Greetings, and welcome to the Schneider's Q3 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Steve Bindas. Please go ahead. Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Rourke, President and Chief Executive Officer, and Steve Bruffett, Executive Vice President and Chief Financial Officer. Earlier today, the company issued an earnings press release, which is available on the investor relations section of our website at schneider.com. Our call will include remarks about future expectations, forecasts, plans, and prospects for Schneider. These constitute forward-looking statements for the purposes of the safe harbor provisions under applicable federal securities laws. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from current expectations. The company urges investors to review the risks and uncertainties discussed in our SEC filings, including, but not limited to, our most recent 10-K and those risks identified in today's earnings release. All forward-looking statements are made as of the date of this call, and Schneider disclaims any duty to update such statements except as required by law. In addition, pursuant to Regulation G, a reconciliation of any non-GAAP financial measures referenced during today's call can be found in our earnings release, which includes reconciliations to the most directly comparable GAAP measures. Now, I'd like to turn the call over to our CEO, Mark Rourke. Mark? Thank you, Steve. Hello, everyone, and thank you for joining Schneider's Q3 earnings call. In our opening comments, we will cover our Q3 results, what we are currently experiencing in the marketplace, and an update on our strategic imperatives as we head into 2023. As we indicated on our last earnings call, shipper freight allocation events were largely complete by the end of the Q2 in our truckload and intermodal network offerings. Therefore, the Q3 freight tender activity served as a gauge on actual fulfillment levels of those awards across our diversified customer base. In general, we experienced steady contractual demand throughout the quarter. However, freight order fulfillment levels post the implementation of those annual allocation events are lagging historical fulfillment averages. We would attribute the lagging fulfillment to inflated awards coming off of pandemic-driven freight levels and elevated inventories due to earlier than normal product sourcing to hedge against supply chain disruptions over the last couple of years. So far in October, we are experiencing sequential volume improvement, but muted seasonal peak demand and below historical average of special project programs. While the supply and demand market dynamics have become more balanced in the quarter, we continue to deliver customer value and gain market share across our multimodal platform with specific focus across our strategic growth drivers of dedicated truck, intermodal, and logistics. Our dedicated service offering grew revenues excluding fuel surcharges 50% over a year ago, a combination of organic and acquisitive growth. On average in the quarter, we had 6,020 tractors operating in dedicated contract configurations or 57% of the truckload fleet. We favor Dedicated's resilient nature due to multi-year contracts, the high level of customer integration points resulting in high renewal rates, and the preference of our professional drivers due to the more predictable nature of the work and the close alignment with the customer's business. Dedicated new business wins and sales pipeline remains robust, particularly in the specialty equipment segments. Additionally, our MLS acquisition at the end of last year is surpassing planned synergy and performance expectations to include recent new business awards due to its unique relay-based execution model. Intermodal grew order volume year-over-year by 4% as network fluidity issues remain despite moderate rail service improvement throughout the quarter. We did experience volume erosion in September as customer hedged against the labor uncertainty on the rails by converting volume back to truck. We continue to be encouraged by the positive customer response to our Western Rail partner change, bringing our own container, chassis, and company-controlled dray to the Union Pacific Western network in combination with the high-performing Eastern network of the CSX offers our customers a distinct asset-based alternative to our largest competitor. 20% of our Western volume is now moving on non-overlapping lanes on the Union Pacific franchise. Finally, and importantly, our detailed conversion plan with the Union Pacific remains on schedule, and we are targeting a flawless transition at the first of the year. Our financial results in the Q3 reflect additional cost impacts resulting from executing on two Western railroads. The temporary redundant cost to protect the customer experience is reflected in suboptimal dray efficiencies as the business optimizes dray, chassis, and container resources between the two networks. We expect to quickly shed those additional expenses in the Q1 of 2023, consistent with our implementation plan. In a moderating spot market environment, our brokerage business grew order volumes year-over-year by 5% and expanded net revenue per order by 10%. Our logistics earning contribution also increased by 26% by leveraging our digital FreightPower platform and its robust decision science capability to efficiently match transportation orders with third-party capacity in both carrier-trailer and Power- Only configurations. We believe we are in the early stages of capacity level correction, especially with the small carrier community that increasingly relies on the spot market. It is our assessment that a meaningful portion of the spot market has dropped below the break-even point for carriers. There are a series of meaningful and persistent inflationary impacts facing the small carrier community, such as wages, equipment acquisition costs, replacement parts and fuel, to name a few. Let me stop there. I'll turn it over to Steve for more financial commentary on the quarter and our full- year 2022 guidance. Thank you, Mark. Good morning to everyone on the call, and we appreciate you joining us today. Beginning with our truckload segment, revenues excluding fuel were up $87 million over the Q3 of last year, driven by MLS and by organic growth and dedicated. Speaking of MLS, they continue to meet or beat our expectations as we approach the one-year anniversary of the acquisition. We also see solid growth prospects for them in the future, and they're a great addition to our dedicated operations. Truckload segment earnings of $83 million were