J.B. Hunt Transport Services (JBHT) 17 Jan 202019 Q4 Earnings call transcript

Company Profile

Participants

Brad Delco	VP, Finance & IR
John Roberts	President, CEO & Director
David Mee	EVP, Finance & Administration and CFO
Shelley Simpson	Corporate EVP, Chief Commercial Officer & President, Highway Services
Darren Field	EVP, Intermodal
Bradley Hicks	EVP, Dedicated Contract Services
Christian Wetherbee	Citigroup
Justin Long	Stephens Inc.
Jordan Alliger	Goldman Sachs Group
Brandon Oglenski	Barclays Bank
David Ross	Stifel, Nicolaus & Company
Scott Group	Wolfe Research
Bascome Majors	Susquehanna Financial Group
Todd Fowler	KeyBanc Capital Markets
David Vernon	Sanford C. Bernstein & Co.
Allison Landry	Crédit Suisse
Thomas Wadewitz	UBS Investment Bank
Brian Ossenbeck	JPMorgan Chase & Co.
Amit Mehrotra	Deutsche Bank

Call transcript

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Operator

Good morning, and welcome to J.B. Hunt's Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]. Today's webcast is being recorded and will be available for replay after the call on the company's website at jbhunt.com.

I would now like to turn the conference over to Brad Delco, Vice President of Investor Relations. Mr. with ahead go please the presentation. Delco,

Brad Delco

be and an opportunity morning, issued Investors this you section thanks on website the release for had everyone earlier should not, If jbhunt.com. Hopefully, of us. morning. to to the was access release joining that Good able at review our earnings our

could meaning statements. take to estimates provide the some are Before I future today's to the on results to statements materially based time or speakers of identify activities and in may call, different I intended Hunt's be statements forward-looking from regarding intends, Litigation J.B. some of statements. that forward-looking These plans current This Securities introduce the would call forward-looking contain like as statements. risks cause similar on Reform to involve are Words XXXX. expectations the and these Private disclosures set expects, within Act anticipates, expressions forth those and forward-looking uncertainties and such

information the For with annual and filings and regarding J.B. Commission. other reports Form Hunt's refer report on to and XX-K more Exchange Securities factors, please risk

and Intermodal; That I'm Hicks, Roberts; of and by This speakers call. on CEO, Chief the Brad President afternoon, Highway Services; Officer, Chief our of Dedicated; introduce President Accounting Vice would Mee; way, of today's Executive to Executive out like John Shelley David President our the Officer John CFO, our Kuhlow. Simpson, joined I Commercial of Field, Darren Vice

the John for comments. Roberts, to At this Mr. time, some I'd call to CEO, turn our like opening

John Roberts

Brad. you, Thank

service our known J.B. initiatives, several two steps key years comments our how we growth Mile past prioritized last offerings. Hunt our the call, technology course. my taken highlighted the our on During Final and as platforms We focused that XXX comprehensively have charted key over were

our strategy. our confirmed Intermodal, a to as long-term also part Services and commitment Dedicated Highway of We

challenging position $XX management data of a XXXX, In income comparative we downward serve. and by that developmental revenue approach freight the is due for And see to observed rather This operating approximately the a results data between should by it platform, the impacting part million with be is income our for ongoing data. driven have pricing out XXXX ICS, move opportunity we We fiscal grew portfolio called the cycle XXX. and financial XXXX. for in our that in X%. forward includes in total to several stated confirming our we markets digital charges XXXX still, strategies Even through XXXX we the year our op shift noisy occurred to X% by onetime

our shown A key come business the company, from overall, to the improvement DCS for XXXX in unit.

growth. for the by performance growth in anticipate enhanced our Mile part, which income XXXX. will moved conversion, of services, in Final XXXX along top X fleet predictably the As initiated In DCS, XX% into growth are operating a stable continue in we growth we experienced organic private line and strong acquisitions trend increases these previous XX% more for with made

which we business, extremely provide. to operations maintain our in this we attribute to also the used managing customers data rate, approximately shared high an closeness XX% We the enjoy in retention services with we and

have pleased for Mile. recently our third Final announced to We also acquisition are

to return growth third and quarters. continued a through directional Intermodal XXXX, slight the demonstrated uptick strive Through to to fourth loan and

a of stages to As bid and for rate we approach will season, watch balanced closely we growth are in the early quality.

needed increase Hopefully, and desired the PSR the experience more our of forward. reliability utilization going transit of service headwinds to margin rail pressure both to us, behind can work highways the keep business providers much velocity improvement. continue with near-term we which and cost with We convert from work challenges, on to

conversion Intermodal patterns will with close XXX a opportunities. keep we freight on watch customers addition, In for newer in

highway and truckload, fourth season. cycle and lines, presented of Our challenges the continue bid ICS the pricing beginning the to quarter monitor through services

solid the delivered XXXX for continue Our expect in current into bids, investment year continues in marketplace to and given model carrier the a ICS XXXX. continue conditions work truckload and shipper a throughout its in through XXXX. we will business and programs more technology, XXX, the to march asset-light particularly and toward

