1
00:00:07,880 --> 00:00:11,440
Speaker 1: Hi everyone, and welcome to Bloomberg Intelligence Talking Transports Podcast.

2
00:00:11,480 --> 00:00:14,400
Speaker 1: I'm your host Lee Klaskal, Senior Freight Transportation and the

3
00:00:14,440 --> 00:00:18,080
Speaker 1: Logistics analyst at Bloomberg Intelligence, Bloomberg's in house research arm

4
00:00:18,520 --> 00:00:21,680
Speaker 1: Before diving in a little public service announcement, your support

5
00:00:21,760 --> 00:00:24,959
Speaker 1: is instrumental in bringing great guests onto the podcast like

6
00:00:25,000 --> 00:00:27,240
Speaker 1: the one we have today. If you haven't already, please

7
00:00:27,280 --> 00:00:30,080
Speaker 1: do take a moment to follow, rate and share the

8
00:00:30,120 --> 00:00:34,519
Speaker 1: Talking Transport Podcast. We appreciate your support. Now, with that

9
00:00:34,560 --> 00:00:36,919
Speaker 1: out of the way, I'm very excited to have Robbie Schanker,

10
00:00:37,080 --> 00:00:41,160
Speaker 1: Managing Director and Lead Analyst for North America Freight Transportation Airlines.

11
00:00:41,479 --> 00:00:45,080
Speaker 1: He joined the firm's global Automotive industry research team in

12
00:00:45,120 --> 00:00:48,680
Speaker 1: twenty four as a research associated before picking up lead

13
00:00:48,720 --> 00:00:51,279
Speaker 1: coverage of North American autos from two thousand and nine

14
00:00:51,320 --> 00:00:55,920
Speaker 1: to twenty fifteen. Rabbi has been ranked by Institutional Investor

15
00:00:56,120 --> 00:00:59,240
Speaker 1: and recognized by the Financial Time starminds as the top

16
00:00:59,280 --> 00:01:03,560
Speaker 1: ten stockpicker across Wall Street and a top auto stock picker.

17
00:01:04,000 --> 00:01:06,280
Speaker 1: Robbie holds a Bachelor of Commerce and a Master's of

18
00:01:06,360 --> 00:01:10,440
Speaker 1: Management degrees from the University of Mumbai with that. Welcome

19
00:01:10,480 --> 00:01:12,880
Speaker 1: to the Talking Transport Podcast. Robbie.

20
00:01:13,680 --> 00:01:15,840
Speaker 2: Thanks, Lee, very excited to be here, Thanks for having me.

21
00:01:16,280 --> 00:01:18,560
Speaker 1: And not only am I excited for you to be here,

22
00:01:18,600 --> 00:01:21,560
Speaker 1: but you're here for our thirtieth episode. So it's quite

23
00:01:21,680 --> 00:01:24,960
Speaker 1: a landmark episode that we're having today and I'm glad

24
00:01:24,959 --> 00:01:25,959
Speaker 1: you're here to share with us.

25
00:01:26,040 --> 00:01:27,200
Speaker 2: Congratulations.

26
00:01:28,160 --> 00:01:31,759
Speaker 1: Thanks. So, you know, we're just coming off of earning season.

27
00:01:31,840 --> 00:01:34,560
Speaker 1: We have we had expediters this morning, we had a

28
00:01:34,760 --> 00:01:39,440
Speaker 1: DHL overnight, so now we can start to rest and

29
00:01:39,880 --> 00:01:43,080
Speaker 1: do the fun part of the job as analysts. You know,

30
00:01:43,160 --> 00:01:45,639
Speaker 1: for you during this earning season, in the first quarter,

31
00:01:46,040 --> 00:01:49,320
Speaker 1: what was the biggest upside surprise for you?

32
00:01:51,840 --> 00:01:55,320
Speaker 3: Look, we were expecting a pretty tough earning season, and

33
00:01:55,400 --> 00:01:58,440
Speaker 3: I think it was probably tougher than we thought, so

34
00:01:59,680 --> 00:02:01,720
Speaker 3: not too many upside surprises.

35
00:02:02,160 --> 00:02:04,920
Speaker 2: Clearly, there were some names like A. H.

36
00:02:05,000 --> 00:02:07,680
Speaker 3: Robinson that was the surprise beat and the stock was

37
00:02:07,760 --> 00:02:11,040
Speaker 3: up significantly. I guess when you look at some of

38
00:02:11,120 --> 00:02:16,320
Speaker 3: the names where sentiment was probably the most suppressed, and

39
00:02:16,720 --> 00:02:18,200
Speaker 3: given some.

40
00:02:18,120 --> 00:02:20,320
Speaker 2: Of the early beat early.

41
00:02:20,080 --> 00:02:25,160
Speaker 3: Prints that were kind of lower than expected, I think

42
00:02:25,240 --> 00:02:28,799
Speaker 3: sentiment had deteriorated a fair bit towards the end of earnings,

43
00:02:29,400 --> 00:02:33,760
Speaker 3: and so I think the reset of expectations towards the

44
00:02:33,880 --> 00:02:37,400
Speaker 3: very end of earnings, whether it was H. Robinson's beat,

45
00:02:38,200 --> 00:02:42,760
Speaker 3: Schneider saying that they were seeing positive contract rate renewals

46
00:02:42,800 --> 00:02:46,080
Speaker 3: on their conference call, I think some support of commentary

47
00:02:46,160 --> 00:02:48,120
Speaker 3: from the likes of Landstar and RXO.

48
00:02:49,040 --> 00:02:52,000
Speaker 2: I think we ended the earning season.

49
00:02:52,160 --> 00:02:54,399
Speaker 3: I mean, I know there's a couple of companies left,

50
00:02:54,440 --> 00:02:57,000
Speaker 3: but I think we're ending the earning season on a

51
00:02:57,040 --> 00:02:59,680
Speaker 3: little bit more of a high than where we started.

52
00:03:00,880 --> 00:03:04,240
Speaker 1: Gotcha, was there something that you were really surprised at

53
00:03:04,240 --> 00:03:06,400
Speaker 1: on the downside during the starting season.

54
00:03:07,240 --> 00:03:10,160
Speaker 3: Yeah, I'd say probably the way we started. We had

55
00:03:10,240 --> 00:03:12,920
Speaker 3: previewed a pretty tough earning season. Like I said, I

56
00:03:12,919 --> 00:03:16,680
Speaker 3: think the title of our earnings review was a lost quarter,

57
00:03:17,400 --> 00:03:21,040
Speaker 3: just given some of the commentary and the data points

58
00:03:21,120 --> 00:03:25,440
Speaker 3: going into the prints. But I think that the numbers

59
00:03:25,560 --> 00:03:28,320
Speaker 3: were probably tougher than we thought.

60
00:03:28,400 --> 00:03:30,359
Speaker 2: For one Q, obviously, JB.

61
00:03:30,520 --> 00:03:33,799
Speaker 3: Hunt Night, a couple of the rails started out kind

62
00:03:33,800 --> 00:03:40,200
Speaker 3: of in a reasonably tough manner. However, I think the

63
00:03:40,640 --> 00:03:45,640
Speaker 3: investors in the space, they don't really react to the

64
00:03:45,680 --> 00:03:48,040
Speaker 3: past quarters earnings as much as they react to what

65
00:03:48,200 --> 00:03:51,080
Speaker 3: is to come, and so I think we sort of

66
00:03:51,120 --> 00:03:54,520
Speaker 3: had a mixed picture for two Q and beyond, right,

67
00:03:54,520 --> 00:03:56,360
Speaker 3: I mean, some of the management teams are sort of

68
00:03:56,760 --> 00:03:59,320
Speaker 3: throwing in the towel and sort of kitchen sinking their

69
00:03:59,360 --> 00:04:02,800
Speaker 3: guidance to the downside, which actually helps from a positioning

70
00:04:02,800 --> 00:04:05,200
Speaker 3: standpoint and from a sentiment standpoint.

71
00:04:05,880 --> 00:04:08,560
Speaker 2: If you're seeing the actual industry.

72
00:04:08,280 --> 00:04:11,760
Speaker 3: Data points start to inflect higher while numbers are coming down,

73
00:04:11,800 --> 00:04:14,400
Speaker 3: it actually could be the right time to buy some

74
00:04:14,440 --> 00:04:15,120
Speaker 3: of these stocks.

75
00:04:15,120 --> 00:04:19,240
Speaker 2: So while the initial stock reaction to the early misses was.

76
00:04:20,760 --> 00:04:24,160
Speaker 3: Pretty stark in terms of the stocks moving to the downside,

77
00:04:24,480 --> 00:04:27,359
Speaker 3: like I said earlier, coming to as the ends of earnings,

78
00:04:27,760 --> 00:04:29,760
Speaker 3: I think people are actually starting to buy some of

79
00:04:29,800 --> 00:04:33,840
Speaker 3: these stocks thinking that we've probably bottomed on valuation and

80
00:04:34,320 --> 00:04:36,719
Speaker 3: numbers and sentiment for some of these names.

81
00:04:37,400 --> 00:04:39,400
Speaker 1: Yeah, on the truckload side, you know the b I

82
00:04:39,560 --> 00:04:43,040
Speaker 1: Truckload peer group their earnings for the first quarter. We're

83
00:04:43,080 --> 00:04:45,719
Speaker 1: down on average or A media and I should say

84
00:04:46,000 --> 00:04:49,960
Speaker 1: around seventy seven percent and that was thirty percent surprise.

85
00:04:50,040 --> 00:04:54,160
Speaker 1: On the downside, the truckload space has been protty, the

86
00:04:54,160 --> 00:04:58,279
Speaker 1: most under pressure. What's been driving that? And when do

87
00:04:58,320 --> 00:05:01,600
Speaker 1: you see things starting to turn around for the industry.

88
00:05:01,920 --> 00:05:04,320
Speaker 1: From your vantage point, look, I think.

89
00:05:04,160 --> 00:05:06,200
Speaker 2: There's been a lot of focus on demand versus supply.

