Welcome to today's Covenant Logistics Group Q3 2025 earnings release and investor conference call. Our host for today's call is Tripp Grant. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host. Mr. Grant, you may begin, sir. Good morning, everyone, and welcome to the Covenant Logistics Group t hird quarter 2025 conference call. As a reminder, this call will contain forward-looking statements under the Private Securities Litigation Reform Act, which are subject to risks and uncertainties that could cause actual results to differ materially. Please review our SEC filings and most recent risk factors. We undertake no obligation to publicly update or revise any forward-looking statements. Our prepared comments and additional financial information are available on our website at www.covenantlogistics.com/investors. Joining me today are CEO David Parker, President Paul Bunn, and COO Dustin Kale. Our business remained resilient in the third quarter, although margins were compressed, particularly in our asset-based truckload operations, due to an inflationary cost environment, persistently high claims expense, headwinds from excessive unproductive equipment, and continued pressure on volume and yields in our expedited and dedicated fleet segments. Year-over-year highlights for the quarter include consolidated freight revenue increased by 4%, or approximately $10.2 million- $268.9 million. Consolidated adjusted operating income shrank by 22.5% to $15 million, primarily as a result of year-over-year increases within our combined truckload segment. Our net indebtedness as of September 30th increased by $48.6 million- $268.3 million compared to December 31st, 2024, yielding an adjusted leverage ratio of approximately 2.1x and debt-to-capital ratio of 38.8%. As As a result of executing our share repurchase program and acquisition-related earn-out payments, the average age of our tractors at September 30th increased to 23 months compared to 20 months a year ago. On an adjusted basis, return on average invested capital was 6.9% versus 8.1% in the prior year. Now, providing a little more color on the performance of the individual business segments, our expedited segment yielded a 93.6% adjusted operating ratio. While this result falls short of our expectations for this segment, we've been pleased with the resilience of this segment over the prolonged downturn. Compared to the prior year, expedited adjusted operating ratio increased 160 basis points. The average fleet size shrunk by 31 units, or 3.4%, to 861 average tractors in the period. We expect the size of this fleet to flex up and down modestly based on various market factors. As market conditions improve, our focus will be on improving margins through rate increases, exiting less profitable business, and adding more profitable business. Dedicated's 94.7% adjusted operating ratio also fell short of both the prior year and our long-term expectations for this segment. We were successful in growing the dedicated fleet by 136 tractors, or approximately 9.6% compared to the prior year, as we have continued to win new business and specialize in high-service niches within our dedicated segment. Going forward, we plan to reduce certain of our fleet in this segment that is exposed to more commoditized end markets where returns are not justified and continue to invest in areas that provide value-added services for customers. Managed freight exceeded both revenue and adjusted operating income compared to the prior year, but fell backward sequentially due to the loss of a short-term customer that scaled up in the first half of 2025 and rolled off in Q3. Our team showed resilience through this difficult freight cycle with their ability to bring on new freight, handle overflow freight from expedited, and reduce costs to offset lost business. Over the longer- term, our strategy is to grow and diversify this segment, and we note that an operating margin in the mid-single- digits generates an acceptable return in capital given the asset-like nature of this segment. Our warehousing segment experienced freight revenue and adjusted operating income that was slightly below the prior year quarter and yielded an adjusted operating ratio of 92.1%. The adjusted operating profit and adjusted operating ratio in this segment was a solid improvement sequentially. Going forward, we anticipate top-line revenue growth and operating income growth as a result of a large customer startup scheduled for November. Our minority investment in TEL contributed a pre-tax net income of $3.6 million for the quarter compared to $4 million in the prior year period. The impact of incremental bad debt expense in the quarter compared to the prior year reduced TEL's pre-tax net income. Although TEL's overall business remains strong, exiting capacity from the general freight environment is expected to impact them again in the fourth quarter and potentially beyond. Regarding our outlook for the future, we anticipate the fourth quarter of the year to remain challenging with