash flow.

Darrell Campbell: While we remain disciplined in our capital allocation efforts, we continue to execute against our Age of Fleet objectives and position our businesses for growth. The ongoing focus on these efforts will shape our cap expand for the remainder of the year, which is affected in our guidance of 300 million to 350 million for the full year. During the second quarter, we continue to advance our share repurchase program with 13 million of opportunistic purchases. We also return 17 million indivitance to our shareholders, which was 5% above the same period last year. On a year-to-day basis, we have strong operating cash flows, and our net debt leverage stood at 0.3 times at the end of the quarter.

Darrell Campbell: While we remain disciplined in our capital allocation, we continue to execute against our Asia Fleet objective, position our businesses for, and The ongoing focus on these efforts will shape our CAPEX plan for the remainder of the year, which is reflected in our guidance of $300 million to $350 million for the full year. During the second quarter, we continued to advance our share repurchase program with 13 million opportunities to purchase. We also returned $17 million in dividends to our shareholders, which was 5% above the same period last year.

Speaker Change: While we remain disciplined in our capital allocation efforts, we continue to execute against our age of fleet objectives and position our businesses for growth.

Speaker Change: The ongoing focus on these efforts will shape our CAPEX plan for the remainder of the year, which is reflected in our guidance of $300 million to $350 million for the full year.

Speaker Change: During the second quarter, we continue to advance our share repurchase program with 13 million of opportunistic purchases.

Speaker Change: We also returned $17 million in dividends to our shareholders, which was 5% above the same period last year.

Operator: On a year-to-date basis, we have strong operating cash, and our Net Debt Leverage stood at 0.3 times at the end of... As Mark laid out during the second quarter, our targeted actions to restore margins, as well as improving market dynamics, led to sequential progress across each of our segments. We expect to see benefits from our ongoing cost and productivity actions and price recovery. The second half of the year, as well as the modest season.

Speaker Change: On a year-to-date basis, we had strong operating cash flows and our net debt leverage stood at 0.3 times at the end of the quarter.

Darrell Campbell: As Mark laid out, during the second quarter, our targeted actions to restore margins as well as improving market dynamics led to sequential progress across each of our segments. We expect to yield the benefits from our ongoing costs and productivity actions and price recovery efforts in the second half of the year, as well as modest season- and Addy. While we expect both sequential and year-over-year earnings growth in the second half of the year, the effects of lower than expected contract price increases in our network businesses and volume impacts of our disciplined approach have shifted the timing of achieving the level of earnings improvement we have previously anticipated.

Speaker Change: As Mark laid out, during the second quarter, our targeted actions to restore margins, as well as improving market dynamics, led to sequential progress across each of our segments.

Speaker Change: We expect to yield the benefits from our ongoing cost and productivity actions and price recovery efforts in the second half of the year, as well as modest seasonality.

Operator: While we expect both sequential and year-over-year earnings growth in the second half of the year, the effects of lower-than-expected contract price increases in our network business have shifted the timing of achieving the level of earnings improvement we had previously anticipated. Based on these considerations, we have refined our full year adjusted diluted EPS guidance for 2024 to a range of $0.80 to $0.96, assuming a full year effective tax rate of 25%. With that, we'll open the call for you. At this time, we'd like to remind everybody that to ask a question, please press star followed by the number one on your telephone keypad.

Speaker Change: While we expect both sequential and year-over-year earnings growth in the second half of the year, the effects of lower-than-expected contract price increases in our network businesses and volume impacts of our disciplined approach have shifted the timing of achieving the level of earnings improvement we had previously anticipated.

Darrell Campbell: Based on these considerations, we will refine our full-year adjusted diluted EPS guidance for 2024 to a range of 80 cents to 90 cents, assuming a full-year effective tax rate of 20 cents.

Speaker Change: Based on these considerations, we have refined our full-year adjusted diluted EPS guidance for 2024 to a range of 80 cents to 90 cents, assuming a full-year effective tax rate of 25 percent.

Operator: With that, we'll open the call for your questions. At this time, we'd like to remind everybody that to ask a question, please press star, followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Speaker Change: With that, we'll open the call for your questions.

Speaker Change: At this time, we'd like to remind everybody that to ask a question, please press star followed by the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

Daniel Imbro: Our first question comes from the line of Daniel Imbro with Steven's Inc. Your line is open.

Operator: We'll pause for just a moment to compile the Q&A. Our first question comes from the line of Daniel Imbrough with Stevens Inc. Your line is open.

Speaker Change: Our first question comes from the line of Daniel Imbro with Stevens Inc. Your line is open.

Daniel Imbro: Hey, guys. Thanks for taking a question. Over the past week, we've heard a lot of different accounts for pricing and in the truckload market and how that's trending.

Mark Rourke: Hey, guys, thanks for taking the question. Over the past week, we've heard a lot of different accounts for pricing and in the truckload market and how that's trending. Could you talk about what you're seeing in terms of market tightness into July and how sustainable that is? And give any color around the pricing backdrop that you're expecting for the back half and guidance. Yeah, I'll try to unpack that a little bit.

Daniel Imbro: Hey, guys, thanks for taking the question. Over the past week, we've, we've heard a lot of different accounts for pricing and in the truckload market and how that's trending. Could you talk about

Mark Rourke: Could you talk about what you're seeing and market tightness into July and how sustainable that is and give any color around the pricing back out that you're expecting for the back half end guidance? Yeah, I'll try to unpack that a little bit. I think your question was more on the truckload side of the house network specifically. As mentioned in our opening day, we had modest improvement in contract pricing, which is our second consecutive quarter, but less so than we had initially anticipated as we expected the market to continue to tighten, which we're seeing, particularly as we're seeing with spot pricing now.

Speaker Change: what you're seeing in like market tightness into July, and how sustainable that is, and give any color around the pricing backdrop that you're expecting for the back half and guidance.

Speaker Change: Yeah, I'll try to unpack that a little bit. I think your question was more on the truck load side of the house network specifically.

Mark Rourke: I think your question was more on the truck load side of the house network specifically. As we mentioned in our opening, Dan, we had modest improvement in contract pricing, which is our second consecutive quarter, but less so than we had initially anticipated as we expected the market to continue to tighten, which we're seeing, particularly as we're seeing with spot pricing now, I think the first time in two years, exceed our spot, our contract pricing in June, and also very solid performance again in the month of July.

Speaker Change: As we mentioned in our opening, Dan, we had modest improvement in contract pricing, which is our second consecutive quarter, but less so than we had initially anticipated.

Speaker Change: As we expected the market to continue to tighten, which we're seeing, particularly as we're seeing with spot pricing now, I think first time in two years exceed our spot, our contract pricing in June and also very solid performance again in the month of July. So again,

Mark Rourke: I think first time in two years exceed our spot, our contract pricing in June and also very solid performance again in the month of July. So again, too early to call inflection, but those are encouraging signs.

Mark Rourke: So again, it's too early to call an inflection, but those are encouraging signs. We have about a quarter of our allocation season left in both our intermodal and truck network business, so we'll continue to lean into that in quarters three and four. And we also have other levers that we are mindful of, what's available relative to project work, how to spot price play, we're seeing an increased level of mini-bids, so there's a series of activities that we think we can continue to adjust and improve the mix of freight across our network businesses in the second half, which is really what's embedded into our guidance.

Mark Rourke: We have about a quarter of our allocation season left on the on both our intermodal and truck network business, so we'll continue to lean into that in quarters three and four. And we also have other levers that we are mindful of what's available relative to project work, how to spot price play. We're seeing an increased level of mini bits, so there's a series of activities that we think we can continue to adjust and improve the mix of freight across our network businesses in the second half, which is really what's embedded into our guidance.

Speaker Change: Too early to call an inflection, but those are those are encouraging signs. We have about a quarter of our allocation season left on the

Speaker Change: on both our intermodal and truck network business. So we'll continue to lean into that in quarters three and four. And we also have other levers that we are mindful of what's available relative to.

Speaker Change: project work, how to spot price play, we're seeing an increased level of mini bids, so there's a series of activities that we think we can continue to adjust and improve the mix of freight across our network businesses in the second half, which is really what's embedded into our guidance.

Daniel Imbro: Got it. Thank you.

Jim Filter: Thank you. And on the intermodal side, how is the pricing backdrop changing there? Are you seeing any competitive backdrop stabilized? And you mentioned seeing freight, like, as you just mentioned, the freight market's tightening. How do you expect that to flow through to the intermodal backdrop going forward as we've seen poor volumes pick up and a lot of positive data points on that side of the business? Yeah, Dan, this is Jim. You have a lot of questions there.

Jim Filter: And on the intermodal side, how is the pricing backdrop change there? Are you seeing any competitive backdrop stabilized? And you mentioned seeing the freight, like I should just mention the freight markets tightening.

Speaker Change: Got it. Thank you. And on the intermodal side...

Speaker Change: How is the price and backdrop change there? Are you seeing any competitive backdrop stabilize?

Jim Filter: How do you expect that to flow through to the intermodal backdrop going forward as we've seen. Poor volumes pick up and a lot of positive data points on that side of the business.

Speaker Change: and you mentioned seeing the freight, like, as you just mentioned, the freight market's tightening. How do you expect that to flow through to the intermodal backdrop going forward as we've seen poor volumes pick up and a lot of positive data points on that side of the business?

Jim Filter: Yeah, Dan, this is Jim. You have a lot of questions there. I'll try to answer this. First is, you know, we look at that market. I think the area to really focus in on is the Drake capacity. And as Mark was talking about earlier, is that, you know, we've, we've really focused on improving our efficiency there. We've taken out 10% of our trucks with more volumes, so we've become more efficient. That really is the most critical asset in that, that business segment. So have that opportunity to be able to flex up to meet customers' demand.

Jim Filter: I'll try to answer this. First, when we look at that market, I think the area to really focus on is dray capacity. And as Mark was talking about earlier, we've really focused on improving our efficiency there. We've taken out 10% of our trucks with more volume. So we've become more efficient. That really is the most critical asset, you know, in that business segment.

Speaker Change: Yeah, Dan, this is Jim. You have a lot of questions there.

Jim: Try to answer this First is you know we look at that market

Speaker Change: I think the area to really focus in on is the dray capacity and

Jim: As Mark was talking about earlier, is that, you know, we've really focused on improving our efficiency there. We've taken out 10% of our trucks with more volume, so we've become more efficient. That really is the most critical asset.

Jim Filter: I still have that opportunity to be able to flex up to meet customers' demand, but that's generally gonna be with third parties that come at a premium price to be able to surge. And, you know, that's something that will be required to get from the market.

Speaker Change: in that business segment still have that opportunity to be able to flex up to meet

Daniel Imbro: But that's generally going to be with third parties that come at a premium price to be able to surge up. And that's something that will be required to get from the market. So that's where I really see the opportunity that we'll see pricing move there. We have seen demand increase last quarter. We talked about. IPI, the growth there hadn't really transferred over to the domestic side. And that started to change laden in the second quarter, and we started to see more translate activity, and that's continuing through July. Got it. Thanks for the color, guys.

