Welcome to today’s Covenant Logistics Group Q3 2022 earnings release and investor conference call. Our host for today’s call is Joey Hogan. At this time, all participants will be in a listen-only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host. Mr. Hogan, you may begin.

Thanks, Ross. Welcome everyone to the Covenant Logistics Group third quarter conference call. As a reminder to everyone, 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 review our disclosures and filings with the SEC, including without limitation the Risk Factors section in our most recent Form 10-K and our current Form 10-Q. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. A copy of our prepared comments and additional financial information is now available on our website at www.covenantlogistics.com in the Investors section. I’m joined on the call this morning by David Parker, Paul Bunn, and Tripp Grant. Opening for the call, despite the challenges of negative GDP growth, overstocked inventories, and industry-wide overcapacity that have increased over recent months, combined with major inflationary pressures, we remain grateful to our teammates for producing record adjusted earnings per share for any third quarter in our history. On a consolidated basis, adjusted net income was up 31% and adjusted earnings per share was up 49% on the strength of revenue growth, flat adjusted operating margin, a growing contribution from TEL, and a 12% reduction in diluted share count resulting from our ongoing share repurchases. Return on capital for the trailing four quarters was 23% compared with 12% for the trailing four quarters in 2021. On the truck side, we were pleased with how our utilization and rates held sequentially from the second quarter, but the impact of delayed deliveries of new equipment and escalating costs of parts, maintenance, and other line items compressed our margins in the quarter. Our managed freight group did a great job in holding margin despite reductions in overflow freight from the truck side, and our warehouse team withstood cost headwinds associated with new customer business and investments in additional warehouse capacity for future growth. The contributions of the AAT acquisition, which operates in a less economically sensitive market, TEL, Dedicated, and stock repurchases provided most of the improved earnings per share despite a weaker market compared to the historically strong market a year ago. In summary, the key highlights of the quarter were: our freight revenue grew 6.5% to $267 million compared to the 2021 quarter; adjusted earnings per share increased 49% to $1.52 per share from the year-ago quarter; our asset-based truckload’s freight revenue grew 15% versus the third quarter of 2021 with 53 fewer trucks; our asset-light managed freight and warehouse segments combined freight revenue shrank by 5% compared to the third quarter of 2021. On the safety side, our DOT accident rate was the lowest third quarter on record, 11% lower than the third quarter of last year, but development of a small number of prior period claims contributed to almost $0.03 per mile increase in insurance expense. Gain on sale was only $200,000 compared to $900,000 in the year-ago quarter. Our TEL leasing company investment produced another record quarter, contributing $0.38 per share or an additional $0.24 per share versus the year-ago quarter. We purchased another million shares during the quarter, bringing the total to 3 million through September 30 for this year. Due to the strong cash flow in the quarter and the sale of the California terminal, our net indebtedness decreased by almost $29 million after utilizing $27.5 million of cash on share repurchases. We finished the quarter with a leverage ratio of 0.23 times, a debt to equity ratio of 7.8%, and again a return on invested capital of 23.3%. Now Paul will provide a little bit more color on the items affecting the business units.

Thanks, Joey. For the quarter, our asset-light businesses, comprised of managed freight and warehousing, were 38% of total freight revenue and 41% of consolidated adjusted operating profit. In the managed trans side of the business, while we believe revenue has stabilized, we expect margin compression into a softening environment. Our warehouse revenue stream has accelerated due to the impact of three startups for the year, receiving the full revenue impact in the third quarter. We expect startup costs and unoccupied lease costs to decline in the fourth quarter, improving our margins. The asset-light group remains a priority for growth, focusing on talent acquisition and technology enhancements. The expedited division was 34% of consolidated freight revenue and 48% of adjusted operating profit in the quarter. It grew its revenue 26% versus the year-ago quarter due to strong revenue per truck per week improvements and growth of 80 trucks, with the first-quarter acquisition contributing to revenue growth nicely. Increased salaries and wages, equipment and maintenance costs, and insurance costs continue to be a major headwind in the year. Sequential operations and maintenance costs were significant in the quarter, but we feel third quarter was our peak from a cost perspective on equipment and maintenance costs due to an aggressive replacement plan between now and the end of 2023. Driver pay remains stable at the present time. The dedicated division was 28% of consolidated freight revenue and 11% of adjusted operating profit in the quarter. Revenue per truck growth was 14% versus the year ago quarter while cost increases in salaries and wages, equipment and maintenance eroded some of our progress on margin improvement. We missed our sequential OR improvement goal for the quarter mainly due to the increased costs during the quarter. We continue to work diligently to improve margins through fleet reductions, a reduction of approximately 60 trucks in the quarter, equipment upgrades, and asset allocation to more profitable accounts. Our minority investment in TEL continues to produce strong and positive results. TEL’s revenue in the quarter grew 45% and pre-tax operating profit increased by 125%, both versus the third quarter of 2021. TEL increased its truck fleet in the quarter versus year ago by 279 trucks to 2,153 and grew its trailer fleet by 492 to 6,860. After receiving more than a $7 million distribution during the quarter, our investment in TEL, which is included in other assets in our consolidated balance sheet, remained at $58 million. As a reminder, TEL focuses on managing lease purchase programs for its clients, leasing trucks and trailers to small fleets or shippers, and aiding clients in the procurement and disposition of their equipment through a robust equipment buy, sell and management program. TEL contributed a total of $0.38 per share to our overall results or an additional $0.24 versus the year-ago quarter. Due to the business model, gains and losses on sale of equipment are a normal part of the business and can cause earnings to fluctuate from quarter to quarter. Now I’ll turn the call back to Joey.

