Hub (HUBG) 30 Apr 192019 Q1 Earnings call transcript

Company Profile

Participants

Dave Yeager	Chief Executive Officer
Phil Yeager	Chief Commercial Officer
Don Maltby	President & Chief Operating Officer
Terri Pizzuto	Chief Financial Officer
Scott Group	Wolfe Research
Benjamin Hartford	Baird
Justin Long	Stephens
David Ross	Stifel
Todd Fowler	KeyBanc
Bascome Majors	Susquehanna
Jason Seidl	Cowen
Mike Triano	UBS
Matt Brooklier	Buckingham Research

Call transcript

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Operator

Hello and welcome to the Hub Group's First Quarter 2019 Earnings Conference Call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's Chief Commercial officer; Don Maltby, Hub's President and Chief Operating Officer; and Terri Pizzuto, Hub's CFO, are joining me on the 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 as variations the of forward-looking use project words. anticipate, such be by believe, identified Statements the are of these and expect, and can factors the these review that those SEC refer to should the addition in you other results actual cautionary Please cause projected and disclosures could statements company in to and filings from XX-K in regarding forward-looking the release materially Form the differ statements. in

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

now begin. may You

Dave Yeager

earnings call. Good in and afternoon you quarter for thank participating first Hub Group's

Don all us today the much improvement with Terri Yeager, result today and of Phil asked and margin usual, continued the business Pizzuto. as to join Chief also focused we me in Commercial to is Phil Hub's while had by increase is, as lines. Maltby our of effort working Hub's Officer, revenue, his reducing I've of As record quarter We expenses our a first network. across team

operating profitability to of focus improving service intense improving is productivity increase also which in increasing the in investment see and our efficiencies. We're and on XXX% a in some Our of benefits income. beginning resulted the Elevate technology,

first our them in of X%. recover a volumes in March the the took the but dramatically. Iowa fallout often aggressive quickly of we're in Volume rail as flooding Much and a On Union the flooding issues is case down As quarter. place Nebraska. partners' was on-time did actions, result improve the which note, surface month. X% performance Intermodal both in Pacific allowed to seeing March of took reduce positive for nonetheless winter, down the that some was the was volume quarter significant for experienced The

their improvements shown driven that Southern of several Pacific's the has performance. Union the exceed those the last And Norfolk on-time XXXX. significant substantially levels in performance weeks Over has months, on-time to three last

financial both integration that and the In first and expect results than be Hub CaseStack better overall aggressively adjust to expectations. and the budgeted together we expectations The identify growth continue continues to were transit sales revenue quarter, throughout We CaseStack's to and improve exceeded their positive. our to will to service customer intend accordingly. CaseStack working the offerings. very both new cross-sell clients We'll year synergies railroads service to continue

very as performance management a and pleased turn team the to over that, excellent I'll of talk business to call family. other Hub our about we're the And has CaseStack lines. workforce talented mentioned, with an the previously Don that have As part to of Group

Don Maltby

Great.

well of hitting as on expand pricing Spot performed committed as our programs. purchasing soft environment our to strong Dave all pleased we improved our CaseStack's we performance stride As new LTL our a technology, operations are and results. with we as margin. but carrier service brokerage, brokerage mentioned, implemented demand truck are management feel saw in and pricing difficult strong to confident our deliver we business we in In performance continue was in lines our philosophy, ability to and we onboarded

spot revenue. strong offering Logistics brokerage and on the had with achieve high XX% are we CaseStack volume diversifying extremely in our customer growth the our market, start continue and a believe we service our to to levels. making challenges long-term with We topline the investments right our customers, profitable brought growing business as increase to exist wins Despite to with that secure while year growth short-term base. we in strategic the expand

continue we upon several of we to addition from our growth, efficiencies. to operating recognize continue In renewals logistics and yield improve improvements to the contract our

Our revenues methodology of with continuous shed quarter safety with strong customers. XX%. XXXX. pipeline on-boarding performance focus and had unprofitable quarter We Dedicated remains enhanced for with growth operational to a third and our scheduled up improvement pricing and on continue already second our legacy and the strong strategic business, improved

We with on our and to our improving our our operational profitable are growth, pleased continue excellence results and scaling business. focus

Now I review to turn it will numbers. over to the Terri

Terri Pizzuto

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

X.X%. income First, margin operating of XXX%, operating an resulting in increased impressive

on execute strategy grew implement improvement Second, new and we technology. gross improve operational continue $XX margin to million our as discipline, yield