close to last year's number, despite having lower equipment gains this year. Also, there was a modest sequential improvement in earnings from Q2 levels. While the segment was not immune to the changing market conditions, the constructive customer mix and largely contractual nature of the revenue base performed solidly. In our intermodal segment, revenues grew nearly $40 million, as both order count and revenue per order increased over the Q3 of 2021. Delivering volume growth despite the operational complexities of the quarter speaks well for what we can accomplish as we look ahead. Intermodal earnings of $31 million were well below last year's level, and there was also a sequential decline. Mark just provided the context for these results as we are making investments in the customer experience and managing temporary operating complexities during the transition to the UP. Moving to the logistics segment, Q3 revenues were down slightly from the prior year after nine consecutive quarters of year-over-year growth. Volume growth in both our brokerage and Power-Only offerings continued over the prior year, but it was more than offset by a decline in revenue per order. At the same time, our year-to-date logistics revenues were up over 20% to $1.5 billion, and this segment is a key component of our growth story. Logistics segment earnings increased about $6 million over the prior year to $28 million, while down from the elevated levels of 2Q 2022, margins of 6% remained historically strong and increased over the prior year. At the enterprise level, revenues excluding fuel increased $112 million, driven by dedicated growth, complemented by MLS and higher intermodal revenues. Year- to- date, revenues excluding fuel were up $675 million or 18%, with each of our three primary segments contributing a similar percentage growth. Adjusted income from operations of $146 million was below the prior year comparison for the first time in a couple of years. For further context, last year's Q3 included $32 million of equipment gains, while this Q3 contained only $11 million. Adjusted diluted earnings per share was $0.70 in the Q3, as compared to $0.62 in last year's Q3. On a year-over-year basis, there was a $0.12 benefit from our equity investments and a $0.09 drag from lower equipment gains. Year- to- date, adjusted income increased $113 million to $469 million, with logistics driving over half of the increase. In addition, I wanna note that over the past 12 months, we've generated $980 million of adjusted EBITDA. We haven't discussed EBITDA on a regular basis, but it is worth highlighting as we are near the $1 billion milestone. Looking ahead, our outlook for the remainder of 2022 continues to call for stable market conditions and freight volumes, along with a muted peak season. Freight volumes, especially in the contractual space, are expected to remain steady through mid-December and then experience a typical seasonal decline in the last couple of weeks of the year. We also expect intermodal margins to remain under pressure for the next two to three months as we invest in the transition to the UP. In addition, we have again reduced our expectations for Q4 equipment gains by $2 million to approximately $10 million. As such, we've tightened our full-year Adjusted EPS guidance to $2.60-$2.65. Regarding net capital expenditures, we are slightly lowering our full- year guidance to $475 million from $500 million, as some units are now expected to roll over into early 2023. We look forward to deploying our strong balance sheet into furthering our strategic initiatives in the upcoming year. I'll now turn it back over to Mark. Thank you, Steve. I'll finish up our opening comments where I started. We have deep and strategic relationships with customers that are winning in their marketplaces, and we are intensely focused on delivering value to them that only a diversified transportation and logistics offering like ours can. The mix of services has been purposefully constructed with the intent to be more resilient through economic and freight cycles. I would offer you a few important proof points. First, Dedicated's prominence within truckload is now approaching 60% of our deployed tractor units. We continue to invest in innovations such as FreightPower for shipper and carrier that enables us to improve the business results year-over-year in a moderating freight market and leverage the highly variable cost nature of our brokerage business. We continue to develop and mature new capabilities to grow revenues and earnings beyond our driver and tractor assets with the Power-Only offering that links small carriers to large trailer pool shippers. We have grown our Intermodal container count and are in the process of growing chassis to align ourselves with the customer value drivers for economic and sustainability benefits that Intermodal uniquely offers. Our innovation efforts also extend outside the four walls of Schneider. In the quarter, we experienced a positive valuation change involving our equity investment in Mastery Logistics. However, our primary interest in Mastery is the value we will achieve operationally as we implement the MasterMind TMS across our various service offerings. In the Q3, we fully implemented Power-Only with the rest of brokerage and dedicated schedule next. Finally, our strong balance sheet offers us optionality to pursue our capital allocation priorities of ensuring maximum resiliency through business cycles and to maximize total shareholder return. Those priorities include targeted organic and inquisitive growth and reliable and consistent quarterly dividends. We are well positioned as we close out the year and look forward to advancing our strategic objectives in the year ahead. With that, we'll open it up to your questions. Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Your first question comes from Jason Seidl with Cowen. Please go ahead. Thank you, operator. Morning, all. I wanted to focus a little bit on the intermodal side. You know, as we look into 2023, how should we think about both the top line and the margins? I mean, obviously, you're gonna have some of these startup expenses go away. I'm assuming that the congestion issues in the network, whether they're on the rail or they're on the drayage side, will have abated by then, so you should have a better comp there. Also, how maybe should we think about pricing given where truckload rates are in a slower economy? Hello? Cleanup phase. I believe certainly that the exp- Excuse me, speakers. Yeah. Can you please start over again? Your line was muted. I apologize. Who's been muted? I guess I left you guys speechless. Can you hear us now? Can you hear us, Jason? We can. I can, yes. Okay. We'll start over, I guess. Was all of that not captured? None, none of it was. Okay. Oh, that was them. I'm sorry. Jason Seidl, so a lot in your question there. What we believe as we work through the transition, the majority of those costs and expenses and redundancies will be borne in the third and Q4 as we prepare for the transition. We'll clearly have a few weeks as we get in the first year on the cleanup phase of that, but we believe, again, most of the transition expenses will be borne this year. We believe we'll get off to a flawless start, and that's really the objective and the plan that we've been working through with the UP. Part of the reason to get 20% of the volume moving this year is to, you know, start to work out those kinks. We feel really, really solid, and we feel good where we are. I know there's questions, what are they prepared for us to come with our volume? I can tell you that the UP planning has been outstanding, not only in their investments for lift capacity that far exceeds what we'll need to bring over at the first of the year, as well as their investments in the driver experience and the dray. We've got some really fantastic experiences now at the ramp locations with our fleet based upon their technology investments. All of that gives us confidence of a good start to the year. It's a little early for us to give guidance full 2023 to your questions. There's still a larger than typical gap between intermodal and truck pricing, and that should continue to contract a bit as we get farther into the next year. As we get to the Q1, we'll give you more insight on what we think about the business. Fair enough. Appreciate the time, guys. Your next question comes from Bert Subin with Stifel. Please go ahead. Hey, good morning. Good morning. Maybe just to follow up to that question, a little bit of a broader question. Do you still feel comfortable with the margin targets that you have out there by segment? Do you anticipate any of those will change, not just in 2023, but just as we progress, you know, over the next couple of years? Steve, I'll take that one. I think that we feel quite comfortable with our margin profiles that we've laid out there. As you know, we go through an annual process, and if we're going to make changes, we'd do that in our Q4 call. Three months from now, we would make any adjustments. Like we signaled on the last earnings call, if there's anything under review, it's our logistics segment margins, and there would be an upward bias in how we view those targets. I think we remain quite comfortable with where we stand in the truckload segment and intermodal segment margin profile. Okay. That's great. Thanks so much, Steve. Just as a follow-up, maybe, you know, sticking onto that logistics topic, what do you see as the next phase of growth there? It seems like currently lower spot rates seem to be weighing on the top line, but volumes and Power- Only remain pretty strong. Is there a way to drive top line expansion in an environment like this, or does your focus become more squarely on margin expansion? Bert, we think the primary growth of our earnings contribution from our logistics offering is in top line growth. Our model is one that, as we've talked before, certainly collaborates at the customer level between our assets and our non-asset capability and even further now with the power-only offering. We also have a freight generation capability in our own brokerage area, so it's not reliant on what's happening on our assets. They generally target a smaller shipper base, which we've invested heavily in the digital connections via our FreightPower for shipper to make that more efficient, to get after that type of customer versus how we typically serve medium to large size customers with sales resources. Again, that's why we continue to invest not only in the technology there, but the resources that can decouple their success, simply what's going on in the asset side. It should continue to be a volume driver for us. As you saw this quarter, we still grew volumes in a moderating spot market, because of that capability. Thanks, Mark. Thanks, Steve. Thank you. Your next question comes from Jack Atkins with Stephens. Please go ahead. Okay, great. Good morning and thank you for taking my questions. I guess- Morning, Jack. I guess maybe this first one's for Steve. Would just love and I know we're gonna get a more robust 2023 outlook next conference call. You know, and I guess kind of thinking bigger picture, higher level, around some of the inflationary pressures next year and maybe some potential offsets for that. You know, could you maybe kinda help us think through some of the items where you're seeing some of the greatest levels of inflationary pressure and maybe some areas where you can look to offset that, whether it's through better equipment utilization or you know, maybe driver wages beginning to plateau. Would just love to kinda get some thoughts on that. Yeah. I do think to your point that there will continue to be some inflationary pressure on the cost base, but at a much lower rate than what's been experienced over the last 18 months or so. I would anticipate a plateauing in most of those areas, that they're not going away, still something to be very conscious of and to deal with. You mentioned efficiency, and I think asset and productivity is one of the biggest opportunities we clearly have in front of us as things become more fluid at customer locations and our partner locations as well, and things that we can do with our own four walls to become more efficient. I think that would be our primary offset vehicle. At the same time, I think that there's a reasonably good construct as we head into 2023. As we start out the year, I think there was a pull forward in freight volumes that happened earlier this year that are leading to a softer peak season as we're currently in. Then just the pull through of that and roll that forward into next year, I think there's a reasonably solid start to the year. Feeling that well positioned, I think, across the portfolio and excited about the intermodal opportunity that we have in front of us to start to capitalize upon that as the year progresses in 2023 is part of our self-help story there too. Okay. That's very helpful, Steve. Thank you. I guess, Mark, maybe if you could just expand a bit on Steve's comments, kind of comments, bigger picture, macro thoughts in 2023. I mean, you know, I guess the setup just from a market perspective in the first half of the year is pretty challenging. You know, you