the continuation of a soft freight market combined with the impact of company-specific factors that will result in what we believe to be an unseasonably soft quarter despite a slight positive impact from Peak. Company-specific factors within our line of sight include the negative impact of increased claims accruals, the negative impact the U.S. government shutdown is having on volumes of freight we carry for the Department of Defense, and accelerated customer bankruptcies with TEL will all prove to be challenges for the quarter. In addition, as capacity exits accelerate within the general market, we anticipate the cost to procure transportation will likely lead to our ability to capture rate increases from our customers in our managed freight segment, resulting in constrained margins. Despite both the general market and company-specific challenges over the short term, we are increasingly optimistic about the pace at which the freight market should recover. Recent enforcement of government policies concerning English language and non-domiciled drivers have seemed to accelerate the pace of capacity exiting the market. We believe the impact of this trend is being masked by consumer pause and uncertainty as a result of elevated interest rates and volatility of global trade policy. Our belief is that consumer demand will improve with the continuation of monetary easing and the eventual settlement of trade tensions. In addition, the impact of recent tax policy will further facilitate demand. Regardless of when the market environment turns, our team is ready to move quickly to execute with urgency to capture additional market share and the appropriate amount of operational leverage that returns appropriate levels of capital to our shareholders. Thank you for your time, and we will now open the call for any questions. If you would like to ask a question, please press star one on your phone now, and you'll be placed into the queue in the order received. Please be prepared to ask your question when prompted. Once again, if you would like to ask a question, please press star one on your phone now. Our first question comes from Scott Group of Wolfe Research. Hey, thanks. Good morning. I want to start where you wrapped up, just talking about the capacity backdrop and maybe just give us some color on what you're actually seeing in the market with respect to capacity exits. How big of a deal do you think this is going to have? I don't know, maybe just like a, you know, there's certainly more talk in the market about this. Why don't you think we're seeing any impact on national spot rates? I know there's a lot of talk about local markets getting tighter, but why do you think this isn't showing up necessarily in national spot rate data? Hey, Scott, it's David. This is something that has been driving me crazy trying to figure out where all this is going. I would say a couple of things because you, great first question. From a standpoint, I'm more excited. I've been in this thing 53 years. I'm more excited right now than I've ever been in my entire career for the next two to three years. I see some things that we've never, ever been in a position where we are starting to get the government that is now starting to get concerned about who's driving trucks and why should they be driving them. You are sensing that, and I just see an avalanche that's in the process of happening. As I think about from spot rates, we have seen compression on margins on our brokerage side in the last three weeks when all this stuff started. It is right now defined to a lot of individual states. I met yesterday with our brokerage group, and California, Texas, Oklahoma, Chicago, those are our states and cities that keep coming up over and over. You have got third parties that are scared to go to those states, right, wrong, or indifferent. That is the reason why you are seeing, instead of across the board, that you are seeing, I believe, spot areas of the country where it's becoming tighter and rates have gone up in those areas because a lot of these truckers just don't want to go. I'm not going to Oklahoma. I heard Oklahoma pulled over 135 trucks and sent everybody to jail and all those stories that we're all hearing. I'm not going to Laredo, Texas. They're going to stop everybody that can't speak English. That is really leading the effort. That said, will it be a red versus blue states? Red being aggressive, blue not being as aggressive. I'm here to tell you that if they continue to have, if we all continue to wake up every day with another fatality accident by an illegal immigrant, it is going to spread throughout the United States. As I look at this, as I look Non-domiciled CDLs, as I look at the English-speaking issue, as I look at ELDs, there is more cheating going on, and toggling is unbelievable, guys, to what's going on with ELDs. So far, the government has suspended five or six companies. I'm here to tell you there's going to have to be hundreds. There's about 950 that are approved ELD suppliers, and they