Good afternoon. My name is JP. I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation 2Q 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. If at any time during this call you require immediate assistance, please press star zero for the operator. Speakers from today's call will be Dave Jackson, President and CEO, Adam Miller, CFO. Mr. Miller, the meeting is now yours. Thank you, JP. Good afternoon, everyone, and thank you for joining our second quarter 2023 earnings call. Today, we plan to discuss topics related to the results of the quarter, provide an update on current market conditions, and update our full year 2023 guidance. We have slides to accompany this call, which are posted on our investor website. Our call is scheduled to go until 5:30 P.M. Eastern Time. Following our commentary, we'll answer questions related to these topics. In order to get to as many participants as possible, we're going to limit the questions to 1 per participant. If you have a second question, please feel free to get back in the queue. We will answer as many questions as time allows. If we're not able to get to your question due to time restrictions, you may call 602-606-6349. To begin, I'll first refer you to the disclosures on slide two of the presentation and 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 1 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. Before we get into the slides, I want to turn the call over to Dave for a few opening remarks. Thanks, Adam, and we appreciate you joining us today. We're now over a year into a freight down cycle with an unusual combination of dynamics at work to create a particularly difficult operating environment. I don't know that we've ever seen freight demand fall this far, so fast and for so long without an accompanying economic recession. I'm not suggesting that truckload demand softness is an automatic read-through or predictive indicator of broader economic weakness. In fact, we're very encouraged with how consumers and the economy have digested interest rate increases and their positive impact on inflation. The truckload market was severely impacted by the reduction from the unusual and enormous growth in inventories that built in the latter part of 2021 and into 2022. The worst of those adjustments appear to be behind us, and we expect further normalization in the flow of goods and supply chains. This normalization is now being met with less truckload capacity as carriers have not survived with the harsh truckload freight environment. One of the reasons is the lack of cost reprieve that would normally be associated with such a decline in truckload freight demand that this inventory destocking catch-up has created. Ordinarily, a broader economic recession would have matched those soft freight volumes with significantly lower fuel prices, very low equipment costs and a loose labor market, with drivers more plentiful than any other time. None of those cost concessions have been present this time, leading to margin pressure, business failures for others. These prolonged challenges are setting up for an eventual strong recovery. Such recoveries often come from an unlikely catalyst and can be difficult to predict with precision. We are positioned to grind in the current environment and thrive as conditions improve. This includes our newly acquired U.S. Xpress. Additionally, we have significant opportunities unique to Knight-Swift, such as the build-out of our LTL network and doing for U.S. Xpress what we have done with Swift in achieving new levels of profitability. We are seeing the benefits of diversification with our LTL segment in their continued growth and performance. Now, I'll turn to slide three. Slide three compares our consolidated second quarter revenue and earnings results on a year-over-year basis. Revenue, excluding fuel surcharges, declined by 17.9%, while our adjusted operating income declined by 66.3%. GAAP earnings per diluted share for the second quarter of 2023 were $0.39 per share, and our adjusted earnings per share came in at $0.49. These results were negatively impacted by a $10.2 million increase or $0.05 per diluted share in interest expense, and the $15 million operating loss, or $0.07 per diluted share in our third-party insurance business within the non-reportable segments, primarily as a result of ongoing claims development during the quarter as we work to realign the performance of this business. The operating loss was reduced from the $22.8 million loss in the first quarter, and we anticipate that the operating loss will moderate further to approximately $10 million for the second half of the year. Now on to slide 4. This slide illustrates the revenue and adjusted operating income for each of our segments. Freight demand in the second quarter was below expectations and has largely lacked the typical seasonal patterns of support for the fourth consecutive quarter. The depressed spot market and weak demand caused pressure on contractual pricing to intensify in the truckload, intermodal, and logistics segments. This caused acute pressure on margins in our truckload and intermodal segments. Our LTL segment weathered the soft environment well, operating in the mid-80s. Logistics navigated significant declines in volume and revenue per load year-over-year to produce a 91.6% adjusted operating ratio. I'll now turn it to Adam to discuss each segment's operating performance, starting with truckload on Slide five. Thanks, Dave. On a year-over-year basis, our truckload revenue, excluding fuel surcharge, declined 15.5%, while our operating income declined by 67.1%, reflecting the comparison of an especially difficult second quarter of 2023 against the record-setting quarter, or record-setting second quarter earnings of 2022. The prior year quarter was the peak of overall rate per mile, as still rising contract rates overcame spot rates that had begun to fall rapidly. The softer-than-expected demand in the first quarter put more pressure on contractual pricing through the second quarter than expected. Our cost control efforts helped hold cost per mile flat with the first quarter, though costs were still up 2.7% year-over-year. During the quarter, revenue per tractor fell 14.5%, driven by an 11% decrease in revenue per loaded mile and a 3.3% decrease in miles per