Richard Cribbs - Chief Financial Officer David Parker - Chief Executive Officer Joey Hogan - Chief Operating Officer.

Jason Seidl - Cowen and Company Brad Delco - Stephens Incorporated Tom Albrecht - BB&T Capital Markets Nick Farwell - The Arbor Group Donald Broughton - Avondale Partners Tom Albrecht - BB&T Capital Markets.

Excuse me, everyone, we now have our speakers in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of today’s presentation, we will open the floor for questions. At that time, instructions will be given as to procedure to fellow if you would like to ask a question.

I’d now like to turn today’s call over to Mr. Richard Cribbs. Sir, you may begin..

Thank you, [Katie] [ph]. Good morning. Welcome to our second quarter conference call. Joining me on the call this morning are David Parker and Joey Hogan along with various members of our management team. This conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Please read our disclosures and filings with the SEC, including without limitations, the Risk Factors section in our most recent Form 10-K and Form 10-Q.

We undertake no obligation to update or revise any forward-looking statements to reflect subsequent events or circumstances. As a reminder, a copy of our prepared comments and additional financial information is available on our website at ctgcompanies.com under the Investor Relations tab.

Our prepared comments will be brief and then we will open up the call for questions. In summary, the key highlights of the quarter were.

Our asset-based divisions’ revenue, excluding fuel, increased 12.2% to $139.5 million due to a 5% increase in average tractors, a 6.1% increase in average freight revenue per truck and an increase in our refrigerated intermodal freight revenue.

Versus the year ago period average freight revenue per loaded mile was up $0.086 per mile or 5% and our loaded miles per truck were also up 1.2%.

Freight revenue per tractor at our Covenant Transport subsidiary was up 7.4% over the prior year quarter, while our refrigerated subsidiary, SRT, experienced an increase of 5.5%, and our Star Transportation subsidiary experienced a decrease of 1.8%.

Compared to the year ago period, the asset-based division’s operating costs per mile, net of surcharge revenue, were down approximately $0.02 per mile, mainly due to lower casualty and workers’ comp insurance and reduced capital costs. These decreases are partially offset by higher employee wages and net fuel cost.

A favorable $3.5 million return of previously expensed insurance premiums for the commutation of our primary auto liability policy for the period of April 1, 2013 through September 2014, as well as $300,000 of reduced insurance premium expensed in the second quarter of 2015 related to the cancel/rewrite of that same policy that extends its coverage through March 31, 2018.

Resulting casualty insurance premium expense of the rewritten policy will be effectively reduced by approximately $1 million per year over the three year policy period that began April 1, 2015. The asset-based operating ratio was 87% in the second quarter of 2015, compared with 93.2% in the second quarter of 2014.

Our Solutions logistics subsidiary decreased revenue by 5%. Although we experienced unfavorable increased purchased transportation expense percentage, other operating expenses favorably decreased as a percentage of revenue resulting an OR improvement of 40 basis points to 95.4% from 95.8% in the year ago quarter.

Our minority investment in Transport Enterprise Leasing contributed $1.3 million to pre-tax earnings or $0.04 per share. The average age of our tractor fleet continues to be very young at 1.8 years as of the end of the quarter, equal to a year ago.

Since December 31, 2014, total indebtedness, net of cash and including the present value of off-balance sheet lease obligations has decreased by approximately $46 million to $181 million. Our Board of Directors approved a stock repurchase program authorizing our purchase of up to $5 million of our Class A common stock.

With available borrowing capacity of $50 million under our revolving credit facility, we do not expect to be required to test our fixed charge covenant in the foreseeable future. The main positives in the second quarter were.

One, significant improvement in the operating profitability at each of our three asset-based trucking subsidiaries, two, a 5.0% increase in average freight revenue per loaded mile and a 1.2% increase in average miles per truck versus the same quarter of 2014, three, a year-over-year increase in our professional driver employee headcount, four, decreased operating costs on a per mile basis, and five, a nice decrease in our total indebtedness.

The main negative in the quarter was our increased net fuel cost partially related to lower fuel surcharge recovery resulting from the lag impact of increased national fuel costs as the quarter progressed, an unfavorable fuel hedge position, as well as comparing to the prior year quarter, which included a discrete $900,000 fuel tax credit.

Our fleet experienced a small reduction to 2,698 trucks by the end of June, a 24 truck decrease from our reported fleet size of 2,722 trucks at the end of March. However, our fleet of team-driven trucks averaged 951 teams in the second quarter of 2015, a 2.5% sequential increase over 928 teams in the first quarter.

