Q1 2026 Knight-Swift Transportation Holdings Inc Earnings Call

Speaker #1: First quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker #5: Thanks.

Speaker #1: Well, I look—I don't want to speak to what other logistics companies should do or have to do. I think about what we felt like was required of us to ensure that we're putting quality carriers, you know, hauling our shipments, hauling our trailers when they're doing power only.

Speaker #1: Speakers from today's call will be Adam Miller, Chief Executive Officer; Andrew Hess, Chief Financial Officer; Brad Stewart, Treasurer and Senior VP of Investor Relations; Mr. Stewart, the meeting is now yours.

Speaker #1: We're anticipating that—you know—our customers are going to start being more concerned about this, as you know, this becomes more of a relevant issue. And I think we're already seeing that in mainstream media.

Speaker #2: Thank you, Sarah. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. Today we plan to discuss topics related to the results of the quarter, current market conditions, and our earnings guidance.

Speaker #1: Good afternoon. My name is Sarah, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation First Quarter 2026 Earnings Call.

Speaker #1: We've already had some discussions with some of these shippers about, you know, how we're really monitoring who's hauling their freight—who's actually driving the truck.

Speaker #2: We have slides to accompany this call, which are posted on our investor website. Our call is scheduled to last one hour. Following our commentary, we will answer questions related to these topics.

Speaker #1: All lines have been placed on mute to prevent any background noise. If at any time during this call you require immediate assistance, please press star zero for the operator.

Speaker #2: In order to get to as many participants as possible, we limit the questions to one per participant. If you have a second question, please feel free to get back in the queue.

Speaker #1: And so we felt it was prudent for us to, you know, take the steps to eliminate capacity that we didn't feel comfortable with.

Speaker #1: Speakers from today's call will be Adam Miller, Chief Executive Officer; Andrew Hess, Chief Financial Officer; and Brad Stewart, Treasurer and Senior VP of Investor Relations. Mr. Stewart, the meeting is now yours.

Speaker #2: We will answer as many questions as time allows. If you are not able if we are not able to get to your question, due to time restrictions, you may call 602-606-6349.

Speaker #1: And do I think others will do that? I think some will. I think some will still take the cheapest carrier when they're available. And that may just be based on survival.

Speaker #2: To begin, I will first refer you to the disclosures on slide 2 of the presentation and note the following: this conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions, and uncertainties that are difficult to predict.

Speaker #1: So I, I, I don't, I don't know how that'll play out. But I do, I do think some of this capacity's just gonna have to exit regardless because of some of the, you know, regulatory changes that are being enforced.

Speaker #2: Thank you, Sarah. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. Today, we plan to discuss topics related to the results of the quarter, current market conditions, and our earnings guidance.

Speaker #2: Investors are directed to the information contained in item 1(a) risk factors or part 1 of the company's annual report on Form 10-K, filed with the United States SEC, for discussion of the risks that may affect the company's future operating results.

Speaker #1: And and we feel very we're we're very supportive of this administration and the actions that they're taking. So some logistics company may not have a choice 'cause because the capacity they're leveraging today won't won't exist.

Speaker #2: We have slides to accompany this call, which are posted on our investor website. Our call is scheduled to last one hour. Following our commentary, we will answer questions related to these topics.

Speaker #2: In order to get through as many participants as possible, we limit the questions to one per participant. If you have a second question, please feel free to get back in the queue.

Speaker #1: But we're not waiting for that. We want to be proactive and to do the right thing. On the hair follicle—Brad, do you want to maybe touch on that?

Speaker #2: Actual results may differ. Now I will hand the call over to Adam for some opening remarks.

Speaker #3: Thank you, Brad, and good afternoon, everyone. So these are certainly interesting times, and there are now more reasons to be optimistic about our industry than we have seen in over four years now.

Speaker #2: We will answer as many questions as time allows. If you are not able, if we are not able to get to your question, due to time restrictions, you may call 602-606-6349.

Speaker #1: I know, Brad, you've been engaged in that.

Speaker #3: Yeah, it was just maybe going to share, in terms of what we've seen in our own experience over the last decade or so, as Adam mentioned.

Speaker #2: To begin, I will first refer you to the disclosures on slide 2 of the presentation and note the following: this conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions, and uncertainties that are difficult to predict.

Speaker #3: You know, we do both, right? We do the urine analysis test because that's what's recognized by the feds, and we do the hair follicle test because that's what works.

Speaker #3: You know, we operate one of the largest fleets in the truckload industry, roughly 70% of our fleet is deployed in one way or over-the-road service.

Speaker #3: So we pay incremental cost to do that, in addition to that, because that is an important part of our hiring process. And what we've found over doing this, you know, thousands if not tens of thousands of times a year, is that the hair follicle test identifies roughly fourteen times the drug users that the urinalysis test does.

Speaker #3: It is true the one-way market has been the most difficult place to be over the past three years plus, as, as this market has felt the brunt of the influx of capacity over the last several years.

Speaker #2: Investors are directed to the information contained in Item 1(a), Risk Factors, or Part 1 of the Company's Annual Report on Form 10-K, filed with the United States SEC, for discussion of the risks that may affect the Company's future operating results.

Speaker #3: Much of that capacity may not have been playing by the by the, the, the rules that we play by, and therefore operating with a different cost structure was distorted pricing behaviors and cyclical patterns.

Speaker #3: So, that prevents us from hiring them. It does not prevent them from driving in our industry, because not all carriers do that. And so, there is an openness, it seems, in Washington to at least engage in this conversation.

Speaker #2: Actual results may differ. Now I will hand the call over to Adam for some opening remarks.

Speaker #3: Thank you, Brad, and good afternoon, everyone. So, these are certainly interesting times, and there are now more reasons to be optimistic than there have been in over four years.

Speaker #3: You know, Congress passed this years ago, and it's just that Health and Human Services has not gotten around to writing the rules to actually put this into practice.

Speaker #3: The ongoing efforts of the FMCSA and the DOT to prevent and revoke invalidly issued CDLs shut down non-compliant CDL schools and address hour-of-service abuses are in the early stages and are already having an impact on the market.

Speaker #3: We operate one of the largest fleets in the truckload industry. Roughly 70% of our fleet is deployed in one-way or over-the-road service. It is true the one-way market has been the most difficult place to be over the past three years plus, as this market has felt the brunt of the influx of capacity over the last several years.

Speaker #3: So, it does seem like there's maybe an openness to engaging in that conversation. We would ask just to allow us to report what those of us who are paying for the test—what we are finding.

Speaker #3: Maybe we don't require it of everyone, but if we're gonna pay for it, let us report that to the registry. 'Cause we do think that is important.

Speaker #3: This cleanup effort should, in our view, have an outsized impact on not just the one-way truckload market but on the lowest-priced capacity in this market.

Speaker #3: For safety, for the motoring public.

Speaker #5: Okay, thanks very much. Appreciate it.

Speaker #3: Much of that capacity may not have been playing by the rules that we play by, and therefore operating with a different cost structure was distorted pricing behaviors and cyclical patterns.

Speaker #3: The market that was the hardest hit over the past few years is now benefiting the most from the removal of capacity, a dynamic which we expect will continue.

Speaker #3: Thanks Brian.

Speaker #4: Your next question comes from Ari Rossa with Citigroup. Your line is open.

Speaker #3: As we mentioned last quarter, the market has progressed to a point where even small changes can cause disruption. And we saw evidence of that during the first quarter as the severe weather in January led to acute tightness and an elevated stock market almost overnight.

Speaker #1: Hey, good afternoon. So, Adam, I wanted to ask a bit of a strategic question. You've shed a few thousand tractors since the USX acquisition.

Speaker #3: The ongoing efforts of the FMCSA and the DOT to prevent and revoke invalidly issued CDLs, shut down non-compliant CDL schools, and address our service abuses are in the early stages and are already having an impact on the market.

Speaker #1: It makes sense to us, of course, why that decision would've been desirable in the downturn, when obviously it was difficult to find loads. But now, as we think about the upcycle, is there any dimension in which that holds back the ability to get the same level of upside that you might've seen if you had kind of retained those tractors?

Speaker #3: We were able to leverage our one-way over-the-road capacity at scale to provide solutions across multiple brands to help our customers recover from the storm when others in our space were not able.

Speaker #3: This cleanup effort should, in our view, have an outsized impact on not just the one-way truckload market, but on the lowest-priced capacity in this market.

Speaker #1: I'm just hoping you can kind of discuss that decision or maybe defend that decision a bit. Give us a little bit of color on why.

Speaker #3: Following the recovery from the storm, the tightness in the truckload market has continued to build, largely due to declining capacity, though some indications of improving demand are beginning to emerge.

Speaker #3: The market that was the hardest hit over the past few years is now benefiting the most from the removal of capacity, a dynamic which we expect will continue.

Speaker #1: That was the right decision to shed those tractors. And also, to put it in context, on an absolute basis, obviously, we're looking at a larger tractor count now than what you had in the prior cycle.

Speaker #3: As we mentioned last quarter, the market has progressed to a point where even small changes can cause disruption. And we saw evidence of that during the first quarter, as the severe weather in January led to acute tightness and an elevated stock market almost overnight.

Speaker #3: Broad truckload market indicators show improving trends for low tenders, tender rejections, and spot pricing. Our business is experiencing even stronger levels on these metrics metrics as our leading presence in the one-way market grows increasingly valuable to shippers.

Speaker #1: So, kind of, how do those dynamics play out against each other as we think about what the upside could look like? Thanks. Yeah.

Speaker #2: Well, well, what I'd say, Ari, is, you know, we don't go into an acquisition with the—intentionally trying to shrink, you know, the capacity.

Speaker #2: I think as we go in and review the freight network and U.S. Xpress, 40% of their loads were coming from brokers. Which, obviously, you're not going to be successful if that's who you're relying on for your freight.

Speaker #3: We were able to leverage our one-way over-the-road capacity at scale to provide solutions across multiple brands to help our customers recover from the storm when others in our space were not able.

Speaker #3: The late in the first quarter, we began to see the outcomes from early first quarter bids, which showed our volumes generally holding steady or growing while achieving mid-single-digit percentage rate increases.

Speaker #3: Following the recovery from the storm, the tightness in the truckload market has continued to build, largely due to declining capacity, though some indications of improving demand are beginning to emerge.

Speaker #2: So we had to go in and adjust their network to find, you know, direct, you know, relationships—loads that can support their network. And so, in doing so, you had to churn some of the business they were very dependent on.

Speaker #3: For reference, that is better than last year at this time when targeting slight, slightly lower price increases often led to, to, to lower volumes.

Speaker #3: Broad truckload market indicators show improving trends for low tenders, tender rejections, and spot pricing. Our business is experiencing even stronger levels on these metrics as our leading presence in the one-way market grows increasingly valuable to shippers.

Speaker #3: Pricing activity is very busy now. In addition to bid season being in full swing, many bid activity has increased indicating incumbent carriers are unable to or perhaps unwilling to service freight at existing rates.

Speaker #2: Okay? And at the same time we're ensuring that we have good quality safe drivers. And so we did change the standards at the hiring standards at US Express very early on in the acquisition to to ensure that we had good quality drivers to to drive down the crash basics to improve the safety to improve productivity.

Speaker #3: In addition, turnback bids are happening more frequently as bid awards are being at least partially rejected by the awarded carriers as networks have shifted or the market has moved well past rates that were proposed even one or two months ago.

Speaker #3: Late in the first quarter, we began to see the outcomes from early first quarter bids, which showed our volumes generally holding steady or growing while achieving mid-single-digit percentage rate increases.

Speaker #2: Some of the things that Andrew has mentioned, and so when you do that, you're kind of, you know, you're limiting the class sizes that you're going to have.

Speaker #3: For reference, that is better than last year at this time, when targeting slightly lower price increases often led to lower volumes. Pricing activity is very seasonal, being in full swing; many bids activity has increased, indicating incumbent carriers are unable or perhaps unwilling to service at existing rates.

Speaker #3: Unlike the past few years, shippers are generally not issuing off-cycle bid opportu-opportu they're not issuing off-cycle bids opportunistically to improve service or drive prices lower.

Speaker #2: And then you’re changing your freight network. When you have that kind of churn, you’ll naturally end up—or you have the risk of ending up—with more open trucks than you’d feel comfortable carrying as overhead.

Speaker #2: And so, as you went through that to get the business on a better foundation and position them to be far more healthy long-term, you end up with some capacity that you just need to sell and exit and remove from your overhead.

Speaker #3: These actions are driven by a need to secure capacity. At the same time, previously deep, deep discounts in the spot market have evaporated. Further encouraging shippers to align with quality asset capacity.

Speaker #2: And so that was the process that we went through at US Express. Now we feel stable today and we and we're making the same investments there on the recruiting front and and now leveraging the academies that we have at Swift and and some at Knight to be able to to train like our other brands do.

Speaker #3: In addition, turnback bids are happening more frequently as bid awards are being at least partially rejected by the awarded carriers, as networks have shifted or the market has moved well past rates that were proposed even one or two months ago.

Speaker #3: This is on top of a trend of shippers favoring asset-based relationships that have formed late last year in response to the regulatory enforcement efforts.

Speaker #3: Whether for these reasons or because of expectations of improving demand we have already had a number of shippers initiate discussions about peak season demand support, which is not typical this early in the year.