Lastly, both beginning data financial year be from quarter Final breaking Mile service DCS Mile prior first with we will and out the from supporting business Final the for Dedicated. in XXXX

setup executing respects, both while many on and to XXXX businesses, this was progressive our we I presence strategy a and base XXXX expand the our our within our in productive. is for I year year in see reveal expect channels. confirm growth

to Mee his Dave ask now comments. I'll make

David Mee

John. going basically peak more no around just XXXX. the but experienced shorter-term on season focus the a I'll compressed results, little room a for of quarter bit fairly the to quarter, very fourth strong Thanks, and hiccup. We allowed a it during operational

levels we've to assumptions, to ever surprise satisfaction. quarter, a In err for customer if into was of This of were one on change addition, customer planning at we knew us our going saw experienced. highest from operational expectations we the and the we not side that accuracy going conditions the

Western pressure from of volume In headwinds all results. growth continue competition get comps, across to And off network. in in we delay load that not revenue customers, contraction Eastern closure on the our as some West but but the seen volume was realized Coast, per put also continue growth truck to the expected, to feel see we effects of additional lap we the Intermodal, as the finally

we addition, trying from volume incurred customer rail meet some we to costs expectations. and events, recovering due lost additional to In service some interruptions those some

as fluid decline kept Dedicated, normal steady peak new predictable from condensed year-over-year and during the patterns the sequential asset contract to productivity customers' fourth benefited season experiencing from quarter start-ups our and from their improvement freight quarter. third In margins we seasonal

freight. both and to contractual and mix more experienced and we ICS, versus we our entirely directives freight brokered over LTL further revenue quarters. it This very effort truckload concerted this prior mix gain volume resulted platform. competitive from drive but and year, was toward penetrate almost pricing freight from In due our last growth where season a product away this through XXX truckload both realized Marketplace change business, the into to freight changes to several on business bid Most of then was customer

experience we pricing However, not nor our were third-party the portion similar in of during fourth activity squeezed. the a did larger competitive capture margins materially carrier we quarter, hence, markets, spot did

complete disruptive declined as growth next for to will technology longer operating X platforms invest to improve digital our operating continue the in as Marketplace to and most Our we income generate X quarters, alluded of to, likely a John continue to And XXX. revenue do so, we disproportionately income we and as term.

spot we operating revenue pressure activity a In in were smaller down year and ago. and a general compared primarily from rate customer truck, to volume both of income,

the and However, rate income return volume experienced of XXX% historically the have when mixture fleet. company-owned declines with and capital operating with of impacts during operating we we equipment contract carriers on independent buffered these were

that Brad, my much remarks. covers prepared pretty

we're for questions. now ready think I

Brad Delco

All for questions. right. We're ready

up can lines. You the open

Operator

[Operator Instructions]

Christian Wetherbee

year. we bit It's from the Chris growth Wetherbee load the to first of the what I like little half look want into Intermodal to Citi. talk at least move as about I expect we guess a

we're lapping rationalization. mentioned PSR for some You initiatives of lane the

utilization need see Do see Do improvement acceleration some to share from from sort rail kind saw there's that? the to of fourth we what an see on we gains. think of been we I quarter?

Darren Field

certainly one that the would Okay. negative back Fair expected. We run question, half volume 'XX. have rate a we hit of in

volume we entered to we sort closures position dig of of out As loan hill were to early the the climb 'XX, produced a steeper in.

out lost to some quarter And comparison so annualized in due having is back to that XX,XXX loads 'XX, XX,XXX represent that of in to volume lane run turning for actually the on help the we're comparison corner dig when an fourth the to of half certainly, first were happy positive during of this able the quarter. us. growth from rate going Certainly, that drive and year, year last we closures, not the we

So that be, have continue we XXXX. certainly on just on would not but in will based what that expectation growth. growing we We're what guiding continued I would today know we're expect -- the volume

Christian Wetherbee

Okay. That's potential up some how at the there's net start of maybe want to the go X quarters. pile profit losses the here spending then the spend. least impact we from cost incrementally Do returns of next X of from follow-up several that. to through as spend, quarters I initiative? just think the go maybe to the to decelerates know maybe or I And rate helpful. just see here? Or coming that a decelerates the you of and because spending XXX that I a starting down appreciate another on sense to the maybe about get

Shelley Simpson

Yes.

key areas. about we think we really about think it X XXX, investment So in if in our

reach We in us the believe critical are it's mass making for transportation an as efficient to a investment more create business scale network. scaling we to

that be both season on. on what's a perspective we're focused brokerage happening and market in So from the That the that's very the in first PTE bid will very component side. carrier in dependent

around investment The is of our our piece people. second

to business our do on and would repeat And doing both carriers. making third continue both have with spend. we customers our so our want that rate our is then and And is and sure experience piece about people the very retention for technology rave carriers, in high a and shippers that one customers our

tech rest costs through more of like this to this year. spend, fairly here is in well-known -- tech too is a for for what will and of from and on investment year, that invest really, early so And our rest XXXX. continue people variability the we It's the scale XXXX, our look the will

Operator

Long from Justin Stephens This comes question from Inc.