noted that you're starting to see some capacity begin to come out of the truckload market. I guess how do you see the next, you know, three to four quarters playing out, maybe four to six quarters playing out, just in terms of the broader freight markets? I know it's tough to have a crystal ball, but I, you know, I think you guys have a great insight into that. Yeah, Jack, thanks for the question. Maybe just a couple of angles to go into to build on Steve's comments. One of the difficulties of having the OEM issues that we have, which we fully expect to continue to some degree all of 2023, is that we have several hundred units or multiple hundreds of units that are beyond what we would consider our ideal life that is from an expense standpoint, maintenance parts. A real drag on the operating income statement. I think those same elements, probably in a more pronounced way, hit the small carrier community is why we do believe, as we look at our brokerage business and we look at, kind of our assessment of that spot market, that there is a good deal of stress that should start to see a moderation of capacity in the marketplace. We think that's, we're on the cusp of that presently. That's not like a, let's kind of wait till the, you know, first half of next year for that to occur. When you look at our truck business, maybe just to talk about that inflation just a bit, and I believe gains are due, should be in the results, and that's a legitimate part of the business. When we have $20 million or so less gains, predominantly that in truckload, and pretty flat earnings, shows that the business was pretty resilient dealing with those inflationary pressures that really are still quite heightened at this point. I absolutely agree with Steve that will start to moderate, it has started to moderate, particularly on the capacity acquisition front. As we look towards the first half of the year, I think there's some interesting things developing there around the customer. We had one of our really valued customers in on a discussion about kind of demand. How does this peak season play out? How does it play into the first of the year? Really, they indicated they had extended their lead time for product three to four-fold, what is kind of their quote-unquote, "average lead time." Their seasonal goods got in in July versus what they would typically get in much later than that. They, as we pull that through for the peak season or for the holiday season, they're already back to their normal lead times. They expect Q1 to be at normal lead times. You know, that's a data sample of 1, but it does kind of demonstrate that it may not be as... We may al ready be dealing with the air pocket today, and it may not extend as heavily into the Q1 as conventional wisdom is. We'll wait to see how that plays out. Okay. Thank you so much for the color. Really appreciate it. Next question, Ken Hoexter with Bank of America. Please go ahead. Hey, Great. Good morning, Mark and Steve. I too think that was really helpful to understand the timing of your thoughts there. Mark, maybe Steve mentioned some thoughts on the balance sheet there. You mentioned, I think, some things about, you know, strategic acquisitions. Maybe you could expand on that a little bit. You know, you're down at 0.2x debt coverage. You've been above one in the past. What is your strategic comfortable level on leverage ratios? And are you seeing more opportunities in the market? Have valuations adjusted? And do you think we can actually see economic benefits of consolidating more within the TL assets? Yeah, Ken, Steve, I'll take the first part of that as far as comfort level with that and so on. Certainly, we will maintain a strong balance sheet regardless of what strategic paths we go down, because we feel like that's an important strategic asset in this space. You know, our comfort level with debt you know depends on the opportunity and what type of cash flow you're acquiring and so on as part of the equation. But in terms of a ratio, I think certainly a 1x EBITDA type of ratio is comfortable. 1.5x is comfortable. I think for the right opportunity, even 2x would be palatable for our profile. That's kind of how we think about our capacity or firepower, if you wanna label it that way, from balance sheet strength. Mark probably has some color to add to this, but as far as the M&A front and what we're seeing out there, I think there are quite a number of assets either in market or planning to come to market in the not-too-distant future as we understand it. We're just carefully assessing things and, you know, we're talking about debt. Cost of debt has gone up, not historically out of bounds yet, but quite a bit higher than we've had opportunities to access over the past several years. I think that will have some element of what people are willing to pay in the M&A space. We'll probably see some normalization or leveling out of earnings streams from those assets that are in the market. I think there probably is a balancing out, if you will, a rationalization of valuations. Nick, as I mentioned in my opening comments, very much we're leaning into creative ways to grow the business. The acquisition front is along with our organic growth objectives are kind of prime A and prime B. We'd be disappointed if we couldn't find opportunities to do that. Is there a specific area? You know, again, is it more truckload, dedicated, you know, like MLS, is there anything you're seeing more of that you like? Yeah. From as you look at our portfolio, we certainly believe our logistics business is a great and has been a great organic driver and even more now so with our ability with the Power- Only offering, as we discussed. Our intent and our focus are on the specialty truck side of the business presently. Dedicated is obviously very interesting there, but it wouldn't necessarily have to be just Dedicated, but something that adds something unique and sticky and that we believe is highly defensible. Dedicated is probably our most interest, but we are looking at a series of other specialty type operations as well. Great. Thanks, Mark. Thanks, Steve. Good luck. Thank you. Your next question comes from Christian Wetherbee with Citigroup. Please go ahead. Hey. Great, thanks. Good morning, guys. You know, I guess I wanted to ask a little bit about sort of the rate environment versus the cost environment as we start to get into next year. You know, maybe it's a little too early to start talking about sort of the financials, but maybe in sort of bigger picture trend dynamics, how do you expect sort of the dedicated and truckload pieces of your business to trend from a