Good morning. My name is Kurt, and I will be your conference operator today. At this time, I would like to welcome everyone to the Knight Transportation first quarter 2014 earnings call. (Operator Instructions) Speakers for today's call will be Kevin Knight, Chairman and CEO; Dave Jackson, President; and Adam Miller, CFO. Mr. Miller, the meeting is now yours.

Thank you, Kurt, appreciate that. Good afternoon, everyone, and thank you for joining the call today. We have slides to accompany this call, posted on our website at investors.knighttrans.com/events. Our call is scheduled to go until 5:30 PM Eastern Time. Following our commentary, we hope to answer as many questions as time will allow. If we're not able to get to your question due to time restrictions, you may call 602-606-6349 following the call and we will return your call. Again that number is 602-606-6349. The rules for questions remain the same as in the past, one question per participants. We don't clearly answer the question, a follow-up question maybe asked. To begin, I'll first refer you to the disclosure on Page 2 of the presentation. I'll also read the following. This conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions and uncertainties that are difficult to predict. Investors are directed to the information contained in item 1A Risk Factors or Part 1 of the company's Annual Report on Form 10-K filed with the United States SEC for a discussion of the risks that may affect the company's future operating results. Actual results may differ. Now, I'll begin by covering some of the numbers in detail, including a brief recap of the first quarter. So on to Slide 3. For the first quarter of 2014, we earned $0.23 per diluted share versus $0.19 from the previous year. Net income increased 25.6% year-over-year to $19.1 million, while our operating income increased 22.3% year-over-year to $31.3 million. Our revenue, excluding trucking fuel surcharge, increased 8.4% year-over-year to $205.6 million, and our total revenue increased 5.8% year-over-year to $249.2 million. Now, on to Slide 4. Knight continues to hold a very solid balance sheet. We ended the first quarter with $575 million of shareholders equity and have returned approximately $79 million to shareholders through dividends over the last two years. Our fleet remains very modern with an average tractor age of 1.9 years. During the quarter, we paid down $26 million of our debt and ended the quarter with just $12 million of debt remaining. We also do not carry any off balance sheet debt, including operating leases for trucks or trailers. We continue to maintain our unsecured line of credit of $300 million, which we believe provides us the flexibility to pursue all opportunities that are presented, including acquisitions as well as any organic growth. Now, Dave Jackson will provide some additional insights into our first quarter results.

Thanks, Adam. Good afternoon, everyone. We'll start with Slide 5. During the first quarter we experienced strong demand for our truckload services. The flexibility and responsiveness of our service center network and operations enabled us to provide needed capacity to our customers. In addition to our nationwide fleet, we were also able to provide meaningful capacity through the sourcing of third-party capacity by our non-asset logistics businesses. We grew our revenue, excluding trucking fuel surcharge, by 8.4% compared to the first quarter of last year. In our trucking segment, we were able to improve our revenue per tractor by 5.1% by increasing our length of haul, operating with a record low empty mile percentage, and increasing our loaded rate per mile. This quarter marked the third consecutive quarter of year-over-year improvement in empty miles percentage. When looking at our first quarter, revenue growth over the last four years, we have averaged a compound annual growth rate of 11%, as illustrated by the graph on Slide 5. Next, as we move to Slide 6. The industry continues to be faced with multiple inflationary cost pressures and we're focused on managing and mitigating these areas. We increased net income 25.6% when compared to the same quarter last year. When comparing first quarter over the last four years, our compounded annual growth rate for earnings is 24.6%, which is illustrated by the graph. Since coming out of the downturn in 2009, we've now averaged 10.1% year-over-year growth in net income over the last 17 quarters. With the combination of the improved trucking environment and our internal initiatives, our team produced a very solid first quarter of 2014. Now, to Slide 7. In the first quarter, our asset-based trucking businesses operated at 82.0% operating ratio, an improvement of 330 basis points year-over-year. We made…