Justin Long

up to know sequential understanding the expectation Long Justin seeing fourth specific something was And ended related this from XXXX. repositioning margins. the costs? much much is sequentially. I This Is any wanted of there to we shortfall fourth was Intermodal mentioned? question quarter, versus in just of I get quarter the margins to derailment XX with better way continue points basis in was we'll start improvement decline initial to for on much of out that how related Stephens. a margin you was about to break to to a your shortfall how how by see Wanted

Darren Field

Again, Okay. Justin. is another This Darren. fair question,

of I those higher we what but XXXX, a margin simply experienced. fourth dollars costs. costs way found prices, the think labor to today increasing lot in than is in support are successful were their we our our have quarter In challenge

purchase costs making rail improvements participates as Intermodal the and Hunt at well. are J.B. transportation in technology we're Our up

some of all degree, some present, those So to challenge.

J.B. we've something but the just meaningful same entire a repositioning. our we sales way fourth through of through expectation during towards But that. our we will working that. some quarter and pretty would our continue I I about for an we structure, done would Hunt, And the As empty improvements empties, empty towards into some early specific it's our mix to cost at that's and we'll customer go effort. XXXX, probably those anything efforts an and it's in with do say to hurt obviously. go expect call at repositioning that's ongoing by in XXXX, in us be certainly degree to of career as was and solving XXXX, base help my is fill to that working But time, be opportunity

Justin Long

on margin like is getting Intermodal environment like. XXXX? had That's a Okay. know to look based XXXX what on feel could to if get your thoughts bid bit Or you season there? to back wanted that we see And curious need you take in of it's secondly, early, do XX% Intermodal to think little but initial the still And a on to pricing. helpful. pricing you better do get I I an possible target updated outlook, XX%

Darren Field

going hear never not Clearly, you're it's possible. say Well, to me possible. it's

think to lot early think is limited we like been The it have the say, I of you well, in it's of are we have, front very -- we do have a headwinds results pricing, and us. saying, a have I that results bag. very mixed

results that are have beneficial. We

challenges. mix add of difficult and happen on price, efforts on lot what early there. there's market, to for a in out when of -- I order pressure to solve We certainly, will going to price, would have have really just we but a I with And pressure some on help layer highlight think try to that it's capacity you our some predict

Operator

Alliger Sachs. question comes from from Jordan Goldman Our next

Jordan Alliger

year move you as update a Just an expectations on of well? give comment that improving. this XXXX on year, wondering I'm you if sort Can And the on for then and you a term? to fleet your next question could little sort of you that and business. through bit productivity how Dedicated more expect longer mentioned just

Bradley Hicks

to Certainly. This terms is Brad. trucks X,XXX new XXXX we XXXX really to as to we've XXXX, Dedicated our range, expect to for in long targeting of sales, for inside be to of continue experienced have to in We would in Good model. traditional XXX ability our XX% and operate historically, morning. XX% the term in confidence similar very the stated what business

to believe in to very it and successful that So favorable believe pipelines to that standards, it historical based XXX remain -- optimism our gives X,XXX us be we trucks. we'll on

Jordan Alliger

sequentially? a well And -- in that's the like follow-up addressed to don't the of for order sort in the obviously, spending. or versus between obviously, quick for And your ICS magnitude in on right the order to of spending. pretty just you sense year try I the of market magnitude market increased weakness know and a get decline now. this, be the remember, there's of and two business. the Just then, last maybe Any terms it I brokerage whether the profits talked you between documented about sense

Shelley Simpson

So margin I the compression would progress as say, saw the through moves as fourth forward. quarter more quarter, we we

really, Thanksgiving, past years a I that's side. we've from the a here in from before December, margin perspective, all primarily say big total. right way historically several So we And driven off January. moved into squeeze we supply what continued the saw in from as through the has experienced in That would pretty December,

with close make our and watching that how the So market. in what's we being make and estimates just handle the for happening happening trying on we're think best to to best the I customers us, we what's market should sure

Operator

Oglenski, question Our Barclays. Brandon from comes next

Brandon Oglenski

probably just increasing to what you much I the make for of growth guys you that guys said to wait this question lot out this come where as efficiency losses the guess, have is market But you Shelley, there, scale, and doing? more discuss I to need last game year. coming the you're specific off your you I and the this want through think can have investments those we build a a see internally guess, greater the year? to have Or strategy, back? you to continue is you are

