CVLG - NASDAQ

Welcome to today's Covenant Logistics Group Q2 2025 Earnings Release and Investor Conference Call. Our host for today's call is Tripp Grant. [Operator Instructions] I would now like to turn the call over to your host. Mr. Grant, you may begin.

Good morning, everyone, and welcome to the Covenant Logistics Group's Second Quarter 2025 Conference Call. As a reminder, this call will contain forward-looking statements under the Private Securities Litigation Reform Act, which are subject to risks and uncertainties that could cause actual results to differ materially. Please review our SEC filings and most recent risk factors. We undertake no obligation to publicly update or revise any forward-looking statements. Our prepared comments and additional financial information are available on our website at www.covenantlogistics.com/investors. Joining me today are CEO, David Parker; President, Paul Bunn; and COO, Dustin Koehl. Revenue rebounded during the second quarter to a new record high, thanks to growing our dedicated fleet, strong new business awards in Managed Freight, a small acquisition and receding impacts of weather and avian influenza. However, margins remain compressed, particularly in our Asset- Based Truckload segments due to an inflationary cost environment, persistently high claims expense, a quarter-end jump in fuel prices and continued pressure on volume and yields in our Expedited and legacy Dedicated segments. During the quarter, we repurchased approximately 1.6 million shares or 5.7% of the average diluted shares outstanding for a total cost of $35.2 million. The average price per share repurchased was $22.69. Approximately $13.8 million remains available under our $50 million share repurchase authorization. We retain the full range of capital allocation alternatives based on our current financial profile. Year-over-year highlights for the quarter include: consolidated freight revenue increased by 7.8% or approximately $20 million to $276.5 million. Consolidated adjusted operating income shrank by 19.6% to $15 million, primarily as a result of year-over-year cost increases within our Truckload segment. Our net indebtedness as of June 30 increased by $49 million to $268.7 million compared to December 31, 2024, yielding an adjusted leverage ratio of approximately 2x and debt-to-capital ratio of 39.2% as a result of executing our share repurchase program and acquisition-related earn-out payments. The average age of our tractors at June 30 increased slightly to 22 months compared to 21 months a year ago. On an adjusted basis, return on average invested capital was 7% versus 8% in the prior year. Now providing a little more color on the performance of the individual business segments. Our Expedited segment yielded a 93.9% adjusted operating ratio, a result only slightly better than the year ago quarter. While this result falls short of our expectations for this segment, we were pleased with the year-over-year consistency. Compared to the prior year, Expedited's average fleet size shrunk by 50 units or 5.5% to 860 average tractors in the period. We expect the size of the fleet to flex up and down modestly based on various market factors. As market conditions improve, our focus will be on improving margins through rate increases, exiting less profitable business and adding more profitable business. Dedicated's 95% adjusted operating ratio improved sequentially, but fell short of both the prior year and our long-term expectations for this segment. On a positive note, we were successful in growing the dedicated fleet by 162 tractors or approximately 11.7% compared to the prior year and grew freight revenue by $8.3 million or 10.2% compared with the 2024 quarter. We continue to win new business in specialized and high service niches within our Dedicated segment and reduce exposure to more commoditized end markets where returns have not justified continued investment. Going forward, we remain focused on our strategy of growing our dedicated fleet, specifically in areas that provide value-added services for customers. Managed freight exceeded both revenue and profitability expectations for the quarter. We were pleased by the team's ability to bring on new freight, handle overflow freight from Expedited and reduce costs. The quarter benefited from nonrecurring business that is expected to roll off during the third quarter, and we point out that this segment generally is susceptible to volatility of revenue gains and losses and to margin expansion and compression related to the cost of sourcing capacity during market cycles. Over the longer- term, our strategy is to grow and diversify this segment, and we note that an operating margin in the mid-single digits generates an acceptable return in capital given the asset-light nature of this segment. Our Warehouse segment experienced freight revenue that was effectively flat to the prior year quarter, but adjusted operating profit fell by approximately 45%. The significant reduction in adjusted operating profit is largely due to facility-related cost increases for which we have not yet been able to negotiate rate increases with our customers and start-up related costs and inefficiencies related to new business. We anticipate improvements to adjusted margin during the remainder of the year. Our minority investment in TEL contributed pretax net income of $4.3 million for the quarter compared to $4.1 million in the prior year period. TEL's revenue in the quarter increased by 34% compared to the prior year, primarily by increasing its truck fleet by 429 trucks to 2,635 and increasing its trailer fleet by 866 to 7,880. The revenue increase was largely offset by lower margins on leased revenue and equipment sales due to a soft market. Regarding our outlook for the future, our team is performing well while keeping the pedal down on growth and shifting mix toward more contracted, specialized and high-service niches. Covenant Logistics is one of the few companies in our industry to grow revenue and fleet count year-over-year, while the combination of tepid general freight market and start-up costs and new dedicated accounts, along with inflationary costs has pressured margins more than we'd like. We see a path to improving fundamentals as the year develops. Our baseline expectations for the second half of the year includes additional start-ups in our Dedicated segment, a slowly improving general freight market and modest peak season that will benefit Expedited and Dedicated and a wide range of outcomes in Managed Freight. If the general freight market fails to improve, we still expect mix change and seasonality to generate better results in the second half of the year. And the general freight market improves and the typical peak season takes place, we believe leverage exists in our model to capitalize in Expedited certain Dedicated accounts and Managed Freight. Regardless of what the remainder of 2025 has in store for us, our team is aligned and focused on continuing to execute on our strategy and plan, which includes a disciplined approach to capital allocation, executing with a high sense of urgency, improving operational leverage as conditions improve, growing our dedicated fleet and improving our cost profile. Thank you for your time, and we will now open up the call for any questions.