Speaker #2: And obviously, as you have a better freight market, they'll be able to make some progress in repairing their network and in putting themselves in a position to have sustainable rates.

Speaker #3: Unlike the past few years, shippers are generally not issuing off-cycle bids—they're not issuing off-cycle bids opportunistically to improve service or drive prices lower. These actions are driven by a need to secure capacity.

Speaker #3: As we navigate a busy and rapidly evolving evolving bid environment, we have shifted our bid targets to a range of high single to low double-digit percentage increases on current pricing activity as compared to our low to mid single-digit target one quarter ago.

Speaker #2: to to to grow the business back. And hey if we we'd we'd love to be able to seat more trucks and and grow trucks.

Speaker #2: But today, we have—you know—we still have some empty trucks that we want to fill before we invest in additional capital.

Speaker #3: At the same time, previously deep discounts in the spot market have evaporated, further encouraging shippers to align with quality asset capacity. This is on top of a trend of shippers favoring asset-based relationships that have formed late last year in response to the regulatory enforcement efforts.

Speaker #2: but but hey we we we're we're in a in a much better spot today than if we would've just tried to hang on to all the trucks from the original acquisition and keep the poor freight and not adjust the the standards that that we hire for in terms of drivers.

Speaker #3: Across our truckload brands, we are reviewing business that is not subject to current or near-term bids and addressing rates that are below market. Aside from the market developments and our position in one-way service, we believe our work over the past two years structurally cutting, costs out of our business with ongoing opportunities for further progress sets us up for great incremental for greater incremental margin as business conditions improve.

Speaker #3: Whether for these reasons, or because of expectations of improving demand, we have already had a number of shippers initiate discussions about peak season demand support, which is not typical this early in the year.

Speaker #2: So I still feel it was the right move. We feel good about how we're positioned and expect to make some real progress on margin and drive accretion to the business.

Speaker #3: As we navigate a busy and rapidly evolving bid environment, we have shifted our bid targets to a range of high single- to low double-digit percentage increases on current pricing activity, as compared to our low- to mid-single-digit target one quarter ago.

Speaker #3: And I'm just gonna add a little bit of context. Ari, this is Brad. I know the up income right now coming out of the long, and Ari, just downcycled, doesn't show it.

Speaker #3: As the market improves, recruiting and retaining quality drivers have and will become more challenging. We believe we have an advantage with our terminal network and academies to source and develop drivers; however, we expect this to be a challenge for the industry in the back half of the year.

Speaker #3: But we are running more miles than we were prior to the last upcycle. So we've got more of a basis there to work with going into this—in this new cycle.

Speaker #2: Yeah. So, I appreciate the question, Ari. I think that now concludes our call. I think we're beyond the time here, so I appreciate all the questions and interest from everyone.

Speaker #3: Across our truckload brands, we are reviewing business that is not subject to current or near-term bids and addressing rates that are below market. Aside from the market developments in our position in one-way service, we believe our work over the past two years structurally cutting costs out of our business, with ongoing opportunities for further progress, sets us up for greater incremental margin as business conditions improve.

Speaker #3: While the LTL sector is not seeing the same sharp tightening as truckload, we are seeing our freight mix improve and rate renewals continue at a mid-single-digit pace.

Speaker #2: and again if we weren't able to get to your question you can call six oh two six oh six six three four nine and we'll try to return your call as quick as possible.

Speaker #3: Shipment volume trends have been directionally in line with normal seasonal patterns, though somewhat understated until late in the first quarter. However, we saw a notable improvement in weight per shipment for the first time in years, with this measure progressively growing throughout the quarter.

Speaker #2: Thank you everyone.

Speaker #3: As the market improves, recruiting and retaining quality drivers has and will become more challenging. We believe we have an advantage with our terminal network and academies to source and develop drivers.

Speaker #3: This is a result of bringing on more industrial customers who can leverage our expanded network footprint to move heavier and longer length of haul shipments.

Speaker #3: However, we expect this to be a challenge for the industry in the back half of the year. While the LTL sector is not seeing the same sharp tightening as truckload, we are seeing our freight mix improve, and rate renewals continue at a mid-single-digit pace.

Speaker #3: We believe we are in the early stages of our network transition from regional to national. We expect that over time, growing into our network investments on maturing freight mix improvement in network density and continuously refining our operational and cost execution will allow us to drive sustained methodical improvement in operating margin.

Speaker #3: Shipment volume trends have been directionally in line with normal seasonal patterns, though somewhat understated until late in the first quarter. However, we saw a notable improvement in weight per shipment for the first time in years, with this measure progressively growing throughout the quarter.

Speaker #3: We remain committed to thoughtfully deploying capital, intentionally leveraging our strengths, and creatively unlocking synergy opportunities across our businesses. And with that, I will turn the call over to Andrew and Brad to review the results and our guidance.

Speaker #3: This is a result of bringing on more industrial customers, who can leverage our expanded network footprint to move heavier and longer length-of-haul shipments.

Speaker #4: Thanks, Adam. The charts on slide three compare our consolidated first quarter revenue and earning results on a year-over-year basis. Consolidated revenue excluding truckload and LTL fuel surcharge was essentially flat.

Speaker #3: We believe we are in the early stages of our network transition from regional to national. We expect that, over time, growing into our network investments on maturing freight mix, improvement in network density, and continuously refining our operational and cost execution will allow us to drive sustained, methodical improvement in operating margin.

Speaker #4: And operating income declined by three 38 million year-over-year largely due to the 18 million dollars of expense proclaimed development in our LTL segment, primarily related to an adverse arbitration ruling on a 2022 claim.

Speaker #3: We remain committed to thoughtfully deploying capital, intentionally leveraging our strengths, and creatively unlocking synergy opportunities across our businesses. And with that, I will turn the call over to Andrew and Brad to review the results and our guidance.

Speaker #4: Four million dollars of expense in our truckload segment for an adverse decision on VAT reimbursement in Mexico for prior tax years. Warehousing project business deferred to future quarters, and an estimated 12 to 14 million dollar net negative impact for volume and cost headwinds from severe winter weather disruptions.

Speaker #4: Thanks, Adam. The charts on slide three compare our consolidated first quarter revenue and earnings results on a year-over-year basis. Consolidated revenue, excluding truckload and LTL fuel surcharge, was essentially flat.

Speaker #4: And sharply rising fuel prices. During the quarter. Adjusted operating income declined 37 million dollars year-over-year, primarily driven by the same items. GAAP earnings per diluted share for the first quarter of 2026 were a loss of 1 cent, primarily due to the items noted above.

Speaker #4: Operating income declined by $38 million year-over-year, largely due to the $18 million of expense proclaimed development in our LTL segment, primarily related to an adverse arbitration ruling on a 2022 claim.

Speaker #4: GAAP earnings per diluted share in the prior year quarter were 19 cents, adjusted EPS was 9 cents for the first quarter of 2026 compared to 28 cents for the first quarter of 2025.

Speaker #4: Four million dollars of expense in our Truckload segment for an adverse decision on VAT reimbursement in Mexico for prior tax years. Warehousing project business deferred to future quarters, and an estimated $12 to $14 million net negative impact for volume and cost headwinds from severe winter weather disruptions.

Speaker #4: Our consolidated adjusted operating ratio was 97%, up 230 basis points year-over-year. The effective tax rate on our GAAP results was 7%, and our non-GAAP effective tax rate was 28%.

Speaker #4: And sharply rising fuel prices during the quarter. Adjusted operating income declined $37 million year-over-year, primarily driven by the same items. GAAP earnings per diluted share for the first quarter of 2026 were a loss of one cent, primarily due to the items noted above.

Speaker #4: Slide four illustrates the revenue and adjusted operating income for each of our segments for the quarter. Overall, the relative shares of our various services service offerings remains largely consistent quarter over quarter, with LTL gains slightly over the fourth quarter as it exits its seasonally weakest period of the year.

Speaker #4: GAAP earnings per diluted share in the prior year quarter were $0.19. Adjusted EPS was $0.09 for the first quarter of 2026, compared to $0.28 for the first quarter of 2025.

Speaker #4: Now we will discuss each of our segments, starting with our truckload segment on slide five. Aside from the negative impacts to volume and costs from severe winter weather and fuel challenges in the quarter, most operational metrics were improving throughout the quarter.

Speaker #4: Our consolidated adjusted operating ratio was 97%, up 230 basis points year-over-year. The effective tax rate on our GAAP results was 7%, and our non-GAAP effective tax rate was 28%.

Speaker #4: Revenue per loaded mile excluding fuel fuel surcharge and intersegment transactions turned out stronger than we anticipated, and even improved sequentially over our end-of-year peak season result.

Speaker #4: Slide four illustrates the revenue and adjusted operating income for each of our segments for the quarter. Overall, the relative shares of our various service offerings remain largely consistent quarter over quarter, with LTL gains slightly over the fourth quarter as it exits its seasonally weakest period of the year.

Speaker #4: Largely driven by spot opportunities that developed within the quarter. However, volumes and cost per mile for the quarter were both in favorable as a result of the weather and fuel challenges.

Speaker #4: Now we will discuss each of our segments, starting with our Truckload segment on slide five. Aside from the negative impacts to volume and cost from severe winter weather and fuel challenges in the quarter, most operational metrics were improving throughout the quarter.

Speaker #4: On the whole, our truckload adjusted operating ratio of 96.3%, only degraded 70 basis points year-over-year as a reduction in empty miles and the strengthening rate environment largely offset the headwinds to volume and cost.

Speaker #4: Q1 marks the seventh consecutive quarter of year-over-year improvement in miles per tractor. Importantly, the strengthening rate backdrop and improving network efficiency have ongoing implications for our business.

Speaker #4: Revenue per loaded mile, excluding fuel surcharge and intersegment transactions, turned out stronger than we anticipated, and even improved sequentially over our end-of-year peak season result.

Speaker #4: Largely driven by spot opportunities that developed within the quarter. However, volumes and cost per mile for the quarter were both unfavorable as a result of the weather and fuel challenges.

Speaker #4: While the weather issues are not expected to reoccur. On a year-over-year basis, revenue excluding fuel surcharge was essentially flat as a 1.4% improvement in revenue per loaded mile excluding fuel surcharge and intersegment transactions largely offset a 1.8% decrease in loaded miles.

Speaker #4: On the whole, our truckload adjusted operating ratio of 96.3% only degraded 70 basis points year-over-year, as a reduction in empty miles and the strengthening rate environment largely offset the headwinds to volume and cost.

Speaker #4: Adjusted operating income declined 7.6 million year-over-year, largely as a result of the adverse decision in VAT reimbursement as noted earlier. As well as the cost headwinds from severe winter weather and fuel escalation in the quarter.

Speaker #4: Q1 marks the seventh consecutive quarter of year-over-year improvement in miles per tractor. Importantly, the strengthening rate backdrop and improving network efficiency have ongoing implications for our business.

Speaker #4: US Express made further progress on operating efficiency and trailed the legacy brands in adjusted operating ratio by approximately 300 basis points for the quarter.

Speaker #4: While the weather issues are not expected to reoccur, on a year-over-year basis, revenue excluding fuel surcharge was essentially flat, as a 1.4% improvement in revenue per loaded mile excluding fuel surcharge and intersegment transactions largely offset a 1.8% decrease in loaded miles.

Speaker #4: The ongoing progress that US Express is encouraging and we expect this business will continue closing the gap in margin performance with our legacy brands as the market moving on to slide six.

Speaker #4: Our LTL business grew revenue excluding fuel surcharge 2.6% year-over-year. Driven by a 5.2% increase in weight per shipment with an 8.5% increase in length of haul.

Speaker #4: Adjusted operating income declined $7.6 million year-over-year, largely as a result of the adverse decision in VAT reimbursement, as noted earlier, as well as the cost headwinds from severe winter weather and fuel escalation in the quarter.

Speaker #4: Tonnage trends showed momentum as the quarter progressed, ending with March average daily tonnage up 7% year-over-year. Our expanded service coverage and presence in new markets is helping us win business with new customers, gradually increase our industrial exposure, and transition our network and freight mix from regional to national.

Speaker #4: US Xpress made further progress on operating efficiency and trailed the legacy brands in adjusted operating ratio by approximately 300 basis points for the quarter.

Speaker #4: The ongoing progress at US Xpress is encouraging, and we expect this business will continue closing the gap in margin performance with our legacy brands as the market—moving on to slide six.

Speaker #4: Shipments per day were down 1% year-over-year for the quarter, largely as a result of winter weather disruption in January and the shift in freight mix to a higher weight per shipment.

Speaker #4: Our LTL business grew revenue, excluding fuel surcharge, 2.6% year-over-year, driven by a 5.2% increase in weight per shipment with an 8.5% increase in length of haul.

Speaker #4: Revenue per hundred rate hundred weight excluding fuel surcharge fell slightly, by 70 basis points year-over-year, driven by the increase in weight per shipment while renewal rates continued their trend of mid-single digit increases.

Speaker #4: Tonnage trends showed momentum as the quarter progressed, ending with March average daily tonnage up 7% year-over-year. Our expanded service coverage and presence in new markets is helping us win business with new customers.

Speaker #4: We continue to make progress normalizing operational and cost fundamentals following a period of significant change to our network and freight. Purchase transportation is a percentage of revenue equipment rent and variable labor per shipment all showed improvement year-over-year in the first quarter.