Shelley Simpson

question. Good

we've we the in and a community. I gaining from said And believe could also I So X and focused last losses that the see opening data on in from from remarks. quarters perspective, will the call. we tell really between our X believe I Dave our shipment you, are reiterated the from continue that's scale platform in carrier platform the

side. see on have recently But supply a So We is our we pressure a in the customer inside the really rate that, carrier platform, if get do they're the for large to the to, often us. full. we market huge will, need abandon you side under from how shelves That's how and both the adoption our and carriers. addition abandoning, focus on

strategy and the work build is very will drive half closely But the last scale, I XXXX So our that through that ICS we to say our impact see more rest continue next would bottom to should customers back the our with a our year weeks. over in into has X material with efficiency people of line. this towards moving total, in and year and to

Brandon Oglenski

a on say supply, When Sorry, constraint supply? just we point is as of clarification. that

Shelley Simpson

before week constraints about supply. There constraints on are -- been the Thanksgiving. supply since on have there's There

been We very or last side. have seen it day tight slight supply easing two, over but the the has on

Brandon Oglenski

mind if into and pushing but -- you bigger Okay. business there's competitors, similar if products models. a I lot of I And then don't don't answering, think,

of about maybe just you platform differentiated what some XXX the entrants? is new the us versus tell can So really

Shelley Simpson

Yes.

largest So the for multimodal we digital freight us, platform. are

brokerage-only we from think market it how really $XXX the billion a at the We perspective. waste look really do out don't of take about we $XXX and market. So billion

XXX, million every So trying day. accomplish drivers, available that's their is X/X X.X wasted in waste of what in the removing driver the to hours every heart in single we're is of the that X/X system. And completely the market today, of

us, us bringing for efficient allows certainly really market multimodal in large and a best product, approach solve the really side to inside way. best So our customers Dedicated in product our the that more highway for to Intermodal

Operator

comes Our Stifel. David from Ross next with question

David Ross

Intermodal A the question side on of things.

up loads? you the for be those among Western and volumes expect undisclosed to amount mentioned two? there You true both Eastern difference Is in that Or an a that the XXXX. is

Darren Field

So we I two for would on didn't differentiate the macro our there. system. say that's

suggesting is cut the service have and railroad I to hurting think can is the in Network it's where of challenges half encouraged early we and Clearly, the highway railroads bulk that so Eastern become don't have by either capacity that. to that costs improved to back competitive they'd XXXX, too the their answer know come we're ability. the Intermodal's like more our Both in I Eastern that. market. really of

products So East West. the we the across our will Intermodal customers to offer board in and the

environment, in capacity we in today's better outperform challenge service, to until or to that think, going are truckload than at truck, I equal secure we're can to the the Intermodal. because and rates to is customers able challenged East there economics be grow a combined, there. offer And

So -- growing, would will think our be we're XXXX. one grow would -- not in be that system, That will our highlighting certainly, segment that certainly any network be be would or we stronger.

David Ross

And a then just follow-on.

normal in higher-than-usual what either And lane the the because You that the that the there's the lane mentioned in network? Was imbalances imbalances up lane I west? or popped east imbalances. always drove, than more certain guess, concentrated

Darren Field

with grow first drove turn were available negative the available. think And to corner, load our volumes. it's in time is on volume of when is, we the that comes when company, to trying the it what for history I in the

layering markets, in were to the highlight the business. repositioning the we last the or and didn't to in in in in to concentrated were And half empty back start-up both a new on of reposition that a drove opportunities that any markets. almost order and capacity East middle presented business, essence, West, on like us repositioning it's produce to and so so requirements expense. few We're We empties growth, year that bring in the

it I'm what rate had so certainly a is run And leave normal. little just than macro, the at going to higher we

it's in markets empties However, time. both move very to the all normal

Operator

Scott The comes Group from with question Wolfe next Research.

Scott Group

is get I Darren, year. tough to XX% XX% for So, the

in then XX% think to think is XX% X sort And Intermodal So improvement the year? role, those you you right do to margin lower? target think any do this take Or you you of the you long-term this questions. One, see still do over target? reset it's as appropriate

Darren Field

system, I'm certainly I ways the time margin. That's long target. find first target. would expand been change We're again. you me me be your our into part am Walk change ready efficiency target long-term not to going and to the every help of -- just not. through long-term our to Absolutely target. will which day the question I continue drive our to hit for to margin with our our working

Scott Group

you margin part was see year? or do you think Intermodal just, this first improvement not The any

Darren Field

our finding of better There is a are margin out Well, a plan. certainly, lot there's of part there. just -- still unknowns

you to So tell I'm Certainly, improve are. the that margin. planning to going we not not we're

Scott Group

ICS. Shelley, And Okay. the then, on

on that how you'd XX%, period quarter? I directional money, and like with Did more growth the fourth what's at judging revenue that know And X think So of next meaning, you on losses, at revenue the time, for X should if thinking year? about we're we quarters of growth, I did to of the the it be segment losing those think of XX%, Is least that XXX happy right sort we seem this don't the lower sort be XX%? maybe it. of in losses. maybe or place? magnitude color get to then Any

Shelley Simpson

think looks market about historical revenue our outpacing like. really we outpacing norm So and growth what the

in From for So loss happening the for here would are the whatever to what's doing happened If and supply and that, going going market. -- a the a on this carrier will we the we haven't quarter. this that, good be certainty it's that is experienced fuzzy also year. it to market, last weeks, X perspective, season as trend because of bid on if happening be year we on what probably the very dependent us. really with have But what in would such I'm side to little that's a the the tightening the rest on look occur like and more of losses when by

Operator

Okay.

