Daseke, Inc.

Q3 2021 Earnings Conference Call

10/22/2021

spk_0: good morning thank you for participating in cities conference call to discuss dasti financial results for the second quarter ended june thirty twenty twenty one with us today are jonathan sept go ceo and board member jason bay d v p n t s o john michelle bp of treasury an investor relations and shop sirianni or chairman after are prepared remarks the management team will take your question as a reminder you may now download a pdf of the presentation slides that will accompany the remarks made on cities conference call as indicated in a press release sweet issued earlier today you may access the slides in the investor relations section of our website before we go further i would like to turn to call over to jean michel the be a treasury and investor relations who will read the company safe harbor statesman within the meaning of the private securities litigation reform act of ninety ninety five now providing for cautious regarding forward looking speak
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spk_2: western side for a you are safe harbor not jeff
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spk_2: performance strategists prospects of desk current estimates projects are subject to risk these could cause actual results to differ materially more expectations i encourage you to read or found with the secure for discussion thread that can affect or at the not place undue reliance for the we undertake have to revise our for which famous reflect occurred after today whether as a result future events rather i've accepted may be required under of with during the call their off discussion sometimes not for the to accept the kind words gap the public adjust the adjusted operate
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spk_2: reconciliation for these not get better service directly compare with get measures are included the appendix the this page a press release sport
spk_7: both of which which are available the desert have the desk website that we defeated that death the terms of the structure of holiday will start a turn the covert that is or chirp chirp sirianni will provide some common of the of enough support of job of coat of death is perfect chief executive officer officer after which chart the law review our operations the progress we're are making as the excuse
spk_8: parts jason will they provide a pay for view the quarter at which point jar the will wrap up or remarks you the comments before we have like requests but that of in the pullover to miss tough cereal thank john and good morning everyone
spk_7: this morning we announce that desi board of directors is with jonathan to the ceo role on a permanent basis
spk_8: the board has spent the last several months debunking a comprehensive executive search process interviewed embedding numerous prospects in order to identify the best the candidate best suited lead or organization
spk_7: the the next phase of it's about him after taking the appropriate time to evaluate the needs of our organization
spk_9: we concluded that you're nothing was the right person to lead us forward with a priority of driving for an operational improvements across the organization in executing against or growth strategy
spk_8: as you know jonathan has been hearing the interim title since the beginning of the year
spk_7: he has more than that the expectations since due to be stepping into the role
spk_8: in fact the board was able to undertake a much more paste intelligent search because of his success is jonathan and arrested executive team were cheating
spk_7: ultimately it did become clear through the several months process
spk_8: the jonathan carried not only the necessary complementary skillset the best of minds with our strategic direction and priorities
spk_7: but also the added benefit of maintaining continuity these factors which combined with his native insight into our business operations will be a significant value as we continue to execute er operational transformation
spk_8: johnson has been a director it as the since we began trading publicly in early he said he and he has a depth and breadth of knowledge around our business operations in strategy that is unparalleled
spk_7: he brings extensive professional experience in capital markets
spk_8: yet in equity financing and direct investing for those of you that are new or story
spk_7: jonathan also served as chairman of a special operating committee the played a critical role in constructing and overseen the tactical pivot that allows for operational transformation in the improvements are operating in financial results
spk_8: additionally as here the committee he helped lead the resetting of our strategic and tactical priorities that the company committed to in executed against and twenty twenty which took place in the middle of a global pandemic that interview significant volatility into the broader economy
spk_7: there's the emerged from the transformation in the pandemic as a stronger entity that is much better suited to achieve sustainable long term growth in jonathan demonstrated his leadership qualities plane and very meaningful role in working with our team you bring that to for issue more recently his experience and expertise were leveraged as a company successfully executed refinancing transaction as part of our larger balance sheet restructuring efforts a key strategic when for us earlier this year
spk_8: jonathan will continue to be supported by a very small bench of town of across our executive leadership team as well as by the numerous industry veterans we haven't eaten das is operating companies
spk_9: it's important to reiterate it as we continue forward and or path
spk_10: johnson's form of appointment to go to the rule is not indicative of a change in our key priorities in overall strategic direction and a we're still completing additional stages of are operational transformation we have made significant progress as or company now begins to look towards a new phase of a free to grow or board firmly believe that jonathan is the right leader to complete ass is continued transformation it becoming a truly work fast company with an altering the call over the jonathan good morning everyone but the outside and tumbled i am to accept the position as permanency of this great organization we're the largest flatbed specialized transportation and were just exclusive cup company in north america we may tremendous strides in our transformation or last two years we still are significantly more opportunity to take advantage of for cheating a level of operation like someone's our team believes is possible for this organization we've also begun to identify plan initiative that will drive walter profitable growth and i believe our approach to accomplish in his objectives yourself a shot highlighted we have an incredibly talented to her death and together we have a unique opportunity to leverage our platform to build a larger more efficient and more profitable business that will drive is significant die you fall where stakeholders i'm looking forward to leading a theme is continuing to develop all the emerging leaders we have across the organization with that but please turn slide for a while and a few of the know will take away from the first quarter
spk_2: das be delivered very strong operational financial performance in you to say numerous poorly records from an eighty percent adjusted operating ratio to adjusted earnings of forty two cents per diluted share
spk_11: it's been a lot of time speaking with you all that uniqueness of our business model which offers a diversified portfolio the markets and customers and serves as a proxy for the performance of his country's industrial standing
spk_2: what a portfolio effect across our business or financially screwed up trades volatility the true force multiplier shows were markets are experiencing more normalized the man like be seen as for twenty twenty one our business model which complied combined the fleet of company on trucks with our network of or operators