tractor. Overall miles and utilization bottomed in April before building modestly throughout the balance of the quarter. This second quarter marks the lowest absolute utilization level for a second quarter ever, largely due to the weak demand environment, coupled with the persistent tightness in labor in the general economy. The low utilization is one of the headwinds on cost per mile and revenue per truck that makes the current environment particularly difficult, but which represents a meaningful operating leverage opportunity once demand levels recover. We'll move to Slide six. Our LTL segment continues to perform well, modestly growing revenue excluding fuel surcharge and delivering an 85.1% adjusted operating ratio despite the softer volume environment. Pricing remains solid as revenue, excluding fuel surcharge per hundredweight, increased 7% year-over-year. Shipments per day were down 3.9% year-over-year, but did show a sequential build in May and June, which appears to be continuing into July. We have experienced a recent increase in inbound requests from shippers for additional capacity support moving forward. The map shows the AAA Cooper and MME terminal locations and indicates new locations since the acquisitions in 2021, as well as planned locations in the near future. Filling out a super regional network in the short term and creating a national network in the long term will allow us to participate in more freight and enable us to find opportunities to further support our existing truckload customers with LTL capacity. This remains a key strategic priority for us. On to Slide seven. Despite the challenges posed by the soft market, our logistics business remains disciplined and nimble and maintained near double-digit margins with an adjusted operating ratio of 91.6%. This was achieved while the current environment is marked by top-line price pressure that is no longer being offset by corresponding declines in purchase transportation costs. Overall revenue was down 52.4%, driven by a 26.8% decrease in revenue per load and a decrease in load count of 35%. Customer behavior has exhibited a strong preference for the power-only value proposition over the past few years. These volumes were stable quarter-over-quarter, while our traditional brokerage volumes declined sequentially. Further, we expect this service will be an outsized beneficiary once demand recovers. On the right, we show an actual snapshot of our trailer locations at a point in time to illustrate the extensive coverage we have throughout the supply chain network. This network of nearly 80,000 trailers, growing further with the addition of U.S. Xpress, provides us the ability to respond with distinctive scale in both our truckload and logistics segments to our customers' needs. We continue to be excited about this business and have several technology initiatives ongoing that will improve the experience for our third-party carriers, as well as provide more seamless information internally and to our customers that will lead to more opportunities to better utilize our equipment. On Slide eight, I will cover our intermodal segment. Revenue decreased 21.5%, driven by a 24.5% decrease in revenue per load, partially offset by a 4% increase in load count. Additionally, the wind down of our container leasing project further pressured revenue and operating margin in the quarter. Intermodal industry volumes are down due to the soft freight environment and the current competitive position of the truckload alternative. Customers are leveraging the low spot rates, quicker transit times, and a better service in the truckload market. However, improvements in rail service and positive volume awards we are seeing through the bid activity should support volume growth and a return to profitability. Further, we will experience improvements in underlying rail costs in the second half of the year. Now on to Slide nine. Slide nine illustrates our non-reportable segment, which includes insurance, maintenance, and equipment sales and rentals under Iron Truck Services, as well as equipment leasing and warehousing activities. For the quarter, revenue growth slowed to 1.6% year-over-year, largely as a result of our actions to address the recent challenges within our third-party insurance program. Our efforts to improve our Iron Insurance line of business reduced its operating loss by $7.8 million since the first quarter to a $15 million operating loss during the second quarter. We have made progress reducing the exposure basis of third-party carrier risk. We are applying more stringent underwriting criteria and higher premiums for any retained risk as policies come up for renewal. The current operating loss is primarily due to ongoing claims development and the time it takes to work higher premiums through the portfolio. The other businesses within the non-reportable category remain largely stable. Their income partially offset the loss within the Iron Insurance business, bringing the non-reportable segments as a whole to an operating loss of $7.1 million, which includes amortization of intangibles of $12 million related to the 2017 merger between Knight and Swift and other acquisitions. We anticipate modestly positive operating income for the non-reportable segments for the second half of the year. We expect to continue growing the revenues and income from these other services over time, and believe this effort supports our ongoing diversification objective. Now on to Slide 10. While incoming cash flows are down during this freight recession, they still compare well in a historical context when compared to pre-pandemic levels. Despite the challenging current environment, we continue making strategic investments in technology and businesses with an intentional approach to deploying capital to improve returns, diversifying our business, and position it for further growth. Recent examples of this are our 2021 entry and further organic expansion in the LTL sector to tap into a new growth vertical that also enjoys greater stability than the truckload industry. Organic and inorganic investments in technology to remove friction, empower our drivers and third-party carriers to unlock greater earnings power, enhance value and visibility for customers, and unlock synergies between businesses, as well as our