Majors next with Our Susquehanna Bascome from question Financial the comes Group.

Bascome Majors

profit growth If back the over per you Intermodal of compounded the six about X% last years, look business year. has

the right and -- closer a look you at and actually Great long-term middle the that, real does the period it. of in From was that the If includes it in of as Intermodal to before shorter just is years Recession Hunt board management X as still high-level Or and view, their continue extract nature Class getting business? gotten value work the partners? chains railroads are from bigger, view growing more it and J.B. a supply X secularly to you've is becoming cyclical to XX%,

Darren Field

Sure.

a to question. in customers Certainly, I of fair we very from think loads. continue the see millions it's opportunities our

I -- the of convert million we've million even the XX Intermodal. shared on to think last off call, X Terry to to highway think loads highlighted opportunity I

them. combination that right Now that's for to raw the customer we economics reality that solution is data. the produce Intermodal convince that of The is service base and in have

difficult wrong those referenced. was it's year six more lot Intermodal be if There than expansion that would I the We of railroads highlight X didn't was had today a years. system. period in I services the during you've during it opening

can it's that it's lower-hanging you that inventory some perfect items transfer after go is and So that -- Intermodal you is business have the and warehouse for. fruit replenishment,

business us it's with Intermodal next rates are Intermodal solutions expecting can do environment truck-like that into years. continue drive of to than a our and they some a business are version for. our to the In up They economics. truck develop providers rail several move as at expect will service discount, Obviously, growth service today's get the a in we higher with to give benefit more not environment, the they're going that customers us to

that. successful to us doing expect I in be

participate to and So, to us growth market, the be front. the we a yes, need expect on railroads but it with economics service I front

it think they to what -- that. they in the able X or are delivering over want that, their I to work I see to together that's years, if do. next guess, X is we'll accomplish a we're strategy

Bascome Majors

the If has your challenge flexibility clarify is your been with last changes? bigger capacity? I partnering cost the could in perspective service it railroads, just the of of the point. in lack In design Or the

Darren Field

there's Wow, to efficient." And to to be competitive is great It's economics, networks, along answer question. the flexibility their one ways benefits not they the to both. customer. reality a railroads I'm the cost they're more a of to the of flexibility correct sure can way is the lack customers I -- a that. The to have order would from the find be drive say, be "In produce we in which removing trying that pass efficient lower of can more ultimately some on

to drive I that's part efficiency perspective to we try that together, to cost portion some in to we So a customer. can, order love and think to their have can, to say, do railroads "I along on egg the pass market, Intermodal would is with that discount, develop very efficiencies a market customer? would railroad think But to Intermodal. chicken a And the thing? so so costs." I lower with that of real. that's in my And every Are offer together their stronger cut it to or the system to grow discount the trying I they to a that, produce a fair the on pass

Operator

Fowler Todd from with KeyBanc. comes question This

Todd Fowler

get help that the then how broken Great. growth support longer-term from I is that being Dedicated, on other organic and about to detail do required basis? Mile. also growth in there? inorganic what you're But I sort we about And investment both And the XXXX some speak to of to you see are thinking quarter Mile, for going to if maybe we're strip there out think then opportunities? Final wanted separately. just more Final or out on have a know next you that can ask us that and

Bradley Hicks

separating reason And question. that part Great unit. gearing why its the think up, it and as I we're we're business it's own out of

more And and see so details. you're a get going lot to information and

do to, show what intend XXXX like you As to John alluded a back. that separation in we look and looks

to better we quarter I you'll have much XXXX. in And so perspective end get here the the think a when first of

Mile, we we terms In investments. Shelley that see investment, similar in given nearly see are to going Final investments There before XXX we've you're the not do tech in but I guidance investment. again, the magnitude incremental to of in have think the technology platform, spoke the about But is is we'll we X% very future. to out, target be around that going and confident at to range and we're range to operating operate our is Mile, that -- that the And and Final -- we're believe able in X%. we see for when split it going the foreseeable

what We're it for part look not business of are, as $X separating Shelley in full percent we growth prepared question said. the be are your to a it's a yet that billion will those believe intentions We us. like. to market on targets Final Mile our But what segment. like in do second of disclose lot growth, out, part the our Similar it will revenue outpace

You won't today. see that

reported with seeing organic million our and us channels announced that going we for had $XXX was third revenue excited $XXX about. were some sales to we're growth last through were weeks help But of a that XXXX I But revenue also we're that that. few that's back, John heard growth. million we think the to numbers we're just the our mentioned, in towards acquisition moving targets. quickly

Todd Fowler

And for XXXX. That's I'm very sure helpful. if CapEx you David, Great. follow-up, just kind a not a expectation then spoke of to

like of little would a be? on down the you'd could maybe it the thinking have container number Intermodal spend a maybe you're fleet break give where If and the what share? and help of us to And you some rest you kind for bit

David Mee

Yes.