Therefore, we actually increased our overall driver count by approximately 20 professional drivers during the second quarter of 2015. As of July 18, 2015, our fleet size has increased further to 2,719 trucks. Freight yields for the first three weeks of July 2015 continue to outpace the prior year.

Similar to historical trends, truck utilization for the third quarter of 2015 is expected to be approximately equal to that of the second quarter of 2015.

Based on early and ongoing discussions with our customers to have accelerated shipping needs during the peak shipping season, we are feeling more confident regarding our volume and truck utilization projections for the entire second half of 2015.

We are continuing to experience year-over-year rate per mile increases, though we are starting to see our experience of deceleration of the year-over-year rate per mile increases we experienced during the first half of 2015 when our rate per loaded mile increased 5.4% compared to the first half of 2014, even with a 6.9% year-over-year increase in our average length of haul.

Fourth quarter pricing still remains a challenge when compared to the year ago period, in part due to the strength of the second half of 2014 rate per mile increases that we achieved. We now expect year-over-year rate per loaded mile increases of between 3% and 5% for the second half of 2015.

Thank you for your time and we will now open up the call for any questions..

Thank you. [Operator Instructions] Our first question will come from Jason Seidl with Cowen and Company..

Good morning, gentlemen..

Good morning, Jason..

Hi, Jason..

I guess, just sort of bigger picture in back half of the year.

So, obviously, we have all seen the deceleration I think in the rate increases, but 3% to 5% historically is still pretty decent, you add on that, you are feeling a little bit more confident in terms of your expected business levels, because you do have a tough comp in -- especially in the fourth quarter? Do you feel that you guys can grow your earnings in the back half of the year?.

Jason, I think, that what we were looking at is kind of similar earnings for the back half of the year. We have a larger truck count. We have good utilization. Rates are where they are.

I think, overall, earnings will increase, but from a earnings per share standpoint where the additional stock that we offered in November, it will be a difficult comp or challenge at least to meet or beat -- to meet and beat the second half of the year earnings per share numbers..

Right.

So your forecast for the back of the year in terms of the bottomline really hasn’t changed, just trying to make sure I get all this correct?.

Look, we haven’t given exact guidance on that for any part of that that part of the year. So nothing really changed and I’d say nothing has changed really from our estimate standpoint through the first half of the year other than that we feel better about our volume..

Okay. And now, I know it’s always a way but looking at 2016 when you passed your more difficult comps with the stock issuance.

Could you talk about plans on growing the earnings from here? Is that 3% to 5% going to be enough to see you consistently grow earnings at a decent pace for investors?.

Yeah. From our standpoint, Jason, we think that 2016 is going to be a good year. We think that whatever out there right now that we think that is a good equilibrium. We see the freight environment to fold one that expedited to feel quite strong. Very pleased with what’s going on with the expedited site that’s where we continue to grow it.

We just got another large ecommerce customer in the last couple of weeks. It’s going to be a big hit for us. But that side of the business goes, it’s going very nicely. The other side on the -- dedicated side, it’s doing very nicely. I’m very happy with that. We’re going to continue to grow it.

It’s a great opportunity doing the dedicated side of the business. And so just on the OTR which is the few single that transport has and then the refrigerated side of our business, we’ve kind of seen that kind of level off to equilibrium, down a little bit in terms of utilization.

As we entered July, that when you put all of the basket, I’m very, very pleased with what we’re seeing from the environment. We think that the second half of the year is going to be a good part, a good portion, a good piece of business from a standpoint of GDP growth.

I think that GDP growth in the second half of the year is going to be in the 2.5% to 3% kind of number. I think we’ll see industry production that’s been a little bit of a low for the last three or four months.

I think that we’ll start seeing it, pick up a little bit because remember anything that’s negative now, give me any cup of positive on the number and we’re going to feel it. All the truckers are going to feel that. And I also think that you’ll see what has been built in the inventory side.

Inventories have been built over the last three or four five months in the second quarter. I think that that will also start to come down which will play nicely into the truckload. So we’re very upbeat. I think that we’ll continue to be able to add some trucks, maybe on that 2% or 3% kind of number. But I think that we’ll be able to add some trucks.