spk_10: what's that a position to capture meaningful benefits by strategically concentrating the deployment of our assets resources into the course of markets or capabilities are most valued at a competitive landscape is most favorable with a close to the second quarter of twenty twenty one we offer up for your very compelling case study in the value proposition of our model which provides for solid performance cross market cycles on the one hand you have the tortilla twenty twenty a daughter the global pandemic where we demonstrated solid absolute and relative performance a we're from an aggressive cause control measured focus more intensely an operational improvement efforts and reposition our assets away from softer and markets into a market there were less affected by the prevailing economic struggles of the time such as women are security cargo all of which enabled us to post sequentially improve financial results are most industries were struggling in contrast with twenty twenty twenty twenty one has provided environment which many our markets have dramatically rebuilding resulting in a return to stronger freight rates and higher margins and we continue to believe we have again for extremely well because to complement of are balanced and market exposure and depth of operational sophistication it's very easy for companies to lose focus on execution and service when times are good but our team aggressively pursued this environment with the intention of our performance despite the increase rate environment neither a customer service nor operational keep your eyes were compromised our team rally to leverage on doing business approved in the states combined with and offering rain by me with manufacturing and construction jason vertical when the way which collectively resulted in record performance for shareholders it turned your specific results for the quarter we drove revenue for and four million which was up fifteen percent year over year and adjusted ebitda over sixty nine million an increase of fifty eight percent versus two to twenty twenty as we said in the past we are committed to improvements in our business the driving earnings portion of the the da question and successor is evident in are operating income performance i think it's important to note that we've seen strong more to drop off before most notably and twenty eighteen when there was a similarly strong environment but historically during these times that he had struggled to convert the strong topple and performance in the profitable returns as discussed earlier though with our emphasis on decisive execution this tournament only underscores the transformational impact of the operational and immigration issues we have completed or last two years or operate our operating ratio results which is eighty eight point eight percent or eighty eight point zero percent on an adjusted basis sure that we were able to engage the environment and operationally efficient manner or operating income of forty five point three million every casual thirty two point three million demonstrated our ability to deliver strong coffee profits to or stockholders and after completing a refinancing transaction earlier this year
spk_11: the closing quarterly leverage to roughly two point four times or balance sheet remains a point of strength and will afford us with to the flexibility to support a long term growth objectives
spk_10: before trying to call over jason to talk to our financial performance at of more granular level our take a brief moment to address the state of our markets our business performance in the first half the years been supported by the improving economic environment across the brought in brought industrial economy and strong demand combined with high capacity as led to a healthy recovering rated by or business serves as a look through specific niches with an industrial economy more broadly all markets the tend to exhibit downside correlation and are declining aggregate demand like we saw during the pandemic last year however a contrast to many markets served by the broader freight and transportation industry many which are starting to exhibit signs of my a slowdown
spk_12: we believe our open deck segment is any material a different of economic of cycle demand alec remains positive and even improving and capacity in the market remains tight
spk_2: oh you're certainly encouraged by the reflation were and markets it has been are demonstrated ability to effectively execute er strategy entities economic feel ones that is provided the real value for stockholders to that end i would hope that this quarter's wide margin records across the board servers a comforting benchmark from which the gauge the fundamental change this company is undertaken as was the death of operating talent delighted his performance and the current health or and markets we're easier for your outlook for both revenues and adjusted ebitda was chasing will get further detail on later during the school with that i went out on the call it would adjacent a to of your second quarter financial performance great the jonathan in the morning everyone if you please try a like five will have a high or of you are consolidated results but second quarter
spk_12: a strong or results are a strong testament that included executed twin improving market backdrop
spk_2: his quarter we continue to see stronger with in construction and they've actually really particles which has been growing momentum since the beginning of the year this is a contributing factor to recovery free environment particularly in a flat that business
spk_12: as long as i mentioned in second quarter gaggle of or revenues for her four million a hundred fifty percent compared to revenues or three out to join point seven million the master second quarter
spk_2: on this why have we done as we done last quarters we provide a console a view of our performance inclusive of the of the a business on the left side with a snapshot pro forma for the the best for this business on the way firefly as most of you know with that the db that this last year and we will the financial details in the people on the right him of the flight provides from more relevant out about this comparison and reflect on how many of the things lot of business and more any decisions
spk_4: excluding a leader or to fully revenues were up by more than eighteen percent earlier
spk_12: we go to law school within our revenue performance had begun to pull more closely aligned with where we would have expected to be absent the pandemic and essentially range from across the second quarter as an athletic improving industrial and market
spk_2: excluded of us that he delivered adjusted net income of thirty point two million or forty two cents per diluted share in the quarter a guy quarterly record against you because nine point four million grew by more than fifty one percent compared to the second quarter twenty twenty excluding a pita due to continue in practice moment and associated with our business improvement plan called with improved free weights and volumes in the flap exactly at a combined operating segment level or consolidated a jockey the got results of seventy four point six million or nearly forty percent versus result of fifty three point four million in last year's prepared a quarter did he began growth is particularly notable as it has won in overtime the normal edition of the were unusually high margins associate with our wind energy project revenues in the year ago period i'd also like to highlight the while many of the into in the industry have cited concerns over driver recruitment retention we're please report that are driver turnover of insignificant significantly below industry averages this phenomenon highlights the excellent work our team had done and each of our off those and attractive work at nation for driving professionals where we focus on getting the miles game and faith and game and home safely and on time we will continue to monitor the situation closely but are very encouraged by the overall performance throughout organization we all really focused on feature were driving professionals finally and i'll take them all to highlight the progress we've made on reducing the corporate overhead burden on the operating companies as evidenced by a forty four percent reduction the expense category this was achieved reductions in various corporate expenses augmented by benefits from are definitely services and insurance as he's out for me expectations with that i'd like to walk into a detailed your result a job with the level on flight over six we present are specializing in results however for to maintain comparability and consistency with our business going forward we also present especially singers result exclusive of the effects of the back of your business which are displayed on slight versa specialized any relatives excluding of the there were two hundred twenty six point one million of nearly seven percent versus the prior year driven by strong operational execution that also a lower fleet size and the mix shift away from the aforementioned when every project revenues from the year ago period or solid execution and the impact of operational improvements and integrations was further evidence by the improvement to the specialize segment the just to keep a dog and a all margins which were up twenty one point six percent and two hundred thirty basis points respectively vs last your second quarter this is particularly notable given the marginal increase to raise as ring for my for the segment of three dollars and twelve cents grew by only two point three percent compared to two dollars and five cents in the second quarter twenty twenty again this year we're waiting crease appears pedestrian but is attributable to the i usually strong requirements stemming from