Speaker Change: Customers Demand, but that's generally going to be with third parties that come in.

Speaker Change: to be able to surge up, and that's something that will be required to get from the market. So that's where I really see the opportunity that we'll see pricing move there. We have seen demand increase. Last quarter, we talked about

Jim Filter: So that's where I really see the opportunity that we'll see pricing move there. We have seen a demand increase. Last quarter, we talked about IPI, the growth there hadn't really transferred over to the domestic side. That started to change late in the second quarter, and we started to see more transload activity, and that's continuing through July.

Speaker Change: IPI, the growth there hadn't really transferred over to the domestic side. That started to change late in the second quarter and we started to see more transload activity and that's continuing through July.

Operator: Thanks for the call, you guys. As a reminder, when asking a question... ask one question and then you are allowed one follow-up. Our next question comes from the line of Jordan Alliger with Golden Sachs. Your line is, Well, Jordan, you're either out or you're on mute. Can you hear me?

Jordan Alliger: As a reminder, when asking a question, please ask one question, and then you are allowed one follow-up. Our next question comes from the line of Jordan Alliger with Golden Sacks.

Speaker Change: As a reminder, when asking a question, please ask one question and then you are allowed one follow-up. Our next question comes from the line of Jordan Alliger with Goldman Sachs. Your line is opened.

Jordan Alliger: Your line is opened. Well, Jordan, you're either out, or you're on mute. Can you hear me? Now we can. If you ask the question, we didn't hear it.

Speaker Change: Well, Jordan, you're either out or you're on mute.

Operator: Now we can. If you asked a question, we didn't hear it. Hello?

Jordan: Can you hear me?

Jordan Alliger: Now we can.

Jordan Alliger: Hello.

Speaker Change: If you asked a question, we didn't hear it.

Bruce Chen: All right, we're going to move on to Bruce Chen with stifle. Your line is open.

Operator: All right, we're going to move on to Bruce Chen, with Stifle, Uruguay. Yeah, thanks, Linda. Good morning, everyone. Maybe if I could just touch on dedicated here, you know, you've had some nice truck additions so far. If you could, you know, maybe walk us through the outlook for fleet capacity in the back half, or more broadly, what the implications are there for the pipeline and how that's shaping up. And then, you know, just any updates on the competitive environment there in the dedicated market. Yeah, this is Jim.

Speaker Change: Hello.

Speaker Change: Alright, we're going to move on to Bruce Chen with Stifle. Your line is open.

Bruce Chen: Yeah, thanks, and good morning, everyone. Maybe if I could just touch on dedicated here, you've had some nice truck additions so far.

Bruce Chen: Yeah, thanks, Linda. Good morning, everyone. Maybe if I could just touch on dedicated here, you know, you've had some nice truck addition so far. If you could, you know, maybe walk us through the outlook for fleet capacity in the back half and.

Jim Filter: If you could maybe walk us through the outlook for capacity in the back half, and maybe more broadly, what the applications are there for the pipeline, and how that's shaping up, and then just any updates on the competitive environment there in the dedicated market.

Speaker Change: Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke, Darrell Campbell,

Jim Filter: Yeah, this is Jim. Thanks for the question. Look at our growth here in Dedicated. I think we've held up very well, and a big part of that is just our customer diversity. We've customer portfolio represents more than 5% of our enterprise revenue, and we've just been really purposeful and in remaining balanced around the verticals that we want to participate in. Mark also talked about some of the efficiency gains that we've had in our dedicated business. We're still believe that we are going to have a couple hundred trucks of growth this year. Now some of our fourth quarter startups might get pushed into next year, but it's really a matter of timing there.

Jim Filter: Thanks for the question. And, you know, when you look at our growth here in dedicated, I think we've held up very well. And a big part of that is just our customer diversity. We've been working on that for a number of years. No customer portfolio represents more than 5% of our enterprise revenue.

Speaker Change: Yeah, this is Jim. Thanks for the question. And, you know, when you look at our growth here in Dedicated, I think we've held up very well. And a big part of that is just our customer diversity. We've been working on that for a number of years.

Jim Filter: And we've just been really purposeful and remaining balanced around the verticals that we want to participate in. Mark also talked about some of the efficiency gains that we've had in our dedicated business. We still believe that we are going to have a couple hundred trucks of growth this year. Now, some of our fourth quarter startups might get pushed into next year. But it's really a matter of timing there that new customer acquisitions are still at the same pace, our pipeline remains strong, and we still see a lot of opportunities to grow there.

Speaker Change: Mark Rourke, Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Unknown Executive,

Speaker Change: We still believe that we are going to have a couple hundred of them.

Speaker Change: Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke, Darrell Campbell,

Jim Filter: That new customer acquisitions are still on the same pace, or pipeline remains strong. I still see a lot of opportunities to grow that. And then just as far as any competitiveness that you're seeing, is that starting to abate at all, or is that more or less consistent with where it's been so far?

Jim Filter: And then, just as far as any competitiveness that you're seeing, is that starting to abate at all? Or is that more or less consistent with where it's been so far? Yeah, what I'd say in terms of competitiveness, most of our losses aren't to a competitor's dedicated solution, but it's rather going back to some sort of network solution or a private fleet. And, you know, if you think about a move from dedicated to network, that's something that might provide a customer a short-term opportunity, but that's not likely to provide value in a stronger market.

Speaker Change: And then just as far as any competitiveness that you're seeing, is that starting to abate at all or is that more or less consistent with where it's been so far?

Mark Rourke: And so those customers that switch from dedicated to network really provide an opportunity for us to grow with them, but we would approach that differently in a stronger market condition. Yeah, Bruce, maybe as it relates to the competitive context, you know, dedicated is competitive. I guess we wouldn't be a proponent of a narrative that is, "Any more competitive this year than it has been the last several years."

Jim Filter: Yeah, what I'd say in terms of competitiveness, most of our losses aren't to a competitor's dedicated solution, but it's rather going back to some sort of network solution or a private fleet.

Speaker Change: Yeah, what I'd say in terms of competitiveness, most of our losses aren't to a competitor's dedicated solution, but it's rather going back to some sort of network solution or private fleet.

Mark Rourke: If you think about it, moving from dedicated to network, that's something that might provide a customer a short-term opportunity, but that's not likely to provide value in a stronger market. And so those customers that switch from dedicated to network really provide an opportunity for us to grow with them, but we would approach that differently in a stronger market condition. Yeah, Bruce, maybe it has a relation to the competitive context. You know, dedicated is competitive. I guess we wouldn't be a proponent of a narrative that is so, any more competitive this year than it's been the last several years.

Speaker Change: and, you know, if you think about it.

Speaker Change: You know, moving from dedicated to network, that's something that might provide a customer a short-term opportunity.

Speaker Change: But that's not likely to provide value in a stronger market. And so those customers that switch from dedicated to network really provide an opportunity for us to grow with them. But we would approach that differently in a stronger market condition.

Speaker Change: Yeah, Bruce, maybe as it relates to the competitive context, you know, dedicated is competitive.

Operator: So, you know, based upon our targeted audience that we're after in specialty-type dedicated solutions and the mix of freight or the mix of customers that we are pursuing, we're still very, very bullish on its prospects, not only including our legacy dedicated but the growth opportunities within the unique sectors that are recent acquisitions. I still think we have some efficiency opportunities, particularly with one of our recent acquired companies, to grow the business and do it so more efficiently with a capital base. We'll continue to lean into those, but we're not of the opinion that it's had this incredible step-level change in competitiveness. Hey, that's great! It is really helpful.

Bruce Chen: I guess we wouldn't be a proponent of the of the narrative that is

Mark Rourke: So, you know, based upon our targeted audience that we're after on the specialty type dedicated solutions and the mix of freight or the mix of customers that we are pursuing, you know, we're still very, very bullish on its prospects, not only including our legacy dedicated, but the growth opportunities within the unique sectors that our recent acquisitions deployed. Now, I still think we have some efficiency opportunities, particularly with one of our recently acquired companies that we can grow the business and do it so more officially with the capital base. We will continue to lean into those.

Bruce Chen: Any more competitive this year than it's been the last several years. So, you know, based upon our targeted audience that we're after on specialty type dedicated solutions and the mix of freight, or the mix of customers that

Speaker Change: We are pursuing, you know, we're still very, very bullish on its prospects, not only including our legacy dedicated, but the growth opportunities within the unique sectors that are recent acquisitions.

Speaker Change: deploy. Now I still think we have some efficiency opportunities particularly with one of our recent acquired companies that we can grow the business and do it so more efficiently with a capital base. We'll continue to lean into those but yeah we're not

Bruce Chen: But yeah, we're not of the opinion that it's had this incredible step-level change in competitiveness. Okay, that's great. Really helpful. Thank you.

Speaker Change: of the opinion that it's had this incredible step-level change in competitiveness.

Tom Wadewitz: Our next question comes from a line of Tom Watowitz with UBS. Your line is opened.

Operator: Thank you. Our next question comes from the line of Tom Wadewitz with UBS. Your line is open. Yeah, good morning; wanted to see if you could offer some thoughts on how we should model or how we should think about revenue per load and intermodal in 3Q, and then revenue per truck per week and network in 3Q relative to 2Q. Is there, you know, is there some impact from contract rates being lower that cause sequential pressure? Or did you hit the, you know, the trough in 2Q when it's stable sequentially? Yeah, Thomas, Mark, I'll open it.

Speaker Change: Okay, that's great. Really helpful. Thank you.

Speaker Change: Our next question comes from the line of Tom Watowicz with UBS. Your line is opened.

Tom Wadewitz: Yeah, good morning. Wanted to see if you could offer some thoughts on how we should model or how we should think about revenue per load and intermodal in 3Q. And then revenue per truck per week and network in 3Q relative to 2Q.

Tom Watowicz: Yeah, good morning. Wanted to see if you could offer some thoughts on how we should model or how we should think about revenue per load in Intermodal and 3Q.

Tom Wadewitz: Is there, you know, is there some impact from contract rates lower the cause sequential pressure or did you hit the, you know, the trough in 2Q when it's stable. Yeah, Thomas Mark, I'll open if Jim has anything to add. I'll let him do so. Certainly that the stabilization of intermodal. We haven't seen as of yet material changes to contract rates. We've changed our mix. You'll see that in our results. We've been more efficient healing the network, less of the friction cost that impact our profitability. Our commercial teams and our operations teams on a really nice job of executing, particularly our drage drivers.

Tom Watowicz: and then revenue per truck per week and network in 3Q relative to 2Q. Is there, you know, is there some impact from contract rates lower that cause sequential pressure? Or did you hit the, you know, the trough in 2Q when it's stable sequentially?

Mark Rourke: If Jim has anything to add, I'll let him do so. Certainly, since the stabilization of Intermodal, we haven't seen, as of yet, material changes to contract rates. We've changed our mix.

