Greetings and welcome to Schneider National, Inc. First Quarter 2023 Earnings Conference Call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star 0 on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference to your host, Mr. Steve Bindas. Thank you. You may begin. Thank you, operator, and good morning, everyone. Joining me on the call today are Mark Rourke, President and Chief Executive Officer, Steve Bruffett, Executive Vice President and Chief Financial Officer, and Jim Filter, Executive Vice President and Group President of Transportation and Logistics. Earlier today, the company issued an earnings press release. This release and an investor presentation are 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 annual report on Form 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 and investor presentation, which includes reconciliations to the most directly comparable GAAP measures. Now I'd like to turn the call over to our CFO, Steve Bruffett. Thank you, Steve, and welcome to each of you. I'll begin with a financial recap of our first quarter results. Mark will provide his insights on the start to the year and what we see ahead of us across the remainder of 2023. I'll return to comment on our full year 2023 guidance. We'll open up the call for your questions. As usual, we will endeavor to get to as many of you as possible in the allotted time. Our refreshed investor presentation is available for your reference and can be found on our website. Slides 21 through 26 are specific to our first quarter results and our full year guidance. Our first quarter revenues, excluding fuel, were down $205 million to $1.25 billion. $164 million or 80% of the decline was in our logistics segment. It's important to note that their purchase transportation cost decreased in proportion. That's the primary reason that our consolidated purchase transportation costs were down $177 million year-over-year. Regarding our quarterly earnings, we obviously had a tough year-over-year comparison as last year was our most profitable first quarter in company history with adjusted operating earnings of $148 million. Contrast that with the challenging freight market conditions of this year's first quarter, which were characterized by soft volumes, the absence of month-end surges, and increasing pricing pressures. Given that context, our first quarter 2023 operating earnings of $115 million represented solid performance and our second-best first quarter. Inherent in our results are some of the benefits of the portfolio restructuring we have strategically pursued and invested in over the past couple of years. Adjusted diluted earnings per share for the first quarter was $0.55 compared to $0.57 in the first quarter of 2022. As noted in our earnings release, our results included a $0.07 equity gain related to our strategic investments. When looking at the line items of our income statement, please note that last year's first quarter included a few sizable non-GAAP items that at first glance can create odd-looking year-over-year comparisons. The first item is the $51 million net property gain, which reduced the operating supplies and expenses line, and the other items were legal settlements totaling $64 million, most of which flowed through the other general expenses line. Regarding our cash flows and net CapEx in particular, equipment deliveries have been much closer to being on schedule this year than they have been for the past couple of years. As such, our first quarter net CapEx is in line with our expectations, and we expect that to continue throughout the rest of the year. In addition, we announced our $150 million share repurchase authorization earlier this year. We now have established the program and expect repurchase activity to begin in the second quarter. I will now hand it over to Mark for his comments. Great. Thank you, Steve, and good morning, everyone, and thank you for joining the Schneider call today. Let me start by offering a strategic framework for our priorities as an organization. It starts with maintaining a disciplined approach to the allocation of capital with specific emphasis around our targeted strategic growth drivers of Dedicated, Intermodal, and Logistics. Over the long term, we believe these strategic priorities enable growth, market share gains, more stable and resilient earning streams, and enhanced return on invested capital. Secondly, our additional investment priorities involve our people, process, and technology efforts to deliver the optimal customer, carrier, and associate experience. That experience is increasingly digital in nature, and it provides timely and relevant information in ways our trade partners and associates prefer and need to consume it. Let's bring it in closer to the first quarter of the year, and let me offer a high-level assessment of what is transpiring consistent with our beliefs coming into the year, and then what has developed differently than our expectations or perhaps occurring at a different pace than expected. First, to the progressing as expected front. Starting with Dedicated. Dedicated truck count grew 228 units year-over-year in the first quarter. The number of new business contract closures for late second quarter and third quarter implementations are very encouraging as we continue to prioritize growth in Dedicated in our Truckload segment. Our new business pipeline remains at historically high levels. In fact, Dedicated solutions presented to customers in the first quarter is up over 40% from the first quarter of a year ago. We are in position to close the year with several hundred more units of organic tractor growth. Additionally, we are actively pursuing potential acquisitive opportunities that complement our Dedicated organic growth initiatives and overall enterprise growth strategy. In Intermodal, we are focusing on our new and existing strategic rail partnerships and the broader positioning of the offering for volume recovery. Overall rail