rate standpoint? Then when you look at the cost environment that we're in, which is quite inflationary, do you think that there are lags between when one is still rising and the other is potentially falling? Just wanna get a sense of, roughly speaking, how you're approaching 2023 from a price cost perspective. Chris, as we think about the truck side of the business, you know, clearly dedicated, more stable, and we have escalators in how we deal with inflationary costs, particularly around the driver. Those are still, as they come up on those annual type renewal dates, are still being addressed. We're still seeing, you know, customers obviously being responsive to the driver needs there. Dedicated is probably still on the upward trend as it relates to price, while the network side has moderated and flattened out. You know, what we're really focused on, as Steve mentioned there, is how do we bring fluidity back as customers aren't sitting on equipment as long? How do we start to see our self-help items be focused around asset utility and asset utilization on both the truck, the trailer, the container? That's one of the things that every day we're coming in looking and focusing on to bring a self-help item to the business. You know, inflation around the equipment is still a bit of a concern. Getting some OEM relief here to get some of this older equipment back out into businesses would be quite helpful. Again, I think the industry's gonna be challenged throughout 2023 as allocations and difficulty of producing at a level even that we experienced here in 2022 might be challenging. I think the whole industry will be under some of that pressure. I do think the cost of capacity and recruiting and some of the other items that have been really inflationary will not be as big a drag as we head into 2023. Okay. That's helpful color. I appreciate that. Just maybe two little quick detail ones here. I apologize if you gave this already, but do you have a sense of what you assume for gains in the Q4. I was wondering if you have broken out the intermodal costs in the quarter that were related to the sort of, you know, administrative or technical dynamics of switching over carriers. This is Steve. On the first part of that, I had indicated that we're at about $10 million or so expected of equipment gains in the Q4. That was, I believe, $16 million or so a year ago. Again, another slight step down. You know, we talked about the buckets of inefficiencies for making the transition, but we haven't shared the dollar amount. Okay. All right. Thank you very much. Appreciate it. Thanks, Chris. Next question comes from Ravi Shanker with Morgan Stanley. Please go ahead. Thanks. Morning, gents. So just to kind of summarize what happened this quarter, kind of when we look at the sequential step down and the kind of earnings trajectory at IM and logistics, I mean, how much of that would you say was like, you know, almost one-time-ish or kind of driven by events that are specific to the quarter versus not carrying forward? Or is this kind of where the cycle is right now and kind of the new base going forward? Good morning, Ravi. Let me take the logistics one first. Clearly, we believed in the Q2, we were at the maximum benefit of the economic condition there between the buy-sell and contract spot as we played out in logistics. Also we had a very robust quarter on the port services part of our business that we don't talk a lot about, but we support the customer around warehousing and port management and port dray that was also at its peak in the Q2. There was a step down in the port activity as well. As spot prices moderated in brokerage, you saw our results follow that. Still expanded net revenue per order, still expanded volume, certainly over a very good Q3 of a year ago. It was a really special quarter for logistics in the Q2 of this year. As it relates to our intermodal business, there's two things that just, you know, while dealing with all the complexities of the quarter, we still grew order count 4%, but we also had a significant shrinkage of our regional part of that business because of the rail labor concerns that shippers had, particularly on those shorter length of hauls. We had a step back in volume on our regional play there that we didn't actually anticipate going into our guidance. Again, that's starting to rebound, but that puts a. It doesn't just happen for a day or two. That's a couple three-week effort when people make the switch and it gets the air pocket through the system. We're starting to see some recovery in those volumes on intermodal. As Steve mentioned, we'll have some other expenses this quarter as we get to the final push on the transition. That really started in earnest. New facilities, new drivers, optimizing between the two railroads around your chassis and containers, and that will continue again here in the Q4. We expect, Ravi, to quickly shed those redundancies as we get into the first- Just as a follow-up to that, kind of speaking of, potential strike and the impact, I mean, we've seen two of the unions that have rejected a tentative agreement. Do you feel like there's a risk of a potential strike action, maybe a couple of weeks from now when the kind of two big unions announce their verdict? If so, do you think shippers will similarly try to adjust for that beforehand, and so you may see a similar headwind in November or December? Yeah, it's really hard for us to comment specifically on that, Ravi. As we've kind of assessed shipper behavior, it was clear the first time that they were making more diversionary actions because of that concern. I would characterize the sentiment presently, doesn't mean this wouldn't change, is that they think there'll be some type of perhaps more government intervention this time as opposed to letting a strike actually occur. I again, that's outside of our expertise. The customer behavior to date hasn't indicated that they're taking those actions, at least yet. Understood. Thank you. Next question, Jonathan Chappell with Evercore. Please go ahead. Thank you. Good morning. Steve, you indicated that, you know, if there was severe review of the long-term margin targets, there might be an upward bias to logistics, which I assume is primarily because of Power- Only. When we look at the Q3 and maybe going forward, that revenue per load decrease that you spoke about, is there any way to parse out how much of that was traditional brokerage versus how much of that was in Power- Only, so we can kind of get a sense to if Power- Only is a bit stickier through the course of the cycle? Yeah, we haven't broken those two dimensions out within