$XXX in number to $XXX our basis. the from million on million a net think I range models

far growth, dry to replacements as container orders We inside of As van going virtually going we're place be obviously containers to flat. Intermodal for. have are

that. for need do But more in we're some be We back-end that additional have actually to may There our equipment. we'll have have going to optionality allow to conviction some growth. contracts

are realize, you and turns been, where think I they've to that. focus not As historically on going our we're

right We They'll the them add that's refrigerated point time the in around quarter, any don't our be throughout to will containers. but is one just containers. now at of add is The to kind X,XXX in year. expect come at goal plan this year. refrigerated in We sprinkled throughout

Brad talked so Dedicated, XXX in there. to would adding be trucks growth about X,XXX CapEx

million, between actually on the I completion, technology will And it somewhere that We Again, have see have so to some wait rest and turns out that maintenance be year. be that CapEx. replacement just million $XXX the then capitalized and of within project ends being be. $XX capitalized what and we'll will think, number is to up based

growth balance somewhere somewhere $XXX $XXX $XXX -- to million, around that out million $XXX is and around would maintenance. million, the million, So of be

Operator

All right.

from Our Vernon next David Bernstein. question comes from

David Vernon

could could bit. what on or for ticked XXXX? us a you you the a Obviously, be gross Dave millions-of-dollar kind in side. like loss volatility DCS up the has is around loss ring-fence be of margin there's little should range rate put there help sequential what of operating kind can Shelley, of operating the know for But the I tens XXXX?

Darren Field

guidance? for asking you Are

David Vernon

XXXX. for asking for directional No, should ICS the on a be loss around what range I'm

Darren Field

the of A some going to market as Zero market know. Shelley to $XXX early the and little I in upon dependent It's seeing is talking now. it was David, be to try to don't we're lot is mixed right what signals million. a quantify it that's that. about.

give kind we're But what shakes have of tech early too pretty point, a out that going and this We idea how it's to on we're to to people. good spend what range. spend any all at going of on

David Vernon

thing? some volume a pickup that running volume Obviously a thing? to and it. of see Like you'd growth? LTL more business, the is All expect bunch Or ICS is when LTL in decline capital the see there. of putting If think volume sort the right. of that us X%, is coming off kind at maybe as -- TL expect to understand about I growth Well, lap we you XXXX is in that a -- in growing falling should and we through when in a the XXXX to

Shelley Simpson

watch and we both So revenue volume.

think Our throughout total. would we inside an in QX. the in going a or you so to total LTL to totally our lap revenue, in see watch that's happening would should load to that. per LTL, I'm number may that revenue most going say that much per change and when see and lower revenue TL much not not be with happen I volume year, may sure have really we'll can't shipment what's this or closely. Shipments, accelerated going say, to you'll what's how will I start faster I we're grow

David Vernon

is there when LTL -- is sort that that? time any to insight additional lapped? of us going Is headwind a just of sort into not Or the you're give

Shelley Simpson

insight. more No Yes.

Operator

move on from to All our question, next right. Landry Suisse. We'll Allison Crédit with

Allison Landry

mile. on ask wanted I to just So last one

and came to if for a on might obviously more on You've M&A? the let's that But sizable from strategically. done some if, potentially market could how allocation maybe be might a take front, very gauge able of number be up to acquisitions, you than you standpoint, And just opportunity capital this willing leverage how large you trying others. answer aggressive a say,

Bradley Hicks

both there Final You never open from never, say size so and in we've far. never. to and opportunities I organic much strategic Mile, say done through growth that, that than a both an would it comes never be you when what think to so we've at been make fairly I modes, I especially larger And acquisitions. standpoint, Obviously, say to said, like might acquisition

days until up it about be thought candid. hadn't to I frankly, ago, But X

an would As we'd add up to approach. portfolio. if rule had our the make willing to the of the But always would it return to whether willing that use it to have we'd far that sufficient our regardless extend we think strategic, we've balance before be to sheet a criteria sheet that Yes, lever be meet willing that's, And as we acquisition, a be in size. is it. profile to frankly, to balance

And or those. fairly directive. and our in performance of have based being wouldn't I think is and on I it that all that we've think disciplined acquisitions size change would wouldn't our anything return metrics, been

Operator

right. All

question comes Wadewitz with next Tom Our UBS. from

Thomas Wadewitz

Tom It's Wadewitz.