Speaker Change: Yeah, Thomas, Mark, I'll open it. If Jim has anything to add, I'll let him do so. Certainly that the stabilization of intermodal we haven't seen

Speaker Change: As of yet, material changes to contract.

Mark Rourke: You'll see that in our results. We've been more efficient, healing the network, and reducing the friction costs that impact our profitability. Our commercial teams, and our operation teams have done a really nice job of execution, particularly our dray drivers. So that's where we've seen the lift.

Speaker Change: Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke, Unknown Executive,

Speaker Change: impact our profitability, our commercial teams and our operation teams on a really nice job of executing, particularly our dray drivers. So that that's where we've seen the lift. I think contract pricing is more in front of us. There's generally a bit of a lag to truck.

Mark Rourke: So that's that's where we've seen the lift. I think contract pricing is more in front of us. We're generally a bit of a lag to truck on that.

Mark Rourke: I think contract pricing is more in front of us; there's generally a bit of a lag to truck on that. So, we don't obviously guide specific metrics to quarter. So that's. It really was a setup for the first quarter.

Mark Rourke: So we don't obviously guide specific metrics to quarter. So that's kind of a really was a set up for the first of the second quarter.

Speaker Change: on that so

Speaker Change: So we don't obviously guide specific metrics to quarter so that's

Jim Filter: We continue to lean in and are encouraged, maybe Jim, with some of the discussions for planning for the second half of the year with customers that may be a little different than we experienced last couple. Yeah, thanks, Mark. Really, the advantage of remaining discipline through the freight allocation season is that we can flex our capacity to where we have the best opportunities outside of the contract season. And so it just feels like we're well positioned to pivot wherever we see quality demand. We have a really broad portfolio of services, which helps us provide solutions to customers.

Mark Rourke: We continue to lean in and are encouraged, maybe, Jim, by some of the discussions about planning for the second half of the year with customers that may be a little different than we experienced the last couple. Yeah. Yeah.

Speaker Change: kind of what really was a setup for the first or the second quarter. We continue to lean in and

Speaker Change: Encourage me, Jim, with some of the discussions for planning for the second half of the year with customers That may be a little different than we experienced the last couple. Yeah. Yeah. Thanks, Mark really

Jim Filter: Really, the advantage of remaining disciplined through the freight allocation season is that we can flex our capacity to where we have the best opportunities outside of the contract season. And so I just feel like we're well-positioned to pivot wherever we see quality demand. We have a really broad portfolio of services, which helps us provide solutions to customers, but we have opportunities to be able to flex to where we see the best profitability.

Speaker Change: Advantage of remaining disciplined through the freight allocation season is that we can flex our capacity to where we have the best opportunities outside of the contract season.

Speaker Change: And so I just feel like we're well positioned to pivot wherever we see quality demand. We have a really broad portfolio of services which helps us provide solutions to customers, but, you know, we have opportunities to.

Jim Filter: But you know, we have opportunities to be able to flex to where we see the best profitability.

Darrell Campbell: Yeah, I guess the only other thing this is Darrell that I'd add is obviously what we saw in the second quarter was a lot of productivity improvements. Mark talked about tightening of our forever to truck ratios. We expect that to carry forward into the second half. So we expect incremental improvement in the second half as it relates to the first half. And a lot of the growth that we expect also is all I'm driven in. Okay.

Darrell Campbell: I guess the only other thing, this is Darrell, that I'd add is obviously what we saw in the second quarter was a lot of productivity improvements. Mark talked about tightening our driver-to-truck ratios, and we expect that to carry forward into the second half.

Speaker Change: to where we see the best profitability.

Speaker Change: is, you know, obviously what we saw in the second quarter was a lot of productivity improvements. Mark talked about tightening of our driver to truck ratios. We expect that to carry forward into the second half. So we expect incremental improvement in the second half as it relates to the first half.

Operator: So we expect incremented improvement in the second half as it relates to the first half. And a lot of the growth that we expect also is volume-driven in the interim. Okay, yeah, that's great. And just for the follow up.

Mark Rourke: and a lot of the growth that we expect also is volume driven and intermodal.

Tom Wadewitz: Yeah, that's great.

Darrell Campbell: And just for the follow-up, I think it was about a year ago that you did a nice dedicated acquisition. I think, you know, Darrell, you mentioned the balance sheet leverage, which is very low. So that's nice to sleep well at night. But I'm wondering if, you know, if you decide to, you know, consider using the balance sheet a bit and just thoughts on timing for acquisitions, you know, if this time of the cycle when there's been a lot of pressure, if that's, you know, gives you more opportunity to find, you know, attractive deals, or if it's just tougher to find things that you might want to buy, you know, obviously it seems like you could do deals if you wanted to.

Operator: I think it was about a year ago that you did a nice dedicated acquisition. I think, you know, Darrell, you mentioned the balance sheet leverage, which is very low. So that's nice to, you know, sleep well at night.

Speaker Change: Okay, yeah, that's great. And just for the follow-up,

Speaker Change: I think it was about a year ago that you did a nice dedicated acquisition.

Speaker Change: I think, you know, Darrell, you mentioned the balance sheet leverage, which is very low. So that's nice to, you know, sleep well at night, but I'm...

Speaker Change: I'm wondering if, you know, if you decide to, you know, consider using the balance sheet a bit and just thoughts on timing for acquisitions, you know, if this time of the cycle when there's been a lot of pressure, if that's.

Darrell Campbell: But I'm wondering if, you know, if you decide to, you know, consider using the balance sheet a bit and just thoughts on timing for acquisitions, you know, if this time of the cycle, when there's been a lot of pressure, if that gives you more opportunity to find, you know, attractive deals? Or if it's just tougher to find things that you might want to buy, you know, obviously, it seems like you could do deals if you wanted to. Yeah, no, good, good question, Tom.

Speaker Change: gives you more opportunity to find attractive deals or if it's just tougher to find things that you might want to buy? Obviously, it seems like you could do deals if you wanted to.

Darrell Campbell: Yeah, now good, good question, Tom. And I'd say this is a good position to be in, right, just to say point three times net leverage. So we are conservative, and there's a reason that we're conservative because it puts us in a position to be flexible on opportunity arises. So if the right strategic opportunity comes up, or if there's something transformative, we'll obviously look at it. But we intend to remain Investment Grade. I couldn't see us going above two times. But there's a big way to go between point three times and two times, and we're looking at things all the time.

Darrell Campbell: And I'd say this is a good position to be in, right, just to say three times net leverage. So we are conservative. And there's a reason that we're conservative, because it puts us in a position to be flexible when the opportunity arises. So if the right strategic opportunity comes up, or if there's something transformative, we'll obviously look at it. But we intend to remain investment grade; I couldn't see us going above two times. But there's a big way to go between point three times and two times.

Speaker Change: Yeah, no, good, good question, Tom, and I'd say.

Speaker Change: This is a good position to be in, right, just to say 0.3 times net leverage. So we are conservative, and there's a reason that we're conservative, because it puts us in a position to be flexible when the opportunity arises.

Speaker Change: So if the right strategic opportunity comes up or if there's something transformative, we'll obviously look at it.

Speaker Change: and Mark Rourke, Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke, Darrell Campbell, Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell,

Darrell Campbell: So I think just for reference, every 12 to 18 months, we'd expect to do something from a more programmatic perspective. So we've been doing that over the past over years. So for modeling purposes, you could assume, you know, that that will continue. But we're always looking in the market for things that add to our strategic portfolio and our initiative of dedicated moral and logistics.

Operator: And we're looking at things all the time. So, just for reference, every 12 to 18 months, we'd expect to do something from a more programmatic perspective. So we've been doing that over the past several years. So for modeling purposes, you could assume, you know, that that will continue. But we're always looking in the market for things that add to our strategic portfolio and our initiatives, Dedicated to World and Logistics. Great, thanks for the time.

Speaker Change: Every 12 to 18 months we'd expect to do something from a more programmatic perspective, so we've been doing that over the past several years.

Speaker Change: So for modeling purposes, you could assume that will continue. But we're always looking in the market for things that add to our strategic portfolio and our initiative of

Tom Wadewitz: Great.

Speaker Change: Dedicated Intermodal and Logistics.

Tom Wadewitz: Thanks for the time.

Tom Wadewitz: Thank you, Job.

Jordan Alliger: Our next question comes from the Jordan allegor with Goldman Sachs.

Operator: Thank you, Chubb. Our next question comes from Jordan Alliger with Goldman Sachs. Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show. He is a licensed financial professional both in the U.S. and Israel, and he is a certified financial planner both in the U.S. and Israel.

Speaker Change: Great, thanks for the time.

Chubb: Thank you, Chubb.

Jordan Alliger: You're as open. Yeah, thanks.

Speaker Change: Our next question comes from Jordan Alliger with Goldman Sachs. Your line is opened.

Jordan Alliger: Thanks for giving me a second chance.

Jordan Alliger: 21st century phone problems. Anyway, on the logistics brokerage out of the equation, actually fairly a bit better than we thought. Are you reaching a point where there's a little bit more normalization and brokerage? Are you curious what you're seeing in your own experience in terms of selling price versus cost of transportation? And is there actually any spot market sort of developing?

Jordan Alliger: Thanks for giving me a second chance on 21st century phone problems. Anyway, on the logistics brokerage side of the equation,

Speaker Change: Unknown Speaker We're going to try to get this fared a bit better than we thought. Are you reaching a point where there's a little bit more...

Speaker Change: Normalization and brokerage are you know curious what you're saying?

Speaker Change: and your own experience in terms of selling price versus cost of transportation and is there actually any spot market sort of developing? Thanks.

Mark Rourke: Thanks. I think in general, as we talked to customers, as we mentioned, our opening Jordan, it does feel that the asset base players. Period, but also asset base brokerage are more in favor and the power only offering that we also have an additional opportunity there is resonating out there, but the customer community. So the spot market, we made really disciplined, and we have our tools that we try not to make that a hobby where we lose money on individual loads. It happens, but it's constantly being calibrated. So we're very comfortable giving a volume for margin as it relates to the spot market, which is generally what we play into our brokerage piece. But I would tell you it's more stable at this juncture.

Mark Rourke: He is a licensed financial professional both in the U.S. and Israel. I think, in general, as we talk to customers, as we mentioned in our opening, Jordan, it does feel that the asset-based players, period, but also asset-based brokering, are more in favor, and the power-only offering that we also have an additional opportunity there is resonating, not only with the player community, but the customer community. So in the spot market, we remain really disciplined, and we have our tools that we try not to make that a hobby where we lose money on individual loads. It happens, but it's constantly being calibrated.

Speaker Change: I think in general, as we talk to customers, as we mentioned in our opening, Jordan, it

Speaker Change: feel that the asset-based players

Speaker Change: period, but also asset-based brokerage.

Speaker Change: are more in favor and the power only offering that we also have an additional.