Third, the which cash of at activities cash up in in flow million $XX was million, operating $XXX quarter. from end the was XX%, resulting

look the a $X.XX, XXXX. last gross lines. diluted few operating strong increase. of let's share increase XXXX revenue XX.X% was per $X.X and restricted stock higher metrics, in a earnings issued of $X.X connection yield XXXX. for addition service stock increased Operating first or quarter amortization connection million in first Group's the of This look at share as and a percentage is expense expense margin expense $XXX,XXX adjusted four CaseStack of key points acquisition-related increased Hub Taking of the of in X.X%. Group's due in driven earnings compared $X.XX Gross to processes. these $XXX amortization higher was XX% acquisition was for a purchase. restricted compared Adjusted performance was an to items the at first of Adjusted last year. $X.XX was the $X.X margin, with sales, a XXX% or earnings first to to record in a all margin our excludes basis This of than million or XXX per growth Hub's our CaseStack XX% improvement CaseStack compensation quarter to of solid X.X% Now per was in diluted margin an a XXXX more the than of in-depth points share closer a Acquisition-related XXX with per $X.XX. basis year. is at take for quarter of million earnings expense million quarter. Hub Compensation compared $XXX,XXX issued XXX%. by share

Turning now to guidance.

We will increasing for from $X.XX guidance range year. for that to our will our the XX% per are earnings between XXXX We project and $X.XX. share increase We revenue XX% believe XXXX. diluted

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

be amortization connection related approximately approximately with to is the gross projected of and expenses projected million We that $XXX expense Acquisition believe gross $X.X lines. XX% and million growth purchase $XX between our issued We XX% margin margin quarterly CaseStack between with million. million. restricted $XX.X four growth costs expect and all be in for stock in is to for compensation and expense service of will year the range our

from recent depreciation million for XX.X%, that range expense will to the that tax expect by year. million adjusted amortization that compensation will this $XXX for and driven to amortization margin We X.X% and partly EBITDA Arkansas. will be total estimate legislation $XXX will operating We from range range $XX from $XXX X% rate million and about to in our effective projected tax million. We

of will As quarter. $XXX,XXX decrease deferred by legislation, a our about expense tax in we result the the second

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

Dave Yeager

much believe for Thank speaks itself. I the pretty you, quarter Terri.

that, to strong in going truckload the and line moving in integration we'll believe planned, opportunistic while lines. of continue market. open be We We another With Group. year for all creating questions. CaseStack see for intermodal forward is environment The XXXX to to any strong logistics, a is the being pricing as business synergies the our yet Hub

Operator

Thank you.

will Group Wolfe the first question our question-and-answer We And now Instructions] session. begin from Research. comes Scott from [Operator

is line open. Your

Scott Group

guys. morning. afternoon, Good Hey thanks. Good

Dave Yeager

Hi, Scott.

Scott Group

give you on April. update us an Can in volumes

Dave Yeager

April did March. for Volumes pretty Yes. in with much what line were in we

So basis. on they approximately same-day X% a were down

Scott Group

that think from And lingering so sort it weather? that continued, of, the what impacts is? Is do demand? Is you

Dave Yeager

I think weather. combination obviously, a the things. of it's It's, partially

in cetera. be rather, basically for our digits basically that for volumes that that's based think don't upon I that's I or Easter, to spring the me, digits our think actually of a currently the aware, very we received yet positive was And and that our impact you're the we had mid will do as excuse have. lot purchasing single a would know low mood up we've I single far awards -- believe be continue what or also least and from that. this not this we I thus have here that's that year, But Chicago, et customers restocking, coming late and year. obviously think impacting it at just clients overall

back see going and and early So but growth -- the year intermodal in volumes. in be it's we to very we'll that bouncing do believe it's the

Scott Group

rail pricing do in you're feel first on related? about XX.X% of update an from just is the looks get us you to all rail cost like, that standpoint? season, cost give tell still of sort that? in Do things gross And here. in you're the so better think from the than year intermodal do we worse you guiding do and seeing can the this did both, quarter you we what quarter XX.X% just that XX.X% the And margin it Terri Can Okay. cost? you Because an what bid standpoint price like was that does how for year us and best and

Dave Yeager

Yeah.