[Operator Instructions] And our first question will come from Scott Group with Wolfe Research.

So you just talked about, I think, improving or optimism about improving fundamentals in the back half of the year. Maybe just give us some sense what you're seeing in the market? Any sort of customer conversations around peak, any impact from English proficiency, enforcement, just broad views about how the market is developing.

Scott, this is David. Yes, we are definitely seeing, I believe, some green shoots that are starting to show forth. And I think we've all been looking for it for 3 years. And the thing is in 3 years, I think we all will say there's been 2 or 3 times we felt like something was happening that never did quite have any longevity to it. But I do believe there are some opportunities out there in the marketplace today. As I look at bids, as I look at midyear bids that people that did bid 6 months ago that all of a sudden are having some issues on capacity that are starting to come back and want to ask questions. I'm looking at -- not inability, but pricing that is not going down, may not be going up as much as I want or those kind of things, but I don't sense the pressure on rate decreases across the book of business. So I do think that some things are happening. I think some things are happening in the capacity side. As well as I look about -- as we know some of the things that are going on from English language and those kind of things that none of us can sit here and say that it's really taken effect, but we're sensing some of that. On the solutions side of the business, it's been kind of ups and downs at the very beginning of it. They really sensed it and had to say goodbye to some carriers that could not guarantee that they're going to have some English-speaking people. But that said, overall, I feel pretty good about what I'm starting to see in the market. But I could get really excited if it had not gone down a couple of times in the last 3 years, Scott.

Understand. You've got a lot of LTL exposure on the Expedited side. Maybe just talk about how that business is developing? Any signs of green shoots there? Or is that still more challenging?

It has been challenging. And that's one of the -- to be honest with you, one of the surprises that I would say to me in the last few months, the last 5 months anyway as we've seen our LTL customers get softer in the marketplace trying to figure out exactly what that is and what is happening there. We kind of did a study in the last couple of days of all our LTL companies, I'm talking about verbalizing with them. And out of all of them, we've only found a couple of them that will say our business is up. The rest of them are saying we're feeling pressure on volumes. And so the LTL side of it is concerning of what's going on there. I will tell you also, though, that's surprising from a good standpoint is that the airfreight side of our business, the consolidation of airfreight, I'm seeing some good things happen there that is exciting me. And I mean, I think we all see the focus of the government, that Trump and the administration has got on AI, and we're sensing that. I mean we're hauling a lot of servers right now. I'm starting to see transportation wise, what I've been hearing from people verbally about AI and starting to see some of that taking place in some of these data centers that are building out the United States and the servers that we're starting to haul just in the last 30, 45 days that we're really starting to sense some opportunity there. So the LTL is down, but the airfreight side of our business is really -- I don't want to say really starting to pick up, but starting to pick up. So that's encouraging.