spk_12: the toby impacted supply chain in this segment back and twenty twenty
spk_2: it's clear that are operational work and fleet bright side sizing which was done to drive enhanced utilization of our asset and better optimize our business has made a significant impact in that segment as evidenced by the revenue protract a result of sixty six thousand seven hundred vs fifty nine thousand and four hundred in last your second quarter and again this was despite the next shift away from the wind energy but that that was unusually strong in the year ago period lastly the thing with offered a ratio improved three hundred basis points to eighty seven point one percent with the adjusted operational community a six point five percent on flannery we teach our flatbed segment result for the quarter we generally wipe the revenue in the second quarter of a hundred eight point nine million which increased thirty two percent from on i'm thirty seven point two million and the prior your quarter as of the know if we are able to capture for the upswing in the man's a coffin number of industrial and markets served by our flat a business where does improving demand backdrop combined with our business improvement initiative has translated into profitable results flapper demand across the broader industrial markets continue to improve with each sequential order and we're happy to see a rebound to near pre pandemic levels this phenomenon was a key contributing factor to robot free environment in the quarter in which we were able to rely on nearly thirty nine percent year over year increase in our a for mile this was additionally reflected in revenue of get fifty five thousand five hundred per tractor metric which grew by more than thirty percent from forty thousand one hundred
spk_12: we operations captured does improving market rates
spk_2: the segment the just leave it all result of thirty two million grew by nearly fifty seven percent compared to result of twenty point four million about your second quarter a stronger a job that he bit ah performance help the segment security but ah margin growth of two hundred eighty base points explaining to seventeen point seven percent finally the segment offered you a show improved four hundred and ninety basis points to eighty seven point three percent with your job the to ratio committed a six point eight percent for you to fly nine of the economic speak about our cash flow performance and provide of the door for your outlook through the second quarter deck is generated fifty eight point one million in cash from operating activities
spk_12: just got that with eighteen million and the political class proceeds from the tale of equipment twenty six point six million this resulted in free cash flow generation of sixty six point seven million your today
spk_2: catholics finance with their capital he says had totaled twenty eight point two million bringing that after financing of thirty seven point five million earlier this year we're now the dark is board of directors had authorized to share repurchase program about the three million common shares in conjunction with the sure whether cooperation agreement enter into at the conclusion of twenty twenty i would like to share that at this point in time we have successfully executed upon our commitment and have completed the three million show report does the total aggregate price paid for the three million shares with twenty point four million or six dollars and seventy nine percent average price for sure having completed this repurchase activity in accordance with our sure whether cooperation agreement
spk_12: as always we will continue to evaluate be available options for capital allocation and will pursue the options that we believe will drive degraded them out shareholder value creation
spk_4: on the right hand side of flying over nine your a snapshot of or of the album for the year
spk_2: although we do you anticipate continued industry wide pass rushers in the form of driver recruitment retention equipment acquisition as well as insurance and other general expenses into the foreseeable future given the strong revenues and a job to keep it dog performance halfway through the year the ongoing realization or business improvement initiative and are positive view towards market fundamentals are twenty twenty one we are raising your guided outlook for both metrics we now expect revenues to raise between one point five and one point six billion
spk_10: of nearly seven percent at the midpoint from our initial guidance range of one point four to one point five billion additionally we now expect to generally between two hundred and two hundred and ten million illegal for the big dog which represents more than a twenty percent increase at the midpoint relatives or prior a lot of one sixty five to one so by billion to be clear the aforementioned talk headwinds are considered in missouri dollar further we are not increasing our twenty when one catholics i'll look at this time however given the strengthen the youth equipment market we would respect to come in several million dollar lower previous night comics guide so that that combined with the substantially increase in a job that you dial look that just referenced well drive meaningful improvements to our free cash flow generation for the year a tray we hope to continue to build upon so without on the on call back over to and chopper few final boss dog jason all computer repair the board supplied ten or we provide a snapshot orders from priorities are you hurt us mission many of these points over the last week years over the coming quarters as we begin to share for planning their execution we will be at a better position to provide you all with more specific some disability around our continued geiger that initiatives that said that we now take a few minutes to provide a slightly more for england's and or key priorities for next several quarters first we'll continue to is to show as the plot we believe technology is one of our biggest opportunities for proof profitability with the old my goal of using differentiated technology and en mass scale to position or with a sustainable competitive advantage longer term broader technology enabled with across the organization will continue to be a strategic mainstay in the near term however or initial focus will be on standardizing or back off systems scaling up a centralized the repository a leverage is best in class analytic solutions for transform the best amounts for data will receive across or platforms and actionable initiatives and standardizing rtms all free across are opposed to ensure coordination continuity and confidence in created with these initial systems enhancements as wish or law call we will continue to seek efficiency through continued rationalization or eleven operating companies streamlining back in middle dysfunctions across the organization or with while creating church service centers to drive additional efficiencies i'd be remiss not the point out over the preservation of the for office driver and customer facing functions along with brand continuity will be sacrosanct earnings integrations the pedigree of october that we have assembled as was their drivers and our customers are the lifeblood of our business preserving their standing in the market their ability to leverage their will heal relationships with customers and longstanding coach
spk_11: your reputation with the driver community is something we believe makes us and them special
