Schneider National, Inc. (SNDR) Earnings Call Transcript & Summary

Awesome. So let's keep it going. Next up, we have Schneider National. I'm very happy to welcome back to Laguna CEO, Mark Rourke; CFO, Darrell Campbell; and Christyne McGarvey, it's Christyne with a Y, VP of IR and Corporate Finance. Thanks so much for being back at Laguna.

So yes. So let's just kick off with the state of the world as we see it. I think, obviously, we've been up here for literally -- I've been here 2 days. And the -- we still really haven't settled the view on has there been pull forward in 2Q? What does 2Q, 3Q seasonality look like? What does 4Q seasonality look like? So help us resolve that.

So I'll help us resolve that? Good. Well, Ravi, as we were sitting here earlier in the year, we expected maybe some of that pull forward air pocket to happen in the second quarter really didn't happen. As we came out of the second quarter, we had a little slow start to July and then finished actually what we would consider above-seasonal expectation a little bit from the volume. So maybe a little more optimistic as we headed into August. And I think volumes have been steady, but then I don't think August, we would characterize as overly robust and perhaps even a little bit subseasonal. So we've been in this continued tight band of demand and not bouncing up or down too directly and which isn't necessarily uncharacteristic of August. When you look at history in September, it's usually kind of the telltale month of the quarter. So as we look ahead to peak, I think is the question. I think the question on everybody's mind is how much is pull forward, particularly for Intermodal, which is more import driven. And so we certainly see a scenario where that could ramp down a little sooner than typical, which usually December...

Only on the Intermodal side?

Only on the Intermodal side. But then the question is where is the inventory? Even if it's in here forward, if it's still out in the West Coast, for example, in warehousing, we can still have the Intermodal moves that actually get it into kind of the end markets. So we don't have perfect visibility to how we expect that pull forward has occurred clearly, where is that inventory at that ultimately leads to its inland move. So we're not ready to declare that we kind of see this huge air pocket, but the probability is probably higher than what we experienced in the second quarter. On the Truck side, I would say, very similar. I think demand has improved. We're -- obviously, as we came through the second quarter, as we came through July, we were predominantly through the allocation season from a contractual renewal standpoint. So not a lot to report there; still in that mid- to single-digit increase on contractual side; have a little bit more in the spot market, which allows us to have some more flexibility as seasonal opportunities if they come forth in the fourth quarter, we'll certainly be prepared to seize those. But we'll have to see. Does the customer compete on price? Does it compete on volume more for share come to this holiday season? If that's more of a volume play for our end consumer -- our end customer, then maybe that gives us some more opportunity to move volume. I would say overall, though, as we sit here today, still in discussion; feels very similar to a year ago, which is probably what we said the last couple of years, right, kind of in that same mode. So probably more going on in the supply side when we get to that than maybe the demand side at this juncture.

Got it. So just one follow-up there. So we had a couple of your TL peers up here in the last 24 hours, and both of them seem to imply that project business for this year appears to be trending a little bit above last year. Would you say the same thing? Or do you think it's too early to tell?

Well, I would say it's in the same pockets as a year ago, the same segments of the economy, many of the same customers. Again, how robust they are depends on how much project work there is. We're ready, and we have our agreements in place. I'd probably put it in as very similar, but we'll have to see what the demand totally is and maybe we could outperform a year ago.

Got it. Are you started -- have you started with 2026 negotiations at this point? And what are some of the early offers expectations going into bid season for '26?

Yes. What really characterized for us at this time of the year and certainly into October, we're into those strategic discussions for what is the customer's goals for next year so that we get an understanding of what they're trying to do. Obviously, we were here a year ago that we would have been talking to customers. And certainly, Intermodal conversion was at the top of their list because of they were expecting a tighter market. There was a discussion about they were going to favor asset solutions over brokerage. So that's the part of the discussions we're in, not so much pricing or allocation events. And I would expect those 2 items, while one played out, certainly, the move to more asset-based solutions; Intermodal didn't convert as much because of what was available on the Truck side of the market. But I would expect, as we get through this season, those same strategic initiatives that they talked to us a year ago, I don't know if they'll change a lot, but we'll get into the more allocation as we get the page turns within the February time frame. Today, it's all about just setting kind of expectations or interest, what we would like to see accomplished, and the next phase will be the actual events.

Got it. Sticking with the TL side of the business, there's also been some discussion on one way versus Dedicated and kind of which is the focus area for now and kind of what really ramps into the cycle. Obviously, some people are saying, we're focused on Dedicated for now because that's a long-term opportunity and that's stable business. Others are saying one way is where the torque is and so we want to be kind of high into that going into the upcycle. So what's your view on that?