Yes. That's interesting about the AI stuff and data center maybe finally starting to drop in freight a little bit. Just last one, if I can. How does the big bill impact your thinking about CapEx and spending on trucks? Does it -- are you more likely to be buying trucks or sign more trucks now, anything like that?

Yes. I don't know that it changes our plan, Scott, but it sure does help our cash tax obligations for the remainder of this year and quite honestly, next year. And you got to think, I mean, just in a broader sense of kind of the economy, there are a lot of industries, particularly kind of heavy CapEx. I think it could spur some additional freight. I think it could be a catalyst for some additional demand. I look at it as kind of a stimulus that can kind of help with some of that industrial lightness that David was talking to. But we talk about our CapEx for the year was planned a little bit lighter than what we had announced in the release. And I think what we've seen, fortunately, is the ability to grow -- continue to grow our Dedicated. And I think we've got some additional dedicated growth opportunities for the tail end of the year. And so there's some growth CapEx in our numbers as well for the rest of the year. But generally, we try to stay pretty disciplined to our CapEx plan and adjust it for growth opportunities.

Our next question will come from Daniel Imbro with Stephens.

David. But maybe on the Dedicated side, starting there. We saw some stronger actual growth in truck count this quarter. It's good to see that. I guess, can you talk about what drove that? Maybe what part of Dedicated business you were able to grow here in the second quarter? And then just tied into that, how are you thinking about poultry for the back half of the year? Is there any avian influenza still kind of out there that you're hearing from the field? I know the back half is important for that poultry business. Would love an update there on that as well.

Daniel, it's Paul. Yes, the avian influenza is -- it's all about gone. That season is generally more mid-fall to mid-winter. And so that's gone. Fingers crossed, we don't experience anything like we did last year on that front. Yes, the growth in the Dedicated count was a function of really 2 things, a small kind of tuck-in acquisition, really small 60, 70 truck kind of deal on some specialized business and as well as growth in poultry. And then I would say the legacy Dedicated business was flattish. We saw a little bit of decline in that in Q1, and that business was flattish for Q2, hence, the truck growth in the quarter.

Got it. That's helpful.

You asked about balance of the year. I would say I'd probably say flat to incrementally up. I think we do have some start-ups that are signed and planned. Also know of a few small reductions. And so on the balance, I think it will be flat to slightly up for the balance of the year.

That's helpful. Appreciate that, Paul. And maybe a financial kind of follow-up question. Just looking at the model, revenue per mile is down a little bit 1Q to 2Q. But if I marry that with David's comments earlier, it sounds like things are actually getting better and pricing is still okay. Can you maybe just walk through kind of what happened in the quarter there optically and then how we should think about that trajectory into the back half of the year?

Yes. I think what you're seeing in revenue per mile, whether you're looking at it sequentially or whether you're looking at it on a year- over-year basis. We -- I mean, going from a year-over-year basis, we have had some rate increases, particularly on our Expedited segment. But I think what you're seeing is a significant change in business mix. And if you're looking at our total truckload operations and you're reducing 50 trucks out of our Expedited fleet, and I'll just use round numbers that are putting 200,000 miles on a truck per year and inherently have a lower rate per total mile, if you will. And then you're adding in these low short-haul mileage trucks in our dedicated and significantly growing that, you're going to see some distortion on the rate per mile and not to add chaos to confusion, but the dedicated business isn't just pure linehaul stuff. It has fixed and variable costs. It's build per load and there's some weight pieces to it. And so you just can't really look at the number of miles they ran and look when you have a changing mix in the fleet, I would say. The other thing I would say, if you're looking at it sequentially, all of the shutdowns and it created -- and the weather created a little bit of a bump in deadhead, and it created some just noise in the first quarter. So it's hard to follow from a 1Q to 2Q when we were out here talking about some rate increases particularly in Expedited. There were some out-of-route miles and it kind of creates some issues where you're kind of -- it makes the rate per total mile look a little wonky. But I think for the rest of the year, we're probably going to be looking at flat absent some sort of like short-term catalysts, which I think this thing is turning. I just don't know how quick it's turning. I'd be hesitant to make a...