spk_10: these initiatives or oh and for the to provide environment with the people the systems and processes the three to function as a single network were consolidated fleet winning the benefits of a larger fleet while preserving the benefits of the regional carrier this will allow us to finally realize efficiencies in the back admit office will provide for for office synergies the will drive better toppling through efforts verses network optimization and coordinated strategic sales but finally our team with a usable data analytics and insights to make real time refinements to operations next up like to spend some time discussing our focus on growth one of the most potentially know where to take a ways from or call a trippy the first bullet of this section as we think about growth perspective we will approach strategic decisions with the objective a building strategically road foot foothold bike and market first is simply looking to ignore ugly a mass open deck scale well today we serve many of the and market verticals that will ultimately be targeting our emphasis will be on building sustainable industry leading positions in each of these niche markets additionally we will be looking to build capabilities and skill and into she verticals were trailer configuration for both different that are open decks people examples of these markets will be formal like sciences which would evolve extremely rare today limited fleet of reefers especially chemicals which would involve adding to our my sweet of thinkers and interesting fact to those actually familiar with her and market competition today more than ten percent of all free food by dusky yorkers is comprised of trailer types that would not be capable of handling the traditional array of open decker flatbed cargo examples of such free includes high security cargo industrial waste commercial explosive drainage intermodal and munitions fundamentally we're looking for in markets were in among other things we have the ability to select and hybrid our customers provide critical skill with capacity provide highly differentiated and were highly specialized capabilities fleet strategies or know how these markets we have high barrier century with the principal segmentation and will also provide diversification characteristics to support further to further support and all weather not poorly to pull fully approach all of which we believe will come with the added benefit of hire more months this will be a new ones shift away from a trailer subjects such a strategy to one the targets favorable industrial inbox and be clear while this isn't necessarily a change or overarching strategy it's an opportunity we are taking to reset how we think about driving growth and improving profitability for shoulders only now with a much more targeted focus and intensity that underpins or should teach it and tactical priorities now that would respect to strategic growth will look for opportunities that position as to develop or sustain and industry leading foothold in the and market verticals we have identified these maitre d's maybe traditional talk and acquisitions of competitors were vertical integration opportunities that provide expanded capabilities for the benefit of our customers we're also excited about a number of highly impactful organic growth opportunities in front of us as well for continue to helps a third party brokerage platform or dedicated tweet offering to leveraging the relationships in their from our customers to build out capabilities the service new in markets our team is working hard to prioritize these opportunities for eating go to market playbooks the best delineate approached execution and this brings us to the final strategic priority to execute decisively as most of you know does he was for to the acquisition of a series of operating company when i look at the ah crew talented as he has around the table it clear to me what differentiates us from our peers we don't have regional offs or general managers running or operating subsidiaries we're ceos tried and true both a generational trucking executives running rockets these are teams that have been through cycles they are proactive operators and without a bunch of oversight without a bunch of financing from corporate they've already made decisions and pull the necessary levers to optimize their respective operate models given the prevailing winds of the time for our executive team it's about providing these are close with the right framework within which to optimize your business to ensure they are collectively performing as a unified network providing right systems to facilitate access to insightful and highly data and providing the right strategic direction to help our teams understand what we are all striving for your a dusty we provide a lot of concerts for this next point over the last few quarters given our diverse by the does show in more to composition is was are blended asif have enough at like capabilities
spk_2: we are able to approach distinct market environments opportunistically repositioning assets thighs the best use great opportunities and managing our free composition are leveraging our ability to recruit and retain drivers by balancing acid have enough sunlight strategies
spk_11: finally black bullet maintaining open a frequent communication with our customers the reason we're all here or customers
spk_10: that is fortunate to work with some of the best shippers in the industry and in times like this we prioritize or longstanding relationship over maximizing rate because we know that we will inevitably be on the other side of the table one day but most importantly because we value the partnerships we have with our customers some of which is it a place for several decades
spk_11: going forward we will look to be much more engaging with our customers looking for ways to provide additional services including additional pre transport approach transfer capabilities of needed
spk_0: looking for ways to provide additional capacity for dedicated private suite offerings looking for ways to provide greater leverage and or supply chains better integrated technology solutions are strategically located terminals yards looking for ways broadly to serve as our customers better this concludes are prepared remarks for today's call but before we get your questions i'd like to quickly highly a shit are higher expectations to host investor called a and utterly in the fall given all the heavy lifting and work i just outlined regarding on your top priorities
spk_13: we like to get through some of that word before we outline or three to five your goals and a deeper dive with it
spk_2: so we're shifting so we're going to shift the timing of better than to the first half of twenty twenty two we won't be event and york city and hopefully the shift and timing laos to see many of a person as opposed to doing a bushel event
spk_13: we're looking forward to it and executing against near factor priorities over the second half of twenty twenty one so we we like to live in the queue a session know things you at this time i would like to remind everyone in order to ask a question press tie them the number one on your cell phone keypad and can that it's char than the number one on your telephone keep keypad who pass for just a moment to compile a human in boston
spk_2: never first question how my some the line of jason settle with callen your line is helping may thank you operator morning everyone jonathan congratulations by the way wanted to to dig in and in talk a little bit about sodas twenty twenty two as we look out there is there's an instructor bill and has some bipartisan support it looks like it's getting more favorable oppressively sonic getting done did you talk a little bit about
spk_12: how that could impact your results and twenty twenty two ah i'm assuming it's going to be mostly on the flip side
spk_2: and maybe what we should expect in terms of to get past would see this year when we should expect any impact from
spk_12: the adjacent a good lesson so i'm having because you're watching this pretty closely
spk_2: you know if it's a ball even over the last six months yourself with regard to the side and the complexity of that bill
spk_13: there's no question your point is valid there's no question that our and market exposure would would definitely stand to benefit from clean type of infrastructure built it comes to fruition
spk_10: given the the absence of funky build on his car hard to project exactly what that might mean by because the up for a specifically by the gun safe to say that
spk_11: you know we're hoping to see and the said that he does come to fruition would definitely help a long day was gonna have a pretty constrain supply to me and environment which gives us the opportunity to try her position ourselves in the best way possible for our customers and and our shareholders and sort of something we will definitely be watching closely as because we're picking together later this year i would really depend on what the with the raftery looks like but i feel right and an impasse said in a lot of
spk_10: uncertainty thereby rest assured that given our and market high and it would definitely be be a good thing for us
spk_2: okay and do to get has more neutral an impact in the flapper division with the special edition
spk_6: get
