Good afternoon. My name is Ronnie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Knight Transportation Fourth Quarter 2014 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. [Operator Instructions]. Speakers for today's call will be Dave Jackson, President and CEO; and Adam Miller, CFO. Mr. Miller, the meeting is now yours.

Thank you, Ronnie, and good afternoon, everyone, and thanks for joining our call. We have slides to accompany the call posted on our website; if you haven't got that already, it is posted at investor.knighttrans.com/events. The call is scheduled to go until 5:30 p.m. 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 can call (602) 606-6315 following the call, and we will return your call. Again that number is (602) 606-6315. The rules for questions remain the same in the past. It's one question per participant and if we don’t clearly answer the question a follow-up question may be asked. So to begin, I will refer you to the disclosure on Page 2 of the presentation. 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 fourth quarter results, and we can move to Slide 3. For the fourth quarter of 2014, we earned $0.40 per diluted share versus $0.25 from the previous year. Net income increased 63.9% year-over-year to just under $33 million. While our operating income increased 64.1% year-over-year to $52.8 million. Revenue, excluding trucking fuel surcharge, increased 32.6% year-over-year to $273.7 million, and our total revenue increased 27.1% year-over-year to $317.5 million. Now on to Slide 4,…

Thanks, Adam. Good to be with everybody, appreciate you joining our call today. I will start with Slide 8. In the fourth quarter, our asset-based trucking businesses operated at 77.5% operating ratio. We continue to see positive results from tightening capacity, improved market demand and our internal initiatives centered around improving yield, increasing productivity and managing our cost per mile. Our non-asset-based logistics businesses again experienced significant revenue growth year-over-year during the quarter. Our logistic segment operated at a 91.0% operating ratio. Our logistics offering, which provides non-asset brokerage and intermodal services, continue to develop opportunities to grow with new customers as well as our existing customer base as evidenced by increased revenue growth of 56.2% and increased operating income growth of 216.4%. Our model is one of industry-leading efficiency on the asset base trucking side with low 80s to upper 70s operating ratios and a high return on invested capital. In our logistics business that also has industry leading efficiency with an operating ratio in the low 90s where the income growth often more than keeps pace with the aggressive organic top-line growth yielding an even higher return on invested capital. We believe this is a model that brings efficiencies to the marketplace and represents a significant growth opportunity for our company and provide valuable capacity to our customers and solid returns to our shareholders that enables us to invest in growth which create opportunities for our employees. Now on to Slide 9. We’re excited about the fourth quarter results from our recent acquisition Barr-Nunn. During the quarter, Barr-Nunn increased the average seated truck count and showed sequential improvement in the operating ratio. Barr-Nunn ended the quarter with an operating ratio comparable to the Knight drive-end business. We’ve been successful in reducing cost in a way that has resulted…

Thanks, Dave. Move to Slide 14, we start final slide where we discuss guidance. Based on the strengthening market and recent trends we’re updating our previously announced first quarter 2015 guidance from $0.26 to $0.29 per diluted share to $0.29 to $0.32 per diluted share. Our expected range we're establishing for the second quarter of 2015 is $0.34 on a low end to $0.37 on the high end per diluted share. We're also updating our full year 2015 guidance from $1.32 to $1.36 per diluted share to $1.37 to $1.41 per diluted share. Some of the assumptions made my management include, as Dave mentioned, growing our tractor fleet 5% to 7% from where it ended in 2014, and we would expect that growth to be relatively consistent throughout the year. We also expect rates to continue to improve year-over-year in that 4% to 5% range. We'd expect to run similar miles per tractor as we did last year. We're going to continue to grow our logistics segment in that 25% plus range while operating with a low to mid 90s operating ratio. In Q1, we take in to account that we would expect a fuel benefit year-over-year, but with the expectation that retail fuel prices begin to stabilize in the second quarter and back half of the year. We expect that fuel benefit will be partially offset though with increases in driver wages and hiring related cost as well as a modestly lower expected gain on sale. We also expect our tax rate to normalize in 2015 to probably the high 39% range, that 39.5% to may be just under 40% is our expectation. Again, these estimates represent management's best estimates based on current information available. Actual results may differ materially from these estimates. We refer you to the risk factors section of the company's annual report for a discussion of the risk that may affect results. This concludes our prepared remarks. Again, we'd like to remind you that this call will end at 5:30 Eastern Time. We will answer as many questions as time will allow. Please keep it again to one question. If we're not able to get your question due to time constraints please call (602) 606-6315 and we will do our best to follow up promptly. And Ronnie, we'll now turn it over to you and we will entertain questions.

