J.B. Hunt Transport Services (JBHT) 16 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

Brad Delco	VP of Finance and IR
John Roberts	CEO
John Kuhlow	Interim CFO, CAO, Controller and SVP of Finance
Shelley Simpson	Chief Commercial Officer and President, Highway Services
Nick Hobbs	President, Dedicated and Final Mile Services
Darren Field	President, Intermodal
Jon Chappell	Evercore
Chris Wetherbee	Citi
Amit Mehrotra	Deutsche Bank
Scott Group	Wolfe Research
Justin Long	Stephens
Ravi Shanker	Morgan Stanley
Jason Seidl	Cowen
Todd Fowler	KeyBanc Capital Markets
Bascome Majors	Susquehanna
David Ross	Stifel

Call transcript

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Operator

Ladies and gentlemen, thank you for standing by, and welcome to J.B. Hunt's Third Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] I'd now like to hand the conference over to your speaker for today, Brad Delco, Vice President of Finance and Investor Relations. you. Thank ahead. go Please

Brad Delco

thanks us. and for morning, joining Good

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

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

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

John Roberts

different was country to across how to work. and all the a proud business mid-March, are we From it to by of have Well, Brad. our the make the the day do in in to we pivot learning virus. the we a normal new on one, sudden are ways found go incredible. had with we began the have so change teams for very we changes we Thanks presented live that to When been response

start, take situation due with we people that the and health people commitments care and begin us so set on the safety the have while and customers. our value priorities of each to people than that to business, us honor of corporate in person, now of building work clearly call we to of pushed and from crisis, our have out This day to as deal of other together, we our the support one made noted, since time the the together drivers As hard our work a particularly culture, should collaborating, We in and good them. ever. and carefully. problems time, being very solving profit adrenalin sharing their the the we Initially, to offices to our to showed but reality benefits through, out very XX% field coming work see team more with start together over of our to many of also been find is and back the in nature ways slowly in effectively the position the our

them thank of grateful in and to our all corporate employees, at the their for We and are both field commitment. extremely

demand. was to spiking across we causing regrettably Topping we customers quarter different as third labor to unloading I demands seeing been opportunities away all The had in have recall some the all we with to offered we company high turn that what our growth. to congestion believe the Currently, capacity but annual our At and points, shortage we are past. bid abnormally is off is the showed delays, demand cycles and carriers at turn and business our list not built to able typical don't for entering us the our past. during well uncertainty not in new plans customer replacement side that and able into an and The trailing quarter. equation, equipment, experienced our of have drivers due higher pressure a Also the original both as and providers the commitments. network supply about rail businesses more been

customers allocate discussing XX our months Encouragingly, every to Intermodal our for serve How trailing generate We and guiding ideas and and in Services. year. continue. leaders ask think annual the long equipment with support not ourselves, we cycles has next the we are can the principle cycles? does We directional a have some models to have including advance fleet can the ball dated where seen customer capital. proper the bids our deal XX to with actively comes our our determining and it modernizing customers. return business Highway customers, good our agreements progress the Highway in need equipment ROIC the we ball for jump are to equipment. those better the can't months segments. we with align when that in cover ask I expansion Services for relationships needs? will jump Personally, internally what and and business hope I We to been Intermodal on to will We investments

recalls COVID as evolve the and transformation to encouraged of of with the with and Final organic say only the ago, us the we let within business asset the Services. set with brokerage other me progress of XXX performance just as have with time This our Both For business years state with services. use and encouraged our tool that big reveal experienced. we the help bulky being for in work progress. to difficult so be growth key a any in need acquisitions I'm Mile far but several before to our done business, our developing non-asset and our marketplace, the current I also Company also overall includes continue digital plays to not these also

We channels forward. going both these lean to into will continue of

and both believe present these Our more growth we work give lines, a to forward. businesses base that established of us sound Dedicated, Intermodal going profiles and and solid from, return

I get With to together job I of plans we other need true over have Company, executives is centered John during true on that done. I of and this months, saying at aspect believed and I our the turn duty commitment test that privilege call eight Hunt that the John? will to culture by have other see leadership each the the had to and to great forward growing a that close every XXXX to people, past seen have a our know from be our I J.B. a what our duty as We to team. each that and look XXXX customers. serve witnessed long the building me with Let out in Kuhlow.

John Kuhlow

labor and let and on provide call the on us the unit prevalent moderate networks John, cost tightness to joining leaders from during morning, segments. our due and impacts from disruption in in The consolidated congestion the quarter driven today. then We comments of other by good to their begin everyone quick related direct Thanks capacity were a the quarter costs I'll the saw a quarter. perspective, challenges. cover business most couple the third to pandemic the

we effectively $X not caring $XX invest incurred as paid protective that specific and and redeploying and of as right well through possible We costs as performed were million have in continue our challenges noted. of year-to-date. million for quarantined, repositioning well offer and time We prior the to which call was We that planned total assets avoid to people for enhancements the given our approximately our equipment return quarter layoffs, for employees in pandemic as as and workstation off a heavily employees office. the the to furloughs labor to

