J.B. Hunt Transport Services (JBHT) 17 Jul 202020 Q2 Earnings call transcript

Company Profile

Participants

Brad Delco	Vice President of Finance and Investor Relations
John Roberts	Chief Executive Officer
John Kuhlow	Interim Chief Financial Officer
Darren Field	President of Intermodal
Shelley Simpson	Chief Commercial Officer
Nick Hobbs	President, Dedicated Contract Services
Scott Group	Wolfe Research
Justin Long	Stephens Inc.
Amit Mehrotra	Deutsche Bank AG
Ravi Shanker	Morgan Stanley & Co.
Jordan Alliger	Goldman Sachs
Ken Hoexter	Bank of America Merrill Lynch
Chris Wetherbee	Citigroup Inc.
Tom Wadewitz	UBS Securities Co., Ltd.
Todd Fowler	KeyBanc Capital Markets
Brian Ossenbeck	JPMorgan Chase & Co.

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to the J.B. Hunt’s Second Quarter 2020 Earnings Call. All lines are currently in a listen-only mode. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] A replay will be made available after today’s call on the company’s website at jbhunt.com.

call recorded. this reminder, a is being As It over to my pleasure the call to hand Mr. is now Brad Delco, Vice President of Finance and Investor Relations. sir. Please ahead, go

Brad Delco

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

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

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

Now, I’d call. our Field, to our afternoon, Services. John? Nick John and call Intermodal; Services; for CFO, Simpson, Shelley today’s Mr. Officer, Hobbs, John Dedicated of turn Highway speakers like time, this opening At Miles Roberts, President Commercial I’d the and and by Vice Interim CEO, Controller joined Chief comments. Finance, of of Final Darren like President introduce Roberts; our our Officer, some and John Kuhlow; the President to on CEO, Accounting I’m Senior This of to President our Chief

John Roberts

Brad. Thanks,

the nature virus throughout the quarter of second period. has confirmed comprehensive The the

have of committed to priorities As made the ourselves our our we promises to care the noted, and customers. delivering we on people, taking of immediately

the and More to with nature results of of and from home both to base quarter. to and than unable and ongoing to have The been We due areas early work daily. business and provide internal through have second the are encouraged continued has safety in XX% external of we employee deployed review our effective data the our our COVID-related needs practices support both substantially customers. our date. We PPE supplies proven

We maintain monitor important the situation to will on these continue focus and priorities.

availability, investments so facility to all country help being it of and and them and continue people, have particularly and areas is Lowell drivers recognition been rewarding the freight many Additional and Equally to acknowledging service We our customers performance where our stand has needed. providing are customers. risk. their work of the ultimate the to encouragement moving our ready and made from serve been lower and consistent for in across to to able

diversity. about and discussion quarter during that the second developed important is inclusion Another has

company. I the and again the past over is new go J.B. engaged weeks. can this While and and to want determining the the level we actively has understanding are Hunt no our quit the remarkable reliable not is employees report J.B. is stay quality and Hunt, at topic of of in where dialogue entire recent amazing I here will leadership in a we to of team all executive safe improving their where in that quarter. elevated strong, and through elements efforts vital together, recognize these There levels thank people. for

teams with the have in Our Lowell and operators, our mission. drivers, in true vigilant and maintenance our technicians, support field field along remained to

of we to in find do our financial difficult trends way online. on of upward plans the organization. Dedicated macro-view even that my stable in will our top as our we about enhancement we see near-term of We lines but are working Highway to and address brokerage particularly, and last Kuhlow And call, Intermodal situation. Final off the current the John and not much business. disruption our the At year remarks a focus proud some in we margins. demand, Services demand the original signaling illuminate comment are of comparisons a businesses, the do extremely curve, ourselves. slowly, steady know I quarter What truckload, where surely and this units. to will leaders is are have cadence back Clearly, we the during many slant saw business albeit across our and business in similar each the of will And on the their Mile, today help an respects. in entire segment performance

as our Finally, particularly in in hope drivers have is we lowest is the encouraging the driver X of that ever cycle. in what we of indication bottom some This need an months. turnover to hire experienced the more a past

some While have we curve. still in to too demand early signs at potential least call, of the inflection

input levels thoughtful confidence retail and to and efforts, our capital conservative hiring second expenditure We well control confidence we contain maintain the information, will the that of the more into inventory Until direction as current a year. data, build our cost as sales from of look trends from half approach, in practices. firms, customers and payroll for import state

our and to we any state will channel thinking. conservative changes for mile rate-supported from on stage and that and COVID of growth hold restarted drive directional sizes, present come implementing cautious. will back all cases demand-driven And are is final the sales strategic as the now have what us anticipate to online, contracts said return new priorities the again, normalcy. We particularly some for current of fleet we may over back maintain let uncertainty needs discussions we to expansion of honor positioning in Kuhlow safe prospects, people it technology, potential inevitable With customers our preparation turn count all the the in what have where expand for dedicated Recent new that, Having around his hope investments areas early we to in commitments John going keeping John? and forward. made that, thoughts. striving me to to for we

John Kuhlow

Thank you, John.