Speaker #4: Gradually increase our industrial exposure and transition our network and freight mix from regional to national. Shipments per day were down 1% year-over-year for the quarter, largely as a result of winter weather disruption in January and the shift in freight mix to a higher weight per shipment.

Speaker #4: And we anticipate further improvements in efficiency as we refine our network and freight flows. As mentioned earlier, adjusted operating income and adjusted operating ratio were negatively impacted year-over-year by the adverse claim development.

Speaker #4: Revenue per hundredweight, excluding fuel surcharge, fell slightly by 70 basis points year-over-year, driven by the increase in weight per shipment, while renewal rates continued their trend of mid-single-digit increases.

Speaker #4: We are encouraged by emerging seasonal freight patterns, steady progress on rate renewals, accelerating volume trends late in the quarter, and an improvement in weight per shipment for the first time in years.

Speaker #4: We continue to make progress normalizing operational and cost fundamentals following a period of significant change to our network and freight. Purchased transportation as a percentage of revenue, equipment rent, and variable labor per shipment all showed improvement year-over-year in the first quarter.

Speaker #4: As freight mix continues to develop into our expanded terminal network. Now I'll turn it over to Brad for a discussion of our logistics segment on slide seven.

Speaker #3: Thanks, Andrew. Logistics revenue for the first quarter declined 9.9% year-over-year, as volumes were down 18.9% while revenue per load grew 10.4%. Third-party carrier capacity grew more difficult to source during the fourth quarter, and this trend continued through the first quarter.

Speaker #4: And we anticipate further improvements in efficiency as we refine our network and freight flows. As mentioned earlier, adjusted operating income and adjusted operating ratio were negatively impacted year-over-year by the adverse claim development.

Speaker #3: Gross margin of 16.6% for the first quarter declined 150 basis points year-over-year, but improved 110 basis points from fourth-quarter levels, as strengthening spot opportunities helped to offset pressure on contractually priced business.

Speaker #4: We are encouraged by emerging seasonal freight patterns, steady progress on rate renewals, accelerating volume trends late in the quarter, and an improvement in weight per shipment for the first time in years.

Speaker #4: As freight mix continues to develop into our expanded terminal network, now I'll turn it over to Brad for a discussion of our logistics segment on slide seven.

Speaker #3: Despite the year-over-year decline in volumes and gross margin, our logistics segment produced an adjusted operating ratio of 96.2%, only a 70 basis point degradation year-over-year.

Speaker #5: Thanks, Andrew. Logistics revenue for the first quarter declined 9.9% year-over-year, as volumes were down 18.9%, while revenue per load grew 10.4%. Third-party carrier capacity grew more difficult to source during the fourth quarter, and this trend continued through the first quarter.

Speaker #3: In addition to the increase in third-party carrier costs brought on by the regulatory pressures on capacity, our logistics business experienced increased pressure on gross margin as we further enhanced our already rigorous carrier qualification standards in response to a sharp increase in cargo thefts in the industry and the troubling carrier practices exposed by recent regulatory efforts.

Speaker #5: Gross margin of 16.6% for the first quarter declined 150 basis points year-over-year, but improved 110 basis points from fourth quarter levels as strengthening spot opportunities helped to offset pressure on contractually priced business.

Speaker #3: This affects not only new applicants seeking to join our carrier base but also resulted in a reduction in the number of existing carriers we are tendering loads to.

Speaker #5: Despite the year-over-year decline in volumes and gross margin, our logistics segment produced an adjusted operating ratio of 96.2%, only a 70 basis point degradation year-over-year.

Speaker #3: While such efforts were a headwind to capacity costs and caused us to reject more loads as unprofitable, as we reset contractual pricing through the bid season we expect that load count will improve and pressure on gross margin should lessen.

Speaker #5: In addition to the increase in third-party carrier costs brought on by the regulatory pressures on capacity, our logistics business experienced increased pressure on gross margin as we further enhanced our already rigorous carrier qualification standards in response to a sharp increase in cargo thefts in the industry and the troubling carrier practices exposed by recent regulatory efforts.

Speaker #3: Given the complementary relationship between our logistics and asset-based truckload segments, we believe the improving market dynamics will ultimately benefit both our asset and logistics businesses over time.

Speaker #3: Our logistics business has demonstrated its agility in navigating a volatile market the past few years by maintaining its operating margin close to target levels through disciplined pricing and cost management.

Speaker #5: This affects not only new applicants seeking to join our carrier base, but also resulted in a reduction in the number of existing carriers we are tendering loads to.

Speaker #3: This team is now further leveraging technology to take cost efficiencies to a new level as well as to improve our responsiveness and our ability to capture opportunities in the marketplace.

Speaker #5: While such efforts were a headwind to capacity costs and caused us to reject more loads as unprofitable, as we reset contractual pricing through the bid season, we expect that load count will improve and pressure on gross margin should lessen.

Speaker #3: Which we expect will contribute to our earnings in 2026. Now on to slide eight for a discussion of our intermodal business. The intermodal segment grew revenue 2.7% and improved its operating ratio 50 basis points year-over-year, as a 1.6% increase in revenue per load and a 1.2% increase in load count all set headwinds from winter weather in the quarter.

Speaker #5: Given the complementary relationship between our logistics and asset-based truckload segments, we believe the improving market dynamics will ultimately benefit both our asset and logistics businesses over time.

Speaker #5: Our logistics business has demonstrated its agility in navigating a volatile market the past few years by maintaining its operating margin close to target levels through disciplined pricing and cost management.

Speaker #3: Load count and revenue per load improved progressively throughout the quarter, with March load count up 8.4% year-over-year. While the intermodal pricing environment is more competitive than truckload, at this point, we are encouraged by ongoing opportunities to leverage our strong service performance and our truckload relationships to continue growing our volumes at improving rates.

Speaker #5: This team is now further leveraging technology to take cost efficiencies to a new level, as well as to improve our responsiveness and our ability to capture opportunities in the marketplace, which we expect will contribute to our earnings in 2026.

Speaker #3: We remain focused on delivering excellent service and driving appropriate returns. Through growing our load count with disciplined pricing, cost control, network balance, and equipment utilization, slide nine illustrates our all-other segments category.

Speaker #5: Now on to slide eight for discussion of our intermodal business. The intermodal segment grew revenue 2.7% and improved its operating ratio 50 basis points year-over-year, as a 1.6% increase in revenue per load and a 1.2% increase in load count offset headwinds from winter weather in the quarter.

Speaker #3: This category includes warehousing activities and support services provided to our customers, independent contractors, and third-party carriers such as equipment sales and rentals, equipment leasing, owner-operator insurance, and maintenance.

Speaker #5: Load count and revenue per load improved progressively throughout the quarter, with March load count up 8.4% year-over-year. While the intermodal pricing environment is more competitive than truckload, at this point, we are encouraged by ongoing opportunities to leverage our strong service performance and our truckload relationships to continue growing our volumes at improving rates.

Speaker #3: Additionally, beginning January 1st of 2026, all other segments also include the cost of our accounts receivable securitization program that was formally reported below the line in interest expense in prior quarters.

Speaker #3: For the first quarter, revenue increased 13.5%. Operating results declined to an operating loss partially due to the inclusion of 5 million in cost 5 million of costs for the accounts receivable securitization program, as well as startup costs on new contract awards in our warehousing business for which revenue is expected to ramp in the coming months.

Speaker #5: We remain focused on delivering excellent service and driving appropriate returns. Through growing our load count with disciplined pricing, cost control, network balance, and equipment utilization, slide nine illustrates our All Other Segments category.

Speaker #5: This category includes warehousing activities and support services provided to our customers, independent contractors, and third-party carriers, such as equipment sales and rentals, equipment leasing, owner-operator insurance, and maintenance.

Speaker #3: On slide 10, we have outlined our guidance and the key assumptions, which are also stated in the earnings release. Actual results may differ from our expectations.

Speaker #5: Additionally, beginning January 1, 2026, all other segments also include the cost of our accounts receivable securitization program that was formerly reported below the line in interest expense in prior quarters.

Speaker #3: Based on our assumptions, we project our adjusted EPS for the second quarter of 2026 will be in the range of $45 to $49. This range represents a larger-than-normal sequential increase in quarterly results as the first quarter was negatively affected by events that we do not expect to recur and because freight market fundamentals are improving exiting the first quarter.

Speaker #5: For the first quarter, revenue increased 13.5%. Operating results declined to an operating loss, partially due to the inclusion of $5 million of costs for the accounts receivable securitization program, as well as startup costs on new contract awards in our warehousing business, for which revenue is expected to ramp in the coming months.

Speaker #3: Our projections reflect recent trends in volumes, spot rates, and bid activity, as well as expectations for a continued seasonal build in freight demand for both truckload and LTL services.

Speaker #5: On slide 10, we have outlined our guidance and the key assumptions, which are also stated in the earnings release. Actual results may differ from our expectations.

Speaker #3: The key assumptions underpinning this guidance are listed on this slide. I won't take time to read through all of our assumptions here, but I do want to highlight the point that the recent strengthening of the truckload pricing environment will generally impact our contractual rates beginning late in the second quarter and into the this concludes our prepared remarks.

Speaker #5: Based on our assumptions, we project our adjusted EPS for the second quarter of 2026 will be in the range of $0.45 to $0.49.

Speaker #5: This range represents a larger-than-normal sequential increase in quarterly results, as the first quarter was negatively affected by events that we do not expect to recur and because freight market fundamentals are improving exiting the first quarter.

Speaker #3: And before I turn it over for questions, I want to remind everyone to keep it to one question per participant. Thank you, Sarah. We will now open the line for questions.

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #5: Our projections reflect recent trends in volumes, spot rates, and bid activity, as well as expectations for a continued seasonal build in freight demand for both truckload and LTL services.

Speaker #1: If you would like to withdraw your question, simply press star one again. Your first question comes from Chris Wetherbee with Wells Fargo. Your line is open.

Speaker #5: The key assumptions underpinning this guidance are listed on this slide. I won't take time to read through all of our assumptions here, but I do want to highlight the point that the recent strengthening of the truckload pricing environment will generally impact our contractual rates beginning late in the second quarter and into the—this concludes our prepared remarks.

Speaker #4: Yeah. Hey, thanks. Good afternoon, guys. you know, I guess obviously the, the pricing environment in the truckload market is improving, you know, probably materially versus what we talked about last time.

Speaker #4: So, Adam, I was kind of curious how you think about the margin opportunity to sort of maybe the, the, the earnings opportunity for the truckload business as we go through, I guess, this year, but, but maybe bigger picture.

Speaker #5: And before I turn it over for questions, I want to remind everyone to keep it to one question per participant. Thank you, Sarah. We will now open the line for questions.

Speaker #4: Do, do you think this cycle has the potential to be what you kind of hoped it could be in terms of the mid-cycle earnings of the truckload business or the mid-cycle margins of the, the truckload business?

Speaker #1: Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star one on your telephone keypad.

Speaker #4: Any color around that and maybe timing towards getting there would be helpful.

Speaker #1: If you would like to withdraw your question, simply press star one again. Your first question comes from Chris Wetherby with Wells Fargo. Your line is open.

Speaker #5: Yeah. So, I mean, great question, Chris. And, you know, it's, it's, you know, early in the, the inflection here. So it's hard to, to know exactly the strength, the duration, and, and the timing, and how that will play out.

Speaker #4: Yeah. Hey, thanks. Good afternoon, guys. You know, I guess obviously the pricing environment in the truckload market is improving, you know, probably materially versus what we talked about last time.

Speaker #5: but just, you know, leaning in on our, you know, experience in previous cycles, you know, I don't think we've ever really seen the pressure on capacity and that coming from regulatory forces versus just normal economics.

Speaker #5: And so I think we could see more capacity coming out of the network than we typically would see in a cycle. And I feel like that could be a catalyst to, to really drive a strong bid season this year, but also into next year.

Speaker #5: And so the question's going to be, you know, can we can we capture rate? But can we also improve the utilization on our equipment, which, you know, we've done that now for seven consecutive quarters on a year-over-year basis?

Hey hey thanks. Good afternoon guys. Um, you know, I guess obviously the the pricing environment in the truckload Market is improving, you know, probably materially versus what we talked about last time. So Adam, I was kind of curious how you think about the margin opportunity. This maybe the, the, the earnings opportunity for the truckload business as we go through, I guess this year. But but maybe bigger picture. Do do you think this cycle has the potential to be what you kind of hoped. It could be in terms of the mid-cycle earnings of the truckload of business or the mythical margins of the the truckload of business. Any color around that and maybe timing towards getting there would be helpful.

Speaker #5: And then can we grow our seated trucks? Not necessarily investing in more trucks. Now, hey, if we get to that point, we obviously we'd have the, the ability to do that.

Yeah, so I mean, that's a great question, Chris, and you know, it's, you know, fairly in the inflection here, so it's hard to know exactly the strength, the duration, and the timing of how that will play out. Uh, but just, you know,

Speaker #5: But to be able to seat more of the trucks that we have on our fleet while running them productively. If we're able to do all three of those, then I do believe this sets up to be able to get back to a more normalized earnings or margin profile, that we're accustomed to seeing in, in our businesses.

