Hub (HUBG) 7 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Dave Yeager	CEO
Don Maltby	President & COO
Terri Pizzuto	CFO
Scott Group	Wolfe Research
Kevin Sterling	Seaport Global
Benjamin Hartford	Baird
Justin Long	Stephens
Todd Fowler	KeyBanc
Brian Ossenbeck	J.P. Morgan
Bascome Majors	Susquehanna
Diane Huang	Morgan Stanley
Adam Kramer	Cowen and Company
Tom Wadewitz	UBS
Matt Brooklier	Buckingham Research
Rick Patterson	Loop Capital

Call transcript

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Operator

Hello, and welcome to the Hub Group Fourth Quarter 2018 Earnings Conference Call. Dave Yeager, Hub's CEO; Don Maltby, Hub's President and Chief Operating Officer; and Terri Pizzuto, Hub's CFO are joining me on this call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one follow-up question. happen during release of good represent as what made contained call faith statements to the future. in the may forward-looking the the course or judgment Any the in company's best that words expect, these the words. forward-looking use variations project believe, be by anticipate, identified Statements the are of and and of can Please cautionary the in statements review release. the

projected In Form could SEC those other factors that these XX-K cause materially addition, results in filings you differ should refer to the statements. and disclosures in the to actual company's forward-looking regarding from

As this my Yeager. reminder, your call conference a It is Dave is pleasure over being now host, the recorded. to turn to

You may now begin.

Dave Yeager

Good had profitability resulting XXXX, continue This significant was Intermodal the as strong had technology, to afternoon that investments Elevate and improving strategic making operating operating Group's We another Hub for very extremely expenses in increase revenue, we're PCs strong service into increase income as X%. and we while a of year-end. as through the in with you expectations Intermodal volume business our our a plan a and all focused, in was put a for quarter, volume profitable a stellar reducing executed. The network. coupled growth. solid quarter in We a platform continued participating year amount call. exceeded Intermodal fourth our had up and provides lines were quarter for in pricing year. in effort our earnings and in XX% of thank record team well

will to best-in-class customers. in will XXXX. for as solutions to We Hub the continues Intermodal prices provide are We our grow bullish mid-to-high-single-digits, volumes while to on increase our continue plan believe

CaseStack's based segments where very fourth products Another markets. our on represent acquisition our and focusing retail CaseStack to business. quarter the non-asset is of Hub, and those CaseStack complementary highlight of LTL focus the warehouse brokerage growing is on strong market consumer December Xrd. consolidation to closing XX% the was

future with the has team, and very synergies turn talk workforce, pleased Don of With talented Hub opportunities. CaseStack we to the to robust of pipeline welcome over about our management performance Family. call other business Group are captured I'll a that, them solid We the the to and we have lines. a a

Don Maltby

Thank you, Dave.

mentioned, Dave and strong XXXX As deliver our confident results to are pleased in XXXX. we with performance our ability feel of

in lowered Now rates higher spot about our talk to as a the quarter business. due business in truck let's the which of had brokerage contractual We amount volume and challenging the declined market committed capacity offered locked in more as spot.

I we In services and LTL, addition, this transforming our distinct our to contract, services. call, mentioned three position business lines: as transactional reflect on to special better truckload last and are

leadership, pricing restructuring We more sales our into rolling technology operations, new bringing great compensation new and made and progress in and efforts. operations, have to adjusting drive aggressive procurement our our in out models

for accounts Our and Logistics. services technology, to we process, bringing future better are strategic these growth. position business this and value sustainable resources

our focused logistics momentum we in and yield. lost gain to continue replaced on efforts early We XXXX, as improving contracts

During the price also new onboarded XXXX, with back increases while two of clients. half we accounts, of our implementing many contract

solutions that same we calls, in on on in continue efficiencies our our XXXX, previous will As to and focused TMS Oracle I scale our mentioned implementing efforts and standardized path in XXXX. drive

back with approach will will now end-to-end Also further offer the that also set earlier onboardings. half pipeline a in the this year. we customers up that strong year, very taking our a the the a solution of with of can marketplace. CaseStack, addition us accounts well full have measured We position with as XX% increased Dedicated. our assimilate and the new in Revenue we to while new enhance continue onboarded

operational discipline, quarter and of and to on and quarter the actions. past we've cost great XXXX during We those believe control. into starting part yield Our see now made the this improvement, focus are early results is strides of

Our in now sales numbers. it to and on future pipeline robust business. remains and the throughout we Terry will turn I this over for to returns are review ensuring focused strong the XXXX