[Operator Instructions]. Your first question comes from the line of Bill Greene with Morgan Stanley.

Hi, good afternoon. Dave and Adam, I want to ask a quick question here. Last year, it seems you were able to keep a fair amount of capacity available almost in a spot kind of way where you talked about not sort of putting yourselves high up in routing guys and what not. When you think about '15, how does that change, and does that change the trajectory of growth how we think about revenue per tractor?

Well, it’s a great question, Bill. We look at 2015 in a similar way that we looked at the end of 2014, which is we're very deliberate about the commitments we make, we focus on committing to customers and lanes that are going to work for our driving associates, that are going to work operationally and financially for us. In the process of doing that, historically over the last several years that’s meant that we usually had some capacity was unspoken for. Throughout 2014 we saw a dramatic increase in requests for our capacity, if you will, and for more commitments. We were very careful and disciplined. I think in 2014 especially towards the back half of the year we saw more situations where customers were looking for a short term commitment situation. And so going into 2015, we would expect to see those similar types of requests. And so that’s not -- that’s different and may be an annual commitment, its different than just maybe being out there without a load in the pure spot market, if you will, its something kind of in between. So looking into 2015, we're factoring in that there might be some of those shorter term commitments to happen. All in all, I would say that we would probably be maybe a little bit less committed throughout the year in 2015 than what we even were in 2014. And so of course in seasonally strong times of year you'll see more benefit from that. And then when you don’t have the seasonal strengths we have to hustle a little bit more to make sure we have enough loads but typically we've been successful in finding a load for the trucks as we need them.

Okay, that’s very helpful. Can I ask one clarification on this? Do you think the change or the easing of hours of service rules will affect the revenue production per tractor? Is that meaningful to you?

It’s a good question and -- we're not really, it's not really clear to us how much that’s going to change. On paper you would see a small amount of capacity created in an optimal ideal world and so there’s -- it probably enables us to get a few more miles. I would say we haven’t totally seeing that in our fleet. So I’m not -- I wouldn’t be ready to paint with a broad stroke that industry-wide we’ve got x percentage that’s not in -- even if you had did that it would be a low-low single digit number but I’m not quite ready to say that its that’s simple. I don’t think that it dramatically changes our outlook on revenue production per truck. I think there might be some folks that feel like that is maybe going to change here in the first quarter. As we’ve seen, if you look the indices, the many indices that are out there that demonstrate that the spot market hasn’t been quite as strong or acute as it was last year, this time a year in January. But I think what we saw last year in January had a lot to do with the dislocation that was created by weather and there was obviously a lot of discussion about weather and I think a lot of folks that had concluded that maybe the market wasn’t as strong but it was really weather driven and as the year played out it proved to be it was both. And I think if we look at it now you still have a strong market, you just don’t have that weather dislocation to drive that spot. And if you still were to rank this January compared to last year or any January probably in the last decade you'd find that this is, even in this spot world, this is probably the second best January with the last year being better on the spot. But again whether had a little bit to do with that. The underlying market strength is still there and intact. And so I know that wasn’t totally your question but I’m kind of reading into maybe reading into the fact that maybe there is a belief that excess capacity has come in and somehow dramatically changed the spot market or the revenue projection or the revenue production capabilities within the space.

Yes, actually I was more thinking that whenever the service came in it was a negative for costs for truck load and then if you ease it I would actually think it would help with the productivity and wouldn’t necessarily affect given the demand function, the revenue production which is more or less what you said. So I think that makes sense.

I think we’re on the same page there, Bill.

Yeah okay great. Thank you so much for the time. Congrats on a good results. Thank you.

Thank you, appreciate it.