our logistics results that we report. We are growing both. The rate of growth within the Power- Only has been higher, but it's off a smaller base, obviously. We would anticipate that dynamic continuing as we go forward. The Power- Only contribution is a reason why there is an upward bias within our targeted margin range for the logistics segment. I agree with all those, but I think we'd stop short of giving specifics between our brokerage business and the Power- Only business at this point in time. Yeah, Jon, I would offer that our Power- Only business is largely contractual. We're making commitments via those allocation events. Our brokerage business is about 50% contract, 50% spot. There's a more fluid revenue per order play in our traditional brokerage than there is in our Power- Only because of that difference. Got it. Even without a magnitude specificity, it's held in better. Mark, my second question is for you. You know, forgive me, it's probably a bit of a long-winded one because there's some puts and takes here. We've had one month now of a real acceleration in Class 8 orders, you know, opening up the book for next year, finally, pent-up demand. As you think about the benefits or potential risks to Schneider, on the one hand, I think it would help you with some of those hundreds of units that are, you know, aged beyond where you'd like them to be. Maybe replacement would be really good. On the other hand, maybe it takes away from some equipment sales opportunities as others are able to get access to new equipment. How do you think about, first of all, the duration? Is this just a one-month blip, or do you think that there's a lot of pent-up demand for the coming months? Two, when you kind of net it all out for Schneider, positive, negative, neutral? Yeah, good question. Let me kind of parse through that a little bit. While the order board is opened up, I wouldn't overreact to that. What I would react to is what is the expected deliveries of new units in the calendar year 2023. I don't think there's gonna be any material uptick than anything that we experienced in 2022, and there's some question whether it could be even slightly contracted. The order timing is less kind of relevant. In my mind it's the delivery and what's gonna be capable of actually getting placed into service and purchased. I don't see a real material change there. The dynamics of, you know, the life cycle ownership, the impact of maintenance, disposal sales, I still think will be fairly similar to this year. Obviously the value dynamics may change based upon what the market condition is, but I don't think a influx of new equipment is gonna dynamically change the marketplace. I just don't see that as a risk in 2023. Okay, great. Thanks, Mark. Thanks, Steve. Next question comes from Ari Rosa with Credit Suisse. Please go ahead. Hey, good morning, Mark. Good morning, Steve. You mentioned in your opening comments that a meaningful portion of the spot market that you think that it's now dropped below the break-even point for a lot of carriers. I just wanted to ask how do you think about what the floor might be on how much further downside there might be to rates? One of your competitors, as I'm sure you are well aware, has kind of given indication of what the implied earnings might be based on kind of what their view is on what that floor might be on rates. Was hoping we could get your thoughts on that you know, even if it's not a specific number, maybe directionally kind of how you're thinking about what that floor might look like. 2023, I'm assuming you're pushing there. Yeah. I mean, yeah, if you wanna speak to 2023, that'd be great, but just kind of as more of a where's the floor on rates and kind of how far are we from that place, and then kind of how do Schneider earnings trend in that environment? Yeah, I do think there is a different floor, quote-unquote, than what is typical if we're into some type of, you know, long-term freight cycle change. I think that she has to be seen because of the wage inflation, because of the equipment costs. The major drivers up and down the income statement are the ones that are experiencing the highest level of increase or have, even though we may moderate on, you know, some of the variable costs, like getting after driver recruiting and others. The wages, those aren't gonna change. The equipment costs and the inflationary there, the replacement parts, the maintenance tech, all the things that takes to operate this type of operation is still gonna have. I think those costs are gonna stay at an elevated level. They may not be going up dramatically from here, but I think they're gonna remain at an elevated level, which will certainly put a floor of what's capable on any type of rate change. As we- sorry, I didn't mean to interrupt you, but I was gonna ask, you know, as it relates to how much further downside there might be to rates, what are the implications of that? Are we near a floor? Well, I think we've seen a stabilization even in the spot market. I think as you know, we have to get through the allocation season next year. I don't see a dramatic drop-off in rate in the contract space because of those fundamentals we just talked about, Ari. Yeah. I think, I guess, say the other way, I think we are close to it. The spot, quote-unquote, spot market influence can be on that type of allocation. Yeah. To the second part of your question, Ari, given the portfolio construction that we have today versus what we had several years ago or even four years ago, feel like we're positioned as a more resilient company, even more resilient, I should say. There's obviously relative and absolute dimensions or comparisons when it comes to the definition of resilience and what that means, as we go forward. Without providing specific numbers or whatever, do feel like that we have a more durable earnings stream and a portfolio that's built for those variabilities, and so feel pretty confident about where we sit. Got it. Okay. That's very helpful. Then just for my second question I wanted to ask, operating supplies and expenses took a big step up over the past few quarters. Maybe you could speak to what's driving that increase. Should we interpret that as being related to some of these costs related to intermodal and kind of operating across two networks, or is it something else that's going on there? Then obviously forecasting that, how should we think about kind of can that moderate in the coming quarters? I think the biggest dimension that's going on there is that, gains, equipment gains go through that line. There were a lot more gains which kind of reduced the number