results mentioned, are positively the update quarter and far effects impacts results, throughout The segment forward. of each also our will so approach had business our the and negatively, throughout pandemic on addressing consolidated impacting and difficult current expenses, on specific going As statements, our of some results. revenues, line pandemic the quarter. you and unit the leaders that talk items add the reaching the on the financial comments I’ll during both It’s cover the pandemic has to financial to through the on

that security the costs prior for employees have identified equipment, well costs we as special million protecting time-off quarter However, were second to for mostly slowdowns to our for or planned of employees. pay specific related from paid costs cleaning pandemic. in These directly reduced quarantined, our not approximately protective and consist $XX as personal the

to As maintain previously million approach $XX a $XX disciplined approximately our around year-to-date. in deployment incurred changed. long-term announced, the we quarter million We not that strategy for and items first COVID-related capital for has

uncertainty the an the the given for liquidity. we quarter, adjustment sake protecting entering intentional made of second However,

cash to needs always Our approach opportunistic used excess buybacks cash has being contemplated and buybacks. for the with

billion. we prudent entered of that sheet strength. higher our the positions received on confident – we until approximately times close to ratio maintain target some EBITDA made the metric at with Accordingly, in the quarter year. uncertainty We overall the within our still million range believe environment. to in stay clarity one the net approximately that cash are quarter the ended balance expect market cash and it We $X $XXX leverage We of throughout or of debt

a repurchases include process watch We of stock second on to the we half expenditures, but careful year allocation expect the and maintain basis. our daily in forecasted capital capital previously a

We’re due after to is the from certain to for $XXX the timing to forecasting pausing $XXX projects CapEx our our mostly within approximately $XXX plan down quarter. be original currently million, of million second XXXX, million which

equipment and Our we investment our our conditions approach and and monitoring assessing those market purchasing the with warrant. long-term container carefully needs, continues environment are power strategy,

As previously our in explained, DCS is success driven. model

our that taking acquisition meet ratio during if that our higher extent With to an we and are our organically, margins business our so. well noted focused targets win to we to spend. standpoint, of ROIC we’re grow So do investment respect I we target the intention prepared quarter margin and accordingly leverage the M&A one-times, new From but considerations. changes capital or comfortable discretionary

hiring In a to normal was to and accounts. up comes to continue shuttered strength to We to that need. our with back eliminating while possible, be as to the using driver and surging ability as pleased reverted we on were as unless online. position warrant. people there assets assets in to our of We as from efficiently most critical avoiding our the back addition layoffs travel, people us use best economy set that furloughs productivity focus and operations, suspended And our redeploy we’ll is conditions

the spend being carefully of to the long-term, for the continue We review to current environment. our need balancing but invest mindful

the market, we call with As may the we first our were freight customers during it and pay. of our and aside market have concerned the their impact liquidity discussed the overall to ability on quarter from uncertainty

the with While pleased of the to second how customers we quarter, issues. level during with any uncollectible which slightly accounts out with payment Overall, call worked we experienced our release. a higher our we deal in were teams

watch to I’ll operations. concluded I’ve to prepared basis. expand working it Darren my Intermodal capital a our over on We and on that, to With metrics continue remarks turn frequent

Darren Field

on primary whole. comments areas: I dynamics; pricing a the performance Thanks, and of everyone. provide thoughts Intermodal I an would on John, in some thought and on quarter; as good network update our afternoon, fluidity my X finally focus

is saw the monthly in volume were today. conditions in they levels, on positive to were quarter. changed lot we swings down as see June. expected volumes on let of our quarter progress a we fuel X% for West was were lower the the the First, said visibility month start and proud expectations economy into expected business they port import further X% prices. we outlook quarter, focus than improvement That surprise not Coast which trends with sit I’m we as team’s the with correlation of little availability extremely the imports, we our the is did react declines the here X that And truck as May down we able could data our supply from significant received in in year, there much and biggest alone in and end to while In performance months X% April, know a activity occurring to of volumes. we June. demand with ago, not general be and in honest, Feedback that This until of the here have of sales Sitting to customers April, experiencing apparent trends deteriorate meaningful reopen. normal stronger were the between has from based the as began

would have would begin revenue we basis. excluding Mix a above pricing have load – XX% fuel QX take cycle. have season, both we relates balanced pricing believe the it At this on we lift expected, new have during price stronger and per call, revenue providing a approach for finished flat and in discussed we we have the rates remainder a West that to strategy are to of volumes completed and our The to we on X Coast on we year-over-year QX. executed per approximately about point, bid would As in anticipated. published to pricing the with will we our where rates what at business the in October I load earnings Transcon last XXXX. volume come implement have a

very that in were thought begin We We we awards outperform and lap we have this bid last previously from quarter. general stated the year’s our will to on we which that on based volume. third trends confident industry process, would

that we our some ship Rail to of would we higher significant I we We that during has into our the not year, or from while cost deviation Coast difficult to significant in levels a stronger the going even the expect mix continued become significantly reality the the face expected have The expect we year. our continues current customer Given experienced do up the we least this last pressure Coast. equipment The than do will strategy off network the balance West empty trends, quarter. to to more increase in at extent hold base service is general year. anticipate third to industry pricing not have of of West volumes. challenges

strength and we rail As point, June to network in volumes had critical level all it solve the point providers, over turn a and the service Intermodal with our significant of consideration record capacity prove understand rail volumes the as we to March as Services. this requirements. to concludes to the for providers worked But with occurred remarks. that in That increased, have strategically At in we demand, I’d like challenges our time April experiencing with my for as experienced rail value capacity aren’t discuss us together declined. have Highway to solution a massive Shelley swing

