Hi, my name is Christian, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation first quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. Speakers for this call will be Dave Jackson, President and CEO, and Adam Miller, CFO. Mr. Miller, the meeting is now yours. Thank you, Christian. Appreciate it. Good afternoon, everyone. Thank you for joining our call. What can I say? We enjoyed, I guess, the last near four-year break from live conference calls, but I guess we're back now. We've decided to reinstitute the quarterly conference call and plan to hold the call on an ongoing basis, so you can expect to see this every quarter now. We plan to touch on quite a few topics today and have slides to accompany this call. The slides are posted on our investor website, which is investor.knight-swift.com/events. Dave Jackson here. Glad to have you back. You know, Adam and I are excited to spend the next hour with you. It's amazing to think that it has been four years since the last call. Boy, how things have changed. In addition to a global pandemic that none of us saw coming, our business has transformed rather significantly over that period of time. I mean, you have Swift Transportation, who, since call it second quarter of 2018, which was the last earnings call, arguably Swift is now the most profitable truckload carrier in the industry. We're in the LTL business with more than $900 million of revenue. Free cash flow on the last earnings call we did was $52 million. This quarter it's $352 million. Maybe what's another little fun fact is we were $99.6 million of adjusted net income on the last call. This one is $225 million for this quarter. All of this has been done while de-risking and diversifying our model, which we plan to talk about. We've got quite a bit pent up, so hopefully you'll bear with us as we walk through these slides and talk about our business. Thanks, Dave. Our call is scheduled to go until 5:30 P.M. Eastern time. During the call, we'll plan to discuss topics related to the results of the first quarter, provide an update on current market conditions, and update our full year 2022 guidance. Following our commentary, we'll answer as many questions as possible. In order to get to as many participants as possible, we're going to limit the questions to one per participant. I know this is our first call back in a while, so please don't try to sneak a second question in as a follow-up question. Just remember those tricks. If you have a second question, please feel free to get back in the queue, and we'll answer as many as time allows. If you don't get to your question, you can call 602-606-6349, and we'll try to connect back with you later today. With that, I'll refer you to the disclosure slide. We note the following. This conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions, and uncertainties that are difficult to predict. Investors are directed to the information contained in Item 1A, Risk Factors, or Part One of the company's annual report on Form 10-K filed with the U.S. SEC for a discussion of the risks that may affect the company's future operating results. Actual results may differ. Now we'll move on to slide three. This compares our consolidated first quarter revenue and earnings results on a year-over-year basis. We continue to generate meaningful revenue and income growth, both organically and via acquisitions that demonstrate the operating leverage of our business. Each reportable segment improved both revenue and margin, which ultimately led to a 49.4% increase in revenue and an 82.7% increase in adjusted operating income on a consolidated basis. GAAP earnings per diluted share for the first quarter of 2022 were $1.25, which represents a 62.3% improvement from the prior year, and our adjusted earnings per share came in at $1.35. Both GAAP and the adjusted earnings per share include a $13.1 million after-tax loss in other income or expense from an unrealized market adjustment in our investment related to Marten Transport. This loss reduced our adjusted earnings per share by $0.08. Now we'll move to the next slide. Slide four illustrates the revenue margin contributions for the first quarter and trailing twelve months in our segments. Chart on the right highlights the percentage of revenue during the first quarter of 2022 in each of our four segments, as well as the percentage of revenue from our other services, which include our rapidly growing insurance, equipment maintenance, innovation, warehouse, and services. Our strategy is to continue to diversify our business while improving both margin and revenue in each segment. During the first quarter of 2022, our truckload segment grew revenue 8.8% year-over-year, but as a percentage of total revenue moved from 77% in the first quarter of 2021 to 57% in 2022. This is a result of our continued focus on growing logistics, intermodal, and our recent investments in the LTL markets. Logistics revenue increased 122% year-over-year, and as a percentage of the total, grew from 10% last year to 17% this year. Revenue from services group together in the other bucket grew 172%, and as a percentage of revenue doubled from 3% to 6%. With our recent acquisition of AAA Cooper in July of last year, MME in December, our LTL segment represents 13% of revenue. The next few slides will discuss each segment, each segment's operating performance, starting with Truckload on slide five. On a year-over-year basis, our truckload revenue excluding fuel surcharge grew nearly 8%, while our operating income grew nearly 30%. Adjusted Operating Ratio of 78.2 was a 360 basis point improvement over the prior year. It was the first time we were below an ADOR in the first quarter since the merger of Knight and Swift back in 2017. During the quarter, revenue per tractor grew 9.6%, driven by a 22.9% increase in revenue per loaded mile and a 9.6% decrease in miles per tractor. Potential shifts to a shorter length of haul partially contributed to the increase in revenue per loaded mile and a decrease in miles per tractor. Miles per tractor also impacted by higher year-over-year unseated tractor counts as well as COVID-related issues early in the quarter. Recruiting and retaining drivers continue to be a challenge, but we are seeing improvement sequentially, that's a modest improvement in seated tractors, primarily as a result of our extensive training programs. Freight demand followed normal seasonal trends and was generally strong throughout the quarter. Contract rates continued to increase as customers work to meet committed capacity. We are especially seeing greater demand from our customers to secure trailer capacity through our truckload and logistics segments. As we make more commitments, as we expect how large carriers are, we are seeing higher tender acceptance levels and fewer