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

Maybe just a question thinking about the guidance a little bit and just looking particularly the implied second half of 2015, it looks like sort of just modest year-over-year growth over what you did in the second half of 2014. And it seems like there is probably some specific situation there, Adam, you call that a couple of items in the fourth quarter, maybe added a little bit fuel being one of them and then maybe that flips over to be a bit of a headwind as we move into the back half of 2015, but just wanted a get a rough sense of maybe how you think about that earning cadence first half versus second half? Is there a level of conservatism in there, just kind of what a get a rough sense kind of how you feel about the market and how it plays out over the course of this year?

Yes I think, historically, we’ve been very conservative when we put out our guidance and I think you hit it right on. In the fourth quarter of this year certainly you saw a fuel benefit that I've kind of laid out in the prepared remarks that I would just not anticipate, at least we haven't modeled into our guidance to be able to pickup in 2015 and you also have that other income that I pointed out as well that was – that was very healthy. So you have a few headwinds there that we would have to overcome so that would become a little bit more difficult for the comp when you look at that back half of the year and its really the fourth quarter that would be the biggest challenge.

Okay, but nothing from sort of a -- from a capacity perspective or sort of trends within the industry that you are thinking about or anticipating that necessarily changes the trajectory of what we’ve seen sort of coming out of the 2014 on a pretty strong note going into 2015?

No I think that difference there is really more on the cost side than anything to do with revenue. We'd expect that still a strengthening environment and be able to bring on the capacity at that 5% to 7% rate that we had -- we suggested.

Your next question comes from the line of Jason Seidl with Cowen and Company.

Just looking a little bit at the logistics side, I mean clearly its been great growth and then pressure that you guys haven’t sacrificed on the margin, if you could talk about the goals I mean it’s a 11% now, over the next call it two to three years, what percent of the business do you think you can grow to?

Well we're going to see that will be the fastest growing segment in our business. And so we’d like to see that it could become a third, and then on its way to half of revenues and probably non-stop there. So definitely non-stop there. So we talked publicly about 25% plus number, we say plus because internally the expectation is much, much higher. We have seen as we’ve looked at other non-asset based particularly brokerages mainly private folks that have shared information about their growth trajectory, we've seen those folks once they hit a certain scale and kind of find their grove, they start to grow significantly and adding $75 million to $100 million a year pretty quick. And so -- and I think we have experienced some of how and why that happens. And benefit we have is it’s not a standalone business from the perspective of the Knight Transportation asset base side has about 1,000 active customers and a lot of relationships and we happen to be in a strong freight environment where our customers need help and need capacity. So we feel like we’ve got tools and resources that are available to us that maybe a standalone, if you will, would have. So we are very bullish on that. The good news for -- I think the good news for our shareholders and for our business in general is that we have found a way to grow that business kind of in tandem, parallel to the growth we have on the asset base side. And it doesn’t rob from one to help the other. And so that’s the case and we are in this kind of a market and we can -- and we have this kind of a model for profitability we are going to be…

So just to clarify here. You said you would like to get to a third to half and is that within the two to three timeframe that I posed in the question?

I think if you look at the operating income, the $5.8 million we spun-off, we would love to double that number here over the next two to three years.

So you got operating income which is 11%, revenue is over 20% today so.

Okay. Fair enough, guys. Thank you for the time. As always, I appreciate it.

You bet.

And your next question comes from the line of Brad Delco with Stephens.

Hi, Brad.

Hi. Hear me okay.

We can hear you now.

Dave, I wanted to get some comments from you on acquisition targets and what the market looks like. And given the improvement you've seen in just truckers profitability, how has that changed expectations on valuation and what gives you comfort that that growth strategy still make sense at this point in the cycle?