90
00:05:06,960 --> 00:05:09,520
Speaker 3: I think probably a little too much focused on supply,

91
00:05:09,560 --> 00:05:13,120
Speaker 3: and our view, from my perspective, it's all about demand.

92
00:05:13,680 --> 00:05:16,039
Speaker 3: That we were the first team on the street to

93
00:05:16,200 --> 00:05:20,160
Speaker 3: call the downturn in late twenty twenty one.

94
00:05:20,680 --> 00:05:22,279
Speaker 2: About six months before it happened.

95
00:05:22,800 --> 00:05:25,640
Speaker 3: We were also the first to call for the end

96
00:05:25,680 --> 00:05:28,799
Speaker 3: of the d stocking by the middle of twenty twenty three,

97
00:05:29,279 --> 00:05:32,560
Speaker 3: which was about six months before it happened. We also

98
00:05:32,720 --> 00:05:34,719
Speaker 3: kind of pointed out that we were in this limbo

99
00:05:34,760 --> 00:05:37,720
Speaker 3: period post the end of the D stocking in the

100
00:05:37,760 --> 00:05:42,080
Speaker 3: back half of twenty twenty three, where like nothing really happened,

101
00:05:42,600 --> 00:05:44,440
Speaker 3: and we were sort of bouncing along the bottom and

102
00:05:44,520 --> 00:05:46,640
Speaker 3: not even bouncing, just kind of rolling around the bottom,

103
00:05:46,680 --> 00:05:50,160
Speaker 3: if you will. And we came into this year admittedly

104
00:05:50,480 --> 00:05:56,120
Speaker 3: looking for the upcycles did come earlier that people expected.

105
00:05:56,160 --> 00:05:58,119
Speaker 3: We were saying in an end of one Q early

106
00:05:58,160 --> 00:06:03,280
Speaker 3: two Q. Now I think everybody's probably moved their expectations

107
00:06:03,279 --> 00:06:05,359
Speaker 3: of when the up cycle comes about a quarter to

108
00:06:05,440 --> 00:06:09,360
Speaker 3: the right. We have started to see some signs of improvement.

109
00:06:10,279 --> 00:06:15,400
Speaker 3: Rtlafi index RTLSS indices have both sort of started to

110
00:06:15,480 --> 00:06:19,120
Speaker 3: bounce towards the end of April and early May. You're

111
00:06:19,160 --> 00:06:23,440
Speaker 3: seeing some commentary from the companies, whether it's the brokers

112
00:06:23,560 --> 00:06:26,520
Speaker 3: or Schneider's bit seas and as I said earlier, kind

113
00:06:26,520 --> 00:06:30,000
Speaker 3: of pointing to some improvement of the upside. And there

114
00:06:30,000 --> 00:06:33,120
Speaker 3: have been so many headfakes over the last kind of

115
00:06:33,160 --> 00:06:36,920
Speaker 3: six to nine months that I think us and investors

116
00:06:37,160 --> 00:06:41,839
Speaker 3: and the industry will want to see a far more

117
00:06:41,960 --> 00:06:46,440
Speaker 3: tangible and sustained upside to trucks portraits and to the

118
00:06:46,480 --> 00:06:50,160
Speaker 3: data point before we get excited about when the up

119
00:06:50,240 --> 00:06:51,800
Speaker 3: cycle is to come again.

120
00:06:51,880 --> 00:06:52,640
Speaker 2: The good news with.

121
00:06:52,680 --> 00:06:56,240
Speaker 3: You well is that there is some smoke which leads

122
00:06:56,279 --> 00:06:59,039
Speaker 3: us to believe that there's at least the kindling of

123
00:06:59,040 --> 00:07:03,520
Speaker 3: a fire somewhere. Also, our data shows us that we

124
00:07:03,600 --> 00:07:07,520
Speaker 3: probably can't sustain the current levels of b stocking with

125
00:07:07,600 --> 00:07:09,720
Speaker 3: the rate of sellout that you're having for too long,

126
00:07:09,720 --> 00:07:12,520
Speaker 3: which means that the upcycle has to come sooner or

127
00:07:12,680 --> 00:07:13,120
Speaker 3: than later.

128
00:07:13,800 --> 00:07:16,640
Speaker 2: In terms of the exactly pinpointing when that's going.

129
00:07:16,560 --> 00:07:18,760
Speaker 3: To be between two Q and medior and three Q,

130
00:07:19,600 --> 00:07:20,800
Speaker 3: that's gonna be a little bit harder.

131
00:07:21,680 --> 00:07:26,680
Speaker 1: Well, hopefully that fires out of dumpster fire. So so

132
00:07:26,720 --> 00:07:29,320
Speaker 1: when you're saying you're you're expected more on the demand side,

133
00:07:29,400 --> 00:07:33,120
Speaker 1: are you talking about inventory restocking? That's where you think

134
00:07:33,120 --> 00:07:35,200
Speaker 1: it's going to because you know we're going to be

135
00:07:35,280 --> 00:07:39,520
Speaker 1: in a period or at least at least couple of

136
00:07:39,600 --> 00:07:43,120
Speaker 1: years of very low single digit GDP growth. So is

137
00:07:43,120 --> 00:07:44,480
Speaker 1: that where the growth is coming from?

138
00:07:45,080 --> 00:07:47,000
Speaker 2: Yes, absolutely, I think it is going to come from

139
00:07:47,040 --> 00:07:48,400
Speaker 2: inventory restocking.

140
00:07:48,480 --> 00:07:51,040
Speaker 3: Kind of history has shown that there's a very strong

141
00:07:51,040 --> 00:07:56,480
Speaker 3: correlation between our Telfy index UH and the inventory d

142
00:07:56,600 --> 00:07:59,840
Speaker 3: stop restock shot from our super survey, which tells me

143
00:07:59,880 --> 00:08:03,480
Speaker 3: that that is the primary driver of the cycle. Rethink,

144
00:08:03,560 --> 00:08:08,280
Speaker 3: Supply determines the severity of an upcycle or downcycle, whether

145
00:08:08,280 --> 00:08:10,200
Speaker 3: we are in a record up cycle or a shallow

146
00:08:10,240 --> 00:08:14,240
Speaker 3: downcycle or whatever. But demand, which is primarily driven by

147
00:08:14,320 --> 00:08:19,000
Speaker 3: inventory restocking and destocking, determines whether we are in an

148
00:08:19,040 --> 00:08:23,120
Speaker 3: upcycle or downcycle or not. So this inflection from rolling

149
00:08:23,120 --> 00:08:26,560
Speaker 3: along the bottom to the next upcycle will be driven

150
00:08:26,640 --> 00:08:32,040
Speaker 3: by when shippers hit the restock button pretty university acrossport.

151
00:08:32,360 --> 00:08:35,720
Speaker 1: And so when you're doing your modeling for your truckload carriers,

152
00:08:35,760 --> 00:08:40,400
Speaker 1: when you expect volumes to inflect positively? Are you doing

153
00:08:40,400 --> 00:08:43,360
Speaker 1: it like a two time multiple of GDP? Like, how

154
00:08:43,360 --> 00:08:47,040
Speaker 1: do you figure out how much of the inventory restocking

155
00:08:47,120 --> 00:08:48,160
Speaker 1: will drive growth?

156
00:08:48,960 --> 00:08:52,120
Speaker 3: Look, I mean this is definitely a combination of art

157
00:08:52,160 --> 00:08:54,560
Speaker 3: and science. There is some level of math and some

158
00:08:54,679 --> 00:08:58,160
Speaker 3: level of sticking a finger in the air. So I

159
00:08:58,160 --> 00:09:01,040
Speaker 3: think the good news and bad news is it almost

160
00:09:01,160 --> 00:09:06,520
Speaker 3: doesn't matter what the slope of the curve looks like

161
00:09:06,600 --> 00:09:09,200
Speaker 3: on the way up. As long as there is a

162
00:09:09,440 --> 00:09:13,240
Speaker 3: definitive upward slope to the curve, right, the stocks are

163
00:09:13,280 --> 00:09:16,760
Speaker 3: going to react to what they think normalized mid cycle

164
00:09:16,840 --> 00:09:20,520
Speaker 3: values are. It almost doesn't matter whether that comes in

165
00:09:20,559 --> 00:09:23,160
Speaker 3: three Q or four Q or kind of early twenty

166
00:09:23,200 --> 00:09:26,120
Speaker 3: twenty five. It probably does matter at the peak, and

167
00:09:26,200 --> 00:09:28,800
Speaker 3: it does matter at the trough. But that inflection in

168
00:09:28,880 --> 00:09:31,000
Speaker 3: the peak to trough is just a switch where we

169
00:09:31,080 --> 00:09:34,920
Speaker 3: go from downcycle upsidle. Right, So, look, we have our

170
00:09:35,000 --> 00:09:38,440
Speaker 3: estimates for what rates will do, and we have the

171
00:09:39,080 --> 00:09:44,480
Speaker 3: industries only quant based forward predictor or leading indicator of

172
00:09:44,600 --> 00:09:48,920
Speaker 3: truck rates, the QURE model, which we launched early last year,

173
00:09:49,400 --> 00:09:53,120
Speaker 3: which still points to spot rates going up to the

174
00:09:53,160 --> 00:09:56,160
Speaker 3: mid one eighties in six months and to the low

175
00:09:56,240 --> 00:09:59,400
Speaker 3: twos in the next twelve months. So we kind of

176
00:09:59,480 --> 00:10:02,560
Speaker 3: use that as our guide on the rates in terms

177
00:10:02,600 --> 00:10:06,160
Speaker 3: of where we go on the volumes. I mean, that's

178
00:10:06,720 --> 00:10:08,559
Speaker 3: a little bit in the air, but yeah, we do

179
00:10:08,600 --> 00:10:10,760
Speaker 3: think that we should be at some multiple of GDP.

180
00:10:11,440 --> 00:10:16,440
Speaker 1: Okay, can you kind of explain how truckload stocks are

181
00:10:17,040 --> 00:10:19,199
Speaker 1: valued and kind of like where we are in that

182
00:10:19,280 --> 00:10:22,800
Speaker 1: multiple cycle because the multiples are relatively high right now.