Good afternoon, everyone, and appreciate you being on our call today. If we could move to Slide 9. First of all, I want to thank all of our team members for the great work that went into our results this quarter. Improving our return on invested capital remains a priority for our company. Our internal initiatives centered around increasing our revenue per tractor, growing our brokerage non-asset based business profitably and optimizing our network for efficiency has resulted in a 100 basis point improvement in our trailing 12 months return on invested capital since the third quarter of 2013. Now to Slide 11. Our team remains focused on executing at the highest levels in each of our businesses, departments and centers. We had solid plans in place that we expect to continue to lead to improving year-over-year results. Hiring and retaining quality driving associates remains the most significant challenge that our company and industry faces today. We have made significant investments in our driver development retention efforts in our company. I am pleased to tell you that the driving job at Knight is improving. In the last 12 months, we have significantly improved our driver pay and performance bonus. All in conjunction with the benefits our service center strategy creates to be a driving associate for Knight Transportation. The overall trucking environment was strong in the first quarter. We expect to see continued demand improvement for our services in the coming quarters. We are working to improve the density of our network, our revenue per loaded mile and minimizing our unpaid empty miles. Now, let's move to Slide 11, if we could. We feel as though 200 growth trucks starting in the current quarter through the end of this year is manageable. The key is driver development retention and we expect that to enable us to accomplish this. On the logistics front, our brokerage model continues to grow and develop, as we increase the number of customers utilizing this service offering is developed into a very solid supporting business for us and it is also having a positive impact on our overall capabilities with our customers. We continue to be active on the acquisition front though have no updates at this time in that area, other than to say, we continue to be active in this area. I will now turn it to Dave, to discuss guidance.

Thank you, Kevin. Slide 12 is our final slide. We are updating our second quarter 2014 guidance to $0.25 to $0.27 per diluted share. Our expected range for the third quarter of 2014 is $0.23 to $0.26 per diluted share. Some of the assumptions made by management include rates to continue to be positive year-over-year and for miles per tractor to be relatively in line with the year-ago period. It also includes consideration for potentially volatile fuel prices. These estimates represent management's best estimates based on current information available. Actual results may differ materially from these estimates. We would refer you to the Risk Factors section of the company's Annual Report for a discussion of the risks that may affect results. This concludes our prepared remarks. We would like to remind you that this call will end at 5:30 Eastern. We will answer as many questions as time allows. So just keep it to one question. If we're not able to get to your question due to time constraints, please call 602-606-6349, and we will do our best to follow-up promptly. Kurt, we will now entertain questions.

Your first question comes from the line of Brad Delco from Stephens Inc.

First question, maybe for you, Kevin. Can you talk about the environment in the first quarter and maybe what was unique from your business model perspective versus some of your peers in the industry? Was it spot, were you in a better position geographically due to the less exposure to weather or what is it that you think really distinguished your results from your peers?

Brad, that's a good question. I'll try to give it all, and if I don't, maybe Dave or Adam could help me with that. First of, I would describe the environment in the first quarter probably strong as I remember. I'm getting a little older, so I'm not sure I remember all of them. That would be 38 first quarters that I've participated in, in this industry. But I don't remember having a market that seemed so strong. I do think, Brad, that certainly the winter weather contributed to some of the disruption. I think too it's important to note that I would describe that as the irregular route truckload market. I think sometimes people think we're all in the irregular route truckload market, but quite honestly, there aren't that many of us anymore that that continues to be our primary focus in terms of the operations of our business. I would say maybe a differentiator maybe between us and some of our competitors is, I would say about 45% of our trucks are based in the east and 55% of our trucks would be based in the west. And so I think many of our competitors are probably closer to 60% or 70% or 75% of their equipment being based in the east, where weather had the greatest impact. Probably, the other thing that might be a bit unique about us is we tend to be under booked every day, that's how we like to start. And we're very cautious about the commitments that we make and we want to make sure that we can fulfill those commitments successfully for our customers. So when you look at our overall product that we offer today, including our IMC product and our brokerage product, we're probably even less committed as a percent than what we typically have been historically, now that can work for you or it can work against you. But we like the culture of coming to work every day, happen to work. And happen to figure out how to get the best loads that we can on our trucks, while at the same time taking care of the commitments that we have made to our customers. So I also think that the way our service center network is set up and the way our culture works in our company, I think it's also conducive to the results that we are able to produce in the first quarter, Brad. So hopefully I answered your question.

