J.B. Hunt Transport Services (JBHT) 17 Jan 192018 Q4 Earnings call transcript

Company Profile

Participants

David Mee	EVP, Finance & Administration and CFO
Shelley Simpson	Corporate Executive VP, Chief Commercial Officer & President, Highway Services
John Roberts	President, CEO & Director
Terrence Matthews	EVP & President of Intermodal
Nicholas Hobbs	EVP & President of Dedicated Contract Services
Bascome Majors	Susquehanna Financial Group
Tom Wadewitz	UBS Investment Bank
Chris Wetherbee	Citigroup
Allison Landry	Crédit Suisse AG
Matthew Reustle	Goldman Sachs Group
Amit Mehrotra	Deutsche Bank AG
Adam Wieschhaus	Cowen and Company
Brad Delco	Stephens Inc.
Brian Ossenbeck	JPMorgan Chase & Co.
Scott Group	Wolfe Research
Todd Fowler	KeyBanc Capital Markets
Ken Hoexter	Bank of America Merrill Lynch
Matthew Brooklier	The Buckingham Research Group
David Vernon	Sanford C. Bernstein & Co.
Casey Deak	Wells Fargo Securities
Ben Hartford	Robert W. Baird & Co.

Call transcript

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Operator

Good afternoon. My name is Jessey, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2018 Q4 earnings call. All lines are placed on mute to prevent any background noise. After the speakers’ remarks we will have a question and answer session. you. Thank Instructions] [Operator you your CFO, may Mee, conference. begin David

David Mee

everyone. our learned second you, little Jessey. call. to afternoon, Good one. last we Thank earnings Welcome We from the bit a hope

President and robotic little this hopefully informative quite I one on will all this me of will productive. sure the ask John state when how but a limit with DCS as gave clearly, so people question name stop a we get o'clock and CEO; that as So again, everybody question Terry Simpson, bit you is these housekeeping, thinks a hard with you X last President can of the to you Jessey we’ll some at one can Hobbs, ICS follow-up asking that got Matthews, We have you to your sayings hour. Services, Intermodal; Nick be Eastern. your know and o'clock we Truck. this but as more not we Central, who we President continue Roberts, was, afternoon, again try one of do as question, Shelley And many is X long and which and as through in team have and Highway remind respond. make old as if you

evident quarter our pre-announced overall, excluding it good pricing as a obviously cycle was quarter a fourth comments, growth felt also have which need first good wouldn’t the we and was quarter, overall, little to targeted we surprised that Terry the the quarter up said, accelerate there session. it our XXXX, were relatively ability bid in and during though the But quarter - were throughout our say will cost a quarter. and to unplanned to sure the we was strong In far still efficiency am opportunities general a rail areas spikes. was not this Intermodal, efforts on go did demand demand Q&A nonetheless, But charges. congestion we frankly the I and to and commenting that As so with little interruptions disappointed demand hamper address. fourth results customer saw That far a end XXXX and continue as one our even I service for some but react quarter. to consistent great

both the additional current of margins In points load We in and QX improved have quarter price a in sequentially. this reminder truck around XXX cycle. growth increases add on that’s XXX bid trucks coming and seen as an in our we started still we positive early XXX off results and basis DCS, a

and market way. obviously consistent where gross has into trajectory healthy to So, agreement and Cory's to on market ICS, the quarter expected should It the the continues the state margins start-ups has strong to Home do XXXX the in we begun reflect profitability in growth as Delivery. contractual price private are going In pipeline acquire time First asset-intensive XXXX allow and its less into remain fleet a into that rolling continue DCS have our spot our softened. in our while Choice of it and pricing remained

pricing actually we through We we of both the help market activity increase very carriers. watched speaking for pleased adoption capitalize able through conducted truck XXXX and but customers was and accelerate another investment sequential allow marketplace, using prepared both this our upgraded least, to customers have platform therefore reaction to And customer in are the and were marketplace. mix to with swing the weather to carriers develop and And to spending on our faster and in features and expanded to released certainly XXXX in the last be execution not even environment.

More contractors customer in importantly, service flexibilities are give several time These quarters. to fleet us the power needs. independent successfully adds excellent added while they which for providing to for satisfy first their customer demand

continue strategy me We of throughout a we to as the quarter end remarks and prepared at of of we’ll third-party glimpse my That’s into expect go growth a purse how of looked the XXXX. power given view a how kind will XXXX. we

we answer Jessie, that, questions. with So are to ready

Operator

question first Your Majors. Instructions] [Operator Bascome from comes

Your line open. is

Bascome Majors

three seeing much assuming we will see last to relationship way mean, years anything for least they this approached here. are so extract does arbitration the I you strategically, growth appear far going realize it long-term any versus is in from way that that, perspective? that be just contingent out thanks curious still that value I intermodal in more taking question will you three? some able they or I though from kind of preliminarily the the my from am BN very Does it over next that able do change Yes, business in pricing versus guys situation of the at but intermodal you to Hunt a prevail different forward.