fluidity has improved as we are experiencing less friction and delays associated with the container dwell time at customer loading and unloading locations, as well as within the rail terminals. With the transition to the Union Pacific, we are experiencing an improved network fluidity and service reliability. As the freight demand recovers, we expect to gain additional asset productivity quickly and grow revenues and earnings contribution with the current container asset base. We continue to look for additional ways to pursue Intermodal conversion growth by leveraging the core competencies that our asset-based model enables. We believe the recently announced partnership with the newly formed CPKC offers an attractive opportunity to garner additional freight volume between Mexico and the United States. This is a relatively small portion of our total agreement with the UP, and this also opens up corridors that do not overlap with the UP and where we were previously less competitive. We believe this new agreement by itself will be a catalyst for Intermodal growth. In addition to the strength of this new agreement, our asset ownership model, our experienced operating team in Mexico City, where we've been doing business for over 30 years, provide further substance to our service offering. The next item is our Power Only offering in the logistics segment. I am pleased with the relative resiliency of Power Only and the incremental enterprise volumes that has enabled in a challenging freight demand condition. Sequentially from the fourth quarter to the first quarter, Power Only maintained 93% of their daily order volume. This service offering performed well during a soft quarter while maintaining the additional capacity that will enable growth and our ability to service our customers during a market correction. We are making progress arresting inflationary cost pressures in key input cost areas such as front and back office efficiencies, driver recruiting and onboarding costs, and equipment parts expense. The planned delivery of new tractor equipment is occurring on schedule, and we expect these investments to enhance the driver experience and further reduce operating expenses. Let's transition to the areas that have developed differently than our expectations or perhaps at a different pace than expected. Industry capacity levels are correcting, but at a slower pace than we anticipated. We are seeing signs of correction that we believe will materialize in more meaningful ways across the next couple of quarters. Those signs include owner-operator lease defaults running ahead of pre-pandemic levels, a meaningful increase in the availability of experienced driver candidates in our new driver hiring pipeline, and the overall stress in the small carrier community operating in our brokerage business as spot rates dip below the break-even point. It is our belief that the accelerated tightening of credit across the small carrier supply base will further hasten the level and timing of capacity correction. The inventory positioning across many of our customers is making solid progress, but the replenishment cycle remains spotty and delayed compared to our original expectation. This dynamic has been especially evident in low import volumes, which highly correlates to the Intermodal volumes. The percentage of spot freight in our asset-based networks is incrementally higher than we planned for this time of year. The contractual renewal rates have been marginally lower than planned, and we have seen in certain customer applications renewal rates that are not likely to be durable for all of 2023, creating pressure in the near term, but opportunities on the horizon. In summary, the current market condition has introduced a higher degree of freight volume recovery uncertainty from a timing perspective, particularly in the network offerings in truckload and Intermodal, along with the transactional volumes in logistics. We do expect an improvement in freight volumes into a moderating capacity condition in the latter portion of 2023. Let me turn it back to Steve to provide further insight into our 2023 guidance. Moving now to our forward-looking comments. You can find a summary of our 2023 guidance on slide 26 of our investor presentation. Regarding our updated expectations for full year 2023 adjusted diluted earnings per share, we now expect the range to be from $2.00-$2.20. This update lowers the range by $0.15 or 7% from our initial guidance. For additional context, I'll offer a reminder that we do not forecast equity gains or losses. We do incorporate them into our results and guidance once they've been recognized. Considering the $0.07 equity gain in the 1st quarter, our updated guidance is essentially a 10% adjustment to our income from operations. In addition, 1st quarter 2023 results were largely in line with our initial expectations. Therefore the adjustments to full year earnings projections compared to our original forecasts are applicable to the remaining three quarters of the year, with the second and third quarters being most impacted as we work our way through the trough of this freight cycle. Our initial guidance assumed the resumption of more typical seasonality in the fourth quarter, characterized by higher volumes along with promotional and project opportunities. Our updated guidance retains this expectation, although at a slightly lower level. Overall, our portfolio is performing well, especially given the operating backdrop. While we always feel like we have room for improvement, there has been a fair amount of progress achieved, and we feel well positioned to achieve profitable growth and deliver shareholder returns over the long term. We continue to make investments in our equipment and technology and have the cash flows and balance sheet to do so throughout freight cycles. Our guidance for 2023 net CapEx remains at a range of $525 million-$575 million, and at this point we're trending toward the upper end of that range as we implement new Dedicated business awards. With that, we'll now open up the call for your questions. Thank you. At this time, we'll be conducting a question and answer session. If you'd 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'd like to remove your question from the queue. We ask that you please limit to one question and one follow-up. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Jack Atkins with Stephens. Please proceed with your question. Okay, Greg, good morning. Thank you for taking my questions. Morning, Jack. You know, I would just say, you know, I first off, really appreciate the color and context in terms of like, what's changing in your outlook. I guess as you, as you think about, you know, a potential for a recovery in fundamentals or an inflection of fundamentals, however you want to kind of think about it or phrase it in the fourth quarter around peak season. You know, maybe you can provide some context in terms of what your customers are telling you about their anticipated freight flows or plans later on this year that gives you confidence that we may see that. I think there's just a lot of uncertainty out there in terms of what we could see in the second half of the year. You know, it's obvious no one has a crystal ball. We'll just be curious to get a feel for what your customers are telling you about their plans. Great. Thanks for the question, Jack. I would say in general, I think most of our customers are feeling that they're making progress, certainly against some of the overhang that they had on inventories and probably are doing so within the pace that they expected. I think some of the uncertainty, and they're certainly, I think, having an increased amount of uncertainty is on that replenishment cycle and when things start to pick up. I would say in general, though, there's cautious optimism, but I guess we're looking to see more proof points versus just cautious optimism. I would say those comments reflect across the multiple segments and verticals that we serve. Part of our caution as we look forward, things are appear certainly in the first quarter and the start here of the second quarter to be a bit delayed in our original expectations as we outlined in our opening comments. Okay. No, that makes sense, and I appreciate that, Mark. I guess, you know, for a follow-up question, you know, as you've gone through bid season here, over the last few months, any sort of update in terms of what you're expecting from like a, you know, a rate realization perspective on contractual renewals, whether it's in the for hire market or in Dedicated. You know, it feels like shippers are getting increasingly aggressive rather as bid season has gone on. Would just be curious to get your thoughts on that. The second quarter is a big quarter for us relative to renewals. We've got some work to do to have a full view of that. Certainly it's in a highly competitive market. Our Dedicated business, we're really encouraged by not only in the context of what we've closed upon and what we'll be implementing yet through this calendar year, but our pipeline remains really strong. Our execution is really strong, and it's, as we laid out in our strategic intent, a much more durable and consistent earnings and revenue stream. All those things, Jack, from our perspective are playing. That really leaves us to the network businesses which I think are a bit more challenged. As we discussed, our Intermodal business is highly correlated to imports, and we need to see some increased import activity, which is driven by the replenishment cycle. As you looked at our revenue per order, that's hanging in there pretty well. The real challenge for us right now is getting a handle around where we're gonna land ultimately on the price point on our network truck business. That's where the most competitive by condition exists. Okay. Thank you for the time, guys. Really appreciate it. Our next question is from Ravi Shanker with Morgan Stanley. Please proceed with your question. Thank you. Morning, Mark and Steve. Maybe starting out with Mark, you said in your prepared remarks that your Dedicated business is at historic highs. What does that tell us about where we are in the cycle and how your customers are thinking of maybe the potential upcycle to come? Is that a sign that they want more stability and visibility in their supply chain? Is that a sign that they're being more defensive? Kind of, what can we take away from that? Yeah, Ravi, I mean, maybe behind your question is perhaps at this part of the cycle, you might expect less interest in Dedicated might be what you're driving at there. Correct. I think a couple of things. Is first, the Dedicated that we're focused on is less aligned to just capacity generation solutions, and more around something that we're providing either extremely high intense volume service play, which the increasing demands even in retail DC to store operations fit that description. Or for us, more increasingly, something more specialized in nature that isn't just "more" in the commodity or generic portion of the market. I think our effort, our sales resources, and our approach to that is reflective in the numbers that I shared. It's not perhaps maybe 10 years ago, more of a direct correlation between a network condition and a Dedicated condition. We've kinda separated from that. It's not completely separated, of course, but I think largely it's the type of Dedicated operations that we are pursuing. Customers need high reliability, need strong balance sheet to invest in that equipment, particularly in the specialty area. So, you know, this is a multi-year effort for us to get to the kind of traction that we're at now, both commercially, operationally, and the markets that we're targeting. I would separate those things out just a little bit for maybe a historical context. That's helpful and kind of exactly the color I was looking for. Maybe as a follow-up, maybe