And our enterprising next year will be -- it’s going to be kind of similar to where we’re at today. If I have to throw a number out there today, I’m probably in that 4% to 5% -- if I had to sit here in July and say what 2016 is going to hold. That’s just the way I feel. We’re still getting rate increases.

I mean, we’re still being very successful in that area. So it’s not that we’re being told no but there is no doubt that everything as I said GDP is very bad and investor productions is very bad and inventories are very good and that’s what struck them..

Okay, guys. That’s fantastic color. I guess, one more and I’ll try to turn it over here. On the regulatory front, could you talk about what you’re hearing coming out of the gates from Washington.

Are we going to get the expected regulations in the trucking industry or do you think they can push them back even further?.

Number one, I mean you are at some of the executive committee of ATA and I’ll tell you from our standpoint, from the ATA standpoint, we do believe that we will hear at the end of September that the ELB computers are definitely something that’s going to happen. I think the chances of that to happen are 95%.

So I do -- I only leave out the 5% because we are dealing with the government. Other than that, I say 100%. I think it’s given that is going to happen. And I think that will be announced at the end of September. And I think it will be phased in over two-year period of time, very similar to what you already know. I think that’s what will be.

And I think that as it’s phased in over that two-year time, I think along this small carriers that are utilizing that.

As soon as it’s announced and the time is given, I think we will start -- we the industry will start seeing the benefit of that because it’s not all going to happen on the 24th month, if it is two years, it’s going to be happening on a monthly basis of carriers. That’s going to reduced those miles. So I think that is definitely going to happen.

I think that the national database for the drug testing, I think that will be in December. I expect that to be early part of 2016. And I think that’s going to have another ramification on terms of driver availability to the industry. I think it’s going to continue to reduce miles.

And so I think those two things -- I don’t feel -- I think those two are 95% of our total number for those two things to happen. The third one would be the speed limiters and who knows about that. I mean, they could happen if I’m going to put a percentage owner asset at 50%..

Okay. Guys, thank you very much. I’ll turn it over to the next guy..

Thank you. Our next question will come from Brad Delco with Stephens Incorporated..

Morning gentlemen..

Good morning..

Good morning..

David, I think you’ve given the government too much credit with the 5% prediction?.

You’re probably right..

David, from your perspective, when you look at the market, I think you gave a bit of color on the last question.

But how did things sort of play out for you in 2Q relative to expectations?.

Yeah. I was pleased on the -- again on the expedited side. On the scale of 1 to 10 my expectation, it was 8. The port sale was funky. I mean, it sales and sent there, all of April and May, I’m trying to figure out the feast or famine while that’s going to happen on the Port of California.

I will state today and I would only say that just in the last couple of weeks, there I think that the port is starting to operate towards normal but pretty close to normal, pretty close to the way you would expect it to be. And I think that whatever freight has moved and the port, I do think that some customs have moved to the East coast.

I think some of them have moved to Savannah, Georgia in particular. In our opinions, that -- the West Coast port are at the lowest point of where we’re going to be at because I have already got some customers that are already making decisions now to go back to the West Coast.

So I think that they are at the bottom and it starts getting better for them. Therefore it gets this craziness of ups and down. That had probably, Brad, the biggest surprise or whatever -- not that surprise but we all knew about the port.

But the biggest hamper that we had on my expectations would be the -- just the up and down of the port situation that existed out there. And keep in mind, we’re accounting our expediter that I’m thrilled with. I’m very happy with the second quarter results. So we were able to maneuver very, very nicely in that arena.

So expectations dedicated much better. I was going to say much better but I’m excited about the dedicated. I think the dedicated has got some great opportunities throughout there. We saw that in the second quarter continue to do a lot of good things.

And I think there is some good growth opportunity in the next couple or three months on the dedicated side. So I’m happy there. The refrigerated side is -- we've made some good head ways. I mean, we -- keep in mind, when I say refrigerators, predominantly the SRT division that we’re talking about.

And it is going exactly the way we felt like and the way we felt like it will and that is that SRT, a great company, for so many years, got two flat towers and we jump to a 99 OR, 98 OR and those kind of numbers that over the last couple of years, we’ve really been able to work that down.

And I am very happy, I mean, in the month of June, SRT had a low 90 OR. So I am very excited about what that is happening there, and we believe the second half of the year on our refrigerated product will be in the low 90s. So we are just pleased with the lot of things.

So that being my feel of expectations is that and let me just say it one other thing, because I am happy with the expedited numbers and I told you about that. But also there is definitely thing is that equilibrium, I don’t want to use the word sluggish because I think it’s too hard of a word phrases that equilibrium.