spk_10: the ideology has read it can be flat that get we we only if we will yourself like up with new or with new iran is one trillion dollar bill would look like him or he would address traditional infrastructure but the united states of twenty seven hundred page go to this came out last night so like we're going away to look what was her versions of that for if you know in the early he got to from some issues with with with the the couple of with reconciliation over but it if and when something does pull through
spk_11: yeah she's a said it does overlay well the for and markets
spk_2: and and roughly well positioned to benefit me expected it will certainly extend the runway have a favorable they will rate environment game any it's your question of why they are specialized wow there's no question at the plaza and would would that would for for that there are different
spk_10: otto's within our flatbed division that would also stand to benefit from similar phrases that with their special sorry for think this was the as it is a topic of yeah i know which as
spk_2: i wanna i would ask for more said as generic question as a couple he wants readers on just java you mentioned about so those are a build out of your all
spk_10: third party brokerage capabilities could you could you give us a little more meat on that and almost so it is is that going to be in in both to this because obviously you had much more the girls in the brokerage pushing the your flabby specialist
spk_11: damn it would be discussed before we said we we we we got to get a pre pre prepared and and revenue levels within brokerage right around sixty million for the poor so historically we've we've been right around two hundred and forty two hundred fifty nine a revenue against the console iran is one a half billion so lots lots of opportunities for gonna both harasser like
spk_10: capabilities of you know what are the things that we we haven't we haven't done a good job of is is really coordinating coordinating and and and really kind of centralizing be yeah so like capabilities
spk_13: the within and across are operating companies and or that's been than earth
spk_12: really i think of a lack of a strategy a lack of direction and and a they should do so and part of that's been would not having the right technology platform and place and so one of them toward iran right now with mission philosophy borders is it getting the right technology platform in place we we we are working on not and an internal an actual oh boy got it we gotta we we got the makings of a of a of an external facing load were right now that we're also and have invested a billion an internal technology to facilitate
spk_2: a better kind of internal third party brokerage capabilities and it's really coming up with the philosophy internally for the after execute on i think a lot of on a lot of of it i use use his brokerages as as head of a release valve and i think that we're thinking about how do you how to use that across market cycle to really to really gotta flex up and down from canada revenue standpoint take a take better advantage of of of opportunities like this and when i went to soften it you take it you take the trigger that disallows initial really should are you built and better times and redeployed as learned to construct helping truck so it's it's really think about strategy getting everyone say page internally about what what what there are a broker should look like and and underpinning it with the right technology solutions execute on a tragic the and job as with a sprinkler can can i just giza to market quick for jason they should be easy as we think of again on sale going forward and couple that we go your callbacks outlook and then are close to completing the share repurchase program animal find this has been and you guys announced a new one you know on a plans to yeah so on on the first question the we actually evaded internally about giving or of i've got a guy but the the difficulty is exactly what you'd have highlighted is to use trustworthy due to quit not just rocks are you to quit the markets been very volatile you don't overlap between four months it's difficult to predict and so field adam as of late it's been pretty strong and out you know we don't see that slowing down you know in the near term by the even industry just as long and i have no on i haven't and you know can turn on a dime so that that either one cow the article little tricky for us we're at a general model we can look at where it's been recently and we kind of project that forward on our thinking about a right now supermodel purposes i think that probably as as good of at added any for for you guys as you think about a model that going forward we do anticipate that just what was he already and and assume that they're naughty immaterial deviation to canada trend that we've been seen their that are no topics will come in lower than when it is a which is gonna generate are you from a free cash flow i in the year and were taking a really hard work in as much about the i would gladly take the opportunity putting a really hard look at at callbacks as an organization we have identified a lot of opportunities were or maybe we are being as efficient at the point nine capital or when you look at kennedy off coach structure that we store the had as we get will point where we are
spk_13: the ability and better communication across both platforms i in the form of data and just ill up a commute communicate with each other we can be more efficiently utilize always gonna and be able to generate similar levels of revenue profitability or approved levels of revenue profitability without on a significant or or you know outside size capital deployment requirement which will only further expand africa locate ability so i were pretty encouraged an ad for the opportunity the were identified as were undertaking this exercise on and of something will be looking forward to do you guys war or is jonathan alluded to on here over the
spk_0: the coming quarters as we further refine i can of three five year strategy and plan so aware of the first question there on the second one with regard to the share repurchase
spk_14: we we do not have on any current plans for incremental share repurchase but on the will be a hobby or board meeting later this month that i'm sure on as is always the case you know just from a cattle deployment in other there's three or four key ways to deploy capital on the in a world
spk_15: good at each of them right whether it
spk_14: no doubt that reduction or sherry bush's with dividends or or and they aren't going away to take a look at all those and figure out which one makes the most sense for organization as we move forward but we will lead to end in fire quarters of that aren't as is not about bomb on necessarily have hundreds of millions of dollars just sitting on the ballot she we want to make sure that we're deploying and the most shareholder friendly and and creative manner possible so so we'll we'll be looking to get additional color on that point of as we move forward
spk_2: and they sensors and will listen or that's all for me
spk_11: nice results and it's now it's also good to see the market recognize him as results to casual and push it down in of however next question coming from the line of third season with people here line is open very good morning to grab from the could of progress in the corner and resolution johnson
spk_10: thank you thank you pressure can you provided them in he died do that's been prepared remarks but can you provide enough data where you are from inoperable same point more
spk_11: you know how far along you are and sort of you know what we should expect from integration of operation the technology investments and ultimately when you think about resuming and the day or we you know middle innings there early innings are we getting closer to lead ratings any color would be helpful thanks
spk_10: that shirt off off off topic that led by jason chanel with any additional calm and so on here that a side were actively of the mission the son of on the last call were actively looking at every opportunity we've we've we've actually it or to do have a handful of non binding allies and we're very close on on one particular acquisition but but ultimately didn't think it was in the best interest of the shoulders and report on an acquisition and we we've as we talk about we've been employed of a lot of additional rigor and and our valuation we're looking at acquisition opportunities from from every different angle from strategic considerations the tackle considerations looking at really the full cycle value proposition those targets so we're being very disciplined very thoughtful
spk_11: not trying to rush rush the acquisition opportunity that you know that the car had a market environment can evaluation complex outstanding
