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Covenant Logistics Group, Inc. (CVLG) Q4 2021 Earnings Call Transcript

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Covenant Logistics Group, Inc. (NASDAQ: CVLG)
Q4 2021 Earnings Call
Jan 27, 2022, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Operator

Welcome to today's Covenant Logistics Group Q4 '21 earnings release conference call. Our host for today's call is Joey Hogan. At this time, all participants will be in a listen-only mode. Later, we will conduct a question-and-answer session. I would now like to turn the call over to your host.

Mr. Hogan, you may begin.

Joey Hogan -- Co-President and Chief Administrative Officer

Thanks, Ross, and good morning, everyone. Welcome to our fourth quarter 2021 conference call. As a reminder for everyone, the conference call will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements.

Please review our disclosures and our filings with the SEC, including, without limitation, the risk factors section and our most recent Form 10-K and our current year Form 10-Qs. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances. A copy of our prepared comments and additional financial information is available on our new website at www.covenantlogistics.com, in the investors tab. I'm joined on our call today by our senior executive vice president and COO, Paul Bunn, and our chief accounting officer, Tripp Grant.

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David Parker is not able to join us this morning for the call. 2021 was a record year by Covenant in many ways. Revenue, our minority investment in sales, earnings per share and return on invested capital, all achieved record results. Our team battled through the continued effects of the pandemic, the most difficult driver market in history, huge growth in our managed freight division and leadership changes early in the year.

We pushed through some large pay adjustments across the enterprise in all conditions, warehouse teammates, and our office staff [Inaudible] and over the last year, and we're excited to tackle [Inaudible]. The model transformation that we started five years ago is really starting to prove out with continued opportunities. And our results for 2021 are directly due to the Covenant community, its hard work and its commitment to each other and our customers. In summary, the key highlights of the quarter were freight revenue grew 27% to $267 million compared to the 2020 quarter.

Our asset-based truckload group freight revenue grew 9% versus the fourth quarter of '20 with 186 less trucks. Our less asset-intensive managed freight and warehouse segments grew a combined 56% compared to the fourth quarter of 2020. On the safety side, we produced another solid quarter with our DOT accident rate per mile being 19% below the year ago period, the second lowest fourth quarter on record, and 2021 for the year finished the best year on record. Our TEL leasing company investment produced a record quarter and year, contributing an additional $0.10 per share versus the year ago period.

We finished the year with an all-time low leverage ratio of 0.72, an all-time low net debt to total capitalization ratio of 15.8% and an all-time high return on invested capital of 13%. Additionally, we're very excited to announce the commencement of a quarterly cash dividend program. Work over the last few years to deleverage the company and improve our operating model to produce more consistent results led our board to this approval. Net indebtedness decreased by almost $240 million over the last two years, with the potential to be close to debt free by the end of 2022.

The goal is to yield 1% on an annualized basis. And at our current share count will impact cash by about $1 million per quarter. We continue to evaluate a full range of capital allocation alternatives to effectively deploy our cash. Now, I'm going to turn it over to Paul to provide a little bit more color on the items affecting the business units.

Paul Bunn -- Chief Operating Officer

Thanks, Joey. For the quarter, our managed freight division was our largest division, both in terms of revenue and operating profit. Its revenue for the quarter grew 67% and achieved record revenue of $321 million for 2021. Managed freight's favorable results for the quarter were primarily attributable to the robust freight market, executing on various spot rate opportunities and handling overflow freight from both expedited and dedicated truckload operations.

This division remains a major strategic growth opportunity as we have invested in more operations and sales resources into the division to continue its momentum into the future. We remain excited about this leadership team and the prospects going forward. The expedited division's revenue grew by 13% versus the year ago quarter due to both strong rate and utilization improvements. We did invest in our driving workforce during the quarter with a significant pay increase, which after several quarters of sequential decline, we were able to hold the fleet size versus the third quarter and increase our seated truck count.

The driver pay investment was our third pay increase for the year and has given us momentum heading into 2022. We are very thankful that our customers value our service and supported our driving things in this unprecedented time. The dedicated division had a good quarter and achieved nice sequential and year-over-year margin improvement despite some unusual corporate expenses that hit both expedited and dedicated in the quarter. Had it not been for the 250 basis points of unusual expenses in the quarter, dedicated would have hit the mid-90s OR target set at the beginning of the year.

