Financial Data and Key Metrics Changes - Consolidated freight revenue increased by 4%, or approximately $10.2 million, to $268.9 million year-over-year [3] - Consolidated adjusted operating income shrank by 22.5% to $15 million, primarily due to increases in the truckload segment [3] - Net indebtedness increased by $48.6 million to $268.3 million compared to December 31, 2024, yielding an adjusted leverage ratio of approximately 2.1 times and a debt-to-capital ratio of 38.8% [3] - Adjusted return on average invested capital was 6.9% versus 8.1% in the prior year [3] Business Segment Data and Key Metrics Changes - The expedited segment yielded a 93.6% adjusted operating ratio, which is an increase of 160 basis points compared to the prior year [4] - The dedicated segment's adjusted operating ratio was 94.7%, falling short of both the prior year and long-term expectations [5] - Managed freight exceeded both revenue and adjusted operating income compared to the prior year but fell sequentially due to the loss of a short-term customer [5] - The warehousing segment experienced slightly below prior year freight revenue and adjusted operating income, yielding an adjusted operating ratio of 92.1% [7] Market Data and Key Metrics Changes - The average fleet size in the expedited segment shrunk by 31 units, or 3.4%, to 861 average tractors [4] - The company anticipates a challenging fourth quarter due to a soft freight market and company-specific factors [8][9] Company Strategy and Development Direction - The company plans to improve margins through rate increases, exiting less profitable business, and adding more profitable business [4] - The strategy includes growing and diversifying the managed freight segment, with an acceptable return in capital expected from mid-single digit operating margins [7] - The company is focused on investing in areas that provide value-added services for customers while reducing exposure to commoditized end markets [5] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued challenges in the fourth quarter due to a soft freight market and specific issues such as increased claims accruals and the impact of the U.S. government shutdown [8][9] - There is optimism about the pace of recovery in the freight market, driven by government policies and consumer demand improvements [9] - Management expressed excitement about the potential for rate increases after four years of stagnation, with bids up 17% since August [23] Other Important Information - The company has been managing costs effectively, with a focus on matching headcount to freight volumes and controlling overhead [74] - There is a cautious approach to fleet expansion due to uncertainty in truck pricing and tariffs [50][52] Q&A Session Summary Question: Insights on market capacity and its impact - Management discussed the challenges in the market regarding capacity exits and the lack of impact on national spot rates despite tighter local markets [12][13] Question: Impact of government shutdown on Department of Defense business - Management indicated that about half of the Department of Defense business would be lost during the shutdown, with a partial recovery expected once operations resume [61][62] Question: Expectations for pricing and bid activity - Management noted that low single-digit rate increases are being discussed with customers, reflecting inflationary pressures [48] Question: Share repurchase strategy - Management acknowledged the potential for share repurchases but emphasized a cautious approach given the current market environment [83]