Terri Pizzuto

Don, Thanks, I'd highlight for three everyone. hello and the like quarter. points to

of third, was First, on and the the impressive on XX.X% gross we all X.X%. purchase an year, we've since as closed Xrd, further our a is the second, fourth CaseStack margin quarter Multimodal highest operating of diversifying December income seen Solutions; XXXX; at percentage highest sales

basis by Mode be look let's August. fourth a $X performance XX% the we our of increased the Now uses per quarter. Group's management with or was due basis The as points per to than of sales connection restricted compared offset the Logistics, business. quarter addition expense mix, of points revenue Gross purchasing lines adjusted as in with earnings expense was of billion partially a a more numbers of month in our $X.X a amortization operations and per new CaseStack million spot management of a XX% margin about continuing carriers, margin items points value-added of was points million $X.XX gross Logistics XXXX third basis key fourth associated insurance from adjusted compared points was and $XX of up days of for Truck We quarter a CaseStack XX quarter partially last and Brokerage basis higher XXXX. and of to service includes X.X% in XX% service. the XX.X quarter eight-tenths higher an less sold Brokerage. $XXX,XXX per income decline is per to earnings day diluted sales basis to increases, in earnings purchase. million Taking exclude to was which growth the since percentage Prices margin it December. stock Truck Logistics take with share quarter higher cost few due stock points is that dedicated about and we Intermodal, year. XX Dedicated Hub's Each in diluted business Brokerage the last additional was decline at and sequentially in-depth from reduced the of temporary trucks. last than XXX amortization loads price expense operations year. share at these and due expense in was sales results, as $X.XX or due to a spot a was Fourth increased was to Intermodal XX% a amortization per last $X.X and with the from XXX Brokerage This because services in CaseStack because XX% a in year. a CaseStack spot XXXX the compared will was of Group's of of by increased Operating is fourth awarded to X.X%. Mode. sale million. $X.X a Hub more on and to share Truck our to quarter. purchase year. in of include continuing margin effectively, up awarded XX.X% of Brokerage solid down related business, use lower this increased for Dedicated from margin increase. slower quarter gross in of $XXX,XXX customer of to metrics, XX% impacted offset Adjusted talking of percentage I'll compared report operating share gross CaseStack fourth fourth of rate, the CaseStack. XX% compensation rail effective the sales or quarter at the compensation XXXX fourth as gross Truck earnings percentage year-over-year look quarter XXX tax a related solid fourth gain more the XXXX or Truck end positive stock to associated from of with and share connection increase. utilization third-party in a business of Amortization to Intermodal, Compensation XXX $X.XX the a rental About that gross drivers, basis Dedicated, acquisitions CaseStack a margin Adjusted earnings negatively partially of growth the All as day $X.XX and share earnings issued year. done at percentage margin than a $X.XX of restricted offset a an of expense revenue. operations XXXX $X.XX which continuing to were of and that's in closer percentage changes Logistics, six-tenths lower our Hub sales excluding costs, restricted

flow Cash EBITDA for the were quarter net Our for $XXX million $XXX $XX from year activities expenditures million year. for was the and and the operating $XXX capital million. million was

XXXX that Truck share we to XX% will discuss Brokerage expect XX% I Now our service revenue. growth to $X.XX in revenue low-single-digit from diluted believe XX% growth in expect earnings in and revenue, Logistics XXXX. what XX% Intermodal, to per we growth growth will XX% $X.XX. for line, By to XX% Dedicated range in We revenue,

XX.X% for We will as range percentage the of expect full-year to sales a from gross margin XX.X%.

range approximately between XX%, will will that connection restricted purchase X.X% for expect approximately of all the We that $XX.X million project effective XX%. XX% $XX from between $XX that between that stock We costs our and margin to tax in our expense million. compensation CaseStack to will compensation margin range service for CaseStack believe $X.X Dedicated depreciation expense and be with and gross We issued and restricted expense million related adjusted million. with to lines. margin quarterly related operating XX% from the will X.X%. Hub gross amortization We be and to project project will to million. amortization rate and management We and be We will growth estimate that expense of stock in acquisitions our Group's be increasing million $XX $XXX that expenses

We We That $XX over as XXXX purchases capital wraps with expect and between fund to trailers, you to Dave, in up performance, for our financial plan closing continue investments. to well containers, on and and as million $XXX to tractors, million primarily remarks. debt. cash expenditures spend for technology

Dave Yeager

divested great aligned the We achieved all customer continued service. the with time Thank XXXX say non-strategic CaseStack, offerings based Hub Mode, asset acquisition our a strategically Group. service company. non-asset while for on How marks logistics of earnings was record expanding Terry. high achieve in to our a you, year to and Needless

opportunity. very questions. lines towards line with well-positioned any is for that we open of As look business our Hub look upon forward the And that, in up we XXXX, executing to all will we and

Operator

Thank you.

session. the will question-and-answer Instructions]. We begin [Operator now

Your from first Wolfe question Research. comes Group from Scott

is open. Your line

Scott Group

to want the just with or guidance the $X.XX that of I is Terry, amortization? $X.XX; So, confirm to without

Terri Pizzuto

basis. GAAP a That on the includes amortization that's

Scott Group

so model, sort share our just or report was in are be you the to you XXXX? the can And of about we when Okay. going then much excluding amortization deal-related total calibrate and talking just you GAAP amortization so adjusted how can

Terri Pizzuto

The deal-related on Dedicated and an was basis -- amortization XXXX the XXXX the million. $XXX,XXX in stock restricted was of of $X.X then about about from $XXX,XXX. acquisition Yes annual that's including about

will about $X.X million. So associated and annually with associated expense amortization in stock about CaseStack with million XXXX, compensation be be restricted that $X.X will

Scott Group

And -- do

Terri Pizzuto

And what so about to is give both. the going because we're we and GAAP you how got have your rule to to but going you've the number we're that's question report, also report adjusted that answer to

Scott Group

helpful. That's Okay.

guess So wanted mid-to-high-single-digits. said you I pricing, to Intermodal -- Dave ask

Dave Yeager

That is correct.