Terrence Matthews

is don’t will Terry. it I this think Yes, strategy. change our

the customers. will has recoup at those we we that grow capable into to we where we eastern grow, able always of been are if as product try us coming network network us to grow price our will have grow. allows western growing, we strategy Obviously grow, Our will grow, to costs from our allows us the to cost as and

Bascome Majors

in on bid in you. season intermodal outcomes And Thank early this for for year? maybe expectation

Terrence Matthews

about in we cost the XX,XXX the will in expectations business get that been the they us calendar will probably rail volume we’ve most for rationalization the because annual out the volume or timing been east the the been depending very the we doesn’t to to we I basically of be rate orderly first meet during and to that because, been of has on some part the to we and market grow very been. to continues will year on think of rounds the half through future first increase some the market orderly to outcome that east with year. with It’s them pleased of headwinds Well, will be believe that of And for to the that we have the grow have bids in XX% rationale XXXX. lanes with their first have I the what going decided have on bids XX,XXX precision and a replace and through high-single-digit the going And have of that’s and the priced had say whatever able persist see is. bids, of But in are of railroads this we early. will we able some have we been of XX% we implemented need XX% most and lose can able loads some

Operator

next Your Tom question comes Wadewitz. from

Your line open. is

Tom Wadewitz

then to of follow-up. quarter within afternoon. have and ask I good you wanted I fourth just kind Yes, a

how how that So, or within applied fourth large of a quarter? related of and the should could charge be fourth if can much you that for And to $XXX Can allocate would we terms fuel, in from quarter, ballpark have how me timing quarter? impact fuel much of might you in the identify basis How in just of the fuel BN? the charge, big thought terms benefit? offer you million to then, fourth if

Terrence Matthews

- million that with for As XXXX our been was the disclosed million XXXX was a in $XX.X That and as charge pre-announcement, $XX.X for would far full year we XXXX. picture. and have that

with quarter. $XX.X fourth should And as fuel business So you am of be comment, applied that I don’t the XX% by to are sure we have. the best going that break million unit, could never really but not assume you is fuel, down where

Tom Wadewitz

not Was a it so tailwind earnings meaningful to much? or

Terrence Matthews

because always it what all consider it even direction out. the don’t I comes when a we is, Frankly, know watch

it get So, been we time. the It the were a would and of for of we tailwind if it. short would have period headwind been chasing ahead a curve have

Tom Wadewitz

Yes.

Okay, part and would sounded you I of Terry, guess question thoughts early the then, on constructive I think, some in terms and of be rates the pretty gave – it bid season. just in second

high-single-digit increases you I heard be and sure think make intermodal. to I to just respect would that right, So, with rate

bid the end and think, you that’s overall do bid are how at like that of the a but rates season tough you – high? bullish could year, beginning on outcome guess, I versus you be plays kind you seems the pretty developing on admittedly out? if and rates to the a would truck more think So some how mid that color pretty down overall of given might think season? wanted would comps bit spot add intermodal up I mean, is that what

Terrence Matthews

Yes.

of rate to the I mentioned intermodal thought increases was a I percent. as I in think, as truck XXXX, of elevation terms held very closely in

to see in on might in we’ve cost little I to little everybody starting talked it of one is I’ll are But higher bit they there in that going Coast. of a the because year about is, the is and on speak see regards trans market seen intermodal, and non-asset what’s be economy is is that that with this that I PTE, challenges load things need in orderly think Shelly spot rate that there. There let everything truck. different. with going structures bit market asset a a to the we rail the that of similar to regards grade bigger for the West

that railroads that there is West early to from be loading heard will more the the have and Coast. which seems power We support in bids carriers trans sea off the pricing ocean

terms scenario which you saw the truck, think year in end where increases intermodal XXXX. higher of of different than see be could a overall rate what the I we at than So, in is could rates

Shelley Simpson

see being to will if their in and to predict stabilization market customers their we required. truckload the really in about capacity create had cost try our what and Yes, to talk I able generally,

good season. have the conversations bid We to

overall that early the too able on they intermodal see think for for lower think intermodal on, an the think will have said customer-by-customer, would the more on and could to I as are cost. I plays truckload is Our speed we bid if what up and year be do overall their But I maybe will for have is transportation from Terry capacity could as for higher as occur this us we early bit full conversions year there out that conversation season. price railroads moving more change a price. depends a predictable it opportunity they at indicators but to market to But and the intermodal that be be this mid-single-digit for customers into think what also do

Operator

question comes Chris Wetherbee. from next Your

line Your open. is

Chris Wetherbee

intermodal give us how indicative a but you XXXX? headwind sense maybe, with to outlook thanks. it know little just Is a for bit railroads, back and you X% the a quarters for outlook. Hey, the some giving maybe like potential to the PSR looks eastern a of of still about minute guidance, some actions loads I come about the maybe not demand Wanted the or what talk of from are from a the this last are are environment thinking is? maybe assumption growth of couple potentially

Terrence Matthews

in will that this that XX,XXX I that grow mentioned are to that we through half and that rationalization first been lose folks able volume XX,XXX the doing. we mentioned precision have Well, I loads the to to we that, equate the the that bids, XXXX going the mentioned even in going to XX% I as to I eastern replace with the have think are are with of headwinds year. I railroading we believe of

Chris Wetherbee

be side doesn’t you when fleet fleet into and a the tractor as conversion your about the guess, private I about strip next look think into think you for helpful. dedicated out year? opportunity. when over you or thinking maybe That’s How at growth minute, are for the side XXXX. when okay. XXXX, about count we looking move we should move Okay, The

Terrence Matthews

of we record-breaking which First of a all XXXX is came year. off

excited about were we So that.

things are going really look our from too are to out. getting it’s good to People what and year. to pipelines It’s too trying back it’s and Moving another We we tell are going very consistent. like. to But forward, holidays figure just have early. we measure think early they

have a right little So be able we bit will around. to feeling

Chris Wetherbee

the suggest the No of feels be that last of would different couple in that though that the environment conversion for to any terms real reason quarters? been opportunities it demand has