So ask this Shelley. you, I wanted think for I is to

what or like you December, tightening trucking think at, some weaker that, really think spot on get Or of is said is do the kind spot hoping into think let's commented people and How seasonality? market the to the here. function this do of look there market data I anticipated freight that stop you a as think that's weeks. happening? you last you do tightens you I was I place think the in spot think seen think in -- beginning takes the of guess you truck say, it we've market. Do you've I up want whatever more data, the reduction big X capacity well, you data the that seasonally are in,

to trying capacity whether the things of seasonal noise that of to out recently. if has coming kind are rates just off tightened -- figure things it's it's so or And due out

Shelley Simpson

little in we've Well, earlier, between so had time is a long period I first a time. and very this the but a such think short I bit that Christmas it talked about Thanksgiving

that draw the And or to so we haven't of in gone long we seasonality any specific that target through that. so parallel

So had have impact that could I some total. in think

in I said watching That in of I a will we as went weeks down in what's here first very closely normal December the the couple both was even considerably January. But are happening. available surprise carriers earlier, seasonality. from and say

we then the are an what to forecast. can't from more to if impact for tighter norm. Christmas something to shake people us, that in in So, a really side, weeks return environment on supply here call starts Maybe just market. a feels, of shortened had the too than between what and that about. early next means the Thanksgiving couple loose Certainly, window and see it We'll it's talking like

Thomas Wadewitz

give down so terms are I mentioned rates recent down? realistic rates contract Intermodal that whether need some it's the earlier rates? contract -- it much Or that to of or be season, tightening, does think does in the So on so to still optimism is that XXXX think pressure, someone call, don't you maybe the truckload bid

Shelley Simpson

trying bid through trying what's match said closely, the season. market. to keep We're happening happening do coming with each like single to abreast working we're to we're we'll with to this each in our customers as continue market I what's customer. to in And watching very every they're earlier, It's bid. as something the that throughout customer It's --

Thomas Wadewitz

Okay. you something a And said. fine last, point on

scale scale revenue do had scale $X you -- you're or ICS scale. ICS? $X of building What in looking XXXX, amount kind ICS. in You're a think you billion, in about you? billion of Is that's decent $X.X to billion, invest is it how in scale reaching to in

Shelley Simpson

Yes.

So $XX the that. actually market billion is so, post or around something like

to is got to abandoned really, shipment where for platform any we've so, and any rate get be And carrier, a would a have perfect perspective filled. a our platform cart that that place where from abandon to carrier is available now our

so billion an for $X.X $X.X billion transportation. platform to brokerage is good, good think but more execute a scale And actually at our to I not a freight automated our enough platform. it's is for is It good not business. efficient traditional good for create way in

Operator

right. All

JPMorgan. Moving on, our from next question comes Brian Ossenbeck from

Brian Ossenbeck

feedback and against bumping the on this, are up the give XXX if how on looks as give getting? the the sort if So Maybe you question, the of XXX in returning, and if those us platform. then And XX% as shipper XX% another them? can side recent it to some you us sense you're of also What platform. do retention the and on the carrier like of on Shipper that carriers you're of of went? How side, XXX,XXX adoption iteration the of platform. carrier can adoption Shelley, sense Just kind many to rate, both you some

Shelley Simpson

actually the very pleased That's release of we level. because the the So carrier of we are of fragmentation out the I carriers think active came inside that and with what platform. platform in the activity We did the percentage market, are very we were pleased. with first

We continue company both well. as to entire into but carriers, our also the onboard XXX in new

we say there. to we're about where back It at would I So really side. feel the great shipment really comes

on gaining in us, it launch did we customer there a about that for perspective, So more November. scale is our Shipper shipments. XXX From

like. have customers talking We what been that to looks about

up as those. growth with inside sales accelerating are we talk really offices We offices our those setting speak, to

we through Shipper through come really progress I to we as the XXX, escalate that expect this continue say year space. that of to shipments in that would We coming early amount

Brian Ossenbeck

Darren, quick Okay. follow-up for you. a

help And collaboration else what you but those maybe off traction, to -- to autonomous there a to in between that back? or put something think system. you movement point Just launch sort some I'm direction how versus happen the has trucking secular How do consolidation, shock to of to of cyclical mix? you you threat far here the we going to tipping opposite I need whole of is, think from do truck-to-rail catalyst you within existential would think back do be far the getting more Obviously, referring the -- here of do conversion. the guess or secular some sort actually with some felt drive are that conversion an some of And Intermodal?

Darren Field

prices that. from pressure in an that capacity opportunity. truck got capacity think, truck change, If certainly, Well, and we've either goes I as feel market or Intermodal tightens, benefit will

for more is putting -- a are for told to the their they're place and of we an efforts months I've than I'm November, material, are what that us. the going service a to improve impactful, they're January. period Intermodal, and much supportive would what railroads help have sustainability December year this industry longer time to of and and Now as in a that But believer that I appreciative sustain in few