Scott Group

going is in we than intermodal pricing an environment What volume truckload volume can it we pricing? grow up how realistic can -- environment price more going think if where grow than we big up picture be Intermodal to where Intermodal like is an in is Intermodal truckload more can pricing pricing? And long

Dave Yeager

too Intermodal a intra Yes, been pricing a think versus for primarily competition that. has to had too problematic; answer deep question your I That's has driven a which of truck. way lot been of discount long it's Intermodal an

saying of There I to think still lot the room bring that looking that and great. is at yet Intermodal variance all too are price increase this the truck we at point, a is market we've seen business but our far what right in it's very XX% the of and to mid-to-high-single-digits the bid so our certainly I about only forecast play solid is in value From what customers. now. granted between

time don't increases -- XX% because and that to of As XX%, we that, taking believe you much XXXX not length far that time, it's at more a through expect see may certainly least incremental. take at again we we're as

tail overall well follow-up that I so that extend very the And do XXXX. to think on could got through we've that

Don Maltby

the -- And gap this you up between is point down price sizable on they look XXXX to to prices business. where XXXX to is TransCon much Intermodal the at XX% into did, is there and point going some truck Dave's that still as as cases in and

So it. to it to and there's grow we going a we're there think runway do

Dave Yeager

the able believe part to -- at second and volume going get well do same we're the to return level. price we into And that our capital increase grow at and your as time, grow of Scott, question, reasonable as the a to be on invested overall

Scott Group

So is gap a than -- there? East is better the is the lot the it in a guessing lot I'm West the pricing because wider

Dave Yeager

lot The gap wider a the of as well. is a but room still there there's in lot East

Terri Pizzuto

we And East in saw the in January. growth

Don Maltby

Yes.

Scott Group

Okay. And then --

Don Maltby

that's still truck local right, a between gap first, up the lease That's and tighten where there where is in will -- and that truck. Intermodal the market

Dave Yeager

a local do lease legally changed economics fully Chicago haul to -- is Harrisburg that mid the you have everybody for ELDs think least an of in not the on overall are no day those a some to can impact having it's required with trucking I longer of at because ELDs, now running and that operations. But haven't some do we

-- So well that I'm not as pricing there gain is well East as room as to lot within grow of still the as share. convinced

Scott Group

more going queue. in I'll back and I’m get ask to Okay. one then

So XXXX changes point from this partners, assumed heart are gross or you sort of have in at of impact are the and any your right making? cost margin you you rails railroading, the are sort impact what rail negative that the of seeing precision

Dave Yeager

easily. marginal can we believe think have relatively I those additional recover far but thus seen we we that cost some do

that lost We areas have -- really have believe we've don't a problem some down that thus it's have shut that volume, been although been where again we we far. lanes tremendous seen been

precision it focuses corridors. railroading, As also trains quite I and there Norfolk that our if of point point it's although no at the We're accelerated is in within it in feel seeing we increased at XX-plus-percent out good early the suggest and with yet Southern. in look to enhanced changes but railroading corridors both longer-term we both we precision there carriers. seeing are this long dense so is dense look are amount precision I change not is we time. with costs to the railroading in obviously really business, on question service has an that of you would improvements still pace the of at it's service. UP take at to There but And

nothing so far, of the on made and is well that But say has we some and change are extremely communicating as overly changes thus I are And foresee our do, been really with negative advance But really really said, bulk to I it. don't pace have being us again of partners I that notice. us the giving increasing.

Operator

And Global. the next from question Seaport Sterling comes from Kevin

Your line is open.

Kevin Sterling

running together Oh are days gosh, here.

X.X Dave a think negative up drag. Scott's point So tariffs on I rail that's were obviously days about and up let piggyback XX.X well, me as service for you question your box turns you said days, maybe that's

how rail the margin your throughout to we that improves, improves XXXX financial and the think utilization should say gross then service impact? impact about As metric and

Terri Pizzuto

us. one million of about as Yes, utilization worth day $XX now is to

the And year to worse so, the and better. What the it'll gets our half expect of we be as half we've the will improve baked utilization service second first is in than the better our of rail year numbers, got XXXX, Kevin, be utilization.

our guidance we've numbers plan. in that And flat we kind so utilization the got for of in discussed

Kevin Sterling

think and first years, pricing for Great, discussion and might let the get maybe level, spot talked with help discussion the going rail and pricing if Dave, from into the as IMCs, obviously positive. and service I I would other boat more being I would here, truckload decent for the imagine there? keep play just help the much and about service to mid-to-high-single-digits truckload And a to on service me okay. make pricing we're But too guess would help time imagine we've the pricing discussion about you're that in on that missing at negative rail actually Intermodal higher competitive I'm that and as contract while a attractive that because follow-up the pricing would improves Scott to how or some heard talking truckload we that pricing few Intermodal or rail pricing much is