It does turn going up.

Yes, we've got some leverage when it does turn. We're just waiting on that day to happen.

All makes sense. Last one if I could squeeze it in. You mentioned you did a small tuck-in this quarter in Dedicated side. Just curious how the M&A backdrop is evolving as we navigate this prolonged downturn, but we're coming off the bottom. Like are you seeing the frequency of deals coming across your desk picking up at all, Tripp?

I think -- well, first of all, the tuck-in acquisition was done on the really back end of last quarter. We mentioned it in the release last quarter. But again, it was a small one. It fit well and it was a tuck-in and really interesting type of business and interesting type of non- poultry-related freight or non-ag-related freight. Yes, I think it's interesting. The deal market ebbs and flows, and I think we're in kind of a situation over the last couple of months where a couple of interesting things have crossed our desks or crossed our paths that have made it to a level where we're talking about them that fit what we do. I think the key to us is sticking to what we've done historically and just being disciplined in our -- working our plan and being disciplined with our capital and making sure that we're allocating it appropriately. But it definitely has. It feels like it has picked up with some interesting opportunities. There's always things floating out there, but the last 2 or 3 months, I've noticed some things that have been particularly interesting, I'd say.

We'll move next to Jeff Kauffman with Vertical Research Partners.

There's a lot of questions have been asked already here. So I got one detailed question and one big picture question here. Question for Tripp. You bought back 1.5 million shares. The shares sequentially changed by only 0.5 million. What's a good number to think of in terms of third quarter shares outstanding?

Well, we purchased -- I mean, remember, our average here's what I would say. The shares that are presented in our financial information are an average. So I think you can -- the 1.5 million or 1.6 million that we repurchased over the course of the quarter, you'll see them be completely out of the Q3 results. So you could basically take where we landed in Q1 or at the end of Q1, reduce it by 1.5 million or 1.6 million, and then that's probably going to be a close run rate. There's not a lot of vestings or anything like that, that -- or diluted share issuances that are going to kind of materially impact that number or that math, if you will, on your reconciliation.

Okay. So an overly simple way to think about it is you had 27.2 million shares average for the second quarter, would something in the 26% to 26.2% range be kind of a fair target in terms of where that third quarter average is likely to be. And that's barring any other activity?

I think that's pretty spot on. It may move up and down a little bit, but not -- 26.2% is probably a good number.

Okay. And then a question for David and Paul. If I take a couple of steps back and look at the bigger picture of the freight environment and where we think we're probably going over the next year or 2. Right now, we're looking at kind of a 95-ish OR in Expedited. We're kind of around the 96-ish OR in Dedicated. Where do you think these should be in the longer run when the markets stabilized? And when I think about the Dedicated business, you mentioned the avian flu is gone, but that impact to the franchise still kind of lingers around kind of as these businesses heal and the markets normalize, where should those margins go?