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

our handle loss our issues, return third we payment of we the receivable, to saw reserves pleased Regarding with worked pre-pandemic customers with to accounts quarter. during management customer how levels and the are teams

the capital change closely We credit monitor in working continue our landscape. to and metrics

the we've approach to capital long-term year, communicated management throughout not changed. has As our

second like freight sake made the markets adjustments we and to uncertainty our protecting However, the pandemic, given liquidity. for the and approach of intentional the quarter the in

maintained Accordingly, cash our and through it given ended still confident third market quarter strength status, we felt as positions the quarter we prudent higher in uncertainty sheet in just liquidity. in times we close the target While range EBITDA our the investment-grade of X ratio debt within staying million metric. that billion. anticipate $XXX at $X and We cash, leverage with still approximately resulting balance net with under

transportation Final over our forecasting we're great revenue balance management equipment I investment we had our today, to technology asset be to feel Hobbs Overall, will our That's pleased sheet now million system. to are on to Dedicated expand approximately XXXX with in of Mile. technology capital and turn and I prepared, in of position $XXX strength approximately to we're in core which million, it full-year all plans. as long-term $XXX million As and a and expenditures Nick as includes $XXX our invest well

Nick Hobbs

I this operating a future. had strong another income also some delivered spend roughly level to Thank you, highlighted segments. these my in on performance similar Dedicated and the updates DCS the morning, by I'll John, a for solid in everyone. and want our year-over-year some time improvement Mile expectations DCS. businesses with fleet. high morning start on I'll both quarter and provide of tractor Final Dedicated give pipeline X% discussing executional good or that performance

T&E density in also region, assets, lower driven of operating In of turnover, greater lower prior cost. utilization by was less and expense versus year, the customer addition, our driver strong the benefits [X:XX:XX.X] performance our start-up

and us some expected of unique our current stated account be remainder environment broad wins presented to of fleet keep new the by ultimately all a the that the truck quarter, accounts, and for attrition would we As offset year. stable last that diverse And pandemic has challenges, portfolio contract the customers. the given we at

case, the pipeline, I lot While that next. will is about feeling the which address still are a we better

we sold of As to trucks business XXX quarter. compares of XXX which of dedicated trucks last XXth, have our year-to-date, September new worth sold as

goal this to reminder, we had trucks a to new XXX early. of expected previously business quarter worth XXX year, this have to sell I and achieved am proud a As

services. months. conversations to lack by cost, for a offered drivers, their the capital outsourced our last of have conversion dedicated to solution, and businesses, insurance uptick flexibilities are contracts available driving meaningful challenges, our of professionally opportunities to desire some including of We allocate sign the of the over demand addition seen all in companies to three greater in fleet Customer core

and evidenced adapt to on pandemic ability update the by needs bring, which testament as we service believe to this the value to has we served our customer pipeline. throughout Our a positive is

continue wages, over cost, term, higher we cost, entertainment normalize. margins recruiting to XX% driver operating start-up out, to and as Looking expenses customers' XX% target the and travel long

predicted to quarter or last the quarter. and gears in versus $XXX we return FMS or Final year-ago slight Now million FMS. deliver shifting XX% was to all-time period able Mile profitability revenue growth of to record as the

portfolio business, We are it. our with and opportunities home appliance segments, improvement. like for ample exercise and put is strong ever growth of seeing across bluntly, pool strength I've market distribution the in it To the opportunities seen equipment pipeline home new furniture, as as in

and high standards As the this a of in invest offering of result, met component deliver satisfaction service, we of continuing ensure chain, customer. are critical we our service in are as customer's the to and to supply products product our safety

optimistic in our remain we rapidly this out, remarks. channel. Looking concludes growing opportunities That long-term my about

I'll over to Shelley. it turn So

Shelley Simpson

investments an as good in and J.B. everyone. complex to update which behalf continue Highway challenges XXX Thank both will the well on our as performance of comments we morning, and and to on Today, XXX, ICS how includes Hunt on you, Nick, my marketplace our respond for our box. focus Truck, in customers, Services,

in as the prior First made X.X% the a out to delivered of strategic and growth and many platform. face of in to only XX% ability this was revenue build scale quarter decline in JBT team extremely is the unique service record in increase operating $XXX the the as with asset-light continue highlighting encouraging despite X% of capitalize evolve both investment our versus ICS growth a increase operational increase quarter. the segment, XX% to year-over-year deliver JBT able and benefits JBT a leveraging and industry the the this quarter, more XXX the a on front, we costs and truck versus a million on in despite second in an a progress proud into box. XX% I'm in average continued rollout revenue of More period, continues count, challenges. to in in ICS the ICS' offering,

select to XXX As capacity utilizing our tremendous a pool. calling box third-party result, providers trailers, trailer visibility have power-only loads, our

of to related the our We customers. the both model and and see data continue grow activity to to scale promising and customer across our ICS ability to meet JBT, to needs engagement our

carrier J.B. Next, providing XXX fit capacity solve tailor customers to team's to a customers' Hunt marketplace for I'm asset provides is ability also at extremely industry or that needs. whether standards, an or a encouraged solutions, asset by by The to the platform or the unique their what whether beat is our J.B. solution, tender serve capacity wants acceptance, customer help challenges the the service solution. levels guaranteed third for committed whatever spot Hunt and party non-asset or that alternative

we In efficiencies. to help tremendous money through to with and that make visibility provide data informed will market analytics them our decisions addition, customers greater save

of the the with as ability opportunities platform All our segments with own J.B. to assets. to into drive well Hunt visibility have leverage efficiencies