a longer-term question, the Intermodal side. Obviously, we now have CPKC closed, excuse me, CPKC closed, and we have the new service with, you know, CN, UP, and Grupo México. I'm sure the third West Coast railway is not going to sit back and kind of wait to see how the other two play out. What's two to three year outlook in the Intermodal space? Do you think that you can finally deliver the kind of truck conversion that many of these players have been wanting to do over the last several years? Do you think it's gonna be more of an interrail competitor thing, they can share from each other? Kind of how does that play out? Ravi, was that a comment or question more to the CPKC or just in general Intermodal? That is a general, the competitive environment within Intermodal as a whole. Again, up to you whether you choose to answer in the form of CPKC or just as a whole from entry. Great. Thanks for the clarity. Yeah. Yeah. This is Jim. I'll let me start broadly, and then I'll jump more specifically into Mexico. You're absolutely right. Service has been something that has held back Intermodal over the last couple of years. There's been a share loss from Intermodal to over the road, as well as having competitive pricing. There was a little bit of a switch from West Coast ports to East Coast ports, which had an impact. You know, I expect to see some improvement. We've already seen the experience improvement in service levels. Rails know that we have to be competitive from a pricing standpoint, and so there's opportunities to convert there. Specifically in Mexico, with this change to the CPKC, it's a pretty dramatic opportunity here because, previously, if you look at the service issues from Mexico, there were really two. Number one, the number of interchanges that you would experience moving freight from Mexico into the U.S., and each one of those interchanges is a potential fault to failure. What the CPKC has created is a single rail delivery going from our three ramps in Mexico directly up to the Midwest. As well as the opportunity to improve the service level with the former KCS. This was an area that was struggled with service, and you know, we have a lot of faith in the crew at CP in delivering output. We'd expect to see a pretty dramatic improvement on the former KCS line there. The reason why we're focused on that is that's a part of the network. When you look at similar length of haul, you would expect much higher conversion to Intermodal. So we see that as an opportunity for growth. Very helpful. Thank you. Our next question is from Bert Subin with Stifel. Please proceed with your question. Hey, good morning, and thank you for the question. Sorry, can you hear me? Yes, we can, Bert. Now, we can. Okay. Yeah. Thanks. Thanks. Maybe a near-term question on the Intermodal side. You know, something you've talked about is your container turns and how those have been sort of running well below where they've been historically. How are you thinking about that flipping back to normalized levels? I think you had talked last quarter about, you know, getting back to a 1.7-ish range, you know, at some point within the year. Has that moved out, and has that just really been driven by what we're seeing on the import side? Yes, it's Jim. Absolutely. There's we have about 15% of our containers are stacked right now. It creates an opportunity for us to be able to grow. The only thing that's holding us back at this point is demand. It's a combination of what we're seeing from West Coast imports as well as overall economic activity. Okay. I think the, I think the point we're gonna we have the opportunity to grow our volumes and our earnings without adding additional containers. So to your original question, we peaked at about, I think, 1.8 several years ago. We don't know if we're gonna get quite back to that, but we can get dramatically better with our company dray resources. The customer dwell time has improved. The rail time has improved, so very much looking forward to exercising the assets that we have. Got it. Okay. Thanks. Thanks, Mark. Just to follow up on the logistics side. You know, sales there declined pretty materially year-over-year but actually, you know, seem to be a little better than what your peers are seeing. Would you say that's mainly driven by Power Only just sort of growing within the offering, or is that a function of how you run your brokerage business, just less of an overflow model? Good question, Bert. As a comparison point, I guess, our volumes contracted somewhere in the 7% range, I believe, on an order volume count, and that's fairly consistent between the offerings. I would characterize that as exactly what you mentioned there, that we don't simply exist as an overflow model. We certainly look for all the opportunities to collaborate and leverage the ability to do that, and we had great success the last couple of years of executing that way. When the market does turn, our investments and our capability to generate demand within our brokerage offering allows us, I think, to be a bit more resilient, and which is part and parcel to our strategy. Thanks, Mark, and thanks, Jim. Our next question is from Tom Wadewitz with UBS. Please proceed with your question. Yeah. Good, good morning. Let's see. I wanted to ask a little more. I know you've had some kinda comments on rates. I wanted to drill down a little bit on competitive behavior and Intermodal. You know, I think there's been a lot of capacity added in terms of boxes. You mentioned you got some stacked up and, you know, improving rail efficiency supports capacity as well. How are you thinking about the kind of, I don't know, discipline or pressure in the market? Do you think that there'll be less pressure on Intermodal contract rates than truckload rates? I think we've kind of heard that, and that would be, you know, I think constructive on the margin. Are you concerned that maybe, you know, that excess capacity sitting there, desire to grow