Shelley Simpson

Darren, our includes followed which us to everyone. with Thank Today, the ICS perspective performance some JBT that J.B. marketplace for operations and our truck by both the good I’ll and brokerage gives XXX. you, our regard of afternoon, Highway showing rollout some in increased highlights Services, discuss in operations confidence in Hunt and

to how offer of platform. the and of I’ll evolve on we continuing Finally, to solve needs some fans our the the thoughts customers create see business raving

and for say organization taking one, we the double-digit our strong of least, at X we First, published conference the but key dynamics our highlighted this unique objectives or pressured focusing see QX, a as stated we business, and honor quarter the earnings recent and proud has serving John ago. non-existent, revenue all based people; have on and the number further in market regards to per customers. I to our while we’re alluded, most for most part were way the the versus spot in responded was we year QX of opportunities revenue care With quarter: continue call, to and we the to in by load two, to our made growth quarter. challenges, commitments customers rates our the number of sure safety the and and am and team we making our health

pressure Additionally, aspects part of I pandemic, COVID-XX the strategy by with was put is business. shippers, medium our to our grow sized believe our market impacted the small penetration segment on of while of and disproportionately which some the also

shipments about confidence Second, support visibility and activity marketplace both the parties digitally. we I as challenging of that And I When by to strengthens our data what we this I’m as engagement level activity, a to believe environment versus and our build enhances trends we connect in platform. fairly wanting supported see grow day the ago. to what would describe volumes. believe a XXX, also and per extremely by is in of activated, rollout platform. seeing carriers we’re to trended in that for the talking about per engagement we number approved number is at in the our number are J.B. digits our momentum, both searches, the about? well encouraged of This the in Hunt available adoption number really and market increasingly transparency platform. loads, customers Well, load year the and of continued talking as of load, grow of The which as the are belief users by for offers, continuing platform carriers we’re offers double evidenced talk

XX% in In fact, of KPIs XXX in over the the Hunt all quarter. of those tracked the for we hit marketplace all-time records KPIs J.B.

to Enhancing that transact data our for and community and shipping with efficiencies the carrier and efficiencies they value shipper transportation platform, both efficient the both As communities for have in there’s support we carrier we to North much in most continue America. mission as very aligns create network platform. the value the scale and to incredible

ensure as that So team, provides terms our not we remain possible. by market, as it visibility but to only creates the own we and value encouraged for in assets of data, also our how the utilize efficiently the

of our million how As in is an just organization JBI see benefits XXXX. in DCS another the from platform. miles eliminated which example, quarter, example for what our of we we’ve the we across new segments exceeds This both eliminated and over X backhaul all

of XXX. for to J.B. committed of do targeted but also Hunt also investment our greater pace investment current remain expect or people we help will scale. gain sales We Market our key the to in on with significant to focusing at X our those in our build play to automation, and scaling the on ability dynamics firms. do continue We be a expect technology investments and force in technology; to scale. our factor areas: to not in reinvested efficiencies people, to both in platform platform. terms some believe marketplace the continue our efficiencies the Now We

offering. growing to falls ICS building to opportunity have XXXbox at which our like DCS worth now Final this becoming continues platform. the well continue about program, risk segment, I’d point committed noting evolves. talk to our businesses achieving will scaling is JBT more Dedicated J.B. it see and as JBT the the in as we to an is second to we It and of out the both platform So evolving that over worth how market even to the closing, JBT by more shift XXXX. Nick But as see Hunt primary it of profitability service remain to to is asset-light within and also half we complementary and our into In both to and turn XXX Mile. JBI noting

Nick Hobbs

my Mile focus we the businesses these Dedicated opportunities Good the I’ll performance Final challenges market with the high-level Mile of in and the Final see on up afternoon. future. current and or for wrap what comments and I’ll FMS. in with both expectations some start quarter, in

call, clearly, by to disruptions As Mile be impacted that QX case. expected we COVID-XX, we’ve the on discussed significantly our and Final was caused business earnings the by

closed remain for portion of distribution from the replenishment [pool] the for as of Across areas results in retailers, [ph] inventory provides largely reminder, our business challenges and While was due we a our for up primary X the than than quarter. opening sooner FMS, services the economy, particular, originally better biggest customers businesses, which it of a saw planned. to which were by we both most back some expected, served off-price significant

XX%. normal overall about the finally, down about hit, and was line our hardest appliance with level. saw business slower a furniture activity our start, finished activity business, despite And second in Next,

recent level COVID noise profitability on very additional create finish up To quarter. the rise rapidly over asset-light our encouraged a to this in business While the we in could provides should this FMS range believe remain of see assets with solutions of QX, cases outlook expectations we the are at customers to and the economic and return FMS, customers, engagement opportunities long mile in grow point, our this by as We our with services term. channel. as final value-added growing well this

on Now, DCS. Dedicated or to

proud light of delivered Dedicated, I’m challenges the our in all which the strong First, of performance results in extremely in market.

of lower result was a our contributed costs, the to driver to relates While asset stronger utilization, safety lower primarily and this driver turnover also performance benefits. as from performance, team strong margin of startup execution turns it and

accounts I think or our to deliver able on highlights Value that on the that extensive and Delivery. is throughout the Customer performance delivering perform team metric of year, of review are the that key to our a we value the internally, delivered each CVD this quantify we focus We an customer.

quarters X customers the XXX% accounts levels, given that much some and our closing fleet last the facilities the to easily base customers above service our as extreme from enjoyed and cannot the surging we with professionally solution solution, outsourced outstanding replicated, be country. down a examples experienced across Over offered size density we think as by flexibility

expect of opportunities our for others. And trucks pipeline result the Dedicated entering engage business within to stages also while We XXX to limited this our regards to and our improvement, pipeline that of retail the the new We stated fall diverse range team as year portfolio customers. early strong, sales industries of for of manufacturing, worth we prospects with with serve, previously sold from potential have XXX concerns trucks our speaks some do we to grocery, still remains agriculture, of to date. new food, think to I home performance a year. XXX

But We now, That will slow stable XXXX. and will out. my this stands have expect concludes fleet of to existing relatively additions pace remarks. QX to and at see some early it accounts. we Net-net, of later how it offset remain be into some are our startups seeing from of the we levels count the this plays could as fleet as sales attrition, our some year

to operator So and back I ready for the to we’re think questions. the it turn over line open

Operator

Instructions] [Operator

John Roberts

sake. to question please just queue, Stephanie, you’re building and in Hey, as one reminder one just for time a everybody, follow up the

Operator

question with our Group And from first comes line of Wolfe Scott the Research.