Dave Yeager

more road. the for from it over on Kevin, more do you're and we've target, competitive increase in to unusual right versus service I and we're that the truck, able the rail business four price course XXXX certainly more of was certainly and are gets convert to the think -- poised that we been an getting We think to allow XXXX will but market. more better us

to So, target begin we no, their and you're some we're to the rails reiterate right seeing improvements. improve meaningful on are service, seeing

and had gets of we're encouraged, than our the as the as we're do to Terry will So we on, be currently transit year said, very clients some that are. believe where shorter expectations of adjusting

Kevin Sterling

or back Are the that? you is you it losing haven't it. any business highway Got to seen

Dave Yeager

really seen this Kevin, a that in that have capacity a not but we also the XXXX there's because put more they back but There's lot up think spot that under of is spot not no some that. market no the market seeing so we're less demand. contract just it lot rapidly people question We pricing a point. spot of went market to because played truck at conversion

Kevin Sterling

very had. year. time very, very you a and I good all evening this your a on that's for quarter nice well Okay, and Thank congrats

Dave Yeager

Thanks, Kevin.

Don Maltby

Thank you.

Operator

ahead. Please comes the from Benjamin next question And Baird. from Hartford go

open. Your line is

Benjamin Hartford

guys of in are of of the of talk being Dave other Coast Year, just evening. now, just build planning you side a interested the the in in of balance interested for the March about terms -- and land you lot maybe are cadence thoughts inbound your the strong, just hearing lot good New for where kind West I and then into of freight on seasonal what the in Can a Hey right through in Lunar uncertainty year?

Dave Yeager

on Yes, degree the many don't levels of inventory did question little I well clients, there think still clients Coast. that I and in of nothing but some have business of that of point our we that concerning in inventory think which the time, forward think rise that is still a do some of is be may our pulled same West was we in seen it's pull that a forward At anticipation lot no the deeply very tariffs.

occur a there's still So surge that could that. with

was in in volume So our January overall up X% Intermodal.

So it than growth. it was an a candidly the and part we do had budgeted, in impact. low-to-mid Year, rest had pulled believe what that always was we stronger quarter fact originally always we really the that forward. believe year single-digit it could first have of But New do -- the be that winter has of we -- we always it volume will through that we have But the in

Benjamin Hartford

could year margins, X.X% guess I great. to the you, X% amortization a that's path, back clarify to like what's a restricted and two, so pathway X% on get come you've that to Okay, to the now Terri that your it wanted when as forward that's margins I in X.X% healthy of that EBIT If about talked I have waypoint, to guys you stock, and these when charges, excluding the talked pricing comment context, target, about a you're as one is X%? longer-term including on environment margins got kind you or excluding that this seems

Terri Pizzuto

season, we we're we X%, this get would close GAAP can so our an -- competitors mid-to-high-single-digits X% report just be will another the economy bid as be well have amortization really to next the that not think as to to it to the because that the think mid-to-high-single-digit year, we pricing we if orderly number. if Yes, closer year, continue much have And year. if X% including going cooperate,

Benjamin Hartford

Okay.

Dave Yeager

going in leveraging the that to network. Plus we're through the organization gain

Terri Pizzuto

in we the as terms as the of procurement the Yes. spend And well from get that CaseStack cross-selling synergies synergies. will

Dave Yeager

Right.

Benjamin Hartford

update Oracle mentioned expenses the starting you -- longer-term? the Logistics Okay. and you the more specifically rollout on cadence of out an broadly saving that what expenses and Maybe may both ramp to related had but maybe that, and get be side to Don, System in can coming on XXXX

Don Maltby

in we as year in the into Oracle. accounts have quarter Logistics about now Yes, and up solutions energy legacy Terry I'll let of our start and lot transitioning where -- we've system But time numbers. completed in we're will second obviously a that our as some and far invested the this then getting old are the of we'll talk at running, that

at few worked the quarter. on the up same -- fleet And now system and by been the end on will past on being in, have And time working is working start While on business, of fleet in years overall our rolled the our the the we'll all the out. then third now over Oracle we'll ERP on second. system be working which we've

on of Logistics made, So to starting we're to to now anything a the business, want effects we're it we've there lot we've of our lot of progress see obviously made, that? on add investment you a David, see in side that first the to fleet. going and

Dave Yeager

I our no right visibility, that's on optimizing we've some got the of set and and is jobs target benefits system drivers new a improved the of easier. Oracle makes drivers, obviously No, think of

aspects this working from for on the So been a positive really lot that we've rollout year-and-a-half. of there's last

Terri Pizzuto

year in And well improve better accuracy efficiency the that this them capital happier other for Pay improve that we're stock. have for office, as of the retention. their Oracle around initiatives working visibility pay enhance the includes million our back is drivers will will to spend as And driver one details the the total drivers $XX pay which is of lot the and a make on

Don Maltby

right. our of availability network, We've been looking at

further it's lines across us as how efficient. the use details about all business into without involved our of our make all we can further to we getting more assets leverage So and get the

Benjamin Hartford

Perfect, great.

Terri Pizzuto

Elevate profit profitability. while internally to fleet which load per benefits our to that enhance always improve said, customer been per on-time and day safe, performance, the improves leads miles, Yes, like for drive abilities Dave out loaded listed

Benjamin Hartford

going be you if And what's ratio quick are remember guys to? one to leverage terms in -- of could follow-up, what that threshold I upper the Terri, going Great. comfortable

Terri Pizzuto

three times but to comfortable are right EBITDA, X.X going up X. we're now We only to

So pretty. we are

Dave Yeager

is room. fair a There amount of

Terri Pizzuto

you there go. Yes,

Benjamin Hartford

time. That the was good. Thanks for

Dave Yeager

Thanks.