Speaker #5: And that includes even US Express getting to, to the legacy performance, that we've seen at, at night in Swift. again, it's early in, in, in the cycle, and we're, we're just getting some feedback on, on bids, and we're seeing how those awards are coming in.

Leaning in on our, you know, experience in previous cycles. You know, I don't think we've ever really seen, uh, the pressure on capacity, and that coming from regulatory forces versus just normal economics. And so I think we could see more capacity coming out of the network than we typically would see in a cycle. And I feel like that could

Speaker #5: And then how, you know, some of our customers are, are tendering those awards and what mini-bid activity looks like, what turndown business is, is looking like.

Speaker #5: So, still a lot to read through into the market, but it's certainly feels like the setup is there for, you, you know, those in the industry to get back to kind of sustainable rates that, that puts our industry in a position where the good quality compliant carriers have the ability to make enough margin to invest in their businesses, invest in drivers, invest in safety, and, and invest in, in good quality equipment.

Be a catalyst to to Really drive a strong bid season this year, but also into next year. And so the question is going to be, you know, can we can we capture rate? But can we also improve the utilization on our equipment, uh, which, you know, we've done that. Now, for 7 consecutive Quarters on a year-over-year basis, and then, can we grow our seated trucks? Not necessarily investing in more trucks now. Hey, if we get to that point, we obviously we'd have the, the ability to do that, but to be able to see more of the trucks that we have on our Fleet while running them productively. If we're able to do all 3 of those, then I do believe this sets up.

Speaker #4: Appreciate the perspective. Thanks very much.

Speaker #1: The next question comes from Richa Harnain with Deutsche Bank. Your line is open.

Speaker #6: Yeah. Thanks for, for the time, guys. So just following up from that previous question, just, Adam, when you say normalized margins, maybe you can highlight kind of what that is, mid-cycle.

Speaker #6: Is it sort of low teens, that we're talking about here? And then just, you know, I think, Brad, when you ended the segment, you said, you know, the impact of this high single-digit, low double-digit rate improvement will really be seen towards the end of Q2 into the back half of the year.

To be able to get back to a more normalized earnings or margin profile, uh, that we're accustomed to seeing and, and our businesses. And that includes even US Express getting to, to the Legacy performance, uh, that we've seen at at night and Swift. Again, it's early in, in, in the cycle. And we're, we're just getting some feedback on on bids and we're seeing how those awards are coming in. And then how, um, you know, some of our customers are, are tendering, those Awards, and what mini bid activity, looks like what turned down businesses is looking like. So still a lot to read through into the market, but it certainly feels like the setup is there for you. You know, those in the industry to get back to kind of sustainable rates that that puts our industry in a position, where the good quality

Speaker #6: but if you can just kind of, like, give us a sense of, you know, the level of magnitude of margin expansion as we move through the year.

Speaker #6: You're already calling for 100 to 200 basis points of year-over-year improvement in Q2 before we really start to see the evidence of this, type of rate environment, I think, in Q2.

Quality compliant, carriers have the ability to make enough margin to invest in their businesses, invest in drivers, invest in safety, and invest in good quality equipment.

Appreciate the perspective. Thanks very much.

Speaker #6: You're just calling for low single-digit improvement, right? So I'm just trying to get a sense of how we should flow through this and the model near term and maybe more longer term if you could help.

The next question comes from Richa. Her name with Deutsche Bank, your line is open.

Speaker #5: Okay. Well, I'll hit on maybe the first portion. I'll try the second, and Brad, you can you can dovetail on that. Y-you know, I think we've, we've probably got this question on normalized margins for the last, like, five earnings calls in a row.

Speaker #5: So I'll, I'll, try to be consistent on how I answer this. Y-you know, w-we look at our business, you know, in a in a normalized market, the truckload business typically operates in, in the in the mid-80s, right?

Speaker #5: So that's kind of that mid-teens margin. When the market's really good, you know, we've operated, you know, sub-80s. And then typically in a difficult market, you're, you're upper-80s, o-obviously this cycle played out differently.

Speaker #5: It's been far more challenging across. The industry and, and for us, included in that. but, but that's where I that's where I'm referencing getting back to that mid-80s, normalized earnings.

Speaker #5: I feel like there's, there's the setup here. In, in this bid season and going into next to be able to achieve that. And then when you look at where we're at, we have our LTL business that's been growing.

Yeah. Thanks for for the time guys. So just following up from that previous question. Just Adam, when you say normalized margins, maybe you can highlight kind of what that is. Mid-cycle, is it sort of low low teens, um that we're talking about here and then just, you know, I think, um, Brad when you ended the segment, you said, you know, the impact of this High single digit low double digit rate, Improvement, will really be seen towards the end of Q2 into the back half of the year. Um, but if you can just kind of, like, give us a sense of, um, you know, the level of magnitude of margin expansion as we move through the year, you're already calling for 100 to 200 basis points of year-over-year improvement in Q2 before we really start to see the evidence of this um type of rate environment. I think in 22, you're just calling for low single digit Improvement, right? So I'm just trying to get a sense of how we should flow through this, in the model near term and maybe more longer term if you could help. Thanks,

Speaker #5: And, and that doesn't have the same cycles as truckload. And we look at just methodically improving, the, the margins in that business. Obviously, we have the anomaly with the with the claim development in the in the first quarter, but we expect that to be put behind us and continue down the path of it of improving margins as we grow in to, to that network and start to march down into the to the 80s, which I still feel this year we can achieve, a sub-90 operating ratio, during the year and just continue to, to build upon that.

Speaker #5: And then typically when our truckload business is, is healthy, the logistics business can grow exponentially. Now, early on in the cycle changes, logistics feels pain because the rates haven't adjusted yet to what the third-party capacity, you know, rates are.

Speaker #5: And so you probably see a low count degradation, which we've seen because you just can't take freight that you can't make a margin on.

Speaker #5: As rates reset, contractual rates, but also backup rates, which we do a lot of with our customers. And so when the routing guy falls apart, they tender us loads with the backup rates that hopefully put us in a position where we can't do it with our own trucks.

Speaker #5: We could do it with quality third-party capacity through our logistics business. And then we are able to take a lot more of the loads that we're turning down today.

Has been far more challenging across the industry and and for us, um, included in that. Uh, but but that's where that's where I'm referencing getting back to that mid 80s. Normalized earnings. I feel like there's there's the setup here in in this bid season and going into next to be able to achieve that. And then when you look at where we're at, we have our LTL business that's been growing and and that doesn't have the same Cycles as truckload. And we look at just methodically, improving the, the margins and that business. Obviously we have the anomaly with the, with the claim development and the in the first quarter. But we expect that to be put behind us and continue down the path of of improving margins. That's been growing to to that Network and start to March down into the to the 80s, which I still feel this year, we can achieve uh uh a sub 9000 operating ratio uh, during the year and just continue to, to build upon that. And then,

Speaker #5: So in, in normal earnings, I would expect logistics to be growing. And then intermodal, we believe, is on a, a path to profitability. I think we laid out the improvement sequentially, that we expect to achieve in intermodal, which would be which would mean we're profitable.

Speaker #5: And, and volumes are really starting to build i-in that business. You know, last year, this time, we took a big step back when you had the tariffs announced, and we were kind of pushing for improving our, our revenue per load.

Speaker #5: And that led to us losing some volume. But this year, it's, it's very different. The we're, we're, we're getting improvement, some improvement in rate, not near what you're getting on the truckload side, but some improvement.

Typically when our truckload business is is healthy the logistics business can grow exponentially. Now, early on in the cycle changes Logistics feels pain because the rates haven't adjusted yet to what the third party capacity, you know, rates are and so you probably see a low count degradation to which we've seen because you just can't take Freight that you can't make a margin on as rates reset contractual rates but also back up rates which we do a lot of with our customers. And so when the routing guy falls apart

They tender as low as the backup rates that, hopefully, put us in a position where

Speaker #5: And it's resulting in better volume as well. So we're starting to see things build, and we'd expect, you know, intermodal to get to, to profitability and to see that improve, as, as the cycle, you know, strengthens.

We can't do it with our own trucks.

We could do it with quality third-party capacity through our Logistics business.

Speaker #5: So that's how we're viewing kind of this, I'm saying, normalized. You're never really at normal. It's kind of you're always flowing in, in the cycle.

I mean, we were able to take a lot more of the load that we're turning down today. So,

Speaker #5: But th-that's how I'd frame it up, Richa, with that with that, for that question. And then in terms of the high, low, double-digit, you know, requests, you know, right now, we're probably got about 70% of our, of our business in bid.

In normal earnings, I would expect Logistics to be growing, and then Intermodal, we believe, is on a path to profitability.

Speaker #5: But a lot of that starts to be implemented, kind of mid to late, second quarter, and then it starts to flow into third quarter.

Speaker #5: We have some pretty big customers that, that hit. In, in the in the third quarter. So we may be seeing, the, the activity really, really build in terms of approving, you know, healthy rate improvement or, or, or rate increases.

I think we laid out the Improvement sequentially, uh, that we expected cheap and inner Moto, which would be, which would mean we're profitable. And, and volumes are really starting to build in that business. You know, last year, this time we took a big step back. When you had the tariffs announced that we were kind of pushing for improving our, our Revenue per load and that led to us losing some volume. But this year it's just very different. The we're, we're we're getting improvements some improvement in rate, not near where you get on the truckload side, but some improvement and its resulting in better volume as well. So we're starting to see things build and we'd expect

Speaker #5: But it may not flow through to the P&L immediately. But we expect that margin, to, to really flow start to flow through, kind of fully baked, more in the third quarter and then build into the fourth quarter.

Speaker #5: Brad, I don't know if you had anything else you wanted to elaborate on.

Speaker #4: Yeah. I'll say that's what I said. And just, just the one thing I would add is, in terms of our contract versus spot mix, you know, we came into the first quarter in the, you know, that 10 to 12 percent kind of range, low, double.

Speaker #4: It's where we had been for really the last couple of years, in terms of spot exposure. We exited the first quarter just a couple of points higher than that, you know, kind of low to mid-teens, perhaps.

You know, inter Moto to get to, to profitability and to see that improve as, as the cycle, you know. Strengthens. So that's how we're viewing kind of this. I I'm saying normalize, you're never really at normal. Its kind of, you're always flowing in in the cycle, but that's how I'd Frame It Up, reach out with that with that, um, for that question. And then, on terms of the high low double digit, um, you know, requests, you know, right now we're probably got about 70% of our of our business in bid,

Speaker #4: and look, as we as we navigate the pricing environment and navigate trying to manage our, our business and extract yield from, from our network, jumping into spot exposure is not step one in trying to manage yield.

Speaker #4: And so our first priority is our contractual recurring relationship business. And, and we have expectations for what, where the market is on price at this and foremost.

But a lot of that starts to be implemented, kind of mid to late uh second quarter, and then it starts to flow into third quarter. We have some pretty big customers that that hit in, in the, in the third quarter. So we may be seeing the, the activity really really build in terms of approving, you know, healthy rate, Improvement or or rate increases, but it may not flow through to the p&l immediately.

Speaker #4: And, if, if we can't come to come to agreement on, on the or, or see, see price the same way in terms of the market, we may end up with less contractual exposure on certain accounts, and that will create more spot exposure.

But we expect that margin to really start to flow through, kind of fully baked, more in the third quarter, and then build into the fourth quarter.

Speaker #4: And so that's something that can evolve. Over the next several months, as we continue to work through bid season. And so that's just another lever that can contribute to our realized rate per mile, in addition to the contract and the backup rates as Adam as Adam spoke to.

Speaker #4: So that's something that we're going to be managing and watching week by week as we work through this. But a lot of different avenues, to, to generate.

Speaker #1: That was great, guys. Thank you.

Speaker #4: All right. Thanks, Richa.

Speaker #1: Your next question comes from Ken Hoexter with Bank of America. Your line is open.

Speaker #5: Hey, great. good afternoon. And I, I guess, Brad, just to extrapolate on that a bit, right, i-it sounds like in prepared remarks, Adam, I think you might have mentioned you're revisiting contracts that are longer in nature.

Brad, I don't know if you had anything else. You wanted to elaborate on? I said it was. Was it? And just just 1 thing. I would add is, uh, in terms of our contract versus spot mix. Uh, you know, we came into the first quarter in the uh, you know, that 10 to 12% kind of range low double they did where we had been for really the last couple of years in terms of spot exposure. We exit the first quarter, just a couple of points higher than that, you know, kind of low to mid teams perhaps. Um, and look, as we as we navigate, the pricing environment and navigate trying to manage our, our business and extract yield from from our network, uh, jumping into spot. Exposure is not Step 1 in, trying to manage yield. And so, our first priority is our contractual recurring relationship business and, and we have expectations for what where the market is on price at this point. And that's what we're trying to address first and foremost. And, um, if if we can't come to come to agreement on on the or proceed, see price the same way. And

Speaker #5: Are you already starting to give those notices to, to get out of the contracts and, and start to renew? Is that how tight the market is, has gotten?

Speaker #5: I just want to understand kind of the comments around that. And to clarify, on the LTL, did you say that delay but the weights are ramping.

Speaker #5: I-i the delay in getting pricing, but you're seeing weights ramping given the industrial move. H-how long does that delay get till you get that pricing?

To generate.

Speaker #4: All right. Well, let me clarify that. We're not saying we're getting delayed pricing on LTL. I think w-w-we're saying we're getting mid-single digit on the renewals, but we're seeing a freight mix change where we're getting you know, longer length of haul, heavier shipments, that we believe will improve the yield of the business.