acquisition of U.S. Xpress earlier this month to bring $2 billion in revenues with significant room to improve operating income and cash flows in a business where we have demonstrated competence. For more context on our plans for U.S. Xpress, I'll turn it over to Dave for Slide 11. Thanks, Adam. We're excited to have the transaction closed as of the beginning of this month and to have our synergy teams fully engaged with work well underway to execute the plans formed over the past few months to improve results at U.S. Xpress. We've already begun to realize $6 million of monthly cost savings out of the gate, with more ground still to cover. We're already making moves to deal directly with shippers and remove intermediaries that often prevent profitability for U.S. Xpress. The revenue opportunities are not only in pure price, but in network strategy, freight selection, lane density, customer mix, and cross-brand collaboration, not all of which require an improving market to facilitate progress. Additionally, we are preparing the business with tools and training to react to a changing market, similar to our approach at Knight and Swift and our other truckload brands. Most of our focus is the over-the-road U.S. Xpress business that has not performed profitably for some time. The need for improvement at Total Transportation of Mississippi in Jackson, Mississippi, in the dedicated segment is less. However, we expect to see meaningful progress there, too. We expect U.S. Xpress to achieve break-even operating results before interest expense in the first half of 2024. We still target positive earnings accretion for 2024 and reach the $1 per share of earnings accretion milestone in 2026, as previously communicated. Early on, barring a market recovery, we anticipate much of the improvement realized will be on the cost side, increasingly shifting towards the realization of revenue synergies over time as the market improves. We estimate that 60%-70% of the synergy opportunities are in the revenue per truck, with the balance in the cost per mile. Given the scale of U.S. Xpress and the large opportunity it represents for earnings accretion over time, we feel it appropriate to provide a little more detail on the types of efforts that are underway to achieve the goals we have communicated. I'll turn it to Adam to provide some detail on the synergy and transformation efforts. Adam? Yeah. Thanks, Dave. We established 10 synergy teams across the business, with members from both U.S. Xpress and Knight and Swift, that have been working closely together since we announced the transaction in March. These teams are all focused on different areas, but all with the goal of reducing our cost per mile and/or improving our revenue per tractor. We have several initiatives already underway. I'll give a few examples. We are building out a terminal network with existing U.S. Xpress properties that will mirror how we execute the OTR, the over-the-road, businesses at both Knight and Swift. Two terminals have already been established, and we have more to come. This will allow the U.S. Xpress team to develop better relationships with drivers, improve turnover, enhance safety, recruit in the local market, develop freight density and regional opportunities, and finally, have financial accountability to a detailed PNL. Now, this is a significant change for U.S. Xpress, but the team is excited and fully on board. A second example would be our pricing and account management teams that are developing a more cohesive market strategy and are building tools and leveraging available resources to allow them to navigate changes in the environment. We're focused on upgrading our freight selection, limiting reliance on brokers, reducing outsized spot exposure that exists, and securing more commitments, all with the intent of significantly increasing our revenue per truck per day and meaningfully improving margins. We have many more initiatives in process, but we wanted to share a couple on the call. We have a lot of progress to make with U.S. Xpress and Total Transportation, but we couldn't be more excited about the team we have working on these initiatives, and we have confidence that we will see meaningful progress in the near term as well as in the long term. I'm going to turn it back to Dave to touch on the market outlook on slide 12. Slide 12 contains our updated outlook on market conditions for the remainder of 2023. We believe we're in the final stage of inventory destocking. While we're not ruling out a market inflection in the next few months, we're not calling for such a turning point. Our base case is for a modest seasonal uplift in the fourth quarter. Not a moderate seasonal uplift or a strong one, but a modest seasonal uplift, including a return of some typical seasonality, activity and project opportunities, with some early movement on project arrangements already showing signs. Having experienced deeper pressure on revenue per mile in the second quarter than we previously expected, we anticipate contract rate declines will slow as bid activity has quieted down and volumes seem to have stabilized. After bottoming in the second quarter, spot rates may bounce along the bottom or show modest improvement in the third quarter before showing expected modest seasonal uplift in the fourth quarter of this year. The soft environment and lower rate expectations, combined with ongoing inflation in equipment, maintenance, and insurance, will keep the pressure on carriers, especially smaller and less well-capitalized carriers. Higher interest rates and tight credit standards are also taking a toll. These factors should serve to accelerate the ongoing capacity attrition and limit immediate capacity expansion upon a recovery. Pressure on LTL shipment volumes seems to be easing throughout the second quarter and especially entering into the third quarter. We anticipate this trend to continue and for pricing to remain positive year-over-year. Inflationary pressures should ease, though plentiful work alternatives in the general economy will pressure hiring and utilization until freight conditions improve. Demand should begin improving as shippers stabilize inventory levels and import volumes return to more normal levels. Combination of demand recovery and supply reduction should lead to