Operator

comes next Long Justin from And our question from Stephens.

open. is line Your

Justin Long

congrats and the Thanks on quarter.

seeing wanted rail as impact your result could of I you and back those and rail your look this circle similar visibility to year are costs any PSR a what you So to on year? cost to of to to rail level comment PSR, implementation increases cost maybe just if you saw last

Dave Yeager

your Yes, as rail the far as cost, second question.

we We very be have comfortable clear able increases price and visibility, so. with cover we'll to feel then those

have clear we forward. able and very So us and very being to that visibility about move to feeling good

not Southern or that are that's are get UP As think There market there's I interchange I PSR no general costs burdensome expense enough there. an the impact is be the costs too minor far saying small are think way as handling Ramp some We're rail lost it's as at as some at again seeing so business and the are cross-sell and of other just that lines such PSR, but interchange of and as some aspects -- implemented. the density. when lines because we're freight, any business then that again Vegas that implementing costs example Norfolk in been yet. looking in and on fact Las with that some for the of it a steel points. and rubber the associated tire with we've just announced they closing buy wheeling UP there's really hasn't had But as to that some probably to will a they on

been of minimal cost no, rail big. a we very not had they've far, all thus So have amount increases; very,

Justin Long

comp maybe And Okay, cadence don't even you of that high-level think as wanted And give EPS seasonality, you probably then secondly this just is the CaseStack you impact just for quarterly help us know that XXXX quarterly into also we guidance about about I to you're ask baking from and expecting think about the but incentive this then in Terri, that's curious you're what a helpful. layer one can guidance? specific year?

Terri Pizzuto

yes. Sure,

we and Our of per we the throughout back significantly share of in progress growth tougher first earnings course the expect first XX% comps the flag X% year we if to half growth it, guess XX% and the as half in back to XX% in so earnings get between the share of and in the half the as of half of opposed the year and more we per the were year, maybe year. to in year

Justin Long

Okay, that's what's you're incentive year-over-year And impact the comp helpful. expecting?

Terri Pizzuto

We $XX be are expecting it down about million in total. to

Justin Long

this color cash have But number year? flow. expectation anticipate Okay. wanted the free capital CapEx the about on good like cash free any you on to think it get if ask flow, I free that and I cash in will be about changes looks an what a in do you And flow lastly for and reduction working really earnings, like improvement maybe should cash you it be seems year to able

Terri Pizzuto

should year. and remarks in so our prepared are that And you capital payable million could mentioned and was divestiture for a DSO improve up, generation flow it Yes, of good of for well this Mode up be that and terms our cash I in the working tell Mode days million be capital. it between help year right will We EBITDA products, that full-year should my only our that $XXX working and $XXX we you would EBITDA this should because expect with million $XXX year. as

Operator

KeyBanc. Fowler next Todd from question the comes And from

is line Your open.

Todd Fowler

still high-single-digits up is don't mean back wanted focused bit with and below that basis conversation, Intermodal the to so there's a going it's is getting seems on mid-single, really Dave, or XX% something Intermodal truck, kind closing still not really is circle -- so forward? pricing on truck if goes opportunity on you're for a mean or Intermodal mid-single-digit be on truck percentage the where XX% different gap bid versus a somebody if of and I just in there little of maybe gap. like that it the value Intermodal I are afternoon. Good I Great. pricing Intermodal is is a that's high-single-digit goes misconception that that that pricing message up is pricing, is

Dave Yeager

than target are on more you eloquently and think Todd, it did. I I right you there, expressed

that is is delta see know XXX, by points basis it XXX may continue over are in than higher very has Let XXX, the truck the pricing increase, fact two prices to that we a costs. be but such still the large gap going the we between to road that

that's So right target. on

Todd Fowler

stronger things that's so move Justin's arms it's guess as on a following seems I just think but conceptually a about questions seen we the just the makes of historically just what us year, I some half and can quarter, standpoint XQ dollar gap that lot you've think if we roughly sounds about that's even is see where two, be in other And growth be sense the things was it here of of just that you thinking make a rate could of what the you you're run you there wouldn't because bit doing metrics to got into gave into there are could there helpful. it back the that That's between strong pull-forward so coming that than thinking that or a helpful maybe call Terri, the around quantify we of of like where let's things. paradigm some been then, that just off get you a one have expectation XXXX? to the conservatism back that in are we guidance, it from into to in lot you've about different still up it quarter, that unusually was some XXXX need fourth fourth their though But about the helpful. something you a to tough something when see of the And the is the because people comps guided given trying than

Terri Pizzuto

we And in big quarter. lot a year, Yes. for our assume will Was got past hope be half some pricing have Well year. this want guidance. opportunity the year pricing the is much year I'm it and so of of that more last we it's us fourth in to get there's of but we the as our a that we lot growth as year next fourth the into for is a higher capacity search don't lever solutions, this to in sorry tight next quarter

Todd Fowler

Okay.