still over it's overall XX% couple mean XX% for a for you points, our first the perspective we the little so if price. year. and of in it's business about high now single we high -- of a I under business we're It's in incidental. the I and from of think single that quarter, digits look its April, our up lower, bid were just In at but increase a basis digits did a

unfolds, it single increases minimally So we'll year. for see expect would mid digit the how I say but we

it of we what our If very to some. perspective, will our price going have you be year, clear able we this the then increases to cover with will and do visibility And are at believe be. them from be costs cost, the look rails, with we a fully that what

Scott Group

the guidance then maybe the the worse year. margins get why So explain of gross throughout

Terri Pizzuto

of was range on do but I projections going be then, got And were -- rail be. than a bit so expect we than to just QX similar, cost great would quarter. be that XX.X% we little the a lower we have. just QX And lower to much. to sight we Yeah. We that, XX.X%. not this just what that's QX based you're a should line Well, increases right, XX.X% have mean, that QX we've of touch and little are really might

goes that As one a goes June on in know, and peak, are have September XXXX. we that X. on X in planning we And another to you one similar

XX.X%. that it's the peak it XXXX, XXXX higher. quarter not could So be in third in If like in was that's at we why certainly is

Scott Group

I ask one. if just And one can Okay. last

I if Terri, is the guidance So, raise same the was of amount quarter. the what first as beat sort look the in

of So there you a XQ sort the year? reason the is in of strength why carry rest into forward saw the doesn't

Terri Pizzuto

We're what currently that projecting so that would conservative part guide in volume low-single-digit terms go We in the didn't intermodal. meet actually that we sure of to want that and make reason up -- we we we And the can as feel guidance Dave comfortable be we're of to. more. we said,

you thought mid-single-digit what be be there's we projecting service And than we're we improve But single-digits. we that to If last right intermodal. remember in rail now. quarter, could volume had a that's continues possibility certainly low higher to up as might

Scott Group

it. Okay. time, Thanks for the Appreciate guys.

Operator

from come question And Benjamin Hartford from Baird. next

open. is line Your

Benjamin Hartford

morning good Norfolk Service evening, perspective I everyone. improve recently. you see as guess, I'm meaningfully good your here Hey, pretty in interested, Dave, or

going about capable eastern baseline where headed market for your and for, can expectations service and and As intermodal rail go I it are both multi-year business guess, side be load the Group and context? what where of that is Hub sits Hub think the growth in the on you is then for where what either to

Dave Yeager

we truly Well, was Norfolk Southern foremost, best in the performance and we've this first week through on-time actually has that that probably service two and enhancements certainly their the past in seen years. dramatic increased been the quarter

very think that truck in centers. the situations. recent but because and Phil with growth and haven't providing clients changing our service makes reason looking enormous his it I current number set anybody? increases So much transit obviously to inventory are seen for within that's market. an at doing is is solid which course, surveys, that the we've one is expectations Large of days, when is don't any we Does east of northeast got tight us dealing that mid-single-digit Southern's towards of any possible. the we're population Norfolk I and good shrinking moving group more that things positive the the very competitive The the those tremendous, there's believe contemplating

Don Maltby

will you've it No, the this intermodal be service and seen. truck come growth to And the improves. is as will where intermodal in softest east gravitates local market

think I So it's story. a good

Benjamin Hartford

give the out west? you Can perspective same

Dave Yeager

a I comment improved has service want to bit. think the Phil, you quite on do it?

Phil Yeager

Yes, the results pleased now improving we're sequentially we that. taken especially improve rationalization are continue the to a going the think of with of lot to weather sure. and definitely Service place. is has that through We the got as network and

So excited about we're really improvement. the

think, have we despite as those the service our a in transcontinental well. I continue to great growth volumes we some and to to offer see lane product of market cancellations

where the feel good very is So about forward. we path service the and

Benjamin Hartford

Sure.

Dave Yeager

intermodal. of really the lengths where is are haul And and price gap biggest those in truck between long

to I've did most people than Pacific are so anticipated. substantial from the kudos far And think opportunities recover Union the faster give got flooding to they also that I the and

that to on they sign with positive rapidly were back just how get a very the So was track. able

Benjamin Hartford

X% the the getting the maybe then intermodal you do weakness as did the for you or David to Phil further of, sort mitigate balance looks for pricing say, have can And further assumed opportunities business? further margins today? any, type how context this to deterioration growth of but and you I think of on offsets pathway pricing side. what stands that do mean the pricing it you year in in cost like you Phil, let's And address about contract an context potential to the of, what in of -- terms contractual intermodal update EBIT provide think