Yes. Well, it’s a primary focus of Kevin Knight and Gary Knight. I probably should say it sounds like we just kicked Kevin out of the building and out of the call. Kevin is in the building; I’m sure he is listening to the call. He may even dial-in with a question if I’m not careful. And so I think we appreciate his wisdom in giving us some space and probably makes it a little easier for Adam and I sit here and answer your questions without him staring at us since he is so good at business, so insightful. And so Kevin is spending a majority of his time evaluating strategic growth opportunities for us which will include looking at carriers and the like. And so there are folks that I think we're are interested in. There are folks that reach out occasionally. And I think every situation is different. So just because things have gone a little bit good for truckers doesn’t mean that has been remedy to all the challenges and sometimes succession planning issues that exist in many carriers throughout the country. I think that there are some who probably like the fact that EBITDA is looking a little bit nicer and they can maybe -- feel like they can walk out on a higher note than they otherwise would have as opposed to looking at that and saying, yes, I’m ready for another 10 years of this. I think also the fact that used equipment market has held up has been a positive in the acquisition front. For a lot of fleets, a lot of their equity is in their equipment. And so as those prices have held up I think there is some that maybe don’t want to push it too long. And so all in all I think it’s a good environment. I think the Barr-Nunn acquisition certainly with only one quarter in our -- under our belt, but you could certainly say that that seems to be off to a good start. I think that -- I think we have a very good idea of what we would look for. I think maybe more importantly we're very open-minded and recognize that every single situation would be unique and different, it might need to be handled in a different way. And so all those factors have us as a buyer when there aren’t very many buyers and hopefully there will be sellers; its impossible to predict how that timing to line up and when we'll find the next good opportunity but just suffice to say there is good effort put into it and hopefully we'll find some matches.

Got you, and maybe just a quick follow-up on that. I think I heard your comment that the Barr-Nunn margins were very similar to your asset base margins at Knight. Is that a function of just the seasonal aspect that their business or has there been that much improvement in the margin performance in that business just in the short three months you've had that business under your control?

Yes, I would say that they're a business that -- they're business that does very well in the kind of environment we saw in the fourth quarter. I think they do well in most environments but they did particularly well. As we talked about last quarter on the call, they've got a little more exposure on the expedited world than what we do and that clearly was a good opportunity. But that being said, we have found some ways to improve their cost in a kind of behind the scenes fashion, having to do with pricing and few other things. We're just barely beginning to find some good wins on the revenue side and there definitely are some opportunities. We talked in our press release about our empty mile percentage, their empty mile percentage is a little bit higher than what we see in the Knight fleet. And so there are definitely some opportunities there. There is not a need for Knight to be invasive with Barr-Nunn. And so things have all been done in a nice, a very orderly fashion where we're just happy to have people that in both businesses Knight and Barr-Nunn that I think that think a lot alike and have the same kind of objective. So good things happen when we put our heads together. So I would not say that Knight has come in and made dramatic changes, but just helps and they've more than pulled their own weight there so.

Great, I appreciate the color guys. Thanks and congrats on the good quarter.

Thanks, Brad.

And your next question comes from the line of Rob Salmon with Deutsche Bank.

Hey, Dave, with the 4% to 5% rate expectations that you guys kind of outlined for 2015, could you give us a sense of how that’s broken down between mix, contract increases and your expectations on the broader spot market?

Well Rob, given how long it's taken me to answer the other questions which were much more simple, I'm not sure we have time for me to ramble on how I think that would work and I would probably be wrong anyway. So I would say when we're talking 4% to 5% we would hope that most of that would come from contractual increases and then there would be some extra, some spot market exposure throughout the year. In the event we see the kind of spot market exposure, seasonal exposure like we've seen in 2014 which we may very well see and I -- for a similar amount of time I know we'll see the strong seasonality, it's just a question of how often and how long, and then that numbers could go up from what we've quoted you. So I guess what I'm getting to, Rob, is that would be very hard for me to break that down very specifically for you in the 4% to 5%, most of that would be contractual.

That’s fair. And I guess David, as a quick follow-up that obviously the Barr-Nunn performance in the fourth quarter is particularly strong with the benefit of some of the expedite business that they do. Would you consider actually allocating more tractors to that side of the, to that underlying business exposure looking out to next year given the strength that you'd seen in 2014 or do you think the mix is right where it is at?

Well, we're always learning and I think in an ecommerce world, which we seem to be quickly adapting as consumers, there is probably going to be more and more opportunities. I would imagine that not lot of the ecommerce finds itself on the rail for movement, and so we'll -- we pay a lot of attention there. The flexibility we have with the nationwide network that we have today, we can move some expedited in places where we would like. We have some situations with training program where we might have more like one and a half drivers, if you will, that can help us in some of those expedited moves certain length of haul. So it’s a space where we're trying to understand and learn more. I don’t think it's -- that it's something that we feel like we have to kind of be officially in that or out of that. I think that Barr-Nunn as a percentage and as a complement to the total portfolio that will give us a really nice healthy exposure to that that we didn’t use to have. So that’s already huge step up but we'll watch it closely.