That's great, guys. Thank you.

All right. Thank you.

Your next question comes from Ken Hoster with Bank of America. Your line is open.

Speaker #4: And so the, the revenue per 100 weight may get a little bit skewed in terms of the year-over-year comparison, because of the freight mix change.

Speaker #4: But we're, we're not seeing delay in LTL pricing. And then, and then in terms of, the, the rate reviews, is what we would call them, is we're going through our network and looking at any rate that may just be stale.

Speaker #4: If it's beyond a year, it's something we're going to look at. It we're, we're reviewing those that are called the bottom 20% of performing.

Speaker #4: And looking at what we need to do to get those rates to where they're, they're closer to market. And so if we don't have a-an active bid to address those, we're being proactive of making that going through that review and then having discussions with, with customers around that.

Hey, great, uh, good afternoon, and I guess Brad, just to extrapolate on that a bit, right? It sounds like in the prepared remarks, Adam, I think you might have mentioned you're revisiting contracts that are longer in nature. Are you already starting to give those notices to get out of the contracts and start to renew? Is that how tight the market has gotten? I just want to understand kind of the comments around that. And to clarify on the LTL, did you say that delay, um, but the weights are ramping? The delay in getting pricing, but you're seeing weights ramping given the industrial move. How long does that delay get until you get that pricing?

Speaker #4: So that is something that is, is active. And I think early stages right now, because there are customers a lot of customers that do, you know, RFPs, and, and, you know, again, like I said, we're probably, you know, in the heart of about 70% of that business.

Speaker #4: But there is the 30% that, that we need to make sure we're addressing as the market moves quickly.

All right. Well, let me clarify that we're not saying we're getting delayed pricing on LTL. I think what we're saying is we're getting mid single digits on the renewals, but we're seeing a freight mix change where we're getting, you know, longer length of haul and heavier shipments that we believe will improve the yield of the business. And so the revenue per hundredweight may get a little bit skewed in terms of the year-over-year comparison because of the freight mix change. But we're not seeing delay in LTL pricing.

Speaker #5: A-and, and same for the LTL. Does that gap close? D-do you get if you're already at high single, low, double in, in truckload, can you see that transfer to the LTL market?

Speaker #4: I, I, I don't know that they align that well. Right now, on LTL, on renewals, we're getting mid-single digits right now.

Speaker #5: Okay. Great. Thanks, guys. Appreciate the time.

Speaker #1: Your next question comes from Ravi Shanker with Morgan Stanley. Your line is open.

Speaker #5: good. I can start from everyone. Adam, last quarter, you were you were very helpfully walked through what you saw were upcoming catalysts on the supply side.

And and in terms of um the the rate reviews is what we would call then is we're going through our Network and looking at any rate that may just be stale. If it's beyond a year, it's something we're going to look at it. We're we're reviewing those that are called the bottom 20% of Performing and looking at what we need to do to get those rates to where they're, they're closer to Market. And so if we don't have an active bid to address those, we're being proactive of making that going through that review and then having discussions with with customers around that. So that is something that is active. I think early stages right now,

Speaker #5: obviously, lots of moving parts here. But everything from Delilah's law, the Montgomery case, and the brokerage side, new, pro-proposal for $5 million minimum insurance, as well as, all of the, rules that we saw last year.

Because there are a couple, a lot of customers that do, you know, rfps, uh, and and you know, like I said we're probably, you know, in the heart of about 70% of that business, but there is the 30% that that we need to make sure we're addressing as the market moves quickly.

Speaker #5: How do you see this evolving over the next few months and potentially the market tightening up more?

And same for the LTL. Does that gap close then? If you're already at high single to low double digits in truckload, can you see that transfer to the LTL market?

Speaker #4: Yeah. I mean, he, I think you, you hit him, Ravi. I mean, these are all, you know, pressures that we think are going to, deter that actors from coming into our space.

I don't know that they align that well. Right now on LTL, on renewals, we're getting mid-single digits. Okay, great. Thanks, guys. Appreciate the time.

Speaker #4: I think it's going to, you know, push capacity out of the market that aren't as sustainable rates and aren't acting in a compliant manner.

Your next question comes from Ravi Shanker with Morgan Stanley. Your line is open.

Speaker #4: I, I think clearly, when this when our industry saw spot rates jump dramatically in 2021, and then we had this push for, for, for immigration, this industry was targeted.

Speaker #4: And, and we had a, a lot of people enter our space that didn't have much experience in trucking. probably didn't have a great safety background, didn't have proper training.

Speaker #4: And, and also, we're probably exploited by some of the chameleon carriers that are out there. And ultimately, paid them rates well below what, you know, someone who's a, a citizen of the US would, would, would, would, view as livable wages.

Uh, good. Thanks, everyone. Um, Adam, uh, last quarter you very helpfully walked through what you saw were upcoming catalysts on the supply side. Uh, obviously lots of moving parts here, but everything from the RAILA's law, the Montgomery case on the brokerage side, new, um, uh, proposal for $0 minimum insurance, as well as, uh, all of the, uh, rules that we saw last year. How do you see this evolving over the next few months and potentially the market tightening up more?

Speaker #4: And so I think that population is getting pushed out with the, the pressure on, on eliminating the improperly issued non-domicile CDLs. And I think Delilah's law will help codify that into into law, among other things.

Speaker #4: I think we've, we've got an administration who's really pushing on, what, you know, some of these chameleon carriers, how they've exploited the system. And, and the, the self-certification of training, the self-certification of logs, and, and putting more regulation, behind that.

Speaker #4: And, and I just think there's going to be a lot more oversight from the FMCSA that, that's, that's needed. Now, hey, if we get minimum insurance, that's, that's another big thing.

Yeah, I mean, he, I think you you hit him Ravi. I mean, these are all, you know, pressures that we think are going to uh, deter that actors from coming into our space. I think it's going to, uh, you know, push capacity out of the market that aren't that sustainable rates in our acting in a compliant manner. Uh, I think, clearly, when this, when our industry saw spot rates jumped dramatically in 2021 and then we had this push for for for immigration. This industry was targeted and and we had a lot of people enter our space that didn't have much experience in trucking. Uh, probably didn't have a great safety background, didn't have proper training and and also, we're probably exploited by some of the chameleon

Speaker #4: I mean, you got English language proficiency. That's pushing capacity out o-of the of the market. And, and hey, I think drug testing is another big one, where, you know, we already have set a, a much higher standard for ourselves.

Carriers that are out there and ultimately paid them rates well below what, uh, you know, someone who's a citizen of the U.S. would view as livable wages. And so I think

Speaker #4: We've been doing hair follicle drug testings for over a decade. And we see that you're probably 10 to 15 times more likely to pick up, a, a, a positive drug test than you would with urine.

Speaker #4: Yet, we don't accept that as a, a, a valid, way to, to, to test drivers. And you can't even submit those, th-th, you know, those positive, you know, results to the clearinghouse.

Speaker #4: And so those drivers can just go on to another company and get a job and be behind the wheel. And we don't think that's right.

Speaker #4: And so I think that's another thing that I think this industry needs to help clean it up and really be focused on putting the safest drivers on the road.

That population is getting pushed out with the the pressure on on eliminating, the improperly issued non-domicile CDLs, and I think Delilah's law will help codify that into into law among other things. Uh, I think we've we've got an Administration whose really pushing on, uh, what, you know, some of these chameleon carries how they've exploited the system and, and the, the self-certification of training the self-certification of logs and and putting more regulation behind that. And and I just think there's going to be a lot more oversight from the FMCSA that that's that's needed. Now. Hey, if we get

Speaker #4: But, Ravi, what I'd say is we've never seen this type of push to clean up some of the capacity in the unsafe drivers out on the road.

Speaker #4: And when you pull that one of them, I think, moves the needle enough. But when you aggregate them, I think we're already starting to see that, you know, influence the market.

Speaker #4: And really, you know, the, the, the, the improvement we're seeing and the ability for us to get rate is driven largely by capacity reduction versus demand.

Speaker #4: And if we start to see demand pick up in conjunction with some of these other, you know, efforts that are just in the early innings, I think we can find ourselves in a in a much more favorable position from a carrier standpoint.

Speaker #5: Yeah. Ravi, I would say that, you know, I think it's, it's clear to us through our conversations, the administrative administration is committed to the cleanup, that, that needs to happen in our industry.

Insurance. That's that's another big thing. I mean you got English language proficiency, that's pushing capacity out of the of the markets and and hey I think drug testing is another big 1 where, you know, we already have set a a much higher standard for ourselves. We've been doing hair follicle drug testing for over a decade and we see that you're probably 10 to 15 times more likely to pick up. Uh ah, ah ah, positive drug test than you would with urine yet. We don't accept that as a a valid way to to to test drivers and you can't even submit those, you know, those positive uh you know results to the Clearing House and so those drivers can just go on to another company and get a job and be be behind the wheel and we don't think that's right. And so I think that's another thing that I think this industry needs to help clean it up and really be focused on putting the safest drivers on the road.

Speaker #5: We think if we can get, you know, legislative support through Delilah's law and the like, that, you know, obviously, that makes that more durable through future administrations.

Speaker #5: But we don't think it's dependent on that. We think whether the whether that happens or not, that the, actions of the administration are going to be effective over the next few years, as we continue to kind of get things right, with our industry.

Speaker #5: Very helpful. Thank you.

But Robbie, what I would say is we've never seen this type of push to clean up some of the capacity and the unsafe drivers out on the road. And when you pull up that one of them, I don't think it moves the needle enough, but when you aggregate them, I think we're already starting to see that influence the market and really, you know, the improvement we're seeing and the ability for us to get, right, is driven largely by capacity reduction versus demand. And if we start to see demand pick up in conjunction with some of these other efforts that are just in the early innings—

Speaker #4: Thanks, Ravi.

Speaker #1: Your next question comes from Scott Group with Wolf Research. Your line is open.

Speaker #6: Hey. Thanks. afternoon, guys. So, Adam, what are you seeing with seated tractor counts and drivers generally? And then just, you know, big picture, if you think back last cycle, just massive growth in, you know, your and, and everyone's brokerage business.

I think we could find ourselves in a much more favorable position from a carrier standpoint. Yeah. Robbie, I would say that, you know, I think it's clear to us through our conversations. The administration is committed.

To the cleanup, um, that needs to happen in our industry.

Speaker #6: But, you know, all the things that you talked about in that last question, with non-domicile and chameleon and Montgomery, all these sorts of things.

We think if we can get, you know, legislative support through July—those laws and the like—that, you know, obviously, that makes that more durable through future.

Administration. But we don't think it's dependent on that—we think.

Speaker #6: I'm wondering, like, as you're having these bid conversations, is there a sense from shippers that they're less willing to do a brokerage offering right now?

Whether whether that happens or not, that the

Uh, actions of the administration are going to be effective over the next few years.

As we continue to kind of get things right with our industry.

Speaker #6: And they're maybe are they are they willing to pay more for asset-based? this time versus maybe prior cycles?

Very helpful. Thank you.

Thanks Robbie.

Speaker #4: Yeah. Okay. Well, let me let me hit on those, Scott. So on the on the sea-seated truck side, y-you know, that, you know, certainly, it finding drivers, hiring drivers has always been a challenge in, in our space.

Your next question comes from Scott Group with Wolfe Research. Your line is open.

Speaker #4: I've always said, in our industry, you either have drivers or you have loads. Really, do you have them at the same time, right? So we're starting to see, the loads come through.

Speaker #4: And so we're making investments to ensure that we can have an advantage in sourcing drivers. And so we're making investments in our marketing spend, in the number of recruiters we have.

Hey, thanks. Uh, afternoon, guys. So, um, Adam, what are you seeing with seated tractor counts and drivers generally? And then just, you know, big picture, if you think back last cycle—just massive growth in, you know, your and everyone's brokerage business. But, you know, all the things that you talked about in that last question, with non-domicile and chameleon in Montgomery, all these sorts of things, I'm wondering, like, as you're having these bid conversations, is there a...

Speaker #4: We're leveraging AI. To, to, to ensure that we're, we're very quick to react to leads as they come in. And we're really leveraging the academy network that we have to train and develop drivers.

Sends from shippers that they're less willing to do a brokerage.

Speaker #4: And we're as we've made those investments, as we saw the market change, we're starting to see that build some momentum, really, across all of our different brands.

Offering right now and they're maybe are they are they willing to pay more for asset based um, this time versus maybe prior Cycles?

Speaker #4: And so I'm feeling more bullish on our ability to, to, to not only improve rates, but to improve our utilization and grow seated truck, which I know was the biggest challenge during the last upcycle in the pandemic.

Yeah, okay, well let me hit on those, uh, Scott. So, on the seated truck side—

You know that?

Speaker #4: I think everyone went backwards a truck with how difficult labor was. I think what the challenge that we'll have is that we've only gone after the high-quality drivers.

Speaker #4: And some of our space have been able to hire those that don't meet the criteria that we have. Now, as some of those drivers are kind of pushed out of the market because of some of the things we just talked about, the quality drivers that we look at are g are going to be more attractive.