Yes. This is David, Jeff. Great questions. I would sum up a couple of things on this. One, that particular question is then an overall summary from a big picture standpoint. I really think that Expedited is a -- depending upon the market, it's an 83% to 93% operation. It's 83% to 93% depending upon the market. I think it's -- when it is thinking like it has been in the last couple of years. Now keep in mind, some of us on this call will remember that, that 10 points that I'm saying there, they used to be 93 to 103. It used to be a 92 to 102 kind of number back in 2015, '14, those kind of days. So we have probably dropped it by a strong 5, 6 points. But I do believe that Expedited is 83% to 93%, depending upon the market. I believe that our Dedicated is going to -- the first goal that we've got there is to get back down into the low 90s. And I think that, that is very, very possible. As I think about Dedicated, as we all know, I mean, our poultry division is in the 80s to give you an idea. We all know that. It's in the 80s. The flu hurt it into the low 90s -- but it's a solid mid- to high 80s kind of number. We want to improve that, and it will improve. We have grown that segment so fast and so rapidly, and I still see continued growth in that, that it costs money to go out here and grow these things even if it's repositioning equipment all over the country in order to do that. So internally, I would tell you that give me 84% to 86% on poultry, and I'm a happy guy. And I think that, that's where it's going to be as long as we're going to be growing by -- I mean we have tripled that business. So it's a big operation that we've got there. And we continue to make good headway on the legacy Dedicated side of our business. No doubt, it's operating to equal 95%, it's operating in the high 90s in order to operate there. But what has happened on that, and it's getting closer, I believe, to maybe it gets to 94% kind of numbers that a lot of -- 2 things happened. A lot of commoditized business has left. I still think out of -- on that legacy out of 800, 900 trucks doing there. I think we still got a couple of hundred trucks that are commoditized that have to be dealt with eventually. But I also think that the business that we lost in that -- over the last couple of years in the legacy Dedicated, as we all know, 2 things happen. Commoditized ruined your rates, and that's not what any of us want to be in is a commoditized kind of any kind of commoditized business. It's what we've ran from for so long. But another one is that the ones that are operating extremely well in the last couple of years, the pressure -- when that contract is up, that pressure gets there. Let's just say those businesses are operating in the low 80s, and they were and they are, those kind of things, an acceptable return, the contract expires and you either lose it or -- it goes to 95%. So you got legacy commoditized as well as the good ones. And so that's the thing on the legacy side that we've been dealing with for the last 3 years. I think it starts telling itself as we go forward, especially when the market gets a little bit tighter. So that's what's going on in the Expedited. I think Expedited is -- we still believe it's high 80s to low 90s together, everything together. And I think that that's where we will end up at. We just may need some help from a strengthening of economy or less capacity. So hopefully, that gave you a big picture on those 2, Jeff.

No, that was really, really helpful. And then Scott Group kind of hinted at this, but let me come back to it. Look, the one great I think this industry has had for 2 to 3 years is where is the volume, right? We've been waiting for that volume catalyst to tighten up the market because capacity is just not coming out as fast as it needs to. Do you believe that between the consumer benefits to disposable income and some of the industrial incentives that are out there on capital investment and manufacturing, could the one big beautiful bill be that volume catalyst the industry has waited for? Or do you think it's something else?

Well, I think there's a couple of things. I think, first of all, the big beautiful bill there. I'm going to say Donald Trump is going to get this economy going nicely. I do believe that. I mean I think he will die before he doesn't get there. And so I think the entire government's focus is there. And I do believe -- I think that we're going to start seeing 3% to 4% GDP kind of numbers. I was with housing folks yesterday in the floor covering business. And they're just basically waiting for housing -- for interest rates to drop on the housing. They think the backlog is gigantic as soon as people can afford the payments. And we see the battle going on in Washington with the Federal Reserve on the interest rates. And I think there's a lot of catalysts because he will win, whether that's trucks, whether that's in November, October or next March, he's going to win that battle and those interest rates are going to go down and housing is going to improve. So I think that those are some of the catalysts there as well as capacity is leaving. It has not left as fast as what all of us would like to see capacity leaving for it's been very stubborn and those kind of things. But capacity is leaving. You can see it in the Class 8 truck orders nobody is buying a bunch of trucks. And so it's just a matter of time. I think that whatever number you want to use, 3% to 3.5% GDP with Class 8 truck orders being down and exit being up, even though maybe not the number I won't, that is going to show up in tightness of business. And whether that's 3 months from now, I believe my guess is good as anybody and you're as good as mine. I think it's October kind of timeframe that we will start seeing capacity really starting to tight because we're starting to sense it as we speak right now.

And our next question will come from Elliot Alper with Covenant Logistics.

This is Elliot on for Jason Seidl. Maybe coming back to Dedicated margins improving in the back half of the year. You spoke about some additional start-ups. Is that margin drag quantifiable at all? I guess trying to think about core Dedicated trends, maybe some of the expectations into what a modest peak season looks like, especially given some trade policy that might swing what a normalized peak might look like?