183
00:10:23,880 --> 00:10:28,040
Speaker 3: Yes, absolutely so, the multiples are relatively high on current earnings.

184
00:10:28,800 --> 00:10:31,760
Speaker 3: But I think for most companies in the space, I

185
00:10:31,760 --> 00:10:34,839
Speaker 3: think for most companies and cyclicals, the market's going to

186
00:10:34,880 --> 00:10:36,199
Speaker 3: be looking to value them.

187
00:10:36,160 --> 00:10:40,200
Speaker 2: On their view of normalized GPS. Now, admittedly.

188
00:10:41,120 --> 00:10:44,520
Speaker 3: The timing of normalized EPs has gotten pushed out into

189
00:10:44,520 --> 00:10:47,679
Speaker 3: the right. I think a bull would have come into

190
00:10:47,720 --> 00:10:50,120
Speaker 3: the ure expecting normalized EPs to be twenty twenty four.

191
00:10:50,800 --> 00:10:53,200
Speaker 3: I think right now the base case is normalized EPs

192
00:10:53,240 --> 00:10:56,040
Speaker 3: is twenty twenty five EPs. I think a bear would

193
00:10:56,080 --> 00:10:58,560
Speaker 3: consider normalized EPs to be twenty twenty six EPs.

194
00:10:58,600 --> 00:11:01,880
Speaker 2: So you're onion may vary, but you're.

195
00:11:01,679 --> 00:11:04,560
Speaker 3: Going to look like, look at what a mid cycle

196
00:11:04,640 --> 00:11:08,320
Speaker 3: EPs number look like, not a peak number, which is

197
00:11:08,320 --> 00:11:12,120
Speaker 3: where we were during the pandemic, not a trough number,

198
00:11:12,160 --> 00:11:14,720
Speaker 3: which is where we are right now, but probably somewhere

199
00:11:14,720 --> 00:11:17,280
Speaker 3: between kind of peak and trough is your view of

200
00:11:17,320 --> 00:11:19,440
Speaker 3: normal ldps, and that's what you can be using to

201
00:11:19,520 --> 00:11:23,280
Speaker 3: value the stock discounted back to today, especially if you're

202
00:11:23,320 --> 00:11:25,199
Speaker 3: looking at twenty twenty six, you discome that back of

203
00:11:25,280 --> 00:11:27,480
Speaker 3: your to at twenty twenty five number, and then that's

204
00:11:27,520 --> 00:11:30,760
Speaker 3: your twelve month forward price target. So if you're looking

205
00:11:30,840 --> 00:11:34,040
Speaker 3: at twenty twenty five EPs as your normalized mid cycle,

206
00:11:34,920 --> 00:11:37,880
Speaker 3: you discount that, you put a normalized multiple on that

207
00:11:37,960 --> 00:11:41,040
Speaker 3: EPs number, discome that back twelve months, and actually the

208
00:11:41,080 --> 00:11:42,120
Speaker 3: stock pressurely.

209
00:11:42,720 --> 00:11:45,160
Speaker 1: Right, and then you know, before we leave talking about

210
00:11:45,200 --> 00:11:47,839
Speaker 1: the truckload market, is there a particular name in the

211
00:11:47,840 --> 00:11:50,400
Speaker 1: truckload market that you're bulletsh on.

212
00:11:51,600 --> 00:11:54,280
Speaker 3: To be honestly, like pretty much all of trucking, with

213
00:11:54,320 --> 00:11:57,080
Speaker 3: the exception of some of the more expensive ltls. We

214
00:11:57,280 --> 00:12:01,599
Speaker 3: prefer PL followed by LTL given the relative positioning and

215
00:12:01,600 --> 00:12:06,360
Speaker 3: relati evaluation of d L over LTL, but night followed

216
00:12:06,360 --> 00:12:12,320
Speaker 3: by our best DFI Schneider Warner ODFL. I think that

217
00:12:12,400 --> 00:12:15,840
Speaker 3: combination of t L and LTL stocks would be our topics.

218
00:12:15,559 --> 00:12:18,000
Speaker 1: Right and and then moving to the less than troubled

219
00:12:18,080 --> 00:12:21,680
Speaker 1: market or the LTL market. You know, they did much

220
00:12:21,720 --> 00:12:25,880
Speaker 1: better during earning season. Their earnings grew by you know,

221
00:12:25,960 --> 00:12:28,760
Speaker 1: mid to low single digits on average. Uh. You know,

222
00:12:28,800 --> 00:12:31,400
Speaker 1: they did surprise on the downside, but only by you know,

223
00:12:31,400 --> 00:12:34,440
Speaker 1: about two percent, So you know, pretty much in line

224
00:12:34,480 --> 00:12:38,320
Speaker 1: a little disappointing, somewhere better than others. You know, the

225
00:12:38,440 --> 00:12:41,760
Speaker 1: LTL spaces has become a lot less cyclical just because

226
00:12:41,760 --> 00:12:46,520
Speaker 1: of the consolidated nature of the business. You know, what

227
00:12:46,640 --> 00:12:50,360
Speaker 1: did you take away from the LTL group coming out

228
00:12:50,360 --> 00:12:51,840
Speaker 1: of our first quarter earnings?

229
00:12:52,679 --> 00:12:56,760
Speaker 3: Look, I've been structurally a trucking bull for the entire

230
00:12:56,840 --> 00:13:00,880
Speaker 3: time that I've covered the space, I think more and

231
00:13:01,400 --> 00:13:05,360
Speaker 3: sooner than anybody else kind of who was more constructive

232
00:13:05,480 --> 00:13:11,080
Speaker 3: on trucking. That said, I do think some of the

233
00:13:10,880 --> 00:13:13,840
Speaker 3: the sentiment sort of ran away a little bit, and

234
00:13:13,920 --> 00:13:16,560
Speaker 3: expectations kind of got a little too high on the

235
00:13:16,640 --> 00:13:20,200
Speaker 3: posting yellow thesis, something that kind of we never really

236
00:13:20,240 --> 00:13:24,040
Speaker 3: subscribe to. Again, I we can tend the details if

237
00:13:24,040 --> 00:13:27,360
Speaker 3: you'd like, but I think the the exit of Yellow

238
00:13:28,200 --> 00:13:32,240
Speaker 3: probably was somewhat of a tailwind to volumes and numbers,

239
00:13:32,840 --> 00:13:37,760
Speaker 3: but not merely as much as got priced into some

240
00:13:37,840 --> 00:13:40,840
Speaker 3: of these stocks, both in terms of the multiple and

241
00:13:41,040 --> 00:13:44,199
Speaker 3: forward earning estimates in our view, and so I think

242
00:13:44,280 --> 00:13:48,040
Speaker 3: what you saw in the second quarter was a normalization

243
00:13:48,120 --> 00:13:50,920
Speaker 3: of that. I think, like you said, the numbers were

244
00:13:51,080 --> 00:13:55,320
Speaker 3: better for the lpls than most other cohorts within transportation,

245
00:13:55,400 --> 00:14:00,439
Speaker 3: and that was understandable given the support kind of tons

246
00:14:01,240 --> 00:14:04,360
Speaker 3: and kind of putting a trough on the cycle, if

247
00:14:04,400 --> 00:14:07,440
Speaker 3: you will, given the exit of Yellow, but at the

248
00:14:07,480 --> 00:14:11,640
Speaker 3: same time, because it wasn't anywhere near as much as

249
00:14:12,000 --> 00:14:15,280
Speaker 3: what people had builton of their models, especially the forward

250
00:14:15,320 --> 00:14:19,840
Speaker 3: commentary for dou q on or versus seasonality on the

251
00:14:19,960 --> 00:14:23,560
Speaker 3: volume and pricing trends in April coming out of March,

252
00:14:24,320 --> 00:14:27,200
Speaker 3: I think what you saw was, as we put in

253
00:14:27,200 --> 00:14:30,480
Speaker 3: our research, a little bit of a deflating.

254
00:14:29,920 --> 00:14:30,560
Speaker 2: Of the balloon.

255
00:14:30,640 --> 00:14:33,560
Speaker 3: I don't think the balloons burst yet, but the balloon's

256
00:14:33,600 --> 00:14:36,080
Speaker 3: deflated a little bit, which I think is actually healthy.

257
00:14:36,160 --> 00:14:38,280
Speaker 3: I think it kind of brings some of these LTL

258
00:14:38,360 --> 00:14:42,520
Speaker 3: valuations closer to normalized levels. I think it takes some

259
00:14:42,560 --> 00:14:44,640
Speaker 3: of the frath in terms of investor positioning out of

260
00:14:44,680 --> 00:14:48,440
Speaker 3: the market, and I think the group is now much

261
00:14:48,480 --> 00:14:51,520
Speaker 3: better position from a risk war perspective going to the

262
00:14:51,600 --> 00:14:54,400
Speaker 3: upcycle than it was maybe three or six months ago.

263
00:14:55,120 --> 00:14:57,320
Speaker 1: Right, So I guess you're a little barrassed on the space.

264
00:14:57,400 --> 00:14:59,240
Speaker 1: Do you have any cells or underweight? So I don't

265
00:14:59,240 --> 00:15:01,440
Speaker 1: know what you guys do over Morgan Stanley in terms

266
00:15:01,480 --> 00:15:03,320
Speaker 1: of the low end of the rating curve.

267
00:15:03,480 --> 00:15:07,240
Speaker 3: Yeah, it's a little painful to hear me re characterize

268
00:15:07,280 --> 00:15:09,440
Speaker 3: as as a trucking bear, because, like I said, I've

269
00:15:09,480 --> 00:15:12,040
Speaker 3: got the biggest bull on the street and.

270
00:15:11,960 --> 00:15:14,040
Speaker 2: The first bull on the street on trucking four years

271
00:15:14,200 --> 00:15:16,200
Speaker 2: is not wrong. I think we have been.