Terrence Matthews

really No. nothing out There see. this that is we point there at driving

Operator

from comes Landry. question next Your Allison

open. is line Your

Allison Landry

for taking question. Hi, good Thanks afternoon. my

what just XXXX. the of I think mentioned, attributable just is? way core $XX of Is relating of back Dave, sense about how million year a charge, to the trying million to to $XXX the to really terms the a In know full was of operating about to you going get that much quarter? fourth am sort I was there ratio

David Mee

as Well, the mean, quarter, I mean, Allison? you - as in far fourth

Allison Landry

yes. Yes,

David Mee

audit same the do maybe audit Yes. or publications that – our But discussions. asked can can maybe We non-GAAP don’t question.

what you you company, XXXX looking to I acknowledge what quarter XXXX. quarter the told what want tell – In they in not how or I’ll I can fourth fourth them was, were I then and intermodal. They determine So guys said, use you all compare just the fourth and at told whatever. or their do entire quarter, them to

XXXX, said, XX.X. fourth in back the of I XXX thousand that XXXX, got back that, to we have and the quarter so, you you XX.X add had XX to add fourth and XX.X in the And quarter charge and the million XX%

Okay?

Allison Landry

Okay.

David Mee

basis. operating the give would income you the That a on quarters normalized between two

Allison Landry

fourth And was the BN to time? much quarter, XXXX helpful. That’s loads you. And service? Transcon Thank if as in there, in in for deterioration some how do definitely would you think then, you is Transcon to the risk far the the persists frame that of this related how as Okay. volume

Terrence Matthews

as that railroads. have They the in and railroads with was consumed service down believe received what not hoped from various boxes been be which will we obviously Yes, railroads. the with in we around the the going up quarter velocity velocity all all the and we talking service had fourth was

box So with to better as better Shelley that anticipating XXXX. alluded should better conversion churns, help we regards are service to velocity,

last service some better seen the days, year-and-a-half that we early. best so So, the than XX and first continue. we But that the much in the rail last hopefully have see refreshing. far We in service January it’s see would of it’s

to have just will We see.

Operator

next comes question Matt Your from Reustle.

open. Your line is

Matthew Reustle

question. Thanks A my to taking a for bit follow-up of that.

seeing headwinds it side that on you revenue and expect might of you offset business. outgrow Curious mentioned again can the are or seeing operating that? do You to in XXXX improvement have and pressure some the cost is the areas if cost pressures in see that easing cost bottlenecks and those in reasonable in income are you which

David Mee

Are intermodal? only the you about talking

Matthew Reustle

Intermodal and on could talk broadly you for the if business, each?

David Mee

well that you be spend is, this consume million probably where as business development each platform Broadly will you units. that of in upgrading of of business for think us business, that they to extra hosts $XX as in enterprise their our units for IT I That’s acceleration will see see as an the the of going platforms buried our the an expectation year. all in our that will be

get the benefit more it’s than the some of out But will to going probably We expect year front that. to in be back of half. half the

expect would increase Terry that So I rail cost let to there. bit a increase – more to that. speak transportation, little purchase I’ll be cost to to those expect I

try will with I costs associated their continue think rails to the recover to operations. their

the of the mechanics We and will to we pace and continue expect ago. policies any by and driver pool have record. But our labor not salaries a the is frankly rate recently to don’t in there some means. we down with insurance to reductions people We’ve We all still are and saw wages out our tight. even and managers things keep and safety increases certainly nature, frontline year cost maybe renewed see capacity to that tried know that

is having are I capacity. intermodal, can to the to take think We in get I Terry, increases rate that of, missed? big anything that ones there Those insurance are

Terrence Matthews

dried better, dried to fewer more gets more better with the of as more efficient and up the as churns on-time should fleet up and be. see boxes are I would are, because changing box that picks show hoping service you our with the efficiency well as Well, velocity the are am as going railroads in loads

be potential could for upside us. a that So,

Matthew Reustle

follow-up that you $XXX in then, that It Is CapEx the how think conference one should came And Anything we on that there? then would target like, above CapEx. helpful. mention pulling dedicated looks forward really That’s XXXX? million got great. about on that Okay, last you And in we call. business?

David Mee

dedicated business certainly year. of reflection half place. the amount the We the added definitely get in is equipment try the to on of a it of Yes, back we in

heavy have a the CapEx a million We But around $XXX cycle successful generate less expect somewhere revenue were we would that. beginning to we with year in ago very fairly would it still what be had trade XXXX. So our we and than XXXX.

Operator

comes Amit Your question Mehrotra. from next

is Your line open.