Terri Pizzuto

they're is are I orderly factors season, upside big if continues having bid will our other that the like it be say competitors well. then so an as could And that

Todd Fowler

And you'll maybe Okay. that's your like what standpoint helpful everybody's mean talk to I sorry I it again expectation the but from something what you'd sounds be doing like also And community our going out even I is non-GAAP estimates obviously asking but consistent, GAAP be curious number. think it expect breaking what I along, and that can consistency a will model know talking to would just just going about be reporting I that GAAP did it we be then, the so sounds these want should is? to that from because be to clarification costs, modeling a view we it we don't then GAAP, analyst just you're and this, you're though pass versus a for about

Terri Pizzuto

to got the include expense we've but cash GAAP we're you amortization of all report and compensation have board to was numbers and we to get to also we do you going GAAP everybody because because numbers the -- report to because a number. right, Yes, the we'll adjusted you're more said give over flow the which kind

Dave Yeager

Right.

in numbers get all focus of fact we exactly do non-GAAP a and clear see sight on just can so because competitors of know give how So you wanted you performing. are so can more some the that to we you we line our

Terri Pizzuto

Yes.

Todd Fowler

well Yes, and is a adjusts EBITDA for that of lot helpful because that. helpful as the that's guidance

so everybody, much nice, for thanks year. nice this year time the So

Dave Yeager

Thanks, Todd.

Don Maltby

Todd. Thanks,

Operator

question next J.P. And Brian your from Morgan. comes Ossenbeck from

Your line is open.

Brian Ossenbeck

Hey good thanks taking evening, question. for the

So, is one's year some competitors Terri, just new and competition put the little other chassis some the season, talking the follow-up on out margins so, the arbitration bid last the about the expect best expectation you one friction orderly share be in little a changes even orderly will bit a ones smaller and changes, bit you or in out do more so. season revenue over you we've bid of and a the those more seen agreement, got with or place to competition still an more improved your the think math you're french? got West given getting competitive it do or What's all

Terri Pizzuto

We far expect and so orderly more it to be --

Dave Yeager

-- From thus far what we've seen

Terri Pizzuto

Yes.

Dave Yeager

orderly has season. an It bid been

seen haven't than we anything So environment that within nothing within the other pricing the market will us believe lead that. to

Don Maltby

Yes.

Terri Pizzuto

the and priced pricing have running in we in that's Yes, high-single-digit that right for the now and quarter, on it's fourth we saw that, so. freight -- the that's what

Don Maltby

an are it's the we we obviously sitting what the we organization as in going sense going today's are okay, in to usually, try on in as doing competitors bids do what's orderly. December, Brian, market our is do point, what here but in And all

Brian Ossenbeck

closed, And today's you. to on managed as market Okay, exposure potential and further continuing is year the this pretty year it when expect tight? ramps that loosen tailwind guys pool I benefit the see PSR you be pretty Granted some well some on to you or is was to you on disruptions pretty last as tight? of do starts going think got an thank the dray there driver maybe the you overall the mentioned programming third-party that call for it but up, is a truck bit side little market

Dave Yeager

focused reducing on on we enhancements are drivers Well course of with miles. productivity MT very our

have headway And so some we made that. on

look If more the headroom continue perspective. productive. they a -- about go -- I And there we have become it high-single-digits we us for year from use -- price do to think more lot up there's third-party a driving. more XX% productivity in did for they still last to at

we're tailwind as again them they year we a for that don't up will going working of that increased somewhat be they expect substantially understand them, have as with costs, and be think to did last I so we us.

Terri Pizzuto

Yes, increases got we have for the dray in models cost. low-to-mid-single-digit third-party

Brian Ossenbeck

it. the is accretion you last couple of last CaseStack, was still is has still one that still think on you is it spoke you the there housekeeping kind -- in expected only to since been of where ex items, expect I And just $X.XX in be XXXX? the but deal that got closed a that months Okay, like $X.XX to

Terri Pizzuto

what we've we when from deal. changed announced thought haven't things the think, I

Operator

the And comes with from Majors Bascome Susquehanna. next question

open. is line Your

Bascome Majors

for here. question my taking thanks Yes,

up back outlook risk to the what initial mean of levers kind and the now something time today? below moves range the of higher budgeted think the year, Going real the do pricing of your you I are to you in, degree get downside you're I exceptional to beginning could kind or coming way clearly but of that, of in above year, that are an what the us ended from guiding is the by gap year $XXX-ish upside last about last XX% asset for kind year it see if you was Thanks.

Terri Pizzuto

rail Rail and utilization, our service our loaded for upside service, impacts have could miles, customer our our We service. volume, accessorials.

PSR as could to rail us So, reliability improve help Dave of mentioned and certainly the earlier, service. consistency the

So than risk could to that related but pricing We kind customer if could it's Downside being headwinds better intend upside and upside. replace certainly margin than we since that projecting, are would And now. that truck we've with anticipate right also and business mix our of business. spot growth be to an we and is brokerage never assumed and think be revenue committed flat we have know higher utilization, we downturn. be risk we for economic downside

Bascome Majors

anyway a Okay. the magnitude the about and help first year, as constructive first you the little you given far second could on earnings and cadence us And pretty half half in the quarter-to-quarter as just of can half kind more of bit the the between is talk growth? you difference seem

Terri Pizzuto

pricing Yes. year right we've went as along got XXXX. Well in that higher comps -- we are the strong get because tougher got anticipating

to of as business, we'll half And price XXXX, that later in so perhaps higher be in at as we're just time. bid at prices get year with the the repricing higher we first the repriced repriced the then with going we that's later naturally

Operator

the question Morgan Huang And from Stanley. comes next from Diane

line Your is open.