Revenue per truck continues to improve as we push through our improvement plan with further rationalization coming in the first half. The 21% revenue per truck improvement in the quarter was a significant contributor to the margin improvement. The pipeline for this division is very encouraging as we start 2022. The warehouse division grew 11% due to the impact of new business late in the third quarter and pricing to offset cost increases.

Operating income was negatively impacted due to higher labor costs as it relates to the tight labor market and escalating real estate costs for newly leased facilities. We remain committed to our current asset-light model and continue to pursue opportunities to accelerate our growth. We are excited about this year as the operating model continues to be refined. We expect the good freight environment for the first half of the year with some moderation in the second half.

Cost pressures will be meaningful in terms of wages, equipment and over-the-road repairs for the year, but the market should allow us to pass the majority of those increases through to our customers in the form of rate increases. The first few weeks of the year were tough from a working for truck percentage as many of our drivers caught the virus after the holidays, but the fleet working percentage has improved greatly in recent days, and we are especially pleased with where the team count is today. The dedicated improvement plan continues to make progress, and we are confident that we will continue to improve the margins to high-single digits in 2022. Net indebtedness is already dropping [Inaudible] generate free cash in 2022, providing further opportunities to deploy cash for growth and/or share repurchases.

Thank you for your time. We'll now open up the call for any questions.

Questions & Answers:


Operator

[Operator instructions] Our first question comes from Scott Group from Wolfe Research. Please go ahead, Scott.

Scott Group -- Wolfe Research -- Analyst

Hey, thanks. Good morning, guys.

Joey Hogan -- Co-President and Chief Administrative Officer

Good morning

Scott Group -- Wolfe Research -- Analyst

So in the earnings release, you had some comment in the outlook section about operating results similar. And maybe just can you give a little bit more color? I wasn't sure if that was a first half comment, a full year comment. If that's -- you're talking about earnings. Just any more color there would be great.

Joey Hogan -- Co-President and Chief Administrative Officer

Yeah. I think, Scott, what we were trying to do -- so if we were confusing, I apologize for that. But we feel -- based on what we see today, we feel that the first half earnings will approximate first half of 2021 or higher. So we feel good between the combination of commitments from the customers and kind of what we see in the market.

And so, that's what we intended to do. Second half from a modeling and/or planning purpose, we just -- the fed continues to do the job, and we're anticipating some slowdown in the second half. But we were saying we felt we could do at least what we did in '21 from an earnings perspective in the first half of '22.

Scott Group -- Wolfe Research -- Analyst

OK. Great. You gave some helpful color on dedicated margins. I'm curious how you're thinking about the expedited margins this year?

Paul Bunn -- Chief Operating Officer

Yeah. Hey, Scott, this is Paul. I think expedited margins will probably approximate '21 for '22. I think you could see margins -- Q1 is starting off really strong.

Dedicated and expedited, we've done a good job getting out of the gate on rate increases early in the year. And so, I think you see margins maybe a little stronger. And as costs continue to pile up, they could dilute a little bit. But expedited specifically to your question, I think, will be similar margins to what you saw in '21 on a full year basis

Scott Group -- Wolfe Research -- Analyst

Right. So maybe if I just take those two things combined. So if expedited is similar and dedicated's got a lot of improvement, I would think there would be some potential for more -- for earnings growth, better than flattish. So maybe just tie those two together.

Paul Bunn -- Chief Operating Officer

I think in warehousing, you should see some small improvement there, too. The pipeline is pretty decent. It's all going to come down to managed trans in the overall freight market. If things stay really tight and managed trans as a year like it had this year, then we'll make more money in '22 than we made in '21.

If things soften up a little bit in the second half of the year, you saw the large contribution that managed trans had, especially in the third and fourth quarters, I think that's where we don't have the full visibility. And so, that's what could determine are we a little bit under this year's earnings or a little bit over this year's earnings is where managed trans ends up in the second half of the year.

Scott Group -- Wolfe Research -- Analyst

Makes sense. And just lastly, just from a pricing standpoint, what you guys are seeing to start the year.

Joey Hogan -- Co-President and Chief Administrative Officer

Yeah. Low single -- high-single digits to low-double digits from the rate standpoint.

Scott Group -- Wolfe Research -- Analyst

OK. Thank you, guys. Appreciate it.

Joey Hogan -- Co-President and Chief Administrative Officer

All right.

Operator

Our next question comes from Jason Seidl from Cowen. Please go ahead, Jason.