Yes. We have 4,000 trucks or so into that one-way network, and we absolutely believe that's where we have a great deal of operating leverage as the market improves just based upon that being the most depressed from a rate and a volume standpoint. However, as we think about strategically, our long view for a couple of reasons is we're leaning into Dedicated. Now 70% of our total trucks, both accounting our organic and our recent 3 acquisitions, we put into a Dedicated configuration. Those are 3- or 5-year contracts. You're very deep. You're not going through a network allocation event every year. Drivers, generally, just like they prefer Intermodal positions where they're regularly scheduled. And Dedicated offers that -- many of those same characteristics. So when you think about what the drivers desire, what we want to be for our shareholders is a consistent revenue and earnings stream, we think that's a favorable mix for us. And we'll still get incremental margin opportunities from backhauls. Wherever we get a chance to upgrade, our pricing will adjust for new business. So there's still margin opportunity growth in Dedicated. Sometimes people think that's stagnant, and it doesn't change. That's not the case in an upmarket. But clearly, operating leverage for financial performance is most evident. And that will happen quickest in turn in our network business and our brokerage business.

Got it. I'll come to brokers in a second, but just on Dedicated itself, there has been some noise in recent quarters, some speculation of competitive activity there, elevated customer churn. Like what is going on?

Yes. We, this year, have experienced more churn than certainly a year ago. We heard some of our competitors having more of that last year. We had a higher percent this year. And I would say, certainly, there are some cases where we've lost other Dedicated providers on renewals. More prominent is the customer may have moved from a Dedicated solution to a network to take advantage of what they consider to perhaps be opportunistic on the price side, which isn't really -- which really is around your 53-foot standard trailer, which our focus is more on the specialty equipment going forward. But competition is particularly things we're interested in is fairly rational, good competitors, but to bring the scale that not everybody can do what we do. And there's a few that obviously are focused on the same markets we are. But it's a very rational market. The pipeline is back to levels that we've seen in 2024. We'll have some dislocation because some of that ramp down of lost business will happen in advance of some of the start-ups. So we'll have some period in between. But we feel really good that we'll be back in the growth mode. Every other time we've been at this level of pipeline, it's translated into a growth period for Dedicated. And even though that you can say, hey, we're not in the most robust market, there's still a high degree of interest there.

Got it.

And even with the churn that we're seeing, our retention rates are still in the 90-plus percent.

That's pretty good. So another debate we've had in the last couple of days is private fleets and the extent to which they have grown in the last couple of years -- last 5 years, if that has exacerbated the supply problem -- a capacity problem in the deal space, and whether that actually presents an opportunity for Dedicated as those fleets mature and potentially the customer's like, take this thing off my hands, right? So thoughts there.

Yes, that's a great on-trend item and one that we're very close to. For a number of years, we've kind of assessed the full Truckload market to be about 50%; for hire, 50%, Dedicated -- I mean, excuse me, private fleet.

Private, private.

And then there's been a shift. It's particularly coming out of COVID, where there was maybe the lack of controls, supply, pricing that pushed some folks that either to grow their fleet or some customers even to get into private fleets. And so we would assess that 55-45 actually. And that's a pretty big movement, even 500 basis points. And Darrell can speak to this, but I think there are some outside pressures, particularly customers that are now having to pay insurance that weren't under their general liability coverage before because the insurance providers kind of looked at this as a different risk profile. And so at minimum, we believe -- we can see it in our pipeline, the growth is probably not for all, but for most. And then as trucks come for renewal, are they going to go to an augmented Dedicated provider like us? Or are they going to re-up? And we think there's a great opportunity to start to move that needle back towards that 50% line. So we're focused on taking advantage of that.

Over the past year or so, as we've been talking to insurance carriers, they've been more focused on just the coverages that private fleets are paying, right? So general liability coverage that would incorporate smaller fleets. As those fleets have grown and as those experiences have changed, there's been more of a focus on separating those exposures to separate policies that for-hire carriers would typically see.

So when you look at that pipeline for Dedicated, do you see an elevated percentage of potential private fleet conversions?

We do. More so than we had a year ago in both ways, both in complete conversions, but also in augmentation. So they may have a private fleet of their own, but they're not adding to it. They're looking for providers to perhaps augment what they're doing with their product.

Do you care like what kind of Dedicated business is? I know one of your big competitors just almost exclusively does private fleet conversions. Like do you care between kind of augmentation versus convert?