Your next question comes from the line of Todd Fowler from KeyBanc Capital Markets.

I wanted to ask about the guidance, particularly looking at the third quarter relative to the second quarter, historically it seems like the earnings have been relative flat third quarter compared to the second quarter. I'm kind of curious as to why there is the step down at the midpoint in the guidance third quarter versus second quarter this year?

Todd, this is Dave, I'll take that question. When you look at the third quarter or maybe I should back up, when you look at the quarters in general, they've evolved and changed, and what may have worked in the right approach in one quarter may not necessarily be the same the next quarter. And certainly between the second quarter and the third quarter there, the market and the demand dynamics change and probably continue to change. If you look at our performance last year in the third quarter, particularly relative to the second quarter, we did experience a step down from where we sit today, given that that is the most recent third quarter we've experience, where I think we are $0.19. The guidance that we're giving of $0.23 to $0.26 that is measurably higher than where we were at last year in the third quarter. So that's probably how I would choose to look at that and define that as oppose to trying to compare it sequentially to the second quarter. Now, we'll just have to kind of see how second quarter continues to play out. And that will maybe give us a better feel for what to expect when third quarter comes. That's how we view it from there.

But, Dave, last year in the third quarter, you would have had the impact of hours of service, but you wouldn't have had or you won't have sequentially this year?

Not sequentially, but we'll still have that impact. So it's just the way we look at it.

And I think Todd, when we look at the sequential performance from second to third quarter last year, our earnings per share was down $0.05. And so, I mean, obviously, hours of service didn't make that little bit impact. And so I think there's still something we said about how those quarters now play out each other.

Just for my follow-up, what do you have for equipment gains in the second quarter?

I would say, Todd, on our equipment gains that it's going to be stronger than what it was a year ago. And probably could be similar to what we experienced in the first quarter and then maybe tailing off after that a bit. So I would think that on a year-over-year basis, second quarter will be stronger. And then in third and fourth quarter I would expect them to be a bit stronger, but probably not nearly as significant as what we expect to see or as what we saw in the first quarter, Todd.

Your next question comes from the line of Brandon Oglenski from Barclays.

Kevin, I wanted to see if we could talk about driver pay here. I mean we've heard a lot of other truckload carriers really ramping up around recruiting drivers. Where are we on the pay schedule and where are we on recruitment? Is that a real limiting factor right now in growth?

Brandon, yes, it is the limiting factor on growth for our company. And I would say probably for our entire industry. So basically we have been working over the last several years to make sure that we've got good recruiting and development efforts, not only as far as experienced drivers are concerned, but as far as inexperienced drivers are concerned. We continue to get the majority of our driving associate as experienced drivers. But we are continuing to get a larger number of drivers coming up through our Squire and our CDL programs. And I think we've got good momentum there. In terms of driver pay, driver pay needs to go up, at least 15% to 20% to 25% as compared to where it is, if we as an industry are going to be able to keep up with the truckable environment that we expect to grow over the next few years. So basically our goal is to basically get our driver pay up fairly significantly over the next three to five years, especially as we are provided the opportunity to improve our yield and our rate. Going back to the second half of last year, we started an aggressive initiative to improve our driver bonus program. And we have seen a significant growth in the amount of pay that our driving associates have received through our driver bonus program. In the first quarter of this year, we initiated a pay increase for our driving associates. In the second quarter of this year, we have initiated a pay increase for our driving associates, a base pay increase. So we are very aggressively taking a large portion of what we're able to receive in terms of rates and making sure that we give that to our driving associates. And our goal is to continue, beyond this path over the next, two to three years to make sure that we're competitive as far as what the job should pay and also as compared to other industries. So we are very committed as a company. All of our businesses are behind us, all of our service centers are behind us, and there's not a department that gets more of our leaderships focus right now than that specific area. So hopefully, Brandon, that answers your question.

Is the progress giving you hope that you can grow even little bit more aggressively as we round out the year or is it still just challenging?