Makes sense, thanks so much.

Thank you.

And your next question comes from the line of Brandon Oglenski with Barclays.

And Dave, way to take over here for Kevin I think the answers are just as robust.

You'll find out, if we -- if our next call we just ask for questions and we just read you the answers on the call and you'll know that maybe it didn’t go as well. So I appreciate it, Brandon.

I think the last Q&A was a little bit better. Look, I want to follow-up on Bill's first question here because investors are quick here to question whether the cycle is over or not more holistically at a macro level. And we're getting some confirmation from these recent various industry data-points about spot pricing and demand but it sounded like you were trying to say this is more of a comp issue year-on-year, it sounds like, I don’t want to put words in your mouth, but that things are okay sequentially as you see it in January, is that the right take away?

Yes, I think that’s a good way to say it. As far as Januarys go this is a good, maybe a very good January, and to compare it to last year when you had one of a kind shutdowns from weather and acute tightness, I mean that -- I think it would be mistake to compare to that and try and extrapolate that throughout the year and try and somehow draw a conclusion about a much longer term cycle that took a long time to build that will likely endure for a long period of time and extrapolate that off of maybe spot market changes on a year-over-year basis. I think that might -- that may be a mistake. But in terms of where the spot is relative to what normally would be in January this January would mark high over the last several years. And in terms of freight demand and volumes, I mean you've got your typical kind of things that happen in January where the whole country doesn't have the same kind of demand but, but I think trucks are moving, we are in the middle of good season. The outlook is our customers understand and appreciate that the limitations on capacity and the need to pay drivers more. And so based on what we see going on in the bids customers also recognize the need and the challenges with the need for capacity, the challenges with securing it particularly 12-months out of the year and so all that leads me to be very positive.

And on those lines if I can just give one more and we've talked about drivers a lot the shortage and the ability to retain folks last year was pretty challenging. But there's also a view that with all of the that we're seeing in the energy sector could that drive an influx of potential candidate, so is that potentially wash out some of the supply constraints that we've seen along with the hours of service issue that we discussed earlier.

Well I think that there is a chance that not is a chance but we will see drivers that we've lost a oil field services not have those opportunities any longer, they need to find some other kind of work, vocational work of some sort, probably a lot will come back to truck driving. I don't know that they all left truck driving some of them left other jobs to go for lucrative opportunities in the oil field, and then they go back to being plumbers or other vocational work where there is high demand still, nonetheless. But in trucking we could use him, we need him and even if -- even if 10,000 or 15,000 of them become available, as a percentage of the $2.7 million active Class A trucks over the road today, you're talking about a few-tenths of a percent of total trucks that are out there that we need. I would expect that looking at GDP that we will likely end it sounds like 2014 with a 3% GDP growth, if you just assume four quarters half of what third quarter was half of the 5% GDP growth in the third quarter. So there was a good chance in 2015 especially with a much healthier consumer with oil prices in particular that just the overall market growth will exceed and drive the need for those kind of drivers that we might see get freed up. So, I don't think by any stretch that creates a flood of drivers who are surplus of drivers.

Appreciate as always Dave.

Okay. Thanks Brandon.

And your next question comes from the line of Ken Hoexter with Bank of America.

Good afternoon. Hey, Dave, Adam. Can you talk a little bit about the -- I think you throughout there before you changed the comp metrics for the drivers can you may be expand on that and talk about the driver pay-rate increases that you've seen and what you expect in your outlook?

Yes, we've done a few things over the last several quarters where we've improved the bonus that our drivers can receive and of course those are -- that's tying them to critical behavioral functions that they can do and if they perform well usually leads to lower cost for us and enables us to pay them more money. And so we've done I think a fair job of creating a simple attainable program and helping them to know where they stand and so when I referenced a bonus program that's what I'm talking about and it's become more significant over time. We plan to make it more significant. If you look at overall driver compensation for 2014, driver paid per mile would probably been up, upper single digits, 7% or 8% --

Yes, close to 10%.