non-contract opportunities. As the bid season progresses, we are reducing our exposure to the spot market as high contract rates support greater commitments. We continue to invest in our trailer network, which increased sequentially by 2,200 trailers to just over 71,000 trailers fleet wide. We believe our scale in trailers is a competitive advantage and provides our customers capabilities that are extremely difficult to replicate. Our Q1 results continue to reflect that the structural and fundamental changes within our Swift brand that has created parity in margins between both Knight and Swift. We believe these trends are lasting and expect the margins for our Swift brand to continue to align with historical Knight margins over the coming quarters. Now we'll move to slide six. This slide illustrates the results of our LTL operations, which now include a full quarter results of MME. For the quarter, revenue excluding fuel surcharge was $216 million, adjusted operating income was $30 million, and our adjusted operating ratio was 85.9, which was a 410 basis point improvement from the fourth quarter. The sequential improvement in OR was driven by AAA Cooper's 5.2% increase in revenue per shipment and 2.4% increase in shipments per day. Improvements were also driven by the benefit from our ongoing synergy efforts and the full quarter results of MME. The team from both AAA Cooper and MME have been working to harmonize network systems to AAA Cooper's footprint in the Southeast, with MME's footprint in the Midwest and Northwest portions of the U.S.. We believe that connecting these networks can together create additional revenue opportunities and improve margins. We are very encouraged by the collaboration of the MME and AAA Cooper teams, and our conviction for synergy achievement continues to grow. Customers are still seeking to secure capacity, and we continue to find revenue synergies from introducing our truckload customers to our LTL service. In January and February, we saw some negative impact from more frequent weather events, but volume and margins finished strong in March, and that momentum has carried into the second quarter. We expect double-digit increases in pricing coupled with realized cost synergies that will more than offset inflationary pressures and keep us ahead of our three-year goal to achieve an 85 OR while growing revenue in the high single digits. Additionally, we continue to look for opportunities to build out our LTL network, primarily in the Southwest and the Northeast. We are pleased to announce that during the first quarter, we acquired five facilities in Texas and one in Las Vegas to support organic growth. We continue to explore additional acquisitions and partnerships as we work to build out a nationwide network. Passing you now through to slide seven. Our logistics segment continues to grow at a rapid pace while expanding margins. Our power-only service continues to thrive, growing over 400% and helping to fuel logistics year-over-year revenue growth of 132%, volume growth of 77% and revenue per load growth of 37%. Gross margin was 20.2% in the quarter compared to 20% from last year, leading to an 85.7 adjusted operating ratio. This revenue growth, combined with improvements in gross margin, led to more than a 400% improvement in operating income, which was nearly $40 million for the quarter. We were able to grow volume in both our traditional and power-only services. Our expansive carrier network gives our customers tremendous flexibility in how they run their operations, allows third-party carriers to participate in drop and hook freight they would not historically have access to, gives us additional revenue opportunities by utilizing third-party carriers. We continue to be excited about this business. We have several projects ongoing that will improve the experience for our contracted carriers, as well as provide more seamless information internally and to our customers that will lead to more opportunities to utilize our equipment. Go to slide eight. Let's talk intermodal. We've made some meaningful progress in expanding margins as we've monetized our underutilized containers while we were transitioning rail partners. We expect to fully complete our package car operation during late second and third quarter, leading to additional growth in load volumes. Our switch from the BNSF to the Union Pacific was completed early 2022, and we are pleased with our new partnership. We did experience some customer disruption through the transition, but a strong pipeline of opportunities we expect will lead to year-over-year load count growth in the back half of the year. During the quarter, volumes were negatively impacted by chassis allocations and some disruption in network fluidity from switching rail providers, but it appears these disruptions are behind us. As we move through the bid season, we are seeing contract rate improvements in the high single- to low double-digit range while improving committed volumes. Our current rail partnerships allow us to approach customers with creative multi-year solutions, which has been received positively through the bid season. Additionally, we continue to make investments in the growth of this business and will be adding 2,000 containers throughout the year. As this business scales, we expect our operating ratios to trend between the high 80s% to low 90s%. We'll move to slide nine. The non-reportable segment hasn't been a great focus for analysts or investors over the years, but is now building as one of our fastest growing combination of businesses. We've seen significant growth in revenue and margin related to Iron Truck Services. We provide third party carriers insurance, equipment maintenance to market day shops, as well as detail truck fuel purchases. The growth in these services, particularly insurance, has been exponential, and we believe will be sustainable regardless of the freight environment. We have seen tremendous demand from our customers to lease trailers for storage, seasonal rushes or typical operational use. With the shortage of trailer equipment in detail, we believe demand will remain strong in this area. We've also performed well in our warehousing business and we are currently looking for areas to expand these services. As these businesses grow and develop, we will evaluate whether it makes sense to aggregate some of these businesses as a separate reportable segment in the future. We remain encouraged with the growth and diversification and contributions from the businesses that make up our non-reportable segment. This will be my last slide before I turn it over to Dave. We're moving to slide 10. Ultimately, we remain focused on creating value to our shareholders. The improved performance of our segments over the years have led to not only strong returns, but