need to look at every one of these ELD suppliers. We all thought that when we went to ELDs that everything was going to be legal and you're not going to have logbooks and everybody's not going to be cheating. I'm here to tell you, us big guys, we love the ELDs. We love not having logbooks. When you got toggling going on, it's rampant cheating that is happening. I run a truck 100,000 mi. They're running trucks 140,000 mi. The government is just now, for the first time ever, starting to go down this road. I feel very confident that over the next six months, one year, two years, whatever it's going to be, it's going to be a snowballing effect that we are going to have less drivers on the road. We're going to have safer drivers on the road. We're going to have English-speaking people that can have the ability to speak English and understand it. We are going to have ELDs that are going to be in much better shape, get rid of the multiple MC numbers. Guys, it's rampant with shutting down this, opening up that one. Today I shut down, tomorrow I open up another one. We're just now learning about this and just now started to do anything about it. As I look at capacity, one of the things that excites me is this is coming to a head. It's in the process of exiting, but as good as anything, I'm here to tell you the funnel is stopping coming in. Whatever that number is that's leaving, whether it's 1,000 or 200,000, they're going to leave, but there's not going to be a flood of entries coming in. That is extremely encouraging that for the first time in my 53 years, there's actually a constraining of supply that's happening. There's not going to be a bunch of new drivers from all over the world that's entering the truck driving workforce. I looked at that, Scott, and I'll shut up here in a minute. You asked the first question of what I've been ate alive with for the last month. As I look at this supply, then I start looking at what the Fed is doing on interest rates. They're going to continue to lower interest rates. They're going to continue to pump the economy up. This physical, the stimulus package that we all hear Trump talk about, $17 trillion, $20 trillion, $8 trillion, I don't know what the number is. The only thing I do know is gigantic. There is a lot of freight on these plants that are being built in America, even if it takes two years. There is a lot of business that's coming to America that's got a lot of freight in it from these new plants that are going to be coming up. As I look at supply, I am more excited than I've ever been. There is no doubt. I think we and the industry, we got some junk to go through. What do I mean by that? Brokerage, margin compression is happening now. I see it in our business. All the brokers are going to see it in their business. As I look at used truck markets as we speak today, it's less than what I want, but I believe it's going to turn around fairly soon, maybe next year, because nobody's going to buy a Class A truck. We don't even know what we're going to pay for a Class A truck. I'm at ATA next week in San Diego, and I can't tell you what the price of a truck is right now, or if I am even going to buy one. It's going to drive up the used truck prices. I'm happy about that. This government shutdown has hurt me on my Department of Defense business, but I'm a month into it. We'll see what happens there, but it's not helping. Eventually, it will go back to work and everything will be good there. Lastly, I was just telling the guys here before we got on here, one of the things that I'm really excited about, as we all know, our industry has not raised rates in four years. We haven't raised rates virtually at all in four years. I was in a meeting in the last couple of days with sales, and both on our legacy dedicated and on our expedited, we've got eight or 10 accounts that we have asked for rate increases and actually have been given 2.5%- 4% in the last couple of weeks. That excites me. Is that something that's going to happen on every customer I got? I don't know, but I haven't seen it in four years, and I'm starting to see it. I'm starting to see bids at all-time highs. You're seeing the customers. Our bids are up 17% since August. That doesn't happen. That's a November, December, January, February event, and it started happening in August and September. Why is that? It's because our customers are concerned about capacity, even though we all need freight right now. Scott, I'll shut up. As I look at it, I'm more excited than I've ever been about 2026, 2027, 2028. If anybody's ever going to buy a trucker, it's now. If they don't buy truckers now, they don't need to be buying truckers. That's where I'm at. Thanks, Scott. Let me give you a couple of things. You know, David talked a lot about the regulation, and there's no doubt that we're sensing it. He's given some color on maybe demand, you know, freight going forward. I would say there's a couple of words we're using internally right now. One is patience. I think we're all going to have some