to ability commitments the from no. being our hear when others say circumstances As meet you otherwise us to yet, customers of It's approach and to tell we able or a allow. our might customers when might comprehensive helps not will our best Darren, this otherwise serve

to on track with with on see goal In the approach raising continue value and our partnering people, continue our technology and on platform, with customers plan. to our be that long-term of closing, remain comprehensive focus scaling will focused our to we We tend. team build our the investments

on it Intermodal. see to a and customers. the to to scaling and we our albeit Darren like investments, encouraged. number platform we will risk into JBT, third our and XX%, complementary performance saw greatest As In one more smaller XXX opportunities is company our trucks on business the program. a to the now to even building of users evolve are an with of target, talk scale, blend and third-party I'd is quarter, of carriers, the In in trailers, blend last service our We out turn platform. records some our XXX in truckload in call, offering recent growth box asset-light long-term all-time about being volume that make of loads and the stated continuing continue to more to value-added of over carriers, achieving

Darren Field

comments here. you, thoughts everyone. my I Today, move we topics; in Thank begin and on good pricing Shelley, current some and forward three focus environment the general performance, key around from to morning, to how demand wanted network

relentless perspective Rail career. continue network during as effort I meaningful capacity I customer of First, be pace encouraged equipment. the have slower to slowdown have what the shortages. most a The from seen primary supply for unloading a team's balance solve and with destinations challenges to and view labor environment to of in the despite customers, the both our across fluidity a of I and our congestion velocity challenges at contributed is centered chain my difficult thus around these our productivity terminal theme of

it have meaningfully impacted the time provide back that some providers capacity productivity extremely the customers at related unload at overall warehouses, we are rail At labor and productivity takes negatively JBI, also our to our get can equipment operations, challenged which also been impacted Our quarter. key rail labor of cost shortages available the confident are experienced working the terminal our availability we tight labor we impacting to while challenges they will to driver in through equipment their with which year-over-year, and has quarter. to negatively Also, have targets, margins the the difficult otherwise market. market, given and increased

the quarter. even velocity industry. remains driver forward, front, of can improvements the We driver we we in on shortage progress We all moving making some challenge if these don't in for last a areas know the are fourth year's yet but expect achieve but the certainly

provide strong. continued X%. the from throughout X%, growth was the weaker Volume in us July During our demand late asked to extremely capacity. grew flat, in volume and have September began challenges velocity to August customers quarter. July and impact the The was quarter, was board, Across more us

in previously ask the quarter. estimate flow support capacity completing to our of meaning during pandemic people capacity yield positive to loads limited a have customers, with we the closely of us equipment want customers. recipe XX,XXX believe eastbound is to as its X, from work J.B. -- due We to solutions West commitments may in our to ICS, the Many business to in ability if to a note, Coast began. this provide of it two with our which believe for many a both collectively the On as velocity provide Velocity was customers we to Our and to honor and strong environment. we health particularly to for empty been focus worked you challenges the back constrained more all for our the solutions that mind, quarter our able its demand during additional JBT work to higher and prevented our times, manage priorities an commitments we growth. Hunt, for communicated At and to With two, chase long-term customers, employees; commitments we foundation consumed improve of Number capacity care sustainable takes honors were well-being provides long-term capacity continue the minimum growth. on quarter DCS prices. the in has effort challenging to difficult in our we our during that a We and while to working made mentioned, network. as

and QX we As anything we on changing move front. the don't XXXX, into forward see demand

planning capacity challenges and shipping to XXXX The the a in At the cycles in customers expect bid with of make velocity is expect would season pricing experienced improvements cost just we QX Certainly, lot continue the cycle, beginning. steps we regarding to areas. for small with our of all discussion management. small front. this continue QX on of stage progress velocity We the peak in

need to to our closing satisfied we appropriate mind. fleet do with balance not margin investments with our performance customers results targeted in prepared with say We to so, our thought that and growth, in returns these for of engage my or will expand container I want on will utilization. we we're In prepared that trends, but to all equipment are comments, volume our

concludes not Brad. changing area. we XX%, pathway long-term in I'll believe of turn our to We are continue to margin back remarks. to to you, target have That a this improvements XX% we it and my

Brad Delco

so one Thanks question Darren. as the those on just And provide ask possible. quick questions very as follow-up, to reminder many for and you can all just as to get a call, one to we

turn over you the questions. open for I'll Stephanie, to to it So line

Operator

Your of first with question comes from the Chappell line Jon Evercore.

Jon Chappell

just Thank very I - ask good were that to much. Darren, you volume wanted the to you hear. trends

as As we any get the think October? that kind throughout of bad the about it equally volumes shortages and the entering be labor, quarter? September, this even the were month of better in of that of or improvement the may July yet July repositioning, did considering Especially first you meaningful kind the no through was to imbalances, the quarter greatest

Darren Field

better frankly say, the had Well I we system. in would July, and in a fluidity slightly

As we equipment. the really quarter, half, really into of with the we August, to have back velocity throughout struggle the the got continued

as highlighted July over X% previous had we the So growth, XXXX. July of

As so our in very of that October we remained to continues. went challenging, velocity challenge far and and relocate equipment empties throughout ability quarter though, the the has