Speaker Change: [inaudible]

Speaker Change: [inaudible]

Speaker Change: Spot market we may really discipline and we have our tools that we try not to make that a hobby where we lose money on individual loads It happens, but it's

Operator: So we're very comfortable giving volume for margin as it relates to the spot market, which is generally what we play in our brokerage piece. But I would tell you it's more stable at this juncture. I wouldn't say it's accelerated, but both on the carrier costing side and the pricing side, it is stabilized. And we continue to look forward to producing positive, consistent, positive earnings results quarter after quarter in our brokerage business. Thank you. Our next question comes from the line of Ravi Shanker with Morgan Stanley. Thanks, everyone.

Speaker Change: constantly being calibrated. So we're very comfortable giving a volume for margin.

Speaker Change: as it relates to the spot market and which is generally what we play into our brokerage piece. But I would tell you it's more stable at this juncture. I wouldn't say it's...

Mark Rourke: Accelerated, but both on the carrier costing side and the pricing side, it is stabilized and continue to look forward to producing positive, consistent, positive earnings results quarter after quarter in our brokerage business.

Speaker Change: accelerated but both on the carrier costing side and the pricing side it is stabilized and continue to look forward to producing positive consistent positive earnings results quarter after quarter in our brokerage business.

Jordan Alliger: Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Robbie Shanker with Morgan Stanley. Your line is open.

Operator: Just a couple of follow-ups here. One is, given the point that you've shifted your timing and the expectation of the inflection, the cycle, can you just confirm from when to when, kind of, is this something that's moved to like 1Q25, 2Q25, kind of, when do you think that happens now? And second, just historically, you guys have given us some pretty good color on peak season, how that's shaping up. Any sense of what this year looks like? Um, Ravi had a hard time maybe catching all that first one.

Robbie Shanker: Thanks everyone. Just a couple of follow-ups here. One is just on the point of you've shifted your timing on the expectation of inflection, the cycle. Can you just confirm from when to when can a business like this move to like 1Q25, 2Q25 kind of

Speaker Change: when do you think that happens now and second just historically you guys have given us some pretty good color on peak season how that's shaping up any sense of what this year looks like?

Jordan Alliger: Ravi had a hard time maybe catching all that first when I think maybe you were looking for a declaration of when the inflection might occur.

Operator: I think maybe you were looking for a declaration of when the inflection might occur. You know, we're not declaring that at this juncture. It's probably a little bit early for us to be projecting out to 2025. So I'll stay away from making a prediction there. It's been incredibly difficult to do so through this most recent cycle. So, we'll stand down on that one, as it relates to color towards the peak.

Speaker Change: [inaudible]

Speaker Change: Ravi had a hard time maybe catching all that first one. I think maybe you were looking for a declaration of when the inflection might occur.

Mark Rourke: You know, we're not declaring that at this junction; probably a little bit early for us to be projecting out to 2025.

Speaker Change: Yeah, we're not declaring that at this juncture probably a little bit early for us to be projecting out to 2025

Mark Rourke: So I'll stay away from a prediction there.

Jim Filter: It's been incredibly difficult to do through this most recent cycle, so we'll stand down on that one. As it relates to color towards peak, you know, this is the season that we're in the early stages of working with customers and trying to understand how they're seeing the world. I think we do believe that customers, in general, will need to have volume for their sales. They've been very successful at price over the last couple of years, but volume will come back as an increasingly a lever, and we've had bit more discussions this year, Jim, maybe just some context of how that plays out by our most recent discussions.

Speaker Change: So I'll stay away from a prediction there. It's been incredibly difficult to do through this

Speaker Change: Most recent cycle so so we'll stand down on that one

Mark Rourke: You know, this is the season that we're in the early stages of working with customers and trying to understand how they're seeing the world. So I think we do believe that customers, in general, will need to have volume for their sales. They've been very successful at price over the last couple of years, but I think volume will come back as, and increasingly as, a lover and we've had a bit more discussions this year, Jim, maybe just some context of, Unknown Executive, Bascome Majors, Ravi Shanker, James Filter, Steve Bindas, Darren Campbell, those pockets of tightness of road checks and then end of quarter and the holiday. But what you didn't see between each one of those is necessarily the same degree of tightness.

Speaker Change: As it relates to color towards peak, you know, this is the season that we're in the early stages of working with customers and trying to understand how they're seeing the world. I think we do believe that customers in general will need to have volume.

Jim: for their sales. They've been very successful at price over the last couple of years, but I think volume will come back as an increasingly a lever. And we've had a bit more discussions this year, Jim, maybe just some context of

Jim Filter: Yeah, and just a little context. You think about what we went through in the first quarter. There were a couple of pockets of tightness, and the market dropped off a little bit in between this time. Those pockets of tightness, of road check, and then end of quarter and the holiday. But what you didn't see in between each one of those is necessarily the same degree of tightness. And Mark also mentioned the more many bits; all these are indications that supply and demand are coming more into balance. And so we are hearing more from customers that want to start talking to us about what is our capability to surge.

Jim: how that plays out by our most recent discussions.

Jim: Yeah, in just a little context, if you think about what we went through in the first quarter, there were a couple pockets of tightness.

Speaker Change: Mark Rourke, Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke,

Jim Filter: And Mark also mentioned the more mini bids; all these are indications that supply and demand are coming more into balance. And so we are hearing more from customers that want to start talking to us about what is our capability to surge? How would we do that?

Mark Rourke: But what you didn't see in between each one of those is necessarily the same degree of tightness. And Mark also mentioned the more mini bits, all these are indications that supply and demand are coming more into balance.

Speaker Change: And so we are hearing more from customers that want to start talking to us about

Jim Filter: How would we do that? What options can we bring to the table? And so we're having those discussions. There's nothing definitive yet in terms of how much they're going to ship and days. But we, you know, just the fact that we're having those discussions this year and that really wasn't the case last year.

Jim Filter: What options can we bring to the table? And so we're having those discussions. There's nothing definitive yet in terms of how much they're going to ship and on what days, but we, you know, just the fact that we're having those discussions this year and that really wasn't the case last year. Thank you. Thank you, Ravi. Our next question comes from the line of Brian Ossenbeck with J.P. Morgan. Hey, good morning. Thanks for taking the question. So, if you can...

Speaker Change: Unknown Executive, Steve Bindas, Mark Rourke, Darrell Campbell, Mark Rourke, Darrell Campbell,

Jim: in terms of how much they're going to ship and days, but we, you know, just the fact that we're having those discussions this year and that really wasn't the case last year.

Jordan Alliger: Understood.

Jordan Alliger: Thank you.

Jordan Alliger: Thank you, Robbie.

Brian Austin: Our next question comes from the line of Brian Austin, back with JP Morgan.

Speaker Change: Understood. Thank you.

Robbie Shanker: Thank you, Robbie.

Brian Austin: Your line is opened. Hey, good morning. Thanks for taking the question.

Speaker Change: Our next question comes from the line of Brian Ossenbeck with JP Morgan. Your line is opened.

Brian Austin: So maybe you can, hey, good morning. Maybe Jim, you can elaborate a little bit more on the IPI, the International, Intermodal. It sounds like you're seeing a little bit of spillover into translating on the domestic sides. I don't know when that would necessarily hit the network if that's kind of in line. with expectations or volume that you're expecting and whether or not that accelerates from here if it's still kind of a slow and steady progress as opposed to maybe picking up into the peak.

Operator: Thank you. Good morning. Maybe Jim, you can elaborate a little bit more on the transcripts provided by Transcription Outsourcing, LLC, necessarily hitting the network if that's kind of in line, www.kenhub.com, Slow and Steady. School of Study Progress as opposed to maybe. Yeah, thanks, Brian. So, you know, we were talking about this last quarter on our call and we were anticipating that we would start to see this just because of some of the tightness with ocean capacity. And it really didn't start.

Brian Ossenbeck: Hey, good morning. Thanks for taking the question.

Brian Ossenbeck: Hey, good morning. Maybe, Jim, you can elaborate a little bit more on the

Jim: The IPI, the International Intermodal, it sounds like you're seeing a little bit of spillover into transloading on the domestic side, so I don't know when that would.

Jim: necessarily hit the network, if that's kind of in line with

Speaker Change: expectations or volume that you're expecting and whether or not that accelerates from here or if it's still kind of a slow and steady, slow and steady progress as opposed to maybe picking up into the peak.

Jim Filter: Yeah, thanks, Brian. So, you know, we were talking about this last quarter on our call that we were anticipating that we would start to see this just because of some of the tightness with ocean capacity. And it really didn't start; we didn't start feeling it until very late in the quarter, and that is carried through July. We just we have not seen a drop off in that.

Speaker Change: Thanks, Brian. So, you know, we were talking about this last quarter on our call that we were anticipating that we would start to see this just because of some of the tightness with with ocean capacity. And it really didn't start.

Jim Filter: We didn't start feeling it until very late in the quarter, and that has carried through July. We just have not seen a drop off in that. So I'm not sure that I could say that, you know, when are we going to see more or a bigger peak?

Speaker Change: We didn't start feeling it until very late in the quarter, and that has carried through July. We just, we have not seen a drop off in that, so I'm not sure that I could say that, you know, when are we going to see more or a bigger peak. That's difficult to make an assessment of how much more we will see there, but we've definitely seen that change.

Jim Filter: So I'm not sure that I could say that, you know, when are we going to see more or bigger peak that that's difficult to make an assessment of how much more we will see there, but we've definitely seen that they change that with that tightness of ocean vessel capacity. They're making that decision to switch from IPI to domestic. Yeah, Brian, as we went through the quarter, you know, solid growth in Transcon, Mexico, and the Western region. Unfortunately, had some offset out these due to the truck capacity, but some of those key intermodal markets, we did see some improvement.

Jim: With that tightness of ocean vessel capacity, they're making that decision to switch from IPI to domestic.

Jim Filter: It's difficult to make an assessment of how much more we will see there, but we've definitely seen that change that with that tightness of ocean vessel capacity, they're making that decision to switch from IPI to domestic. Yeah, Brahma, as we went through the quarter, um... No solid growth in Transcon Mexico in the western region. Unfortunately, we had some offset out in the east.

Robbie Shanker: as we went through the quarter.

Speaker Change: No solid growth in Transcon Mexico in the western region unfortunately had some some offset out these

Mark Rourke: Truck capacity, but some of those key intermodal markets, we did see some improvement, and as we get to the busier part of the season, we would expect some, what we're calling, a return to more normal seasonality, not peak, not inflection, but more normal seasonality. Just to follow up on Intermodal, then, in terms of where the truck market is, sounds like it's still challenging in the east. Where are the spreads relative to history right now?

Jim Filter: And as we get to the busier part of the season, we would expect some, what we're calling return to more normal seasonality, not Pete. Not conflection, but more normal seasonality.

Robbie Shanker: do the truck capacity but some of those key intermodal markets we did see some improvement and as we get to the busier

Speaker Change: Part of the season we would expect some what we're calling return to more normal seasonality, not peak, not inflection, but more normal seasonality.

Jim Filter: Understood, just to follow up on intermodal, then in terms of where the truck market is, sounds like it's still challenging in the east, where the spreads relative to history right now, and are you having yeah, this gym, yeah, from a service standpoint, that really has not been a barrier here.