Regarding our outlook for the future, as we said in our release, we expect the remainder of the year to include continued moderating freight demand, greater driver availability, and continuing cost inflation, although we do expect our fourth quarter adjusted earnings per share to be similar to the third quarter, bringing the full year to approximately $6.00 per share. For 2023, we believe there will be market headwinds from a softer market during contract renewals as well as continued inflationary pressures. However, based on company-specific factors – the investments we have made in our sales team, the small acquisition, share repurchases, the equipment upgrade plan, and reduced insurance casualty costs resulting from our improved safety results, we expect less earnings volatility than in prior periods of economic weakness. Over the last five years, our customer base has been strategically shifted to less cyclical industries through our full-service logistics focus. We predicted last quarter that 2023 will be a breakout year for Covenant, and we remain confident in that plan. Even with a heavy equipment investment year, we expect our cash generation, low leverage, and available liquidity to provide the full range of capital allocation opportunities to benefit our shareholders. Lastly, I’ve been honored and humbled to serve Covenant for 25 years and I’m excited about the leadership team that we’ve been able to assemble, the best we’ve ever had. Over the last five years, the model has been retooled under David’s leadership, and Paul will do a great job leading the company in his new role. I’ll still be around to assist the team in whatever I can do to help. It’s just time to hand the reins to the next generation and let them go. Ross, we’re done with our prepared comments. We’ll now open it up for questions.

Our first question comes from Jason Seidl from Cowen. Please go ahead, Jason.

Hey everyone, good morning. Thank you, Operator. Guys, impressive quarter. Wanted to talk a little bit about some of the commentary around ’23. Can you maybe put some barriers around that less volatility comment? Obviously, you bumped $6 this year. Is less volatility above 4, is it above 5? Can you put that in numbers for us?

You know, Jason, as we look at it, and this will be probably the second or third quarter in a row we’ve said it, and I know some of our peers have said the same thing, we think peak-to-trough is probably a 25% to 30% reduction, and depending on where peak is and where trough is, and I guess we’ll look back at some point and know that, but we still feel confident in that range of a 25% to 30% reduction peak-to-trough, and so if you think you know where the peak is, you can adjust it for that. I think that’s a good spot.

Okay, sounds fair. Wanted to talk a little bit more about the dedicated segment. Obviously, over the last 12 to 18 months, you guys have made a lot of changes there, getting the business up to a more traditional, more profitable type business. What percent is left to touch here that you guys would like to either change out or improve the pricing on?

I would say of the 1,400, 1,500 trucks that are in there, Jason, there’s a couple hundred trucks that are left in there that we’re actively working on, and so I think we’ve got a plan for those trucks and we’ll continue the steady process.

Okay, so most of the heavy lifting done, but there’s still a couple hundred trucks which will help you offset some of the challenges going forward?

Two things I would say, and I’ll give a little bit more color to one of the things in the comments. The effect of the equipment and maintenance issues on all of our trucking operations really diluted a lot of the progress that we’ve made, and so as we get this newer age fleet in here and maintenance costs start coming down and we’re not having to carry a lot of excess equipment, I think you’ll start seeing some of the fruits of that, so it’s a combination of that and some continued weed-and-feed.