And what does that mean? What is equilibrium mean? It means that today I need five loads and tomorrow my customer needs five trucks. That’s the environment. It’s not 2014, there is no doubt that, but it’s not bad out there. It’s just a little sluggish. And I don’t mean I don’t want to use that word, but it’s equilibrium.

Does that make any sense to you?.

No, that does. But the reason why I asked it because we’ve seen a bunch of truckload or ports thus far, and you are the only one that’s put up positive utilization. And I understand the dynamic with themes there.

But I think a lot of investors are wrestling with is with capacity is not as tight, people don’t believe that there is as much need for theme or expedited services. And to me I don’t know what do you think about it, but there is something else going on to you put a positive utilization and what you being is more of a balanced supply demand dynamic.

I am just trying to see what is the driving..

Here is what’s driving it. Here is absolutely what’s driving it is that we are so glad that we never gave up on the team model. They are in good times, bad times, thus with time, so everybody thought every load is going to become 300 mile at the haul, but everything is going to be regionally not wrong or stupid.

We can’t do the plugging away at the team side. And the ecommerce, I am not just talking about Amazon, I mean they have been the later, but everybody as you know every company in the country is getting into it.

And as long as you and I can get on that computer and I can go to Walmart or I can go to Home Depot or I can go to Amazon and I can press the button that say I am going to have it in 48 or 72 hours. Let me tell you the vast majority of that is going under expedited and if they get over 500 mile at the haul, it’s going on team expedited.

And so that is the -- and so your question would be how long does that last? Well, I think we just hit the ball. I mean, I think we just hit it and we’re all in our way to first state, not just Covenant but as the economy. I think it’s going to become more and more of what is happening.

You got every retail company in the country, whether it is, I am not just talking about Walmart’s of the world, but they are all whether you are selling coat or you are having jeans, you are having the ketchup on the ecommerce side and that plays wonderfully into the teams expedited that were involved in and we are just very, very pleased with it..

Really about -- Brad it’s really about the vertical that we are playing in. And on that expedited side, we are playing in verticals that are seeing over 10% double-digit growth year after year after year. That’s on time sensitive food as well time sensitive retail ecommerce type stuff.

And as long as you believe that’s going to continue at a double digit increase which we do for the foreseeable future out three, four years, then we feel comfortable that the need for our product to be greater than the need for the commodity freight market through that the entire time period..

No, not makes sense, I kind of wonder to tie into this last question if you don’t mind. Dave, if you can give an update on what you’ve seen in July and I guess where else going with that? I am not an Amazon prime member, but apparently there is a big day of bunch of sales that was better than any cyber Monday.

So did you see any impact in your business from that thus far in July?.

Yes. We did and did the right thing because the magic day was July 15, which is last week. And we saw some increased volume Monday or Tuesday but nothing that you can really just say well these wealthy deals really going to work.

We didn’t say that, but I will tell you that after Wednesday happened, Thursday, Friday, Saturday, Sunday there are a lot of opportunities out there. And to the tune of about just on that week, probably about 20%, 25% increase in that segment for about a five or six day period of time.

It’s deal and it’s deal pretty strong out there on that side of the business. I am very pleased now. I have got to believe that, A, it’s not Christmas, B, I hope that they successful.

And all of a sudden July 15th in terms of second Christmas for truckers, I hope that truly that happens, but number three just like Christmas that he is on the first of the year kind of slows down.

So I expect that the big bump that we all felt for four, five, six, seven days, I mean I think it will go back previous days which is fine, but so that’s what I felt..

But probably for a pretty short term, July is seasonally a weak, weak month for all of trucking and probably the second week of February, maybe of all of the month, the timing couldn’t have been better for us than to have that happened. Again, it’s not Black Friday, but it was a nice bump for us in a time period that’s traditionally slow..

That sounds great and that’s perfect color. Well, thanks, guys. I will turn it over and sorry for taking up so much time..

Thank you, Brad..

Thank you. Our next question will come from Tom Albrecht with BB&T Capital Markets..

Hey, guys. Congratulations on another nice quarter. I wanted to dig into a couple of other things so and not to nitpick, but the solo trucks look like it went backwards just a little bit, even though you continue to move forward with team truck, I am kind of talking from March 31 through June.

Do you need to adjust pay? I know you’ve kind of described pay as premium for teams and maybe sort of average for solo, but what are your thoughts there?.