Amit Mehrotra

offer and monthly slowing And just everybody. in growth. Could overall quarter? the a Hi, in of cost of Thanks. lot out more volume you just the cadence uncertainty just of wars comment the environment, trade because terms intermodal there overall broadly, volume

kind be would us just those contextualize in ground on you concerns that Thanks. today, could terms you seeing help helpful. If of of the what are

David Mee

that canceled thought I war. trade heard the just truck Amit. Hi, we

Amit Mehrotra

great, is everything so right. Okay,

David Mee

to on far plus October, demand. we month, and we Anyway, were answer as November, year-over-year. the X, And in we calendar December, of year-over-year. in were were then, year-over-year general In on some five, three as, volume question minus your a minus

Terrence Matthews

Yes, some was supposed X, pre-shipping. helped in that activity the some volume of churn that to I think December go the tariff

are we well we disappointed opening international should last after heard now announcement, companies that January as the in that we’ve what will as to December. from boats Dave XX comment everything or But today’s January, a plus here make loaded year. intermodal mentioned a standpoint, So see percent January, future his in their in as little which from equal happens are but

first low week of Year, third Chinese there of be or basically plays think into in I – a February. Now week could February New is the fourth this out which

of going rationalization up, to there freight though in to the move over some pre-shipping an little opportunity is there goes think out. that because itself get intermodal has happened March and could to back on, even service I I some are some Overall, a bit what is that looser, marketplace. possibly wash or and they of think now going So, is happen kind in trucks when intermodal,

difficult to the it’s of it’s far we February, volumes, even what January, half in regards anticipated pretty rationalization line with with with so the well January. in for March, first but with So,

Amit Mehrotra

helpful. Okay, Thanks. that’s very

way on, margins. dedicated two guess, about incremental What’s margins kind halves, the that the intermodal now. about And incremental it XXXX? in if incremental that for the second us about weighed both tale costs have dedicated of right to really it’s down XXXX? several pretty the of and Super some give thanks. up for then, right quarters of Just for follow-up think really that I spiked dynamics half can of significantly. how the XXXX? business and a in color The intermodal to think me, start-up way just of to That’s a you the What’s

David Mee

Yes, generally, well, business just I tell on mean, dedicated. I would I well, talk you, about your mean, they base

to We go will we’ll start and there Intermodal. then

Terrence Matthews

we how dedicated to out guidelines business. we within which base we margin. Yes, pleased XXXX that in business our very want to operate our turned at operated say, operating is base are with for We the XX XX

loaded start-ups are everything. we that So, with and with there and in pleased that’s

So very pleased we business. are the just with base

challenges business our growth headwinds performing guidelines. final but facing are within is We some the it, that in base and mile with to dedicated provides some

David Mee

mix our yet. aspect, how think haven’t XX% priced or intermodal, and the again, as is We down would all been. running far just In or it it’s in XX% that’s margin really as that moved range. be said, grow we margins. if just and XX% So, how always long-term right mean, he how that’s at XX% completely, I is shut general it’s That that margin look how targets we

room some get have up there. We to

to XX% that, how an So load the we some base this because But we cover of in to have XX% we to get cost before nut extra – margin range talk intermodal. and back answer inch have time, can to to to have our short-term, is the the what that into don’t back do inside our overall know tailwinds. we incremental about get I to or cost case margin in at point

get We to there. have to overcome in order

Operator

Your next Seidl. Jason question comes from

Your line is open.

Adam Wieschhaus

where wanted deliver? afternoon light in an guys. for This you I First question. your purchase? a Hey ask about Choice here feel mile area bit want you and guys of is in to other and Jason. where Purchase. a your guys bit thoughts I Is kind you taking on Do you particularly to just Cory’s Adam little maybe good just thoughts maybe delivery, Good you you maybe acquisitions, and this for like with little of on last pretty my guess, the surrounding about thank strategy feel are this Thanks. last last mile mile look now grow more for

Nicholas Hobbs

is Okay. Yes, Nick. this

us pleased are with acquisition. We our big mile the gets into of final It furniture a in very side way.

appliance furniture the largest gets it’s $XX us and big side delivery, in is we mile We area. the you think the billion furniture billion final this are pretty look and heavy $XX and bulky spend. so that’s at into billion side on the $X the if to and

appliance then about equipment. of we what are then and is ones and we about exercise and get right the where excited we medical focused and now smaller that. excited do is billion But So that on are can on you $X that in big are

one big culture They’ve delivery We on and We this reputation the are big segment ours us was their in and will give on think and great got of we are service excited well. really acquisitions. we and any We are great matches it that that. very into the side larger will and the not service the a and players one take great match. think we about planning Cory a bulky now launch more

the I’ve setting their of transition call been transition. a all a customers - and up it’s on So, for great been with great

to that a month. But be integration, going with We able I and to intermodal Terry will on on close inbound. some team we is of Shelley’s are think lot even next do

be So going up relationship. extra from there is our picked to revenue some I from that think

beneficial it’s So of a going lot divisions. be I think to to different

Adam Wieschhaus

But follow-up that is NSC or spoke rollouts as railroading it's you intermodal at how your be about other was about quick you customers? might well. you a the I that guys there bit there if little bunch guys I a about and specifically to and wondering just else can know Just maybe you the maybe able regarding already and a Thanks. have guys and share affected just any rollouts then maybe And share UP? anything details PSR thanks. Great, with precision and

Terrence Matthews

yet, precision Well, doing stages. some done the CSX all I there what looks definition were things is developed It well. it service, implemented been should railroading some follow of Pacific they things that if of side would others better it to of pieces the do, they maybe I accelerate the with on-time the should that so and EP new some also that on regards the rational grow. on I as like of the is think don’t on-time and their that say is better in that, have various they’ve by Union in taken And things service this precision. intermodal with means be going obviously as they quality all to the Precision revenue and should railroading of then, know

is slashing So, ORs all things that, XX I going is pricing trying that difficult if up of going are a they that one railroads that to holding the think rates. I are as is you do to if it’s as your these you seeing think and quickly get can why are

next to reasons So, PTE create opportunities that’s of some similar last level environment them months the kind in of mentioned everybody year of to and market what the front of and we going an see along it’s it’s ahead. dray in one elderly I the an as I those why has settles think out it with because

Operator

Delco. question Brad next from comes Your

Your line is open.