Jason Seidl -- Cowen and Company -- Analyst

Thank you, operator. Good morning, gentlemen. And my best to David who's not on the call. I wanted to talk a little bit about the pricing in your script that you have out there online.

You talked about how the contracts are elongating. Excluding dedicated, can you give us a sense of sort of what percentage of your contracts now are over a year?

Joey Hogan -- Co-President and Chief Administrative Officer

Yeah. I'll speak -- as you know, managed trans, there's not a lot of stuff that's over a year. It's pretty short-term opportunities. And as we've said before, that's where we play in the spot market.

On the expedited, we're probably somewhere in that 40% to 50% of contracts that are multiyear in nature right now.

Jason Seidl -- Cowen and Company -- Analyst

OK. That's helpful. I wanted to switch back to the dedicated side. I know you said if you exclude some of those unusual costs, which I'm assuming aren't going to happen again, reoccur in '22, you're about 95% from the end of the year.

What sort of market do we need to get this business down to that low 90% level?

Paul Bunn -- Chief Operating Officer

Yeah. I mean, I think some of it's market, and some of it's time. But if you look at on an adjusted basis, Jason, with year to 95%, and the thing have been running 100% or 101%, so we get improvement through there. We continue the weed and feed process.

And you'll remember, we entered some contracts and right on the hills of COVID and had some contracts that were longer term in nature that we've gotten the increases we could get, but they're still subpart of market. And as we roll out of those in the first half and second half of the year and either replace those with a business that is, let's say, more market rate business and has more of a fixed variable pricing margin or renegotiate those contracts to be more, I'll call it, true DCC with fixed variable, you're going to continue to see that improvement. So I agree, I'm going to err on about a 95% run rate for Q4. And I think you're going to continue to see that heat down a little bit each quarter for the balance of this year.

And so, are we going to be at a 92% OR at the end of Q1? No. Do we hope to be there by the end of the year, first part of '23? Yes.

Jason Seidl -- Cowen and Company -- Analyst

Well, the progress is definitely there. I didn't want to insinuate it wasn't.

Paul Bunn -- Chief Operating Officer

Yeah. Yeah.

Jason Seidl -- Cowen and Company -- Analyst

You talked a little bit about the contracts that weren't really true DCC. What percentage of the contracts that you have right now would you consider problematic?

Paul Bunn -- Chief Operating Officer

Yeah. 30%, 40% of the contracts, and there's a -- half of those come up between now and August.

Jason Seidl -- Cowen and Company -- Analyst

OK. That's a good sign, for sure. Well, fantastic, gentlemen. Those are my few, and I'll turn it over to a colleague.

Thank you for the time, as always.

Paul Bunn -- Chief Operating Officer

Thanks, Jason.

Joey Hogan -- Co-President and Chief Administrative Officer

Thanks, Jason

Operator

Our next question comes from Jack Atkins from Stephens. Please go ahead, Jack.

Jack Atkins -- Stephens Inc. -- Analyst

Great. Good morning, everybody. Thanks for taking my questions.

Joey Hogan -- Co-President and Chief Administrative Officer

Good morning.

Paul Bunn -- Chief Operating Officer

Hey, Jack. Good morning

Jack Atkins -- Stephens Inc. -- Analyst

So I guess maybe to start, I'd like to ask maybe a two-part question. First, just Joey, Paul, Tripp, whoever wants to take it. What are you seeing in the equipment market, both for trucks and trailers? And if you could maybe think -- help us think through how that's going to change if it changes at all over the course of 2022? And then I guess kind of as it relates to Covenant specifically, within your equipment leasing investment TEL, it's obviously a very strong contributor to the bottom line. Can you help us think through how that should maybe trend as we look forward?

Joey Hogan -- Co-President and Chief Administrative Officer

Yeah. We did have some trucks pushed from '21 into '22. It was a small amount, about 50 trucks that pushed into first part of '22. We'll have those by March.

So they're satisfying the commitment from '21. Our '22 initial order, as well as everybody is what you wanted, you didn't get. You got a percentage of that for '22. We've worked around that from various means.

So we got about 70% of our requested order for '22. Now, for us, I don't say that's OK, but we're trying to pull some equipment forward that we're having problems with that we wanted to kind of transition to another manufacturer inside of our suppliers. So for us, it's OK. Trailer market, the pricing is up pretty meaningfully on the truck side.

But I would say it's -- I would call it manageable. The trailer side is a different ball game. If you go look at our trailer capacity, it's pretty concentrated in a few years. And so, our big years to start trading trailers will start in 2023 and will go on in five or six years.