improving freight market conditions in the near future, so long as the consumer spending remains largely stable. I'll now turn it back to Adam to cover our 2023 guidance on Slide 13. Okay, thanks, Dave. This will be our last slide for our prepared remarks. For the full year 2023, we now expect adjusted EPS to be in the range of $2.10-$2.30, which includes a projected U.S. Xpress loss of $0.25-$0.30 per share, including roughly $0.11 per share for acquisition-related and legacy interest expense. This guidance is updated from our previous guidance of $3.35-$3.55 per share, which did not include U.S. Xpress. We recognize this is a significant change, so we're going to walk through some of the key drivers. First, as noted earlier, the persistent weakness in demand caused pressure on pricing to intensify in our truckload segment. We now anticipate that revenue per mile will decline high single to low double digits for the year as compared to our previous expectation of being down high single digits on the year. We anticipate the 11% year-over-year decline in Q2 should prove to be the worst. We are now recovering off a lower base and expect a slower pace of recovery than previously projected, with the deficit narrowing in Q4. No longer being flat year-over-year. We still expect non-contract opportunities, combined with some return to peak season patterns, to provide some support for rates in Q4, as discussions around certain projects have already begun. Second, gains on sale continue to fall as small carriers struggle in the soft market. Our projection has reduced from $15 million-$20 million per quarter per Knight-Swift to a range of $10 million-$15 million per quarter, inclusive of U.S. Xpress moving forward. It is proving more difficult to make further progress on cost reductions than we had previously anticipated in our truckload segment. While we have held cost per mile largely flat since late last year, the tightness in labor in the general economy is preventing us from seeing the typical benefit from labor availability that occurs in freight recessions. This serves as a governor on hiring and utilization, resulting in a headwind on cost per mile. Third, as in the truckload business, we are seeing greater pressure on revenue per load in intermodal than originally projected, even as we continue to modestly grow volumes. As a result, we now project this business to break even for the year as compared to our previous expectation for a mid-90s OR. Fourth, our guidance now includes the impact of U.S. Xpress for the back half of the year. We estimate a loss of $0.25-$0.30 per share for this business, inclusive of the acquisition-related and legacy interest expense of approximately $0.11. Our other assumptions saw little change and are as follows: Our LTL segment is expected to see slight improvement in revenue with a relatively stable sequential margin profile, subject to typical seasonality. Logistics volume and revenue per load remain under pressure in Q3 before improving sequentially in Q4. We still expect an OR in the low nineties for the year. For our non-reportable segments, we expect modest growth for the year and our operating income for the second half of the year to be in line with what the second half of the year was last year. Excluding U.S. Xpress, truckload tractor counts should be down modestly, with miles per tractor slightly positive year-over-year in Q4. Interest expense should increase roughly $20 million in the second half over the first half of the year, primarily acquisition-related and assuming the Fed hiking cycle is nearly complete. Our CapEx is expected to be $700 million-$750 million, as we've now added U.S. Xpress to the back half of our projections, and our tax rate is expected to be 25%-26%. That concludes our prepared remarks. JP, we will now open the line for questions. At this time, I would like to welcome everyone to the question-and-answer session. If you wish to ask a question, please press star, then the number one in your telephone keypad. Again, this is star one in your telephone keypad. We will pause for a moment to compile the Q&A roster. Your first question comes from the line of Jack Atkins from Stephens. Your line is now open. Okay, great. Good afternoon, thanks for taking my questions, Dave and Adam. Appreciate it. Absolutely. I guess, you know, if we could maybe start, I'd like to touch on LTL for a minute. I know it's probably not the biggest question people have out there today, but there's a lot of changes going on in the LTL market right now. You touched on seeing an uptick in activity here in recent days, Adam, in your comments. I wonder if you could maybe expand on that a bit, and how you think things could unfold here, assuming we do have a closure at Yellow or maybe a strike early next week. How are you planning on, you know, protecting the network, you know, against any sort of operational challenges? I guess, longer term, you know, if we were to see Yellow shut down, you know, does that change the thought around, you know, acquisitions versus building out the rest of the LTL network organically? If you could maybe touch on that for a minute, I'd really appreciate it. Okay, thanks, Jack. You know, I guess it's probably reasonable to assume that some of the very recent volume gains that we've seen in our LTL network might be connected to some of the uncertainty that you noted. Probably not appropriate for us to try and speculate a whole lot more than that. Clearly that's a factor at play right now, yet to be totally understood how that will totally play out. I would say that our vision and view for building out the LTL network is one that is steady. It's going to involve consistently growing organically and making some key acquisitions along the way to fill out the country, hopefully doing so with the least degree of overlap in cities that we are already existing, have existing service with our LTL business. I would say that any opportunity to pick up properties along the way, you know, we would have great interest in that, and I would say that we would be opportunistic there as we have been prior. There was, you know, Central Freight Lines. With their bankruptcy and liquidation, we had an opportunity to pick up some valuable facilities. I think there are some others that are underway that