Brad Delco

hear afternoon Good everybody. you Thanks. me? Can

Terrence Matthews

Yes.

David Mee

Yes.

Brad Delco

the portfolio. for a got I you about John, broader question

represent do more about, wanting be spoke out? when portfolio, extent there. there are you but is just pie What growth Nick the what across and opportunities to you that want acquisition you or the you of to out businesses would Another inorganic looking to these where look the total

John Roberts

in anything I we logically organically. providing can’t adjacent do very other specifically mind right now something services today that be something that us would suggest with we it don’t have than, are to

lot have I don’t saw we’ve would both that works We say, a complementary got think very those we in to that two is to made, use conversations gap, build. quickly a really really the to of haven’t are fill and long-term could like that we now that of need we and take the looking have we companies that something really here had acquisitions us here we be big and gap.

we delivery the feel think on that side. side particularly did way furniture on delivery and that contracted and I the

in do Cory of for is right a now. nothing we platform good going activity have burning cooking have we a around real internal a and lot was projects So, that don’t add-on but us

So about want us comments, careful and he see our on finish off I would the opening be they like were technology on I’d to of deals. some see present. Dave’s that stage getting projects what us bigger increasing pre-late investments to our platform. remarked

are too sticks with too one. can’t we as there. what We get are We on seeing pleased many places many

about thoughtful and I think be to want careful. we be that

having the times, really Now bit on that, of that that’s do seeing workforce. we have is, not to that way few more a said they program deal a the a of say now assets in I this we think done one like, they these little comes several internally in now with

within entry in story good we consumer have listening. So, have some tell have they and that’s But say the one of I to and and a really that’s around the these our anything be divisions like wouldn’t for current we’d at that they moment. had DNA

Brad Delco

Okay, for great. And then, maybe that I can you if Dave. to follow-up

we You amongst budget $XXX XXXX, us How should about segments? less the think million than that plans capital being capital the XXXX. for gave deployed

David Mee

obviously trade going But even intermodal heavy a think, dedicated. got the I be biggest user has here. is to Yes, still

decided going spend enterprise as of going we that at platforms a obviously high been additional overall much intermodal to our looking these far to expansions, things that to software part that they that are in as to with consumer it’s goes which associated - the is are So our our these and platforms, where, guidance well. of develop spend plan, yard an large of – $XX been items. is And out we say would capitalization. million that are be nature, that We’ve but being issue then, guidance. hardware as we how of able and as had looking I at that run would breaking CapEx digital part end one-time technology requires cost up – But

Operator

comes Chase & Ossenbeck Co. Your from question - next Brian JPMorgan

is line open. Your

Brian Ossenbeck

just for increasing and It down. of us but per healthy serve Shelley, sounds about margins just – you control like VFB taking elaborate tower are think my function it optimizer? for a to that with specifically is Hey revenue everyone. load Thanks It's just marketplace. those through the of next the were revenue. you rollout questions. the walk XXX? generating little a Do on XX% pretty that ICS lower looks like the Can was and cost bit,

Shelley Simpson

to Well, cost great a XXX. that question. serve with was Lower

we to between is traditional see platform. lower There platform. in definitely the serve executing with the brokerage So delta in a and executing cost a

that We in I has acceleration happening. that have specifically mentioned spot has the always Dave in out But impacted as about in well the I would into do happened the think, ICS, fourth on think to just market quarter us, December, that's particular say So softer coming we platform, general. January. and continue in but in what’s

predictive. network are drive we need have efficiency a working the but inside few more we to We quite inside XXX to the on features be that’s very going that and platform

of very we this piece So, first machine learning. get rollout our

in time, and in we So, something we and the so on for searching have the also create work platform data and to will was matches carriers and for coming data, carriers that speed. points and we do information that implemented better how we that the using shippers from what continue that with turn

happening investment that inside large a So space.

inside that’s a on have really just and XXXX and We entire organization can mid-sized then component another internal the XXX see segments but then small market really are that also access budgets rest you'll the the to to platforms, inside gain working of in the coming services, the on benefit platform. here And expanding so our start the from to XXXX. the to platform key

Brian Ossenbeck

Okay, great. all Thanks there. detail for the

was. higher year Just for year correlation rate or pretty bigger model see this seen tighter a you we back the in follow-up when for you we’ve fare market last think do question to than is Terry. just Why there year past go a and truck increases a could Shelley stronger picture than but

that mix bit behind a effect? Thank base logic walk that on that? more can Is Maybe a is shift? little you So through just the a you

Terrence Matthews

it’s think think players to are with the West against the going to rail cost boxes certain want as inching in going cost, tightness will I maybe think that providers be intermodal are more better and don’t dray I higher way their inland an and transload. that option they to transloading headwinds Coast then the points the in international pricing the all in the continue the a they PTE, in such up see we are

situation on demand is for So, rail a got and improving higher Coast West supply – cost the and you service. positive higher you ease, which have price, dray and and so PTE

its and the have some there first East the is with So now a day, think we speaking, and sight within. in I many lanes hold that, day-and-a-half there ground lanes priced But that in were be are that here backhaulings able might that that intermodal to a East. maybe generally #-day will for

think I different type, and this be those be doesn’t normally for reasons. it economy this might if this year said, I As