patience, and I'll get a little bit into that. The other is, you know, there's going to be some pain before there's some gain. Pain in used truck prices, and you know, we see smaller guys go bankrupt and flood the market, pain with some brokerage compression. Every time in history in this business, there has to be pain before there's gain. I think that's where we're at. On the patience side of things, specific to your spot market question, the week after Secretary Duffy came out and talked about Non-domiciled CDLs, i think you did see spot rates go up, especially in those markets David was talking about. What happened was a lot of those folks just stayed home. A lot of Non-domiciled CDLs have been issued in a, they're concentrated in a handful of states. I mean, there's some in every state, but there's some West Coast states that had a lot of Non-domiciled CDLs. the reason you hadn't seen the spot rates jump up is that the two largest West Coast states that have Non-domiciled CDLs, they have not, they're in the process of trying to figure out what are they going to do with the people that have the Non-domiciled CDLs. I think California is supposed to decide in the next five days, they're supposed to direct carriers what to do with those drivers. The first five, six, 10 days, you had some people that maybe had those type licenses stay home. They've had to get back to work, so they're still out there running around. In the next five to ten days, California is going to tell the carriers, "Here's what we want you to do. Here's the process to do that." I think that's when you're going to start seeing some of that capacity exit. I mean, I think on that side, it's probably sooner than later. To David's point, the other is, you know, you're stopping filling the bucket with new entrants into the market. I don't know if that helps paint a picture on maybe why the spot rates haven't jumped, but you know, you had some of them stay home right when it came out, then they've gotten back to work. I think in the next five to ten days, you're going to see some of these states roll out the policies that, you know, here's what you do. I think over 30 days after that is when you'll start seeing some of this capacity exit. Okay. Super helpful. David, at the risk of getting your blood pressure any higher, can I, I'd like to ask a follow-up if I can. Yeah, how, you know, how do I think about like how many of these drivers do you have, you know, from just your perspective on enforcement? It's always been easier to enforce large fleets than mom-and-pop truckers. How does, how do you change this? Is your perspective here that ultimately this is going to be a big help for large fleets? Is it a risk to the brokerage model in general? Yeah, I mean, you know, we got a $200 million brokerage, and it does concern me because I think led by Duffy at the Department of Defense, I think that they're going to, I think there's going to be enough leading from the Department of Defense that is going to go after more of the small carriers that are illegal than it is the big carriers. I think that I'm concerned about compression on my margins on my brokerage, but I think after a period of time, whether that's three months, six months, I don't know, but a period of time, you'll start seeing the asset rates rise very nicely to all that will offset any of the brokerage compression. Yeah. I think, Scott, that when I was referring to there's going to be some pain before there's gain, I think that that was probably more on the brokerage side, you know, because there will be some pain going through this with a lot of brokerages. Your point, it should help asset companies more. Okay, but brokers make money. Yeah, brokers make money when rates are rising hard, when rates are falling hard. Where are they getting troubles? You know, in the middle, and if you got contract rates and they hadn't reset, it'll, you know. If the government was not doing nothing, if the government was just going to be on the sidelines, it'd all go back to the way it's always been for 40 years. I don't believe that's happening. I believe that there's an unbelievable amount of pressure that, A, the government is putting on it, but I think constituents are putting back to the government now saying, "Am I going to wake up every day to a fatality accident? Okay. Just last one, if I can, just turning to your business, you talked about near-term pain in Q4. Any way to sort of size what you're thinking about for Q4? I know you've got a lot of like that Line Haul LTL business. How's that performing right now? Yeah, the LTL is down. It's interesting because, you know, forever, LTL would slow down in November, December. That was typical. To be honest with you, from COVID for two or three years, say 2021, 2022, 2023, we really didn't see the LTLs really slow down a lot. The LTL guys are slow. I mean, you know, their business has been hit. I think overall, the volumes are down. I don't know when that is necessarily going to come back. It will, but I don't