last year in the comparative period and fewer gains in this Q3. I think, yeah, that's what you're seeing mostly there. If you were to be able to strip those out, I think you'd see something like a 9% or 10% year-over-year increase in that line. Within bounds of the type of inflationary pressures that we've seen. Got it. Okay. That's very helpful. Thanks for the time. You're welcome. Thank you. Next question comes from Brian Ossenbeck with JPMorgan. Please go ahead. Hey, good morning, guys. Thanks for taking the question. So maybe just two quick ones. Can you just talk about we're finally seeing, I think, after two years, some service improvements on BNSF, but I realize you're transitioning off that network. Do you feel like that's going to help you a little bit here, you know, towards the tail end of the transition? Or is there just a little bit too much to kind of get over the goal line in terms of the additional costs and the duplicate of chassis and things like that that you mentioned? Secondly, if you could just offer some context on rates. I know there's mix and length of haul involved, but the intermodal rates increase a little bit lower than we would have thought. Is there anything that you would call out in there in terms of relative to the market, your peers and then also, you know, I guess relative to that spread you mentioned where Intermodal is still quite a bit cheaper than truck? Forgot the first part of that was cost in the quarter interim. Can you repeat just the first part of that? Sorry. I'm sorry, Brian. Yeah, sorry. Sorry for the one, two there. Yeah, the first part was really just BNSF finally getting some service improvements. Okay. I realize you're transitioning off. Does that provide any benefit here, or is it just too little, too late, essentially, given the big lift to get the shift done? Yeah. Yeah. Thank you, Brian. Sorry for missing that first part. Yeah, absolutely. Fluidity and service is a big help. The more predictable we are, the more turns we can get and yeah, we're pleased that any part of our partner network can improve upon that. I would not diminish the importance of that and 'cause we're gonna be on the BN in a meaningful way all the way through the tape, so every bit of help there that helps us get another box turned, get another customer served, get another box freed up, all contributes to improved results. Appreciative of their focus and appreciative of the improvement. Second part of that is the line can't be tied. The relative, now maybe I'm up on coffee this morning, so I lumped them both in there but. Okay. That's part of it. Yeah. Second one really was on rates. We saw J.B. Hunt go up, you know, close to 20%. Schneider was up closer to 10x fuel. If there's any mix impact between those two? Yeah. Just curious. Yeah, yeah. If there was service or it seems like there's more room to price, at least at this point of the cycle. Yeah. Our mix did change. We did it and international was certainly a nice bright spot in and out of Mexico. As I mentioned, we had a contraction in our regional lanes, particularly out east because of the more readily available to convert to truck because of the labor uncertainty. This was a kind of a goofy quarter for us as it related to what is typical comparisons because of the mix. We introduced a more Western regional type lanes as well, with ours not overlapping with the UP. It's a little bit of a hard comparison for us because it's a different mix for a series of influences there, Brian. Okay. Thanks, Mark. I appreciate the details here. Thanks. Next question comes from Tom Wadewitz with UBS. Please go ahead. Hi. Yeah, good morning. Mark, I wanted to ask you your view on, you know, kind of how optimistic really we should be on volume for intermodal in 2023. You know, it seems like you've got two kind of significant but opposing forces. You've got probably some meaningful weakness in freight, you know, maybe meaningful weakness in container imports. At the same time, I think you've got, you know, a lot of conversion opportunity, truck to intermodal. How do you think about how that shakes out? Are you optimistic about volume growth for intermodal in 2023, or would you say, "Hey, we ought to be a little guarded because just that broader freight backdrop might be a bit soft"? There are, as you mentioned there, Tom, opposing forces that could have some influence there. I can tell you, we've gone through now two consecutive years of more conversion from rail to truck versus the conversion from truck to rail. There is, in our view, some pent-up opportunity and demand just to get back to, you know, what really should be moving on the rail, whether that's on the regional basis or in the East or the West. We think there's plenty of opportunity there. As I mentioned, international Mexico is also, I think, a nice catalyst for growth in the coming year as well. From that standpoint, we feel that there's probably more opportunity than we certainly experienced here in the last couple of years. Combine that with having more origin destination pairs, more efficiencies that we're gaining with our change in the West, just the better connection points that we have with the CSX. You know, one of the things we've suffered a great deal is just the fluidity of the box at the customer, the inefficiencies at the rail. We have again another one of those great self-help opportunities with just better fluidity to get our boxes in the right place, more efficient. All of that generally leads to growth. I think we have to just see if this recovery of demand is a little quicker than people think, just because of the distortion that we've been through and the early placement of goods in the country in the middle part of the year. As we get through that has to be replenished. You know, I'm looking for maybe some pleasant surprise, just based upon things getting back to a more normal replenishment cycle as well. Okay. Great. I guess for the second question or the follow-up, how do you think about volume versus price? I think, you know, you're optimistic on volume growth in intermodal. You know, I think your competitor from Arkansas is very optimistic on volume. They've got some new capacity available on the BN. They've got a lot of boxes. You know, I'm assuming your Chicago competitor is gonna be optimistic on volume too. I think there might be more flexibility in some of the rail arrangements than historical. You know, are you gonna prioritize volume? And if you need to push a little harder on price, would you be willing to do that? If there's a, you know, kind of, you know, significant price pressure, will you say, "Hey, well, you