Shelley Simpson

And more feel I in customer from stabilization sector that, like to award. from a there perspective, might is add a the bid I happening that truckload

it rates And or and accept so, could truckload happened if what in what market what churning, consumers XXXX they you their were freight have turn the volatile, XXXX, at at to – and that tip made for works in really service was very networks. the remains look a in churn

more think I a is network there today. stable

move business this the the happening. cost to Terry at create closures this. intermodal. that pressures at So favorable the that talked cliff in the in less I look happening are Lane that and that alone would about disruption will prices churn in then the have rail rationalization same bid say, is don't you

the think I intermodal is disruption the happening in than what’s inside different side. so, happening truckload And

Operator

Your next question comes from Scott Group.

is line open. Your

Scott Group

thanks. Hey, Afternoon guys.

So, clear for wanted your just impact on answers Is specific on tell just earlier. to better I there in then, the forward-looking from a want wasn’t to arbitration. $XX use million follow-up XXXX? number anything Is the you guess, more to And us? I this there

you feel of just just XX% improve XX% still If changed XX% comment, adding longer to really the do wasn’t with by sure of to XXXX something it, and I XX% And And good XX% think arbitration targets you there is if I then, yet. even misreading margins had term? am because with arbitration? a haven’t what or you intermodal to the we about meant changed you that, XX% still margin to can in impact our

David Mee

one. questions margin XX% three time, long-term what Scott. for a XX% exactly I this forgotten At still them. in of now is That’s target And to point And our basis. I’d It incredibly the clever, was all three start with in margin.

and this wait arbitration. on not to have pinning see However, we'll we are down and

out cost The also are pressures rail other there.

that big we but Let’s not, railroads. ride of one forget all the

look cost today, as on up to XX% range. But right rails have still being. as then think we is XX% accept increases, and customers where as our long-term those us will stands we margin the it at to end so targets price pass And their

cost. As don't public issued we’ve information far far as what arbitration have not I the that's itself, any as other as already

Scott Group

this intermodal? just And the think you was then that do can margins in year given part you improve

David Mee

short-term, one don’t on the In it again, it just hanging have, but, railroad.

wait see look at all have a railroads back bid cost and to mix we and some and that our all from we’ll entire the rail see. to will whether have in and expecting capture what cycle, We our like period we one can look are increases PTE

Operator

from Your next Fowler. question comes Todd

line Your open. is

Todd Fowler

Great, thanks. Good evening.

the Just dedicated a on follow-up comments.

the At for do of the coming thought isn’t cadence in that’s the a recent is that XX%. comment to some business. grow that expectations I follow that the that XXXX of expectations should right for has then, it that XXXX for around point half into And that the Is which dedicated was through also for see understanding if margin to you what XXXX? think what’s the runrate now kind a business up targets or the continue growth? revenue I with that other with all second dedicated of is improvement the where with throughout are going grow pushed at really the made more could been

Nicholas Hobbs

guidance, asking would that be clever. for Todd,

just clear, make he okay. I and Dave answer, not allow will I before you give However, wanted very to make guidance, that point

Todd Fowler

just about it. say about to if That’s think I helping how really us and do. we which directionally are think we try you Well, not think it, guidance, always and

David Mee

Well, I is right? volatile, most we me, you probably that, will being at of all customer dependent I when it growth what tell mean, is the contract, do, their dedicated Nick looking because on size is frankly

Todd Fowler

Right .

David Mee

of So okay? better for pretty it’s throughout to hand year, ratable me lack a scheduling, maybe and their budgets the them

Todd Fowler

The is trucks? ratable? growth The

David Mee

The the right. data anything any of January start-up we’ve and revenue about costs, seen overcoming here think layering what scheduled coming don’t are growth have year. because on out is start-ups I But are, otherwise. the that’s part he it good as we that’s the him what, XXXX, It’s throughout That’s this the are we ratable, is, is we priced.

margin a go expect I wouldn’t in lag So, their on. huge they as

the start – on think their margins speak because ORs. a they and side. get has asset to getting put he to this to their I mix am to starting biggest pressure headwind are or I to to mix with is non-asset that would growth size Nick in the this, going as can that in talk piece That is, they area in let about

Todd Fowler

Right.

David Mee

to to happening. will we for their For we that have as see what is ROIC a which number we that start of want discuss things but

Nicholas Hobbs

percent particularly, something I acquisition would XX just once the non-asset. get we owned, it’s say,

it’s percent portfolio to be we a then, the of So and in growth side it’s going come that have on the to just our general on already and non-asset the bigger going and climbing. it’s final mile,

going dedicated that’s and on our has so, final dedicated in both overall pressure in it. put mile to margin And that

to And so was to. trying allude I what that’s

very it are pleased, internally. we out We break

We times. hitting the margin very and we that are pleased it targets numerous have shared is

about So very good it. we feel

Todd Fowler

mean, don’t Okay. to have And the to we get volatility. want expectations then, I the our We are I I want mean, questions that obviously, all think directionally correct.

making, questions I'm least about from think growth my think recently? or But by forward? outside of the directionally the when into is Brad opportunities I think, coming been and John, that’s investments portfolio just are read you this intermodal is guess the the should that’s business of Is from opportunistic that and there you design, businesses, that Delco that going something just the reflection about something in asked that follow-up, that that So we a where see more again of I I at earlier. you that is