Brandon, I would say it's still challenging. We have an enormous amount of initiatives on the plate of our leaders, on the plate of our businesses, on the plate of our service centers, around driver development and retention. And we recognize that there is an enormous amount of opportunity for growth in the market. Though it is being inhibited by driver development, so for right now, I'm going to be really proud of our team, if we can increase our fleet by 200, as a result of the success in our driver development efforts, but would not want to predict at this time that it would be any more than that.

Your next question comes from the line of Allison Landry from Credit Suisse.

Kevin, I just wanted to refer back to your comments, a couple of minutes ago regarding driver pay needing to go up, anywhere from 15% to 25%. And this would likely take about three to five years to unfold. That sort of seems like a long timeframe and potentially having the impact of exacerbating and already problematic shortage situation. So as you'd think about that from a medium-term or a longer-term perspective, is there any point at which you might start to become worried that you may not be able to grow your fleet? And if so how far away do you think that Knight is from having to deal with something like that?

Well, first off, Allison, we've struggled to grow our fleet for the last couple or three years in terms of even 200 net gains. So basically yes, we are concerned about that. But we feel confident as a company that the limiting factor for service, for us to increase our services is drivers. And you're seeing a lot of stuff in our market. You're seeing an elevated level of closings. The increased regulations that we now have in our industry are certainly taking more drivers out of this system. The electronic onboard recorders are taking more available hours out of the system. And so from our perspective, I think we're in the early innings of a prolong environment of rate growth. And we will move as fast as that allows us to move. And we are in a very good position in terms of our profitability. So we can be on the high-end of that if we think that is prudent. And so we're going take what it gives us and we're going to convert that to our drivers as rapidly as we can. If we can do it faster in three to five years, we will, but just based on our experience as a company, and really our understanding of the peer irregular route-truckload market, I think we've got a very good plan. And I think over time, this job is going to pay more than it does, because really that that a regular rule is the most difficult one to execute. And we happen to do a very good job at that. And I think in our space that's where the biggest opportunities lie over the next three to five years. So we're just going to keep working. We're putting a lot of efforts into our Squire and our CDL programs. And we're going to try to get more confident in our ability to grow our fleet, but that's what I have for you, Allison.

I just had a quick follow-up question. In terms of what you're seeing in the brokerage division, could you maybe provide some commentary even directionally with respect to the net revenue margins on a year-over-year basis and/or sequentially?

I would say that from a brokerage perspective, Allison, first quarter was a phenomenal environment for that specific business. But we continue through the call here today to grow that business rapidly even as we've worked our way beyond the weather. From our perspective our gross margins have remained close to the same, but a little bit better. And we've seen that continued thus far into this quarter. So we have a lot of confidence in that supporting business right now. And feel like we're doing a very good job of executing in that particular business. So my guess would be that we'll continue to be close to margin year-over-year with maybe slightly improving that. And you probably won't see the same level of growth in the coming quarters as what we experienced in the first quarter, unless the market gets disruptive again like it was this quarter.

Your next question comes from the line of John Larkin from Stifel Nicolaus.

I wanted to dig in a little bit on that wonderful 4.9% improvement in revenue per loaded mile, which is by far the best number we've seen in a number of years from any carrier. And I was wondering if you could just clarify a little bit how much of that was probably called, good old-fashioned contractual price increase? How much of that was better freight selection? And how much of that was, you mentioned that you come in to work in the morning and not all the trucks are already allocated, and you do have some flexibility perhaps to plough the spot market a little bit. Could you parse that out for us a little bit on the 4.9% improvement?