Yes, and that was going to be my next question too, guys, in terms of when you look at your average age of your tractors, I think it’s 2.4 years now versus about two a year ago. Where do you think you’re going to be able to bring that down in ’23 to, and then how should we think about capex in ’23?

Hey Jason, we aim to reduce the average age of the fleet to around 21 months by the end of next year, so starting in Q4, you should see the current average of 29 months or 2.4 years decrease. We mentioned last quarter that we are being aggressive with our replacement plan. This year, we have about 800 trucks scheduled for replacement, and nearly 900 for next year, which will help us achieve the 21-month target, and you will see that number decline each quarter next year. Regarding capital expenditures, I estimate that next year we will be in the range of $80 million to $90 million for net capex focused on replacement equipment. This year, we are being aggressive while also turning in many operating lease assets, and we will keep doing that through this year, extending a bit into 2023. However, most of the replacements will involve owned equipment, allowing us to gain a better return as we turn in owned equipment and receive the sale proceeds.

So gains on sale next year, we should be modeling up?

Yes.

Okay, perfect. Well, congrats on the quarter and I’ll turn it over to the next person.

Thank you, Jason.

Our next question comes from Scott Group from Wolfe Research. Please go ahead, Scott.

Hey, thanks. Good morning guys. I’m just curious, how are you thinking about pricing into next year? What’s a realistic drop in rate per mile next year?

Scott, I think we’ll have all these answers in the next six months, don’t you? But that said, I think there’s going to be pressure on pricing. I will also tell you that I think that we have done a great job in the last year, year and a half in being in the right buckets as it pertains to expedited and dedicated, and because you know, let’s take dedicated first. The thing that we see there is not necessarily so much pressure on rates as much as it is, I don’t need your 25 trucks now because I don’t have the freight, I need you to reengineer it and I need 22. That’s where I think the pressure on the dedicated side will come from, is the pipeline with existing new business, be strong enough to take care of some reengineering that me and you both know is where the customer is going to come from. But it’s not like the dedicated accounts are saying, I need you to take 5% off, and I don’t really see that coming unless we get into near-depression kind of numbers. I’m not as concerned there. Then on the expedited side, we’ve only had one customer that has come to us and said, we would like to have a rate decrease, and that one customer is one that we did not have long-term agreements with. Keep in mind over the last couple of years, with about 60% of our business we’ve entered into long-term agreements with our expedited customers. Again, it started back in 2020 when we said Mr. Customer, do you really need teams? If you don’t, when we let SRT go and we downsized the solo side, we took 400 or 500 trucks out of the expedited side of the model. We really had blunt conversations with customers - do you really need these, because they cost more to operate and we want you to enter into a long agreement with us that we are here in ’20 and ’21 when you can’t find trucks, and we want you to be here for us in ’22, ’23, whatever that’s going to be. So far, that has worked out extremely well. So that said, I think there’s going to be pressure, but I don’t think it’s going to be the magnitude of what it possibly could have been years ago when we were into a recession. I know I didn’t give you a percentage because I don’t know what that percentage is, because I’m here to tell you I could say negative 2%, as good as I could say a negative 5%, because that’s how much confidence I’ve got in our customer base, the relationships we’ve got with our customers.

So you think maybe your expedited is going to hold up better than maybe the broader van market?

I do believe that our customers have a genuine need. Our pressure will be on both dedicated and expedited services. Regardless of the circumstances, I don’t have enough loads—specifically, I don’t have 10 loads available for air freight. My freight is down, and I need seven of them, but Covenant will be getting all seven. I won’t distribute them among other companies. That’s the situation we’re facing, and we will need to find a way to replace those three additional loads, which may lead to negotiations on lower rates. However, I don’t anticipate that our existing business will suffer significantly.

Hey Scott, one thing I would add just for perspective is when you look at Covenant historically, what you see today as expedited is different than what you’ve seen in the past as, quote, Covenant transport or highway services. We had chapters where we had Covenant transport for years, that was a mixture of team and solo and some dedicated, then we had the highway services chapter which was some team and a lot of solos, and now expedited is just team, and so that volatility in the past, albeit very much understood and we understand the questions, what we’re trying to say, and David’s right - for the next six, eight, nine months will answer the question for sure, is it’s not an apples to apples as you look at us historically, so I want to make sure that people try to understand that what is expedited today is different than what you’ve seen in the past, and we feel much better about its position and its pricing.