hopefully will pick up some facilities. If there were to be a nationwide network here in the near future that were to offload those facilities, there might be some of their larger ones that we're not quite ready for. If a larger center is swallowed up by somebody who's a little further down in their LTL network than we are, it may mean that there are some smaller or mid-size that open up as they trade up. We watch this very closely. We're in the LTL business for the long game. You know, we've established kind of the style, the labor style, if you will, that we've approached for our network, we're still committed to that, and we'll stay committed to that. Clearly, if there were to be a disruption as a result of Yellow, I think that, you know, that could be felt in all types of transportation, including in the truckload world. As there is space to absorb that, I would say in our own LTL network, there is space to absorb increased volume, even to the degree of double digits. We stand ready to help and serve our customers, especially if they're dealing with some uncertainty along the way. Our LTL group and AAA Cooper and MME are incredibly capable at being able to, I think, provide a lot of solutions through a time of uncertainty, they're positioned and ready to do so. Jack, I mean, I would also add that even in our truckload businesses, we're seeing more opportunities come our way from not only AAA Cooper, but other LTL providers. So I think that's an opportunity that could pull some truckload capacity into the LTL space to handle maybe some surge volumes that others are seeing. That, Jack, just want to be clear, we're not taking that into account right now in our estimates for the back half of the year? That could play out to become a much bigger catalyst, but that is not taken into account right now. Okay. Thank you very much for the time. Thanks, Jack. Your next question comes from the line of Scott Group from Wolfe Research. Your line is now open. Hey, thanks. Afternoon, guys. Sorry about my voice. Maybe I'm getting a little ahead of myself, but what do you think are the puts and takes in terms of the ability to grow earnings next year? Obviously, the pricing that we're seeing now, we got to live with that at least through the first half of next year. I know, what are the puts and takes as you see it, to grow from this reduced base this year? Hope you feel better soon, Scott, first off. You know, if you look at the kind of OR degradation that we've seen in the truckload business, call it 1,290 basis points, if we were to look at our rate per total mile, it's off 1,150. We're largely tied to what's going on in rates, and certainly feeling like that has bottomed. We would sure hope, and we expect that we've seen the bottom of this cycle. If we look at previous transition points in the cycle, obviously 2017, it came the second week of September. In 2020, it came really at the start of June 2020. It kind of just sneaks up. You see things building, and then it turns. You know, our ability has been with each successive cycle, we have been able to make capacity available in a strong market very quickly, almost create capacity. If you were to look at, you know, we alluded to the fact that our miles per truck are as low as they've been, probably in any second quarter that we have record of. Which is definitely weighs on your cost per mile, but it also means we have a lot of pent-up operating leverage and capacity to run more miles. In a strong market, not only do rates go up, but our ability to begin to maximize the productivity of the business, it can change really fast. Again, to reiterate, we're not forecasting that in our numbers. We're not ruling it out, but we're not forecasting it as we look at the back half of the year. It may not take a traditional, you know, bid cycle, if you will, to see some meaningful lift come from that. If we look at U.S. Xpress, you know, you might say, gosh, what a tough time to have even more truckload exposure. I wouldn't necessarily disagree with that, but now is exactly the time to help a business like that position itself to be ready for what we think is inevitable. It's just a matter of time, and to what degree, and then how potent that recovery is. That being said, I think, I think we could very much exit next year, with a, you know, having made up, several hundred basis points in margin, but probably doesn't go back up as fast as it came down. I think it may surprise you how fast it could be, how fast we could recoup earnings now that we have this expanded revenue base, with the extra $2 billion from U.S. Xpress. Yes, Scott, I think when we think of how, you know, the trucking cycles work, first you see a lift in load count, and then that leads to spot opportunities that are a premium, and then that will lead to improvements in contractual rates. I think we believe we're one of the first to know when the spot becomes available at a premium. The reason being is that we have scale unlike anyone else, and we get the calls when, you know, our customers are in a pinch and need to have someone who can be nimble. We see some of that already, you know, very short, temporary type projects. There's a few green shoots, but again, nothing, you know, across the network that would give us confidence in, you know, predicting a strong recovery this year. We're already starting to see some of that percolate, and then these are opportunities that we're seeing, and, in many cases, others, even some of our other brands, aren't seeing those opportunities. When it does turn, I think we know it probably faster than anyone and can react to it. Then, as Dave mentioned, we have that, the self-help story with U.S. Xpress that will just layer on top of that additional earnings when the market does turn. Okay, that makes sense. I hopped on that. I wasn't sure if it was one question or two. If I can get a second one, just follow up on LTL. Is there, given how rapidly things changed in the last week or so, is anyone starting to talk about GRIs? Is pricing really changing given all the changes in the market right now? I think it's still just a little early. I mean, you know, we would have views and opinions, but, you know, things need to play out here. Yeah, probably too premature for us to comment right now. We would have opinions, but