So we tried to start -- we tried to get an order placed for '22 and got 0 to try to start moving that schedule forward to smooth out that concentrated purchase cycle. We got 0. I mean, not even a quote of pricing. I mean, we're not a huge fleet, but we're not a small fleet.

And so, basically from all the suppliers, look, we can't commit anything, and we'll talk to you late in '22 for '23 and beyond. We've even tried to float a five-year commitment, five-year committed capacity. So again, no biters, but folks willing to talk in the end of '22. Pricing in that market from what I understand is up significant, just significant.

And so, there's various theories and reasons why, but it's up significantly. TEL, on the other hand, our investment in sales it's in this business. It's in the truck, trailer sale, resale, leasing business. And obviously, it had a good record actually [Inaudible], and I believe strongly will have another record '22.

They were able to get some trailer capacity. That's their business. They're paying about 25%-ish more, and they will pay more for that in '22. Reefer pricing, I can't even say the number, and I won't say the number because it's almost ridiculous what I'm hearing, what he's having to pay for reefer.

On the other hand, the pricing he's been able to get out in the market to lease that equipment is unbelievable also. So TEL's doing really well. I mean, the $5 million-ish number in the fourth quarter that they contributed to our results, some of that was gain on sale. They're very opportunistic buyer also in the marketplace, and they do a great job.

So -- but it's definitely going to be higher than what we've seen over the last year or so in '22. So they're going to have a really good year. We buy trucks and trailers together. Between the two of us, we have a pretty good-sized fleet between trucks and trailers.

We chose to let them have the trailer capacity because they had opportunities this year, and we'll -- I mean, the two of us will sort it out in '23 for going forward. But equipment market is real tight, and we did get a little risk on other note, our trucks that were pushed in the fourth quarter into the first quarter are being delivered slightly early, which is a blessing versus over the last year or so and the schedule that's been committed to [Inaudbile] schedule and no further delays that we know of.

Paul Bunn -- Chief Operating Officer

And just to add on to Joey's point about kind of the size, give you some context and -- 2021 was a very, very light year from a capex perspective. Obviously, we've talked about it throughout the quarters and had a little bit of a bump up with some deliveries in Q4 of 2021. But over the course of the year, we had, I think, net proceeds of $10 million or such rounded. As we think back to 2022, just to give you kind of an idea of the scale of what -- how it will look with the equipment purchases, even though it wasn't as much as we had ordered with the cutbacks and assuming things -- well, we're looking at a range of about $50 million to $70 million of net capex for the year.

So there's quite a big swing as we try to normalize our capex flow in terms of maintenance capex and get it back to a normal course, a lot of which stems back to what we did in 2020 with the downsizing of the shrink and -- or downsizing of the fleet and shrinking it and selling a bunch of older equipment. It naturally made 2021 like capex here. So you're going to see a little bit of a rebound in 2022 and probably even a bigger rebound in 2023 as trailers come into the equation.

Jack Atkins -- Stephens Inc. -- Analyst

OK Got it. Got it. That's helpful. And I guess maybe thinking bigger picture, Joey, going back to your comments in your prepared remarks around the market and sort of the outlook for the market and how it could unfold this year.

It doesn't seem like there's going to be an influx of capacity coming just because of the items you just talked about on the equipment side. When you kind of think about the idea of the second half maybe being a little bit more of a moderation in terms of the marketplace versus the first half, is that because of your outlook for the economy, just concerned about the fed? Or is it something that your customers are maybe telling you about their business in the second half of the year?

Joey Hogan -- Co-President and Chief Administrative Officer

Just the economy. I mean, as when the fed starts raising rates, it's intending to slow the economy down. And so, if they do, there's a lot of rhetoric around that. Is it four? Is it eight? Is it three? But history shows that it's impactful.

Now, the question is how big and when do we start seeing it, but we certainly know it's within six months or so. That's what history shows. Now, if this is different because of drug and alcohol clearinghouse, because of infrastructure spending, which is a natural competitor to our drivers, the construction market in general, is hot and low inventories. Inventories, the sales is still very low.

Is there some things that overcome that to divide that impact into the economy that pushes it out or the freight side is minimal impact because of that? I find that hard to believe, but we'll see. So that's just that. No, there's no indication from customers regarding any anticipated slowdown. No, nobody is talking about peak either, but it's way too early to be talking about peak.