spk_2: so are you know it is establish something or open to were prepared to deal we have ample for doctors critically within within iraq a stable that are that have the death and have the capacity to absorb it as or bad right target so that's ongoing
spk_11: you know from a furlough could have integration standpoint
spk_10: no not not not overly prepared to share too much at this time or on that i think that we've we've done a lot of work and continued a lot of work
spk_2: i think when you think about integrations it's nothing it's something that would think we're going to rush rush to accomplish
spk_16: the the integrations of of of a year after two ago where we're very different than the integrations that we want to make up
spk_2: over the next twelve eighteen months we what these be very thoughtful very very very surgical tight integration will were were taken into account culture operator models customer composition capabilities to really consider it as the the full picture as we think about those who got a lot a great team so it's thinking about how to had to be of the pieces are the on again table or out the to optimize the offering for for stakeholders identity think about integrations they're probably not have a twenty twenty what about their they're likely more of a of a twenty twenty two type of that or going to leave though with with system systems early the fulcrum here for us better systems are going to help provide some of that some of the top line
spk_14: the opportunities we mention and are literally bb again the fulcrum for for better execution whether it's on every front with some the up to integration from we've got out the systems in place to to better facilitate some of those movements
spk_2: yeah i don't have too much down there are the summer i do really well just that i'm hopefully that the thing that you can have noted took away from his comments are in and around emanate is that there is going to be a very ah
spk_12: discipline
spk_2: and and practically strategic approach to emanate it's not just gonna be a girl for the sake of growing by strategy as much as it is your one aligns with our stated strategy it as a team and and then once we get into things as he alluded to listen we're not afraid to pulled out and say know this this is it what we thought it was or of you know there's there's a to hear that on nice teeth the thesis and and mean that we weekend a backup and and push paused or or even put cancel our men and we've already demonstrated that discipline i'm gonna be the world fees are have but you know we wanted the sure you got to understand other that held this team is approaching of types of things and and and with regard to come where we go from here i swear i go again which aren't i think there is a lot of time and energy and and and horsepower that's been applied to making sure that we're making the right strategic decisions for this organization a long term and that there's going to be systems that are gonna play a critical part of that i'm in and deal with for sure work or as we continue to move down that path here over the coming months and quartered yeah that that's screen i appreciate all the color there are maybe just as the follow up you look great second would result just trying to figure out what what have you guys think we should interpret this is it you know operational challenges are starting reverse the business is becoming more sustainably profitable or is just a function nina really tied by market on you lee high rates on specialize in flatbed in sort of leading to you know a really good to queue may be slightly softer to each and he thought to be very helpful thank you yeah so what are your knowledge jonathan chime in
spk_10: yeah i think he get to the can somewhere in between those two things i i don't want anyone to walk away from a feeling is that the are we just got locked into this quarter because that's definitely not what happened right there's been a lot of work the thing going on behind the scenes for the last eighteen to twenty four months heavy lifting by lots of people tough decisions integration fleet downsizing on conversations with customers are dead has is really kind of the masked by a lot of other things that were going on in the world ah man and i think that can all came together and really started man attack in itself european kimberly in the first quarter and second quarter he started seeing that there's no question that there is a of the of it supplied a man in balance out there in the market but by you know that going to be disappearing as jonathan touched on it is prepared remarks in philly in our markets that we service and he has in in into the point is know jason seidel brought up he only to the structure built on down the pipeline that only going to further
spk_17: you know it
spk_10: dr length to to detail on that and so i think it's a combination of the two things i think the key point we want to drive home with their organization and and i touched on this on two or three calls and it and so ugly or i don't mean the hitting a one more time one of the things i love about ascii it our ability
spk_2: he took flex as an organization we have a variety of different operating companies that are led by unbelievably talented and informed operators who can last up and flesh down when we need to into the market and and we've demonstrated that overlapped and ah six seven course now and i expect a to do so on as before they are all out a little bit of a good reason to it out of if there's no secret minutes ago it's a good writer by right but we we we executed them in revenue a consolidated on a cathartic basis without eighteen percent a just leave it out of fifty seven percent with wifi to trucks and and we control variable costs it's also i think the mission of his grip it's offered i think for the call l a bit of edwin going into the sheer relative the last year we we did rationalize are free down delta percent or so says you look at performance we were able to greatly greatly improve as the utilization a great group over rated version of top line or is that a great recruiting and training driver's seat a truck countless said percentage was was flat year over year and i get to that's important point optically given or was going on last quarter at this time when he probably would have of at a lot of drivers would around for different opportunities with recovery kind of living in the backdrop but
spk_18: they were able to prove come out for trucker day
spk_12: focused on moderating dead at all right out of rough miles should feel great execution around also we touched a little bit on us with jason but brokerage some some some early and success with brokerage so again i gotta get lots was incredible it's credit do or aka is not drivers did a phenomenal job
spk_2: so many final question for me it just sort of along those lines were you just speaking about you have your own or operate a truck make i think increased every corner since the first quarter last year ah you know now you're i wouldn't like a forty four percent level is that increasing because you know organic growth is getting tougher
spk_19: ah in do you think that that continue to me think thinking in front of them
spk_0: yeah dad not a patch on that ah there are there are so again getting back to the differentiated strategies across or auto stable we have different operating company that that focus and specialize on on kind of different driver relationships are some are much more of italy's purchase an owner operator
spk_9: centric and and others are more company centric ah we have seen a lot of opportunities to grow out in a and ali's purchase and or offer environment has been strong and and there's no question that that the rising rate environment is health he will let me keep in mind a lot of the deal even contractors that typically house
spk_2: politicians that are more aligned on a percentage of days and so so that day because they practice the his force in any pets of rising market but i'm also in kind of odd the evolution of a driver life cycle to be calm and into these purchase and in an isolated and contractors kind of while those guys aspire to
spk_9: who is in many cases on and then there someday they're happy being on the buyers and they do a really good god and they wanted to of rubber on so i think there's a a variety of things at play there but without shed a little bit a lie on on on kind of what we've been doing by the scenes and in why we've seen from it's a lot migration i don't know
spk_12: that i would characterize it as a
spk_2: we we are to see an interest in company driver opportunities are but there's no question that the field the drivers were going to see got geography they're going to be the most advantageous for them and and so we have seen that evolution or left twelve months or so very helpful thank you