It’s interesting, Tom. Actually on the refrigerated solo side, we are able to increase our truck count a little bit and in Star also and Star as well.

And so it’s really on the Covenant solo side, which is some dedicated accounts that we had as we kind of talked about over -- really over a three period, then slowly moving away from that less profitable service offering to some commodity dedicated that we are running some freight on.

And as we reduced that, we reduced some of the solo trucks associated with that. So we are happy with our pay around that. We are looking at what to do with the solos to improve their performance and profitability, which would include giving them better utilization and which should help with retention efforts in those type of things.

We are making some strides there. That’s another opportunity for us over the next year and half to improve things..

Okay. And then couple other things.

When you talked about utilization for Q3 being similar to Q2, that was a mileage utilization comment or revenue utilization?.

That’s a mileage utilization, yields will -- should continue to improve..

And then I guess maybe, David, you kind of talked a little bit about the dynamics with SRT, both your internal opportunities combined, I think you said July refill market might be off slightly. Kind of year-to-date though, the drivers that we think about beginning with produce and then in the beverage season, weather has been so weird.

How would you kind of describe the influence of those two big markets? I guess you could throw the other one, if the protein market, whether that be beef or chicken..

I think you used the right word that it’s bit weird in the second quarter. First of all, I guarantee there is nobody grilling a hamburger until the end of May or 1st of June. I mean, April was cold where the weather was cold and nobody was doing anything and almost out until May. And we sell our pork. We sell our hamburgers and hotdog business shippers.

They just didn’t have the volume at all. They just told us that if we need the weather to get into the 90s, so 90s will start selling some of it. And it’s across the board that we saw that and we also saw in the beverage side of our business that it was same timeframe. Both of those started trending nicely in the month of June.

So there was two months out of the quarter that I would tell you those two items right there were down. I don’t have the percentages here, Tom. I would say they were down 15%, 20%. It was a big number that they were down but now they are going quite nicely.

So, I can’t complain as we speak excluding one major customer that we got is that it always scares me based upon our path when anybody does a IT convergence and we have a large -- one of our customers did a IT convergent about 10 days ago and we will have to work our way through it if they do plan, plan, plan, plan and they got a bunch of plans.

So that kind of worries me a little bit out there and we have seen there little bit of being all more than it’s more because they can’t get it out the door because of the computer than it is than anything..

And there was a small reduction in shipments related to the avian flu issues that were in the Midwest in the late first quarter and through early second quarter but does seem to work themselves out. We are not seeing any volume decreases from that at this point..

Right. Right. The other thing too, I think we are all just kind of parsing this. We are all probably a little more calm than the stock market is. Thank goodness. You look back to last year, you had these weird pork uncertainties and the pork volumes in September and October were really large, rail problems were an issue.

When you kind of think about your freight flows for the rest of the year, how do you think about the fact that September, October had closed to double-digit inbound container volumes out west?.

Yeah. The way we look at that and it’s kind of one of the reasons why we are also being -- the word cautious. I was going to say conservative, but it is part of reality of what you saw us talk about little bit on the pricing.

But it wasn’t because there was -- last year with pork business being up dramatically like you just said in October and November weakens the prominent trucks period. It could be up and instead be up, whatever it was 25%, it would have been up 7%, we still couldn’t provide the amount of trucks that they needed.

So, I do believe that it has hit a bottom and that it will gradually continue to go up the bottom and gets better, which we will fill that. So at the end of the day, I can always pick up one low, whether they got five in October a day or not, I can only pick up one of them.

And as long as I have that one to pick up, I’m going to be happy with our numbers..

All right..

I think that it will come back somewhat. It’s not going to be like it was last year but I think it will come back. But that tells me that pricing out of there won’t be as dramatic and you won’t be able to get the rate that you are able to get last year because they have five modes instead of one.

So, we do believe that we are going to be able to continue to get pricing because we want to make sure that they get trucks..

And then just kind of -- let me just look at something here and I will get out of the queue. So, on the mileage utilization, so if it is similar to Q2 then it would be close to flat year-over-year.

Is that the message you want to convey, Richard?.

Slightly up, we are up 1.2% year-over-year last year and it was similar..

1.2%..

For second quarter and so we are probably looking at similar kind of up 1%, flat to up 1% in the third quarter on a year-over-year basis..

Right. Right. Okay. Guys, thanks for the color. I will hop back in the queue..