Scott Group

Hey, guys. thanks, afternoon,

you. trends volume April. Maybe any give So, Darren, color just a us can on you couple in for

cost per the commentary longer West imbalances, term? any to Your Coast then, where is do a thinking load? issue, that there as you And offset change XX% margins in some on rev around the think helps XX% it

Darren Field

Okay, From continues margin question. call, prices benefit that we No, in highlighting into we outlook of flat comments was was I per way to haven’t contributing relatively earlier target. for and predictable to was we target. a on what the out load in the the expected coming the get volume our the that our in perspective, were our I’ll our right long-term line going That year, be away. well, revenue had with in on were changed load yeah, think quarter. the while that mix revenue per

feedback of obviously that really, this were So that, volume X% the not anticipated. in benefit is in – our From quarter, down been that that suggested Last hung April we negative. continued really third you the a flat back kind At last from being seeing May of the in were to the as a driving think in info nice But comparisons be flat. At during revenue customers did and it on And to headed really with about keeping we we a time as perspective, gains mid-April did highlighted to June, of lot in said then, point, against were as the headed going a of we’re that And the was And negative highlight volumes so month, bookings. so load down. customers. level. Prices But significantly a on, through started we really, end at our I falling, at stabilize we we traffic volumes to our and than necessarily volumes with April. by per our call pricing rapidly. mix this slightly is traffic have import and to pricing there. lap we we’re going beginning compare some ships against volumes concerned – quarter had And with up had We year, X% in got cycles June, earlier. did the we time, the from blanking begin June. were we really in of into stronger lot year.

Our same in volume July been comparison doing different. run rate the the in so volumes we’re weekly far June. has is relatively in line But with certainly

comp get the on difficult will So more third we quarter growth the more through percent. and as move

Scott Group

helpful. last And Nick. that’s then Okay, one for just

of longer-term quarters X XX% and half relative target? then How about of thinking year had margins. to XX% are either margins back you You’ve the the XX% to

Nick Hobbs

no phenomenal of going margins just We’ve less not that our change safety because were the out got driver We’re unique amount results low this to point. very, very turnover, at traffic road, long-term benefits T&E. some really from on

we So of lot a got just things.

So by our us as are we really need reassess get to that. we’re before we they comfortable stated with margins right let now. But this

Scott Group

you guys. Thank time, the Okay. for

Operator

Your with Stephens. line next from Long Justin comes of the question

Justin Long

on congrats and the Thanks quarter.

sound doesn’t look And but that Intermodal, volumes thoughts well. market on Darren, around start to your and willing season, wrapping of of just expectation with So Intermodal fourth share terms bid like in the going changed that as materially, we back share, anything then, get as now any wanted your maybe third it you’d we’re quarter? some to to be commentary, up into to

Darren Field

share in of market. it’s don’t our I at I volume expectation market this confident to that. think can ability much Justin, forward. point. our really about That’s give maintain volumes minimum, our any with as very guidance feel as to At clearly to about probably on Yeah, forward moving would grow moving kind do say, the say expect we I and a I can

Justin Long

in next we And Okay, you’re the fair pricing, intermodal thinking the we the look Is stages rate kind pricing. think how starts on I of ask a is about then, year Or change should early you two? cycle wanted relative enough. to see to a there divergence that perspective pricing October of into your X. to get a mentioned expectation as the new from recovery? contractual intermodal TL this similar reason between the of

Darren Field

as Historically, I truckload that might But are intermodal. and of climbing think climbing, the much is further in There intermodal. price so sit a a as it’s the because forecast I today, how know like further times current that load. think don’t simply percentage do in have prices price at cost XX, feels I some with next haul that revenue pressure than length per at to times is dip different – the year. true. smaller are truckload environment, we when we here July between inverse coming truckload it is us. the The

about about John will pricing months, their in will cost hard to more. his see don’t year know prices in all way. And months we’ll today, be railroads X I less X think environment. have cautious cost right We some learning more feeling the But pressures, next say have that now headed had we And in and we’ll challenges. customers now, much just all do to cost cycle. I here certainly, would sit to – challenges that our that it’s talking that we’re talking about front – expect so, from I we’re some on this the comments, highlighted be something as

Justin Long

Okay, time. thanks. appreciate I the

Operator

Bank. with comes line Mehrotra Your of Deutsche Amit from question the next

Amit Mehrotra

if it’s solid box if you June out just I costs. there could on of the the June to on what figure underlying The your started there I’m may diem outperformance aggressive the I bit some there of port being unique Anything trying much Thanks. and shippers explain is there. release opening container are or explained on per in results. volatile demand – the heard pretty was guys improvement up? economy fleet. Darren, been being are by with everybody, Thanks, are environment. the about of advantage happening huge have sustainable a intermodal relatively just more really what little that in an inventories outperformance. pent-up the dynamics as course, specific are And, volume kind a any with those up high to things and out specific that a follow respect wanted I or operator. we’ve maybe to and Congrats, maybe mean, I mean,

Darren Field

philosophies Sure, on has private and providers whether lot that a time it��s or for and detention with loan know intermodal to amongst think okay. different piece it. to I demurrage of don’t a our ability billing, I different customers that at the rail Well, all box do equipment the