Jon Chappell

you that get the for breakeven thought by on right some change next investments to the And quick the the year? at the that on then all Shelley, the the has pushed in follow-up to ICS, of middle making? but you're that business becoming growth remains. the of been Any pressure tremendous, margin Does given topline super just of

Shelley Simpson

with we his really growth differently. the to the we and mentioned our about opening sometime that into have XXX around profitability business year the in something we interested next could prepared fourth Well, in to different experiencing have and should next doing half. deliver that we more the the jump second by quarter that as in I scenario we year be are as also remarks, pushing remain that customers. our comments ball be we believe of of on appetite John comments and we so are talked our that behalf inside second encouraged and that are my intact half return to the progress quarter said Having that, through and customers confidence

Operator

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

Chris Wetherbee

regaining you about of think cost cadence should recover how us out about, towards margin you sound we think cost, longer-term Intermodal Understanding some a XQ. of the and maybe the on So of intact, that in fluidity means from a specifically sort elevated like those quarter, bit side give the what of little doesn't come the perspective? they guidance levels? But third maybe thinking a can it all of is cost the how still of quickly that you kind that can

Darren Field

into customers. talking get the we with our challenge that about as we're very bid cycle, Yes,

we've a to I far, theme so done think got we've differently that our deal way with the a - you've what we've from heard than bit that to we've little past. in find comments as -

to really I clearly, we is to that normal, rail system first far. to don't reality relieved we need prices. bit would nothing the implement as be has the XXXX So, challenges the so And in expect in somewhat. to relieve but a I little some new normal been congestion XXXX be QX. about need happen expect time into Certainly, we quarter that congestion would move

as pricing, even would go when the to of cover until we QX some that's to not we which get bulk business see. repriced year. the through certainly, of And help new is or QX and cycle. have of likely bid our would to we'll next also But be wait So visible challenges, cost the

Chris Wetherbee

is then the When And what saying loads. necessarily not sounds the a you're getting quarter, fluidity on bigger fourth necessarily year-over-year it getting just is about fleets perspective, is better. the follow-up quick think on not like we

enhancements where utilization get XQ. to you were going from in not you're So

kind rate run reasonable single-digit lower is that So expectation? a roughly of,

Darren Field

on kind volume, beneficial really ready anticipate changes be any to don't I we're but of said, that know I I like QX. Well, velocity to during don't provide guidance

have any coming And so, kind it's would of we difficult benefit that in think QX. to material

Operator

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

Amit Mehrotra

about of the pricing of in hands you If to was - to from there out exercise was it a workload third the floor? because them comment in if contract visiting that of I there, be But can you way if the to pricing, pricing seems that the book kind cadence Darren, of talk hoping the are like if of in just which about sure was the of that leverage were? shippers what's carriers business Hunt - Intermodal the When the with reflected I of the you on left very XQ, us - commitments. on none to that of necessarily quarter, the said of and just I'm appreciate honoring just bulk kind could how fell of the kind dynamic in third could remind is the make that you pricing was Or being book J.B. perspective talk You you reflective that the in with us just is assume could respect truck? I happening And of to XQ, did standing now. that much the majority - is through fourth equally of but just it by shippers and that there the shippers? - J.B. the And talk sure wasn't kind of that get business, there volumes implies help Hunt's table contract other apply money the can equation then cadence? what you repriced quarter? appreciate of I XX% will quarter? the us guys both certain appreciated minimum you kind of the kind much

Darren Field

harsh maybe terms way feel customers prices of on is new historically, it's an difficult, in changing this. how It's move times us. some our And we Well, how the QX. on fast of other from the amplified it standpoint, gets in But do rethink us, jump trying be around implement really engage implementation what to - would smallest we same can direction. you're in want is we do during with think ball percentage hearing business I it customers the the to and typically if probably, and

call Implemented the and for to XX% during XX%, and price be through would it. business. same to It's like the more system So new it of the a QX XX% quarter. QX. running the and QX XX% on

of So QX of into, rule of you each quarter it, give year more the exact - and the but for is going it not maybe to have in kind the I'm you if thumb. kind just first good just call I don't XX% first a the us. in of that's benchmark three like break percentages, of XX% good a

honor commitment our As relative relates it to customer's a to environment those demand honor and commitments commitments compared this when willingness to did to volume are - willingness to a maybe times changing.

have I they're - the their think I - have like - customer. every commitment to to we're to that confident our minimum business the mean customer an are to of us, we the we at have but going a to commitment well, needed the do to felt we end because equal day we're expectation, day. customer we to earn would for the

we capacity it with serve this to continue and very, set challenge would now capacity different those in to us difficult just We that for our provide we like in plan time away take something to do. And customers have and to extremely to have the difficult right way very been felt overcome. a do that up was

to know, at want comment a I customers relevant and point. two this that, or about I'll to may her let Shelley, the have So comment

Shelley Simpson

Darren. you, Thank

budgeting, cycle, was we our and disruption cycle our customers appropriate six or customers that at now XXXX was time the so. similar through sure this have sure So so and XXXX we We've every looked fulfill just we grow don't last and have this or appropriate could four In We for has market more similar five swings if were help period. that did making sticking but about our margins. and we time. that a five-year our in right customers we customers do that it, our and to the we every lot right commitments then started in - end, this internally it with that walking think through the which we commitments, more plan we're very have believe able focused swung capacity time. in we years. past, very also have on help our now our difficult having it, throughout now And that in twice difficult prudent customers our of conversations, part happening our to are and making stick unleashing Usually part. over very piece albeit you on at years this with so that cyclicality case, they approach our That's this took every that We we and a about recognized them why it. I lever through