Jack Atkins -- Stephens Inc. -- Analyst

Got it. No, that sounds good. I guess, the question is, have we even stopped with peak yet? Maybe, maybe not. But, I guess, last question, and I'll turn it over.

But it's on capital allocation. Obviously, there have been some just significant improvements to the balance sheet over the course of the last couple of years because of the actions that you guys have taken. Business is hopefully more profitable through cycles, but I think that's -- I think folks are looking forward to that. The stock is kind of back down to the levels where you guys sort of initiated the Dutch tender last year, you initiated the quarterly dividend.

Help us think through ways to -- that you're kind of contemplating returning capital to shareholders outside of the quarterly dividend. Would you look to maybe get more aggressive on open market purchases of the stock just given that the Dutch tender really didn't yield the type of reduction in share count that maybe you were initially intending. Could you maybe kind of walk us through some of the capital allocation strategies just given the strength of the balance sheet here?

Joey Hogan -- Co-President and Chief Administrative Officer

I think, a, let's go back to the expectations for cash generation for the year. So it depends on whatever modeling that everybody has as far as what they expect EBITDA to contribute to '22. We feel that even with 50 to 70 million of net capex, we will still generate cash for 2022. The dividend relatively speaking, the cash impact of that is small.

It's around $1 million a quarter. And we felt there was not only a commitment but a signal to the market and our shareholders that it's time, just because of where we are. No. 2, what are we going to do with the cash generated this year and what we see into the future? I would say, Jack, it's all of that.

We firmly and fully intended to execute the Dutch Auction in full. Some people would say that we executed it without having to use the cash. Our intent was to use the cash. People that ran away from us because we just -- I think we kind of woke the market up and tell them it's going to buy this too cheap, and I'm not going to sell it at this price.

And [Inaudible] because it ran much higher than what our, generous at the time of announcement, offer based on [Inaudible]. So it ran away from us. And our intention was to execute that. So as we move forward, obviously, Jack, I can't -- I mean, we're looking at M&A.

Our last one of size was 2018. And so, we feel the model's at a place that our team can focus and execute, another acquisition, size, I don't know. I mean, there are some things, there's some strategic smaller ones that make sense that are good complements, and there's some larger ones that are larger, similar to what the Landair acquisition was back in '18. So we're in the market looking.

We're in the market looking further, whether it's normal share repurchases, Dutches, whatever. So we're going to move and the dividend was a start, if you will, and we'll see how it plays out. But we're excited about -- it needs to be in a cash generation mode because it gives you a lot of opportunities, and we're going to try to be diligent about deploying that cash in the right means.

Jack Atkins -- Stephens Inc. -- Analyst

OK. That's great. Thanks so much.

Joey Hogan -- Co-President and Chief Administrative Officer

Thanks, Jack.

Operator

Our next question comes from Bert Subin from Stifel. Please go ahead, Bert.

Bert Subin -- Stifel Financial Corp. -- Analyst

Hey. Good morning, everyone.

Joey Hogan -- Co-President and Chief Administrative Officer

Hey, Bert.

Bert Subin -- Stifel Financial Corp. -- Analyst

Joey, just a follow-up to your comments there. What is your view on inventory restocking? It seems like there's been some concerns that perhaps retail sales start to moderate through the year, inventory sales ratio still at all-time lows. Are you noting any actions to rebuild inventories? And do you think that could be an offsetting tailwind if the economy does moderate from high levels in upcoming quarters?

Paul Bunn -- Chief Operating Officer

It's Paul, Bert. We met with a large customer yesterday that carries a lot of inventory. And yeah, I think that restocking and carrying more inventories, building more warehouses, I mean, this company basically said, everybody knows what they need to do post COVID, and which is keep more inventory domestically. They've just got to get there, and it's just been a fire fight since COVID.

And again, that's a poll of one. But if it's a really large company that carries a lot of inventory and their comment was that that has not happened yet.

Joey Hogan -- Co-President and Chief Administrative Officer

Oh, yeah.

Paul Bunn -- Chief Operating Officer

But they are making plans every day to try to do that, to increase inventory levels domestically and...

Joey Hogan -- Co-President and Chief Administrative Officer

You got to close it in two phases. I think whichever your favorite stores are as we walk through the stores as we see the empty shelves start filling, whenever it gets to fill, I think it will be moving into the next phase, which is how do I fill the warehouse? Or do I add warehouses? And I think that the general whether you read it or hear it directly, I think people are saying, "OK, we got too skinny, obviously." Now, pandemic is once every 100 years, we hope. We've got one that's lasting a while. But even besides that, I think the market in general feels that we were too skinny.