Yes. So in 2015 we -- it will continue to increase. We don't have a particular percentage set out, but we have multiple ways of increasing the pay whether we do more in a particular bonus or we pay a certain group of drivers a little bit more or and then of course there's across the board we did last year in the first quarter and early second quarter we began and did some across the board catch-ups in pay and I think that we're going to have the rate environment this year to be able to accommodate further increases and typically we would pass about a quarter, about a quarter of the rate improvement would find its way to the driver and that will be meaningful and continue to do the trick over time. As we've talked about we feel like that we need to -- we need to make the job more and more attractive and these are certainly some of the most hard working folks in the entire economy and their pay has largely been held-up throughout the entire recession period. And so there is some probably some catching-up that needs to take place over the next few years and then also just to make it a more attractive place so that we can bring more drivers in the space.

Appreciate and I'm sorry just sounded like when you stated initially you we're moving away from mile metric to something else, but sounds like just more bonus things. For a follow-up everybody else has been throwing in different questions but I think just may be just a clarification, on the logistics was there any Barr-Nunn in that brokerage number or is that just a pure growth at intermodal and brokerage and are you going to separate the two in terms of what where the growth is coming from?

I think it's almost entirely Knight, but Barr-Nutt we just experimented slightly because the way I would described into the brokerage non-asset space. So there is probably an opportunity there with them over time but that is not in the fourth quarter numbers.

Okay.

Thanks Ken.

Okay. And your next question comes from the line of Scott Group with Wolfe Research.

So wanted get your perspective on the impact of lower fuel here. So we've heard from all the rails and they're kind of saying that they don't think it changes much in terms of the intermodal story. But curious from a truckers perspective and do you think that the slower fuel environment is going to create opportunities for truckload guys to regain share or is the rail service getting better enough for intermodal to regain some share this year. I'm just personally think about that the dynamic between truckload and intermodal with lower fuel. And then just one other kind of side question on the fuel, Adam within the guidance are you assuming fuel is a net positive or drag in 2015?

Okay we'll hit both those questions. I'll take the first one let Adam handle the second one. So what happy to give you a truckers perspective of fuel in the rails at least for what it's worth. We look at a rule of thumb that for every $0.50 drop in the diesel price it probably changes the break-even price by about 80 miles on the further rail. So it's possible that may be by as soon as the end of this first quarter that you'll see diesel fuel price settle may be about $1.50 lower than where they were back at the $3.80 range in September. And so to lose a $1.50 and diesel prices would suggest that may be in the neighborhood of 240 miles has been added to that break-even calculation with intermodal. And that being said there is -- we've read it that there is it's estimated to be more than 70% of the truck loads that move in this country are 500 miles or less. And of course that numbers falls off dramatically for every 100 mile band that you have. So to move intermodal into a range to where it's -- is now 750 and above let's say 750 or may be even little higher than that at miles and above from a length of haul perspective that the economics work for intermodal there than that would suggest that there are thousands and thousands of truckloads that that might be more economical on truck to say nothing for the growing, that the growth we've seen in the expedited space that over time some of that might find itself in less expedited but still on a truck as the ecommerce evolution continues to take hold through retailers throughout the country. So our position would be that that fuel is a meaningful change and I mean if you look at the growth of intermodal relative to the growth in fuel prices that we saw in the first half of 2008 there's a big difference. And there is a high correlation I should say. And we're clearly a long ways away from the $1.25 fuel price. We have to go back to 2002 or 2003 and I don't think we'll get to that price again. But intermodal was very hard to pencil back in those days. So now it may sound like, I mean that may be a trucker's perspective. But I think that there may be some truth to some of those measurements that kind of laid out to you so. We'll let Adam answer the --

Sure, on the fuel benefits, well Scott, a large portion of your fuel benefit or even headwind typically comes when there is a rapid increase or decrease in fuel prices. So obviously in the first -- in the fourth quarter we saw a large benefit to that that we already talked about and we're still seeing fuel prices, at least at the pop retail national average retail prices still are coming down fairly rapidly. So we would expect to see some fuel benefits in the first quarter. Now as fuel prices settle down closer to that lower $2 range, the kind of one-time benefits go away, but certainly we would benefit from lower fuel prices on an absolute dollar because probably 20%, 25% of the miles we drive or the gallons we burn are uncovered under our fuel surcharge programs. So I think -- but we would still think fuel as a whole for 2015 if it goes as we expect would be a net benefit may be not huge it probably bigger on the first half of the year particularly in the first quarter and probably still be a benefit in the second and start to neutralize in the third and may even be it's probably going to be a little headwind in the fourth quarter. But net-net, I would expect it to be a slight positive for us for the full year.