Speaker Change: Understood. Just to follow up on

Speaker Change: Intermodal then, in terms of where the truck market is, sounds like it's still challenging in the east, where are the

Operator: And are you having shipper conversations where they're looking to do more conversion now that rail service is stabilized and improving? Have you seen anything notable in the quarter so far? Yeah, this is Jim.

Speaker Change: Spreads relative to history right now and are you having shipper conversations where they're looking to do More conversion now that rail service is stabilized improving. Have you seen anything notable in the quarter so far?

Jim Filter: Yeah, from a service standpoint, that really has not been a barrier here. I've seen great service from all three of our rail partners. So it really is a matter of price relative to over the road. And here more recently, as we are seeing truckload rates start to slowly increase, it's putting Intermola in a position to compete there. So that's something I would expect that we'll start to see a little bit of an improvement, especially in those truck competitive lanes. Okay, thank you for your time.

Speaker Change: Yeah, this is Jim. Yeah, from a service standpoint, that really has not been a barrier here, seeing great service from all three of our rail partners.

Jim Filter: I was seeing great service from all three of our rail partners. So it really is a matter of price relative to over the road. And here, more recently, as we are seeing the truck load rate start to slowly increase, it's putting intermodal in position to compete there.

Brian Austin: So that's something I would expect that will start to see a little bit of an improvement, especially in those truck competitive lanes. Okay, thank you for the time.

Chris Weatherby: Our next question comes from the line of Chris Weatherby with Wells Fargo. Your line is opened.

Operator: Our next question comes from the line of Chris Wetherbee with Wells Fargo. Your line is open. Hey, thanks. Good morning, guys.

Speaker Change: Okay, thank you for the time.

Chris Weatherby: Yeah, hey, thanks.

Operator: I was wondering if you could dig in a little bit into the July commentary and maybe sort of compare it to what you'd normally expect from a seasonality perspective, you know, some fairly negative macro data out this morning. I guess I'm just kind of curious how you guys compare and contrast what you've seen over the course of the last several weeks in the business. I know you mentioned that spot rates were still above contract.

Chris Weatherby: Good morning, guys. I was wondering if you dig in a little bit into the July commentary and maybe sort of compare it to what you normally expect from a seasonality perspective, you know, some fairly negative macro data out this morning. I guess I'm just kind of curious how you guys compare and contrast what you've seen over the course of the last several weeks in the business. I know you mentioned that spot rates were still a little bit of contract, but you're probably speaking from a demand perspective is applying out the way that normal seasonality was to Jeff.

Operator: But broadly speaking, from a demand perspective, is it playing out the way that normal seasonality would suggest? Yeah, Chris, from my expectations and normalcy, obviously, it's a little bit of a shorter month coming with a major holiday in it, but I wouldn't say there was anything particularly unusual in either direction.

Mark Rourke: Yeah, Chris, from my expectations and normalcy, obviously, so a little bit of a shorter month coming with a major holiday in it, but I wouldn't say there was anything particularly unusual in either direction. It's been fairly steady, which is I think overall a good sign coming off end of quarter in June. So not spectacular, but not a reversion back to much less lower volumes or pricing changes. As I mentioned in the spot market, so pretty steady, pretty steady performance.

Mark Rourke: It's been fairly steady, which is, I think, overall, a good sign coming off the end of the quarter in June. So not spectacular, but not a reversion back to, you know, much lower volumes or pricing changes, as I mentioned in the spot market. So pretty steady, pretty steady performance. Okay, that's helpful.

Speaker Change: Yeah Chris, from my expectations and normalcy, obviously it's a little bit of a shorter month coming with a major holiday in it, but I wouldn't say there was anything particularly unusual in either direction.

Darrell Campbell: Okay, that's helpful. And then maybe just putting all of that into the context of the guidance. I think you guys mentioned that you'd expect sequential improvement and a year of year in earnings in the next couple of quarters. Any other sort of shape you can put around that I guess maybe the direct question is, you know, what will your expectations be around the fourth quarter that can have some more significant seasonality. So just trying to get a sense of maybe how to sort of pace out the rest of the year from an earnings perspective. Going towards your updated guidance.

Operator: And then maybe just putting all of that into the context of the guidance. I think you guys mentioned that you'd expect sequential improvement year over year in earnings in the next couple of quarters. Any other sort of shape you can put around that?

Speaker Change: Any other sort of shape you can put around it. I guess maybe the direct question is, you know, what will your expectations be around the fourth quarter that can have some more significant seasonality. So just trying to get a sense of maybe how to sort of pace out the rest of the year from an earnings perspective, going towards your updated guidance.

Darrell Campbell: Chris, I think you kind of hit on the kind of how we're thinking about it. We did we are talking sequential first half, second half there. And when we use the phraseology of more normal seasonality, again, that would indicate a fourth quarter is generally more favorable in third quarter. And that's where we would expect normal seasonality to be defined as.

Mark Rourke: I guess maybe the direct question is, you know, what will your expectations be around the fourth quarter that can have some more significant seasonality? So just trying to get a sense of maybe how to sort of pace out the rest of the year from an earnings perspective, going towards your updated guide. Chris, I think you've kind of hit on kind of how we're thinking about it. We did, we are talking sequential first half, second half there.

Speaker Change: Chris, I think you've you've kind of hit on the kind of how we're thinking about it We did we we are talking sequential first half second half there

Mark Rourke: And when we use the phraseology of more normal seasonality, again, that would indicate a fourth quarter is generally more favorable than the third quarter, and that's what we would expect normal seasonality to be defined as. Okay, okay. All right. Thanks very much for the time.

Darrell Campbell: Okay.

Darrell Campbell: All right.

Darrell Campbell: Thanks very much for the time.

Darrell Campbell: Appreciate it. Thank you.

Jonathan Chappell: Our next question comes from the wide of John Chappell with Evercore ISI. Your wine is open. Thank you.

Operator: I appreciate it. Thank you. Our next question comes from the line of John Chappell with Evercore ISI. Thank you. Good morning.

Speaker Change: Our next question comes from the line of John Chappell with Evercore ISI. Your line is open.

Operator: So good morning. You spent a lot of time, I think, on the inside, on the intermodal side. You talked through some of the cost initiatives, I think, in detail. It's really interesting to read to see most of the revenue lines effectively flat sequentially and then a doubling of EBIT in every revenue line, I'm sorry, in every segment line. So on the TL and maybe the logistics side, too, is there any more detail you can give around the cost initiatives that you've implemented to enable the margin to expand so much, even on a flat revenue backdrop? Yeah, good question.

Jonathan Chappell: Good morning. I just spent a lot of time. I think on the intermodal side, you've talked through some of the cost issues. I think in detail. It's a really interesting read to see most of the revenue lines effectively flat sequentially, and then a doubling of EBIT in every revenue line. I'm sorry in every segment line. So I'm a TL, and maybe the logistics side too.

Mark Rourke: Is there any more detail you can give around the cost initiatives that you've implemented to enable the margin to expand so much, even a flat revenue backdrop. Yeah. Good question. And as we've spoken in our last several calls. If we baseline ourselves to the fourth quarter of 2022, which is where we've typically discussed this topic. I'm just really proud of the entire organization's ability across multiple expense pools to dig in and look for opportunity to arrest inflation. And now, in many cases, be able to turn back some of those costs to inflation. Jonathan, so it really is across the board and you know from our maintenance organization on uptime on equipment to getting the parts and all the things that was inhibiting our ability to be low cost and high uptime.

Mark Rourke: And as we've spoken in our last several calls, if we baseline ourselves to the fourth quarter of 2022, which is where we've typically discussed this topic, I'm just really proud of the entire organization's ability across multiple expense pools to dig in and look for opportunities to arrest inflation and, now, in many cases, be able to turn back some of those costs to inflation, Jonathan. So it really is across the board.

Speaker Change: Yeah, good question. And as we've spoken in our last

Speaker Change: I'm just really proud of the entire organization's ability across multiple expense pools to dig in and look for opportunity to arrest.

Mark Rourke: And, you know, from our maintenance organization on uptime on equipment to, you know, getting the parts and all the things that were inhibiting our ability to be low cost and high uptime, they've done a really good job of getting us back to what we would consider our standard spec, our driver recruiting teams, and our headcount actions to be more efficient. We've talked about capital efficiency by being able to increase ratios. You know, all of those things you're not hitting, you know. One Bounce, Double Over the Fence.

Speaker Change: inflation and now in many cases be able to turn back some of those costs to inflation Jonathan so it really is really is across the board and you know from our maintenance organization on uptime on equipment to you know getting the parts and all the things that was

Mark Rourke: They've done a really good job of getting us back to what we would consider our standard spec, our driver recruiting teams, our headcount actions to be more efficient. We've talked about capital efficiency by being able to increase ratios. You know, all of those you're not hitting, you know, one bounce, a double over the fence. You're hitting lots of signals across lots of categories to build momentum. And, you know, we're talking about how those are structural improvements. Those don't have to change based upon cut market. And so, you know, really, really across the board from third party expense to in house dollars.

Speaker Change: headcount actions to be more efficient. We've talked about capital efficiency by being able to increase ratios, you know, all of those, you're not hitting, you know,

Mark Rourke: You're hitting lots of signals across lots of categories to build momentum. And, you know, we're talking about how those are structural improvements that don't have to change based upon.

Speaker Change: One bounce, double over the fence. You're hitting lots of signals across lots of categories to build momentum. And, you know, we're talking about how those are structural improvements. Those don't have to change based upon market. And so,

Jim Filter: Cut Market. And so, you know, really, really across the board, from third-party expense to in-house dollars, the team has leaned into it. And that's why you see it really prevalent across all three of our operating segments. It isn't in a single or targeted part of the business; it's really across the board.

Jim Filter: The team has leaned into, and that's why you see it really prevalent across all three of our operating segments that isn't in a single or targeted part of the business, is really across the board. Yeah, this just really is across the enterprise like Mark said and mentioned. All the places we've taken cost of the value of remaining discipline through that allocation season is we've been able to, you know, get a better mix of freight. And that better mix of freight helps us reduce some of the friction costs that also place, and so really is an enterprise action.

Speaker Change: Third-party expense to in-house dollars the team has leaned into, and that's why you see it really prevalent across all three of our operating segments. It isn't in a single or targeted part of the business, it's really across the board.

Jim Filter: Yeah, this just really is across the enterprise, like Mark said, and mentioned all the places we've taken the cost of the value remaining discipline through that allocation season. We've been able to, you know, get a better mix of freight. And that better mix of freight helps us reduce some of the friction costs that also play a role, so this really is an enterprise action. Jim, that leads right to my follow-up question, which was the mix of freight.

Jim Filter: Are you effectively saying that you're walking away from business that's maybe lower margin or requires greater resources than the return you can get on it at this point? And does that change the kind of trajectory that you would see when the freight high winds do become tailwinds? Yes, John. Absolutely. We are positioning ourselves to align with freight that, you know, generates return for the organizations that we can reinvest. I would expect that in a different market cycle, those are opportunities that become available again and create opportunities for growth. Yeah, there are multiple levers there.