Thanks, Tom..

Thank you. Our next question will come from Nick Farwell with The Arbor Group..

David, good morning. Just a couple of very quick questions.

In your mind, what are the competitive implications of the continued sort of federal regulatory restrictions on your long haul segment of your business, especially from the West Coast?.

Yeah. I think that whether you are doing West Coast or East Coast, I think that when the regulatory stuff starts happening, Nick, then it’s going to affect all of them. Because there is no doubt that there is a -- that these are rates from the analysts. I agree with them that when the computers get on the trust, it is a number. It’s a big number.

It’s a 7% to 15% kind of number. It’s going to be a large number of miles that over a two year period are going to be reduced and whatever regions or country you are in, it is going to have a major of the impact on miles.

And so that was going to affect the West Coast and the other one is national database of the drug testing and that’s going to impact the driver. So, I don’t think it’s got anything to do with West Coast or East Coast, if those are the questions that you are asking..

Well, maybe another way of asking this, are you yet seeing any greater pricing power due to your scale?.

Yeah. I think that we have in the last couple of years that we can say, as our strategic plan develops what its way up and we went out there. We are three years into it now and that’s the best thing ever happened to us.

And I really think it took us from the entrepreneurial company to a real major company that runs the company the way that we all wanted to be ran.

And the strategic plan has been very important to that and we hit the areas that we can sit there and realize what is growing faster than GDP that plays into what we had and that was expedited thing and our refrigerated segment of our business.

And we picked the ecommerce and we picked the produce, organic produce commodities that does play so well in that and that said, we’ve been able to -- you look over the last three years, our rates are up very nicely, very dramatically.

And so just in my mind even I said the reason why we are kind of throwing up 3% to 5%, kind of number say in the second half. It’s because of the effect that 2014 and everything that Tom Albrecht said about port and all that stuff. But rates are going up. I mean, because of time where we -- you can just beat the customer.

I don’t care if they -- you’ve got to treat them like a partner and you’ve got to make sure you keep the business long-term and so that’s where it is at. And that not to go after the last screw into the coffin, but treat people when the deal is open, you shake hands and you keep the business out there. So we’ll continue to do that.

But I think we’re going to continue to get nice rate increases..

Yes. So just from a conceptual standpoint, you maintained your service capacity in long haul team, the long haul/team.

During a very challenging period of time and given the current industry conditions, my impression is the last three or four years you’ve been able to leverage that capacity? Do you think that that trend that maybe your back continues and if you do, is it a two to three-year incremental timeframe, is it….

We don’t know….

… 90% of that improvement already, what’s left in front of you from having maintained service in the long haul?.

I think it’s true that was all in my heart. I mean, they just said here, when days are going bright as we all do, we said that it never end, its never going to end, the rest laugh and those kind of things.

But I think that the trucking industry and in particular the expedited side of it, whether you run in long haul or you involved in a expedited short haul. I think the next two years are going to been about the outstanding years that we’ve ever seen, if we don’t go into late recession.

The things that thrills me is that we’re all on this phone trying to figure out, is the world coming to an end, if freight get ready to go to nothing.

And we got virtually in economy that’s not done anything for the last four or five years and here we are with supply and demand at equilibrium and if we get any help from an economy one day, we will, we got a new administration or something what come about to get us an assistance on the economy, that’s going to do nothing, but that’s going to give us more business but I find it amazing.

If this has been 15 years ago and this industry have been operating in the economic environment that its been operating in for the last three or four years, we’d all be in the graves, but its not, because of equilibrium of capacity.

So to answer your question, I do believe that as long as e-commerce continues, I believe as long as people don’t want a better pesticide all over their food, I believe as long as organic growth is there and I think that that’s a question need to be answer.

Its -- how much long as people go get on the computer to order something and you want it into 48-hour time period, that’s a question, then the consumer get happy with 7 days and if they do then that will affect our expedited team. As long as they get on that computer and ordering and wanting it quickly that, it’s going to continue.

I think for the forcible few years that along with everything I just say it about regulatory and reduction of mile and reduction of driver availability fit into the truckload segment tremendously. And I am going -- and my humble opinion, the next four to five years are going to be great years as long as the economy at least maintain.

Does that mean that we all going to get own and say, what’s going on in the second quarter and does reduction did quietly well, while we want get, we’re going to have that, we’re going to have periods of time. But overall, if you take, is that the economy is flat and you take it that e-commerce is going to continue.