spk_20: never next question coming from the line of minds and do with craig helen have no one is open
spk_12: good morning i can get some strong results like everyone else in that you jonathan
spk_2: the right she got very detail commentary appreciate that on the current angle horn strategy here i just one for me in one follow up but you guys have talked about and ninety percent of our target you it eighty percent is quarter certainly sounds from become terry some company specific is want some industry retail and split it ninety percent spilled the ray long term expectation here or have you guys who identified and a further costs a be except for that that potentially could be better than that
spk_12: yeah but not good question i would actually georgia with jonathan that the what was going to call ah i see the that when we were think about an ideal are with more i have for your you know through the the that the peaks and the and the bally's so as i know you know that i'll reiterate what you think about are already kidding said
spk_2: the organization typically your second and third quarters are going to be your very very strong outperforming quarters and your first and fourth quarters to student seasonality of a traditional lab and opened deficits are going to be slower ah and so in a college world we love to see how much smoother earnings of cadence and it's over already papa
spk_11: these we have that aren't but others are more exposed to that kind of seasonal volatility and so our super pleased with the performance of the key on the again a o r whereas also realistic about can have that the seasonal adjustment for the to take into consideration ivy
spk_21: with we send your target was like oh them of the year and a half ago and they are the time we were bombing on one hundred right high nineties
spk_2: there's the added a very impressive flow through on the traction our business integration into that improve it initiative combined with aligning with the your are very constrained supply demand environment which which helped by as well we want to make sure that were able to continue to deliver a is a night of your son ninety offer to reach your target through the cycles so not through the that the annual cycles but also true that broader economic cycles we don't we don't wanna be and eighty eight or when when the markets hominin or
spk_10: he's great in an eighty five one thing slowdown we want to be able to be in your open oh hi even in the slower time the medieval the oh lord of the eighties in the really really hard times but but those things take time all the stuff the jonathan alluded to about all or forgiveness is and how we're gonna tactically approach them each one of those days of to help chip away guilt tweet by this point here for cases point there we can more consistently deliver that kind of performance longer term so hopefully i'll don't have anything you would add to that that i look at allegations i like to start he said he said i i think it's it's it's a normal life
spk_11: the through the cycle type type objective i still they get a
spk_2: is it going to be kind of a couple your double your target and i think it it of the history of of others that this new team the last four or five order suspended sentence to guy beat expectations to i'd i'd hope that i don't get overtime as we continue to tap the alcatel we have as we continue to the out of all all love harmonizes a team that will be a
spk_11: hello kitty describes the market that helpful guys magazine can answer t jake expansion and didn't intend juice and verticals mentioned parma eccentric can any that be done with the organic business and business units that you have or is most about acquiring other can experts in that area to get in there and and secondly on that would have a multiple three seen in the market today from anemone standpoint
spk_2: yeah so i added the first part we we we've actually had a demagogue as we as we will always be awarded care bill vs by so we look at these new markets are already the usual five analysis that does it doesn't make sense to the a a marker premium to acquire a platform to get to said your do vertical or or does it does it make such a few build up these capabilities internal and and unfortunately a lot of the a marketing we're looking at today we have very large very well established bluechip customers that that are already playing in that space and already offer a path to going into those those and market vertical that in some cases and already asked us to consider working with unsuitable capabilities and as and market so it's going to be in a war going to we're going to get put in the right right have analysis the right kind a bot behind by to those opportunities and and and will kind of look at look at it as they come with the way the you know the michelle the call with you have it out of commission for a lifetime we do have reported abilities today so it's enough we want to do that we certainly have of he customers we could very easily
spk_12: it used to the leg into that space so we're looking at all those things currently we we are here we are as you pointed out we are looking for them and a sample you're looking at that only horizontal or law integration but but vertical integration opportunity so
spk_2: how to get this is this is about providing providing our customers with with or expanded capabilities
spk_21: and that are scale so if as we find opportunities that are great or zolli to integrate guardedly
spk_0: all will will have to do that were also testing opportunities to find some of those initiatives whether strategically placed yards building outer free transport capabilities in else at requests are customers
spk_22: really there's been some capital doing those things again
spk_23: about about getting closer to customers so it will be falco and intelligent elders and others opportunities
spk_22: yeah the only the i would is the second quarter questionnaire about the multiples
spk_12: it really does depend on what you're looking at riot you're looking at a more traditional flat bed
spk_2: decently run a know organization your it see multiple they're going to be a high for as well by if you're looking at something that much more at and life or
spk_18: ito maybe maybe more specialized in nature you know you could feel multiples movie hire an hour before
spk_12: some of the multiples we see out there that account or head scratchers for us we are to figure out of your what the exits the old a long exit strategy it on off a little thing and so we're we're not you know what we're not gonna go out there in a getting the been worse are you know and and and rappel the bought the our be very
spk_9: methodical this point about how pally how we approach this propagate thanks good luck
spk_2: agree it we have our next question coming from the line and playing games with northland security near learning something a i said good morning and regulations jonathan in the us to all of a wrong result do
spk_24: i'm sorry but mrs
spk_2: what you know wondered if you commented on you know whether you're expecting traditional he's now the arcade and in the back of the here
spk_12: yeah i uh you know you are you directly addresses but the he complain about all i do think that the on what we know today we would assume that are we would hope that there's you know that that the third quarter is gonna i was a directly in line with the second quarter but more seasonally in line with what week but we found
spk_2: i work and then we would expect a little bit of a slowdown if you're going for that the be you know that total whether see then and and the the year and and holiday something like that so i would expect are over a one is really going to a perfect mural what we saw if you want you to buy maybe something more directional the rationally that way okay if this helpful and then none a couple of money the and market who you know you mention construction in a factoring he is ernie other maybe call out through market that of you either positively or negatively or whether you expect them you know any anything regarding you know positively performing and market could continue the trend the way they all right now and maybe any comment on the geographical trend your seem to
spk_4: yeah yeah so you're you're i mean construction has has been strong feel ah has been strong high security cargo is one date that we talk about a little bit in the past but ah well you know we've seen a really really strong performance from are operating company the participate in that ago
