Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $342 million and adjusted diluted EPS of $1.07, both exceeding expectations, with adjusted EBITDA growing by 3% year-over-year [5][14] - Total company revenue increased by 3% year-over-year to $2.1 billion, with LTL segment revenue also up to $1.3 billion [13][14] - Adjusted EBITDA in the LTL segment was up 9% to $308 million, and adjusted operating income increased by 10% to $217 million, both setting company records [14] Business Line Data and Key Metrics Changes - In the North American LTL business, adjusted operating income grew by 10% year-over-year to $217 million, with an adjusted operating ratio improvement of 150 basis points to 82.7% [5][14] - LTL adjusted EBITDA reached the highest level in company history at $308 million, reflecting strong operational execution and pricing strategies [6][14] - The company achieved a 5.9% year-over-year yield growth excluding fuel, with revenue per shipment also increasing sequentially for the 11th consecutive quarter [8][18] Market Data and Key Metrics Changes - Shipments per day in the LTL segment were down 3.5% year-over-year, while tonnage per day decreased by 6.1%, although both metrics improved compared to the second quarter [17][18] - The company reported a 48% decrease in purchased transportation expense, indicating improved cost efficiency through insourcing initiatives [13][14] Company Strategy and Development Direction - The company is focusing on high-growth freight markets and optimizing its network to enhance service quality and drive long-term cost efficiency [7][11] - Investments in AI and technology are expected to continue improving productivity and margins, with a strong emphasis on customer service and operational excellence [10][22] - The company aims to capture profitable share gains and strengthen its position in the market as the freight cycle turns [7][12] Management's Comments on Operating Environment and Future Outlook - Management noted that while the freight market remains soft, there is optimism for a recovery in 2026, with customers expressing expectations for improved demand [79][80] - The company anticipates continued above-market yield growth and margin expansion, even in the current macro environment [32][56] - Management emphasized the importance of maintaining service quality and operational efficiency to navigate the current challenges in the industry [71][72] Other Important Information - The company ended the quarter with $335 million in cash and a net leverage ratio of 2.4x trailing 12 months adjusted EBITDA [15] - The company is committed to moderating CapEx while increasing free cash flow conversion, positioning itself for greater flexibility in returning capital to shareholders [15][59] Q&A Session Summary Question: Insights on October tonnage and margin outlook - Management indicated that October tonnage is expected to be down around 3%, consistent with typical seasonality, and they expect to materially outperform seasonal trends in Q4 [24][26] Question: Thoughts on margin improvement into next year - Management expects strong OR improvement and earnings growth in 2026, even without a macro recovery, driven by above-market yield growth and cost control initiatives [31][32] Question: Pricing expectations for Q4 and beyond - Management anticipates yield growth excluding fuel to remain in the 5%-6% range, supported by ongoing pricing initiatives and service quality improvements [62][64] Question: Competitive environment and customer sentiment - Management noted that while demand remains soft, there is a neutral outlook from customers, with some optimism for 2026 as economic conditions improve [78][79]

Core Insights - Less-than-truckload (LTL) carriers are maintaining strong pricing power, with forecasts indicating elevated LTL rates for the fourth quarter [1] - The LTL rate-per-pound reached a record high in Q3, standing 65.1% above the January 2018 baseline, with a slight expected dip to 64.8% in Q4, marking eight consecutive quarters of year-over-year growth [1][2] - The cost per LTL shipment has shown strong pricing discipline, with a widening spread between cost and weight per shipment, reflecting effective yield management by carriers [6][7] Pricing and Market Trends - The LTL rate-per-pound component of the TD Cowen/AFS Freight Index is projected to remain elevated, with a year-over-year increase of 180 basis points [1] - The dataset has maintained a premium of approximately 60% to the baseline over the past three years, indicating stability in pricing despite market fluctuations [2] - The truckload (TL) rate-per-mile is expected to see minimal increase, reflecting a lack of robust trends in the truckload segment [8] Economic Indicators - Manufacturing data has shown weakness, with the PMI registering a contraction at 49.1, and the new orders subindex falling to 48.9, indicating potential future declines in activity [5] - Despite negative manufacturing indicators, LTL rates have remained resilient, suggesting that carriers are focusing on yield rather than volume [4] Cost and Shipment Analysis - In Q3, the cost per LTL shipment decreased by 0.7% year-over-year, while the weight per shipment fell by 7.4%, leading to a significant widening of the cost-weight spread [6] - Fuel surcharges increased by 5.6% sequentially, while the length of haul rose by 1.3%, indicating rising operational costs for carriers [6]