Yes. Let me break it down for you a little bit, Elliot. I think that Dedicated margin got better from Q1 to Q2. And I think Dedicated margin could get slightly better from Q2 to Q3. And then wherever it gets in Q3, that will probably be where it will be because Q4 with the holidays, Thanksgiving and Christmas, it actually always pressures Dedicated margins. And so I think you'll see Dedicated get a little better Q2 to Q3, and then it could be flat to back a little bit in Q4. And then on the Expedited side, you're talking about the peak season. If some of the things David talks about come to pass and October, things start tightening, we did see a little bit of peak last year. You could see an uptick in our rates and tightness in that kind of -- in that fourth quarter on the Expedited side. If we experience that and nothing tells us that it's going to be looser than it was last year, especially with the tax policy and maybe what GDP might do, you think it'd be better than it was last year, then I think you could see Expedited actually get a little better in the fourth quarter.

Okay. Very helpful. And then maybe just following up on that within Dedicated, you spoke some value-added services for customers. Curious to get your thoughts on maybe what that could look like.

Yes. I mean I think we're just -- we're continuing to try to diversify on the Dedicated side out of those commoditized end markets. And so that takes time. And -- but here's what you know is that every time specialty businesses that are harder generally have better margins than stuff that's not specialized. And so over time, I think you'll continue to see that margin improve as we work that plan, but that's going to kind of be a slow, steady plan, not a flip of a switch kind of deal.

Elliot, just to add to that, I mean, all of this prolonged down cycle, if you will, has -- if it's done one thing, it's created a lot of competition within traditional Dedicated, dry van Dedicated. And there is a lot of capacity flooding into that. And adding to Paul's comments and part of our strategy is to figure out how -- figure out ways basically how to differentiate ourselves, whether it's hauling different things like live haul or feed or using different equipment or doing different things that require driver credentials or that are just difficult high service requirement type things. Those are the type of areas that we're trying to penetrate. And the more commoditized stuff is the stuff that we're going to -- as we think about capital allocation long-term, those are the types of things that are going to be we're going to have to leave those behind because they may have been considered nichey or kind of Dedicated and high margin at one time. But I do think it's becoming more and more competitive. And I don't know if it will ever come back to where it was. So we're having to adjust our plan and adjust our sights on some of that more specialized stuff to help us stay ahead of the game.

Our next question will come from David Floyd with Chattanooga Times.

I was hoping you could elaborate on the factors that led to the record revenues you guys saw in the second quarter this year.

Yes. We've been really blessed. I mean, David, this freight economy has been terrible for 3 years, and we've had the benefit of being able to grow our Dedicated fleet and our total trucks. And unlike any time in company history, we've been able to kind of sustain our margin and sustain our Expedited business. Our Managed Freight, which is an asset-light business has continued to grow organically. We did have some surge freight in the quarter that helped whether you're looking at it on a year-over-year or a sequential basis. But that happens in that segment. And I think it will be up again year-over-year in the third quarter. And who knows, it can be impacted by peak in the fourth quarter and additional business adds. We're seeing a lot of opportunities there. And then organic growth in warehousing has helped. And so the combination of the 2 big drivers of the growth year-over-year are going to be the Dedicated segment and that growth, I would say, of 162 units net in that segment and then basically your Managed Freight, which grew almost $18 million year-over-year. So we're excited about it, and we like the direction of the company, especially of where we're going, especially in an environment that is really, really tough to grow.

Got you. And I was curious about just like what the effects of the English proficiency requirements are on just like recruitment of drivers. I mean, industry-wide, but also at Covenant?

That's not been a problem, David, because they had to pass that we've never been there where we would not allow them to come to work. So we've always had to have English-speaking abilities and so drivers. So that's not a problem with us. And so really, from our standpoint and for the carriers that do not have that issue or do not employ those drivers that can't speak English, anything that comes out is something that we've been talking about on the reduction of capacity that will help the industry.