You know, certainly, finding drivers—hiring drivers—has always been a challenge in our space. I've always said, in our industry, you either have drivers or you have loads, really. Do you have them at the same time, right? So, we're starting to see the loads come through, and so we're making investments to ensure that we can have an advantage in sourcing drivers, and so,

Speaker #4: But we believe we bring far more to the table with a terminal network we have, the equipment we have, and the ability to give high-quality training.

Speaker #4: And so we feel like we'll have an advantage to, to maintain and even grow our seated truck count as, as drivers become more challenging.

We're making investments in our marketing spend and the number of recruiters we have, we're leveraging AI to to, to ensure that we're, we're very quick to react to leads as they come in. And we're really, um, leveraging The Academy Network that we have to train and develop drivers and we're as we've made those Investments as we solve the market change. We're starting to see that build some momentum, but really across all of our different brands. And so I'm feeling more

Speaker #4: And to your, your point about logistics, I, I agree with you that I think we saw this proliferation in logistics because you had customers that just had to move goods at all costs because demand was so high.

Speaker #4: And you had this flood of capacity coming in. I think I'm talking to shippers. I think they're going to have a bias towards towards asset-based carriers.

Speaker #4: I mean, we're already starting to see that. We're starting to see that they're limiting you know, even some bids, many bids, only to asset-based carriers or limiting the percentage that they will allow you know, in terms of brokers to participate in a bid.

Bullish on our ability to, to, to not only improve rates, but to improve our utilization and grow, see the truck, which I know was the biggest challenge during the last upcycle in the pandemic. I think everyone went backwards to truck with how difficult labor was. I think what the challenge that we'll have is that we've only gone after the high quality drivers, and some of our space have been able to hire those that don't meet the criteria that we have. Now, as some of those drivers are kind of pushed out of the market because of some of the things we just talked about, the quality drivers that we look at are going to be more attractive.

But we believe we bring far more to the table with

Speaker #4: And I think that's going to continue. Now, I think we get viewed a little bit differently because we do bring some assets to the equation with the power only that we offer.

Speaker #4: But we've also talked about what we're doing to vet the carriers that we work with. We have taken a great number of steps to, to really ensure that we have high-quality safe carriers.

And so we feel like we'll have an advantage to maintain and even grow our seated truck count as drivers become more challenging. And to your point about logistics, I agree with you that I think we saw this proliferation in logistics.

Speaker #4: Now, you're not always going to be perfect at that. But we have we have cut down the number of carriers that we work with dramatically.

Because you had customers that just had to move goods at all costs because demand was so high, and you had this flood of capacity coming in, I think.

Speaker #4: Just since the beginning of this year, we're down 30%. And we had made a large cut even earlier last year. And so we vet how long you've been in business.

Speaker #4: we're looking at evidence that you have logs that we can see where your tractors are at. We actually because I think one of the challenges in our space is the broker has no idea.

Speaker #4: In most cases, who is actually driving the truck? And I think that's been a real challenge for the broker and the shipper to really know that.

Speaker #4: And so we are taking steps to ensure we know we have a copy of the license. We know who's in the truck, especially if they're going to operate and leverage one of our trailers.

When talking to shippers, I think they're going to have a bias towards towards asset based carriers. I mean, we're already starting to see that we're starting to see that they're limiting, you know, even some bids, many bids only to asset based carriers or limiting the percentage that they will allow um, you know, in terms of Brokers to participate in a bid and I think that's going to continue now. I think we get viewed a little bit differently because we do bring some assets to the equation with the power only that we offer, but we've also talked about what we're doing.

Speaker #4: So we're taking a lot of steps to put ourselves in a position that when customers kind of demand that as part of the logistics solution, we have that to offer.

Speaker #4: So I don't think you're going to see the same you know, expansive growth that we saw during the pandemic. But I do think those that are good-quality logistics providers do it the right way and have an asset solution to complement what they what they're offering.

To vet the carriers that we work with. We have taken a great number of steps to to Really ensure that we have high quality safe carriers. Now you're not always going to be perfect that, but we have, we have cut down the number of carriers that we work with dramatically. Just since the beginning of this year, we're down 30% and we had made a large cut even uh, earlier last year. And so we that how long you've been in business?

Speaker #4: We'll have the ability to grow in a strengthening market.

Speaker #6: Thank you.

Speaker #4: Scott. Thanks, Scott.

Speaker #1: Your next question comes from Jonathan Chappell with Evercore ISI. Your line is open.

Speaker #5: Thank you. Good afternoon. Adam, I know you don't go into the monthly detail on LTL as some of the pure plays do. But is there any way to help give a cadence on kind of how the first quarter and maybe April transpired as we think about, like, weight spin good?

Speaker #5: That's you're finally getting the turn there. But are we going to start to see more consistent kind of shipment tonnage growth? and then importantly, are your do you do you feel if you do get that demand tailwind or tonnage tailwind shipment tailwind behind you, I know cost alignment was kind of pretty difficult.

Speaker #5: Have you been building out the national network? Do you feel like your costs are now appropriately aligned that if there were a be to be a demand pickup, that would kind of go right to margin improvement as opposed to still kind of chasing that with resources?

Uh we're looking at evidence that you have logs that we could see where your tractors are at. We actually cuz I think 1 of the challenges in our space is the broker has no idea in most cases who is actually driving the truck. And I think that's been a real challenge uh, for the broker and the shipper to really know that. And so we are taking steps to ensure. We know we have a copy of the license, we know who's in the truck, especially if they're going to operate and leverage 1 of our trailers. So we're taking a lot of steps to put ourselves in a position that when customers kind of demand that as part of the logistics solution we have that to offer. So I don't think you're going to see the same. You know, expansive growth that we saw during the pandemic but I do think those that are good Quality Logistics providers, do it the right way and have an asset solution to complement. What they what they're offering will have the ability to grow in a strengthening Market.

Thank you.

Thanks Scott.

Speaker #4: Okay. That was a long question, John. I'll try to hit I'll try to hit every component of it. so.

Your next question comes from Jonathan Chapel with Evercore ISI. Your line is open.

Speaker #5: That was the shortest one so far.

Speaker #4: Yeah. Okay. So so on the on the LTL front, I, I think we talked about in our commentary that we were a little bit slower on volume.

Speaker #4: To begin the quarter. But it did build with, with March being, being the strongest and then those trends continuing in, into April. You know, we only got a couple weeks i-into April.

Thank you, good afternoon. Um, Adam, I know you don't go into the monthly detail on LTL as some of the pure plays do. But is there any way to help give a cadence on kind of how the first quarter, maybe April, transpired, as we think about, like, weight's been good? You're finally getting a turn there, but are we going to start to see more consistent kind of shipment tonnage growth?

Speaker #4: But, we're, we're not seeing that, that slowdown at all. And then typically, second quarter is our, our one of our strongest quarters. In, in LTL.

Speaker #4: We do believe we have a tremendous amount of operating leverage in the business. You know, there's just a few pinch points that we have where we may have a few locations, to open up this year.

Speaker #4: But it's not going to be near the investment we had to make in the prior years. And so it's allowed us to focus on the fundamentals with, you know, ensuring that we're efficient with our with our labor, managing the purchase trends.

Um, and then importantly, are you do, do you feel if you do get that demand Tailwind or tonnage Tailwind, shipment Tailwind behind you? I know cost alignment was kind of pretty difficult. Have you been building out the national network? Do you feel like your costs are now appropriately? Aligned that if there were be to be a demand pickup, that would kind of go right to margin Improvement as opposed to still kind of chasing that with resources

Okay, that was a long question, John. I'll try to hit every component of it. That was the shortest one so far.

Speaker #4: I think some of the things that, that Andrew touched on on the on the LTL discussion and so, yeah, as we see the tonnage improve, and it may not because of the freight mix, it may not even have to be a huge lift in shipment count if you're getting more tonnage that typically yields better.

Speaker #4: And as we look at our kind of our weekly performance and we have an estimated OR in that in that weekly performance, as we see that building, yeah, I think we're seeing the operating leverage in the business and a lot of that flowing to improved margins.

Yes. Okay, so so on the on the LTL front, I I think we talked about in our commentary that we were a little bit slower on volume to begin the quarter, but it did build with with March being being the strongest. And then those Trends continuing in into April, you know, we only got a couple weeks into April but um, we're we're not seeing that that slowed down at all. And then typically second quarter is

Speaker #4: And so that's where if you feel like if this continues, you know, it could be back half of, of this year. We start to see that, that operating mar operating ratio begin with an 8 versus a 9.

Speaker #4: And then just continue to build, from there. I mean, hey, we're still working on freight flows and, a-again, you know, adjusting to the different the changing network.

Speaker #4: but we feel very confident about our LTL, team and, and what we're doing there and just making kind of consistent improvement in, in both the freight mix and the cost structure.

Our, our 1 of our strongest Quarters Inn. In LTL, we do believe we have a tremendous amount of operating leverage in the business. You know, there's just a few pinch points that we have where we may have a few locations to open up this year, but it's not going to be near the investment. We had to make in the prior years. And so it's allowed us to focus on the fundamentals with, you know, ensuring that we're efficient with our with our labor managing the purchase Trends. I think some of the things that that Andrew touched on on the, on the lto,

Speaker #4: You know, Andrew, you may have something you want to add to that.

Speaker #3: Well, just I let me just say a couple things just to give you a, a sense for the momentum within the quarter. So obviously, the Southeast was pretty heavily impacted by weather.

Discussion. And so, yeah, as we see the tonnage improve, and it may not, because of the freight mix, it may not even have to be a huge lifted shipment count if you're getting more tonnage, that typically yields better. And as we look at our kind of our weekly performance and we have an estimated, oh, and that in that Weekly performance,

Speaker #3: And that's kind of where our highest density volume is in our business. But if you look at tonnage in, in January, it was up 1.6%.

Speaker #3: February, 2.6. In March, 6.9. So we, we really and it ended up at 4.1% up or so on tonnage. Year over year. So we, we really did see that build as we kind of moved out of the weather.

Speaker #3: And as some of the new contract winds took, took effect. So I think that's, that's going to be positive momentum as we build into what for us in Q2 was our strongest seasonal quarter of our business.

Speaker #3: But when it comes to cost, I, I think, you know, below the surface, obviously, the, the, the claim had or the, the, the arbitration liability cost impact of the core a lot.

You know, it could be back half of of this year. We start to see that that operating uh, operating ratio begin with an 8 versus a 9 and then just continue to build uh, from there I mean, hey we're still working on freight flows and again you know, adjusting to the different, the changing network. Uh but we feel very confident about our LTL team and and what we're doing there and just making kind of consistent Improvement in in both the freight mix and the cost structure and I'll Andrew, you may have something you want to add to that.

Speaker #3: But we have we're seeing steady progress in our cost efficiency. So we saw our, our variable wage per ship improve from, from the from the fourth quarter to the first quarter.

Well, just let me say a couple of things, just to give you a sense for the momentum within the quarter. So, obviously, the Southeast was pretty heavily impacted by weather, and that's kind of where our highest density volume is and our business.

Speaker #3: We expect that's going to continue. we expect we've seen I guess I would say just to give you a little feel for it, we're seeing the most improvement in our dock wages per shipment.

Speaker #3: And I think Lion Hall is the next area where we're going to start to see the most improvement. So now w the, the costs that came out of the business as we brought our different businesses together last year but in terms of vehicle we're in, travel costs, right-sizing our equipment, all of those are showing positive trends.

Speaker #3: I th the one thing I would probably mention to you is we've we've mentioned that we are we're slowing down building new locations. and, and that is right.

Speaker #3: That's kind of where we're at. But we are going to con we have locations where that are pinch points that in our the security, security of our flow need to be addressed.

Speaker #3: And we're increasing door counts in those locations. That co that's going to allow our freight to flow in a more natural way, in a more cost-efficient way.

Speaker #3: So you're going to see us add locations where where we need to, to help with that flow. Those are going to create some growth.

Speaker #3: But primarily, they're going to help with our costs. So we're still aligning our evolving network with our footprint. But we're in we're in a place now where it's just the the we're positioned well.

Speaker #3: We're just going to see improvement in terms of that efficiency we expect going forward.

Speaker #5: Super helpful, Andrew. Thank you. Thanks, Adam.

Speaker #4: All right. Thanks, Sean.

Speaker #1: Your next question comes from Dan Moore with Baird. Your line is open.

Speaker #5: Hey, guys. A lot of questions have been asked and answered. But one that was not addressed yet that I think is, is definitely worth a little bit of time is leverage around US Express.

Speaker #5: So you know, I can't imagine a better rate environment to begin to realize momentum in that business. I think we've argued for a while now that that's really what was needed.

Speaker #5: I know you guys have done a lot of cost repair and management repair. in terms of the business. But you know, just the ability to move through a rate cycle much less a rate cycle like this one really presents a lot of opportunity.

Speaker #5: Can you talk to us about the size of the business today, generally? And maybe talk to the potential earnings, earnings leverage of US Express as as we move forward.

Speaker #5: thank you.

Speaker #4: Yeah. Well, so, so Dan, I think you're right. I mean, we, when we purchased US Express a few years ago, I mean, we felt like we were going to into being a more favorable ri environment sooner than, than we have found ourselves.

Speaker #4: And so that's put some, some pressure on the, the margin. And, and how quickly we were able to you know, drive accretion through that acquisition.

Speaker #4: but, but I agree. We're, we're finally in a place now where we can you know, work on improving their freight network and improving their rates to a to a more sustainable level.