too premature for a public comment. Fair enough. All right. Thank you, guys. Thanks. Your next question comes from the line of Ravi Shanker from Morgan Stanley. Your line is now open. Thank you. Good afternoon, everyone. Dave, can you elaborate a little bit more on kind of what you're hearing from your customers right now on the cycle? Kind of, are they still destocking? Are they done destocking but are hesitant to restock? Are they thinking of restocking? Kind of how quickly do you think does the cycle turn, if people decide that the consumer is holding up and, you know, we're not going to recession? Yeah. Well, Ravi, I think our customers, we've heard stories about great lengths they went to store product, to find warehousing space. Certainly, our trailers were used in an unprecedented way to store product. You know, we firsthand have seen that go away. We've seen things, we've seen that inventory deplete. We've just come through a bid season where our customers, you know, they're sort of the largest businesses in the world, they're negotiating on rates and of course, for their own businesses, representing their own interests, to, you know, try to maximize the decreases that they could get. I would tell you that as we've come through this bid cycle, we have fared better than we would've expected, based on what the demand might be too strong of a word, but we were, in many cases, given targets and target decreases in rates that the customer expected us to get to, and somewhat put our incumbent business in jeopardy if we didn't get to those levels. I will tell you that in most cases, we did not get, certainly in the cases where they were aggressive declines, we did not lower our rates to those levels, and yet we were awarded business, and in some cases, we were awarded even more business than the incumbent business that we have. So it's been a little bit difficult, admittedly, Ravi, to always get the exact story and exact outlook. You know, it's like the old basketball defense example, you know, watch the belly button, don't fall for the head fake. If we watch the belly button, perhaps meaning, what happens as a result of the bid, what's the end product? What it's telling us is there is not new capacity out there. We're not facing severe competition from fellow trucking companies trying to gobble up, share or anything. I think what we have experienced is perhaps the most irrational aggressiveness we've ever seen out of the non-asset broker group through a bid season. I think there has been an all-out attempt to hold on to volume in some of those shops, that it's led to some unrealistic expectations for some of our customers and full truckload shippers as to what kind of rate decreases they could possibly get. You know, when it comes down to it, you know, our costs continue to go up. Our cost per mile was still up 2.7%. Now, we're glad that number is down to only 2.7%, but it's that number has been extremely inflationary for the last few years. You know, we're not in a position to digest those kind of decreases and still provide the kind of trailer pool nationwide capacity that we've done. It feels like we're at that point where as much blood as can be extracted out of the turnip has been extracted, and the market seems particularly sensitive right now to the least degree of seasonality. Now, I would say that the freight volumes still have not normalized. The imports still are weaker than one would expect them to be. There still is some room to go here. But things are sensitive. This is. We're in that phase. I'm not going to try and predict when exactly it's going to turn. Never gotten it right in the past. Don't expect I ever will. What we do know, as Adam alluded to, is we see it fast. Maybe as fast as anybody, but I will tell you, we see it immediately fast. We've seen it immediately as it happens, without nearly the amount of data that we now have and collect, and without nearly the kind of size and scope that now we have across all of our network. What matters most to us isn't exactly when it's going to happen, but it's have you taken the steps necessary to prepare for it to happen? An example would be, if we look at the Knight-Swift network, it's approximately 2% of our business comes via an intermediary that isn't acting as a 3PL, that's personally representing the carrier, but through an intermediary. Whereas U.S. Xpress, you know, that number is significantly higher. I would say that, you know, if you were to go back in time, just a little bit prior to our acquisition, that number could be as high as 40%. It's not unrealistic to believe that if you're going through intermediaries versus dealing directly with customers and positioning yourself for the cycles to be able to deal directly with the customer, it's not unlikely to see a difference in rate that could be as much as $0.80 or $0.90 per mile to provide, in essence, the same service, in many cases, in the same lanes. So it's all about how you've set up and how you've positioned your business to be able to provide, to provide the value and service to our customers. That's where our focus is right now, is to be prepared, so whenever it comes, and every day that goes by, we're obviously a day closer to it. But we'll be prepared, and we're, you know, in this guidance that we've given, we're going to let you, and we're going to let the investing public decide when they think that turn is going to come. You have guidance that just assumes that we're not going to see it here in the next two quarters. Thanks for the color, Dave. I may borrow your look at the belly button quote from my report, but I'll turn it over to you. Thank you. Yeah, it's all yours. Your next question comes from the line of Amit Mehrotra from Deutsche Bank. Your line is now open. Hi, this is Ben Moore, calling in for Amit Mehrotra at Deutsche Bank. Just wanted to ask, what's your outlook on yields and OR in your truckload segment as we move from 2Q to 3Q? Do we take another leg down, or do we stabilize from these levels? I don't know that we're going to get that granular on the guidance on the call here. I think, you know, when I think of rate, I think we gave the color that kind of being down 11% year-over-year would be the bottom, would be the trough. That starts to improve on a year-over-year basis, more