significant increases in the amount of free cash flow we have generated. This free cash flow has enabled us to invest in organic growth, aggressively pursue M&A opportunities, optimize our capital structure following the Knight-Swift merger, opportunistically buy back shares every year, and consistently increase our dividend. We've been able to position our business for long term growth and to navigate the different markets we may face along the way. With that, I'll now turn it over to Dave Jackson. Thanks, Adam. I'm gonna start here with slide 11. Our objective has been to build a successful industrial growth company with consistent double-digit returns on tangible net assets. This requires multiple growth avenues. It requires diversification of revenue streams to mitigate seasons and cycles. It requires massive network building to accumulate economies of scale, which we have done with over 200 facilities representing approximately 3,000 acres in the right places with employees, equipment, and execution for our customers. It enables us to operate with industry-leading cost efficiency and create value for our customers that yields abundant revenue opportunities. We've seen huge demand for our trailers as electronic logs have changed supply chains to using trailer pools as opposed to paying for detention when a driver can't immediately be loaded or unloaded upon arrival, which historically and prior to the regulation in 2018, that's largely gone uncharged to the supply chains and small carriers previous to that electronic log mandate. Consequently, we've been able to provide our customers additional capacity while still using trailer pools when we hire the power-only from small carriers. The power is the truck and the driver moving our trailer. This has been hugely successful with more customer and small carrier demand than we can keep up with. It has the potential to be a massive growth platform, one we've been designing and implementing technology along the way over the last couple of years to further remove friction and maximize the use of this platform, which in essence is our fleet network of profitable loads combined with our trailers. We'll continue to share more about this in coming quarters as additional technology is rolled out. The significance of the trailer in our industry's largest trailer fleet of 71,000 truckload trailers makes us a more resilient company. In 2019, when index spot rates between brokers and small carriers was nearly cut in half, contract rates endured better than any other negative cycle since deregulation. Most contract business uses trailer pools on at least one end. Non-asset brokers offering one truck and one trailer who need to be immediately loaded or unloaded is no longer a viable alternative as it was in previous cycles and it was exploited heavily in those cycles, whether that was 2008, 2009 or 2010 or 2011 or 2012 or 2013 or 2016 or 2017. Traditional non-asset brokers have struggled to have more than single-digit load volume growth in what has been the strongest freight demand in history. It's about value creation, and electronic logs changed economics and large trailer fleets are finally being rewarded and can mitigate volatility for the additional value that we create to the supply chain. Further evidence of this trend, and of the increased resilience in our truckload model, is that over 90% of the truckloads that we move involve a trailer pool on at least one side, if not both. It was never that high before this regulation took effect in early 2018. We'll continue to speak to the other new growth verticals in coming quarters, particularly the organic LTL growth and the fast-growing services to third-party carriers through Iron Truck Services. In addition to steps that we've mentioned to mitigate the seasonality and cyclicality of our truckload business, our revenues come from more diverse sources than ever. Over 40% of revenue comes from non-truckload services. 14% of revenue is multi-year dedicated, resulting in only 43% of our total revenues coming from irregular route truckload service. Next, on to slide number 12. You can see how our changing revenue diversity is leading to a diversity of earnings as well. This chart on the left shows the percentage of adjusted operating income from each of our segments and our other non-reportable services since the Knight-Swift merger in 2017 through the first quarter of this year. We're pleased to report meaningful contributions and earnings from each of these areas. I'd also like to point out that in 2017, virtually 100% of our earnings were generated by our truckload segment. For the first quarter of 2022, this percentage of adjusted operating income has moved to 64%. Keep in mind that this reduction in our truckload earnings percentage has changed, while at the same time we more than doubled our truckload earnings from the 2017 full year combined pro forma Knight and Swift earnings of $319 million to $786 million for the full year of 2021. The chart on the right shows our rolling fourth quarter adjusted earnings per share since the Knight and Swift merger. During this time, the EPS has moved from $2.15 per share to $5.24 per share. Next, on to slide 13. It shows the scale of our network across our various brands and services throughout North America. The graphic highlights our locations by brand, including major truckload locations at Knight, Swift, Abilene, Barr-Nunn, and our LTL locations of AAA Cooper and Midwest Motor Express or MME, also our warehouse locations. In total, as mentioned, we have over 200 sites across the U.S. and Mexico. The size and scale of our network allows us to provide end-to-end services to our customers, the opportunity to link various solutions to optimize each brand and collectively, afford us significant buying power. I don't want to say that our network can't be replicated. There's just nothing that rivals what we have, and we're just beginning to leverage all that can be done with this network. Next to slide 14. Just a glimpse into some of our ESG-related activities. Sustainability and being good stewards to all stakeholders, including the community and the environment, are important and a priority to us. We're making progress towards our multiple goals, including the near-term goal of a 5% reduction in CO2 grams per mile by 2025. We've made major investments in safety-related technology and experienced a 37% decline in our combined DOT recordable crash rate since 2018. Supporting worthy community causes and supporting individuals seeking education and training to better themselves have long been part of our culture, now more so than ever. On slide 15, we'll provide a bit of an outlook. We see that contract rates continue to be strong, which is pulling capacity from the spot market to be locked up and