Amit Mehrotra

and this debt? Right

Nick Hobbs

and And dividends to was being them impact have lot jump a them true got they our of say, I same their and of that on dedicated business haven’t to I feel we big units. their the it going customers, customers in pays clearly the side.

very We portfolio. across in that a have plays entire business, see as high and retention our rate, our you

one all take through them of care historically. in segment segments We've you that are that thin. and thick across you with So there seen

Amit Mehrotra

quarter, XQ? the pricing on what of to follow-up enter the of said, And if going book business. the have you and in margins book terms Darren it move the better. business, I talk fourth the puts the XQ? takes the some down as the Just back could, Obviously, of come issue, as puts I the COVID issue. down just quick to pricing from XQ in one just of embedded you Do is gets OR you move an to - an still as XQ about you still and takes sorry, come is fluidity us to do assume

Darren Field

the for me able real that the change. all we implementing course back trend on of cost in looking have. front. sort towards think hard material or it's significant a see Without of a over moving a of change significant we're see to that's for long-term any year, we pricing We're Certainly, our improvements think our pathway to question I velocity, our continuously next - some Yes, guidance. in amount towards should really be our we where the new that

Operator

Wolfe Research. with is question next Your Group Scott from

Scott Group

why up see don't thoughts would just, I volumes if I rail broader about or at were know is were then I if have great. [indiscernible] third as be this volumes, you look fourth Intermodal quarter, do a Darren, flat. on that think reason IANA a So, you were train but BNS speeds there lagging And I you're any in intermodal that issue industry right up, now? the is XX%. Is quarter

Darren Field

growth. not that of the has of of understand - road. they're line I that measure been the congestion ability and is is a a see, get hasn't out on but part BNS terminals, challenges moving, volume When you been Well, the lot drive our a of train that that velocity trains to significant in there impact terminal speed a

think that in is significant parcel. and the Now, that IANA shows LTL data the do Yes, of I growth? some and

- that So would that to business moves in converted containers. of lot has in today see more you a the trailers. business that past, Today, XX-foot

domestic Intermodal. container compared out moves, So to the and IANA the LTL doesn't really parcel and data break

down. same more I'm turning grow we - So I that's XX,XXX Hunt. our we I faster mentioned but we to quarter, going I we're the Scott, have that. the our better feel going frankly, get expected and rate, maintain able the and comments industry to see a allow industry in system, have didn't think where out like would growth estimate. the back what the ways the to we to quarter than I loads Certainly, argue railroads that's during a to congestion to that's to think similar Intermodal, it at in as my And J.B. pace would domestic guys expect to parcel a relates it to to not was soft it are highlighted. that. growing handled conservative the and leave that you prepared that could LTL to are experiencing. in figure growth all I'm in we've

serve week. turning absolutely certainly in growth and long to are that because made. quarter. capacity down we to commitments these down strongly struggle thousands we're cases, will It have term of We us. to we've the over find per some the And that benefit turning honor In feel Eastern opportunities, the Network hurt loads we us

Scott Group

for if then one just I can ask Shelley. And

about or next Intermodal magnitude prepared the the be increases than the year, one Should truckload other? similar it I for thinking XXXX, I were and rate you the up reason you How double-digit of the So think is would first are in there XXXX. why that market in in more pricing? think, a one - be

Shelley Simpson

from just having just host a come more we that better think open did actually peak really how XX% election call. a a happening on to We just do. challenges video an prepared challenge we business had of to really And will season dislocation So what just a already our in It's to got conference should Roberts. what's into next of the actually cost consensus We to revenue, a John And have with the of our to past that call about our labor aren't along looking they view to wanted around our to about are want through with that us discussion questions with said wait our really customers and a customers. discussion. we And issue. of presidents on believe lot But call. year. perspective Had a our update for market lean we and from customers, real. give pricing that, Scott, in XX% segment really

be It could to be it be do say more be we if with I be because to understand it metered approach talk I want think year. would I feel modest. customers a range would just this what expect wait to the think end we'll talking along towards cost we of I one, our up of really that I recovery. year. having be happens, off. couldn't the challenges. up; and customers with sure could with quite gave And - that I We'll what I think, believe the end cost significantly would Also it growth making towards is, customers see could are them and do or our have I like to our

Operator

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

Justin Long

we business a from there And under if margins wins just new or coming cost good to coming start then said through sequentially be is been think units. of think you growth hear those costs board the the pipeline leverage I should offset wanted that up. some XXX help year-to-date, if with about enough was a to cadence from question you be forward? should Can start-up the on that? about have activity picking to when think what I on curious perspective, operating sold Dedicated. the us pressure expecting? in you going Nick, I'm trucks start-up It because of

Nick Hobbs

Justin. The Thanks, of of some you'll timing in up Yes. see those, those start QX.

is and starts of some come Some them starting QX. are end group early of there good of the up already year, them will that them a and right now pretty then towards in of the

beginning towards the So right that been is of those year, have end year when the next sold now. of

on So to XXX those days it's typically - when typically it's start till days XX seeing the we on ground. trucks you sign

feel we about cover We've start-up to base anyway, lot larger cost. So got good of cost. that a a that