And you take it that organic produce type commodities are still going to be shipping, I feel good about our business..

So, two other quick questions and that is, I’m curious with the plunge in virtually all commodities worldwide for all the regions we are aware of, certainly including energy and diesel.

Has this changed your hedging strategy?.

No..

In what way and why?.

Yeah. As a change, it maybe a little bit but we still continue to hedge at the market. I mean, we’ve got some hedges that are in place in 2018. So we’re still be in disciplined on that side of it. There is no doubt that 2017-2018 are at much lower pricing level. So maybe the market comes up.

We believe that at the end of the day that the pricing that we’ve got in the next few years are numbers that we can run our company at a very sustainable level and get nice returns.

And I mean, I’m not going to sit there and allow something that the markets at $3 a gallon, I’m buying at $5 a gallon, I mean that’s not happening but I will take the risk with the market at $3 and I have divided 330 in those kind of numbers.

I will take that because I remember the day that only thing I was doing in ‘08 and ‘09 is how do I protect my P&L.

And one thing I knew is we can get our company turned around when fuel -- there are no time that fuel as at 350 and we book it and hedge at 350 but a fuel and we all thought it was going there, a fuel went to 450, I don’t know whatever they had done.

And so that started our hedging program and we have reduced it more that the spreads are not as great but there is also that possibility. I mean, I personally believe that crude is about where crudes at. That $45 to $48 to $60 range, I think that that’s kind of where we’re at for the next 18 month.

You led a bomb go off somewhere and its going to sky rocket. So it’s a long answer, Nick but I feel comfortable we were at..

On the hedges we have -- the way we’ve done it, we basically are fully hedged all the way through 2017 now and have some hedges in ‘18.

But what we’ve effectively done is from even a little bit of incremental cost saving through the second half of the year on fuel, the hedge rates that we have in place for next year are about $0.13 to $0.15 lower on that fuel we’re purchasing which is 25% of our fuel or so.

And so that should be incrementally a little over $2 million of cost savings next year that we have built in on fuel.

And then going forward to the next year, the increment is a much bigger increment, down something like $0.50 to, I don’t have the number with me right now but $0.50-$0.55 a gallon that we have built in as cost savings on that 22% to 25% of fuel purchases and that’s going to be a big number.

That’s going to be cost savings a year-over-year cost savings of probably $6 million or $7 million from ‘15 to ‘16, I mean ‘16 to ‘17, sorry. And in ‘17 to ‘18, we have a very similar kind of cost structure in place.

So, even though, we depending on what the market does, we may beat the market, may not in ‘17 but we have some built in cost savings at least, from our standpoint on a year-over-year basis..

Based on current pricing?.

That’s based on just having those inferred..

Have based on the curve ….

Yeah. They built in but we’ve already purchase them, so they’re already built-in..

We’re going to pay more today than we’re going to be paying tomorrow..

Right..

On the hedges..

On those hedges, right..

Then the last thing quickly, it maybe David or so.

If you talk a little bit about your expectation for this retail season and to what degree do you think the -- although it appears in terms of big numbers that shift to online but we have the one-off that Amazon had et cetera and there are other implications of the shift to online that we’re all generally aware of.

What do you thing the implications are trying to take all these factors together on this upcoming retail season for the September, October, rather be, whatever -- yeah September, October..

I say the retail season will from a trucking standpoint be similar to what it was in 2014 from just a volume standpoint. The reason why 2014 was unbelievable because a lot of them was that surprised and the e-commerce continue to just explode in 2014.

And our expectations work with our customers is that we believe that e-commerce will continue to increase 10% kind of numbers year-over-year expectations. So, I think at the end of the day, I think retail sales as a whole will be up in that 2%, 3%, 4% kind of number year-over-year on retail sales. But I think that e-commerce will be up another 10%.

So they are going to continue to take a bigger piece of the total pie..

Thank you. I appreciate your comments..

Okay..

Thank you. [Operator Instructions] Our next question will come from Donald Broughton with Avondale Partners..

Good morning, gentlemen..

Hey, Don..

Congratulations on another solid, solid quarter. Let me ask just more of a strategic question. I know you are realizing some real improvements in fuel economies and certainly the driver situation resolved.

You have new and newer fleet, no one would argue that you don’t have a new enough fleet but is there any talk about bringing the average age of your fleet down even more in an attempt to capture some of the more efficient, the more of the efficiencies in the dealer trucks and in order to gain yourself any advantage, maybe greater advantage in retaining drivers?.