272
00:15:16,080 --> 00:15:19,960
Speaker 3: The most skeptical of this yellow thesis and I'd say that, Look,

273
00:15:20,000 --> 00:15:23,120
Speaker 3: I mean the two names that we are underweight on

274
00:15:23,160 --> 00:15:24,800
Speaker 3: the trucking side are Sayah and XPO.

275
00:15:24,920 --> 00:15:27,239
Speaker 2: Again, two great companies, two great.

276
00:15:27,000 --> 00:15:30,720
Speaker 3: Management teams, both of them doing absolutely the right thing

277
00:15:31,200 --> 00:15:34,360
Speaker 3: in terms of their go to market strategy. The XPO

278
00:15:34,360 --> 00:15:37,480
Speaker 3: in particular has a bunch of idiosyncratic catalysts that help

279
00:15:37,560 --> 00:15:40,320
Speaker 3: them in addition to the rising tide. But when you

280
00:15:40,440 --> 00:15:43,160
Speaker 3: consider what those stocks have done over the last two

281
00:15:43,200 --> 00:15:46,640
Speaker 3: years and up whatever two three hundred percent, and given

282
00:15:46,680 --> 00:15:50,840
Speaker 3: how much the street has earnings growth or rade built

283
00:15:50,840 --> 00:15:53,280
Speaker 3: into their models for the next two three years. I

284
00:15:53,280 --> 00:15:57,120
Speaker 3: think the risk reward is not as attractive as we

285
00:15:57,200 --> 00:15:59,840
Speaker 3: have elsewhere in the group. So within trucking at say

286
00:16:00,240 --> 00:16:02,200
Speaker 3: SIA and XPO especially, I mean SIA has got a

287
00:16:02,240 --> 00:16:05,720
Speaker 3: little bit better post the earning sell off, but I'd

288
00:16:05,760 --> 00:16:07,920
Speaker 3: say that's probably where risk award is the most off

289
00:16:07,920 --> 00:16:11,240
Speaker 3: sides within all of transportation kind of we continue to

290
00:16:11,280 --> 00:16:17,600
Speaker 3: be cautious the parcels, especially ups, the brokers, especially in UNCIH. Robinson,

291
00:16:18,600 --> 00:16:24,080
Speaker 3: and again maybe the more expensibility as well.

292
00:16:24,880 --> 00:16:27,800
Speaker 1: Do you have any thoughts on the ups the CFO

293
00:16:27,920 --> 00:16:29,600
Speaker 1: announcing his retirement.

294
00:16:30,840 --> 00:16:34,160
Speaker 3: We we don't really have any more detail on that

295
00:16:34,600 --> 00:16:36,680
Speaker 3: apart from what came out yesterday, So I think there

296
00:16:36,680 --> 00:16:38,600
Speaker 3: will be a lot of focus on the next conference

297
00:16:38,640 --> 00:16:40,440
Speaker 3: call to see kind of.

298
00:16:40,400 --> 00:16:44,040
Speaker 2: What the messaging around that is. And again I think

299
00:16:44,080 --> 00:16:45,080
Speaker 2: there's already.

300
00:16:44,760 --> 00:16:46,400
Speaker 3: Going to be a lot of scrutiny on two Q

301
00:16:46,600 --> 00:16:48,960
Speaker 3: numbers given the trajectory of numbers in recent quarters.

302
00:16:49,400 --> 00:16:51,000
Speaker 2: I think there may be a little more now post

303
00:16:51,080 --> 00:16:51,640
Speaker 2: this development.

304
00:16:52,480 --> 00:16:56,040
Speaker 1: Right, So, you know you were mentioning, you know your

305
00:16:56,200 --> 00:16:58,800
Speaker 1: ball on the truckload guys, a little barrassed on the

306
00:16:58,920 --> 00:17:02,640
Speaker 1: LTL guys, there's someone that's been straddling both those spheres.

307
00:17:02,960 --> 00:17:06,080
Speaker 1: You know, you have night Swift, a fantastic truckload carrier

308
00:17:06,080 --> 00:17:08,560
Speaker 1: that got into the LTL business a couple of years ago.

309
00:17:10,000 --> 00:17:12,040
Speaker 1: What are your thoughts on night Swift and what they're

310
00:17:12,080 --> 00:17:13,840
Speaker 1: doing in the LTL space. Do you think it's the

311
00:17:13,920 --> 00:17:14,360
Speaker 1: right move.

312
00:17:15,440 --> 00:17:17,360
Speaker 2: I do think it's the right move. I think it's

313
00:17:17,359 --> 00:17:19,240
Speaker 2: the right move strategically for the company.

314
00:17:19,800 --> 00:17:22,880
Speaker 3: I think there are some investors who kind of are

315
00:17:22,960 --> 00:17:25,320
Speaker 3: looking at it as the right move from some of

316
00:17:25,320 --> 00:17:28,960
Speaker 3: the parts perspective, thinking it will help the multiple. I'm

317
00:17:29,000 --> 00:17:31,560
Speaker 3: not a huge fan of financial engineering as an analyst.

318
00:17:31,800 --> 00:17:34,520
Speaker 3: I don't think the market certainly wakes up overnight and

319
00:17:34,640 --> 00:17:37,719
Speaker 3: decides to give stocks massive multiple re ratings because they

320
00:17:37,800 --> 00:17:40,120
Speaker 3: just kind of entered a new vertical. I think that's

321
00:17:40,160 --> 00:17:42,760
Speaker 3: something a company needs to earn over time, and I

322
00:17:42,800 --> 00:17:45,520
Speaker 3: think that is what night is doing, and that's what

323
00:17:45,560 --> 00:17:48,120
Speaker 3: it will do in the coming years. I think they

324
00:17:48,160 --> 00:17:52,240
Speaker 3: still need to become a full national LTL carrier. They'll

325
00:17:52,320 --> 00:17:56,000
Speaker 3: probably do that in organically, as they've said several times,

326
00:17:56,320 --> 00:17:58,800
Speaker 3: over the next kind of year or two. But I

327
00:17:58,840 --> 00:18:03,560
Speaker 3: think kind of having that diversification between the TL business,

328
00:18:03,600 --> 00:18:07,560
Speaker 3: the LTL business, and intermodal business and logistics business, all of.

329
00:18:07,520 --> 00:18:10,440
Speaker 2: That helps them. Obviously there's a new CEO and new

330
00:18:10,480 --> 00:18:11,200
Speaker 2: CFO there.

331
00:18:11,720 --> 00:18:15,040
Speaker 3: I think they're going back to a back to basics approach,

332
00:18:15,080 --> 00:18:18,520
Speaker 3: kind of focusing on what made them, you know, really

333
00:18:18,560 --> 00:18:22,919
Speaker 3: good at anticipating and staying one step ahead of cycle

334
00:18:22,960 --> 00:18:26,480
Speaker 3: inflections in the past, and so all of that should

335
00:18:26,560 --> 00:18:31,400
Speaker 3: come together, should drive again. Normalized learning's power much higher

336
00:18:31,440 --> 00:18:33,359
Speaker 3: than what's currently priced into the stock in RGO.

337
00:18:33,840 --> 00:18:34,880
Speaker 2: A little bit of a show me.

338
00:18:34,880 --> 00:18:41,280
Speaker 3: Story, given how the downturn unfolded for them relative to.

339
00:18:42,280 --> 00:18:45,119
Speaker 2: Expectations, and given the management change.

340
00:18:45,680 --> 00:18:50,040
Speaker 3: But I think their approach is correct UH and we

341
00:18:50,160 --> 00:18:51,520
Speaker 3: think that you will see the rewards of that in

342
00:18:51,560 --> 00:18:52,160
Speaker 3: the next cite.

343
00:18:53,119 --> 00:18:55,239
Speaker 1: Yeah, I mean I thought that management change is at

344
00:18:55,440 --> 00:18:57,360
Speaker 1: a little bit of a surprise when they announced it.

345
00:18:58,320 --> 00:19:02,159
Speaker 1: Do you think there'd be way down by the US

346
00:19:02,160 --> 00:19:06,520
Speaker 1: Express acquisition? Do you think it's going as you would

347
00:19:06,560 --> 00:19:08,480
Speaker 1: thought it would have gone. I mean, obviously they're they're

348
00:19:08,520 --> 00:19:11,480
Speaker 1: dealing with a very tough freight back backdrop.

349
00:19:12,160 --> 00:19:12,320
Speaker 2: Right.

350
00:19:12,960 --> 00:19:15,199
Speaker 3: Look, I think the market in general is not a

351
00:19:15,280 --> 00:19:20,440
Speaker 3: huge fan of UH transportation M and A. I think

352
00:19:21,000 --> 00:19:22,920
Speaker 3: the t F I u P s l GL deal

353
00:19:23,040 --> 00:19:25,840
Speaker 3: was very well receeen but eventually right. Eventually the market

354
00:19:25,920 --> 00:19:28,480
Speaker 3: is a good a big fan of M and A

355
00:19:28,600 --> 00:19:31,119
Speaker 3: that's done right, But the market tends to be pretty

356
00:19:31,119 --> 00:19:35,160
Speaker 3: skeptical Outdgate. Right, and to your point, the down cycle

357
00:19:35,800 --> 00:19:41,800
Speaker 3: hasn't yet allowed Night to show us what a normalized

358
00:19:41,920 --> 00:19:45,720
Speaker 3: US Express earning level can be. Uh, that's a kind

359
00:19:45,760 --> 00:19:51,040
Speaker 3: of the ups US Express tends to have the most

360
00:19:51,080 --> 00:19:54,479
Speaker 3: torque to the upcycle given the spot right exposure, and

361
00:19:54,560 --> 00:19:57,480
Speaker 3: so given all of the changes that Night has put in.

362
00:19:57,840 --> 00:19:57,959
Speaker 2: Uh.

363
00:19:58,040 --> 00:19:59,960
Speaker 3: And then everything you've told us so far sounds like

364
00:20:00,200 --> 00:20:03,760
Speaker 3: that's going just as well or even slightly better than

365
00:20:03,760 --> 00:20:05,800
Speaker 3: they anticipated when they made the acquisition.