And then, I think to your point, Bert, is depending on that view, it could delay -- as I was saying earlier, it could delay that impact to the freight side of the economy as people are trying to push through that. And this depends on rates. Some CFOs doing the plus and minus on cost of capital and when does it make sense. I'd rather have more inventory than empty shelves and the cost of capital is still pretty cheap.

They can move a lot and it's still cheap, relatively speaking.

That makes sense. Thanks for the commentary there. Paul, my fellow national champion, my follow-up questions for you. How good do you think the improvement in dedicated would have to be to more than offset what you're expecting to be, it sounds like, some normalization of managed freight? Like can you just give us like a rough order of magnitude perhaps on OR improvement?

Paul Bunn -- Chief Operating Officer

Yeah. To offset it, dedicated would have to be -- it would have to be in the 80s to get anywhere close once on a longer-term basis. So I don't think dedicated will get there this year, but I don't think managed trans will drop of that much. I mean, it's going to drop probably in the second half of the year.

So to fully offset it, it had to be in the 80s, probably.

Bert Subin -- Stifel Financial Corp. -- Analyst

OK, great. [Inaudible]

Joey Hogan -- Co-President and Chief Administrative Officer

[Inaudible]

Operator

Our next question comes from Bruce Olephant from Oppenheimer. Please go ahead, Bruce.

Bruce Olephant -- Oppenheimer and Company -- Analyst

Thank you. Congratulations on an excellent year. The one thing that -- I know it was just covered, but I have to mention it. The one thing that's a little bit disturbing is that back in August, the company realized the stock was extremely undervalued, and you decided to have a Dutch auction, put $40 million to purchase, roughly 1.7 million shares, which represented about 12% of the outstanding shares.

And that sort of sent a signal to Wall Street and investors that you thought your stock was extremely undervalued. And now, with the stock where it is today, selling at less than seven times earnings, it's sort of disappointing that what we got was a small dividend for shareholders rather than management realizing some kind of buyback. It's almost like only 80,000 shares got tended under Dutch auction. We never really raised the price, which we could have done and it's sort of disappointing that there's no action taken right now.

Joey Hogan -- Co-President and Chief Administrative Officer

Yeah, it's a fair question, Bruce. As I said earlier, we fully intended to do that, to spend that cash. Arguably, we still have that cash. And there are several things that go into the decision and the actions and the timing, and we're still very interested and feel that whether it's seven times earnings or 1.3 times tangible book value, we agree with you, and we're working diligently to, as I said earlier, to deploy our cash to the best means that we can.

Bruce Olephant -- Oppenheimer and Company -- Analyst

OK. Thank you. I hope something is done.

Operator

And we have a follow-up question from Bert Subin. Please go ahead, Bert.

Bert Subin -- Stifel Financial Corp. -- Analyst

Hey. Sorry, I got sort of cut off there at the end. I just had a quick follow-up to an earlier question. You guys said high-single to low-double-digit rate increases.

Can you break that out among dedicated and expedited? Thank you.

Paul Bunn -- Chief Operating Officer

Yeah. It's probably -- I would say they're pretty similar, Mark. I mean, there's not a ton of differentiation between the two. You've probably got expedited probably a little higher on the rate side.

They're probably in the low double digits and dedicated is probably in the high single digits, and both business units are about the same size from a revenue perspective. And so, if one is a 11 or 12 or 13, the other one is eight or nine.

Bert Subin -- Stifel Financial Corp. -- Analyst

OK. That was helpful. Thanks, Paul.

Operator

And gentlemen, at this time, there are no further questions.

Joey Hogan -- Co-President and Chief Administrative Officer

OK. Well, thanks, everybody, for being on the call. Thank you for your questions. Bruce, again, fair question, and we agree with you, so -- but hang tight.

So look forward to meeting with you all and visiting with you after the first quarter. Thanks a lot.

Operator

[Operator signoff]

Duration: 36 minutes

Call participants:

Joey Hogan -- Co-President and Chief Administrative Officer

Paul Bunn -- Chief Operating Officer

Scott Group -- Wolfe Research -- Analyst

Jason Seidl -- Cowen and Company -- Analyst

Jack Atkins -- Stephens Inc. -- Analyst

Bert Subin -- Stifel Financial Corp. -- Analyst

Bruce Olephant -- Oppenheimer and Company -- Analyst

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