And so drivers because It's to tight. just predict, you'll some hard cost. see are very

try be going recruiting are to we drivers. up find and And costs wages to as those so driver

to us predict. from pressure cost. But I some of So see it's slight pretty a think you'll hard on those

Justin Long

Is quarter like the could sounds the it in a quarter. bit versus be that in expectation? clear, margins be Dedicated your fourth third sequentially little down to just So

John Kuhlow

good are We Dedicated, haven't and maybe executing. bit a provided startup But guidance like of think but is suggested, in costs, Nick little there I on guys momentum margins. still pretty

weather is what XX%. no for winter cost, always guidance than term play we can So say to in Dedicated being we'll XX% long margins specific but a see role other

Justin Long

operating with in maybe general, Shelley, Is of then, going current shifting about expense should half was get XX to hold that back the idea to next in trend to wondering can levels, I about kind of level And that how months? the and you can forward. how thinking ICS. year, we expenses tech thinking next the spend be and of scale XX operating expenses the the you're months operating or in profitability business to

Shelley Simpson

people; So in and in in talked from we three scaling the in business. really investment technology; about areas; our investing perspective, our an

that of And reinvested some some from into of inside shipper so, from quarter our that's we're buried that third plan. has in of efficiencies benefit our we've the saw group. and you work, the part actually some been operations that our XXX, there From seeing

platform were in continue constrained we've our maybe managing the we stay a As rest if slightly. very base relatively to up year, scale we great records part done count for in scale comments to environment, the a year, But that of records might has reach quickly in to to add, to and great job our cost results you spoke my is believe inside look but people through and earlier the us. through just that our I same, more I that's the really of our next really that segment this invest produced of platform and it. reached has us of prepared rest that continuing allowing

would the of for progress improvement labor percent margin a year. expect half in come improve next result as of year, So of a revenue year next as our second as to throughout and cost we both I technology to for the

Operator

Your next question is with from Ravi Stanley. Shanker Morgan

Ravi Shanker

I about how and can first but unacceptable rate. how quarter, running tough in you what flag seems just call, like were the an running of It you at, talk were Shelley, XQ that July the margins were to kind October gross the pretty think call, entire through for trended margins that's on so you that gross far?

Shelley Simpson

question. great Yes,

quarter inverse third we market trying demand. the find saw what of the and that between the second really in exact brokerage as supply was balance was to the So quarter

is lot So business be as we've customers October, our progressed. unplanned, that think I responded would into pricing worst the moved well. that that of that moving, performance, July, here published was to is we as as appropriate. looked quarter gross into is have our continued improve really There and margin not a we And

and I are saw than But October spot that's of You they actually in margins percent the would market. were August. and some that July our in September of in better business in both say

Ravi Shanker

could some on you on it follow can investors you Intermodal issues of Clearly, as seems mean, to up I John, operating a maybe side, opportunity And be the - the - and and these the upside truck Do the resolved be going like are somewhat XXXX? overnight. not are do focused you for like these into Intermodal. XXXX feel issues restricted because extremely the market into of at spillover truck of potential from end tight

John Kuhlow

have to Darren that. answer going I'm

Darren Field

we where talking what those Yes. of Intermodal And and we honoring doing we've and out we're into customers value commitments, the we've Well, our find. run certainly, organization about we're and our organization about said demand. but with the an can like have to board with - working commitments. do to I when can the we're as the the drive customer then honored And capable across capacity of with talking capacity, we more - we're how they capacity, still

And improving all the the railroads, I in - have think ongoing want their of relates think to dialog those about I at to terminals. it productivity just think railroads engaged I As conversations. we're

the Now, of it's in over area occurred very significant the course demand of this rapid during difficult the to in that really unusual that course summer. climb changes implement

remaining to we have order to not It to I through changed in I do drive Certainly, want for be work of necessarily and without growth. for XXXX, expand really together, be buying productivity the railroads And if has would into value yet been what painful us in go Intermodal we our material are to As something that parking want be about railroads to more customers, that all just am long-term going and how order year, and can accommodate new to way. surprised have more - to capacity expand any ways next with or the I and going push be railroads expect those we terminals. that's will in in terminals. year. that that. do just they we part this that convinced rail buy The talking in to the system in that, We that can't XXX% they're investing don't

Operator

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

Jason Seidl

to has? a about up how on Is little to jump this that, more changing color something I'd of more going would your where look some change like you to and different units. bit contracts set get how mentioned that view ball Dedicated love you're You sort bids, across

John N. Roberts

John. is this Yes,

those everybody more lot a have there we just fact, that that about annual understanding think area for time. in change We'd witnessed different present we more appreciation Intermodal aligned the need some frankly many good with really in all business we longer, last the seemed do Darren no that in you of carriers, that range - quite equipments really railroad services the the decades services will I we time, sync business. if price kind and And and but collaboratively of were think Does do, customers, And had evolution the constant customer to to we equipment service about nature presented learned procure lot is a and work. really providers position studied - and way historically, what providing, need how Highway really of three and is, life of of with have of buy some it our equipment one we And have it's value the how work we've with for nearly and a with if week areas takes the that But that that deal or niche cycle for better what industry this to other approaches in So been of a that real and arrange for the service have with to out customers. networks. only logically those in ways hasn't contractually our event value? for And this we we conversation a to with great contracts of agreements we to equipment. were does. I the I not really that to the business our

logic happened. I probably a drivers, the DCS utilization, we've engineer what there the shippers need good benefiting think our all contracts that apply would an all of year and in are set could that and don't and advantage we're be which it for to answer is, into these Dedicated, our much year arrange do that I could better already I've our from in seen up labor our But business. our And it. really that, cases, who out, is our particularly this go and larger from it where, in to things middle we learned all frankly, some we providers of not, learn the way our customers, to both and in we suggest us,

pushing encouragement changing I'm our my we be a frankly going the do thoughtful organization And so approach. and world to to to customers and way is, the one to logical this way forward. consider And in business more