Okay, that’s very helpful. I have a similar question regarding the equity earnings from TEL. They were $4 million, $3 million, $4 million, $7 million, $7 million, $4 million, and now we’re at about $28 million. Aside from the market being significantly different, what has changed in that business or earnings stream that will make it more sustainable going forward?

I think it’s a combination of factors, Scott. First, the leadership team, led by Doug, has done an exceptional job over the past five or six years by putting together an outstanding leadership team. Second, he has worked hard on strengthening the business units within overall TEL. Third, they have undertaken significant reengineering on the systems side, which has greatly assisted with managing costs, pricing, and collaboration among the businesses. This is very similar to what has occurred on the Covenant side over the last five years; all of these efforts are coming together and delivering the impressive results you are observing.

Let me add to what Joey said, Scott. I think there are two other points. If you reflect on the different phases, you have the current situation, the COVID period, and the time just before COVID. Before COVID, there was a transaction that consumed a significant portion of earnings, and while they were making good money, a collective decision was made that negatively impacted earnings. Once that transaction was fully resolved during the COVID period, and with the way equipment has been rationed in recent years, they had been in a phase of aggressive growth in acquiring trucks and trailers. The OEMs typically evaluate the average number purchased over the last few years, allowing them to significantly increase their truck and trailer fleet about 18 months ago, 12 months ago, three weeks ago, and into next year with these orders. This has enabled them to continue growing. Their equipment accounts have been increasing while others have remained flat or declined. All of this contributes to their success. It’s important to note that it now costs more to buy or lease a truck or trailer, and having a good supply of equipment in a tight market has benefited them in terms of customer upgrades and pricing improvements.

So maybe just to, oh, go ahead. Sorry.

I would just add, Scott, they do have headwinds also, obviously with rising interest rates, so how strong is the team in being able to pass through, or the pricing structures to be able to pass through their increased capital costs, because they do have a lot of leverage - it’s that model, it’s a leveraged model, so are they able to do that as interest rates are rising. Thus far, they’re able to do that. Credit quality - their credit quality is incredible, and so in a recessionary time, they’ve had some of these in the past, the group’s done a really good job of who they pick and choose to do business with to minimize that. But A, are they able to pass through additional increased capital costs, so I would say that’s a headwind depending on their customer base. Then B, what’s the view of the used equipment market, because there’s no question that’s a very, very important part of their model, both for their own accounts as well as in and out of the market. So you know, those two things are what I would call in a softening environment two headwinds. We’re confident they can power through that, but nevertheless those are two things they’ve got to work through, but they have a lot of equipment coming in. Pretty much most of it is all spoken for already for the next several quarters. A lot of equipment they’re putting on the books this year is in the second half of this year, so we won’t see the full year effect of that EBITDA until first quarter. EBITDA from ongoing business is going to continue to grow, it’s just what did gain on sales do as they move into the market, and are they on existing business able to pass through additional interest costs.

I guess maybe just to wrap up, relative to that comment of earnings down 25%, maybe 30% peak-to-trough, how much do you think these equity earnings would drop from upper $20 million this year? Where do you think that could go?

Yes, I think it will be less than the 20% to 30%. I’d put them in probably that 10% to 20% range.

Thank you guys, appreciate the time.

Thanks, Scott.

Our next question comes from Jack Atkins from Stephens. Please go ahead, Jack.

Okay, great. Good morning and congrats to Paul and to Joey as well. Joey, I just want to say that the fact the company is such a strong footing today as we head into a freight recession, I think that’s just a testament to your leadership, and all the best as you sort of move on into the next phase of your career, so congratulations.

Thanks, Jack.

I guess maybe kind of picking up where Scott left off, one more question on TEL. As we kind of think about the mix of that book of business, how do you kind of think about large fleets versus owner-operators? We’re seeing some early signs of some exiting capacity. Do you worry that there may be a little bit of increased bad debt there or just some equipment that you have to maybe turn back to TEL, given we’re kind of coming off some really, really good times?

Here’s what I would say to it, Jack - no, not significantly. Here’s one thing to remember - when we say owner-operators in the TEL model, they’re leasing to a lot of captive owner-operators, a lot of fleets that have captive owner-operator programs, and so they’re not leasing to a bunch of mom and pops. As I said a minute ago, they upgraded their credit quality during this last downturn, and so with the fleets that they do business with, I mean, those are one-off owner-operators but there’s structures with those fleets that protect tail, and so on that, no concerns. On the smaller fleet side of things, that’s where they’ve upgraded their credit quality. Yes, I’m sure they’ll take a few back here and there, but there’s a list of people ready to lease that equipment if they turn it back in, and so I don’t think we see a lot of major concern here.