First of John, that's a very good question. As we look at that 4.9% improvement, what I would say is generally the contract rate increases that we are getting are moving into the 3% to 5% range, as compared to the last year, where we would have estimated 2% to 3%. So depending on the freight, depending on how things have developed with that freight over the several years, we're now solidly in the 3% to 5% expectation as far as our contract freight is concerned. And so a large part of the 4.9% would certainly be the work that we accomplished on rates in the fourth quarter of last year and the first quarter of this year. We also have a certain percent of our capacity that is not committed. Most of that capacity moves to our contract freight customers that that we may have a backup metrics with or that may call us and offer to pay debt head or may call an offer to pay us additional dollars in order to supply that capacity. So I wouldn't call it spot, I would call it basically demand that we receive from our customer base primarily. And then certainly there is freight that comes -- opportunities that come otherwise. So if I had to parcel the 4.9%, I would probably guess about half of it was from contract rates, and I would guess that probably about half of it was from the other that I just described.

Is it fair to say that because you were not over booked every morning, that that the brokerage business is not a traditional overflow business, that that's sort of a separate line of business, where you're dealing with in many cases different customers?

John, this is Dave. You nailed it. It is a different type of a business than what you -- different type of brokerage than what you would see, and maybe a traditional asset-based type of a business where it's more of an overflow. So you have to remember we have a very diverse group of customers. We've got people across the country constantly outsourcing opportunities, hearing about opportunities with our broad customer base. And so we're constantly figuring out, what loads should go on our trucks, what are the needs for our customers, so we can provide a high-level of service. And then what are the opportunities for our brokerage group to find third-party capacity to solve the many problems that constantly come up on a day-to-day business with our customers.

I would just add, John, I think going back to the beginning when we started Knight, we tried the pattern ourselves, we kind of tried to take from the best and build what we thought was the best model, which probably ended up being a combination of Heartland and Swift, because of just Heartland has always been the leader as far as efficiency and Jerry was always the leader as far as growth. And I would say, as we think about our brokerage business, we think a lot about CH Robinson, and maybe not so much CH Robinson today, but certainly the CH Robinson that became the CH Robinson that they are. So as we try to build that business, we try to pattern ourselves after the people that have been the most successful in their areas of expertise. And certainly, we're a long way behind those guys, but we do feel right now when we get a call, we have modified capacity available in every part of the country to service those requirements. And of course that's our goal.

Your next question comes from the line of Chris Wetherbee from Citi.

Maybe a couple of quick questions on the underlying specifics of the guidance. David, just gave us a rough sense of maybe so what are the underlying rate assumption there. And I guess maybe it's a pace of the fleet growth when you think about the 200 mini trucks that you want to add from where we are today?

I'll let Adam take that.

So on the growth in the fleet, we will start bringing that on here in the second quarter and that will continue probably for the third quarter and maybe partially into the fourth quarter. But we usually don't have a lot of capacity near the end of the year. I think kind of the bulk of that's in the back half in the second and then probably in the third. Our expectation is that rates are going to continue to be positive. I don't know that we'd expect to see the 4.9% as Kevin alluded to on a year-over-year basis, but certainly in that 3%-plus is where we would to expect to see the rate per mile coming at.

So somewhere in that contract range is the 3% to 5% still okay, if you're thinking about as far as --

We would support that, and of course that takes to time to build fully, so it will come one negotiation at a time.

Your next question comes from the line of Rob Salmon from Deutsche Bank.

When I think, you guys sort of highlighted that you're continuing to look for acquisitions at the beginning of the call, obviously the truckload operating environment has gotten stronger with spot rates up and the contractual rates up as much as they have been. Does that make it easier or harder for you guys to try and find a potential acquisition out there as well as come to terms from a pricing perspective?

I would say, neutral, Rob. I mean we have as much on our plate right now with regard to acquisitions as we have at any point in our history. But we are also very disciplined and that I think as long as we're working hard at it, I think that we will be successful in accomplishing or being part of this consolidation that we continue to see in our industry. So we are highly motivated to do something and we need a reasonable third-party to participate and we're going to continue to work this, especially I think it's probably obvious to most of you that follow our company closely, that our leadership is developing very well and taking on more of the responsibility day-to-day from me. And as a result to that it allows me to spend more time in this specific area. So certainly it's going to have a lot of attention from the top of our organization and we do have access to significant capital and we would like to put it to work. But we're going to make sure that it's going to work for our shareholders or has a very high probability that it will, and if we find that, then we're going to get our done. So that's how we look at it.