Speaker #4: And we've got a, a great team there the gentleman who leads that business was led sales at Swift. following the merger. And was an integral part of the improvement Swift and, and the margin profile at Swift.

Speaker #4: And so we feel him and his team are, are well-positioned to, to understand what it takes to make some of the changes. And, and hey, some of those rates are going to are going to need to go up in a in a very meaningful way.

Speaker #4: And, and they're very equipped with understanding of the market, leveraging the network information we see across all of our brands, and closing the gap on where we're at from a legacy standpoint.

Speaker #4: I think this last quarter, there are about 300 basis point difference from a from an OR standpoint. some of that is still a cost delta.

Speaker #4: But I think a lot, a lot can be can be made up through you know, getting the rates closer to where we are from a legacy standpoint.

Speaker #4: I, I think we've got the right team there. We've made a lot of changes there. but, you know, feel well-positioned if the discussions with our customers and, and getting you know, I think good feedback in the early parts of the bid and expect to see rate continue to, to grow and develop.

Speaker #3: Yeah. And from a from a cost perspective, let me just make a couple of points.

Speaker #4: Okay.

Speaker #3: I'll point.

Speaker #4: Hold on. Wait, wait, where were you going to say, Dan?

Speaker #5: Yeah. I'm sorry. I just wanted to o-one thing that would be helpful to understand is just the size of the business today and you know, if you want to bracket it, that's fine.

Speaker #5: Or, or in, you know, any manner in which you'd like to answer the question. I know it's you know, I know obviously that i-it's a it's a, a consolidated business at this point.

Speaker #5: But we don't know how, how we don't know what the revenues are. So if you can maybe add some context around that today, i-if at all possible, that would be really appreciated.

Speaker #5: Thank you.

Speaker #4: Y-yeah. I think between the, the trucking and the and the logistics business, I mean, you're, you're, you're just under, under 2 billion. Between, between you know, those two.

Adam Miller: In the early parts of the bid and expect to see rate continue to grow and develop.

Adam Miller: In the early parts of the bid and expect to see rate continue to grow and develop.

Andrew Hess: Yeah, from a cost perspective, let me just make a couple points.

Andrew Hess: Yeah, from a cost perspective, let me just make a couple points.

Speaker #4: Probably about 1.7, close to that. And now, Andrew, you want.

Adam Miller: Hold on. What were you going to say, Dan?

Adam Miller: Hold on. What were you going to say, Dan?

Speaker #3: Yeah. So just I, I think four areas that I think are opportunities ahead of us on cost. First, the cost of, of insurance and safety.

From a cost perspective, let me just make a couple of points.

Daniel Imbro: Yeah, I'm sorry. I just wanted to. One thing that would be helpful to understand is just the size of the business today, and if you want to bracket it, that's fine, or in any manner in which you'd like to answer the question. I know obviously that it's a consolidated business at this point, but we don't know what the revenues are. If you can maybe add some context around that today, if at all possible, that would be really appreciated. Thank you.

Daniel Imbro: Yeah, I'm sorry. I just wanted to. One thing that would be helpful to understand is just the size of the business today, and if you want to bracket it, that's fine, or in any manner in which you'd like to answer the question. I know obviously that it's a consolidated business at this point, but we don't know what the revenues are. If you can maybe add some context around that today, if at all possible, that would be really appreciated. Thank you.

Speaker #3: So that, you know, we've had to go through something of a culture change there, in regards to how we manage safety and insurance. And we, you know, the CSA crashed basic, I think, is a it's a good number for us to look at.

Speaker #3: That's that's over 60% better. From where we where went at the acquisition. So we, we are seeing especially we're starting to see that impact the business.

Adam Miller: Yeah. I think between the trucking and the logistics business, you're just under $2 billion between those two.

Adam Miller: Yeah. I think between the trucking and the logistics business, you're just under $2 billion between those two.

Speaker #3: And then and that and th-th-those legacy costs of insurance and claims have weighed on the business. We think that the, the safety performance that's improved dramatically is going to start to impact the business.

Daniel Imbro: Thank you.

Daniel Imbro: Thank you.

Adam Miller: Probably about 1.7, close to that. Now, Andrew, you wanted-

Adam Miller: Probably about 1.7, close to that. Now, Andrew, you wanted-

Andrew Hess: Yeah. Just, I think four areas that I think are opportunities ahead of us on cost. First, the cost of insurance and safety. We've had to go through something of a culture change there in regards to how we manage safety and insurance. The CSA Crash BASIC, I think, is a good number for us to look at. That's over 60% better from where we were at the acquisition. We're starting to see that impact the business, and those legacy costs of insurance and claims have weighed on the business. We think that the safety performance that's improved dramatically is going to start to impact the business. The equipment costs, we're still working through some of our high cost equipment leasing, and so we think as we roll through that equipment, that's going to provide some opportunity.

Andrew Hess: Yeah. Just, I think four areas that I think are opportunities ahead of us on cost. First, the cost of insurance and safety. We've had to go through something of a culture change there in regards to how we manage safety and insurance. The CSA Crash BASIC, I think, is a good number for us to look at. That's over 60% better from where we were at the acquisition. We're starting to see that impact the business, and those legacy costs of insurance and claims have weighed on the business. We think that the safety performance that's improved dramatically is going to start to impact the business. The equipment costs, we're still working through some of our high cost equipment leasing, and so we think as we roll through that equipment, that's going to provide some opportunity.

Speaker #3: the equipment costs, we're still working through some of our high cost equipment leasing. And so we think as we roll through that equipment, that's going to provide some opportunity.

Speaker #3: we've in terms of hiring costs and advertising, we think there's opportunity there as we get better at that to bring that cost down. But obviously, the biggest the biggest opportunity is rate, that, that Adam talked about, where we think there we have more than a normal amount of progress to make on rate.

Speaker #3: So a lot of the work we've done on cost has been on the fixed cost side. on our overhead costs, which has been pretty significant in the last year.

Speaker #3: We think that that's going to be structural and, and sustainable through volume growing in the business.

Speaker #5: A lot of tailwinds emerging. good luck with the remainder of the year, guys.

Speaker #4: All right. Thanks, Dan.

Speaker #1: Your next question comes from Brian Ossenbeck with JPMorgan Chase. Your line is open.

Andrew Hess: In terms of hiring costs and advertising, we think there's opportunity there as we get better at that to bring that cost down. Obviously the biggest opportunity is rate, that Adam talked about, where we think that we have more than a normal amount of progress to make on rate. A lot of the work we've done on cost has been on the fixed cost side, on our overhead costs, which has been pretty significant in the last year. We think that that's going to be structural and sustainable through volume growing in the business.

Andrew Hess: In terms of hiring costs and advertising, we think there's opportunity there as we get better at that to bring that cost down. Obviously the biggest opportunity is rate, that Adam talked about, where we think that we have more than a normal amount of progress to make on rate. A lot of the work we've done on cost has been on the fixed cost side, on our overhead costs, which has been pretty significant in the last year. We think that that's going to be structural and sustainable through volume growing in the business.

Speaker #6: Hey. Thanks for taking the question. maybe just to come back to some of the, the more topical ones here, it'll be discussing here for a while.

Speaker #6: just in terms of the I guess, the, the work you did with, with carriers in the logistics business, you know, down 30%, I think it was, for accepted carriers.

Speaker #6: That's a pretty significant number. So is that something you feel like the rest of the industry has to go through as well? Maybe they have an even higher number of carriers they're going to have to squeeze out of there of their networks?

Speaker #6: And, you know, Adam, we've heard for a long time about hair follicle testing and things of that nature. sounds like that, like you said, there's some momentum.

Daniel Imbro: A lot of tailwinds emerging. Good luck with the remainder of the year, guys.

Daniel Imbro: A lot of tailwinds emerging. Good luck with the remainder of the year, guys.

Speaker #6: But, like, what are the what are the steps we would have to see for that to get a bit more progress and, and when should we expect maybe we could see that start to begin?

Adam Miller: All right. Thanks, Dan.

Adam Miller: All right. Thanks, Dan.

Operator: Your next question comes from Brian Ossenbeck with JPMorgan Chase. Your line is open.

Operator: Your next question comes from Brian Ossenbeck with JPMorgan Chase. Your line is open.

Speaker #6: Thanks.

Speaker #4: well, I look, I, I don't want to speak to what other logistics companies should do or have to do. I think about what we felt like was required of us to ensure that we're putting quality carriers you know, hauling our shipments, hauling our trailers when they're doing power only.

Brian Ossenbeck: Hey, thanks for taking the question. Maybe just to come back to some of the more topical ones here we'll be discussing here for a while. Just in terms of the work you did with carriers in the logistics business, down 30%, I think it was, for accepted carriers. That's a pretty significant number. Is that something you feel like the rest of the industry has to go through as well? Maybe they have an even higher number of carriers they're going to have to squeeze out of their networks. Adam, we've heard for a long time about hair follicle testing and things of that nature. Sounds like, I think you said there's some momentum, but what are the steps we would have to see for that to get a bit more progress? When should we expect maybe we could see that start to begin? Thanks.

Brian Ossenbeck: Hey, thanks for taking the question. Maybe just to come back to some of the more topical ones here we'll be discussing here for a while. Just in terms of the work you did with carriers in the logistics business, down 30%, I think it was, for accepted carriers. That's a pretty significant number. Is that something you feel like the rest of the industry has to go through as well? Maybe they have an even higher number of carriers they're going to have to squeeze out of their networks. Adam, we've heard for a long time about hair follicle testing and things of that nature. Sounds like, I think you said there's some momentum, but what are the steps we would have to see for that to get a bit more progress? When should we expect maybe we could see that start to begin? Thanks.

Speaker #4: We're anticipating that, you know, our customers are going to start being more concerned about this. As, you know, this becomes more of a relevant issue, and I think we're already seeing that in, in, in mainstream media.

Speaker #4: We've already had some discussions with, with some of these shippers about, you know, how we're really monitoring who's hauling their, their freight, who's actually driving the truck.

Speaker #4: And so we felt it was prudent for us to you know, take, take the steps to eliminate capacity that we didn't feel comfortable with.

Adam Miller: Well, look, I don't want to speak to what other logistics companies should do or have to do. I think about what we felt like was required of us to ensure that we're putting quality carriers, hauling our shipments, hauling our trailers when they're doing power only. We're anticipating that our customers are going to start being more concerned about this as this becomes more of a relevant issue, and I think we're already seeing that in mainstream media. We've already had some discussions with some of these shippers about how we're really monitoring who's hauling their freight, who's actually driving the truck. We felt it was prudent for us to take the steps to eliminate capacity that we didn't feel comfortable with. Do I think others will do that? I think some will.

Adam Miller: Well, look, I don't want to speak to what other logistics companies should do or have to do. I think about what we felt like was required of us to ensure that we're putting quality carriers, hauling our shipments, hauling our trailers when they're doing power only. We're anticipating that our customers are going to start being more concerned about this as this becomes more of a relevant issue, and I think we're already seeing that in mainstream media. We've already had some discussions with some of these shippers about how we're really monitoring who's hauling their freight, who's actually driving the truck. We felt it was prudent for us to take the steps to eliminate capacity that we didn't feel comfortable with. Do I think others will do that? I think some will.

Speaker #4: And do I think others will do that? I think some will. I think some will still take the cheapest carrier when they're available. And that may just be based on survival.

Speaker #4: so I, I, I don't I don't know how that'll play out, but I do I do think some of this capacity is just going to have to exit regardless because of some of the, you know, regulatory changes that are being enforced.

Speaker #4: And, and we feel very we're, we're very supportive of this administration and the actions that they're taking. So some logistics company may not have a choice 'cause because the capacity they're leveraging today won't, won't exist.

Speaker #4: But, but we're not waiting for that. We're we want to be proactive. And to, to, to do the right thing. On the hair follicle, Brad, do you want to maybe touch on that?

Speaker #4: No, Brad, you're, you've been inva engaged in that.

Speaker #5: yeah. I was just maybe going to share in terms of what we've seen in our own experience over the last, decade or so as Adam mentioned.

Speaker #5: you know, we, we do both, right? We do the year analysis test because that's what's recognized by the feds. and we do the hair follicle test because that's what works.

Adam Miller: I think some will still take the cheapest carrier when they're available, and that may just be based on survival. I don't know how that'll play out, but I do think some of this capacity is just going to have to exit regardless because of some of the regulatory changes that are being enforced, and we were very supportive of this administration and the actions that they're taking. Some logistics companies may not have a choice because the capacity they're leveraging today won't exist. We're not waiting for that. We want to be proactive and to do the right thing. On the hair follicle, Brad, do you want to maybe touch on that? I know, Brad, you've been engaged in that.

Adam Miller: I think some will still take the cheapest carrier when they're available, and that may just be based on survival. I don't know how that'll play out, but I do think some of this capacity is just going to have to exit regardless because of some of the regulatory changes that are being enforced, and we were very supportive of this administration and the actions that they're taking. Some logistics companies may not have a choice because the capacity they're leveraging today won't exist. We're not waiting for that. We want to be proactive and to do the right thing. On the hair follicle, Brad, do you want to maybe touch on that? I know, Brad, you've been engaged in that.

