U.S. Xpress Enterprises, Inc. Class A

Good afternoon, ladies and gentlemen. Welcome to the US Express first quarter 2022 earnings conference call. During today's presentation, all parties will be in listen-only mode. Following the presentation, the conference will be open for questions with instructions to follow at that time. As a reminder, this conference is being recorded. I would now like to turn the call over to Matt Garvey, Vice President of Investor Relations.

Please go ahead, sir. Thank you, operator, and good afternoon, everyone. Welcome to the US express first quarter 2022 earnings call Eric fuller us expresses President and CEO will lead our call today, followed by Eric peterson our CFO who will discuss our financial results. Our discussion today includes forecasts and other information that are considered forward looking statements, while these statements reflect our current outlook, they are subject to a number of risks and uncertainties that can cause actual results to differ materially. These risk factors are described in US Express's most recent 10-K, filed with the SEC, and in the Form 10-Q for the quarter ended March 31, 2022, that is expected to be filed with the SEC in the next several days. We undertake no duty or obligation to update our forward-looking statements. During today's call, we will discuss certain non-GAAP measures, which we believe can be helpful in evaluating our performance. The presentation of this additional information should not be considered in isolation or as a substitute for results prepared in accordance with US GAAP. A reconciliation of these non-GAAP measures to the most comparable GAAP measure can be found in our earnings release. As a reminder, a replay of this call will be available on the investor section of our website. We have also posted an updated supplemental presentation to accompany today's discussion, also available on our website at investor.usexpress.com. We will be referencing portions of this supplement as part of today's call. And with that, I would like to turn the call over to Eric Fuller.

Thank you, Matt, and good afternoon, everyone. Today I would like to provide an update on the sequential improvement we saw in Variant during the first quarter, highlight key achievements in the quarter from our other business segments, and, following Eric Peterson's discussion of our financial results, provide our market outlook for the remainder of 2022. As a reminder, I spent much of the first quarter in Atlanta with our Variant team reviewing the business and determining where we needed to focus our time, efforts, and resources to turn the corner from a nimble startup to a sustainable growing business and ultimately improve the profitability of the division. Variant is the growth engine for our company, and improving its financial results is critical to our long-term success. We continue to believe there is a large customer need for one-way freight movement and that we can implement technology to improve capacity, cost, and service levels for our customers while at the same time improving the experience for our professional drivers. Variant generated operating revenue of $84 million in the first quarter net of fuel, an increase of 17% sequentially compared to the fourth quarter of 2021. The increase in revenue was primarily due to the 9% increase in tractor count combined with a 4% increase in average revenue per mile. Exiting the first quarter, Variant is approximating a $360 million run rate business. In the first quarter, we were able to increase the amount of freight that the optimizer was able to select from, which contributed to revenue per tractor per week increasing 9% sequentially to $4,065. The increase was due to a 5% increase in utilization and a 4% increase in average revenue per mile. We saw utilization improve in the quarter as we reorganized our fleet operations to establish single-threaded accountability, which helped to sequentially improve driver availability and lower deadhead. During the quarter, we added 136 tractors to the variant fleet, exiting the quarter with 1,691 tractors in the fleet, Although we grew our fleet in the quarter, we didn't grow as much as we would have liked. Variance turnover spiked in the first quarter to 148% due to process changes we implemented in the quarter, which we expect will have an overall positive impact on turnover in the coming quarters. However, in the short term, we saw an increase in turnover as we transitioned to operating workflows which brought more structure and discipline to our fleet operations. Turning to achievements in our other business segments, in our dedicated division, revenue per tractor per week increased 13% year-over-year to $4,709 and was up 2% sequentially from the seasonally stronger fourth quarter. The increase in revenue year-over-year was due to an 18% increase in average revenue per mile which was partially offset by a 4% decline in utilization. The decline in utilization was partially caused by the number of drivers off-truck due to COVID in the early part of the quarter, but the division performed strong in March. Our focus for dedicated going forward is to continue optimizing the portfolio for profitability, and as such, we expect modest growth in tractor counts. Our brokerage segment generated revenue of $94 million, an increase of approximately 15% year-over-year, and was driven by a 15% increase in revenue per load. The segment produced a small operating loss in the quarter, but was within our expectations of being approximately break-even. We continue to expect the segment to break even for the remainder of 2022. Before I turn the call over to Eric Peterson to discuss our financials, I want to thank all of our employees who have worked tirelessly over the last quarter to accelerate our transformation at US Express. We made a lot of progress in one quarter, which gives us confidence that we are moving in the right direction. With that, I would like to turn the call over to Eric Peterson.