by, you know, some of the biggest Intermodal players might put further pressure on the market? Just really some, you know, I guess, some thoughts around competitive dynamic and Intermodal. Thank you. I will speak, Tom, thanks for the question. I'll speak to our thoughts relative to us as opposed to others. You know, we believe that there is ample opportunity for conversion. It's unusual that we went the other way the last couple of years for a host and series of reasons that we've talked about. Before we get into the dynamic of between competitors, there's just a great opportunity for the industry itself to grow from getting back to what should be moving on the rail today. Again, why we're excited about the arrangement that we just announced because we think Mexico is gonna be a winner in a whole series of ways economically for where freight will originate from, and Intermodal has a great opportunity to play there. We really would characterize that as virtually every market that we're in the East, as well as in the regional West, that we can get more converted, just what's moving over the road. That's how I would kinda frame the opportunity and what we're focused on. If you looked at our revenue per order, I think we contracted 2% year-over-year, so I think that would suggest that market is a bit more resilient, from a pricing and value standpoint. Now it's about getting the right freight moving on the train versus over the road. Yeah, that price decrease was over what was still a very strong Q1 last year. That's a relatively small decline year-over-year. I think the other thing you have to consider is that once you stack your containers, there really isn't a great deal of cost there. There's nothing pushing us, saying, "You just have to get this volume to be able to..." It's not a huge cost on our business. Yeah, that's the point I was gonna make. This is Steve. Is. We'd much rather retain the discipline and just keep a container stacked rather than move it at non-compensatory rates. It just doesn't make sense, and we're return on capital focused, like we emphasize. That goes into the equation side. We do think you'll see, you know, disciplined behavior as we go through this period of time. Oh, okay. Yeah, that's great. It sounds like there's, you know, recognizing cyclical pressures, there's some discipline. The follow-up question I have was just, Steve, as we think about the financials and how the lower contract rates, let's say, in truckload flow through, did you see much of an impact on the margin from lower rates in 1Q? Or is that, you know, you haven't really seen much of an impact yet, and it'll be a much greater impact as you look forward? Just trying to think about how the, you know, timing of that affects on the margins for lower contract in truck. Thank you. Sure. We did try to craft our prepared comments in a way that reflected the maturity and realization of this year's bid cycle as we go through time. The first quarter definitely had some downward pressure reflected in it, yet we don't feel like it's the full force of this particular cycle yet. That's why we signaled second quarter and third quarter could be a bit more challenged as we get the fuller book of business and contractual renewals completed. We start to see some balance or lift as we get a little later in the year after that. Okay, great. Great. Thanks for the time. Thanks, Tom. Our next question is from Jason Seidl with TD Cowen. Please proceed with your question. Thank you, operator. Gentlemen, appreciate you letting me ask a question here. Wanted to stay on Intermodal a bit here. How should we think about your sort of revenue per order as that CPKC business begins to develop? Is that gonna expand because there's gonna be a longer length of haul attached to it? Yeah. If that became a larger percentage of our total, it could have an impact. At the same time, as Mark was just saying, we expect that there's a lot of conversion opportunities on the rest of our network. I believe that I'm not expecting a major change in terms of the overall split across our network at this point. Okay, fair enough. Let me switch back a little bit to the Dedicated side. You know, I believe, Mark, in your comments, you talked about how there's a couple hundred more additions coming on between now and the end of the year. How should we expect that to flow sequentially between 2Q and 4Q? As we laid out in the opening comments, we have closed on implementations for late second quarter and into the third quarter. Most of those for a full impact will be in the second half of the year, which is good because we have to overcome some of the startup impacts of that level of activity. The longer we can get those into the calendar year, the more we can get through that initial startup phase. If you're just thinking about the year, it's more of a second half because what's closed in the first quarter takes some time to get here, to get it positioned, to get it started. We are talking late second quarter for the largest share of that. I believe you said you had record sort of book of business waiting for you to potentially, you know, win some bids on. I imagine that there could be more after this between now and the end of 4Q. Yeah. I'd say our pipeline is maintaining its historical high level that we've experienced the last couple of years. A year ago, we had an acquisition of about 900 units and about 800 units of organic growth. We're not yet predicting all of that to be a repeat, but our pipeline would suggest that we're well positioned to keep capitalizing on one of those key strategic growth areas. Feel really good about where we are, and now we just got to see how it plays out. Appreciate the color as always. Thank you. Our next question is from Scott Group with Wolfe Research. Please proceed with your question. Hey. Thanks. Good morning. Thanks. Steve, just want to clarify, did you guys share what gains on sale were? Can you share, like, what percentage