Diane Huang

Hi.

from briefly peers' I if any on ongoing this think on but can earlier you or you seen you spillover touched process? have just Western arbitration impact expand your

Dave Yeager

we're You're because competitor? the up issue with that arbitration business questioning additional of if picking

Diane Huang

going the expect pricing impact Yes. to your you kind forward? And whether dynamics of volumes or

Dave Yeager

to us that Yes, I we've seen very over over was taking a public of public That result year, actually arbitration. -- for that that come probably has place that it XX was obviously as don't months. something as and of as business any a much well was -- the think amount was

have So as it we from from seen really nor haven't any benefits fallout seen we any it direct well.

focus order that reinforce just that adequate of many to to that the and I that us clients think in that need continue are the I items can think so expect. we in we get of our Intermodal reinvest plant offer an one proper services in industry our to ROIC it continues to they just all physical

Operator

Company. And next Cowen question Jason your comes from from Seidl and

is line Your open.

Adam Kramer

Hey Adam for Jason. is this on guys

CaseStack changed in far, so has months just future? your two far, at Just been potential bit has targets to and maybe so a about been acquisition a that how the of perspective about CaseStack, has Thanks. your I to been acquiring the quick one process from know a acquisition me, looking maybe so strategy I approach from or the it's how little ask integration that of wanted higher level

Dave Yeager

that things weren't synergies Okay. really going we well. headcount into we When this, I what that And such would we been as that though something value-added This a has prosper. market grow could scale has on. is say felt capitalize number that's within and and was then looking we that. really their to extremely product niche one on went them for the a focused unique help integration we've and as

thing that think most of a to little a cost going and found I have hauls of thing. sales synergies. which really couple and the their line is much the just as synergies some longer kind to able it's of and a exciting reduce But, We some take months as than again

LTL times of CPG relationships at have customers very sized obviously into large a in that we some with significantly that shift think I fact do retailer.

there's perspective. synergy from a sales lot opportunity upside a of So

So all, we very all I about that say feel it. would in positive very,

it a is which future market our as while and it what say As this how does to that far aligned us acquisitions, would our it was different I it's a market diligence, puts due different core to is. is for exciting one impact the us you into

our that focus I will to is of. for acquisition playbook made as look So this continuing what such opportunities think and be really

DonMaltby

enter it that a it, into a about and solution we market to it to full us do think us couldn't allows allows end-to-end You offer before.

Dave Yeager

Right.

Operator

And our from from Tom next comes UBS. question Wadewitz

is line open. Your

Tom Wadewitz

afternoon. Yes, good

how I'll on the well maybe kind if know perspective some gotten the with brokerage You effort I incentive that's I -- a don't characterization doing offer at of is but changes? up on attention. improvement so brokerage the perspective one fair takes side; that. on the guess of give what Can you Intermodal more little long on to turnaround the a you all you're much and more performing some Guess specifically that have taken is implement think

Dave Yeager

a did business manager, act we going a we've which services logistics right. and have did Yes, that to had good I about market a very of, years. if stool manager, And we mean results but a it like legged it's other really very carrier proud proud over acted broker, you we three had spot we didn't think we're a business like We at. been special then and we of not the very

our we at what internally go and we option continue services customers ourselves right, have leadership needed we And tight, share the it we really transactional our contracted that we're gets to do needed that is and to look start process, be to special a under it business, and market took to volume the course and on in to to second that, to on. probably you'll positive it. consider road the market would provide we to a the needed made market And is last we we to great can I quarter; it, turn grow fair on in would technology the put of to whole the I needed said especially see But sell. it, if to And of half process can think strong that ability really buy and year. results strides this we very the So path we've construction. reengineer and put the

we're on, that grow look at look the that we underpenetrated were base with our on to ability at customer this, our brokerage customers existing we underpenetrated reengineering the So XXX business. Top

Tom Wadewitz

try future, kind go the more to do of contract spot --? So the conventional target or you what's mix in XX:XX to split a

Dave Yeager

-- ish XX:XX roughly. It's Yes

Don Maltby

XX:XX.

Dave Yeager

Yes, XX:XX.

So volume side being the trying transactional of side we selling, that the of in to business. and do up in of contractual us game see that it's just it’s a in excuse It's are what matter turning business the I the me still, buying better.

Tom Wadewitz

guess? But going still contract just and you at I execute it are XX% skewed to more towards effectively stay

Dave Yeager

-- be explode. even ability could business an that it's though right to in it It so see that, upside how XX%, could XX% really be we grow depending XX% on but we now there's

Tom Wadewitz

then interest going some that level cycle your what your you to well And further sounds is do a capacity the one M&A on sales another Right, maybe you've do that time. that okay. on on you out of other of opportunity it XXXX, you'd your little enough as things with look deals? a terms side, But quick are in in of the understand deal takes like say kind CaseStack plate got I about that or something think that

Don Maltby

I looking, we certainly we that would are are opportunistic. say

on effectively target, with you're further XXXX and Tom, fully right to is sure that goal and Dedicated Our make integrate also CaseStack. then for we major integrate, with integration

us. to same at would are job one. But not going the be So that we're point important something those certainly to forego strategically

market, something looking if Martino the continue Geoff be we to and we'll and So arises. to will his continue opportunistic people be be will in De

Tom Wadewitz

quarter. that's That makes sense. and Thank yes the you Okay, in strong results for nice time great. the

Dave Yeager

you. Thank

Don Maltby

Thank you.