Phil Yeager

is we're still Sure throughout think take we a on assets and particularly utilization there. we're But through network be capacity. increases cost-outs more we're the philosophy. improvements therefore also so us in effectively, our balance going focus in efficiency our high our procuring big mentioned, but continuing mid the utilizing of this again, third-party on into speeds and way container see to focus train that enhanced in that to are to opportunity price to to seeing we're great season for single our Dave a seeing remainder hold. a street, continuing And we digit drive continuing and pricing enhancing that also

and we on that So upside as I there's with continued see significant we're preliminary implement excited technology, think just and the we to continue results upside well. our as

with pleased have to very we're better. opportunities So keep we the getting

Benjamin Hartford

you. thank Okay,

Terri Pizzuto

if add the X% expense operating we to for on Ben, that close compensation X% this we if the million back intangibles expense CaseStack stock you on the amortization anticipate in get could fourth margin, we quarter back million. that $X.X And add acquisition-related related to year, restricted of at an adjusted basis you issued and $XX.X of to the

Benjamin Hartford

you. thank it, Got

Operator

from Your Stephens. next question Justin comes Long from

Your line is open.

Justin Long

Terri, the a changed Thanks you how with guidance? EPS the beat. wanted on quarter about on and start three remaining quarter year year. you could of what your Congrats good to versus compared quarter. how comparing the Maybe the sense question for just afternoon. that the this guidance to for into the I full $X.XX a was raise first follow-up baked expectations to get the original this have reported for the quarters share

Terri Pizzuto

Our bit. intermodal the three are other what a than same we down remaining had quarters thought brought volume much we as before pretty

expenses were salaries might we general as we a didn't didn't lower compared for because be. for employees would the beat thought fast for in to where benefits million because million thought many and we then intermodal $X that and we beat we would our that only -- really be than well. hire on we spend that fact are earlier. didn't we lower that really lower areas then would higher about our we in as little the than -- we until we we IT part $X Because the pricing be mentioned So had thought it in as were than as also thought couple was we increases was and a much mid-February, we about thought million quarter. go And so be raises of as people as it. And of would to they where we Dave $X would. we And administrative thought we

full see prospectively. we'll quarters So

Justin Long

helpful. volumes, if rationalizations the That’s of volume lane impact great. something revised PSR-related the guidance curious on update and any into the from on Just then And this Class what Okay, baked some intermodal that's could Xs magnitude volumes intermodal getting is? so intermodal that's how the order of your year? if

Dave Yeager

the competitors by that ours about minimal. another that was impacted able was It's -- we negatively effectively. one lane some closures. know be sizeable It overall to number a XX,XXX had of loads cover to I that find way of our But very were actually and couldn't

small I just for it very continue the that these and have allow again nor So not did the lanes think was to structure density the them. rails to cost

Phil Yeager

I just was on service. steel the cancellation add wheel in that the particular of changes interline would

still our are lost that it'd in been and volume rubber-wheeling we volume So really network.

although lanes us. those are of So it's there impacting not rationalizations

Justin Long

if specifically best rail one what's if done do And earlier one I Dave the forward? and great. Phil's pricing improvement going with company-specific dynamics ask I intermodal of of Okay, and margin to are from margin last aside costs things sneak and we set wanted in? on margins the you that about perspective, could the a opportunities you what intermodal going kind some for mentioned think

Dave Yeager

address Phil that. let I'll

Phil Yeager

our recovery think our street we going Yeah. well Those rail improve fleet I really think our efficiency yield be in significant have with third-party trucking service our drayage we we're think driving Hub still in to for enhance would and as to management are carriers. as that. run of as our us. our cost through out and Group I especially – I mentioned opportunities and as able room containers to improves, utilization we that assessorial on network

have are So upside. significant those and us dynamics internal big for

what out and we to as drive the preliminarily we're I we're as in seeing results can continue roll improvement think is that really itself. pleased technology well technology that with

Justin Long

Thanks Congrats, Great. the again. for Okay. time.

Phil Yeager

Thank you, Justin.

Operator

the Stifel. from And comes from next question David Ross

open. line Your is

David Ross

to everyone. customer from truckload. the been to just do decision talk from intermodal – I road? people people conversations network? Yes. guess, when the around the How Good wanted general look talk to the rail those are optimizing afternoon, and coming about the people moving back between about you more Have road modal conversations their first I still? rail Or to own

Dave Yeager

That's good really – That's this is a Dave. question.