of your Intermodal volume is Mexico cross-border? I'll tackle the first part of that. This is Steve. We didn't have it in our earnings releases. It wasn't a significant value at the in this particular quarter. We did experience $12 million of gains in the first quarter of 2023. In a broader context of our full year earnings per share guidance, we're still consistent with where we initially guided. I believe our comments were along the lines of we expect full year 2023 equipment gains to be close to the level that they were in 2022, which was around $27 million. That's still the bandwidth that or the boundaries that we're in for this year. Scott, second question was around Mexico. you know, cross-border, we do equally across all of our services, across logistics, truckload, and Intermodal. We don't break out geographically by segment. It's an important part of what we do, but we think more of the growth is in front of us than currently exists in our portfolio at today. Okay. Then I know you guys don't break out over-the-road versus Dedicated margin. One of your peers does. I thought maybe it'd just be helpful, like, can you just give some color directionally, how are over-the-road margins versus Dedicated margins year-over-year? Or what% of the earnings now in truckload or over-the-road versus Dedicated? Just I thought maybe it'd be helpful to give some context in terms of how much bigger Dedicated is as% of the business now. Yeah. I think what we've normally shared there, Scott, that the last couple of years, that those services have operated close to on par together. Obviously one has a bit more, based upon where you are on your growth curve, what it takes to get something started up can be a short-term drag on that. Historically and expectation-wise, we think both of those perform at par. At any given part of a cycle, any given part of a quarter, it could be different just based upon the individual nuances. I think as we think positioning and long term, we don't expect to see a great deal of difference in margin performance. Okay. Thank you. Our next question. Thank you. is from Jon Chappell with Evercore ISI. Please proceed with your question. Thank you. Good morning. I'm gonna put my two together in one question. Starting with you, Mark. Talked about inorganic opportunities a little bit, in relation to Dedicated, looking at some opportunities there. Given the pain points in some other segments, maybe ones that you've been de-emphasizing a little bit, traditional logistics or brokerage or network truckload, do certain things get so attractive from a bottom of the cycle perspective that you may actually look outside of the core competencies of where you really want to target your inorganic growth? Secondarily to Steve, as you get started on this new buyback program, how do you think about the capital you're willing to deploy there, vis-a-vis the M&A opportunities that are out there? The first part of that, you know, I think we maintain a healthy dose of intellectual curiosity of things that may sit directly outside of what we traditionally outline as our strategic growth priorities. At this juncture though, we haven't found anything that would knock us off our current path. We get opportunities to see things and explore things on a regular basis. We really have honed in particularly on the truck side, where we believe the inorganic growth can be most valuable to our shareholder around the specialty truck location. I would maybe correct you on just one part of your question is that we have not de-emphasized logistics and third-party growth at all. We're talking more about a newer service called Power Only, but that's not de-emphasizing a more traditional brokerage or third-party support for our customers, just in concert with that. Yeah, we remain open. At this juncture, what we have pursued is consistent with that specialty truck. I think in the short term, I think it's certainly through 2023 of where we are, that's, that should be the expectation. Yep. This is Steve. I'll tackle the second part of your question there, which was how do we think about capital allocation between share repurchases and M&A opportunities. I guess a high-level comment would be is it's a great position to be in to come at this from a position of strength, balance sheet capability, and capacity. We do have quite a bit of flexibility there. Our general approach to the repurchase program at this point envisions a steady amount of repurchase activity as we move through time, then potentially some opportunistic activity on top of that. Part of that opportunistic activity in the buyback space could be dialed up or dialed down depending on the number of acquisitive opportunities that we see. There is an interplay. I understand your question, and we'll manage as we go through time. In the scheme of our overall capital structure, cash flow generation, balance sheet capacity, all of that, the $150 million repurchase program, you know, fits comfortably inside of our capabilities. We feel good about our overall positioning with capital allocation and look forward to carrying that out for the next couple of years. All right. Appreciate that. Thanks, Steve. Thanks, Mark. Thank you. Our next question comes from Jordan Alliger with Goldman Sachs. Please proceed with your question. Yeah. Hi. Morning. I'm sort of curious, you mentioned an expectation that loads would look better or volumes would look better the latter part of 2023. When you think about your three segments excluding Dedicated, you know, network, Intermodal, and logistics, you know, or is it a uniform confidence, or is there one versus the other that you may feel better about as you head closer towards peak season in terms of thinking about that? Thanks. We, as we've looked at this and talked to our customers, assessed with the carrier and the capacity condition through a kind of several different lenses, we do obviously think there's an interplay to some level of