I high-quality customers, we our like think believe service over have ourselves with a our provider. as experience proven to I’d

have large relationships been with we we well lend with certainly demand. and in have their our to have And in positioned available it that was us and – we markets. to fleet variety needed the us We of customers. a equipment June. We itself have of do were wide the there right for containers help a When equipment with customers – right

the the certainly there been intermodal to our even what the like port for I’d But to had have suggested. data would or us around a simply is our the correlation figure strong I demand as to at the domestic it’s customers. a activity gave of to the from if out disconnect. know from the ask trusted opportunity Coast to that how working I seemed direct a pent-up whole, the ports just just experience those think imports inventory able business years have business haven’t was day, – we’ve feels as and June, than warehouses. import June. Just more of equipment customers little all with Demand compared in data in a and end was we looked us there of that. don’t help bit if West that It higher at determine in a customers

Amit Mehrotra

where those Okay, volumes headwinds on quarter you better follow-up environment still of of helpful. quarter that’s business? obviously, great turns of But the pricing. terms network as like. a I volume question, kind get the context lower obviously, think, cost or the Is the easier just have extra detrimental were for And the I some box that’s profitability the that have the in better? intermodal sequentially than gets and some and the been general guess unbalanced network and in to expect obviously, then effect. intermodal was, July my getting of that And margins introduced you’d of in Do kind then, third in of

Darren Field

to with the certainly, look in the Well, north at number negative If and May turn mean, get the quarter good weren’t very the quarter be related in April third being number to we something I volume our of expect overall turn the back would going to better. second X%, volume, quarter. X%. is in in I to can

a on QX highlighted effective a QX the from So, into us was higher front. were in do balance really move us that on that us I in to price our We on and I network front. driver challenge drayage percentage. to we helped for QX. it actually front some would had and need comments, low just the a if on that think going to We still highlighted a I larger That’s we dipped a for us become perspective, From the But sequential helps beneficial of the than improvement. And We in his at turnover margin assets is had box to margin help and that we’ve think I that outsourcing use expect a our of margin. improve turns’ able successful quarter was Nick perspective, in do area. had margin. the safety some – in – perspective, margin slight very we

of into were return. positioning the lot market, first to our expected volume year, half we equipment where of For we a the the

QX hard Well, same the customers demand equipment in empty to And are back pace. on to running expect network in all come in more we be a than in Chicago, began our bit a little the back of And going we’re moving that’s balance. equipment had in already is challenged creating from We network Midwest, where at of California. the had impact actually faster. more And balance as QX. were be even not But the so, to we today, prediction equipment. of I the network

Amit Mehrotra

still environment, dependent on could to how margins is just going XQ QX is? the or think be than be it you that So volume strong down

Darren Field

of the Well, margin the comment expectation the quarter. aren’t going on we next to just in

Amit Mehrotra

question. Okay, that’s it. taking I fair. for Thanks appreciate a lot my

Operator

Stanley. Shanker with Ravi Morgan from is question next Your

Ravi Shanker

Thanks for helping, everyone.

trucking done industry. XQ, in the guys of back much especially volumes share keeping in as overall have than at what done? relative a back come You said, faster the job, have to stronger volumes your they have half good growing all you surprised you pretty than of haven’t intermodal But are that intermodal

John Roberts

a have moving I busy a Well, I to just the that. my on more happen. all I in in and I’m are know as thought know how volumes what back-half of today. experience we don’t well. I’m is mean, did have surprised would us, what expected guess, their mean, Ravi, than whole more surprised, characterize certainly than the certain global have entire we I the May. pandemic, In I would June was or in that April it any system what lift competitors networks don’t business

Ravi Shanker

you a Shelley, you follow-up of in business, update digital some understood. have in of an some brokerage seen environment of larger either maybe Kind new us then, in on any for Okay, of And as competitive well as entrants? both the Shelley, can incumbents of change behavior? from truck the terms them the the give

Shelley Simpson

of the the been it also from middle market’s the perspective, then last in part kind think the of margin I in of a brokerage Particularly, the process. bid right was business, difficult. wild had fluctuations has and the

full estimate customers. difficult So in would look what the much I think less for year price in to putting margins it’s month a been like

bids out in are back board Those of back awarded what more the seen from seen larger quarter. the say that coming volumes first-half with much And were of weren’t think, we segments I across And process. second-half did I the as their we to awarded. really weren’t general. capacity the that position, a implemented in it our tighter are we’ve come carriers and the the bid versus would getting quarter seen taking or defend bid, more environment, brokers, would change like we’ve prices mini customers was some the customers well. really competitive in back-half front-half the would at, the volumes of I say mini So across quarter a quarter from the have bids of

aggressive market. from there. from different. think not I There’s price I anybody perspective, then anything price there’s from lot think behaved don’t do the So digital think ill I But that perspective, always environment a a been a incumbents that more freight a I large don’t was of in but with think competitive change mentality it’s an been and is customers,

Ravi Shanker

Very Thank good. you.

Operator

is next Your from question Jordan Sachs. Goldman Alliger with

Jordan Alliger

some know great. what refresh pretty question. little Yeah. Hi, Dedicated your be solid. I Can it’s you just margin that target mentioned memory the on you But if reasons it. a behind been on my a Obviously, is? you DCS That And could bit? would of touch

John Roberts

Yeah, But sometimes it’s target. thinner. gets that XX% go bounce startups, into we’re guidelines try to lot. is a of a that in affected to And that’s a it’s that have it XX% If we that, a little our at. factors of between we kind of where around but lot lot and

Jordan Alliger

X? the near-term But there margin you’re reason any standpoint in now the a coming different that to at is or in be would the from pace quarter think

John Roberts

industry really – I different if cases what’s to just what It’s maybe and the were I about you at know, the is now. things, business it’s to very I don’t our going prediction. going I but better times volume COVID I’m just could you give don’t those pandemic in way. it going all all know help what they’re happen if But agile, next was to do the normal can X up on customers nervous that. do back months a know with It to probably coming then with shut going is affecting with different or X don’t the But I

I wouldn’t next comfortable really addressing feel couple of So the quarters.