We have to cycles. multiple for sustain it

method educating be benefit good to customers what's have the from best Intermodal. our to We very at on

doing best we're I at that. think the

in if continue the them a move between transportation X we've offer time, already. to we at confidence their shippers got put actually drive do same transaction won't I the the risk best their businesses. of service customer think Intermodal our to at that a product to goods But delivering is

do to big we're the view they with that. left business risky, have a to hard and positioned sure And make smaller is little them and assurance that to educate being think I Intermodal, bucket to excellent really and That's give them, shippers. to their and experience of work Intermodal It's as we to continue bit convert.

the pickup. don't clear. need I how price think question. their a give to going your cut and don't know I that answering tell that's it's to I'm sure X%, not to I'm by railroads you us

with have that and customers, drive the have us, capacity work represent Intermodal the has and service I a will our and to Meanwhile, think with design of communication a shipper, to we'll the and period. to to combination together, drive to continue costs high-quality help and growth. railroads value

Shelley Simpson

And, that. Darren, to add might I

able convert to be One over business Intermodal a shipments our of of that moving Intermodal. with of the customers. platform into can our is to a in our targets We that identify long-term road group small inside do are the still lot

shipments that truckload customers market results now And midsized mean Shipper We small just with platform Intermodal entering for so for that marketplace would time. already like and in see that our and about to now what as of that to talking them good those they're what XXX. are market historically the in we're have first look getting the introduced would moved we

rest Intermodal our for inside J.B. the XXX, it Hunt gain the we asset scale more for business. the is So better of and

Brian Ossenbeck

internally. focused might for I a it harder drive to table. right. be venture operating mixed get you the ratio, that All guess a dilutive are the if question on opportunities to is But to I and appreciate the appreciate little you're can Shelley and really all challenges them have railroads Darren. trying that, I the

Operator

We'll our question. take next

Amit Mehrotra

XXXX help Amit of David, think that Intermodal the I us XXXX. business. wondering allocated underlying helpful with Bank. like investments in respect understanding Deutsche profitability XXX-related because decrease costs it I would in are whether It's real or And to the to Mehrotra buffets Intermodal could increase from in just XXX be if also, the headwinds you the to just that was with

David Mee

in business. on That's that. let hit I'll Darren his

Darren Field

that that we don't way that's we're operating modernizing -- did we our thing. our platform, batch railroads, way sort so we the It's the orders, certainly technology we book trucks, of the communicate system. paid Well, way

was an to can cost to going number today's I'm specific need that. a it's be don't don't. a than do I that all you, out, that's certainly, say into to headwind, modernized guess probably systems those have so be it. But of technology it able about I break not Do I and All We we for get impact. different Amit? and

Amit Mehrotra

XXXX it of terms than in incremental Is is it costs? higher XXXX in in

Darren Field

honestly I don't -- answer that. the don't to I know

Amit Mehrotra

more just very We were or quarter, I yield you follow-ups. the One about talk just in be bit I favorable of little year-over-year. a expected the would yield? to better it I is had all Okay. quarter. length you quick sequentially dynamics would could guess in of look The couple at -- a if have was than

more guess, it, that potential just year there about not this if capacity, If is tightening truckload because And for maybe is, a I hopefully, maybe to through talk relevant could I'm mix Eastern could network growth of effect? you then, that. as yield the returns to because, thinking about be down that. Or you talk

Darren Field

us, and lot in various the would for... We marketing East, our we've West the meeting people difference that. simply make [indiscernible] don't ask through we like our -- my with in margin folks, of a the the highlight years to So of and what's

Amit Mehrotra

yield, yields. about asking I'm sorry. about though. asking I'm margin, I'm about not asking

Darren Field

length going were faster haul? I outcome Well, grow we going faster it than all of That's have it influence would. I in past, our In potential we had in times it's Transcon East it where Okay. East. if West, that to -- of certainly the was that to it's your much grow to the revenue going than guess, going business, the the is the a per lower Network the to mean Eastern to Potentially, business, if could. faster load, growing

Amit Mehrotra

Okay.

one. Okay. follow-up. very I allocation, One quick but over very know one my quick, quick I'm

XX% about to wave you in that 'XX a because have lot talked in and Dedicated, OR. added to being added -- talked you and -- you benefited XXX in that's in You I effect nice you trucks XXXX have know this more that you from the about trucks XXX should -- would kind and XX% as a margins we margins, are of be wave additions think the and pretty the consistent are year-over-year that dynamic? -- best it'll that given 'XX, this long-term target, at kind flat null void of about with given way effect but the year

David Mee

business on when will evenly off exactly gap of would chunks to the comes that add does had from It we time, seen have throughout tractor that on come business we actually it high. in we'll the XXXX not say because X/XX know of doesn't starts. There's effect each year. abnormally and month, have historically, in all we've also But we points year That when timing was wave First, the X,XXX realized come trucks, sell wave. our on it still when onboard. a to XXX and was standards overstated don't at that in you I the that historical a yet it

the our if you But hit we a so again, are win. our there predict other ability of feel a goals. question, now. very on to call Will, it's And ending favorable can't just we'll be matter no

Operator

right. All for your you using conference. concludes our enhanced. conferencing Thank AT&T, That

You now disconnect. may

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