Hi, Donald. It’s Joey. If you look at our existing fleet, we will break it down by all the divisions as well as what’s performing well and what isn’t. From a fuel total cost ownership perspective, we’ve really work hard. We only have probably across the fleet, a couple of hundred left.

So by the end of the year, we are going to be up to the most recent version, the newest version of equipment regardless for the OV that we maybe using, still primarily about four, five liner. We’ve talked about getting actually a little bit longer to your question on expedited side. It’s because -- it's an idea that we haven’t started yet.

For sure, it’s a great question. We used to back in the day where we are growing our teams, 15%, 20% of year. One of our marketing position was come what force when you get a new truck, we are revisiting that kind of strategy that we’ve used in past.

But there is lot of costs involved that we moved over the years from moving kind of higher miles truck into solos, that this cost that we maybe able to save from identification cost, freight costs, things of that nature. So, do we pick up a little bit on the driver side? Maybe a little bit more capital costs.

But yet saving on retention and saving on fuel economy, saving on one last freight cost time. But other than that, I think we are in pretty good shape. Our dedicated product is still bit old. So, we are working hard to get it down closure to where our refrigerated and expedited product is. The margins are definitely there for that.

And I think it will continue to pickup some operating cost as we do that. So, we are in pretty good shape. We are playing around some ideas on the expedited side. We still have a little opportunity to add on fuel but all pretty much will be done by the end of the year..

And don, we were earlier adopters as well on that. We were one of the first companies that brought into the new, at least on the evolution side, evolution truck and so even though 1.8 years like Joey said, we don’t have a handful, really 150 to 200 trucks that are running something other than at the new engines.

And then the other part of what would be beneficial, I think for going ahead and increasing and improving the average age a little bit. As we -- basically all the trucks that we’ve got with the new engines, all the installed, they’ve had stability control systems for safety purposes.

We just this year started putting in truckloads and mitigation technology on our trucks. And so the pasture that we can ramp up those purchases is the fastest that we will have, that extra safety equipment on the truck that we’re seeing really good results from thus far..

Well, you do that and I will just start modeling for your insurance and claim cost to be $0.05 a mile should the guys come on..

I hope you left..

Exactly. Well, let’s turn to the trailer side just for a quick then.

I know your average age of the trailers overall, what’s the average age of your refill trailers by now?.

This is probably about a 2 to 3.5 years..

That is part I was significantly newer. All right. And then one last question, and I will let someone else have this board. Your brokerage business, so we all saw the changes in revenue and [indiscernible] for that business and maintenance relative maintenance margin.

So if I could get a little bit better granular on what was going on there? Was it a higher number of loads that drove the improvement revenue because that’s what we have seen so far the pattern then others reporting in some a lot more loads maybe a little less revenue per load.

Can you tell us what you saw?.

Sequentially from Q1 to Q2..

Well both quite frankly year-over-year and sequentially, more from a sequentially?.

Yes. Year-over-year it was down a little bit. We still had a product and LTL consolidation product that we’re running in Pacific Northwest through the end of the second quarter last year so that comp will be over. And so that part of the reason is down a little bit. Since that time, we have added brokers.

So we are growing with size of our offering in that brokerage area and that’s a big reason for us. So it is a more loads. I don’t think the average revenue per load is down all that much, even though you are looking at including fuel and which you’re seeing in the revenue there and maybe even up a little bit.

So I think that’s what we are seeing as we continue to grow our brokerage with new employees and good employees that are taking care of that..

Thank you..

Thank you. Our next question comes from Tom Albrecht from BB&T Capital Markets..

Thank you. Just a quick follow-up. Richard, I know for the year you have a smaller gains, but there is a still quite a bit of smaller than what we thought about 160 grand I think in the second quarter barely 100 grand first quarter.

What’s your outlook for gains for second half in the year?.

We have some larger gains come in. We have some equipment that get better there on the trailers side actually that we’re going to be disposing of over the next six months that should increase that back upto more normalize levels anywhere from 600 to 1.1 million..

Per quarter or total?.

Per quarter..

Okay. That’s helpful. Thanks very much, guys..

Thank you..

Thank you. [Operator Instructions].

Well, no more questions. So we appreciate your time and look forward to talking to you again the next quarter. Thank you..

Thank you. This concludes today’s presentation. You may disconnect at this time..