Operator

next your Buckingham Research. Brooklier from comes from question Matt And

is line open. Your

Matt Brooklier

good Yes, thanks evening. and

number you, you we're the in what's revenue how accretion CaseStack of and couple talk continuing. then we much get the to CaseStack also contribution CaseStack XXXX from going So EPS will? from if I talked for to questions GAAP incremental could to you think

Terri Pizzuto

we And that associated of of $XX break revenue XXXX, are million estimating brokerage. CaseStack. for Yes, between $XXX million projecting million we're we from Case Truck to $XXX about Logistics LTL revenue separately for the Brokerage GAAP for out you million to with and CaseStack. I $XX tell don't can Stack related

Matt Brooklier

potential to you maybe know but synergies think then helpful. guys want touched And some did it, for for CaseStack, that's I potential synergies but sale if Okay, you don't you on to have I from cost talk to those both it put buckets upside? could a in maybe of number add those you could through out over and the bigger you some play how if walk but think maybe categories XXXX, --

Terri Pizzuto

the side as got and baked as $XX synergies We've we've guidance of those our not got house in are selling. savings And so cross into mentioned. I significant some million about of that revenue just cross-selling the that procurement

Dave Yeager

substitute the got some whole of instance had though they moves some warehouses. that for And on into of the of time. some the being be areas it’s thing Intermodal The for to XXX% to truck is able of

kind to we very the to but is the of it's very performance of be still So can attractive point same add amount so got do time that is there enough to at the conversion the limits in focused critical it on-time and make and to bottom-line.

Operator

comes from question Loop next Capital. our Patterson And from Rick

is line Your open.

Rick Patterson

to Hi, cold met railroads how you they specifically My still do backlogs? through thank last question is to regard Thanks. week, back normal or with -- think working now freight the the you. Terminal, are the handled Chicago

Dave Yeager

drivers as the if they certainly Yes, our and can they at in I of expected, a probably we did all took from vortex had XX% can road, it Thursday it -- to them wasn't the on thought they so I slowdowns made lot the polar Wednesday our get of just with out actions terminals railroads, well XX% maybe congested be as that, of some have the candor, we I sense. on the think the handled look certainly mean but

we that didn't our want do. kind personnel people, cold much in the our so deadly locked that nor don't period kind risk our we mean a polar but of and railroads. I to of and time you can did get only So vortex that there's of during And drivers, the

some had, freights effectively. us I lot the just I coming ramp Chicago a communicated of it's not they made to lockout, -- that lot they they lockouts and So very thought of thought of going to sense

Operator

from Research. Scott Wolfe [Operator Instructions]. comes from And your next Group question

open. Your is line

Scott Group

thanks follow-up. guys, the for Hey

XX% growth amortization to XX% XX% half Dedicated? like plus like the get like to were half you the to and of numbers in adjusted first $X.XX closer ex the earnings, speaking XX% the we in gave took you sort just I if when so that in Terri to XX% back of So

Terri Pizzuto

to the speaking was solid and I GAAP. No,

Scott Group

maybe but you Maybe I of right. I'm $X.XX it I all think wrong if north $X.XX to know the guidance? Okay, don't gets doing math the

Terri Pizzuto

have $X.XX old if which for just as Modes segment, I and new is now of then we and sell XXXX continuing ops our earnings share know we we ops right, we our Hub QX Hub earnings $X.XX share I our continuing the QX so of per I'm that don’t we numbers, talking and and in reported have $X.XX reported QX. per QX $X.XX XXXX in was in had was

Scott Group

that you forward guide? of everybody. right in the for us us All can think helpful, bridge quick that and think -- probably I thing, and for then we that's the explains the I it And $XX plus last QX bridge OpEx to to $XX did million

Terri Pizzuto

so $XX that the We change addition of costs month one million and CaseStack quarter of million to CaseStack's of in expenses have we'll fourth biggest Yes, that's of a quarter about most each full relates are CaseStack. quarter, in jump. the and XXXX had a $XX in the to only those

Scott Group

is in Okay. And CaseStack revenue correct? brokerage,

Terri Pizzuto

our Well million part so is Logistics. in part brokerage of then million and estimate $XXX Logistics, to in in of million $XX $XXX it's it's is in brokerage to it's and million $XX it's

Operator

to call Yeager for over remarks. we have questions. And David turn final no I'll back further the

Dave Yeager

us thank the for Well again Great. you for joining call. earnings

I if for questions need further again a clarification. and Don us. or available, be if Terri, good Have any you would always, As joining do you have any evening. Thanks

Operator

gentlemen. you conference participating now disconnect. may This Thank you Thank today's you, ladies and call. and concludes for

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