John Roberts

and with that into we are whole I now really it’s of a the of we as we unique like we’ve work that opening rail final intermodal, we've a mile we new their even are things with the and networks can minded they customers that has and our really it’s kind which responsive smaller in they, been reaching very now platforms customers and open are that people some that of marketplaces. big and doors efficiently to us from from the in. what’s serve think on we to systems fluid think services. creating new with whole, are we're to going base listening If shippers provider need I get more customer that hearing it’s serve how I think Historically ears some are if we supply shipper chain. how developing across that open been needs technologies or

need is and offer discussed that service, a is obtain getting for else also things the is, are is we here us that of there who this providing a one it’s good, return So, and service, there grow. they

are past to So size because our of meaningful some our let that think can’t growth away distracted we with way learned to going present aren’t on are get move going ideas you big if to meaningful you and can’t enough matter. needle going take things of - management that the talent that that really to that and I be we've from not along your

today to are to overall, what do think back on always comes enjoy we here. doing organic based this customers Where and again, do we've what we have gaps our telling I So, us. need be growth

or if good needs investing We systems. capital to support property have it and program the us flow equipment or in cash

of we've us that’s good brought some from of a little ways. good pool I brought lot a us system a years, in little differently found that a disruptive. last few self-fulfilling the outside, support real think people year a growth helped lot But kind has and think been lot the of on I that a and to on this really for of that than hired in we the just we

good people it with of we about know whether minded we’ve that acquisition can it What that. return again But enough that own, going good Can some that our is other a things our big always us pretty If this. return not on pre-conceived we simple for outside So would we or and recent a matter? growth the allergic is we What aware do that to working we are customer and looking with am have places. make organic need? announcement us will also help an the I to that's can great. do be keenly that we been to are like notion best be in

Operator

comes next Ken question Your from Hoexter.

Your line is open.

Ken Hoexter

on comments February, just your Dave, kind pre-shipping move we Hey, want you of mentioned of activity good I low April, want until a expect the if just afternoon. adds. understand you Terry, to given on pre-shipping just sizable this then, the just do into have end the you thoughts to container impact volumes. as to March or ports? And understand May at your the continue

boxes? or state congestion market of due said up demand because trued accelerated to your of You the

Terrence Matthews

congestion, leaves it’s velocity up, the and goes relieved it the when boxes. more Well,

those talked to think I some back to Year. With see rail we of last slow the potential year it five are always or seeing the some think of thousand quickly. about on. that our do could regards velocity rail be Chinese pre-shipping six we the tariff, consumed some I getting going December and before the or velocity March we rather containers Xst, New the We tariff, where similar pre-shipping are

stands, Chinese kind activity of might less So, or that tariffs. activity but the Where not New some have washes normal sometimes itself might the out. low, only of you have Easter Year because you

tariffs. have the what just to to regards with see will we So, happens

Ken Hoexter

sounds it that already or pre-shipping a like oversupply So significant seen low? you’ve significantly is

Terrence Matthews

contact have are are boats their – West last steam that What said January Coast. the I said January that been with in they the what full to the and in is, they versus we’ve more had reservations coming companies they ship

Ken Hoexter

just... then, Dave Okay. And

Operator

Matt Brooklier. Your next question comes from

open. is line Your

Matt Brooklier

Good thanks. Hey, afternoon.

mix Choice the over and use So, not color margins of impact us on owner First give also but you Cory’s how question, more businesses talked a terms could you revenue lot the potentially operators. a in there months much some did to that guidance a the XX is trailing

next could kind margin relative about a margins talk a from year help pretty would perspective, think you be as whole dedicated of the to that to If us helpful?

Terrence Matthews

months be trailing with had $XXX and the months trailing conference calls revenue million XX we $XXX would Okay, thanks. XX million in and those in that between and did they all customers

the we So with acquisition. pleased very are

when faster we grow I capital help to the have grow with. have lot quite pent-up they can think Cory that lot a them a demand of didn’t

excited develop margins non-assets. – the are capital the the is there our was, they in on So other about customer excited it that. question – And depends required to then

business. are We in going are in targets to our be the going to to is be operating what margin X that X range

Matt Brooklier

Thanks. I over XXXX. than you looking Hunt potential headwinds if at JB am Okay, that’s and are West? to shifting is service volume that from on mentioned, are volume volume curious to PSR Pacific Union level in and grow are for meaningful. disruptions there What’s in potential factors you additional negative And the take the intermodal, helpful. maybe then, they growth to

Terrence Matthews

boxes available the they the with the year continues their and if velocity. have way have should We started increased

will up as to and we I pick stay think deliveries. can have So, long – destination boxes, as there the we fluid, necessary is their can terminals power origin and

network rail the as long as good it’s say would I So, stays stable.

David Mee

of Matt, loads. the question, your answer those rationalization of yes, the loss and specifically spite to growth in in rail just the XXXX expectation is And

Operator

Your question David Vernon. from comes next

Your open. is line

David Vernon

Hey, good me fitting afternoon for in. and thanks

of gave the rate Are to way. the are on ask how you of about sort wanted You environment. you different I a in some question feeling sort color good us seeing follow-up. the Is just have side is getting that And sort then, any way? see on easier quick material to of any signs losing market in I labor hiring the drivers? a

David Mee

take We’ll that Nick Nick hired has since drivers, we’ll most directly. has let the one the – let

Nicholas Hobbs

it’s and still tracked. drivers of is Yes, would few still But a but difficult there. a those. still would find good really to challenge There it’s are out quite that just needing that quality I say eased slightly, markets some still say I it’s we are

that out are So, still on there bonuses hire is there.