Okay, that’s great. That’s great. Maybe shifting gears here for a minute, and Tripp, I’d love to get you to chime in on this if you’d like, but how are you guys thinking about some of the inflationary cost pressures as we head into next year? You’ve got drivers on one end and then you’ve also got back office support staff as well, and then you’ve got issues with equipment inflation, parts, service inflation. How are you weighing all of that, and it feels like you’ve got some maybe opportunity to improve some operational costs with regard to how you’re managing your fleet as well, so love to kind of let you run with that question. How are you guys thinking about cost per mile as we go into 2023?

Yes Jack, we are definitely facing significant inflationary cost challenges. The trends you’ve noticed in Q2 and Q3 are magnified, particularly regarding insurance and operations and maintenance. Returning to Joey’s earlier comments, which align with our statements from Q2, we have experienced multiple quarters of strong safety performance. However, this has not translated into lower insurance costs as we anticipated. Many of the current expenses are tied to past claims, and while we focus on what we can manage, there are broader economic factors outside our control. On the insurance front, we are working diligently to negotiate and resolve issues effectively. Unfortunately, insurance expenses have been a challenge for two consecutive quarters, and as we approach the fourth quarter, we will continue to address these matters. We hope that as we move into 2023, there will be a better link between our insurance costs and safety performance. Regarding operations and maintenance, this has also proven to be a significant operational challenge. We recognize that much of this stems from the aging fleet and downtime of equipment. Fleets once requiring 15 trucks now need 20 due to maintenance issues, which creates a considerable operational setback across all fleets. One area we can control is our procurement of new tractors. Initially, our target was to acquire 525 to 550 new trucks, but we now expect to exceed that in 2023, aiming for nearly 900 new tractors next year. We are prioritizing older equipment to reduce costs and ensuring we enter 2023 as prepared as possible, even understanding it might be a tough freight market. We are implementing efficiencies with our equipment while focusing on factors we can manage to improve our overall operational costs.

Okay, great. Then I guess maybe last question and I’ll hand it over. But you guys are going into a more challenging operating environment in ’23 for a lot of folks with the strongest balance sheet you’ve had in an awfully long time. The AAT acquisition has been a great success. I guess as you sort of think about allocating capital moving forward, the stock’s trading at a pretty low level but there could be opportunities for consolidating M&A. So how do you think about capital allocation between those two items? And then what are you looking for on the M&A front over the next 12 months? I’d just love to get your thoughts on that.

Yes Jack, I would tell you on the M&A front, I would say I would use the word nichey. If there’s anything nichey out there, it could be nichey expedited or nichey dedicated, or nichey warehousing. I think I would just use the word nichey - you know, non-commoditized type businesses that are stable with a good long-term track record. Nichey. I think we would entertain looking at anything like that, and I think the share repurchase plan that’s still out there has still got dry powder in it, and so we’ll just let that thing keep working and see what it does. I think that’s how I’d answer your question.

That makes sense. I like to hear you’re looking at non-commoditized businesses, so I think that’s great. Thanks again for the time, guys. Really appreciate it.

Thanks, Jack.

Our next question comes from Bert Subin from Stifel. Please go ahead, Bert.

Yes, thanks, and good morning everyone. Congrats to Joey and to Paul. Paul, I know Tripp’s not in the room but he’s nearby, so I’ve got to say, Go Dogs, big game coming up.

Say it while we can, brother!

That’s right, that’s right. So, you know, I think you guys have answered a lot of the high level questions so far, and I think one, I’d just be interested to get your opinion on this, is I think a lot of people were looking for sort of when freight would soften, and now we’ve seen that. I think the focus is going to turn to how long this lasts. I’m just curious if you have any thoughts about is this going to be more extended than what we saw in 2019? Is it a scenario where inventories draw down and we start to see some improvement in the first half and so by second half, you’re starting to see sequential improvement in your EPS? I’m just curious - you’ve put out some markers for the 25% to 30%, but how are you thinking about that in the context of how long this may last?