committed contractually. Just extraordinary demand for trailers right now. Different than 2021, we do expect to see, and have seen, some seasonality to 2022. Produce and beverage are typically the first seasonal upticks of the year. We typically don't see those until middle part of the second quarter, which we would expect to see. Used equipment is scarce and at all-time high prices with very limited access to new trucks or new trailers, all of which is creating a very high barrier for any growth. Fuel, of course, further discourages capacity additions at the moment. Speaking industry-wide, we're seeing and expect strong LTL demand to continue throughout the year. Driver hiring continues to be difficult. The Drug and Alcohol Clearinghouse continues to make the industry safer, but does disqualify a meaningful amount of drivers each month. The cost of everything is on the rise, especially for those who don't have economies of scale. Speaking particularly to small carriers that we might compete with. Cost per mile has been irreversibly increased in many ways, in many areas. For perspective, the peaks in rates in 2018 is insufficient to cover small carrier costs today. The trough in rates, this cycle could very well be higher than the 2018 peak in rates. I'll now turn it over to Adam for guidance. Okay. This will be our last slide, and then we'll jump into calls. Slide 15 outlines our guidance for the full year 2022. We now expect full year 2022 adjusted EPS to fall within the range of $5.20-$5.40. This is an increase from our previous quarter guidance of $5.10-$5.30. During the first quarter, bid season was robust and we expect full year double-digit contract rate increases, with larger increases occurring earlier in the bid season and now moderating as the bid season progresses. In spot rates, we expect those to continue to moderate. We expect tractor count to remain stable through the year with a modest sequential improvement in miles per tractor as we improve our seated truck count. Stronger modal margins in the first half of the year, then normalizing into the high 80s or low 90s by year-end. We expect load volumes will grow sequentially and expect to surpass year-over-year numbers in the second half. Logistics, we expect that to grow by about 30% with margins in the high 80s-low 90s. At LTL, we're expecting to grow through the year and improve our margins towards the mid-80s goal that we referred to. We expect other revenue and income to grow compared to the prior year as well. Continuing inflationary pressures from driver expenses, maintenance, equipment, non-driver labor will continue to see inflation. We're feeling pressure really everywhere in our business. Gain on sale was elevated in the first quarter, but we expect to see that still on a much higher level than in a normal year, but begin to moderate in the back half of the year. Then we expect our net cash CapEx for the full year to be in the range of $550 million-$600 million with our cash rate to stay around 25% for the year. These estimates represent management's best estimates based on current information available. Actual results may differ materially from these estimates. We refer you to the Risk Factors section of the company's annual report for a discussion of the risks that may affect results. That concludes our prepared remarks. We'd like to remind you that this call will end at 5:30 P.M. Eastern. We will answer as many questions as time will allow. Please again, keep it to one question, and if we can't get to your question, you can dial 602-606-6349, and we'll do our best to follow up. We will now entertain questions. Christian. Ladies and gentlemen, if you have a question at this time, please press star and the number one key on your telephone. Again, that's star one to ask a question. Your first question is from Jack Atkins from Stephens. Okay, great. Good afternoon, guys. Thanks very much for taking my question. Hi, Jack. I guess let me start with the one that's on probably the top of mind for most investors and most analysts on the call. You know, you guys did a great job, I think, laying out the steps you've taken over the last several years to diversify the business, make you more resilient to the typical upside and downside of the freight markets. I guess as we look forward, nobody has a crystal ball, but you know, what do you think that translates into in terms of the potential risk to earnings if we were to go into a more challenging freight market? We think back to 2019, your earnings were down sort of 15% versus 2018. Do you think the changes that you've made to the business, mute that somewhat as we kind of think about what could come next for the freight markets? I'll just hand it over to you and let you kind of talk about that. Yeah. Well, I think the business profile has changed quite a bit. You know, I think in those prepared remarks, hopefully, they weren't too comprehensive, but we've covered quite a bit of that. I think when you look at our business and you look at the just a kind of a recap here, just to size up really how much we're talking about in terms of volatility. Because this will support kind of my end statement, which is you have trouble finding a trough EPS that doesn't start with a four. That's ultimately where I'm headed with this. That's quite a bit different than where we were in 2019. The makeup again of the business is quite a bit different. If 43% of our business is really a regular route exposed, and that's when you back away dedicated, you back away all the other businesses. Recognizing that again, 90% of that business is tied to trailer pools, which makes it where there's a relatively small number of competitors that we have that can come in and bring thousands of trailers in a nationwide type of a bid to compete with. 24% of our revenue is variable, and that would be logistics. The new arrangements we have with our rail partners provide some variability for us, allowing us to be a little flexible in the market. Then of course, you've got 13% presently, and we have an appetite to continue to grow that both organically and through acquisition. The 13% is LTL, which historically is incredibly durable. Then we got another 6% of other revenues that's growing rapidly that is not really tied to freight rates. That's why when we look at our model and we look at, okay, giving up as much as, you know, comparing to where we just performed with our truckload business in the first quarter. Giving up as much as nine or 10 OR points, we still can see our way to an EPS annual number that starts with a four. You know, that's significantly different than any other cycle we've been part of. If we can, as we think about a crystal ball and just look out for a moment, you know, the reality is equipment is very scarce and has a limited useful