Jason Seidl

take And over like assuming that's customer sort to contracts something years I'm move that? of will

John N. Roberts

to somewhere. got Most you but likely, start

Jason Seidl

I'm... And, Yes.

Shelley Simpson

If I...

Jason Seidl

Shelley. ahead Go please,

Shelley Simpson

customers that we're great are Just across growth longer-term and all to wanted success segments. really a That's be to will our perspective. in, us from to something for we our asking of grow seeing add that, that believe

secured with ourselves, together a across the when great so providers. plan we the information can we them give have them and about the really to locked better more about are we that can the board. And customers make lane don't plan, also and in we railroad capacity more we with that level, can we the think do how plan the understanding we just And sure that give we

long-term for walk planning short-term I one-year doing need driver answer. us So like tactical feel Certainly, in difficult really focusing strategic our providers. a we're what perspective environment from we is better bid very it’s railroad a versus to on a a like

Jason Seidl

is Services, mentioned more with changing trailers working growing really this you the trailers one. and in makes requires world, catch-up business, to that chain of Highway going the is own let one because need supply sense there the all the And quick throw you me something No. how forward? on That is you or them

Shelley Simpson

of the the our has trailing the started. how brokerage of from Marketplace at customers segment XXX half that one business that if capital truckload for that's part our about as a heard you the more from been But we've look is, perspective. for actually things introduced Well, we business have industry, the most and requires

you And the community XX% that XX is capacity the if capacity market, think available available or carrier so of small about the trucks. is in the with in less

network instead our of the customers loving are drop-trailer now, moving product. Marketplace into one the creating that we've and the environment, actually both environment two, live-load with So blended

the customers in one really bid So season. started reasons our our It's early of out strong we've in this growth leaned with year.

continue have we a as inside business said answer, and company how platform. we some so have in move. moving a we're and do of We boxes will independent that contractors, asset-light to customers my more brokering the even many But I of ask all prepared remarks, us great truck blend sitting to and

perspective more I exists trailers for a is create sense So better, the and significantly, ability market from XXX capacity think network and box a to our our just efficient network large in the putting makes or customers. drop that

Operator

next Fowler Your from Capital with comes Markets. KeyBanc Todd question

Todd Fowler

travel longer some an seven the environment on Dedicated maybe where said run range. get margins, in higher, normalize what continue structurally guidance range do see isn't it's Nick, where your especially give So that in understand reluctance range to entertainment can't if maybe close sounds But to you margin longer and the been above XX% the near-term expenses like quarters to why business of but there margin you reason should of that to a on term. you I the of back can't it just Is it historically? that give comments thought to this you've XX% that kind why some profile term? be a at was even been

Nick Hobbs

of price way the on targeted return a we our based deals at think look one I on invested set capital. we our each Yes, deals

customer if the their own each so, is we get some deal assets, has lighter on trailers, And differently. priced that are little deals

And we in. are assets, the going come assets don't so heavy I'm just long at mix of trying and to range, look light know which to

long guidance that so we're on forth. and the So very that's term in see based the we comfortable deals think we still with pipeline that

on ROIC. pure based Just

Brad Delco

to push say targeted the alluded Todd. time, little differently is the approach margins to think to some Nick higher achieve I have Hi, is invested this bit regardless to maybe always of on what it order capital Brad. focusing way could that Yes, over deals capital. Dedicated I return And capital. will deals pricing in bit invested the are the - on a of that as on intensive. more that Yes, is, to, same return say And a little happens extent

which And the a on how so that, is we is initially those importantly, those focus change that deals, to think, the I will there in driver But of changes change. is could not be extent what that more big approach margin returns.

Todd Fowler

see that of that you that about you talk just and As kind that kind organic through may would of of like. the that how about that grow, of with think something of about be associated in numbers you're out require they're segment? do is expect Final the both my more infrastructure what I something to light, the intensity pretty so, think I about? some acquisitions deals guess this business point it's versus the what just and is coming you sounds growth difficult the more Mile and seeing growth support like that to the for in of little And looks right decent that is place now a cost is at that that seeing And you tease longer be all growth near in that what's bit are to we for platform look facilitating maybe Nick, with it do difficult us term sticking the and to and have continuing something way mix talked to or the that the that asset - that's the think the Can follow-up with trends you in you'd just reported you, you're asset term? kind