know when it's going to be. Yeah, I look at that. That concerns me. I look at how long is the government shutdown going to be on my DoD business because it's only, you know, it's only half of what it was. We got to deal with that. Then compression on the brokerage side of the business. I think we got to go through that junk. You know, in our TEL business, I'm happy about a couple of things. They've grown more business, you know, more sales, more leases is what I'm trying to think of. They've grown customers so far in the last six weeks, which is a good sign. They also have had to take back more trucks than they've had. I'm seeing some sloppiness in the TEL business that concerns me. I think all that adds up to fourth quarter that it ain't going to be third quarter. It's going to be less than third quarter. I'll let y'all. I think it's too early to put a number on it, Scott, but I would say it's softer than what it seasonably will be for all of the reasons that David talked about, mostly on the truckload side and also on the TEL side. I think from our line of sight and what we have seen, even though it's early in this quarter, and then the visibility that we have into peak, which there's a little bit of good peak in freight in there, but it's not enough to offset some of the negatives that we've seen over the first two or three weeks of October. I do think it's unseasonably softer, but I'd be hesitant to put a. Yeah, that's interesting because I am somewhat optimistic about what I'm seeing about peak business. Some of our customers have already gotten back with us saying that carriers have given back freight to them, which is on the brokerage side. That's also interesting to me. Peak is not going to take care of some of the reductions, but I am optimistic that peak seems like it might be a decent peak for us. All right, super helpful. Thank you, guys. Who's that operator at? Don't do it. Can you dial on your cell phone? He says I can hear you talking about operator. Guys, I don't know if you can still hear me, but just so you know, we can hear you. Oh, okay. Thank you. You've got to put it on mute. Our operator has disappeared. Yeah, we're trying to see if there's any more, any other questions. Maybe you convince the operator who's busy buying trucking stocks. He's busy, yeah. Market is open. Hey, guys, we're trying to get a hold of the operator to see if they can facilitate any more questions, so we'll see what happens. Just so there's not dead air, do you want me to ask more questions? Yes, please. I mean, let's talk pricing a little bit. I think you said you're starting to have some bid activity. Just what you're seeing from a pricing standpoint. Early thoughts on 2026 bid season. You know, Scott, yeah, it's early. As David said, we're going out to some customers. I think low, low- single- digits is kind of the norm. I mean, we need a lot more than that. Inflation has been significant in 2022, 2023, 2024, 2025. I'm betting the price of trucks is going to go up next year, and health insurance and casualty insurance is going to go up. We need a lot more. I think low, low- single- digits, there are customers that are willing to have good active discussions around those numbers, just from the recent experience we've had. Okay. You made a comment that no one wants to buy trucks right now. What are you doing from a fleet perspective? How are you thinking about that? A couple of things. I'll speak to it and then let David follow up. First off, nobody's pricing. Most years, most of the large fleets already have pricing by this point. With all the questions around tariffs, and you know, there were some announcements in late September, early October about additional potential big truck tariffs. Is that on the whole truck? Is that on parts of the truck? Which vendors? There's a lot that's been up in the air. Hopefully, by next week, we'll know more. We're meeting with all the OEMs while out in San Diego. I think nobody's been placing orders because you don't know what the price is, A. B, the order boards at all these OEMs are very slack right now. In the fourth quarter going into next year, order boards are very, very slack on truck and trailer equipment. As far as our fleet numbers, I think our total fleet size in total, trip probably be about the same. We may rationalize a little bit of business if we can't get the margin out of it. Trip, from a Net CapEx standpoint next year, I'll let you give them that. Yeah, I think one, it's a big question mark. It has got to be somewhere probably net in the neighborhood between $70 million- $80 million, but I would be hesitant to commit to that. I would say that could be subject to change. We have a number of new trucks that we have financed and are sitting on the fence that are ready to go into service. We have quite a bit of unproductive equipment right now, whether it's new or used. We don't want to fire sell it. I think we're in the position to kind of sit on it for a little bit longer and take advantage of a market swing. At the