366
00:20:06,600 --> 00:20:08,000
Speaker 2: Again, it should be good for numbers.

367
00:20:08,560 --> 00:20:12,199
Speaker 3: Again, the street's probably gonna wait just for evidence of

368
00:20:12,200 --> 00:20:16,480
Speaker 3: that again part of the showing story there. But so far,

369
00:20:16,600 --> 00:20:19,840
Speaker 3: so good, it appears, from from what management saying in

370
00:20:19,840 --> 00:20:21,960
Speaker 3: from of the integration, we just need to wait for

371
00:20:22,000 --> 00:20:24,159
Speaker 3: the up cycle to show up to see what that

372
00:20:24,200 --> 00:20:25,240
Speaker 3: means the numbers.

373
00:20:25,640 --> 00:20:27,840
Speaker 1: Yeah, I think given their track record, what they're able

374
00:20:27,880 --> 00:20:30,880
Speaker 1: to do with Swift when they acquire them, I think

375
00:20:30,920 --> 00:20:32,479
Speaker 1: there's gonna be a lot of good news coming out

376
00:20:32,480 --> 00:20:37,359
Speaker 1: at Night Swift once the market turns for them. So

377
00:20:37,800 --> 00:20:43,840
Speaker 1: you know, is there is there a particular truckload carrier?

378
00:20:43,960 --> 00:20:45,560
Speaker 1: I know you said you kind of like them. All

379
00:20:45,720 --> 00:20:47,480
Speaker 1: is do you have like a I don't know what

380
00:20:47,520 --> 00:20:49,119
Speaker 1: you guys do Morgan Stanely? Do you have like a

381
00:20:49,160 --> 00:20:52,440
Speaker 1: best idea or like a focus idea, like which which

382
00:20:52,520 --> 00:20:54,480
Speaker 1: is your your top your topic in the space.

383
00:20:54,800 --> 00:20:56,680
Speaker 3: So right now, if you look at a ranking of stocks,

384
00:20:57,480 --> 00:21:01,040
Speaker 3: Night is number one, uh and and we have t

385
00:21:01,280 --> 00:21:06,760
Speaker 3: FI number two, and then Schneider our best warner, and

386
00:21:06,960 --> 00:21:07,760
Speaker 3: ODFL for.

387
00:21:07,800 --> 00:21:11,720
Speaker 1: Them, gotcha? And so you know on tf I, you

388
00:21:11,720 --> 00:21:14,560
Speaker 1: know they've been making a lot of acquisitions. You know,

389
00:21:14,760 --> 00:21:17,159
Speaker 1: they announced that they you know, they own a slug

390
00:21:17,200 --> 00:21:20,159
Speaker 1: of our best. What's behind that? I mean there are

391
00:21:20,160 --> 00:21:24,240
Speaker 1: two obviously teamster or unionized carriers kind of the only

392
00:21:24,280 --> 00:21:27,000
Speaker 1: ones that are left, if you will, what do you

393
00:21:27,040 --> 00:21:27,399
Speaker 1: make of that?

394
00:21:28,680 --> 00:21:31,520
Speaker 3: Look, that is a management team that has a phenomenal

395
00:21:31,640 --> 00:21:35,040
Speaker 3: track record of M and A. If there's any management

396
00:21:35,040 --> 00:21:39,280
Speaker 3: team in our coverage that plays four D chess on

397
00:21:39,320 --> 00:21:42,520
Speaker 3: the M and A side, and there's several steps ahead

398
00:21:42,520 --> 00:21:45,960
Speaker 3: of the market, it's probably t FI. I don't think

399
00:21:45,960 --> 00:21:49,840
Speaker 3: anyone can really question their track record there. I don't

400
00:21:49,840 --> 00:21:51,920
Speaker 3: think I quite understand what happened there.

401
00:21:51,760 --> 00:21:52,440
Speaker 2: With the TFI.

402
00:21:52,560 --> 00:21:56,680
Speaker 3: Our best kind of investment, I think is the best

403
00:21:56,720 --> 00:21:59,600
Speaker 3: word to use for it. But that said, I think

404
00:21:59,600 --> 00:22:02,440
Speaker 3: the manage the team right now is very focused on themselves.

405
00:22:02,960 --> 00:22:06,720
Speaker 3: I think TFI is looking to get their normalized EPs

406
00:22:07,320 --> 00:22:09,040
Speaker 3: back above seven dollars towards eight.

407
00:22:09,800 --> 00:22:13,480
Speaker 2: I think they just did the uh Dasky acquisition and

408
00:22:13,520 --> 00:22:15,440
Speaker 2: so that was a that was a reasonably chunky deal

409
00:22:15,480 --> 00:22:16,560
Speaker 2: for them.

410
00:22:16,840 --> 00:22:19,800
Speaker 3: They're also talking about potentially kind of taking some strategic

411
00:22:19,880 --> 00:22:23,399
Speaker 3: actions or on the portfolio of the business, so a

412
00:22:23,440 --> 00:22:26,879
Speaker 3: bunch of moving parts there without them having to go

413
00:22:26,960 --> 00:22:30,320
Speaker 3: out and do another big deal, which again the market

414
00:22:30,440 --> 00:22:33,720
Speaker 3: may be at least initially skeptical of. So yeah, we

415
00:22:33,840 --> 00:22:35,919
Speaker 3: we think that there's a lot of room for upsided

416
00:22:36,000 --> 00:22:40,960
Speaker 3: numbers there with them digesting the deals they've already done

417
00:22:41,960 --> 00:22:43,240
Speaker 3: and benefiting from.

418
00:22:43,119 --> 00:22:43,920
Speaker 2: The cycle as well.

419
00:22:44,680 --> 00:22:47,200
Speaker 1: Right, Dasky was a very weird company when it was

420
00:22:47,240 --> 00:22:51,560
Speaker 1: a standalone, very decentralized company. I'm assuming TFI is going

421
00:22:51,600 --> 00:22:53,360
Speaker 1: to be able to distract a lot of value from that.

422
00:22:55,119 --> 00:22:59,480
Speaker 3: Not too dissimilar to TFI's own internal structure and the

423
00:22:59,520 --> 00:23:04,480
Speaker 3: way they make uh several acquisitions all year and kind

424
00:23:04,480 --> 00:23:07,120
Speaker 3: of run them as independent entities and keep the old

425
00:23:07,160 --> 00:23:09,199
Speaker 3: management team to share best practices.

426
00:23:09,520 --> 00:23:10,680
Speaker 2: So I do think there will be a lot of

427
00:23:10,720 --> 00:23:11,400
Speaker 2: s energy there.

428
00:23:11,920 --> 00:23:15,200
Speaker 1: All right, Great, so let's talk rails if you will.

429
00:23:15,800 --> 00:23:17,399
Speaker 1: You know, what did you learn coming out of first

430
00:23:17,480 --> 00:23:20,000
Speaker 1: Q earnings about the rest of the year.

431
00:23:21,160 --> 00:23:24,000
Speaker 2: Look, I think rail earnings were relatively uneventful.

432
00:23:24,320 --> 00:23:25,920
Speaker 3: I think that's a good thing or a bad thing,

433
00:23:25,960 --> 00:23:29,080
Speaker 3: depending on kind of what your view on the rails are.

434
00:23:29,640 --> 00:23:31,720
Speaker 3: We are reasonably new for the rails kind of we

435
00:23:31,800 --> 00:23:35,600
Speaker 3: have long been uh, somewhat cautious.

436
00:23:35,160 --> 00:23:37,320
Speaker 2: On the rail's ability to grow.

437
00:23:37,760 --> 00:23:41,399
Speaker 3: Somewhat cautious on the sustainability of PSR games on the

438
00:23:41,640 --> 00:23:43,879
Speaker 3: R side, and we're seeing some of that kind of

439
00:23:43,920 --> 00:23:45,959
Speaker 3: unwind in the last couple of years.

440
00:23:46,720 --> 00:23:47,800
Speaker 2: We have long preferred the.

441
00:23:47,720 --> 00:23:50,439
Speaker 3: Canadian rails over the US rails, just given some of

442
00:23:50,520 --> 00:23:54,320
Speaker 3: their kind of organic growth and markets uh and and

443
00:23:54,359 --> 00:23:57,639
Speaker 3: some of the opportunities that they have that kind of

444
00:23:57,680 --> 00:23:58,640
Speaker 3: maybe stronger than.

445
00:23:58,560 --> 00:24:00,879
Speaker 2: Some of the US rails. That said, some of the

446
00:24:00,960 --> 00:24:03,000
Speaker 2: US rails do have idiosyncretic catas.

447
00:24:03,080 --> 00:24:03,159
Speaker 1: Right.

448
00:24:03,200 --> 00:24:05,520
Speaker 3: Obviously, people are very excited about what Jim Venna can

449
00:24:05,560 --> 00:24:08,119
Speaker 3: do at UNP. People are very excited to see if

450
00:24:08,200 --> 00:24:13,040
Speaker 3: Jeohannrix can deliver growth at the CSX. Obviously, some other

451
00:24:13,119 --> 00:24:16,680
Speaker 3: rails are going through other situations as well. Obviously CP

452
00:24:17,040 --> 00:24:20,800
Speaker 3: case and the growth opportunity there's pretty exciting too, and

453
00:24:20,840 --> 00:24:25,120
Speaker 3: so I think sentiment is and positioning is somewhat mixed

454
00:24:25,200 --> 00:24:28,800
Speaker 3: on the rails. I think people want to see the

455
00:24:28,960 --> 00:24:33,399
Speaker 3: rails pivot to growth. I think it has been a

456
00:24:33,400 --> 00:24:38,040
Speaker 3: little more challenging than people have anticipated, but obviously not

457
00:24:38,160 --> 00:24:40,480
Speaker 3: helped but the cycle, it's gonna be very interesting to

458
00:24:40,480 --> 00:24:44,280
Speaker 3: see where numbers go and where operating leverage turns out

459
00:24:45,080 --> 00:24:48,560
Speaker 3: when the upcycle does come. Our data shows that historically,

460
00:24:48,560 --> 00:24:53,359
Speaker 3: when the upcycle shows up, rail actually loses share to

461
00:24:53,560 --> 00:24:57,720
Speaker 3: trucking because shippers tend to prefer the speed, service and

462
00:24:57,720 --> 00:25:01,919
Speaker 3: flexibility of truck over rail when they're to restock. But

463
00:25:02,600 --> 00:25:06,320
Speaker 3: the rails now have a better service product than they

464
00:25:06,440 --> 00:25:11,280
Speaker 3: did in the last upcycle in twenty twenty one. The

465
00:25:11,400 --> 00:25:14,120
Speaker 3: question is whether they have a better service product than

466
00:25:14,160 --> 00:25:18,119
Speaker 3: the upcycle before that in twenty eighteen, and what the

467
00:25:18,160 --> 00:25:20,480
Speaker 3: net result is in terms of the truck versus share

468
00:25:20,840 --> 00:25:24,960
Speaker 3: shift when the upcycle does come, so lots of moving

469
00:25:25,000 --> 00:25:27,760
Speaker 3: parts of the rails. We still have a little more

470
00:25:27,760 --> 00:25:32,400
Speaker 3: confidence and visibility into the growth at the Canadian rails.