We believe that 2023 will see a slowdown in freight. We expect that the difficulties we are facing now will persist for about eight to nine months. There are a couple of perspectives we have on this situation. One possibility is that the economy may deteriorate further, which I personally anticipate. On the other hand, the trucking industry is experiencing some favorable conditions. Currently, there is no restocking of inventory occurring. I mentioned to the Board recently that if we could maintain our current situation throughout 2023, I would be satisfied with it. We're not overwhelmed with the need to load large quantities; we might only need to load around 50 loads a day. Eventually, whether in March or September next year, inventory restocking will begin, which will be a positive factor for truckers. Another aspect we're observing is the significant number of trucks—estimated in the hundreds of thousands—that entered the market when freight rates were high. Those trucks are now exiting the market, which is easing some of the pressure we’re facing. In summary, while the economy may slow further, restocking will eventually occur, and the reduction of capacity in the market will benefit truckers.

Thanks for that, David. Maybe just to go a little deeper there as it pertains to your business, you guys have provided some commentary on the expedited side, and it sounds like AAT is certainly helping at least diversify that revenue stream, and it sounds like your LTL line haul business is holding in there, and so perhaps that does better, certainly better than it has in the past. Dedicated, it sounds like it’s improving, you may have some volume headwinds but you expect pretty good yield there, so that really makes managed freight probably the odd one out. 3Q, we saw sales pretty similar to 2Q, we saw margin in the double-digit range. When do you think that starts to break and you start to see some of the impact of the overflow issues?

Yes Bert, I’ll take that. I think you will see margins go down in Q4 from Q3 on managed freight, and I think Q1 will be lower than Q4. There’s no doubt that that is where probably the spot cyclical slowing freight economy is going to probably erode our margins the most, so I don’t think it’s going to drop like a rock, but I think you’re going to see that thing start trending back more towards normal over the next two to three quarters.

Thank you, Paul. I have one last question before I hand it back to you. You've mentioned inflation several times during this call, and it's been a recurring theme in other discussions as well. Do you believe that, although it's still early in the bidding season, there is a perception among truckers that inflation will restrict shippers' ability to recover as many contract rates as they could in the past, especially when comparing to 2019? This is largely due to the rising costs that challenge their ability to scale back. Do you agree with this perspective? What are your thoughts on how inflation will continue to impact your business? I know Tripp addressed some points regarding insurance and operational costs, but I'm specifically interested in how it might affect rates.

Yes, I believe that's accurate and aligns with what David mentioned earlier. This week, we had discussions with several large customers, and they are reinforcing that sentiment. None of them are demanding significant rate cuts. In fact, we expect to see some small rate increases next year to address inflation and some requests for assistance in optimizing their fleets and enhancing efficiency. However, they are not asking for major reductions in transportation rates. I concur that inflation will serve as a buffer against declining rates. In our business, where we provide value to our customers, I believe we will be in a better position. In contrast, companies that are more commoditized may face greater challenges. Our strategy has been to focus on areas where we can deliver increased value, moving away from commoditized services as quickly as possible.

Thanks Paul.

Our next question comes from Barry Haimes from Sage Asset Management. Please go ahead, Barry.

Thanks so much everyone, and good quarter. I had a question. We haven’t talked too much about peak season, and from other quarters, we’ve heard it’s much more on the muted side, if not non-existent, so just wondering what you guys are seeing, and maybe just a reminder, how much of your trucking business typically is coming in from the west coast going inland, and do you typically in the fourth quarter run any project business or get surcharges or anything like that that you might have gotten last year that you may not get this year? Just an update on peak, thanks.

Yes, Barry, I have a lot to cover. Going back in time, especially referencing the years ’11 to ’15, peak season was a significant part of our business. The fourth quarter would largely determine our success for the year. Since around ’16, we have intentionally shifted our focus to running our operations year-round instead of just during peak weeks. We have deliberately reduced our reliance on peak. Shippers have taken various steps to adapt for peak season. This year, the economy is not expected to support much of a peak, but we will see some peak freight. Yes, we will be compensated well for the freight we handle for a few customers during this surge period. While the pricing will be consistent with the last couple of years, the volume won't be substantial.

I remember years ago, we would do $50 million of peak in about a four-week period, and that number now is less than $10 million.

On a $160 million quarter.

And so yes, it’s there, it’s there with some of our old peak customers, but it’s down to two or three customers and we’re very happy with that. That’s just where it’s at.

Great, thanks. That was a great update. Appreciate it.

At this time, there are no further questions.

Well Ross, thank you for hosting us. Thanks everybody for joining the call. I look forward to updating everybody in January. You all have a good day.

This concludes today’s conference call. Thank you for attending.