So what we care is more about the durability of this solution. So if you're putting yourself in a 53-foot van that is masquerading as Dedicated and it will only flip back and forth, that's the Dedicated that, hey, we've had some churn because we have some in that category, but that's not where our focus and growth is. We want to be able to be -- what are we doing beyond just moving something from A to B? Are we helping stage product at the store? Are we moving -- roll containers to the back of the store? Are we driving ATVs off and giving to the dealer? Something that's just not a generic, I can hire somebody down the street for a $0.01 less and I might make a change, right? So not that we don't have 53-foot standard component, but that's increasingly getting smaller and smaller as we remix the portfolio.

Got it. So let's talk about industry capacity. Kind of obviously, you guys and your peers have been saying that, that's an inevitable squeeze coming at some point. How has that been evolving? Do you think the pace is accelerating? And how much of that is being exacerbated by these new rules on ELP and visas?

Yes. I've been on this topic for a little while because I think -- and I don't know what the right word is. Sometimes you hear the word shadow capacity on the small operator that's come in coming after all this publicity relative to what went through COVID is a great opportunity that exists in trucking, which is one of the great -- that's how we even get started in 1935 in a very similar way. But when we step back and look at the rules, and this administration, I think, has taken a much firmer stance, not put new rules on the books, but starting to enforce. So we can definitely feel the B-1 driver Mexico situation. The -- I could see upwards of 20,000 drivers at some point in my life have been operating in that configuration. I mean hard to be overly precise, but when you look at the customer base and how we thought that was moving at the border, it was certainly having an impact. And as that -- just the mere threat of enforcement has a deterring effect, the opportunities and the pipeline of those type just kind of turned on. And it just gives me further conviction that there was some impact to that enforcement activity. English language as well. And that's not just border. There's other areas of the country, the upper Midwest, different populations that are impacted by that. We went out and surveyed a number of our Power Only carriers and other carriers and certainly suggested that they've had to take action, which also releases capacity. And then as you mentioned, the tragic accident that happened in Florida, how CDLs in some states are being prosecuted. All of that is not adding capacity to the mix. And certainly, we think that's a catalyst that we didn't have a year ago. And the other catalyst is you've been watching the new truck orders. So we haven't even been at replacement levels for months on end, another good sign that things are changing on the capacity front.

Sure. Do you think that these changes are somewhat structural? And that when the up cycle comes, you're not going to have another kind of free for all coming in and it actually puts barriers to entry? Or do you think it's too early to tell?

Well, our industry is notoriously for low barriers to entry. But I think again, the enforcement of the basic rules help, but I don't know if that will be a panacea that doesn't attract. I think the other thing we've done as an industry really well is we've increased and certainly in our book attracting female drivers into the fleet. We went from 7% to over 14%, 15% now, which we're proud of. And so there's other elements that we've tapped into and to the -- and others have as well. So that's also helped on the driver front, but it's awful lot to be. It's my 38th year, and the driver condition not being one -- #1 issue on the list, not been a whole lot of years. And right now, it's other issues that are rate recovery and demand is far outstripping my concern level than driver level.

I'm not sure if that's a good thing or a bad thing, but it's a thing.

Good thing.

Yes. Let's switch gears to Intermodal. So you said earlier that it's probably a little bit of a trickier outlook for the back half of the year than trucking. How would you characterize the pricing environment there, especially kind of demand capacity in that space?

Yes. On a like lane basis, as we've talked, flat has been kind of the new norm there, and that's what we expect to happen as we've been through the whole renewal season. So we don't see a lot of change there. What change will be our mix, growing more out of Mexico, growing more out West, having a little bit more shrink in the East just because of the truck alternative. But we've been able to have a nice steady growth pattern there. And that's not with a great deal of conversion. It's been -- these new markets, Mexico was way underrepresented relative to what we believe was capable there. And then that with the new service into the Southeast with the connection with the CSX, which we haven't been through an allocation season there yet with that service, it's been more ad hoc as opportunities come out of cycle. But as we get into our third cycle now with the CPKC in and out of Mexico, we think there's still, on our measurement, 6% market share to 30% because I think we absolutely have the best solution there. So we're going to lean into our differentiators and be very clear to our customer base. This is where we have the best solution relative to transit proximity to ramp and here's the benefit you get for that. We may not be as well positioned on these lanes. That's fine. We want you to understand where our strengths are.

Despite -- as I say, despite flat pricing, we've grown margin, right? So that's some structural changes that we've made as it relates to cost and productivity that are coming through despite that backdrop.