spk_2: or on commercial black last as glass in general has has been pretty strong as well i'm for that so again hopefully yeah annika ralph with agriculture have been pretty strong ethical or out through the that help you appreciate about that diversity of gonna the and market that the service the with sided at his and and the oh no surprise here of wind energy oh is that that i don't want to say it bad right it should last year with so good and people forget about that that if it's kind of return to a more normal keep threads so so you're all your bases when you look at that from a pop expected it's it down on the and wow is slowly improving the only aerospace is still one of those and market vertical that that you know it is not like rebounded you know like some of the other industrial that we touched on top of the ethical or color on on on car the and market particles and the with regard to geographic yeah i don't know if i would necessarily highlight a wide area of the country has been stronger than other are given their we had of service the entire country and and are will be freed all over the place you know eight there's not one that i would surely highlighter call out at at at the that normally stronger week i have is from where we stand today a job and any good at that i agree great yeah that's really helpful basin and i'm you know we're going as kind of a your new marketers for difficult and there's nothing on there quite a bit arms i take that off line and i get the last one for me regarding driver recruitment retention and then he mentioned elevated insurance costs to the headwinds again
spk_22: i'm just wondering if you could maybe talk about the impact that your senior year try to quantify than anyone
spk_0: yeah on so you're driving probably rotation
spk_25: joined we said in in in income or or remarks wow there's no question that it's something that we need to keep our eyes on and watch out the on a knocking on wood and we're talking right like our team is done a really good job in in that regard the i've i've got a lot of close acquaintances and friends in in the to be free but riley in space who were you are or and i think all of our time there than than what we've been having ah again i don't want to on under the rug and say that we're not worried about rival approve interpretation but i but i do want to say that when you compare us to kind of industry averages we are significantly outperforming out in in that in that arena i'm and and so again it's on you always have to keep your eyes on a be mindful of and make sure you're taking her your drivers your get the miles you're given pay to get them all and and there and i thought we were not stop focusing on by i like i said knock on wood that we've seen some pretty strong performance from our ortiz at at attracting and retaining drivers you know jonathan eluded fact that are as he truck percentage is relatively flat year over year and i don't know that there's many people in the industry the can say that right now and i'll join as coming off of or what was an unusually low turnover environments a huge your last year due to prove it as as john at the reference so on the other team is really executed and i love or we couldn't be more proud of of that that focus you on our on the insurance i
spk_2: you know we we went down the path as we been talking about of feel the and three you're creating a brisk attention group in a movie few a new environment where we are focusing more on on on controlling our own destiny with regard to kind of insurance a a we still a the early days in that by the insurance markets and you're probably hearing this from everyone on the premiums in in in the excess markets are are up substantially and have been two or three years in a row and so that's something we with me to keep watch he of we feel pretty good about the strategy that we have in place and and the team's ability to compete execute on that brought down as evidenced by the form of that we saw this particular quarter are in line item but it's one that we got to continue to keep our eyes on great the premier the colleges and things as or later the our next question coming from the line a very things and seat acid management new line is and
spk_25: thanks very much in a game i can breath on that corner and and to jonathan kiffin first question and on callbacks you know understanding that you want to update the old number but could you just remind us what the old number was so
spk_2: the the total couldn't purchase numbers and looking for the cash plus financed and then with your old assumption was on on the equipment sales their first question thanks yeah so we the previous guy we have given was a hundred to hundred and ten million for cat bags he then proceeds so that factored into that figure arm and then you know now finding a heater
spk_25: aphex the guy we have given was gonna thirty five to forty five million answer that those with the previous members we're given am i again we we're like see we we are with that twenty percent raise on the eve dog eyes on combined with a are better than anticipated youth truck and get used equipment market were worse we would expect a commensurate that to kind of the overall cashflow generated capabilities but if you just look at a cafe side of equation is going to the lower on the at the i would say it's gonna be millions of dollars lower i don't know that case to be tens of millions of dollars based on what i know today but again we thought five months left and and and in and he used equipment environment that pretty difficult to project right now thanks mate my second question is
spk_2: can you give us some feel for for contract pricing snow
spk_10: in and maybe in the second quarter or both contract for came up you know how much prices are going up or any kind of a you're reading and number of from the walk from today so any in feel for for that thanks
spk_11: yeah on ios or or or or businesses a little different in kind of the driving guys are in that respect a i would tell you are that the of little some of the cannot broader industry gator that out there you know they're they're kind of back on track to ways to be an issue that disagree
spk_10: counterpoint to write contract rate to continue to be know that by class percent type environment
spk_11: now you know each customer is unique for us there are some scenarios where we're going to take it all smaller rate increases because maybe they they gave us a lot of additional business or higher rates than the previous year on in and so it is unique the way we think about it and then there's a the others were given the supply the an environment or the specialized nature of the business or or the are difficult driver
spk_2: environment for that particular specialize in the market we may be seen much higher increases and so again i know it's not a direct answer the question the you that you're looking for their but hopefully that kind of more industry outlook can come to help you from a modeling perspective and can how do you think about it going forward into a tweet tweet you
spk_11: but at at our i had a with a better away for a job and image with that
spk_10: memphis my last question pushing for time is ah
spk_11: i'm on the effort light part of the business
spk_25: you know i know historically you know that we've used to suffer as an augmentation for capacity and
spk_26: i'm in a unified give customers that extra capacity of and ah you know agreed on contract on and of course you know in a market different type of market they can work to your decision as soon as your rethinking you know the whole effort like part of the difference and i'm just kind of curious have you think he knew for the contractor
spk_0: bad or any other color in terms of you know how you think you you want that to work going forward thanks
spk_11: yeah very short to when we talk about and and and first of all and i don't think you're saying this the want to make sure that it's clear to everyone would i not advocating a big a big shift at the white were switched over be or southerly asset heavy asset right within our i think is what we like say we are you know in terms of thinking about the build out i think i think we have as you have a number of off to your point do you think about brokerages is kind of that additional capacity al it
spk_12: and and so the relationship the our the customers the loads of they go after or the responding dollar apiece or of cues from their customers are based on their capacity and at it if if for whatever will forever issued a got that were constraints
spk_0: because of how they're deploying their trucks in a particular day in a particular we don't go out to go out to the arcade look for a third party carrier to to the gonna passes was off to
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