Jonathan Chappell: Jim, that leads right to my follow-up, which was the mix of freight. Are you effectively saying that you're walking away from business that's maybe lower margin or requires greater resources than the return you can get on at this point? And does that change the kind of trajectory that you would see when the freight high winds do become tailwinds? Yes, Sean, absolutely. That we are positioning ourselves to align with freight that generates return for the organizations that we can reinvest. I would expect that in a different market cycle, those are opportunities that become available again and create opportunities for growth.

Mark Rourke: and Mark Rourke.

Speaker Change: Jim, that leads right to my follow-up, which was the mix of freight. Are you effectively saying that you're walking away from business that's maybe lower margin or requires greater resources than the return you can get on it at this point? And does that change the kind of trajectory that you would see when the freight high winds do become tailwinds?

Jim: Yes, John, absolutely, that we are positioning ourselves to align with freight that that

Jim: generates a return for the organizations that we can reinvest. I would expect that in a different market cycle, those are opportunities that become available again and create opportunities for growth.

Mark Rourke: Yeah, there are multiple levers there: how we accept freight, how we use the spot freight, giving ourselves the flexibility to go after in the event that it's their more premium project work. All that's behind our decision relative to what we're making commitments and what we mean by discipline through the allocation season, Jonathan. And I just don't do on a reinforced the good work our sales and commercial teams doing, and we've used the example here today on Intermobile by getting the network in a better position, healing the network. We have less of the assasorial costs. We have less of the repositioning costs, and it's enabled our driver fleet to be more efficient, which allowed us to take capital out of the business and the corresponding expense that we saved by doing that.

Mark Rourke: How we accept freight, how we use spot freight, giving ourselves the flexibility to go after in the event that it's their more premium project work, all that's behind our decision relative to what we're making commitments to and what we mean by discipline through the allocation season, Jonathan. And I just do want to reinforce the good work our sales and commercial teams are doing. We've used the example here today on Intermobile. By getting the network in a better position, healing the network, we have less of the accessorial costs, and we have less of the repositioning costs.

Speaker Change: Yeah, there are multiple levers there. How we accept freight, how we use the spot freight, giving ourselves the flexibility to go after in the event that it's their more premium project work, all that's behind our decision relative to what

Speaker Change: We're making commitments and what we mean by discipline through the allocation season, Jonathan.

Mark Rourke: and I just do want to reinforce the good work our sales and commercial teams doing. We've used the example here today on Intermobile by getting the network in a better position, healing the network, we have less of the accessorial costs, we have less of the repositioning costs.

Mark Rourke: And it's enabled our driver fleet to be more efficient, which has allowed us to take capital out of the business and the corresponding expense that we save by doing that. So the commercial and healing relative to this allocation season has cost benefits in addition to giving us additional flexibility in the event that we have the opportunity to yield it in the second half of the year. Okay, that's great. Thanks, Mark. Thanks, Jim. Our next question comes from the line of Jason Seidl with TBC. Hey, March M team!

Mark Rourke: and it's enabled our driver fleet to be more efficient, which has allowed us to take capital.

Mark Rourke: So the commercial and healing relative to this allocation season has the cost benefits in addition to giving us additional flexibility in the event that we have the opportunity to yield at the second half of the year.

Mark Rourke: Out of of the business and the corresponding expense that we save by doing that so the commercial healing relative to this allocation season has the cost benefits in addition to

Speaker Change: Giving us additional flexibility in the event that we have the opportunity to yield it in the second half of the year

Jonathan Chappell: Okay, that's great. Thanks, Mark. Thanks, Jim.

Jason Seidl: Okay, that's great. Thanks, Mark. Thanks, Jim.

Jason Sidel: Our next question comes from the line of Jason Sidel with Key. Your line is opened.

Speaker Change: Our next question comes from the line of Jason Seidel with TECON. Your line is open.

Jason Sidel: Hey, Mark Jim team. What is that focus a little bit on sort of the back half of the year, what you're hearing about peak season, you know, you mentioned that, you know, you kept a lot of capacity to be more flexible. Are we expecting a lot more sort of pop-up business in the back half of the year?

Operator: Wanted to focus a little bit on sort of the back half of the year, what you're hearing about peak season, you know. You mentioned that you kept a lot of capacity to be more flexible. Are we expecting a lot more sort of pop-up business in the back half of the year? What are shippers saying, Well, I'm not sure what the definition is, but we've kept a lot of extra capacity; what we've done is given ourselves the flexibility to the degree that we can to help our customers who may need that type of support.

Speaker Change: Hey Mark, Jim, team. I wanted to focus a little bit on sort of the back half of the year, what you're hearing about peak season, you know, you mentioned that

Mark Rourke: What are you pursuing? Well, I'm not sure the definition. We've kept a lot of extra capacity. What we've done have given ourselves a flexibility to the degree that we can to help our customers who may need that type of support, and we're in some discussions, and we have it in discussions, trying to understand what that may look like. And so what we're really trying to do is make sure that we can pivot appropriately and have the resources and the aptitude to do that, Jason.

Operator: Well, I'm not sure the definition. We've kept a lot of extra capacity. What we've done is given ourselves the flexibility to the degree that we can to help our customers who may need that type of support. And we're in some discussions, and we have been in discussions, trying to understand what that may look like.

Operator: And we're in some discussions, and we have been in discussions trying to understand what that may look like. And so, what we're really trying to do is make sure that we can pivot appropriately and have the resources and the aptitude to do that, Jason. So, a little early for us to be definitive on that, but, uh, that's the point of the planning process that we are involved in internally and also in conjunction with our customers. Okay, fair enough.

Speaker Change: And so what we're really trying to do is make sure that we can pivot appropriately and have the resources and the aptitude to do that, Jason. So a little early for us to be definitive on that.

Mark Rourke: So, a little early for us to be definitive on that. But that's the point of the planning process that we internally are in and also in conjunction with our customers.

Jim Filter: Okay, fair enough. And on the dedicated side, have you guys seen the more aggressive marketplace in terms of pricing on the contracts that it seems like, you know, some of your competitors have taken some trucks out of their dedicated operations as we look at some of the two. Well, as in any market, there is a distribution of type of freight that you're hauling, even in dedicated and customer segments. We are in the more generic drive-and-type dedicated in certain locations and certain geographies, but increasingly what our focus has been, where our growth has been both organically and equisitively.

Operator: And on the dedicated side, have you guys seen the more aggressive marketplace in terms of pricing on the contract side? It seems like, you know, some of your competitors have taken some trucks out of their dedicated operations as we look at some of the 2Q numbers. Well, as in any market, there are as a distribution of the type of freight that you're hauling, even in dedicated and customer segments. We are in the more generic dry van type dedicated to certain locations and certain geographies, but increasingly, where our focus has been where our growth has been both organically and acquisitively.

Speaker Change: Okay, fair enough.

Operator: And on the dedicated side, have you guys seen the more aggressive marketplace in terms of pricing on the contract side? It seems like, you know, some of your competitors have taken some trucks out of their dedicated operations as we look at some of the 2Q numbers.

Operator: Well as in any market there are as a distribution of type of freight that you're hauling even in dedicated in customer segments we

Operator: Jason, as we're trying to certainly position ourselves in the more durable dedicated, those that we're providing a specialty in their equipment or additional service that our drivers are involved in the supply chain process for the customer. And as such, there's I wouldn't say there's less competition. As I said, there's plenty of competition there, but it's much stickier, and harder to replace. And you're really demonstrating your value to your customers every day. And if you do that, your retention levels will remain high.

Jim Filter: Jason, we're trying to certainly position ourselves in the more durable, dedicated, those that we're providing a special to you, their equipment or additional service that our drivers involved in the supply chain process for the customer. And as such, there's, I wouldn't say there's less competition; there's plenty of competition there, but it's much stickier, harder to replace, and you're really demonstrating your value to your customer every day. And if you do that, your retention levels remain high, and we're still, well, as we sit here today, 95% plus through our retention actions this year. So, not that we're not immune to some of the behavior that may take place, but it's a much, much smaller portion of our portfolio.

Operator: Jason, as we're trying to certainly position ourselves in the more durable, dedicated, those that we're providing a specialty, either their equipment or...

Mark Rourke: And we're still well, as we sit here today, 95% plus through our retention actions this year. So not that we're not immune to some of the behavior that may take place, but it's a much, much smaller portion of our portfolio. That makes sense. And what percent of your accounts would you consider more durable? Well, the vast majority, I'd probably put that in the 75-80% at least.

Mark Rourke: Demonstrating your value to your customer every day. And if you do that, your retention levels remain high and we're still well as we sit here today at 95% plus through our retention actions this year. So not that we're not not immune to some of the

Jim Filter: That makes sense. And what percent of your accounts that you've indicated would you consider more durable? Well, the vast majority, I'd probably put that in the 50% least.

Mark Rourke: Well, the vast majority, I'd probably put that in the 75-80% at least.

Jim Filter: Okay, fantastic.

Mark Rourke: Okay. Fantastic. Appreciate the time, gentlemen. Our next question comes from the line of Bascome Majors with Susquehanna. To follow up on Jason's first question, you noted that it's a little early to really know what you have for peak season. Typically, how far into the calendar would it be before you really know what you're dealing with from a price, pop-up demand, and ultimately profit perspective for the fourth quarter? Yeah, Bascom, this is Jim.

Jim Filter: Appreciate the time, gentlemen.

Baskin Majors: Our next question comes from the line of Baskin Majors with Susquehanna. Your one is open.

Mark Rourke: Okay, fantastic. Appreciate the time, gentlemen.

Mark Rourke: Our next question comes from the line of Bascom Majors with Susquehanna. Your line is opened.

Baskin Majors: To follow up on Jason's first question, you noted that it's a little early to really know what you have for peak season. Typically, how far into the calendar would it be before you really know what you're dealing with from a price pop-up demand and ultimately profit perspective for the fourth quarter?

Bascome Majors: To follow up on Jason's first question, you noted that it's a little early to really know what you have for peak season. Typically, how far into the calendar would it be before you really know what you're dealing with from a price pop-up demand and ultimately, profit perspective for the fourth quarter?

Jim Filter: Yeah, Baskin, this is Jim. And typically, the processes that were customers come to us, they have a general idea. We start sharing information. It's not until later in August that they're really starting to put together those plans. There's some of those that are actually already completed. But the vast majority, those are getting worked here later in August, and some of those actually move even into September.

Jim Filter: And typically, the processes that we're customers come to us, they have a general idea, we start sharing information, but it's not until later in August that they're really starting to put those plans together. There are some of those that are actually already completed, but the vast majority are getting worked on here later in August, and some of those actually move even into September.

Jim Filter: Yeah, Bascom, this is Jim.