Got it. I think CPKC shouts you out in almost every conference call, and it's kind of not often that the rail operator shouts out the IMC. So clearly, you guys have a good relationship there. On the cost side, can you just talk about some of those initiatives that you have on the chassis side and on the cost side that kind of helps you do that and kind of how much more bandwidth you have?

Yes. So the cost initiatives are across the board. So Intermodal is one example of the productivity initiatives. So we're just doing things to fill empty lanes, going into the areas of differentiation that set us apart, reducing friction cost, working on the box repositioning, all those things are coming through. On the Truckload side, similarly, we're working on tightening our ratios whether that's tractor to driver, that's the trailer to tractor as well. We're looking at facilities. We're looking at third-party costs. We're looking at headcount reduction across the board. So if you look at sequential improvement in our earnings in Truckload, 60% from Q1 to Q2 despite low to mid-single-digit growth. That's just a culmination of all those initiatives that started more than 2 years ago that we continue to go through. But again, these are structural. We're not cutting to the bone. We have to make sure that in the up cycle, we're positioned to react. And we've seen -- whenever there's a small inflection, there's a disproportionate impact to earnings because we're being very thoughtful in those initiatives.

Got it. Understood. So let me ask you about the biggest topic of discussion at the conference, which is the rail merger. I think a couple of your peers came out with statements kind of supportive of it. Correct me if I'm wrong, I don't think you have just yet. So thoughts on...

Yes. We're not against. We're just being thoughtful, and we think details matter in this category. So what is the service design? What are the concessions? What changes? What other things -- there might be another story or 2 that comes out between now and the end. So once the dust settles there, I think we'll weigh in, and we'll also look at what's best for our organization. And we're really happy with our 3 providers today. The CPKC is absolutely great for us in Mexico. UP has really done a nice job under Jim relative to its service reliability. And excited about at CSX with the tunnel being done and some of the things that they've been dealing with there, and they've been a solid performer on the service performance for a number of years. So in fact, one of the reasons we went to the UP was because of its improved connections with the CSX around steel wheel and some efficiency on crosstowning in a number of key markets for us. And so while those may not be the 2 that's in the connection talks, so there's still very efficient things that we gain through that. I think you're seeing these other announcements come out to talk about the cooperation that they're having. And so we just want to see what that whole design looks like, and we're confident we'll be able to adapt our strategy to take advantage of whatever that end game is and look forward to getting the clarity that everybody else is looking for.

Got it. If I were to ask you a purely theoretical question.

Purely.

Purely. There's been a lot of debate with very polarized views about whether you need a merger to achieve end-to-end service improvement or if you can get almost all the way there with a partnership alone. Obviously, depending on who you are, you have very different views here, right? So as somewhat of an unbiased party, what is your view?

Well, I think on current what was considered Intermodal lanes, I think they've done a really good job of taking friction out. I think the Mexico story was very unique because it was very hard to keep fluid well cars and empties getting back to an unbalanced market, and the CPKC really saw that. I'm not sure that's the same single line problem that gets solved by a transcon -- a railroad merger. That being said, what's important as we say in the service design when we say that, are there other lanes that aren't as effective today that this combination or other concessions make something more attractive against the truck, right? And so we think it's bigger than just what's -- how does today get better, but what's new opportunity that exists based upon ultimate design. And that's the part that could unlock further conversion opportunities from truck to Intermodal. So anything that allows us to do that, that takes improved transit, improved experience, take friction out, we're going to be supportive of because that ultimately allows us to be more successful in converting over the road to Intermodal. But we don't believe right now is the time to kind of weigh in until we better understand all of that.

Got it. So I've always thought that there's been maybe a little bit of tension between being a TL and Intermodal at the same time. Maybe it's the best of both worlds, maybe it's the worst of both worlds. So do you make sure that you are -- like your TL business does not suffer from this combination being very good for IM and vice versa?

Yes, Ravi, this is paramount to what I just give Don Schneider so much credit for, right? When this all was emerging, it would have been very easy, and we had a number of competitors fight the change, right? Defend the core, defend my today. And Don said we have to adapt to where the economy or where the customer is going and where the economics are going. If he didn't make that decision to really was very destructive to our truck business at the time to accelerate towards that, we wouldn't be who we are today. And it's very hard to get in and get scale, right? So I think that's a very important lesson. We don't let what today is get in the way of what the future needs to be, whether that's autonomous, whether that's Intermodal conversion because ultimately, the customer will decide. And what we think about the world is, let's give them 2 great solutions that, based upon their cost and transit and service requirement, we can do this or we can do that and let them choose where the value is. So we don't worry about cannibalization. There's enough to go around. We just want to make sure that we give the customer the best chance to choose us.