Kevin, when we think about just the dry powder that you have what sort of size parameters are you guys looking at from the acquisition standpoint?

Well, I would really say, Rob, probably all sizes. I mean, we're of a size now, where if it's too small maybe we don't get much bang for the buck. But what I would say, Rob, is really, the way our business is built, we're not too big anywhere and we absolutely could take on something fairly sizeable, but also if we found a good 200 or 300 truck operators that could be very meaningful also, especially to whichever one of our truckload businesses that ended up inheriting most of that in their operation or of course we could just let it stand on its own and work it outside of the network. So really the field is open and with very few limitations. Our expertise, as a company, really is around efficient growth and operations. And so probably based on the pursuers you have in the non-asset base space were probably not going to compete with the multiples that they are willing to pay. But certainly where we can create the most value to our shareholders is heavily asset based, primarily company equipment operation. So that's basically where our focus is, as where we can acquire underperforming company trucks and convert that to a higher levels of earnings.

Your next question comes from the line of Ken Hoexter from Bank of America.

Just when you think about the targets, Dave, that you said out in your prepared remarks. Can you talk about what included in that in terms of tractor growth? I mean, I know you started out the presentation talking about the difficult of getting drivers to seat them, but what kind of growth have you built in there. And given your margins and where they are, do you feel like you can go and just grow the fleet a little bit faster and put pressure on, given where the market pricing is to grow the fleet right now and take advantage of that opportunity?

Well, Ken, I think it's a great question. I think to piggyback a little bit what Adam just commented on, on what goes into the estimates and the targets. Looking at throughout the year, from a growth perspective, we're still modeling out that 200 truck growth to start this quarter continue through the third quarter and probably not finish until some time in the fourth quarter. When we look at our business from a return perspective, there are very, very few service centers in the large network of service center that don't have the current economics to support or to justify reinvestment and growth in their fleet. So the challenge, this has already been stated, the primary challenge is drivers. I think our ability to raise rates to a level that allows us to pay drivers more is the significant advantage. And so if you look at the 4.9% loaded per mile improvement we had in the first quarter, in Kevin's comment, that we've already twice raised the driver pay, in addition to what we had done on the bonus pay side towards the end of last year. It demonstrates that we don't take very long to raise rates and put it where we feel like it's going to lead to the best growth opportunities for us, which is in drivers. And so it's a major focus for us. And making sure that Knight Transportation is a place that drivers want to come to, and once they are here that they want to stay. And while they're here, they want to be productive and efficient. And so we continue to be highly focused on those initiatives. We're fortunate that we have a great people that have bought into our goals, they've bought into our model, they've bought into our system. And so we have confidence that we're going to be able to continue to attract and retain drivers, hopefully at a level that's maybe better than our peers, but that enables us to make the capital investment in equipment and to run more trucks at [ph] AD, in many cases better than an [ph] ADOR throughout our service center network. So I hope that answers your question, in terms of there is willingness for us to grow faster, but the limiting factor is drivers at the moment.

I guess a relatively quick follow-up would just be, does that differ by division? Obviously, that's going to be true for driving, but does that change when you think about port or drayage, where you're doing more short-haul regional, where they can be home on a regular basis?

It really doesn't change between all of the driving jobs in all of the businesses.

And I think Ken it's interesting. This has been a universal comment by almost every participator in truckload is that it's just really, really difficult as far as finding the drivers is concerned. And so we're putting everything in it that we can, including we're putting our money where our mouth is and we're working hard to be able to put ourselves in a position where we can. The good news is we seem to be in an environment probably in the early stages, where we would expect that we we'll be in for many years of solid rate improvement. And that's really the gas that powers the engine.

Your next question comes from the line of Scott Group from Wolfe Research.

So I don't think we heard much, if any of that kind of, the current demand environment in the past few weeks in April, maybe if you can give us some color there? And is that what gives you the confidence that you can start growing the fleet without seeing any setback in utilization?