471
00:25:32,840 --> 00:25:34,879
Speaker 3: Both of them should be able to do double digit

472
00:25:35,200 --> 00:25:38,080
Speaker 3: earnings growth in twenty four, definitely in twenty five.

473
00:25:38,760 --> 00:25:40,119
Speaker 2: It's a little bit of a show me story on

474
00:25:40,160 --> 00:25:40,600
Speaker 2: the USID.

475
00:25:42,000 --> 00:25:44,920
Speaker 1: Yeah, and they don't have a great track record of

476
00:25:45,040 --> 00:25:48,280
Speaker 1: keeping that service level up once yumes increase.

477
00:25:49,000 --> 00:25:51,919
Speaker 3: I think that's an excellent point. I think both for

478
00:25:52,080 --> 00:25:55,000
Speaker 3: the ltls and the rails. Again, the management teams have

479
00:25:55,119 --> 00:25:58,719
Speaker 3: focused very hard on service improvements, but they are marketing

480
00:25:58,760 --> 00:26:01,760
Speaker 3: to market service improvements at the bottom of the worst

481
00:26:01,760 --> 00:26:02,920
Speaker 3: downcycle we've ever seen.

482
00:26:03,480 --> 00:26:04,800
Speaker 2: The question is whether they.

483
00:26:04,640 --> 00:26:09,440
Speaker 3: Can keep the service improvements up when volumes do accelerate,

484
00:26:10,480 --> 00:26:13,400
Speaker 3: and whether they can do that without having to bring

485
00:26:13,440 --> 00:26:17,520
Speaker 3: on incrementally more resources that could hurt their all being leverage.

486
00:26:18,600 --> 00:26:23,520
Speaker 1: Right, So it sounds like you're you're most bullish on

487
00:26:23,760 --> 00:26:26,160
Speaker 1: on Canadian Pacific and Canadian National.

488
00:26:27,240 --> 00:26:30,680
Speaker 3: Canadian National is our preferred rail, followed by Maniams.

489
00:26:30,840 --> 00:26:35,000
Speaker 1: That's correct, Okay, cool? Uh yeah, so you know too

490
00:26:35,160 --> 00:26:38,680
Speaker 1: the two US rails, you know, kind of surprise in

491
00:26:38,760 --> 00:26:40,920
Speaker 1: the upside U n P and CSX.

492
00:26:42,760 --> 00:26:45,480
Speaker 4: You know, what do you think what do you think

493
00:26:45,520 --> 00:26:49,040
Speaker 4: that Jim Venna can do at Union Pacific that hasn't

494
00:26:49,040 --> 00:26:53,560
Speaker 4: been done before or beyond what has already been accomplished.

495
00:26:54,640 --> 00:26:57,000
Speaker 3: Look, that's a great question, and I think that's exactly

496
00:26:57,000 --> 00:27:01,040
Speaker 3: the question to ask. I think it's also really encouraging

497
00:27:01,080 --> 00:27:03,399
Speaker 3: that that's exactly the question that Jim Venna himself is

498
00:27:03,400 --> 00:27:06,280
Speaker 3: trying to answer. I think when Jim Venna was named

499
00:27:06,720 --> 00:27:09,840
Speaker 3: CEO of the in Pacific, there were several investors who

500
00:27:09,920 --> 00:27:13,480
Speaker 3: kind of thought of his previous tenure as CEO of

501
00:27:13,600 --> 00:27:15,600
Speaker 3: in Pacific and thought.

502
00:27:15,359 --> 00:27:17,440
Speaker 2: That he was going to go in there and slash

503
00:27:17,520 --> 00:27:20,400
Speaker 2: cost and PSR.

504
00:27:20,080 --> 00:27:26,200
Speaker 3: The railroad UH and deliver very quick, tangible or improvement.

505
00:27:26,840 --> 00:27:29,679
Speaker 3: But instead, I think he was at a Laguna conference

506
00:27:29,760 --> 00:27:33,560
Speaker 3: last year, his first official conference as CEO, and he

507
00:27:33,600 --> 00:27:36,840
Speaker 3: made very clear that his focus was on the service product.

508
00:27:37,600 --> 00:27:41,400
Speaker 2: He made very clear that he may have to even invest.

509
00:27:40,960 --> 00:27:45,960
Speaker 3: In the business to improve the service product and use

510
00:27:46,080 --> 00:27:52,000
Speaker 3: that to drive both operating improvements and volume growth and

511
00:27:52,200 --> 00:27:57,240
Speaker 3: improve over through the top line rather than by cutting cost.

512
00:27:57,320 --> 00:28:00,720
Speaker 3: I think that's exactly the right approach. Again, a little

513
00:28:00,760 --> 00:28:02,800
Speaker 3: bit of TBD A little bit of show me on

514
00:28:02,880 --> 00:28:06,040
Speaker 3: whether they can do it. I don't think that is

515
00:28:08,240 --> 00:28:11,000
Speaker 3: a commentary on union specific itself. I think it's a

516
00:28:11,000 --> 00:28:14,600
Speaker 3: commentary on the transportation cycle. I think it's a commentary

517
00:28:14,640 --> 00:28:17,800
Speaker 3: on Frock versus rail Share. I think it's a commentary

518
00:28:17,840 --> 00:28:22,359
Speaker 3: on competitive dynamics between the railroads, which is probably the

519
00:28:22,400 --> 00:28:24,440
Speaker 3: first time we are going to say that going into

520
00:28:24,440 --> 00:28:27,200
Speaker 3: an upcycle. When you think of the West in particular,

521
00:28:27,840 --> 00:28:31,760
Speaker 3: you have three entities, right, you have the BNJB Hunt combination,

522
00:28:32,520 --> 00:28:35,840
Speaker 3: you have the Falcon service which is CN plus up,

523
00:28:36,520 --> 00:28:39,320
Speaker 3: and then you have CBKC. I think all three entities

524
00:28:39,840 --> 00:28:43,200
Speaker 3: are going to try very aggressively to go after share.

525
00:28:44,080 --> 00:28:46,040
Speaker 2: What does that do to pricing in the industry.

526
00:28:46,440 --> 00:28:48,120
Speaker 3: I think that is a little bit of an open

527
00:28:48,200 --> 00:28:51,520
Speaker 3: question again, a little bit outside the control of all

528
00:28:51,560 --> 00:28:53,080
Speaker 3: three entities, if you will. It's sort of where the

529
00:28:54,360 --> 00:28:59,360
Speaker 3: chips may fall in terms of industry dynamics. But I

530
00:28:59,400 --> 00:29:03,840
Speaker 3: think the attitude and the approach and what Jim Benner

531
00:29:03,920 --> 00:29:07,920
Speaker 3: is doing uh now in the down cycle to kind

532
00:29:07,920 --> 00:29:11,080
Speaker 3: of uh set the stage for how.

533
00:29:11,040 --> 00:29:14,640
Speaker 2: U NP acts and reacts in the upturn is.

534
00:29:14,600 --> 00:29:17,959
Speaker 1: The right for you interview, right, and just for people listening.

535
00:29:18,000 --> 00:29:20,520
Speaker 1: You know, analysts are looking at transportation companies. They look

536
00:29:20,560 --> 00:29:22,920
Speaker 1: at usually look at the operating ratio, which is an

537
00:29:22,960 --> 00:29:26,160
Speaker 1: inverse of an ebit ratio or an ebit margin, So

538
00:29:26,520 --> 00:29:30,280
Speaker 1: an operating ratio. The lower the number, the better. When

539
00:29:30,280 --> 00:29:32,960
Speaker 1: you're modeling like a union specific kind of where do

540
00:29:33,000 --> 00:29:37,959
Speaker 1: you think margins or UH, you know, the operating ratio stabilizes,

541
00:29:38,640 --> 00:29:40,640
Speaker 1: you know, with within basis points.

542
00:29:41,000 --> 00:29:43,440
Speaker 2: Yeah. To be honestly, I don't really focus on the

543
00:29:43,480 --> 00:29:44,520
Speaker 2: operating ratio.

544
00:29:44,240 --> 00:29:47,440
Speaker 3: And I think a lot of our skepticism on the

545
00:29:48,120 --> 00:29:51,280
Speaker 3: US rails towards the end of the last decade, when

546
00:29:51,400 --> 00:29:53,920
Speaker 3: you know everyone is trying to out PSR the other

547
00:29:54,520 --> 00:29:57,880
Speaker 3: UH and trying to target lower and lower PSR ratios,

548
00:29:58,560 --> 00:30:01,640
Speaker 3: operating ratios in our view.

549
00:30:01,640 --> 00:30:03,240
Speaker 2: Was a little bit of a race to the bottom.