Jordan Alliger

XXX. moving And was so and truck truck I’m you on very helpful front. second quarter just it. tale on halves days and have costs rundown brokerage you do probably but Got to, for the as a then from a like point many truck into just the these alluded perspective? brokerage from framework of curious was feel in you competitiveness – X you the price that pricing pieces framework all looking profit excluding taking this brokerage The as at brighter is that account,

Shelley Simpson

say inside I third unsustainable quarter, that ended and as the say, began across industry now. I brokerage, quarter the the we would would right the that second have margins are

tightness demand So you’re occurring. really supply seeing the

as price as that flexibility agile in be the because think and to able shipments being change And several a a that constrained lack a I pandemic, a of to in in most one occurring demand happening. are environments near-term if years answer it that have are will I from think the customers, Obviously, things will, capacity it’s share perspective, of the are total I as versus number this continue challenges do an total happening. turndowns overall long-term. they that when things from a but the great of then of is, has market, the customers, over in are percentage the is brokerage in capacity it’s gained seen. think are I last happening market I surges that for our and I think were and as you if for margin, customers, think we

So I near-term that occurring get think have that the just through We outlook is the to are in business. good. headwinds

Jordan Alliger

Thank you.

Operator

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

Ken Hoexter

Good maybe on talk great. cash. mentioned John a cautious bit capacity could John use on And But grow – the about you of being kind you opportunity great of mentioned Hey, afternoon. that or Darren, to job the then the little quarter. earlier. you also mentioned

can there delve maybe just that into bit. thought you in conflicting a obviously So

Darren Field

a – you’re manufacturer, to grow require Intermodal of place manufacturing order point opportunities would a So for there aren’t lot here capacity America. going at North container this with a in to located

into to in containers as much produce timely in opportunity to country for and enough a this year. the certainly transportation the if it the the assist about is So provide manner

always, close volume We a network keeping quickly to to our investing and and consideration – same eye And add It we capacity some are drive back cautious margins our are be would to now. trajectory more we’re but in shareholders balanced need Intermodal ourselves going get understand profile capacity. to been balanced return to the always, to and on opportunity or fleet in as be we want about capacity. more drive is really will the talking trying in a on trying At we grow some time, stronger that several an Eastern always hold for for our price in both quarters to we the truckload first. growth we’re is how expect improvement to our that there expanding expect, and go so be and certainly goal Intermodal, decision we’ve

Ken Hoexter

follow-up Thanks, then quick Shelley. on, a Darren. for And

about contract going how is at losses kind answer on XX when you talk plan, understand just your see to pricing that you the spot you of you the ICS, do and you the want started to in and about market about XX months the can talked now maybe in as now? thoughts Just think

Shelley Simpson

important Yes, component in I that our really opening remarks return an business is talked about my that to in the profitability. scaling

In are now as second should going don’t I our quickly look quickly how have total, half right will able said Nick revenue earlier, really investment customers depend of to what level to what to am somewhat from going the shipments here revenue scale great a to be will created we as from do. to as returned really have depending is or to But on forecasts like. add cautious do we is As how we can on and that profitability.

that So in both you substantially up a to at shipment and When tell down that spot from with I it’s spot would revenue too early rebound the what quarter published, then inside what’s in moved happen look think I back and perspective. I think June. saw per happened

so perspective, to customer will brokerage some total, different both day at room watermark that a and – December those call June in pricing in and think, that continuing in in change price pushing earnings this has tight seen published January that is quarter as was carriers of as release I unusually were occurring very the low month our and well. that really day COVID, prices We’ve I the There and think move QX on are And emerge a July. basis here were before by from there a weeks at unseasonably talked view into and a about about. change in I talked I to back things

And as to speak. it talking talking I through I’m us think I with it to that to others published move other comes moving think pricing we’re about, certainly, know will when that they’re certainly and we So what customers is business as means I talking about well.

Ken Hoexter

Thanks. Thanks, color. I appreciate the guys.

Operator

from question with comes Citi. Chris Wetherbee next Your

Chris Wetherbee

Hey, thanks. Good afternoon.

potential on as up give last downward bit the side? in of change – margin kind of to of magnitude that potential the to Let as like the trying Can maybe things the can changes X Just of halves sort XQ of of bit us just the picking sense on a of sense get quarter quarter me talk scale you little you exited point. look the mentioned here Shelley, what you the little you a of of ICS maybe the magnitude progressed. and July? gross a a bit little

Shelley Simpson

experienced start characterize the would I the end of the end we would at margins, our Yeah, the the at high as of what at quarter, June, experienced our of say we of low and I margin. end

the swing total. throughout quarter significant the So was in

industry. the turndowns as think, MDI there’s around an perspective in even in that and I moving and an been into July, what further reports we’ve there’s evidence tightening of seen from well

price So perspective we’re certainly at a feeling that carriers. spot impact with from capacity a

right So I in now July. probably say tightest it’s would here

Chris Wetherbee

Okay.

year just I how and the to point. I next understand about profit, profit the That’s then said that. you appreciate as an And comment just to think you turning the potential execution guess, helpful. a it that back opportunity, up. but point, for of XXX-scaling back Okay. the that was potential think quite at didn’t I I that and half relates scaling also

help an wasn’t just case half sure next maybe back us understand sort coming of know you now perspective? most could I for of So something in back of want to missing is year you from sort still sort likely the I better the of ICS profit a what make little that explanation.