so because of an easier comparison rather than making improvements in rate. You know, I think, you know, with the bid season being largely complete, there may be a few, you know, bids out there that still need to be implemented. Rate's been relatively stable, and that's what we would expect. I think you can kind of run your model to try to back into it to an OR on the truckload business that gets you to the guidance we've put, but it probably doesn't change it a ton. Sequentially, maybe a little bit of a lift in Q4 if we see the very modest seasonality we alluded to. Thanks. If I can just squeeze one more in, do you expect to acquire another LTL company before the end of the year? It felt like you guys were maybe close 3Q. Not sure if the recent Yellow developments changed that outcome at all for 4Q. Yeah, we. Oh, sorry, I meant 3 Q and then 4 Q. Yeah. Yeah, we don't speak to the timing of any kind of, at least not intentionally, we don't speak to the timing of any potential future acquisition. We, since our commitment to move into the LTL space, which really took shape, I think we were committed to get into the space probably as early as 2020, maybe even into late 2019, and then finally we're able to do so in the middle of 2021. We've been committed ever since. We continue to have dialogue and evaluate potential opportunities. As you know, the pool there is not, is not huge. We've been patient. We'd ask everybody else to be patient, but we are committed to building it over time. Okay, thanks for the insights. Yep. Your next question comes from the line of Tom Wadewitz from UBS. Your line is now open. Hey, Dave and Adam, this is Michael Triano for Tom. Can you provide more details on the evolution of the evolution for U.S. Xpress in the back half of 2023 into 2024? How much of the path to growth is macro versus the opportunities that you described in the slides? You know, as we described in the slides, we've already identified $6 million of monthly cost savings on the U.S. Xpress business, and we expect that number to improve as we can dig into many of the areas that we've identified as having opportunities. We've just had the business owned for, I think, 20 days now, there's still a lot of room to figure out what's going to be an opportunity and, you know, how much savings will come from that. I think those will be done regardless of the market. We expect the results of the business to improve sequentially, and I think we talked about this in the presentation, that we expect to be breakeven in the first half of 2024. Certainly, if we have some wind at our back from a market perspective, that could lead to a capturing revenue synergies sooner than what we've projected. Again, that's kind of subject to what happens with the overall trucking market. We'd be prepared, if that does occur, to be able to react very quickly to the synergy opportunity, similar to how we would on the Knight and Swift business. Great. Thank you. Just, is there a way to think about the evolution of OR if we look out 18 months? Could this be a mid-90s at OR business, or what's the right ways to think about? Yeah, I think, Michael, where we are right now, again, to Adam's point, we're 20 days into ownership, is we're targeting that dollar per share for 2026. A strong market brings that forward a lot faster. We are trying to not we don't have the ability to be the economist to predict when that change happens. Obviously, we have a high degree of confidence that we'll see the cycle switch and see some strength and recovery between now and that 2026 period. We're not prepared to give any more commentary on the margins than what we've already alluded to through the first half of 2024 right now. That's helpful. Thank you. Your next question comes from the line of Ken Hoexter from Bank of America. Your line is now open. Hey, Dave, Adam, good afternoon. I guess we've now moved your outlook to half your prior trough target that was below your, now seemingly below your prior cyclical low. Not sure if you're being overly conservative now versus not being prior, but I don't know, is there something you need to do here in terms of the downturn, you know, to find that higher floor that you kept talking about? Is it consolidating the brand names and operations? Have things gotten too sprawling with U.S. Xpress and Barr-Nunn, and too many brand names? Is intermodal the issue? Do you need to get rid of intermodal? Maybe just thinking about that conceptually versus the cost machine that we saw at the prior Knight standalone. Well, I would answer with none of the above, Ken. Really, you know, when we first rolled out the $4 trough, I think that was early 2022, there was a few things that have kind of changed, I'd say, materially since that. Some were maybe out of our control, others probably just didn't anticipate the type of downturn that we would experience coming off, you know, the strength we had in 2021 and the first half of 2022. For instance, you know, rising interest rates have had probably a negative impact of about $0.35, you know, beyond what our original expectations were, just given the rising rates, which when you think about in a freight recession, rarely does that align with rates that are rising as rapidly as we, as we've seen. That's been a headwind to those original projections. You know, our Iron Insurance business, we were very bullish on that business early on. We had great results when we first rolled that out, starting in the fourth quarter of last year, we saw claims experience develop well beyond what we had historically seen. That's been a headwind this year, much more than we anticipated. We actually had baked in that we would, you know, make money in that business. Now that we're going to lose money for the full year, that's probably a $0.45 delta between original projections. Right there, you're at an $0.80 difference from what our original expectations were. Then we think through the rate pressure that we felt. I don't think we've ever seen, you know, double-digit declines in rate per mile, even considering what we have in dedicated, which those rates have been very stable. When we put out the $4 floor, it was really, you know, comparing how we've navigated these downsides in previous cycles, and this one has proven to be more dramatic than we would