550
00:30:03,840 --> 00:30:06,000
Speaker 3: I think any company on the planet can double their

551
00:30:06,040 --> 00:30:09,520
Speaker 3: margins or lower the operating ratio overnight if they wanted to,

552
00:30:10,280 --> 00:30:12,520
Speaker 3: But the net result of the top line and the

553
00:30:12,560 --> 00:30:18,200
Speaker 3: sustainability of that LOWAR is going to be very questionable

554
00:30:18,240 --> 00:30:21,120
Speaker 3: depending on how they do it. My focus is on

555
00:30:21,240 --> 00:30:26,760
Speaker 3: sustainable EBIT growth. I honestly don't care if THEIRAR is

556
00:30:26,880 --> 00:30:31,000
Speaker 3: seventy percent, if you are able to beat or drive

557
00:30:31,120 --> 00:30:35,080
Speaker 3: the highest EBIT growth among your peers. Obviously, that was

558
00:30:35,080 --> 00:30:38,680
Speaker 3: an extraw example that's not going to happen. But I

559
00:30:38,720 --> 00:30:44,240
Speaker 3: think the NORMALIZEDAR for a North American Class one railroad

560
00:30:44,280 --> 00:30:47,720
Speaker 3: is between sixty and sixty five, with the Canadian rails

561
00:30:47,760 --> 00:30:51,160
Speaker 3: probably towards the better end of that range and towards

562
00:30:51,360 --> 00:30:54,640
Speaker 3: and with the US rails probably towards the higher end

563
00:30:54,680 --> 00:31:01,040
Speaker 3: of that range, and you can potentially drive sustainable volume growth,

564
00:31:01,800 --> 00:31:05,760
Speaker 3: get some level of sustainable pricing, take some share from

565
00:31:05,800 --> 00:31:08,760
Speaker 3: truck with that kind of low sixties of war, I

566
00:31:08,760 --> 00:31:13,240
Speaker 3: think trying to target a sub sixty or even a

567
00:31:13,280 --> 00:31:18,760
Speaker 3: fifty five AR is probably going to need unsustainable sacrifices

568
00:31:18,800 --> 00:31:21,200
Speaker 3: in our view. Again, we will also see how the

569
00:31:21,200 --> 00:31:25,520
Speaker 3: market develops. Right in all the North American railroads are

570
00:31:25,560 --> 00:31:29,280
Speaker 3: trying to push for volume growth going into this upcycle.

571
00:31:29,360 --> 00:31:31,040
Speaker 3: That is the first time that has happened in a

572
00:31:31,160 --> 00:31:35,040
Speaker 3: very long time that they've had to work to grow volumes.

573
00:31:35,320 --> 00:31:38,320
Speaker 3: To your point, earlier, the North American railroads haven't had

574
00:31:38,320 --> 00:31:41,440
Speaker 3: a great factor of growing volumes, and it's gonna be

575
00:31:41,480 --> 00:31:43,560
Speaker 3: very interesting to see in the subcycle where they get

576
00:31:43,560 --> 00:31:45,640
Speaker 3: that volume growth easily or they're going to have to

577
00:31:46,200 --> 00:31:48,840
Speaker 3: work a little bit harder for it, against each other

578
00:31:49,440 --> 00:31:50,440
Speaker 3: and against truck.

579
00:31:51,320 --> 00:31:54,200
Speaker 1: Okay, just to switching gears right now. You know your

580
00:31:54,280 --> 00:31:58,240
Speaker 1: your franchise is a little unique amongst them sales side analysts.

581
00:31:58,280 --> 00:32:00,240
Speaker 1: As you cover airlines as well. I think there's only

582
00:32:00,480 --> 00:32:02,880
Speaker 1: like a couple of you guys that do that. I

583
00:32:02,920 --> 00:32:06,520
Speaker 1: personally don't cover airlines, so I'm probably not going to

584
00:32:06,560 --> 00:32:09,320
Speaker 1: ask any smart questions here, But you know, coming out

585
00:32:09,360 --> 00:32:12,560
Speaker 1: of first quarter earnings, what did you learn from the airlines?

586
00:32:13,920 --> 00:32:17,160
Speaker 3: We have been the very polish the airline space since

587
00:32:17,200 --> 00:32:19,080
Speaker 3: the trough of the pandemic, and we continue to be so.

588
00:32:20,000 --> 00:32:23,520
Speaker 2: I think, if anything, we saw very very supportive.

589
00:32:23,160 --> 00:32:26,520
Speaker 3: Commentary from most of the airlines, especially a lot of

590
00:32:26,600 --> 00:32:31,440
Speaker 3: legacy carriers this earning season. DeMont continues to be very strong,

591
00:32:32,360 --> 00:32:37,720
Speaker 3: both domestic and international, especially for premium products. And coming

592
00:32:37,720 --> 00:32:42,040
Speaker 3: into twenty twenty four, our outlook focused on the premiumization

593
00:32:42,160 --> 00:32:44,360
Speaker 3: of the industry, which is kind of a.

594
00:32:44,320 --> 00:32:47,360
Speaker 2: One eighty degree turn from where the industry was going.

595
00:32:48,000 --> 00:32:50,960
Speaker 3: Let's say, you know five ten years ago, you actually

596
00:32:50,960 --> 00:32:54,160
Speaker 3: were seeing commoditization of the industry. You were seeing the

597
00:32:54,480 --> 00:32:58,240
Speaker 3: full service carriers introduced a basic economy fair to try

598
00:32:58,280 --> 00:33:00,960
Speaker 3: and compete with the low cost carriers who are growing

599
00:33:01,080 --> 00:33:03,840
Speaker 3: very quickly. Now you're actually seeing the low cost carriers

600
00:33:03,840 --> 00:33:06,120
Speaker 3: sort of struggling a little bit. Low cost carrier is

601
00:33:06,160 --> 00:33:10,680
Speaker 3: being forced to pull back on capacity, and the legacy

602
00:33:10,720 --> 00:33:14,640
Speaker 3: full service carriers, especially if you can offer a customer

603
00:33:15,320 --> 00:33:19,280
Speaker 3: a credit card and a lounge and premium boarding and

604
00:33:19,480 --> 00:33:22,560
Speaker 3: a first glass cabin. That's where the growth is right,

605
00:33:22,560 --> 00:33:25,320
Speaker 3: So that's good for mix, it's good for pricing across

606
00:33:25,360 --> 00:33:29,160
Speaker 3: the industry. At the same time, you're seeing capacity moderate

607
00:33:29,160 --> 00:33:31,720
Speaker 3: across the board right there has been the biggest concern

608
00:33:31,800 --> 00:33:34,080
Speaker 3: for airline investors over the last two or few decades,

609
00:33:34,120 --> 00:33:37,880
Speaker 3: and have been a good reason. Yes, it's external constraints

610
00:33:37,920 --> 00:33:41,600
Speaker 3: on capacity because of planes and pilots and gates and

611
00:33:41,680 --> 00:33:43,760
Speaker 3: ADC capacity and a bunch of different things.

612
00:33:44,040 --> 00:33:48,160
Speaker 2: But at the end of the day, you have moderated.

613
00:33:47,560 --> 00:33:52,440
Speaker 3: Capacity growth, strong demand, and strong mix, and that's a

614
00:33:52,520 --> 00:33:56,200
Speaker 3: pretty good environment for most of these airlines to grow earnings.

615
00:33:56,680 --> 00:33:59,280
Speaker 3: In twenty twenty four, I think investors have been kind

616
00:33:59,320 --> 00:34:03,560
Speaker 3: of pretty scalical about the sustainability of these trends since

617
00:34:03,600 --> 00:34:05,960
Speaker 3: the bottom of the pandemic, and that's why kind of

618
00:34:05,960 --> 00:34:07,600
Speaker 3: the last three years I've been sort of boom and

619
00:34:07,640 --> 00:34:09,920
Speaker 3: bust in terms of what the stocks have done. But

620
00:34:10,080 --> 00:34:14,000
Speaker 3: we think the kind of outperformance versus the market you've

621
00:34:14,000 --> 00:34:17,200
Speaker 3: seen the airline stock here to day should be sustainable

622
00:34:17,960 --> 00:34:20,080
Speaker 3: if these trends continue through the rest of the year

623
00:34:20,120 --> 00:34:20,719
Speaker 3: any twenty five.

624
00:34:21,520 --> 00:34:24,239
Speaker 1: So you know, when you're not flying private, you know

625
00:34:24,280 --> 00:34:27,480
Speaker 1: when you're flying commercial, you know which airline do you

626
00:34:27,600 --> 00:34:30,080
Speaker 1: think does it the best in terms of service?

627
00:34:31,480 --> 00:34:35,560
Speaker 3: I think you have a very misunderserd view of what

628
00:34:35,600 --> 00:34:42,480
Speaker 3: the average sell side life is like. But look, I

629
00:34:42,520 --> 00:34:46,920
Speaker 3: think all the full service carriers are looking to improve

630
00:34:46,920 --> 00:34:49,359
Speaker 3: their service product. I think even some of the low

631
00:34:49,440 --> 00:34:52,879
Speaker 3: cost carriers. I mean you've heard Southwest c on their

632
00:34:52,880 --> 00:34:57,000
Speaker 3: conference call that they're looking to change their kind of

633
00:34:57,080 --> 00:35:00,959
Speaker 3: you know, seek choice and their boarding preference. You've seen

634
00:35:01,560 --> 00:35:05,520
Speaker 3: a low cost carrier like Frontier introduced a premium product.

635
00:35:06,680 --> 00:35:09,279
Speaker 3: You've seen other kind of low cost airlines talk about

636
00:35:09,360 --> 00:35:10,600
Speaker 3: premium premium manage in.

637
00:35:10,520 --> 00:35:11,320
Speaker 2: The cabin as well.

638
00:35:11,880 --> 00:35:14,400
Speaker 3: So I think the good thing is the planes are

639
00:35:14,440 --> 00:35:17,880
Speaker 3: getting newer, h and the product is getting better.

640
00:35:18,320 --> 00:35:21,120
Speaker 2: Uh, and that should serve everybody better.