So is as some tight. still but not that there that There it’s there. you many, is tells out

is would in still so. very our dedicated side, I market So tight, the particularly say

Shelley Simpson

I note would that Nick hire… And just cost to our

Nicholas Hobbs

Absolutely.

Shelley Simpson

Are still level. at high a

but are for talent new bonuses those our in cost we WX So drivers. to hiring we those it’s hiring about as cost bonuses, now our more just talked doing new paying also total and acquire

Nicholas Hobbs

Well, good a that’s point.

David Vernon

more we a you letting in wildest going way from in two and we question one feel not one us you sure All want make of are some is to be of things assertive arbitration tell right. pieces us but here we Thank about think there do the are comfortable Dave, then, of off earnings to I But company. we a kind there of the stuff are stock get when is around to that where the JB you a and the of are And sort us are you. going that think this where timing-wise, kind to there as not guidance. an is don’t may – is that our a I the And calls, point use so on any giving the Any year, probably, least point directional follow-up. push helpful. there visibility the come XX% have back understand helpful. Hunt that that uncertainty hold able often That’s lot ask I that is, guide models They as a that at this overhang can you to is of I so around pricing?

David Mee

that Yes, to is talk ignored about try we it reading it’s then or will never in even visibility, it. when been either who it’s likely guidance updated. get caveated XXXX is not we more on depending And

the behind always are we curve. So,

We never on then our and use two we where doing we’d So, out putting We numbers even far. are issue the to there. worked thought too are before out about for getting back it. were started lens It years to guidance. people we out

to we you issue the in intend to will more we see to the information public So that is the get are issue I going information the definitely and as to we if that we public. When information, information public. in us far doubt more XXXX the all issue guidance as have issued arbitration,

Operator

Your next comes from question Deak. Casey

Your line is open.

Casey Deak

A you. in Shelley, Thank question some for nature. more long-term

general business growth your labor marketplace front, model? more the change looking revenue, over Does the needs coming that more you time, how look If from are brokerage and ICS at on change that at the how does on along many And business? that you that you those if brokers you just need forward? kind profiles and footprint can lines, the view margins you return have or comment how on then of going in you

Shelley Simpson

our about you If your I say, brokerage a differently, could look you, take better to share if that. just continue real-time procedures we we in think I understanding to the you questions more ability I I at having can where accelerate would to are because happening fill and have that to in now data, were gaps differently tell visibility grow the where little going marketplace thought

to customers help owner data to how expect or but organizationally, also to ICS dedicated So I expect know into that that intermodal continue we would stronger, because fleets to have or transition for footprint. create backhaul use better

to perspective, expect continue to also we I over labor large that And to as the margins So think do labor. the expense go a that a – beneficial to long-term. of here bottom-line of prove several would years from then margins next portion our fund

do the business. people So

expecting in near-term. the aren’t We

headcount. So lower our total

successful platform when people technologies. We that be the have accelerate to our fit experienced great we We with headcount. will think

carriers. need and And customers really do both our accelerate work to for so we to think we with

think that will we really brokers. to as still But efficiency So the range computer should we lot margin percentage our get be a over works our of doing and my gross in shrink a time. our bottom-line not fun percentage of that’s brokerage is

more So transition can, automated. with and the problem collect of brokers the more and can skills computer side that the their bids things that computer use solving more will are creative and do

Casey Deak

going take into at for And over business? of time hiring to Thanks. you that of your of the force that does type kind or change come to are who that’s that change labor person looking job

Shelley Simpson

our ICS Yes, definitely work the started of sales team. segment have we to

versus looking procurement. for for we carrier carrier so, different And sales are skillsets

And moment are to be so, jobs the will over that I do going carriers and that change times, be think time. but think can talking I at do to we when them shared needs adoptions about having a we at Those the platform and happen. to experience, benefits giving time of and their more money, features them giving saving the something just let’s doing better that are be

Operator

time enough have for another we question? do presenters, And

David Mee

one Yes, we will take last question.

Operator

All right.

Ben Your the from W. - Baird next line question Co. of Robert comes Hartford &

Ben Hartford

Thanks.

I activity is your We in levels the Basin. about in inventory finish. planning the across in LA first sense just tight, something give are XXXX? overall, it comment capacity you channel, as But will on the mean, what the customers for transload relates saying the a particularly inventory Terry, to made warehouse quarter, levels as perspective to

Terrence Matthews

think that as we think markets don’t also of I the there only dual see am our to seen in the new shortages freight any changed I levels we others saw anything latest and couple to up which the have what out but I not of that the know country haven’t seen what weeks. see warehousing We new regards that. soils is years maybe would I’ve that’s three comes months. Yes, on to I inventory here I like some data trader spike it two next the for from – curious in we data sits storage. certain why that December But in and down are seen a last pursued versus throughout it’s two is say year-and-a-half really But data for it in to January. when various the will ago. have materially in or

Ben Hartford

Okay. That’s helpful. you. Thank

Operator

know back the you all and And bunch over this turn I’ll the we scheduled out in will Thank and XXXX is you call this come and for all of take to am excited joining I questions. to to presenters. are us come to about to a we for on you. have are beyond. talk planning I our to see the us. and we sure see got time circuits have on Thank are – you company down off scheduled where we

Operator

This concludes today’s conference call.

now disconnect. may You

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