Got it. You have a third solution as well, which is logistics.

We do.

Obviously, a big focus area for you. You've made some key acquisitions in that space. So a, talk about what is the current environment points to for the logistics space; and b, also strategically where that goes over time?

Yes, we love that logistics business because it allows us to grow our business earnings over time without putting as much capital to play. So from a return on invested capital standpoint, very, very accretive. But we also have standards that we want to make sure that we're not just chasing volume. We're not -- we don't have a goal to sell our brokerage to a private equity firm. So we want to deliver results on a consistent basis and be profitable for our shareholders. So we focus on profitability first, growth second in that business. And our tools and our guidance systems are set up to do that. That being said, it has been a more difficult year for us on the Truckload mode because of the customers' aspiration to be more asset-centric. And we've done really well on the older modes like LTL. And Power Only has done really well because that feels much more like our network offering. And so we've grown now not only the up cycle, but we've consistently grown our Power Only offering through this "down cycle." So -- and we do so at a better return because we're getting additional net revenue because of the trailing asset being part of that. So we look forward to being able to capture the incremental volume quickly. Our tools are set up to do that. We don't have -- we're not constrained because it's not our driver and our truck. So a very important part of the future. We're just in a bit of a lull as it relates to Truckload mode as it relates within our standard.

I think there's opportunity as well as it relates to Cowan, right? So with the Cowan acquisition came the Logistics business. We believe that there are synergies between our operations and theirs. So part of bringing them into kind of the Schneider logistics network, we think, has a lot of uplift.

Got it. One of your peers has been very aggressive with rolling out tech tools and/or cost cuts. I think there's some debate as to which side of that dial is pushing it. Thoughts on that? Kind of what are you doing in that regard in both of those?

Yes. Our FreightPower platform generally some of our most innovative technology starts in the brokerage side and then we learned how to deploy and then kind of use it across more parts of our portfolio. So AI is the buzzword, maybe we'll make it FreightPowerAI or something better valuation. But...

Change your website to Schneider already.

But we've been using that for years, particularly around the decision science, taking in a whole host of structured, unstructured data to help us price and both on the buy side and the sell side and brokerage and then obviously translate to how that makes sense on the assets. We've deployed other use cases now with voice and generative language model. It's amazing how you can talk and feel like you're really talking to somebody. You stutter, you have the ums, you do all the things that you would normally do in a conversation. It's taken some of that meaningful work that you have to do, but it's not always value-added and put our people against other more important work. And so we probably didn't get as much press on this, but in the last quarter, we grew our carrier brokers, so matching the load to the broker through automation and through the AI, a 61% improvement in productivity year-over-year. And don't have less broker -- we've redeployed them in other places to generate freight versus put it against the carrier side of the house. So there's many use cases. We've got some in Intermodal we're pursuing. Many of those though are enhancing the job so that we can grow the business without growing people. Some of them are replacing lower-level tasks that we can actually have less folks in the business. And so it's very, very interesting. And so we're in the early innings of all of this. We think there is a myriad of use cases. And transport and transportation, I think, is a great place to deploy.

Got it. Any question in the audience? Howard.

I wanted to ask you a little bit on the autonomous side. You guys are doing tests with Aurora and...

Are you with an autonomous company?

I am not. I'm interested...

He wishes he was.

But I guess I'm interested in hearing -- I have an idea in my mind where the amount of work and effort and time that you guys put in right now to validate what needs to be done to deploy those into your fleet over time as well as the cost to just put them into service. Is there a world where we see accelerating gains and share gains because when autonomous trucks become here and now, that it's the smaller fleets and the mom-and-pops that can't really do that as effectively as you guys can.

Please ignore the guy sitting on the fourth row when you answer.

Right behind him? Yes. We're very bullish on the future as it relates to how we can deploy the technology. We have a belief that those who are aligned with the OEMs and engineering from the ground up as opposed to the other systems that are kind of added after the fact is the right -- we happen to believe that the winners are associated with a couple like Torc and Aurora, who I think was before us in here. So good solutions. Technology is amazing. Probably have to figure out a little bit about liability in this world. Everything we do, it probably means everybody is liable versus somebody being liable. It's definitely how the world is working today. But having some clarity there, I think, would be important in the economic models, right? We're so focused, at least on our end, of how would we integrate and what's the learning that goes into play on how we can deploy across our network that getting to where those use cases are best deployed, I think, is really the next step. And how does the economic exchange happen that makes sense for us, makes sense for our customers. But the technology is really impressive, and we're on the cusp.