Okay. Thanks for that. Thought it's a really insightful comments on the truck intermodal just we're not putting words in your mouth, would you think the local lease market is where you would see most of that risk coming intermodal side?

I don't. I'm not sure. I probably wouldn't have a good opinion there for you.

Okay. Thank you, guys.

You bet.

And your next question comes from the line of Matt Brooklier with Longbow.

Hey, thanks, Dave and Adam, good afternoon.

Good afternoon, Matt.

So a couple of questions on drivers thus far in a call, but I was just going to ask you more directly and as we sit here in January and you think about the driver market may be three, six months ago, is your opinion that as a whole the market on a relative basis and relative being the keyword, on a relative basis, has the driver market improved at this point?

I would be careful to say that. I don't know that I would go that far. I would tell you we have -- we're going now on a few years of that being a very, very intent focus for us. So I think as evidenced by the growth that we've had and the fact that we're talking about another 5% to 7% fleet growth within our fleet. That speaks to the fact that we feel good that we can do that. I wouldn't say that as much to do with external factors. Now, seasonally there are times of the year where it's a little bit easier to find and easier is may be not the right term, but less difficult despite a better way to say it to find drivers. And so when weather beings to change as we move into the spring time that April/May timeframe when there are -- when the weather is nice throughout the entire country there is typically that's when it can become even more difficult to find drivers. So this was the time of the year where -- where often times it’s -- you'll have a little more success it would feel. But I would -- the demographic hasn't changed. Recent study showed that, it's a vast study that shows that the average age of an overload driver was 46-years-old. The average age of a private fleet driver was 52-years-old. And so in terms of average ages that's worrisome and it means that we have a long ways to go, and we're going to find a lot that are leaving and retiring that aren't being replaced with new entrants coming in. So this is here to stay for a long time.

Okay. Appreciate the color.

Okay. Thanks Matt. Ronnie, I think we have time for one more question.

Okay. And this question comes from the line of Art Hatfield with Raymond James.

Good afternoon, Dave and Adam.

Hi, Art.

Hopefully as I ask your questions, it would only take a 60 seconds to answer.

Seconds only.

Just real quick, you asked a lot about capacity, Dave, but can you give us kind of your latter thoughts on how you see assuming we get the ELD rule in June, how that's going to play out over the next 6 -- 12 months to 18 months?

It's a good question because I imagine there will be grandfather periods and whatnot. From what we've seen there are a lot of fleets that have had to -- due to having follow-up as a result of poor CSA scores, there are lot of small fleets that have signed up for ELDs as a condition of compliance and proving a lot violation CSA basic. So there has been a kind of a -- what's turned into may be a brisk walk up to this regulation. So there are a lot that are already implementing that will continue to implement. And so I think whatever grandfather period there may or may not be, I think we may be surprised that how many adopt so quickly. So if this entire industry used ELDs, I think it would be a dramatically different situation in this country. And so we're going on I want to say 5-years of when we implemented the ELDs in our fleet. And a lot of the big folks have but as a percentage of total trucks over the road, it's the vast minority actually have ELDs. And I mean this could move the needle several percentage points in terms of capacity out there on the road. So again I mean I don't want to throw out the term "game changer" too often but this that would go down as the most significant regulatory change that this industry has ever seen and would clearly have constraining effect on capacity. To a degree we don't know but even it doesn't happen capacity is already tight and with the slightest of growing economy which all indications inside this is -- this is one of the brightest outlets we've had since the recession from an overall economy. I mean it could come at a kind of a difficult time in terms of finding capacity. So hey it's -- its going to be a big deal.

Great. Hey that's very helpful comment. Thanks.

Very technical answer for you, Art.

That’s -- now that’s very helpful. Thank you.

Okay, thanks Art. Well we appreciate everybody dialing in and joining our call we didn't get to your call. Hopefully you'll give us a call at (602) 606-6315 and we'll try and get back to you quickly. Thanks everybody. Take care.