Scott, I would basically say that we're more normalized now than what we were, as a result of the disruptions of the winter weather. But we have seen continued improvement in demand year-over-year and continued improvement in revenue per truck year-over-year on a more normalized basis. I will tell you that Aprils are typically the third worst month in trucking, January and February and then April. And so we now are progressing into a much busier expectation as far as freight is concerned. We expect much more freight to be coming through the ports. We expect more freight to be coming from our beverage customers. We expect much more freight to be coming as a result of the fresh vegetables and produce. And so typically, Aprils are a little bit somber, but this has been certainly one of the better Aprils that I remember. So that's how we see it.

And then just, Kevin, I think I just heard you say multiple years of better pricing, what gives you that confidence?

Well, I would say that we focused on what's happening in the overall economy as far as growth in truckloads. And we subscribe to a couple of products that are confidential and you have to pay to receive them, but it basically by reading that data, we really have been on a steady improvement of truckloads since the bottoming in 2009 and with the chat that we have on capacity, because of the driver situation and because of intensified regulations. And if you look at the lack of interest in the regular route trucking by many in the space, I mean many folks are closing the doors, many of the bigger competitors are moving more away from the regular truckload and into other sectors, it just seems to me like we're approaching an environment that I don't really see anything on the horizon that's going to change the momentum. So that would be my answer.

Your next question comes from the line of Will Greene from Morgan Stanley.

Kevin, I wanted to ask you a question about acquisitions. And there has obviously been a lot of talk about the driver challenges. And I'm curious if you think that having more scale, more trucks, more size helps the driver situation or in your experience does it create a bigger challenge? I'm not quite sure sort of what advantage a much larger truck fleet in a short period of time kind of does? So maybe you can help me think that through a little bit?

Well, Bill, I think when we think of how we've built our business, we have tried to build the business that advantages economies of scale and also operationally avoids diseconomies of scale. And I would say on the driver side, with a large company there is a significant opportunity to find yourself on the wrong end of economy of scale. So what we have done is we have protected the service center model that we operate in all of our asset-based businesses very much. And really, when you go into any of our buildings, Bill, it looks like it's a small trucking company with great people and good equipment and so forth. So basically we believe that based on the way we've built our business that we have mitigated any diseconomy of scale that there would from a driver perspective. We also, not only on experienced drivers, we've also in terms of our Squire program and our CDL program, we've also kept that working along those same lines, as by business and by service center. So I believe that we, because of the uniqueness of our model have created an advantage where we should be able to over time do better than others. And certainly we've demonstrated that over the last 25 years, even though we probably find ourselves in this difficult environment, as I can see. So I would say naturally more trucks would create a diseconomy of scale, unless you understand it, guard against it, and build your business in a way that converts that into a strategic competitive advantage.

The second question I had was just on the first quarter. I know this is going to sound strange, because it was such a good quarter for you, but was there any weather impact, even if it was just you felt like you got sort of extraordinary kind of revenues that you weren't sure will repeat. Like how you think about what a core number is or is that a good number that you have, that's really sort of how we should think about core?

Well, I think, Bill, weather was less of a factor for us than it was for many of our competitors. But I would say, absolutely, it had a negative impact on our idle time. Idle time was up probably 4 to 5 points over a year ago. And so it had a significantly negative effect on our idle time. We had many more service calls as a result of frozen trucks, and as far as their fuel gelling and so forth -- and I mean the number was significant, certainly, the worst that we've ever seen it. And we had some days in Dallas, where we couldn't work. We had some days in Atlanta, and days in Charlotte, days in all of our various service centers that are in the Northeast and the Midwest, where basically we couldn't get much done. Even in some cases, we had days where people couldn't -- our leadership couldn't get to work at those service centers. So I don't know if we could quantify it. But it was probably a $0.01 or $0.02, would be my guess. We certainly -- we didn't have any, what I would call, really serious accidents, which is a testament, commitment of our people to be safe. We have a process that we follow and we dispatch every truck in certain environments, and that was obviously effective. But nonetheless, we had a few jackknifes. We had few trucks that went over and other incidents that come with very slick roads. But overall, I couldn't be more proud of the job that our folks did. We had more slips and falls from a workers compensation perspective. And what did I missed, Dave? Was there any other area?