same time, our fleet, although it aged probably two or three months compared to the prior year, it's a little bit of a misnomer because we've got a lot of new equipment that hasn't gone into service. Our fleet is very, very healthy. Our balance sheet remains very, very healthy, and we're going to buy some equipment. It's hard to commit to a number when you don't have pricing on it. I think that gives us a little bit of an advantage over some of the other peers in our group as we've been pretty consistent about replacement and replacing our fleets in bad times and having a good, healthy fleet with the latest and greatest safety equipment on it and the best, you know, MPG, if you will, so fuel economy. That's what we're going to continue to do. We're going to continue to operate that playbook. I think we've got a little more flexibility than maybe some of the others in the market to whether it's either delay purchase or reduce purchases next year, but we're just kind of in wait-and-hold mode in terms of absolute volumes. Have you guys tracked down the operator yet? Thank you. There you. There you go, Operator. Yes. Yes. What about some more questions? Yes, our next question comes from Jason Seidel from TD Cowen. Please go ahead, Jason. Hey, thank you. I appreciate you joining the fray again. You know, David, it's one of the things I love about you. You're just so calm about the markets and not really ever enthused. Don't change. I wanted to touch a little more on two different things. You know, can you talk a little bit about the government shutdown and the Department of Defense? You know, you said that business is down about half. Sort of how should we expect that to flow through the P&L? Once the government does reopen, whenever that may be, how quickly do you expect that freight to come back? I have a question on sort of capacity. Yeah, Jason, this is Paul. A couple of things. Hey, Paul. On the Department of Defense business, I would say about half that business will kind of just be lost. That's just kind of the way they move that freight. Some of it is just inventory movements, and then some of it's vendor-type freight. It's not like some of it will build a backlog that has to be moved eventually, and some of it won't. It'll just be kind of lost freight. We've moved a lot of those trucks onto a lot of expedited loads just to keep the trucks moving and keep the drivers getting paid and that kind of stuff. I think you'll see a little bit of a spike whenever the government opens back up, but I don't know that it's going to be a one-for-one makeup. As far as it flowing through the P&L, I think the question is, if it lasts the whole quarter, it's going to be pretty impactful on expedited results. If they get something done first week in November, which I guess that's next week at this point, then maybe it'll be a little muted. I hate that we've lost the month of October because a lot of these bases shut down around Thanksgiving. A lot of them shut down around Christmas. October is a month that we really, really run hard in that fleet. Really, October 1 to about November 15 is when that fleet is really flowing. The government shutdown couldn't have come at a less opportune time. It's going to hit us. As David said, it kind of stinks. That's another one of my, there's pain before the gain, but that business will come back. Okay. Appreciate the color there. I guess turning back to capacity, as Scott mentioned, we're really not seeing much of an impact in the spot market. I think, obviously, you've seen what we've written. I think that eventually comes back as we keep sort of rolling through the months here. My question is, what could accelerate this? Is there, you know, we've heard some smatterings that some insurance companies have talked about taking some actions, and then some customers have talked about taking some actions in terms of exposure to carriers who might have non-domiciled drivers. How should we sort of frame that up and what are you hearing in the marketplace? I think everything you just said there, Jason, is in the process of happening. I think you're going to see insurance companies that are not going to insure non-domiciled CDL license. I think that that will be happening. As Paul was saying, of course, California is leading it. We're going to hear in the next week or so what California is planning on doing about it. I think you got insurance companies that are in the process of saying, "We're not going to insure this." I guarantee you they're sitting around in their offices right now looking at their book of business, saying, "What do we have on the books?" They're going to have to get their hands around that. The process will be that there's going to be a bunch of folks that aren't going to have no insurance. I think that that is one thing that is definitely going to be transpiring. It's just going to be pressure from the government on all the stuff that I talked. We didn't even talk about cabotage. I mean, that's unbelievable how much cheating is going