know, we don't need to grow volume if there's too much pressure on price"? Yeah. We look to optimize contribution to the business, and we're always constantly looking at the leverage between volume and price. I think we'll respond to the market. I think we have the resources and the capability and the technology to do that effectively, Tom. That's whether that's in our highly variable cost nature of our brokerage business. You know, we are now, as mentioned in truck, 60% dedicated, so we have less influence on the truck side of our business. Still meaningful, but not as much as because of that switch to the dedicated portfolio. We have more boxes. We're a little behind on our chassis. We're gonna get that caught up as we're starting to take chassis here in the Q4, which again puts us in better fighting shape on the volume gains next year. The customers have been really responsive. You know, we'll be up against tough competition. We're always up against tough competition, but we'll optimize and respond to the market as appropriate. You think about balance or do you think more about volume? I think our view is we don't generally chase volume. We're chasing contribution, and if we can do that at a reasonable return, we will. If we can't, then we'll probably look for other avenues within our portfolio. Okay. Makes a lot of sense. Thank you, Mark. Thank you. Next question, Scott Group with Wolfe Research, please go ahead. Hey, thanks. Good morning. Good morning, Scott. The underlying guidance for Q4 is up from Q3 if you sort of strip out the equity gain, which is a little different than we've heard from some of the other truckers. Maybe just what's the driver of the sequential earnings growth from Q3 to Q4? Broadly, what's driving that? Yeah, Scott, Steve, there's a combination of things in there. I do think that some of the dynamics within our intermodal operations will continue into the Q4, those complexities, but I think that we have an opportunity to put a few more dollars on the board from our intermodal segment in the Q4 than we did in the third. And that's perhaps true across the board, across all of our three primary segments. It's incremental. It's not huge. But I think that there is a little bit of lift just from a volume dynamic. If you think about the Q3, you know, you've got July. July was a pretty soft volume month, and I think we'll have better volumes as we go through October and November and up through mid-December. That volume play translates across our service portfolio, and that's helpful. Okay. I'd also add, Scott, that our dedicated fleet is largely implemented. We don't have a lot of startup activity the last six to eight weeks of the month. There's generally a little less drag than we typically have as the startups push into next year. Okay. Helpful. Your comment, Mark, that our costs are up, so rates have to bottom higher than, you know, maybe they bottomed in the past. I guess I'm wondering where are spot rates today versus historical bottoms? Is that sort of proving out your point or not? At bottom, yeah, that's, I guess, lane specific. I do believe it has certainly stabilized, Scott. As we look not only what we do, which is on a more moderated basis, but as we look at what is occurring with our brokerage offering, I think carrier costs have stabilized. You know, net revenue per order I think will stabilize as a result of that. I don't know if that means we're at bottom, but it kind of feels that way to me. Certainly, I think that's over now an extended several-week period. I think we're at what is, I guess, considered a trough, if that's the right word. I guess what I was trying to say is like, so if this is the trough, what we'll ultimately see, how is this trough look versus prior troughs? Are we troughing higher or not? I'm just trying to think, are we actually seeing it play out that rates are troughing higher than they did through prior cycles? From a carrier costing standpoint, I think that would be absolutely the statement. I don't have a percentage number or something to put some extra, but Scott, we'll take a closer look at that. Maybe we can be prepared for a better answer on that at a follow-up call. Certainly our expenses are higher than the last trough as it relates to the carrier piece. Yeah. That's not just ours. I think it's across the space, which by itself. Which is our third-party costs. Yeah. articulated that type of position for the past several quarters, that we do believe that all those dynamics, including the constraints on OEM capacity, which is a meaningful input to this equation, does support a higher trough, if you will. Yes. The reason for my hesitation as we look at our business, we look at net revenue per order, which is the spread between those two. We don't necessarily just look at the price point, we look at the spread. That's where my head is around a metric. Okay. All right. Maybe we'll take it offline. Thank you, guys. Thanks. Next question comes from Jordan Alliger with Goldman Sachs. Please go ahead. Yeah. Hi. Morning. You guys have a relatively diverse customer base. I'm just curious. I know you've touched on demand and thoughts around that and replenishment big picture, but as you look at the various subsectors, you know, some of the bigger pockets like retail or consumer, home improvement, you know, can you maybe talk a little bit about sort of some of the demand thoughts on some of the bigger segments and maybe even how they're suggesting inventories look as we move into peak? Thanks. Yeah, Jordan, we do play in a very diversified way across the economy in various verticals. I would tell you what's, you know, perhaps the strongest presently with maybe surprisingly, the home improvement channel is showing some strengths as well as off-price retail, value retail. That's more on kind of what I would consider more general vendor inbound type. Obviously the dedicated DC to store and the things that we're doing at this period of the year are also pretty busy and as you would expect as getting ready for the holiday season. If I put food and bev is showing some strength, and those would be the three or four verticals that I think are that we're most optimistic about. Perhaps on the side that might be a little bit pressured, I don't know. I'm just curious. Yeah, I guess I would just consider maybe that is just more stable, not necessarily retracting in any way, but not perhaps increasing because of seasonality either. Those are the ones that I mentioned, the ones that kind of stand out, that are moving above their kind of average number. Got it. Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.