Jim Filter: Customers come to us, they have a general idea, we start sharing information. It's not until later in August that they're really starting to put together those plans. There's some of those that are actually already completed, but the vast majority, those are getting worked here later in August, and some of those actually move even into September.

Baskin Majors: Thank you for that.

Operator: And looking beyond this year's peak season, as we think about the bridge back in the truckload segment from call it mid single-digit operating margins today to your 12 to 16% long-term range, you know, is it really just a couple of years of price above inflation that gets us there? If, can you kind of walk us through how we get back there without necessarily trying to put a hard cyclical timeline on it?

Mark Rourke: And looking beyond the peak season from this year, as we think about the bridge back in the truck load segment from, call it mid-single digit operating margins today to your 12 to 16% long-term range. Is it really just a couple of years of price above inflation that gets us there? Can you kind of walk us through the how we get back there without necessarily trying to put a hard cyclical timeline on it? That would be helpful. Thank you. Yeah, certainly, very important is price recovery. As an industry, we went through a period of inflation around wages, equipment; that is part of the business today.

Operator: Thank you for that. And looking beyond the peak season from this year, as we think about the bridge back in the truckload segment from, call it mid-single digit operating margins today to

Operator: Your 12 to 16 percent long-term range, you know

Speaker Change: is it really just a couple of years of price above inflation that gets us there?

Speaker Change: Can you kind of walk us through the how we get back there without necessarily trying to put a hard cyclical timeline on it? That would be helpful.

Mark Rourke: That would be helpful. Thank you. Yeah, certainly, very important is price recovery. As an industry, we went through a period of inflation around wages, and equipment. That is part of the business today. And what we've been through, particularly on the network side of the business, is not getting compensable rates to cover that to include what's expected from Acceptance, performance, and we're just the industry, and that part of the business, particularly the truckload network, at this juncture is just out of whack, and for us to invest in the future.

Mark Rourke: Yeah, certainly.

Mark Rourke: Very important is price recovery. As an industry, we went through a period of inflation around wages, equipment, that is part of the business today.

Mark Rourke: And what we've been through, particularly the network side of the businesses, is that not getting compensable rates to cover that, to include what's expected from. Acceptance, performance, and we're just the industry at that part of the business, particularly Treco Network. At this juncture, is just out of whack, and for us to invest in the future, we have to see some correction there.

Mark Rourke: and what we've been through, particularly the network side of the business, is not getting compensable rates to cover that, to include what's expected from

Mark Rourke: Acceptance performance and we're just the industry and that part of the business particularly truckload network at this juncture is just out of whack and

Mark Rourke: We have to see some correction there. We're confident that the values are there, and it will take some time. But it will, as we'll start to give guidance later in the year to 2025. We'll be more specific about that bridge, but pricing plays a role, and also all the other actions that we're doing today around productivity, efficiency, cost. All of those things are an important contributor to put us in a position to yield those benefits quickly as price recovery becomes more prominent. Our next question comes from the line David Hicks with Raymond James.

Mark Rourke: We're confident that the value is there, and it will take some time, but as we'll start to give guidance later in the year to 2025, we'll be more specific about that bridge. But pricing plays a role, but also all the other actions that we're doing today around productivity, efficiency, cost, all of those things are an important contributor to put us in a position to yield those benefits quickly as price recovery becomes more prominent.

Mark Rourke: And for us to invest in the future, we have to see some correction there. We're confident that the value's there and it will take some time, but it

Mark Rourke: But as we'll start to give guidance later in the year to 2025, we'll be more specific about that bridge

Mark Rourke: But pricing plays a role, but also all the other actions that we're doing today around productivity, efficiency, cost, all of those things are an important contributor to put us in a position to yield those benefits quickly as price recovery becomes more prominent.

David Hicks: Our next question comes from the line of David Hicks with Raymond James. Thanks, guys. Congrats on the quarter. We've seen sequential improvement across the board, across segments; all of that performance needs and typical seasonality here in QQ. Is that kind of outperformance that we're seeing? I know you expect sequential improvement, but kind of outperformance versus seasonal trends, is that expected for the bounce of the year, just kind of as we see, to kind of seasonality come back, and there's still room to attack on the cost side of things.

David Hicks: Thank you.

Mark Rourke: Our next question comes from the line of David Hicks with Raymond James.

Operator: Thanks, guys. Congratulations on the quarter. We've seen sequential margin improvement kind of across the board, across segments, as well as outperformance and typical seasonality here in QQ. Is that the kind of outperformance that we're seeing? I know you expect sequential improvement, but kind of outperformance versus seasonal trends, is that expected for the balance of the year, just kind of as we see kind of seasonality come back? Yeah, this is this is Mark, and I, we still have the yield of all the cost actions that we've been taking that will still be what we believe is certainly durable through the remaining part of the year.

Speaker Change: Thanks guys, congrats on the quarter.

Operator: Good morning. We've seen sequential margin improvement kind of across the board, across segments.

Speaker Change: Unknown Speaker ... typical seasonality here in QQ. Is that kind of outperformance that we're seeing? I know you expect sequential improvement, but kind of...

Operator: Outperformance versus seasonal trends is that expected for the balance of the year just kind of as you we see to kind of seasonality come back and there's still room to attack on the cost side of things.

Mark Rourke: Yeah, this is, this is, Mark. We still have the yield of all the cost actions that we've been that will still be, what we believe is certainly durable through the remaining part of the year, and so there's constant ability to kind of feather those in and is part of our, certainly part of our outlook. And we've also, from a commercial standpoint or a freight standpoint, we keep using the word return to some normalcy of seasonality. We're not saying we're going to have the peak of peaks, but a normal seasonality. After we've seen the end of quarter activity in March, the experience that we had in the second quarter in some of the conditions that we've outlined in our discussion the day would suggest have to play out.

Operator: Yeah, this is, this is Mark. Uh, I, we still have the yield of all the cost actions that we've been, that that will still be what we believe is certainly durable, uh, through the remaining part of the year. And so there's constant ability to kind of feather those in and.

Operator: And so there's constant ability to kind of feather those in and part of our certainly part of our outlook. And we've also, from a commercial standpoint or freight standpoint, we keep using the word return to some normalcy of seasonality. We're not saying we're going to have the peak of peak.

Operator: is part of our certainly part of our outlook and we've also from a commercial standpoint or a freight standpoint we keep using the word a return to some some normalcy of seasonality we're not saying we're going to have the peak of peaks

Mark Rourke: But a normal seasonality, after we've seen the end of quarter activity in March, the experience that we had in the second quarter and some of the conditions that we've outlined in our discussion today, would suggest has to play out. We have to see these trends be durable, which, again, we noted in our opening comments, but based upon those data points, it gives us at least some confidence that we have some level of seasonality in front of us, which is generally, in our industry, the best part of the year comes through the late third and into the fourth quarter. Okay, that's helpful.

Mark Rourke: But a normal seasonality, after we've seen the end of quarter activity in March, the experience that we had in the second quarter, and some of the conditions that we've outlined in our discussion to date, would suggest, has to play out,

Darrell Campbell: We have to see these trends be durable, which again, we noted in our opening comments. But based upon those data points, it gives us at least some confidence that we have some level of seasonality in front of us, which is generally in our industry, the best part of the year comes through the late third and into the last day. I was just kind of curious as to the weakness in the all-other segment on the operating income line, first time I've seen that negative quite quite a while while revenue is kind of improved sequentially from one queue.

Mark Rourke: We have to see these trends be durable, which again we noted in our opening comments, but based upon those data points, it gives us at least some confidence that we have some level of seasonality in front of us, which is generally in our industry the best part of the year.

Operator: And then lastly, I was just kind of curious as to the weakness in the all other segment on the operating income line. First time I've seen that negative in quite quite a while, while revenues kind of improved sequentially from 1Q. Is this kind of a headwind expected to continue, or should we get kind of back to that regular cadence? Good question. Thank you. Yeah, this is Darrell.

Speaker Change: comes through the late third and into the fourth quarter.

Operator: Okay, that's helpful. And then, lastly, I was just kind of curious as to the weakness in the all-other segment on the operating income line. First time I've seen that negative in quite a while, while revenues kind of improved sequentially from 1Q.

Darrell Campbell: This kind of a headwind expects to continue, or should we get kind of back to that regular cadence? Thank you for the fourth question. Thank you.

Operator: Is this kind of a headwind expected to continue, or should we get kind of back to that regular cadence of... Good question. Thank you.

Darrell Campbell: Yeah, this is Darrell, so I'll take that. So just as a reminder, what's in Other is primarily the results of our leasing business, so we lease tractors to owner operators and small carriers. We also have our captive insurance business that's in that bucket, and we have some unallocated corporate expenses there as well. To your specific question on the year where you're declined, that's mostly in the leasing business, so if you think about the market conditions and the stress that the small carriers are under, we're seeing that come through in those results, so not really surprising.

Darrell Campbell: So I'll take that. So just as a reminder, what's in the other is primarily the results of our leasing business. So we lease tractors to owner operators and small carriers.

Darrell Campbell: All right, very helpful. Thank you.

Scott Group: Our next question comes from the line of Scott Group with Wolf Research. Your line is opened.

Darrell Campbell: We also have our captive insurance business that's in that bucket. And we have some unallocated corporate expenses there as well. To your specific question on the year over year decline, that's mostly in the leasing business. So if you think about the market conditions and the stress that the small carriers are under, we're seeing that come through in those results. So not really surprising.

Operator: All right, very helpful. Our next question comes from the line of Scott Group with Wolf Research. Your line is open.

Scott Group: Hey, thanks. Can you guys? I know we talked a lot about normal seasonality. Just remind us, what's normal seasonality, Q2 to Q3, just for the various segments? Yeah, normal seasonality would suggest a peak, peak season. We said a return to a level of seasonality.

Operator: Hey, thanks. Can you guys, I know we talked a lot about normal seasonality, just remind us what normal seasonality is, Q2 to Q3, just for the various segments. Yeah, normal seasonality would suggest a peak peak season, but we said a return to a level of seasonality, so a little bit nuanced there, Scott. We're not, again, calling for an inflection. So, again, I want to be incredibly clear about that. The bigger sequential number, if you go to history, is certainly the third to the fourth quarter.

Mark Rourke: So a little bit nuanced there, Scott. We're not, again, calling for an inflection. So again, we want to be incredibly clear about that. The bigger sequential, if you go to history, is certainly the third to the fourth quarter with the improved performance in the second quarter, and what we're saw so far in July. We think there is some seasonal improvement, second to third; we have to see again, see those trends to play out. And the trends that we've seen be sustainable, but the normal seasonality in our business is more third to fourth.

Operator: Again calling for an inflection. So again want to be incredibly clear about that

Operator: The bigger sequential, if you go to history, is certainly the third to the fourth quarter. With the improved performance in the second quarter and what we saw so far in July, we think there is some

Mark Rourke: But with the improved performance in the second quarter and what we saw so far in July, we think there is some seasonal improvement 2nd to 3rd. We have to see again, see those trends play out, and the trends that we've seen be sustainable, but the normal seasonality in our business is more third to fourth. And on the equipment side, can you just talk about any gains in the quarter, expectations for gains, and then, on the CapEx side, I think it's the second quarter in a row you've lowered it. Any thoughts on CapEx next year? Are you focused on a pre-buy? Anything like that?