life. We've not, as an industry, supplied the industry with enough trucks to really accommodate the aging useful life of equipment. The OEMs aren't taking any more orders this year for trucks. They haven't opened up the order books for 2023 yet. They're having difficulty delivering on time, trucks from last year have been pushed into this year. We suspect the same will happen, as we have difficulty there. Dealers are on allocation right now. In previous cycles where there hasn't been discipline and there's been an oversupply, what we've seen is that the dealers are complicit in that as they speculate. The finance companies, even the banks, get a little aggressive on the financing side to this. Those are not happening now. Another impact that I'm not sure has been fully recognized is that the large fleets like us, we're not trading our small trucks. We're not selling those at the normal pace that we're accustomed to because we can't replace them with new trucks. It's preventing us introducing affordable four-year-old, call it four- to five-year-old, is the typical large fleet would trade out on a trade cycle. We're not supplying or enabling small carriers to affordably come in and add capacity. The limited number of used trucks we are selling, in some cases we're selling these for as much or close to what we paid for them brand new before we put 450,000-500,000 miles on the trucks. It sets up a whole new problem if the economy's headed for a little tough patch and the banks decide to not be so aggressive in the financing. I would say that watching what's happening with equipment is maybe the most valuable thing we can look at for the crystal ball for the whole truckload. Now, we know that demand has been incredibly high, but part of that demand has been because of urgency. Normally there's six months or sophisticated supply chains are buying products that they import nine months in advance. Things have been more hand-to-mouth and more urgent in the supply chain. You know, because you can look at inventory to sales ratios and the reality is there, you know, has been a little bit of a dead cat bounce off the bottom. It's still, I think, the last number was 1.13, which is well below the 1.4 historical average. I think when we look at what's happened most recently in freight rates and the reports of the death of the freight market, which have been greatly exaggerated, I think that what we're seeing a little bit of is seasonality. There isn't the kind of urgency that we saw last year or really that we've seen for almost a year and a half nonstop. There isn't a lot of urgency. There's not a holiday with a deadline that's driving a lot of this. It'll be interesting to see what seasonality looks like when beverage and produce season come into play. I suspect that we're back to a world where we'll see the seasonality, the ebbs and flows. You know, some of what we've seen here in the first quarter was likely you know, some of the least efficient freight. This was live load, live unload. I'm speaking to what we saw happen in the index, which is the indices that are out there, which is smallest carrier getting a load from a broker. It's live load, live unload. It's stuff that didn't have commitments and it's paid at ridiculously high rates. Of course, that's going to be the first stuff to go away. I think it's a little early to try and call the bottom of the overall market, you know, given what I shared about equipment. That being said, our business is prepared, and it's been years in the making, to weather whatever cycles might come our way, you know, in the future. Adam, anything to- Yeah. Again, I think talking about the used equipment market, those that have ventured into to grow their used truck count from a small carrier perspective, their cost structure is very different to where it's ever been. They can only afford to drop rates to a certain level before they exit our space because they're buying equipment at probably 3x to 4 x what they would have purchased it in the previous cycle. That's one thing to watch really closely. As Dave mentioned, there's less urgency, but there's still a firm market out there. There's still quite a bit of demand to secure trailer pool capacity. Even looking at some of the indices, although they're off their record highs, they're still very elevated when you compare, you know, to, you know, to other prior years or even, you know, even averages over a period of time. Well, Jack, that was two answers to one question. Dave and Adam, thanks very much for that. Really appreciate your time. I'll hand it over. Thanks, Jack. I appreciate it. Next question is from Bert Subin from Stifel. Hey, guys. Good afternoon, and thanks for the time. You bet, Bert. Adam, you said you expect spot rates to continue to moderate, but ex fuel rates are already down, you know, roughly 20% from the peak. What makes you think they'll continue that trend will continue to persist? How does that make you assess as you guys get to that four handle? Well, when we're thinking about spot rates, we're thinking about what we do in our business. I think what you see in some of the indices is really more of a broker to small carrier transaction. Anything that we do spot right now is gonna be at a premium to where our contract rates are. As we improve our contract rates, we make more commitments, we'll probably see less exposure to spot and probably see those rates come a little bit tighter in to where our contract rates are. As you know, there's even less urgency to move goods. I think what we do on the contract side, which now represents closer to 85% of our load count on our regular route trucking, that I think gets to the business. We can offset any impact from the fewer spot loads that we're able to haul. Now, kind of follow up, just for clarification, you weren't making any sort of prognostication about spot rates from here. You're just talking about sort of how you guys are switching to contract? Yeah. I think we're just thinking about the progression of the market and how we would navigate through and how it would impact our business in the back half of this year. That comment is not tied to what we think will happen with PHC rates or Internet Truckstop source or any other derivative of those on that relationship between small carriers and brokers. Yeah. We don't participate. We don't get those kind of spot rates through brokers. In that world, we think that you'll see some seasonality, which is part of what we've seen already. I think the comment that we talk about moderating is that we have been. We've had the throttle a little bit more opened in terms of a percentage of our revenue that is more in that spot factor. That is, you know, we are seeing very strong contractual renewals. I would even dare say stronger than we would have