on on cabotage. These people coming out of Mexico and going to Canada and going to the United States and supposed to go straight back, and they sit here for a month going back and forth. The government is under that. That's under Christie Nolan. They are over under that, and that is coming to the top that I think will bring more freight back to us, U.S. carriers. There's just a lot of stuff that whether it takes between now, if I was going to throw one, it's April. I don't know. Only because fourth quarter is virtually over with here. It is what it is. First quarter gets into the weather. With the government's heavy hand, of which I agree with, their heavy hand, you are going to see capacity leaving the market. Better than anything, no new capacity coming. I don't know if you saw this, Jason, but you know we look at a number that is a plus and minus of MC numbers on a weekly basis. To give you an idea, for the last few months, that number has been negative 50- 100 less MC numbers a week, 50- 100. Last week, it was over 400, 400 less. That was powerful. I look at another number that I keep an eye on. Look at total volume, a report that we look at that has taken all of the reports that are coming out on whether it's CAS or Truck Stop This, and they accumulate them all. Volume is down 17%, but rejections are up almost 2%. What is that saying? This is this week. Volume is down 17%, but rejections are up almost 2%. It's telling you something about capacity. That's the kind of stuff that we're looking at, you know, as we go forward. David, let's say you're right, and the recovery is in April with, you know, the start of spring shipping season because you finally get the volume back. Bid season, you know, we're going to be well into that already, and you know, probably not at exceedingly favorable rates at this stage. Right. What's your ability to go back to the customers and say, "Hey, listen, you know, it's June. The market's, you know, the market's different," right? Yeah. 100%. Not 99, 100%. I mean, I love my customers. Ain't nobody love my customers like I love my customers. At the same time, if I've not raised you in four years, if I cannot make an argument that says three months into a pathetic rate that I don't have the ability to be able to get a rate increase when the market allows me, then we have no relationship, and I don't want them in my portfolio. You will, but it won't be me. It will be the entire industry. As I look at that on the rates, Jason, that we talked about in Department of Defense, and you know, we got a margin compression on this, and we got to go through some difficult times that I think, I think it is, I'm happy with it. I'm very pleased with it because as I step back from this junk that we're having to go through, or the negatives or whatever words you want to use, and I look at how much positive demand opportunities, foreign investments, accelerated depreciation, as I look at rate cuts from the Federal Reserve, as I look at all this domestic investment that Trump is bringing, as I look at the Build Back America Beautiful or whatever they're calling the, whatever that bill's called. It is going to be, and with ISM being down below 50 for three years, with what Trump is doing on bringing back plants, I promise you, interest rates going down, it is going to feed the economy with capacity leaving. That's why I'm excited. A perfect storm is here. Yeah, I can totally see it. I don't have 50 years in trucking, but I have just over 30. It's definitely one of the more interesting times I've seen for sure. I appreciate the time as always, and tell everyone to stay safe out there. Yeah. Thanks, Jason. Our next question comes from Reed Sayre from Stephens. Please go ahead, Reed. Hey, guys. Thanks for taking the question. You've given a lot of good color, but I wanted to come back and touch on some of this government business. You mentioned the volume will come back once the government comes back. Here in the fourth quarter, let's say maybe we get a shutdown at the end of the month. Could we potentially see a catch-up of these volumes in Q4, or how would you expect the cadence following a return of these volumes? Yeah, Reed, here's what I'd say. A minute ago when I speak to you, it won't be a full catch-up. It'd be a partial. There could be a partial catch-up. Part of what handcuffs the catch-up is, you know, these bases are going to shut down around Thanksgiving, and they're going to shut down around Christmas. Just the way the calendar is going to fall, it's going to hamper a full recovery. Some other things just around the nature of the freight, I mean, it's still moving. It won't be a full catch-up. You could have a partial catch-up if the government reopened sooner than later. Got it. Got it. It looks like during the quarter, costs were moving in the right direction. Can you talk about maybe some actions that you've taken on the cost side here in 3Q and maybe if there are any more to come in 4Q if we have demand continue to be weak in the LTL or in