capacity correction which needs to occur and is occurring in our view, which I think serves as a bit of a catalyst. We also believe that the inventory correction will largely be behind at some point here in the second or early third quarter for most of our customers that we're aligned with. It does come down to what is the replenishment cycle and how confident are our customers to get back to buying more. So that's that combination. We think both of those are instructive. They both have, I think, occur in concert to have a full recovery. We think the conditions are increasingly moving that direction. Not here yet, but increasingly moving that direction. Okay. Thank you. Our next question is from Brian Ossenbeck with J.P. Morgan. Please proceed with your question. Hey, good morning. Thanks for taking the question. Good day. Wanted to ask maybe for Jim, can you just give some comments about your confidence or maybe visibility into converting truckload freight off the highway? Do you see any of that, you know, baked into the bids? Are you having real conversations of that, more than you maybe were a couple quarters ago? You know, it seems like there's certainly some excess capacity, as you pointed out. The spreads are still constricting. Just wanted to see how we should think about that in terms of timing and magnitude and what sort of visibility you have on that front? Yeah, thanks. One of the things that we're hearing more frequently from customers are starting to talk about the environmental impacts of the Intermodal, and that actually is starting to factor in somewhat into their decision making as well. Over the long term, I'd expect that we'll see much faster growth with Intermodal than the overall growth of transportation. In the short term, we are able to demonstrate, particularly in the east, the really strong performance of the CSX is enabling some of the transitions there from over the road to Intermodal. We have already been able to win some freight this year, that is over the road conversion. But significant opportunities are still in front of us to have conversion. I would expect that we'll see more of that as the market starts to tighten up as well. Okay. For a follow-up, I guess in terms of the capacity front, Mark, you gave some good color on that. Do you think that's... I mean, it's been a little more durable, and I think most of us would have thought at this point. But do you feel like we're really at a tipping point maybe for lack of a better word? Are you gonna expect to see accelerated departures from the market, or do you expect this to be a little bit more of a slow decline? How are you thinking about that, and have you seen anything, you know, sort of accelerate into April as things really haven't seemed to bounce back as seasonally strong as we might have expected? Right, Brian. Yeah, certainly I would agree with your assessment that it's taken longer than we reasonably think it should have and that we've experienced to date. What we're looking for, what are the leading indicators, you know, certainly one that we can get great visibility to is the number of experienced driver candidates that are looking to join the organization in our driver hiring pipeline, which is a direct correlation to difficulty in some other parts of the carrier community. We have, you know, baselines, we have historical perspectives, and when we see some inflections, dramatic inflections like we're experiencing today, we think that is a sign, and that is a more recent sign. That's more of a mid first quarter inflection sign. Then I think things that we should be looking at and we're hearing more signals is the supply base and the restricting of credit a bit because of, I think we've had a competitor talk about not getting payments on time, and we're seeing and hearing more of that. So, you know, I think that's a direct sign of stress, and suppliers are going to have to take corrective action to deal with that, which I think can, in my opening comments, the combination of those could be an inflection point to hasten the correction that has been delayed. Okay. You think it could accelerate from here based on those factors? I'm optimistic. Okay. Thank you very much for the time. Thank you. Our next question is from Christian Wetherbee with Citi. Please proceed with your question. Hey. Hey, thanks. Good morning. Maybe wanted to touch a little bit on the guidance and just maybe if you could help us think about sort of the cadence for the year. I know you noted that 2Q and 3Q might be, you know, the more challenging quarters of the year. I guess if I look at the 1st quarter and maybe look through the gain, the equity gain, do you still feel like sequential improvement, which I think is historically normal, seasonally normal in 2Q versus 1Q in that respect is possible, or is there just going to be incremental weakness that has the potential to offset what would normally be seasonality? Yeah, this is Steve. Well, while trying to stay away from quarterly guidance, which we want to stay in the annual space, we were trying to steer things a little bit there to give some additional perspective and insight in how we see things unfolding. As, in particular, like we noted earlier on the call, we get deeper into the bid renewal cycle and those, new rates take effect and so on. There is some dampening effect on earnings that comes from that. Sequentially, you may not see some of the seasonal lifts that you might expect ordinarily in second, third quarter. It may be more flattish type of sequential trajectory, before picking up, would be our expectation at this point in time. We'll have to see how all that plays out. If that helps with some additional color, that's how we're seeing things today. That's very helpful. I appreciate you going through that. Then, you know, just maybe as you think about fleet size as you go through a year, a challenging year like this, can you just give us a sense of maybe how you think about