have anticipated. So, you know, given that sharp decline, I think that all those factors led to the type of, you know, EPS that we see. look, here's what I would say: We're confident that our margins will return very quickly when the market improves. We think we'll make meaningful improvements with the U.S. Xpress business. We've already started on the cost side. We'll continue to chip away there, then we'll make even further improvement on the revenue side when we have some wind at our back. You know, we, I think a lot of people don't really understand how these business operate. To combine brands, we would lose accountability, you'd probably lose scale, you'd lose market efficiency. It doesn't work that way. On paper, it sounds a lot easier, but to have these brands out there that have the accountability and they can navigate the market, be more nimble. Our job is to ensure we have great leaders that understand what we're trying to accomplish and that we're executing, and where we have opportunities to prove we help and give them resources. We would not change our strategy given the market that we have today. Great. Thanks for the update. Thanks, Ken. Appreciate it. Thanks, Ken. Your next question comes from the line of Jason Seidl from TD Cowen. Your line is now open. Hey, thank you guys very much. Listen, I wanted to focus a little bit on the intermodal sector. You know, a bigger loss than we expected in the quarter. Was there much difference in performance between sort of the Knight legacy and sort of that Swift intermodal business? How should we think about volumes going forward as we look into, you know, 2024, and as truckload rates are expected to increase? We don't really have much of a Knight intermodal legacy to compare against. That was a very small and very different model. I look at the Swift Intermodal business. You know, we made, I'd say, some nice progress on operating ratio the last couple years, but that was really on the back of some leasing we've done with some containers that proved to be very profitable. You know, we were making some changes in our network in terms of rail providers, and when doing that, you know, you have some fallout from customers that you have to rebuild, but we felt very confident with the providers that we have and knew that we would eventually build that volume back up. When that lease project has ended and we've you know, received most of those containers back, you lose that revenue, you pick up. You know, you still have that depreciation, and it weighed on our margins a bit more than we anticipated. You know, pricing has been a bit of a challenge because, you know, intermodal kind of follows the path that we see on the truckload side. Revenue per load has taken a bit of a hit. If I back out the effects the leasing project that we had as well as the change in fuel, revenue per loads may be off 10%, right? Much better than what the print looks like. We're building volume, right? We're up 4% this year, and the bids that we have coming in the door, are going to prove to have more volume that we add to that network. Based on the way we have our contracts, we do have some savings that we expect to pick up in the back half this year from a rail cost standpoint. We have some new leadership in place that have different strategies that we think will help us improve the operating costs of our business. Yeah, we had a tough quarter in the second quarter here. We expect to get that business back to profitability by the end of this year and believe 2024 could be a nice rebound year where we grow both top line, we grow margins and ultimately the bottom line of that business. Yeah, that's great. If I could pop more in here. When you guys look at your non-reportable insurance segment, obviously, you gave us good guidance for the back half of the year. Do you think you've gotten that segment where we shouldn't expect any more losses as we head into 2024? Well, look, the insurance we talked about, we've seen some losses there. We still have some things to work through there. We do believe that the overall segment will be profitable in the third and fourth quarter. Expect that to continue into 2024. Hey, we still have some work to do on the insurance front to get there. Yeah. Jason, to be kind of specific, what we mentioned earlier in the remarks was we expect to be around $10 million in losses for the insurance piece for the remainder of the year. That's third and fourth quarters combined, which of course, is down considerably from the $15 million and $22 million, almost $23 million in the first quarter. And then just one comment on the intermodal piece, that container leasing business, we'll lap that come, call it, middle of the first quarter. We'll be. That'll make for a more difficult comparison. When we do look at 2024, comparisons for nearly the entire year of 2024 will be a favorable comparison versus what we've been dealing with up to this point. Okay, we'll do one more question. We're gonna do one more question, and that actually does need one more question, so we'll reiterate that next time a little bit more. JP, we'll take our last question here. Your next question or your last question is coming from the line of Chris Wetherbee from Citi. Your line is now open. Hey, guys, thanks for squeezing me in, under the wire here. I will keep it to one. Just wanted to ask about U.S. Xpress, and I guess, Adam, you said that you're going to be breakeven as you think about the first half of next year. Should we assume that USX contributes to earnings, assuming, you know, a market that's arguably better than what we have here in 2023? I just want to get a sense, will it be accretive in 2024? Yeah, I mean, we do believe it'll be accretive in 2024. If the market turns quicker, then, hey, that could come even sooner. Yeah, hey, we believe we'll make tremendous amount of progress on the cost side. As we mentioned in our prepared remarks, the revenue side represents 60%-70% of synergy opportunities. If we get a little help from a market perspective, that'll move sooner. Got it. Thank you. Thanks, Chris. Well, thanks everybody for joining our call. That will conclude our call. We appreciate your interest. Take care. This concludes today's conference call. Thank you for your participation. You may now disconnect.