expected. That is naturally pulling some of that spot, that very high spot into a longer term, more durable, contract arrangement. There are two different things. Please don't take that as an industry-wide prognostication. Thanks. Thanks for that. Your next question is from Ravi Shanker from Morgan Stanley. Thanks. First of all, gentlemen, thank you so much for being this far as well back, and I genuinely mean that. You won't regret it. Let's get to the next question. I just wanted to focus a little bit on power-only. Your commentary there was incredibly powerful, as it has been the last several quarters. Do you see a long-term shift in the, you know, what would have been a traditional quarter for a brokerage market away from the asset-light brokers toward the asset-heavy carriers as a power-only? What does it look like, and what could the long-term margin discipline supply? Yeah. Ravi, thanks for the question. It, yeah, we've seen a shift. I mean, this is the first time where you've had such strong freight demand and truthfully, the non-asset broker has been somewhat on the sideline that's not marginalized in this. You know, we kind of have this new term we refer to, which is traditional brokerage. Within our own logistics business, we kind of have traditional brokerage, which we, to some degree, are running to stand still like some of the other large ones, where it's hard to get above a single-digit load volume growth. Meanwhile, we have our power-only business, you know, that represents give or take 40% of our logistics revenue. You know, we see load... We saw load count improvement year-over-year in the first quarter of 166%. Now collectively, our logistics business was up about 77% or 76.9%. That gives you a sense at what the pace is. Keep in mind, this is at a time where small carriers have opportunities, better opportunities to haul loads, and so they're choosing to come in. You saw that our gross margin for our logistics business was 20.2%. I can tell you that the power-only margin was higher. It pulled that average up. The average for the traditional brokerage was much lower. You see we're in a case where we are artificially propping up or we're in some way cannibalizing our business to make this work. There's no doubt that there is demand from both sides, from small carriers to participate in freight that they used to be part of but no longer are because of shipper preference and demand to use trailer pools. They have two days to unload a load as opposed to two hours to unload a load. There's no doubt that those forces exist. The question is: How do you efficiently facilitate a platform that can serve both of their needs while at the same time serving our need to get a return? That's what we're doing, and that's where we have technology that we've been developing, that we've been acquiring, that will help us to facilitate this. You know, the difference for us is we don't have X number of trailers that we've allocated to this. We have, as we've mentioned about 5x so far in the call, we have 71,000 trailers. We're gonna keep talking about that. If all goes well this year, we're gonna add more than 10% to our trailer fleet that we should receive based on what we think schedules will allow. It's going to continue to grow. If we have this kind of demand in this strong environment, we feel like there are ways we can transition and make that even more appetizing and appealing, in an even more difficult environment. It is very much a different offering. To your point, it is very much a different offering, and it is a tale of two cities in terms of, one, the traditional old school live load, live unload way that is struggling to grow versus this, that we almost can't slow it down. So. Ravi, you're talking to customers. Sorry. Rob, you're talking to customers. The value proposition is so different than a traditional broker who isn't bringing equipment. Some customers limit how much of their business they'll allow to actually go to brokers because they want people with assets. When we come with a logistics sell that involves trailers, that is not put into the brokers bucket. It allows for as much growth, in many cases, as they can get from that service because it allows for them to keep the fluidity of that network, which has become so much more important to supply chain than it really ever has been. Yeah. You are confident that this is not just a quirk of the last cycle. I mean, this is here to stay, right? We believe this is here to stay because this is a function of a regulatory change that took effect technically December 18, 2017, when electronic logs were mandated. Enforcement, I don't think started until, like, April 2018. On that day in December, in our brokerage, we had the smallest of carriers demanding to be paid or unloaded within two hours. All of a sudden, the industry began to charge detention. The truth is that change should have happened January 4, 2004 when the hours of service rules were changed. That's when we saw it. If you look at most carriers, when you're just comparing a solo driver in a truck, we saw somewhere between 8%-10% of miles per truck of productivity just disappear till the fleets could have ways to audit against the logs. They didn't have ELDs in the truck. They hadn't been developed to the level that they eventually were. But for just trying to live up to that hours of service change where you can't stop the clock, the big guys, we felt it. We felt the impact. We saw our detention go up, and we saw it become much more difficult to compete, frankly, since 2004 until 2018. Because we were largely competing with, in some cases, large brokers or 3PLs that were dealing with small carriers that perhaps had more flexibility. We'll just call it that with the log book than what those of us that were living by the 2004 rule. Now the 2004 rule is finally being enforced, and it's dramatically changed the economics of trucking because you know, this is a penny business. On many backhaul lanes, if you charge an extra $60 on a, you know, 350-mile length of haul backhaul load, you're talking about a 50% increase 'cause it took you three hours to unload instead of two hours. You know, historically, that small carrier was kind of the rubber band, and the customer didn't have to pay for that kind of inefficiency, and they just weren't built for it. They probably didn't even realize how much, how inefficient it was. Of course, in 2018 we had immediate overnight tightness because you had these carriers having to drive less miles, perhaps 8%-10%, just like we had seen back in 2004. This is not a fluke of the pandemic. In fact, if you look at what happened to spot rates and contract rates in 2019. Spot rates were off about 50%. Contract rates were off about 5%. It's never been that wide of a gap between those two. You