Mark, what do you need to see to put out a press release saying we are going to buy 1,000 autonomous trucks or put in an order for like -- I'm not saying it should happen now, but what do you need to see to get there?

Yes. I think it's understanding the economic model and where does it best fit. I think it's -- this industry, while density on individual lanes is amazingly not dense. I mean even if you look at -- even with somebody as large as us or you combine even multiple carriers together, there's not a lot of lanes that moving truck that would just -- you could put -- let's put 15 on this a day and kind of run back and forth. So where can we do that at scale? And how do we operate? That's what we're trying to learn with the pilots that we're doing. And the liability piece, right? That's -- I mean I've been in this a long time. It's -- when I talk about what my issues are not the drivers, it's like every time that we turn a mile, we're putting so much risk because of what's going on in the country right now. And unfortunately, there's a lot of momentum on reform. We can talk about that at a different time. So it's just getting those use cases down and how do we make that translate to we're not just doing it to put press releases out, but we're doing it because it makes sense for our margin performance, our customers, and we can deploy. I'm confident that we're going to get there. It's just we're a little soon in that process.

Got it. You've also been a leader in deploying EV. So what's the update there, especially given some of the changing ESG requirements.

Yes, we're running about 100 Class 8s out in California. That whole piece from learning how to be a charging station and deploying them operationally has gone exceedingly well. Very proud of our team, both operations and our equipment engineering group. So really no negative trade-offs there. We're not probably exactly breakeven, but we're pretty darn close to diesel which, without the subsidies, would be very hard. And that's kind of the [ stymie-ness ] now without the subsidies. So I don't really see a lot of development of us in the electric space in the next 24 months. I think you'll see us do a little bit more in the natural gas space, particularly with the new Cummins engine and customers' interest level gives a little more range, gives us a little more opportunity and not so weather-sensitive. So alternative place, I think, will be in the renewable diesel and the perhaps natural gas, more so in electric in the next couple of years.

Got it. Any more questions in the audience?

I believe it's been a little less than a year since your last acquisition. How should I think about your appetite for M&A going forward? And if that's a priority, where do you see that fitting into your portfolio, whether it's asset light or more on the asset-based side?

Good question. So I think publicly, we've said that every 12 to 18 months, we expect to do something inorganic. We have very specialized areas that we think are strategic areas of growth. And we talked about Dedicated and specialty with Dedicated, Intermodal, logistics. You think about the Intermodal landscape and the fact that it's very concentrated in terms of the players there, probably not a whole lot of opportunities for acquisitions there. From a logistics standpoint, based on where multiples are, probably not as compelling to do an acquisition in that space today. But we found a good niche in terms of Dedicated, right? So there's a playbook that we've seen. We're not looking to fixer operators. We're looking at different areas of differentiation where we don't currently play, whether that's a vertical, a type of specialty play and geography that we don't specifically cover. So the last 3 acquisitions that we've done have fit that profile. So we have the luxury of focusing on organic growth, which is our #1, as well as inorganic growth because of the strength of our batch sheet, right? So we're at 0.6x levered. And the success of those acquisitions means that with the accretion, we can delever pretty quickly. So even with Cowan that we did in December of last year, by June of this year, we already started to delever. So that wheel keeps moving. So we have a strong pipeline of potential acquisitions that we look at, but they have to fit that profile that ultimately enhances return.

Would you ever consider opening a new front with LTL?

I don't think that will be where we kind of lean into, Ravi, on LTL. I think maybe there's already adequate capacity there. And where will we differentiate and can we cobble something together? I think we have just better opportunities in our strengths of Intermodal and truck, particularly Dedicated. I would also say, though, that we would consider Darrell's comments for more programmatic-type acquisition, like the last 3 we did, that Cowan was the largest at 1,800 trucks. But if there was something more transformative, that advanced our strategy and had a bigger play and a bigger splash, I think we have the wherewithal and the interest and certainly the Board's support to do it. So we're thinking bigger too, not just programmatic, but it have to be the right fit and we got a lot of people that like to talk to us about what those right fits are. But it's a good time to be in those discussions.

Got it. Let's hope it's a good time for the cycle as well. Thanks so much for joining us here today, and we will see you at Laguna next year.

Thank you.

Thank you.

Thanks.