certain parts of the business? We've continued to try to make sure our headcount matched our, you know, it was matching our freight volumes, and tried to make sure we weren't getting frivolous on overhead. We've really shut down any significant growth in overhead. We did that earlier in the year, maybe even the end of last year, knowing this market was continuing to drag out. We saw, I would say we're happy with maintenance costs, some things we've done on those to really manage them down. I would say it's just more of blocking and tackling, Reed, and trying to make sure that we're battening down the hatches for the, we've been in this storm for 36- 40 months now. You can't be getting out over your skis on cost. Yeah, I agree. You know, there were some callouts. I'll just add on to what Paul was saying. There were some callouts to some pretty hard cost-cutting decisions in the quarter for which we provided a table in there that kind of reconciled those. Those were difficult decisions, but I would also say that throughout the year, we've been very cost-conscious. Some of the headwinds that we saw probably earlier in the year, whether it's first quarter or second quarter, were equipment-related costs. You know, just as we grow certain of our dedicated fleets and we start to expand geographies, it takes a while to begin to optimize your cost profile in those geographies and within those fleets. We're trying to find the sweet spot. We're trying to develop the amount of density needed to efficiently operate that equipment. There was some cost in the quarter and Q3 related to some startup costs, I would say, for shops and new hires, shop salaries, and things like that that we think will make us more efficient in the long run. We continue to invest in the things that are going to return the right capital to our shareholders. It's just clunky. I will say there was some clunkiness in the quarter. I think longer term, as we continue to grow that business, you're going to see some efficiencies from it. Got it. Appreciate the color, guys. Thanks, Reed. Our next question comes from Jeff Kauffman from Vertical Research Partners. Please go ahead, Jeff. Hey, guys, just some quick kind of look-aheads here. What are you expecting to hear from the other carriers at ATA that might be a little different than what you were thinking a couple of weeks ago? I think it's just going to be an add-on jump of everything we've talked about today. I think you've got motor carriers that are mad. I think you've got motor carriers that are happy with what the government is doing. I think that's going to be the tone at ATA. The side note is going to be, "OEMs, what are we going to do about trucks?" I think that's going to be the two pressing issues, don't you, Paul? I think it's going to be government regulation. It's going to be how bad's inflation been over the last 36- 42 months that you hadn't been able to get in rates? Regulation, trucks, and inflation that you hadn't been able to cover in rates. That'll be the three big talking points. Okay. Just one follow-up question because I know a lot of questions were asked by Scott Group. The shares are about 9x earnings right now, give or take. I know it frustrates you. It just is what it is. I know the balance sheet's in good shape, but what are you thinking in terms of share repurchase here? You don't want to get over your skis and buy them in a tough environment. On the other hand, the shares appear like a bit of a gift at these valuations for a buyback. No, I agree with you. I think our shares are highly discounted, and I think there's a lot of potential value there. To your point, the balance sheet is in good shape. Our debt today in terms of EBITDA leverage is just over 2x. We, for a variety of reasons, bought back a ton of stock. In the first half of the year, we had an earnout payment, and we front-loaded to avoid some tariffs on almost all of our equipment. I do think our margin or our debt potentially, just call it free cash flow, if you will, maintenance CapEx and cash from operations will improve in the fourth quarter and will allow us opportunities. I don't want to commit. We do have some availability under our share repurchase program that was approved by the board, but I don't want to commit to say that we're going to buy back any of that. We have a full range of options that we've exercised in the past, whether that's M&A or whether that's share repurchases and continuation of dividends. We feel like our formula is working, and we're going to stick with that. All right. I appreciate your answer, and that's all I have. Thank you. Thanks, Jeff. Thanks, Jeff. At this time, there are no further questions. We'll turn the call back over to Tripp for closing remarks. All right. Thank you, everybody, for joining us for the third quarter earnings call for Covenant Logistics Group. We look forward to talking to you next quarter. Thank you very much. This concludes today's conference call. Thank you for attending. The host has ended this call. Goodbye.