know, the big difference was contract rates are largely nearly all today, but back then were largely trailer pool connected. Ravi Shanker, if you look at, we talk about Iron Truck Services, and we see that kind of growth in the other reportable. You know, we're now a couple years into developing, you know, for example, the maintenance network where we're doing maintenance out of 29 or so shops, or we're underwriting insurance for thousands of carriers now. We're really addressing the pain points for these small carriers because the nature of our relationship with third party carriers is evolving and changing. It's becoming less transactional as it normally was in a non-asset broker world where you take a margin off of desperation when a small carrier needs to move a load. That's been. That's not 100% of how brokerage works, but that's a lot of the broker loads. That's how that works. We are finding ways to create more of a win-win and dare I say, consolidation. That's where this is headed. We're able to help them. We're able to leverage our size and scale to bring some of these benefits to them that ultimately, we believe can lead us to more competitive pricing, be more enduring in up and down cycles and give us the kind of variability that we're looking for. What you see now, I hope, is these things are not unrelated. Ultimately, efficiency wins today, which is why trailer pools are in such high demand from the supply chain. It is so much more efficient. We are bringing other efficiencies to these small carriers because in the end, we think it will allow us to be even more efficient in the kind of pricing we can offer long term. Great. Thank you, Adam. Thanks, Ravi Shanker. The next question is from Todd Fowler from KeyBanc Capital Markets. Hey, afternoon. Hi, Todd Fowler. Sorry, it's Zach. Question on LTL. We saw the growth in terminals during the quarter. I guess, can you guys think about your ability to continue to grow that business organically through the year? Is that through leveraging existing locations or maybe just additional terminal adds? If that's the case, is there a guidance we should be thinking around in terms of those adds quarterly? Conversely, just kind of your general thoughts on the M&A environment in LTL. Thanks. Yeah. Well, thanks for the question. You know, as we noted, we picked up six new facilities. These are existing LTL terminals. They've been LTL terminals in the past. You know, we'll do a little bit of work to get these things ready to go and embrace those. You know, we'll have a couple of those. Hopefully we'll get rolling with them, but before the end of the second quarter, and then between Q3 and Q4, we'll continue to add some more. There may be a terminal or two that don't really come into full life until maybe even early next year. We saw an opportunity to pick those up, which we did. You know, Adam, in his remarks, mentioned about how connecting just the AAA Cooper and the MME network is leading to revenue opportunities. We're seeing that. I mean, this was by far the, you know, our best performance in our limited time so far in our nine months that we've been in the LTL business. If you were to break it down, you know, January and February, particularly in the southeast, suffered quite a bit of inclement weather. Those were at least five weeks between January and February where we were not where we would have normally been. March was perhaps the best in history. We brought that momentum into the second quarter. When you look at that mid-80s OR, you know, March helped significantly there. We're starting to see the impact of these, of working together. We're starting to see the impact of some customer introductions and increasing just organically the volume. We're seeing improvement in the rates. A way to think about this is we're going from two regional businesses to, you could maybe say we now have a super regional LTL presence, and we're on our way to a national presence. It appears that the pricing, when you can be super regional, there's pricing opportunities with that. When you can be national, there's even more pricing opportunity that can come with that. We're just getting going and exploring that. Adam, anything else you'd like to add about the growth cadence throughout the year? Yeah. As I mentioned earlier, we're finding customer synergies. When we look at the customer base of our truckload business, those are very large shippers, and many of them are not in AAA or MME portfolio. As we make those introductions on board freight, those are big wins, big opportunities to grow and diversify the freight mix in those businesses. We've seen several of those wins that have started to scale, and we'll see more and more of those as the quarters, you know, progress. We're excited about that. We're bringing the MME team onto the AAA system to have better connectivity to the customer, more fluidity through the network. There's a lot to be done that wasn't connected versus two separate systems. We're excited about that. What's the most encouraging is that the MME team and the AAA team are on the same page and they're working hand in hand to find the best way to develop the most fluid, cost efficient, effective LTL network. As we bring on other LTL providers, which you know, that's our desire, that's our plan. We have now a roadmap to be able to do that and to know how that could work. Great. Appreciate it. Thanks. Your next question is from Amit Mehrotra from Deutsche Bank. Your line is open. Hi, Amit. Thanks, operator. Hi, Dave. Hey, Adam. So I just wanted to ask you, I guess a couple quick hit questions, if I could. First one, the operating ratio last year, high 70s%, even mid-70s% at some point last year. Obviously, you showed the power of the model, the power of the Swift integration in a really, really good market. What does that look like at the other end of the spectrum in a really bad market? No one, you know, I'm not calling for that. You guys aren't calling for that. Clearly, I think that's an important question in the context of the conversations today. The second related to that, Adam, you talked about rejections coming down due to higher contract rates. That makes entirely good sense from the carrier's perspective. What I'm wondering is, have shippers tendered less volume because of what's happening in the spot market? It doesn't appear that way because of, you know, the drop and hook or the trailer pools. If you can just talk about at what point do you think. Have you seen any indication of the shippers moving away from tendering volumes that they committed to because of what's happening in the spot market? Well, real quick, I think Dave touched on a little bit on the potential downside, particularly on the truckload side. You know, the way we look at that is we expect the full