Knight-Swift Transportation Holdings Inc. (NYSE:KNX) Q3 2023 Earnings Call Transcript

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To get to the long-term profitability, that — dollar of accretion, we’re going to need both revenue and cost to support that. But I think that’s just a matter of time before we have an opportunity to be able do what we need to do on the revenue front to really close the gap from a rate perspective between U.S. Xpress and our other brands.

David Jackson: Yeah. Maybe, Scott, I’ll just add. The logistics business is in a good place, it’s contributing earnings. The dedicated business is contributing earnings. The subsidiary total is contributing some earnings. And the wildcard is that, over-the-road component and it’s made dramatic progress. And some of the things that we outlined on that slide, those are things that we have experienced that seen driver turnover go down, we have experienced seeing revenue on a per-truck basis improve and we have experienced and seen a P&L accountability on the cost side drive to lower cost to improve margin. And so we — they are not very far. As you could tell by the earnings for this quarter, they were not nearly the drag that frankly we would have expected and this early on.

And so the idea of getting to breakeven without any help from the market that is definitely within reach. And so — of course, that’s not the goal. But to take them from the state, as Adam alluded to, the state they were in coming out of the second quarter and into this. This has been dramatic and faster than we would have expected.

Scott Group: Thank you.

David Jackson: Thanks, Scott.

Operator: Your next question comes from the line of Jack Atkins from JTK [Sic] [Stephens]. Your line is open.

Jack Atkins: Okay, great. Thanks very much. Jack Atkins from Stephens. But I guess, Dave and Adam, I’d love to maybe ask you about the LTL business for a moment. You said it exceeded your expectations in the quarter. There has been further market disruption in October. Just sort of curious, how did operating ratio trend in that business relative to normal seasonality? Did you incur any additional expenses as you were trying to sort of onboard some of the market share that was probably moving around? And I guess just would be curious, the opportunity to maybe grab some of the real estate that’s up for auction here with the Yellow estate over the next couple of weeks. I know it’s a lot of questions in one, Adam. So if you could excuse, just kind of [indiscernible] I would be curious if you could expand on that for a minute.

David Jackson: Yes. Adam, the enforcer might shut this down before we get started with all those questions.

Jack Atkins: That’s okay.

David Jackson: But it is not typical at least in the experience with the two LTL franchises that we own to see that sequential improvement from the second into a third. But we did, it was slight, but we saw slight improvement sequentially from second to third quarter. In terms of bearing an additional cost burden, I don’t know that was so much the issue. I think in the LTL space, as our customers had found themselves with some immediate need, our LTL group just jumped in to get those things covered. It’s more of handling those shipments and preserving the service than it is immediately talking about price. It works a little differently in the truckload space, when there is projects or things that are out of the norm. And so, some of that volume that we’ve picked up, some of that volume that I think is in the process of being disbursed long-term throughout the LTL providers, that will be addressed in these bids that have already started and that will continue to happen to make sure that we price it appropriately as you kind of know-how it fits the network.

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