Shelley Simpson

to be think we’ve in about side opening we scaling talked of customer’s redeployed the efficiency – I of right will profitability. half have year, into have operationally my this resources we back Yeah, the already scheduled seen business our in that still to it return now, next I business. remarks, But the

there. profitable in in we bottom revenue contribute so their have takes and so an and a as flat scaling people, of as one of number those There depend feel is each environment us had more really line. technology revenue half I COVID with XXXX. largely a investments in towards if things on what say an we right throughout And like quarter. how that comfortable stays than May. we more start April still costs organization, a has made has can if it those state would quickly percentage revenue, to the holding But that as and will the platform really And the impact the second now, into I have build get of in changed is it and

very it’s So going what’s predict to for us to difficult happen.

Chris Wetherbee

That’s I time. it. clear. Okay. the appreciate Very helpful. Thanks for

Operator

comes Tom Your line of the next question Wadewitz from with UBS.

Tom Wadewitz

volumes June you’re a if know I seeing that working we surprising just the Yeah, in working is happy Intermodal been to through lot that and it that that couple KPI in the and guess, volumes down, quite technology do bit you’ve I’m do And I string you I to it’s XX%. freight – the time. seems keep But how It thank with saw with going compare not quarter. improvement guess, of you just think the X.X%. like going. we’re down better mentioned And I market environment. the – yet, row. improved sounds you you see the tightened guess, I the is for guess, How some – asked especially well. a in about and pretty Shelley, a a

in really So And sounds think you’re what gain and and the more volume that, of that’s you of side would think terms share is you that seeing traction ICS? lot brokerage? in growth of that key what a on happening, like do change is do because not volume getting that really it a factor

Shelley Simpson

did opening about I So platform volume experienced that talk double-digit remarks, increases. the my

the digitally, we If the shippers committed about contractual connecting also connecting platform. so carriers with points customers. means mentioned so quarter, with grow what think spot how QX, our continued to growing And and and happening through in in we’re throughout with volumes both been have scaled our that I actually you happened that technology, that business

market market we happened So experience business the share that what continue that spot in total. published offset by in that growth in those business to call our segments good was

did So both per from has both move forward June April see to a shipment, just load revenue July. continued not in and total in that May. and and see we that spot the in could We last rebound overcome

Tom Wadewitz

Okay. commentary saw Or view, is really Thank improving, the caution? think just some of in to driving market the on there’s kind volume, that comments quarter? seems and pretty – in framework tightness to we in significant now. the but My the freight in June kind tightness you you. overall freight other think of in nice What despite cautious that third that is I look a outlook, July, of your freight some questions June growth do keep as right could point certainly into a overall that

Shelley Simpson

we think as in that result well, of internally. sure was the what And had I points comes as just from to the our experience expectations QX, both in than first different quarter, even And from QX. because had discussion of happened would caution served that a each Well, also us our cautiousness customers month we our think lot you if not good a what’s I’m I happen here expectation. and recall

up. saw a going think I think roller sure to that volumes do sure aren’t through Nick what’s happen QX coaster said what’s really cases as earlier in happen could But the aren’t QX. with So ride, to continue the with what’s to we we to pandemic, what go we I around wild going end consumer. rising, move happening just

the few is to forecast it’s struggling, too next for happen what So certainly the knowing can are about to customers are happen. past speak and that exactly and we to weeks really what’s happening what’s and now as for We well. our difficult just us going right going say

Tom Wadewitz

Okay.

now, really but good concerned on just it’s right So COVID.

Shelley Simpson

Correct.

Tom Wadewitz

Yeah.

Okay. Thank the for time. you

Operator

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

Todd Fowler

a everyone. ask Shelley, I’ll Great. question. afternoon, I’ll give And Thanks. Good Nick you break. a

that and you quarter, in I gave margin for mile then, shift profitable expectations the for is final fleet size at consumption Nick, mile on third a What’s Dedicated your still where growth the point the with does into XX% shift And seeing if final that on on X% mile or the think have, comments expectation operate On now to markets a based you your the final in top-line growth accelerate Or and consistently that that’s consumer on to so half. to either trends? being X% now thought back some end business? we’re change range? to right

Nick Hobbs

question. I think that’s good a

now a niche But in is now. course, equipment home really demand industry. exercise the It’s is strong Of right high. right very small

grow that appliances. So we’re seeing

not my As back, is strong. back statement I to coming it but coming is solid was, strong, very back really said, where Furniture enough.

the time is is growth off-price see with really I is it’s during there this it good. we’ll is mile good year. the that is of have we we’re really that that that guidance, about some see really, strong so So you think that force comfortable what at normally point. retail said the mile to final and this going demand margin excited – really The okay our But final

that’ll and hope up we there continue. So stay

going So we truck what demand, that’s We XXX love still And think. we’re to good. then that the our adds just XXX model. with still dedicated

pandemic, big to going you’re to I it’s out it think do replace or the be meeting that It because next fleet. a whatever Zoom of said doing. to to And as a while sell we get well. takes growth the is I’ve XX a on if but to XX private the this, can lot to people always months, face-time or once it. do it of takes hard Teams year stronger decision seeing is start

So so we’re sold a XXX trucks we’ve We’ve pause little year. seen this far – hitting there.

little the up bit back pick will upon depending what that hopefully the doing. so a in And pandemics half, again

Todd Fowler

any costs about That’s That future? right that things quick modeling into shift sense. the there like add Okay. kind in run foreseeable It we $XX as lower, COVID Or Thanks. or back that’s follow-up either makes XQ one would that the helpful. the are of be to feels higher that on rate million. just for And think that for the half?