managing that? You know, steadily drifted down a bit over the last couple of quarters, which just makes sense given the context that we're in. Should we expect that to be sort of the cadence for the next couple of quarters as we go through what hopefully is the trough of the cycle? You know, Just how do you I guess just maybe more broadly, how do you think about sort of fleet count the next couple quarters? Yeah, Chris, we don't have any specific plans based upon the cycle or the condition that we're trying to drive down. I believe your question's network-based, I believe. We certainly have seen some additional pressure in the owner-operator world because of the combination of rate structures and inflationary costs. That's probably in the entire, not only, what we would see within our various mix of capacity wide. I think we've seen some of our competitor reports as well, that that's probably the area that's most under stress. It's the most likely comparison to a small carrier, obviously. But we don't have any specific plans to do that any differently than, you know, again, we would like that to be stabilized. I would also reinforce that our customers feel and see our network offering not only in the network trucks that we bring, but that's largely where we serve from our Power Only offering as well, and logistics that gets reported in logistics. Increasingly, Power Only is part of our network offering from the customer lens. Obviously, we're using third-party power, so we wanna make sure we're reporting that appropriately within the various segments that we operate in. From a customer perspective, they're seeing a very stable to slightly growing network presence from us. Okay. That's helpful color. I appreciate the time this morning. Thank you. Our final question is from Ari Rosa with Credit Suisse. Please proceed with your question. Great. Good morning. Thanks for taking the question. I wanted to ask, go back to Brian's question a bit. You talked about the industry capacity correcting at a slower pace than expected. Maybe you could talk about what accounts for that in your perspective. Is something structurally changed in the market that maybe is getting carriers to stick around longer than they might otherwise? Yeah. Ari, I understand the question. I don't really characterize it as anything structural per se. You know, certainly what has perhaps changed over time is the discovery of information, discovery of price, both from a customer and a carrier perspective. Perhaps some of the activities that we're doing with Power Only and services has helped carriers and maybe in a different way than happened structurally before. You know, this is still a business that you have to cash flow and you have to have the adequate revenue stream across the asset base. I still think that is more challenged in this type of environment, clearly in the small, undercapitalized carrier than it is in the larger, well-capitalized space. I don't know if there's massive restructuring. Obviously, there's some influences there that are different over time. I also think that this may or may not be true. I don't have anything to prove it to you with, but given the strength of the prior couple of years, if you're a small carrier or... Little more staying power. You may have built up some cash reserves in that time period, some excess earnings, if you will, that allowed you to last a bit longer in an environment like we're in today. That might be different from past cycles, given just how strong the last couple of years were. Got it. That's very helpful. Then just for my last question, switching to the Intermodal side, we've seen a lot of headlines, you know, railroads making a big deal of partnering with you on the Intermodal business. I just wanna make sure I understand what it is that's actually going on. Obviously, this year you moved your Western business over to the UP and now CPKC is talking about the growth on their network that they're expecting. Is there any business from UP that you're actually migrating over to CPKC, or is it just part of a larger pie that you're seeing? Kind of where was that business previously moving that you're moving into the CPKC network? Let me just make sure I understand that. Thanks. Great. Good question. Thank you. Yeah, sure. There was a small amount of the business that we're running on the UP that we're migrating over to the CPKC. Also there are some additional lanes that don't overlap with the UP that we're going to be implementing. Those are lanes that we either don't have today or we're uncompetitive today. There's a little bit of an extension of our service network. There was business we were going directly with the KCS, right? Yes. Got it. Okay. All right. Thank you. Very helpful. Thanks. All right. Great. Well, let me just close by referring you to page 12 of our updated investor presentation. It really outlines our strategy to be disciplined in our deployment of capital. And we've talked today on this call about those strategic priorities around Dedicated Intermodal logistics. Steve did a great job talking about our pristine balance sheet, which we believe does give us the optionality to not only go after the organic growth drivers that we're interested in, but also actively seek the right acquisitive opportunities that advance those same strategic priorities. In addition, we are going to start executing against our share buyback authorization. Our goal is to have a stable and predictable predictable share count in the neighborhood of $175 million or so shares when we're done. While we're operating in this environment with a heightened sense of economic and perhaps freight demand uncertainty, we are gonna continue to invest in our considerable strengths across our highly diversified portfolio. Again, several of those which we had a chance to highlight with you today. In closing, I appreciate your time and your attention. Thank you. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.