Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Frank, nice to speak with you again. Welcome back to transports. You guys gave more color on some of the monthly trends. That was helpful, but it was going quick. So it sounded like March deteriorated. And then maybe, Frank, at the end, your comments around pricing in April were a little bit better. Maybe just a little bit more color on sort of what happened in March and what you're seeing in April?
A: (Frank A. Lonegro - President, CEO & Director) Thanks, Scott. We're watching this thing on a daily and weekly basis, just given the desire to see an inflection. The week-by-week view in April on rate was beginning to show some positivity. We're hopeful that this is the beginning of an inflection. It's not going to be a rapid rebound as maybe we saw in the immediate post-COVID time period, but a little bit of sign of green shoots is always helpful.
Q: And then any thoughts about April there?
A: (James P. Todd - VP, Principal Accounting Officer & CFO) In fiscal April, week 1 to week 2 truck revenue per load improved week 2 to week 3 and improved, such that we're going to be maybe flattish March to April, and that compares with a historical plus 100 basis point good guy on truck revenue per load historically March to April.
Q: Okay. That's helpful. And then Frank, just bigger picture, right? If you look net revenue is coming back to where it used to be pre-pandemic, but the cost structure is just so much higher. Is there anything you could do or any initiatives to meaningfully reduce cost, one. And then secondly, we've had a view that there is -- there should be an opportunity to meaningfully accelerate the pace of buyback here. Any thoughts on that in your new role?
A: (Frank A. Lonegro - President, CEO & Director) On the cost side, it is always going to be something that we're focused on. We are very disciplined on headcount. So what you're really seeing are selective investments that are really driving the year-over-year change, and whether that's on the depreciation side or adding some selective positions in those strategic areas that we called out on the phone. Technology is always going to be an area that we continue to invest in. I mean our job is to support the agents and the BCOs and the carriers out there. So there's no initiative to really go hard at cost right now. It's more around the growth side of the equation.
Q: Yes. And yes, also kind of welcome back to the transports, Frank. Nice to talk with you again. How do you think about the dynamic on agents and BCOs? I think you said that the decline in BCOs is slowing a bit. So when do you -- I mean, do you think that's just kind of like spot rates, bottoming, you'll see that bottom out? Or what do you think the dynamic will be and kind of, I guess, key levers for how the BCO count goes and also the Million Dollar Agent count, if you think about that in, let's say, 2Q, 3Q?
A: (Frank A. Lonegro - President, CEO & Director) In terms of the Million Dollar Agent count, I mean it was down year-over-year just because of the rate environment. I think as the rates inflect, that number will go up on a full year or full year type basis. Certainly, the exit rate if the rates we'll operate with us the exit rate will be higher this year than it was at the end of 2023. On the BCOs, one of the things that's really important and Joe can get into the numbers. But even though the BCO count effectively declined in line with where volumes went, the actual productivity of the BCOs went up. They hold more loads per person than they were doing last year. So that tells us that they're out there scratching for every load.
Q: I want to circle back to February and March, especially. Jim, you noted February, 8% good guy to the model marks 3.5%. I mean that is very contrary to everything we've heard throughout this earnings season for the last 1.5 weeks. So is there any way you can kind of dig a little deeper on where the relative outperformance came from, how things changed to the positive when it seemed to be changing the negative for most of the -- the rest of the industry post the January conference call?
A: (James P. Todd - VP, Principal Accounting Officer & CFO) John, I'm happy to. So in February, the biggest good guy was truck revenue per load in February was 60 basis points higher than January. That compares to a down 220 historically, if you look at 2019 to 2015 pre-pandemic patterns. In addition, truck volume beat on seasonality as well. And I would tell you, John, we saw this too in -- not just on the revenue side, but we saw it on the net revenue side on the brokerage side of the house. So from the fourth quarter of 2023 to the first 8 weeks of the first quarter of 2024, we saw our net revenue margin compress 105 basis points.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