Nick Hobbs

a A Yes, say deals anything running the is we're doing not the or deliveries. running that. that locations, I lot home like today, we're that infrastructure of facilities of business just existing lot of doing customers' of new would out cost

in infrastructure, going big that. don't anything we see So on expense any like capital

so, there is their come percentage five We're we're business, right their our riding organic we'll largest continued on from customers. we with of but seeing now as deals and we a they're their kind and growth on small what approaches a those just networks, of Acquisitions, about in, just them. six or along And runway at coattails. look, of look out feel we're the right growth. rolling But big good always

Operator

comes Your from next Majors Bascome Susquehanna. with question

Bascome Majors

ball comment Yes, wanted and to thanks question. just for the my questions of prior couple on on that. I jump a taking follow-up

world protects of intensity I a set cost-plus customer? to of Is you new that understand you win-win - of that this you more is would a both floors think the able more you evolution it optimal agree type just your to to? it Just for what the that a Is commitment your move some for setting Intermodal capital the longer be also could for sort in guys to what customers term - were way would and if mind do have that - industry think in that accounts and like up markets? would pricing you that customers? have would look or in you down a volume revenue Thank tactically in want you.

John Roberts

in. then or and or Shelley I’ll come to Yes, thanks else start ask anybody Bascome. Darren

had and past the with lot explored ideas in had that customers. of on success a I think different have we have - you hit with

And kind labor recognize we working we to in apply and things and inflationary to we that process. bid index-based to business. our strategy, the easy a a an the present that work and the all ago in on out, was implemented of way pricing way cost activity One in require doesn't visible some spend a and time have other that recognize are pricing time pressures Dedicated where of we

jump we those track not Customer service, so on be performance program, the as that performance, one service on is us metrics, can together Value where all way things We Delivery, a pricing. that keep the have identify it call tied energy key we the we call and with ball indicators

be to Shelley our the levels commitment hey, still as on And if rail got XX. business this total to book. can providers I - helpful It either provide think what at to say and the Nick, guidance of - lane now? would Nick's that really needed our what's look we've is volume you retention present, said, and we i.e. or different to want

Nick Hobbs

It's XX% and some change.

John Roberts

customer we so year And I and for out, really have reason business that. a think we else year they XXs, for that stay we would can really while retention the High good job plan because in and such happening in is what's know the that us. do high with

here customer, logic. experimentation for better some I And We've that had mean, for so made we that's actually it for apply of with We've idea we've better do can prioritizing work. and it's this. really it's not We the us, need. the - better seen it's is living that some think the a customer. just frankly

anything to Darren if me Shelley Let see to or want add that?

Shelley Simpson

to don't I we lanes price think business nor that think of for them on model. ability want particular budgeting. I business good that about not can are would all do comes to to a that's to I we from that, think our our that gaps fill think good Bascome, embedded together. season, we're the their leave are I predictable business do largely does business plus cost actually a not in give us cost And bid in, do that say you long really and interested our that prediction, customers in for budget customers basis our a to asset perspective, our to bill do think customer, able have longer it's how in I down to the a Because prediction together. an in in our

that into the we area pattern in And really and of as that's we be longer and that would the also But whether lot published Services that's customers. should and there a that be business be in over save and internally And regular old, that published business better found up capacity to that can't time business a longer-term Intermodal market. that customers moment, that commensurate at a actually do so business could business that not is is or can about that go that trying a every we have believe business and for and there a match customers our I unpredictable. actually dynamic is static money agreement. repeating is with as that we're However, and to factual have business in that process the customers many needs our to them say to and are directly capacity. what the causes customer, assigned that to in nature, if period bid That their the our we've were get more any Highway service up that predicted that really able that a talking into and for to and is loads market a improve a our number issues more go against price in for still moves could is lanes we in to of

Bascome Majors

for you answer. Thank the thoughtful

Brad Delco

more one quick hang question before do we'll Stephanie, we And up. it

Operator

of from question the with final David Your Ross comes Stifel. line

David Ross

asset Yes, thanks of we've nice bit talk everyone. in where the obviously from slight in you want how profitability, I Because getting biggest to the Nick, here get seen and where the not not FMS but to about you know line Dedicated in just there? little more they're but a it? either growth them? turn to there, be obstacle or with light, want segment, margin want it's I line with do because you a going What's Dedicated,

Nick Hobbs

to and look the a I try same it's fragmented very, in approach at very and industry, take so Yes Dedicated. it

then gave customer returns get people the in the able fantastic and contracts be and that on executing rates come that's service, to you'll you that service need You go as great appropriate up. a

a to pretty methodical there's and and industry, the low. And that acceptable fragmented barriers able because is safety And trying customers' we our going an we'll a time, approach now, executing, and to But are just careful price better very we service, down that. improve lot it's to And now think of so do. right methodically on return. have the return. - is higher to then to very able to it industry, set into you of that path get execute higher be security rate checks, our and bar going care of a margins background But to on lot the a to our a a so, of small with product over and you very being best-in-class come then will taking things be We're right of customers. be the we entry

David Ross

the industry much seeing than you are fragmented consolidation is levers? yet And it or in those

Nick Hobbs

coming consolidation five is or four do No, there to some in. There is some folks that's starting acquisitions.

some a seeing consolidation, process. slow still is but it So it's

David Ross

thank you. Excellent,

Brad Delco

for Hi, the time. thanks everybody

will in in not during we'll or the next a quarter couple with We you. Thank touch conferences, you talk you if to be quarter.

Operator

today's does call. conclude This conference Thanks.

You may now disconnect.

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