truckload segment, which includes dedicated business and the Knight business, in a difficult market to operate at that mid-80s operating ratio consolidated, including our dedicated. In a more normalized environment, maybe that's 80 to low 80s. In a good environment like we're in, you're operating in the 70s. I mean, that's consistent with how we performed in the Knight business, you know, through cycles. When you think about tenders, you know, again, as Dave alluded to, there's less of the urgency in the system. You know, a lot of times the rejections we see or and others will see are the same load. They're tendering it to as many people as they can until they can get someone to accept it. Now as customers are willing to make concessions on contract rates, more commitments are being loaded in the systems for these carriers, and they're accepting more loads. There's no longer the waterfall that people have to go through and get tendered out to multiple carriers to see who has capacity to pick it up. I do think that has, you know, the greater number of commitments being made has helped that. I would say, you know, we watch really closely kind of what the response and behavior demand is from our customers. We've already seen where some of those that started the bid season late last year and finally got through to tender the awards in the first quarter was supposedly the earlier one. We've already seen where it appears that those bids that they didn't get as many commitments as they would've hoped because we immediately see a mini bid following the normal bid that in essence was seeking commitments on what had just gone through the system. Of course, you know, of course that second round typically comes with much higher rates because there were already increases in the first one. That mini bid follow on typically is even higher. You know, we're still seeing that. We've been seeing that. We saw that all through 2021. We saw that through the back half of 2020. But really the bid season of 2021, which was a year ago, I mean, that was the norm. We're still seeing that today. I just think it speaks to the fact that there's just the kind of capacity that they need in their supply chains. It's become scarce. If you look at the regular route capacity, particularly on a larger scale, which would include, you know, having access to trucks and trailers in the spot market, even the large guys are the only ones that can really provide that. The large truckload players have been moving away from the regular route, full truckload, and have been moving maybe into the arms of dedicated a little bit more or something else. There just isn't as much of that. Now that's our bread and butter. I mean, we love that. We're very comfortable with that. It arguably is the most valuable to the customer. I think that's what we continue to see. You know, I think one has to be careful in extrapolating too much on data that comes from a load board. When the high quality capacity and the kind of capacity that the majority of the shippers in this country look for, we're not on load boards looking for loads. Right. Okay. Very good. Thank you very much. The last question is from Tom Wadewitz. Please state your company affiliation, and your line is open. Yeah. Hey, Dave. Hey, Adam. Thanks for- This is Tom from UBS. Yeah, Tom from UBS. You got it. Thank you. Thanks for doing the call. It's great to hear you guys live and you know, appreciate it. I wanted to get your thoughts on use of cash. You generated a lot of cash in the quarter. You know, I think too, there's an intention to you know, expand these non-regular route truckload businesses more aggressively. You know, how do we think about the most likely use of this cash? I know when you do M&A it's hard to forecast when that happens. You know, are you optimistic on doing LTL deals this year? Are you thinking there are other types of deals or just, you know, what's your kind of lay of the land and most likely uses of, you know, the pretty significant free cash you have in the balance sheet for next year? Yeah. Well, thanks, Tom. Yeah, the cash flow creation is astounding and probably, I don't know, dare I say underappreciated a little bit. I mean, when you look at over $900 million of cash flow generated last year or in a first quarter, $352 million, it's significant. You know, if you look at where our debt is, our debt is at the low end, if not slightly below what our target capital structure would have us at. We're definitely poised to continue to make investments. We would love to grow in LTL, but we will only grow as fast as reasonable opportunities present themselves. You know, we're gonna continue to execute. We did two deals in six months, and so we've been digesting those. I think one of the most compelling things that we have for future LTL deals is success with the current partners that we have right now. Proving out that this can work. Reid Dove, who's the CEO of AAA Cooper, he gives a great example talking about how, you know, the loads that get picked up in Birmingham, Alabama, are picked up by AAA Cooper, and just as they would have expected. Those loads might be delivered in Fargo, North Dakota, and those loads are delivered by MME, which is exactly who they expected to deliver it. Behind the scenes, you know, we're there connecting networks and making it all happen behind the scenes. Very few people have ever done it quite that way. Certainly, nobody's done it that way on a nationwide scale using those different brands. MME drivers, they enjoy driving for MME, likewise for AAA Cooper. The fact that we're having success, the fact that we just posted an 85.9 OR with continued revenue growth, that's powerful for other families or individuals who own these other LTL, regional LTL businesses. They put their heart and soul into it. The fact that they can look and see what we're doing, we think stands as powerful evidence. We're gonna continue to do that, hopefully put some money to work in LTL and continue to look for other deals that connect and help us diversify and become a stronger industrial growth company. Now, along the way, you know, when our stock price gets attractive, you can expect that we'll take advantage of an opportunity to buy back some shares that, you know, feel like very discounted key multiples. Bought back almost $150 million worth of stock here in the first quarter. You know, at some point it could be that we just generate so much cash that we continue to look at the dividends as well. The priority is investing in our current business and making acquisitions. Thanks, Tom, for the question. Everybody else, boy, we appreciate you joining our call this afternoon. Everybody be safe. Ladies and gentlemen, discussion concludes on this call. Thank you for participating and have a great evening.