I think miles were down 1.3% for the quarter.

Although, we had the hours of service difference year-over-year.

The fourth quarter, we've had a little bit better year-over-year in miles than what we saw in the first quarter, and arguably just as good if not better in that environment. I think, for it's worth, there are certainly a weather issues and challenges that come every winter and there is dynamics that change, they were clearly exacerbated in this quarter. But our folks figured out how to work their way around those issues, the best that they could. And our folks weren't hiding behind anything and simply did their best. And we have facilities in Chicago, Indianapolis, Green Bay and Eagan Minnesota and Columbus Ohio, Carlisle, Pennsylvania, where they clearly had -- what did I miss?

Atlanta.

I hadn't got that far. And then you have cities that freeze over like in Atlanta and Dallas. And so we were clearly -- those operations affected, but those folks where dialed in and we did our best.

And I would say the winter was especially mild in the west, it felt to me like. I mean, I don't remember and I'm probably wrong, did [ph] AD ever get shutdown, did we ever, with what maybe one day or two days. And you know typically that's more often than that. The Pacific Northwest wasn't too bad and Utah and Colorado weren't too bad. So I think that that's our best answer.

Your next question comes from the line of Art Hatfield from Raymond James.

I just wanted to quickly kind of, if you dive into the 9.6% debt head percentage in the quarter. Obviously, as you commented a great number. But can you comment how much of that was people actually paid for debt head miles in Q1? And if so will that continue? And then kind of finally, have you thought about, if from the standpoint over a long haul for lack of better works, what could be a theoretical full employment level for that number? And if so and you can get there what are the tools that you use to get there? I know that's a lot.

Let me start off by saying that the most helpful factor in empty miles is strong freight demand with a coordinated operating network, which we happened to have both of those. We bring the strong network that has close oversight in decisions and in the freight selection that we make. And when we jam that full of, a lot of loads it usually leads to pretty good result, which 9.6% is close to an all-time high. I think you have to go back to when we had like less than 1,000 trucks to find that last time we were that good. So now there is one factor that has been very instrumental and helping us do that and it is an optimization of software tool that we in various degrees have had implemented now for some time, meaning a year or two at most. But by far, our usage was up with that tool. And so we've been very cautious and very careful on how we tested that tool in the last several quarters and the implementation and the level of usage was significantly higher. It was the most we've ever used the recommendations coming from that tool in this first quarter. And result of that is lower empty miles. And that's one of the reasons why we purchased the tool, why we used the tool and it takes into account several factors in order to minimize the empty miles. We still have a ways to go in terms of usage and usages in all of our asset-based businesses. And so we do not use it in all three, we use it in one and we only use it for about half of those loads. And so we clearly today have more conviction in using that as a part of the process that we go through, and when we select loads and when we dispatch loads and drive productivity on truck. So those are the factors. Of course, that last factor, the software that we will continue to use that in good times and in not so good times. As part of a long-term run rate, over the long-haul, which was a bad time by the way. As we look forward, I don't know that our expectation is to always be under 10%, but it's not to be under 10%, but we want to be give or take 10% or a little less.

And I would add that our benefit came from paid debt head, but probably more important in the way we optimize. We really, I mean the system is an off-the-shelf system. But we put the decision making into that system and we do that based on the way run our trucking business. But to make that optimizer the most effective, you got to have loads. And the more loads you have, the more efficient and the more effective that becomes making sure that we're doing operationally what's best for our customers, what's best for driving associates and what's best for the company. And do you have a quick follow-up?

Just real quick on your comment about paid debt head. I know that you've probably got a lot of that in the first quarter, because of circumstances. But do you think with the market being as tight as it is and it will continue to be so that that will be more common place?

Well, it certainly, could become more common place. I mean I think as you look at things, as freight demand becomes stronger you have opportunities to improve your overall freight base. And it certainly could become more common, but I still think we're ways away from that becoming common practice. But anyway, it certainly could become more common.

That wraps it up. We appreciate everybody joining our call today.

And thanks again guys for being there with us.

This concludes today's conference call. You may now disconnect.