Darrell Campbell: And on the equipment side, can you just talk about any gains in the quarter expectations for gains?

Darrell Campbell: And then on the cat backside, I think it's the second quarter row; you've lowered it.

Darrell Campbell: Any thoughts on cat backs next year? Are you focused on a pre buy anything like that? Thank you. Yeah, thanks for questions. Scott, really the big difference of our guidance for this quarter versus last is the efficiency actions that we were able to take to lessen the need for new equipment. We're not backing off our age of fleet. It really became down to an efficiency factor, and kudos to our equipment team who've been able to prepare and some additional proceeds to get out and sell the equipment. That said, we don't expect material gains. We've had very moderate gains.

Speaker Change: On the CAPEX side, I think it's the second quarter in a row you've lowered it.

Speaker Change: Any thoughts on CapEx next year? Are you focused on a pre-buy? Anything like that. Thank you.

Operator: Yeah, good. Thanks for the question, Scott. Really, the big difference in our guidance for this quarter versus last is the efficiency actions that we were able to take to lessen the need for new equipment. We're not backing off our age of fleet; it really became down to an efficiency factor, and kudos to our Equipment Team, who have been able to prepare and get some additional proceeds to get out and sell the equipment. That said, we don't expect material gains. We've had very moderate gains, I mean, barely positive gains in the second quarter. We're not modeling anything significant at all for the third and fourth quarters.

Operator: Thanks for the question, Scott. Really, the big difference of our guidance for this quarter versus last is the efficiency actions that we were able to take to lessen the need for new equipment. We're not backing off our age of fleet.

Operator: really came down to an efficiency factor and kudos to our

Operator: equipment team who've been able to prepare

Darrell Campbell: I mean, barely positive in the second quarter. We're not modeling anything significant at all for the third and fourth quarter. We're moving the equipment, but we're not moving it at a significant gains standpoint.

Operator: We're moving the equipment, but we're not moving it, at a significant gain standpoint. And then, as it relates to next year, a little early for us, we're in the planning stages there with our OEMs and what we think makes sense and what, quite honestly, will actually be available. Um, so we're not convinced there's going to be a large pool of capability pre-buy, but it's a little early for us to make any comment on that.

Darrell Campbell: And then, as it relates next year, little early for us, we're in our planning stages. There were 3 OEMs, and what we think makes sense of what, quite honestly, will actually be available. So we're not convinced there's going to be a large pool of capability of pre-buy, but it's all early for us to make any comment on that. Thank you.

Ken Hoexter: Our last question comes from a line of Ken Hookster with Bank of America.

Operator: Thank you. Our last question comes from the line of Kenneth Hoexter with Bank of America. Your line is open. Hey, great. Good morning.

Kenneth Hoexter: Thank you.

Ken Hoexter: Your wine is opened.

Speaker Change: Our last question comes from the line of Ken Hoekstra with Bank of America. Your line is opened.

Ken Hoexter: Hey, great morning, and thanks for getting me in here. So very interesting discussion through the morning. Sorry, Mark. Interesting discussion through the morning on kind of peak and just given the consumer weakness. You know, we hear whatever McDonald's, Starbucks, PNG, just so many. But you're saying spot is now above contract. So, Mark, when does that happen, right? What does that occur without an inflection? What else do you need to see to call that? I guess in the backdrop where it seems like all the major carriers have now finally decided to take out about 10% of the fleet, right? Which I don't know, is that the final cleanup that was that was long needed just to get to this point?

Operator: And thanks for getting me in here. So really interesting discussion through the morning on kind of peak and just given the consumer weakness, you know, we hear whatever, McDonald's, Starbucks, P&G, just so many. But you're saying spot is now above contract. Mark, when does that happen, right? When does that occur without an inflection? What else do you need to see to call that?

Mark Rourke: Hey, great. Good morning and thanks for getting me in here.

Mark Rourke: I guess in the backdrop where it seems like all the major carriers have now finally decided to take out about 10% of their fleet, right? Which, I don't know, is that the final cleanup that was long needed just to get to this point? And is that the beginning of the inflection?

Mark Rourke: Mark, when does that happen, right? When does that occur without an inflection? What else do you need to see to call that?

Mark Rourke: I guess in the backdrop where it seems like all the major carriers have now finally decided to take out about 10% of the fleet, right? Which I don't know, is that the final cleanup that was that was long needed just to get to this point? And is that the beginning of the inflection?

Mark Rourke: And is that the beginning of the inflection?

Mark Rourke: Well, I'm not speaking for everybody, but certainly for us, it's been hard; it's been difficult for us to make a case to invest in growth in the network business based upon where it was and where it is in the return profile. So it would not be surprised that that's more of a prevalent theme across the industry, but it's certainly prevalent here. And so spot pricing is really a function of a couple of things. First of all, we're disciplined; we're not playing, you know, 20, 30% in the spot rate, so it's an important component for us, and it gives us flexibility, particularly as it continues to improve to be an adder to our yield actions in the second half of the year.

Mark Rourke: Well, not speaking for everybody, but certainly for us, it's been hard, and it's been difficult for us to make a case to invest in growth in the network business based upon where it was and where it is in the return profile, Ken. So I would not be surprised that that's more of a prevalent theme across the industry, but it's certainly prevalent here. And so spot pricing is really a function of a couple things. First of all, we're disciplined; we're not playing.

Mark Rourke: Well, I'm not speaking for everybody, but certainly for us, it's been hard. It's been difficult for us to make a case to invest in growth in the network business based upon.

Mark Rourke: [inaudible]

Mark Rourke: And so spot pricing is it really a function of a couple things. First of all, we're disciplined. We're not playing

Mark Rourke: You know, 20-30% in the spot rate, so it's an important component for us, and it gives us flexibility, particularly if it continues to improve, to be an adder to our yield actions in the second half of the year. So, but I do think, generally, that is a sign. We'd have to see these things, these trends sustain themselves before we'd be comfortable enough to say, okay, we're now into a different phase of the market, but it's an encouraging sign nonetheless.

Jim Filter: So, but I do think generally that is a sign; we'd have to see these things, these trends sustain themselves before we be comfortable enough to say, okay, we're now into a different phase of the market, but it's an encouraging sign nonetheless.

Jim Filter: I can just add on this, Jim, that this is part of just, you know, being very purposeful and the construction of our portfolio as well in terms of the customers we're aligning with. And, you know, when we're talking about spot pricing, it really is working directly with customers is primarily where our spot volume comes from in our asset-based business. It's not necessarily the same thing that you're seeing on broker load boards.

Mark Rourke: Ken, I'll just add, this is Jim, that this is part of just, you know, being very purposeful in the construction of our portfolio as well in terms of the customers we're aligning with. And, you know, when we're talking about spot pricing, it really is working directly with customers that is primarily where our spot volume comes from in our asset-based business. It's not necessarily the same thing that you're seeing on broker load boards. Yeah, definitely. I think we're hearing maybe more and more of that in terms of load boards not really being realistic in terms of what's going on, certainly as you went through the contract bid season.

Speaker Change: But it's an encouraging sign nonetheless.

Jim Filter: Yeah, definitely, I think we're hearing maybe more and more of that in terms of load boards, not really being realistic in terms of what's going on, certainly as you went through the contract bid season.

Mark Rourke: It's not necessarily the same thing that you're seeing on broker load boards.

Mark Rourke: Yeah, definitely. I think we're hearing maybe more and more of that in terms of load boards not really being realistic in terms of what's going on certainly as you went through the contract bid season.

Jim Filter: I guess switching over to intermodal for a second, just to wrap up, I guess in my follow up, really interesting growth prospects as you gain long haul share from Mexico. So can we see, or can you see, a step change in your revenue per order as you get longer lanes involved from Mexico? Or is that just still a small part of the business, and it doesn't really impact the overall change? Yeah, there's an opportunity there and, you know, one thing we're really looking forward to and with Mexico is STB approval of our new Southeast to Southwest and Mexico lane.

Jim Filter: I'm switching over to Intermodal for a second, just to wrap up. I guess in my follow-up, really interesting growth prospects as you gain long haul share from Mexico. Can we see, or can you see, a step change in your revenue per order as you get longer lengths of haul from Mexico? Or is that just still a small part of the business?

Speaker Change: Really interesting growth prospects as you gain long-haul share from Mexico. Can we see or can you see a Step change in your revenue per order as you get longer lengths of haul from Mexico Or is that just still a small part of the business and it doesn't really impact the overall change

Jim Filter: doesn't really impact the overall, Yeah, there's an opportunity there. And, you know, one thing we're really looking forward to, and with Mexico, is STB approval of our no new southeast to southwest and Mexico lane. And we're looking forward to seeing that, in the next few weeks, and that creates a new corridor for their absolutely right that has an opportunity to provide a little bit of a lift on rate per order, as does, you know, the UP Last time we talked about the change in transit times between LA and Chicago, that the largest intermodal lane that's out there, we've seen that improvement in transit times.

Jim Filter: And we're looking forward to seeing that as early as the next few weeks, and that creates a new corridor for there, absolutely write that as an opportunity to provide a little bit of lift on rate per order as does. You know, the UP last time we talked about the change in transit times between LA and Chicago, that largest intermodal lane that's out there, we've seen that improvement in transit times. I think that's an opportunity to be able to grow. So, you know, that creates a little bit of opportunity to see a little bit of lift at rate per order, but we're not going to slow down in the ease because that is also a great opportunity for us to grow our intermodal assets.

Jim Filter: I think that's an opportunity for us to be able to grow. So, you know, that creates a little bit of an opportunity to see a little bit of a lift in rates per order, but we're not going to slow down in the east because that is also a great opportunity for us to grow our intermodal assets and, you know, believe that as the market starts to change, that's where we would expect to see some growth as well. So it's difficult to say with that entire mix, specifically the lift on the rate per order because the east is a really large part of our portfolio.

Jim Filter: You know, that creates a little bit of opportunity to see a little bit of lift of rate per order, but we're not going to slow down in the east, because that is also, you know, a great opportunity for us to grow our intermodal assets.

Jim Filter: And, you know, believe that as the market starts to change, that's where we would expect to see some growth as well. So, it's difficult to say with the entire mix, specifically the lift on on rate per order because the East is a really large part of our portfolio. Understood. Thanks. Thanks, Mark. Appreciate the time. Thanks, Jim. Appreciate you.

Jim Filter: Thanks, Jim. Thanks, Mark. Appreciate the time. Thanks, Ken. Thank you. Thank you, everyone. This concludes today's conference call. Connacht.

Jim Filter: Understood. Thanks, Jim. Thanks, Mark. Appreciate the time. Thanks, Cam. Appreciate you.

Operator: Thank you, everyone.

Operator: This concludes today's conference call. We now disconnect. Have a good rest of your day.