Speaker #5: so we, we pay incremental costs to do that in addition to that because that is an important part of our hiring process. And what we've found over doing this, you know, thousands, if not tens of thousands of times a year, is that the hair follicle test identifies roughly 14 times the drug users that the year analysis test does.

Speaker #5: So that prevents us from hiring them. It does not prevent them from driving in our industry. 'cause not all carriers do that. And so there is an openness, it seems, in, in Washington to at least engage in this conversation.

Speaker #5: You know, Congress passed this years ago and just Health and Human Services has not gotten around to writing the rules to actually put this into practice.

Brad Stewart: Yeah. I was just maybe going to share in terms of what we've seen in our own experience over the last decade or so, as Adam mentioned. We do both, right? We do the urinalysis test because that's what's recognized by the feds, and we do the hair follicle test because that's what works. We pay incremental cost to do that in addition to that, because that is an important part of our hiring process. What we've found over doing this thousands, if not tens of thousands of times a year, is that the hair follicle test identifies roughly 14 times the drug users that the urinalysis test does. That prevents us from hiring them. It does not prevent them from driving in our industry, because not all carriers do that.

Brad Stewart: Yeah. I was just maybe going to share in terms of what we've seen in our own experience over the last decade or so, as Adam mentioned. We do both, right? We do the urinalysis test because that's what's recognized by the feds, and we do the hair follicle test because that's what works. We pay incremental cost to do that in addition to that, because that is an important part of our hiring process. What we've found over doing this thousands, if not tens of thousands of times a year, is that the hair follicle test identifies roughly 14 times the drug users that the urinalysis test does. That prevents us from hiring them. It does not prevent them from driving in our industry, because not all carriers do that.

Speaker #5: so it, it does seem like there's maybe an openness to engaging in that conversation. We would ask just to allow us to report what, what those of us who are paying for the test, what we are finding.

Speaker #5: Maybe we don't require it of everyone, but if we're going to pay for it, let us report that to the registry 'cause we do think that is important.

Speaker #5: For safety for the motoring public.

Speaker #6: Okay. Thanks very much. Appreciate it.

Speaker #5: Thanks, Brian.

Speaker #1: Your next question comes from Ari Rossa with Citigroup. Your line is open.

Speaker #4: Hey, good afternoon. so Adam, I, I wanted to ask a, a bit of a strategic question. y-you've shed a few thousand tractors since the USX acquisition.

Brad Stewart: There is an openness, it seems, in Washington to at least engage in this conversation. Congress passed this years ago, and just the Department of Health and Human Services has not gotten around to writing the rules to actually put this into practice. It does seem like there's maybe an openness to engaging in that conversation. We would ask just to allow us to report what those of us who are paying for the test, what we are finding. Maybe don't require it of everyone, but if we're going to pay for it, let us report that to the registry, because we do think that is important for safety for the motoring public.

Brad Stewart: There is an openness, it seems, in Washington to at least engage in this conversation. Congress passed this years ago, and just the Department of Health and Human Services has not gotten around to writing the rules to actually put this into practice. It does seem like there's maybe an openness to engaging in that conversation. We would ask just to allow us to report what those of us who are paying for the test, what we are finding. Maybe don't require it of everyone, but if we're going to pay for it, let us report that to the registry, because we do think that is important for safety for the motoring public.

Speaker #4: it makes sense to us, of course, why that decision would have been desirable in the downturn when obviously, it was difficult to find loads.

Speaker #4: But now, as we think about the upcycle, is there any dimension in which that holds back the ability to get the same level of upside that you might have seen if you had kind of retained those tractors?

Speaker #4: I'm just hoping you can kind of, discuss that decision or maybe defend that decision a bit. give us a little bit of color on, like, why that was the right decision to shed those tractors.

Brian Ossenbeck: Okay. Thanks very much. Appreciate it.

Brian Ossenbeck: Okay. Thanks very much. Appreciate it.

Speaker #4: And, and also put it in the context of, on an absolute basis, obviously, we're looking at a larger tractor count now than what you had in kind of the prior cycle.

Brad Stewart: Thanks. Bye.

Brad Stewart: Thanks. Brian.

Operator: Your next question comes from Ariel Rosa with Citigroup. Your line is open.

Operator: Your next question comes from Ari Rosa with Citigroup. Your line is open.

Speaker #4: So kind of how do those dynamics play out against each other as we think about what the upside could look like? Thanks. Yeah. Well, well, what, what I'd say, Ari, is, you know, we don't go into an acquisition with the in-intentionally trying to shrink, you know, the, the capacity.

Ariel Rosa: Hey, good afternoon. Adam, I wanted to ask a bit of a strategic question. You've shed a few thousand tractors since the U.S. Xpress acquisition. It makes sense to us, of course, why that decision would have been desirable in the downturn when obviously it was difficult to find loads. Now as we think about the upcycle, is there any dimension in which that holds back the ability to get the same level of upside that you might have seen if you had kind of retained those tractors? I'm just hoping you can kind of discuss that decision or maybe defend that decision a bit.

Ari Rosa: Hey, good afternoon. Adam, I wanted to ask a bit of a strategic question. You've shed a few thousand tractors since the U.S. Xpress acquisition. It makes sense to us, of course, why that decision would have been desirable in the downturn when obviously it was difficult to find loads. Now as we think about the upcycle, is there any dimension in which that holds back the ability to get the same level of upside that you might have seen if you had kind of retained those tractors? I'm just hoping you can kind of discuss that decision or maybe defend that decision a bit.

Speaker #4: I think as we go in and review the freight network and US Express, 40% of their loads were coming from brokers, which obviously, you're not going to be successful if that's where, you know, who you're relying on for your freight.

Speaker #4: So we had to go in and adjust their network to find, you know, direct, you know, relationships, loads that can support their network. And so in doing so, you had to turn some of the business they were very dependent on.

Ariel Rosa: Give us a little bit of color on why that was the right decision to shed those tractors and also put it in the context of, on an absolute basis, obviously, we're looking at a larger tractor count now than what you had in kind of the prior cycle. How do those dynamics play out against each other as we think about what the upside could look like? Thanks.

Ari Rosa: Give us a little bit of color on why that was the right decision to shed those tractors and also put it in the context of, on an absolute basis, obviously, we're looking at a larger tractor count now than what you had in kind of the prior cycle. How do those dynamics play out against each other as we think about what the upside could look like? Thanks.

Speaker #4: Okay? And at the same time, we're ensuring that we have good quality safe drivers. And so we did change the standards at the hiring standards at US Express very early on in the acquisition to, to ensure that we had good quality drivers to, to drive down the crash basics, to improve the safety, to improve productivity, some of the things that, that Andrew has mentioned.

Adam Miller: Yeah. Well, what I'd say, Ari, is we don't go into an acquisition with intentionally trying to shrink the capacity. I think as we go in and review the freight network and U.S. Xpress, 40% of their loads were coming from brokers, which obviously you're not going to be successful if that's who you're relying on for your freight. We had to go in and adjust their network to find direct relationships, loads that can support their network. In doing so, you had to churn some of the business they were very dependent on. Okay? At the same time, we're ensuring that we have good quality, safe drivers.

Adam Miller: Yeah. Well, what I'd say, Ari, is we don't go into an acquisition with intentionally trying to shrink the capacity. I think as we go in and review the freight network and U.S. Xpress, 40% of their loads were coming from brokers, which obviously you're not going to be successful if that's who you're relying on for your freight. We had to go in and adjust their network to find direct relationships, loads that can support their network. In doing so, you had to churn some of the business they were very dependent on. Okay? At the same time, we're ensuring that we have good quality, safe drivers.

Speaker #4: And so when you do that, you're kind of, you know, you're limiting the class sizes that you're going to have, and then you're changing your freight network.

Speaker #4: When you have that kind of churn, you, you'll naturally end up or you have the risk of ending up with more open trucks than you'd feel comfortable carrying as overhead.

Speaker #4: And so as you went through that, to, to get the business on a better foundation and position them to be far more healthy long-term, you end up with some capacity that you just need to sell and exit and remove from your from your overhead.

Speaker #4: And so that was the process that we went through at US Express. Now, we feel stable today. And we and we're making the same investments there on the recruiting front and, and now leveraging the academies that we have at Swift and, and some at Knight to be able to, to train like our other brands do.

Adam Miller: We did change the hiring standards at U.S. Xpress very early on in the acquisition to ensure that we had good quality drivers to drive down the crash BASICs, to improve the safety, to improve productivity, some of the things that Andrew had mentioned. When you do that, you're limiting the class sizes that you're going to have, and then you're changing your freight network. When you have that kind of churn, you'll naturally end up, or you have the risk of ending up with more open trucks than you'd feel comfortable carrying as overhead. As you went through that to get the business on a better foundation and position them to be far more healthy long term, you end up with some capacity that you just need to sell and exit and remove from your overhead.

Adam Miller: We did change the hiring standards at U.S. Xpress very early on in the acquisition to ensure that we had good quality drivers to drive down the crash BASICs, to improve the safety, to improve productivity, some of the things that Andrew had mentioned. When you do that, you're limiting the class sizes that you're going to have, and then you're changing your freight network. When you have that kind of churn, you'll naturally end up, or you have the risk of ending up with more open trucks than you'd feel comfortable carrying as overhead. As you went through that to get the business on a better foundation and position them to be far more healthy long term, you end up with some capacity that you just need to sell and exit and remove from your overhead.

Speaker #4: And obviously, as you have a better freight market, they'll be able to make some, some, progress in repairing their network and in, in putting themselves in a position to have sustainable rates to, to, to grow the business back.

Speaker #4: And hey, if we, we, we'd love to be able to seat more trucks and, and grow trucks, but today, we have y-you know, we still have you know, some empty trucks that we want to fill before we invest in, in additional capital.

Speaker #4: but, but hey, we, we we're, we're in a in a much better spot today than if we would have just tried to hang on to all the trucks from the original acquisition and keep the poor freight and not adjust the, the standards that, that we hire for in terms of drivers.

Adam Miller: That was the process that we went through at U.S. Xpress. Now we feel stable today, and we're making the same investments there on the recruiting front and now leveraging the academies that we have at Swift and some at Knight to be able to train like our other brands do. Obviously, as you have a better freight market, they'll be able to make some progress in repairing their network and putting themselves in a position to have sustainable rates to grow the business back. Hey, we'd love to be able to seat more trucks and grow trucks. Today we still have some empty trucks that we want to fill before we invest in additional capital.

Adam Miller: That was the process that we went through at U.S. Xpress. Now we feel stable today, and we're making the same investments there on the recruiting front and now leveraging the academies that we have at Swift and some at Knight to be able to train like our other brands do. Obviously, as you have a better freight market, they'll be able to make some progress in repairing their network and putting themselves in a position to have sustainable rates to grow the business back. Hey, we'd love to be able to seat more trucks and grow trucks. Today we still have some empty trucks that we want to fill before we invest in additional capital.

Speaker #4: So I still feel it was the right move. w-we feel good about how we're positioned and, expect to make some, some real progress on, on margin and drive accretion to the business.

Speaker #6: And I'm just going to add a little bit of context. Ari, this is Brad. I know the up income right now coming out of the long and, and Ari just downcycled doesn't show it, but we are running more miles than we were prior to the last upcycle.

Speaker #6: So we've got we've got more of a basis there to work with going into this in this new cycle.

Speaker #4: Yeah. So sort of pre-appreciate the, the question. Ari, I think that now concludes our call. I think we're, we're beyond the time here. so appreciate all, all the questions and interest from everyone.

Adam Miller: Hey, we're in a much better spot today than if we would have just tried to hang on to all the trucks from the original acquisition and keep the poor freight, and not adjust the standards that we hire for in terms of drivers. I still feel it was the right move. We feel good about how we're positioned and expect to make some real progress on margin and drive accretion to the business.

Adam Miller: Hey, we're in a much better spot today than if we would have just tried to hang on to all the trucks from the original acquisition and keep the poor freight, and not adjust the standards that we hire for in terms of drivers. I still feel it was the right move. We feel good about how we're positioned and expect to make some real progress on margin and drive accretion to the business.

Speaker #4: and again, if we weren't able to get to your question, you can call 602-606-6349, and we'll try to return your call as quick as possible.

Speaker #4: Thank you, everyone.

Brad Stewart: I'm just going to add a little bit of context. Ari, this is Brad. I know the operating income right now coming out of the long and arduous down cycle doesn't show it, but we are running more miles than we were prior to the last upcycle. We've got more of a basis there to work with going into this new cycle.

Brad Stewart: I'm just going to add a little bit of context. Ari, this is Brad. I know the operating income right now coming out of the long and arduous down cycle doesn't show it, but we are running more miles than we were prior to the last upcycle. We've got more of a basis there to work with going into this new cycle.

Adam Miller: Yeah. Appreciate the question, Ari. I think that now concludes our call. I think we're beyond the time here. Appreciate all the questions and interest from everyone. Again, if we weren't able to get to your question, you can call 602-606-6349, and we'll try to return your call as quick as possible. Thank you, everyone.

Adam Miller: Yeah. Appreciate the question, Ari. I think that now concludes our call. I think we're beyond the time here. Appreciate all the questions and interest from everyone. Again, if we weren't able to get to your question, you can call 602-606-6349, and we'll try to return your call as quick as possible. Thank you, everyone.

Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.

Operator: This concludes today's conference call. Thank you for joining. You may now disconnect.

Operator: [Break]