Got you. Last thing I had was, Jeff and you were talking about how there's the anticipation that interest rates will come down, which will, I guess, encourage more people to start buying homes, and that could be good for the industry. I was hoping you could just kind of elaborate on just like the outlook for the freight market going forward under Trump's economy?

Well, here's what I know. The higher GDP is, the more freight there's going to be. The lower interest rates are, the more it's going to help housing. And there's probably 20 truckloads of freight for every house that gets built. To give you an idea, if you get into flatbeds and those kind of things, probably more than that. But it's just a big nucleus of freight for the housing industry. So the better the economy, the more freight that's going to be available for all of us. So that's really the 2 things that we look at.

[Operator Instructions] And it appears there are no further questions at this time. Mr. Grant, I'll turn the conference back to you.

I want to say -- add on a little bit about the big picture that we were talking about a little while ago. And I want to make sure that I look at our company and what we've done. This -- I am so thrilled and so proud of what this team has done. They've done an excellent job, especially when you look at the last 3 years environment that the whole trucking industry has been in, we've excelled much better than virtually any peer that we've got out there during the most difficult environment in trucking history that this team has done great. And I look at that and I look at things that I believe are going to get better. And the thing that I love about this because this has been since 2018, we're on a 7-year journey now of taking our company and transforming our company tremendously since 2018. And the model that we're sitting here talking about and raising all the various questions around Expedited and Dedicated and freight management and warehousing, et cetera, that's exactly what we wanted. And what we are seeing is taking place is what we've been working on for the last -- since 2018, so the last 8 years. And it's exciting to me because I look and I say, when something is up, one of the other ones are coming stronger. When one is down, the other ones are pulling us up, and that's something that is happening our model tremendously. Expedited, I take the freight management, we're all happy about the second quarter on freight management. They did a great job. Well, let me tell you, a lot of that -- some of that or a percentage of that is because of the overflow from Expedited. I look at Expedited, we had a discussion about it. 93% OR in Expedited, I think it's 83% to 93% is where Expedited can go at. But because of something that 93%, the high end of a number that I won't, but Managed Freight did extremely well. They had to give them a lot. I mean, it was a lot of freight because of the network because Expedited is working in a network in this economy that could be up, it can be down. The network, it can be sluggish in one area is strong in another area. And they may not have the trucks available when that -- in those areas that are strong in. And so they give it over to the Managed Freight, and that has helped Managed Freight tremendously in the second quarter. So what ends up happening is that Expedited as freight continues to get stronger. We talked about LTL. As LTLs gets stronger, the network for Expedited will get better. It will get stricter and the rates on there, deadhead will go down, rates will go up, utilization will go up. Now and Expedited will perform better. Now the worst part of that is that they won't be throwing over as much freight over to Managed Freight. And so therefore, Managed Freight will go down a little bit. And so that's what I love about what I'm seeing in our model. And I just want to make sure that everybody sees, recognizes that because that's powerful. And it's this team that has done this throughout our company. Another thing I'd say that does drive me crazy and our industry has got to get a help on this, but is the insurance. As I look for the last 4 years -- this is our fourth year that we're trying to set a record on safety. Fourth year, the last 3 years, the previous 3 years have been records. We beat it every year for the last 3 years, and we're working on trying to beat it again this year for the fourth year in a row. And we're also putting inward-facing cameras. As we speak, we got in about 700 trucks. today. So we're continuously looking and working and the results are there on safety. But I look at our costs on insurance. It has almost doubled since COVID. It's telling you that something is not right. We've got to get tort reform. We got a couple of accidents I'm concerned about. I don't know where it's going to go. We'll figure out where it's going to go. But tort reform has got to happen. The American Truck Association is working extremely hard on tort reform, but it's got to happen in our industry. And so I don't know -- as I look at the big picture, I think that we have done a great job. I will question whether we've been rewarded for that great job from Wall Street or not, but that's your questions and your answers. But I'm proud of the team. So anyway, I hope that we gave you all a big overall big picture of how I feel. So I think that's it.

All right. Well, thanks, everyone, for joining us today, and we look forward to speaking with you again in the third quarter. Thank you.