John Kuhlow

Kuhlow. Yeah. Todd, this is John

also, special And on I our think we’ve PPE. of it’s most some of PTO had then that for is quarantine. the

seeing is going there’s or and little PPE the I now, for others second a most drop what’s PTO to if that continue, think run – we good those But pretty as the going we that’s I bit. off so, have to a how don’t a wave And And it’s know right of are rate. think mentioned, look. Nick really that

Todd Fowler

the helps. for Thanks Okay. time. That

John Roberts

time one got we’ve Stephanie, question. last for Hey,

Operator

Our comes the of line from question Ossenbeck last JPMorgan. Brian with

Brian Ossenbeck

me squeezing overall you in come here. wanted on for just Thanks evening. Shelley, market back the good Hey, to truckload in to capacity.

the even You last mentioned supply during points quarter, has been different quarter. dynamics and different

remainder And sort factors the a progressing of of here? demand year of what that see underlying throughout is does? So the how do the factors, you think you what do the few side independent

Shelley Simpson

carrier I been Well, from the supply environment has Brian, lot early community, perspective. and for from prices a had fell was PPE question think unemployment had perspective. impact and the quarter an because supply that think I of in frustration spot from live on. they tightening a really for occurring in that, PTE a there us a May. also And from the a first question a of really possibly We think April also that We in the that’s perspective quarter. was that do

came to state. until And that other of business industry the chose outside carriers those back stay in business work trucking to healthier of do or was home some a so, think chose I and

impact think continue earlier. that I seeing a about in perspective you, as the If to signs I think from could would tell well. Darren that’s that talked so, think part to on pressure cost of I it I And were we’re occur, what closely of with be change a we’re environment right to putting longer board. ready that’s out to balance. our customers is now, handle business have help the means customers, But term. that. that as our we’ll working of about think Certainly, And across the one happening over we’ll thing margins to is that

happening That’s are what’s moving the in lanes well. causing a about different And so, customers West that happening right Coast. as now also on bit there the country talked we in little right different are throughout problem the now, that’s shipping a market as

That’s that a want margins. the so to that constraining working we’re And our from promises with closely of we to problem an We customers. environment perspective, that’s also, on make deliver spot customers. continue sure creating

Brian Ossenbeck

difficult one maybe lot which may just so is Okay, last have point here. you’re we actually forward like seen to in we balanced the help always challenging is a going sounds for a not practice doing reasons that going I And strong historically, talked may because it’s third market, it be for been the it’s much do understand or free goal got it it. about. we’ve differently, what easier, me a think already And network Darren, more one in it balance, quarter, get then, just obviously, in to actually, the to on of

Independent maybe extra be is What of can capacity? to equation? So me into going that this need of to lanes what’s You the to different understand adjusted. need that manage get through you freight sort there with market, there. help else just goal is

Darren Field

challenges from is a I to of customers. and the basis rate was growth are so our I eastbound, products come cargo population Coast large mean, consumer the demand West Coast. West going The in from food westbound to shipping the come which for predominantly imported and that’s lift the support to products cargoes. mean significant going balance be on Okay, really, there the opportunities

talk retailers. driving and import may we’re from So, sales from a growth From just consumer that’s driven been the the organization. realities are it’s the be balance that And high it’s behavior we when too, – goods a some that mostly – various challenge. about of what’s balance challenges

minute of We want always grow. to to our try goal grow. to That’s day. We’re every going every

So you’re with balance. going not to grow

particular to ability But difficult So we as of odd of of odd year, then. of But network the the ago. balanced. way outcome that in more year In this where our our moving that’s are I I the expect to the shippers view expect shippers I state were that and very in. from consumers the or more an and kind been this a pandemic don’t on kind patterns the improve do time, this be

Brian Ossenbeck

Okay, got it. Darren. that, for Thanks

Brad Delco

I Stephanie, is finishing going close with think John comments. off to some

Operator

ahead. Certainly, please go

John Roberts

all Thank for of you, today. you. Thank you, participation your

of our I we’ve different and of state future have I’m here. experienced cycles. What core seen team. present pandemic. had e-commerce be demand technology businesses a to part And really us people. discussion I’d I different a really through are and This the that good for in some the they’re during I and going will lot changes of changes a and talking lot say that areas to in leadership know a We different like what markets think our new like the of group after conditions in opportunities of in very things demand is our we conversation. proud feel for be – about will

to the that still quarter say think some can carefully. is of you talking what tone looking have we this don’t feel that data just watching longer-term from on rely you we’re think are cautious us did we sort enough present I for. how But we and positives. But of is the I hear that

So know very a discussion. that it’s active

confidence and keep still firm We’re that to posted. waiting obviously see up you we’ll

around the just not dynamics, those margin discussed questions On obviously, And normal we questions. again, in we’re times.

our an on data, to Several as comments and those really both That’s sharing customers with this to have with ways have people throughout customers. sharing continue of finding around promises. been of and integrated let say we highly people, working normal going I our to on cycle, would to very Yeah. to be we’ll look that kind us forward. continue demand The normal what thing like enough will is that with thought organization. our more able of last So hour have be see that and deliver

talking When look think, you you J.B. your and [indiscernible] Hunt, at I We you quarter. interest important. we that’s think think package. to I whole have about look to forward next to the appreciate So that

Operator

This concludes you. Thank conference. today’s

hold disconnect. You the may now please Speakers line.

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