641
00:35:21,200 --> 00:35:23,719
Speaker 3: Now, I know when you and I look to go

642
00:35:23,760 --> 00:35:26,800
Speaker 3: book our travel kind of the prices can be pretty

643
00:35:26,840 --> 00:35:29,799
Speaker 3: eye popping now, and the airline industry will tell you

644
00:35:29,840 --> 00:35:33,000
Speaker 3: that on an inflation adjusted basis, air travel is still

645
00:35:33,040 --> 00:35:35,319
Speaker 3: the cheapest it's ever been. But there is a little

646
00:35:35,320 --> 00:35:38,160
Speaker 3: bit of sticker shock the good news that you're active

647
00:35:38,239 --> 00:35:41,439
Speaker 3: lyast getting a much better product for that higher price

648
00:35:41,440 --> 00:35:41,600
Speaker 3: that you.

649
00:35:41,680 --> 00:35:44,400
Speaker 1: Can in Which airline is your favorite in terms of

650
00:35:44,480 --> 00:35:46,720
Speaker 1: stock recommendation From.

651
00:35:46,600 --> 00:35:51,040
Speaker 3: A stock recommendation Delta is a topic followed by Alaska,

652
00:35:51,800 --> 00:35:56,600
Speaker 3: United American and Southwest. Again, we have a preference for

653
00:35:57,440 --> 00:36:01,960
Speaker 3: premium carriers over non premium carriers, although given our overall

654
00:36:02,000 --> 00:36:04,759
Speaker 3: bullishly on the space, we think it's a rising tide

655
00:36:04,800 --> 00:36:05,800
Speaker 3: that should left almost.

656
00:36:05,600 --> 00:36:09,640
Speaker 1: All the boats gotcha and and that the drama over

657
00:36:09,680 --> 00:36:12,400
Speaker 1: at Boeing with you know, doors falling off and and

658
00:36:12,640 --> 00:36:17,560
Speaker 1: and issues with their products. How has that impacted the

659
00:36:17,640 --> 00:36:18,600
Speaker 1: carriers that you cover?

660
00:36:20,200 --> 00:36:21,080
Speaker 2: Look, I think.

661
00:36:22,800 --> 00:36:26,360
Speaker 3: I don't think there's been a material change in demontrends

662
00:36:26,400 --> 00:36:30,840
Speaker 3: as a result, but I think it has made forward

663
00:36:30,880 --> 00:36:35,920
Speaker 3: planning very challenging for the airlines. Obviously, you saw Southwest

664
00:36:36,000 --> 00:36:40,200
Speaker 3: that in late March put them there full your guidance

665
00:36:40,280 --> 00:36:44,280
Speaker 3: only a few weeks after issuing it because primarily driven

666
00:36:44,320 --> 00:36:48,799
Speaker 3: by uncertainty on a new aircraft delivery, You've seeing the

667
00:36:48,800 --> 00:36:51,640
Speaker 3: same thing across multiple carriers. I think the United is

668
00:36:51,680 --> 00:36:53,439
Speaker 3: taking a look at its unit next plan as well,

669
00:36:54,160 --> 00:36:57,760
Speaker 3: and so I think it has made planning a little harder.

670
00:36:58,360 --> 00:37:01,080
Speaker 3: I think it has part margins the near term because

671
00:37:01,440 --> 00:37:04,600
Speaker 3: a lot of the airlines are sort of resourced up

672
00:37:04,800 --> 00:37:07,839
Speaker 3: to fly that higher capacity that they now don't have.

673
00:37:08,760 --> 00:37:11,520
Speaker 3: But I think they're obviously working through it with Boeing

674
00:37:11,560 --> 00:37:13,880
Speaker 3: as well, and it's something that should resolve it.

675
00:37:13,920 --> 00:37:18,359
Speaker 1: So full time, gotcha, and just you know totally, you know,

676
00:37:18,560 --> 00:37:21,880
Speaker 1: a different kind of question. You know, you've been with

677
00:37:21,920 --> 00:37:24,520
Speaker 1: Morgan Stanley for quite some time, you know, being a

678
00:37:24,560 --> 00:37:27,359
Speaker 1: senior analyst, I think since two thousand and nine. How

679
00:37:27,360 --> 00:37:29,080
Speaker 1: did you get into the industry and how did you

680
00:37:29,120 --> 00:37:32,000
Speaker 1: know sell side research was something that you wanted to pursue.

681
00:37:33,040 --> 00:37:37,439
Speaker 2: I actually got into this in a very unique way.

682
00:37:38,520 --> 00:37:42,600
Speaker 3: As a kid, I loved cars, and I kind of

683
00:37:42,800 --> 00:37:47,480
Speaker 3: determined fairly early in life that I wanted to have

684
00:37:47,520 --> 00:37:51,200
Speaker 3: a career somewhat associated with the auto industry.

685
00:37:51,800 --> 00:37:54,840
Speaker 2: But I'm not an engineer. I'm an accountant.

686
00:37:54,920 --> 00:37:58,000
Speaker 3: And a finance grind by training, and so that sort

687
00:37:58,040 --> 00:38:02,320
Speaker 3: of limited my opportunities working in the auto industry. I

688
00:38:02,400 --> 00:38:05,719
Speaker 3: basically could get into an auto company doing finance or

689
00:38:06,920 --> 00:38:11,879
Speaker 3: I was reading a Current Driver magazine once and I

690
00:38:11,920 --> 00:38:16,040
Speaker 3: saw then quote Steve Goersky, who was Morgan Stanley's auto

691
00:38:16,080 --> 00:38:17,120
Speaker 3: analyst at the time.

692
00:38:17,520 --> 00:38:20,200
Speaker 2: I'm like, Oh, that's a pretty cool job, and let

693
00:38:20,239 --> 00:38:21,960
Speaker 2: me go try and get that. Uh.

694
00:38:22,239 --> 00:38:25,439
Speaker 3: And I don't know if it was good fortune or

695
00:38:25,560 --> 00:38:29,520
Speaker 3: I sort of you know, manifested it, but I ended

696
00:38:29,560 --> 00:38:32,560
Speaker 3: up getting a job at Morgan Stanley. Steve Gorsky hired

697
00:38:32,600 --> 00:38:34,680
Speaker 3: me to be part of the udos team at Morgan

698
00:38:34,719 --> 00:38:37,960
Speaker 3: Stanley h and I got the opportunity to be a

699
00:38:38,040 --> 00:38:42,399
Speaker 3: lead auto analyst at MS. So I covered autos here

700
00:38:42,440 --> 00:38:46,520
Speaker 3: for twelve years and then kind of diversified to cover

701
00:38:46,640 --> 00:38:50,640
Speaker 3: transports and airlines. So a little bit of a different

702
00:38:50,760 --> 00:38:53,080
Speaker 3: career path than I think most of our self cierce industry.

703
00:38:53,560 --> 00:38:55,239
Speaker 1: Right, And what's the one thing you like most about

704
00:38:55,320 --> 00:38:56,360
Speaker 1: being a sell side analyst?

705
00:38:57,360 --> 00:38:58,560
Speaker 2: Oh?

706
00:38:59,000 --> 00:39:03,239
Speaker 3: I think research is one of the few jobs on

707
00:39:03,280 --> 00:39:07,600
Speaker 3: Wall Street or probably in any industry anywhere that combines

708
00:39:08,760 --> 00:39:13,000
Speaker 3: creativity and analytical rigor, like you can sit and write

709
00:39:13,000 --> 00:39:15,040
Speaker 3: a one hundred page report on a big theme like

710
00:39:15,040 --> 00:39:18,960
Speaker 3: you know, autonomous cars or parcel disruption while you're working

711
00:39:19,000 --> 00:39:21,160
Speaker 3: on a model, trying to figure out kind of next

712
00:39:21,320 --> 00:39:24,640
Speaker 3: quarter's earnings.

713
00:39:23,640 --> 00:39:25,400
Speaker 2: And also the people side of it.

714
00:39:25,480 --> 00:39:28,160
Speaker 3: Right again, you can sit behind your computer and again

715
00:39:28,200 --> 00:39:30,120
Speaker 3: write a hundred page report, kind of not talking to

716
00:39:30,200 --> 00:39:32,200
Speaker 3: anyone for a week, but at the same time you're

717
00:39:32,239 --> 00:39:33,880
Speaker 3: going out and meeting a lot of investors.

718
00:39:34,160 --> 00:39:37,719
Speaker 2: You're meeting very very smart people every day and kind

719
00:39:37,719 --> 00:39:39,200
Speaker 2: of exchanging ideas with them.

720
00:39:39,680 --> 00:39:41,440
Speaker 3: I think there are very few jobs that kind of

721
00:39:42,400 --> 00:39:46,040
Speaker 3: check as many boxes as being on the outside.

722
00:39:46,640 --> 00:39:50,720
Speaker 1: All right, great, well, Rovin, I really really appreciate your time.

723
00:39:51,200 --> 00:39:53,719
Speaker 1: This is a great conversation and I learned a lot,

724
00:39:53,760 --> 00:39:54,359
Speaker 1: So thank you.

725
00:39:55,600 --> 00:39:57,239
Speaker 2: Thanksully, Thanks for having me. This is fun.

726
00:39:57,800 --> 00:40:00,440
Speaker 1: Yeah, and thanks for tuning in. If you like the episode,

727
00:40:00,440 --> 00:40:03,520
Speaker 1: please subscribe and leave a review. We've lined up a

728
00:40:03,560 --> 00:40:05,960
Speaker 1: great number of guests for the podcast. Check back to

729
00:40:06,000 --> 00:40:10,320
Speaker 1: hear conversations with C suite executives, shippers, regulators, and decision

730
00:40:10,360 --> 00:40:13,560
Speaker 1: makers within the freight markets. Also, you have any ideas

731
00:40:13,560 --> 00:40:15,920
Speaker 1: for a future episode, please hit me up on the

732
00:40:16,040 --> 00:40:19,440
Speaker 1: terminal or on Twitter at Logistics League. Thanks a lot everyone,

733
00:40:19,480 --> 00:40:19,960
Speaker 1: and take care