In of fact, we polar did had do anticipate did over-the-road. we small delays the convert vortex see to and more the to back that at during service service economics intermodal some the that the We The the and product mode see flooding all. albeit and that some is that we the them. look diversion with clients We back will compelling. sophisticated believe really Providing to as are continue intermodal, future for and consistent. just predictable

I that from with of intermodal. to our And go see over-the-road conversion we'll much think that's lot clients. our discussions how pretty continue a to

David Ross

on And – the

Phil Yeager

for shrinking of us opportunity which give more transits, to competitive us improves is and as service And I it. going well think to make more convert

David Ross

better the purchasing guess I that all in I of business? pricing technology most attacking. the mentioned Yes. are you brokerage are change you improved freight holistic And revamp What's philosophy, important? on new you're think side, areas carrier where And management, in

Phil Yeager

I would transportation purchase right enhancing think Phil. need good we ensuring certainly think going place pricing we're early those that be margins. our improving building is really and and to in We significant making very make But to our now stages, we're in philosophy our This place technology's us trust and I customers. that the Yeah. going is getting progress. really service giving to costs we more say impactful with a incentives efficient. we're in on but focus have

would-- expansion we early very if our seeing with there's volume great and would take I upside. in anybody early great So, think hold I still But don't we're improvements the to -- yield. there's opportunities in there sequential know start stages we're say and market and that

Don Maltby

we're you share wallet underpenetrated that that got know we business. customers our of really top could with is and opportunity see We've XXX grow

to the very really so to We business services, are really allow good going grow. at our projects us contract in special value-added is focusing on

David Griffith

the can And is side? brokerage how of you business that me versus spot in contract remind much

Terri Pizzuto

XX% contractual is committed. or

David Griffith

much. Okay. Thank you very

Dave Yeager

Thank you.

Operator

question from next our from And comes Fowler Todd KeyBanc.

open. is Your line

Todd Fowler

everyone. Good Thanks. Great. evening

for So, just really raised margin the it the the sounds your with to and XX.X% place base XX.X% are to cost gross rail the the like customers. the the from year from assumptions this expectations XX.X% pricing XX.X%, most on increases guidance of still in

So, margins that other think that and something the or of started right the something that's you gross to are moving way most from where that the there that's the the rest your about that's control parts impacting company-specific is year? are within of year for

Terri Pizzuto

our So, and predictable it's to have and all it. line-of-sight within control very

XXXX, with about the in but our So, And And every a utilization you're given service, and annually. have know our hopefully able million in we more the them Phil utilization. customers improved enhancements his that we're that is to revised the than margin one $XX have what utilization you was improve Not the rail of transit are forecast. day the to talked with team right. We're some assuming of is lot lot very a it to on especially similar Phil in there.

Todd Fowler

I didn't I'm mean to sorry interrupt.

Terri Pizzuto

No, a assuming -- it's pretty we I way much goes XXXX. bit long little that was just with don't and saying we're flat a

Todd Fowler

it. Got

so Okay, helpful. that's

could know margins bottomed where I thought, of were then they a if through I'm think get out think had XXXX, that initiatives gross of you of side? you margin a you're XXXX, now to can you're of been the don't and the or higher doing than and about not Do in about -- we guidance on where and XXXX. improve that to margins sense kind was but where from how the you the they you gross what time I some they talk have -- have we where back kind do trying about ability could gross of I as with you So to there we about think kind but guess want internally from of a think have gross margins the go or if where period at opportunity place, go

Dave Yeager

I down the to think our think pricing we're intermodal between level we that have return acceptable and at just subpar. where the a themselves elements the looked of the the to ourselves enhancing gross ourselves brought players candidly, industry margin key one the is I and that And was an to margins focused invested overall a the capital is on on ROIC at level. getting very just level

And and very so now having issues address amount of that rational participate tremendous some Phil that time that's field right to we're able to we being at a with makes the a did of in other want level internal have? market playing difference. you a

Phil Yeager

yes. management continuous into just still margin I yield think, would on and say driving for technology has that improvement our and to our a of assets, have once And we upside just processed from business. bottom-line sure build again, job operational There's upside improving huge structure. I excellence a done purchase us. we're we've waste. great to philosophy great a our Sure continue opportunity the maximizing expansion But getting organizational scalable the also out transportation, making great a

that we grow contribution. as bottom-line improving So we're

we a gross significant think still opportunity improve a So there’s from bottom-line. to and

Dave Yeager

Yeah.

in right? and have going we're approach we So customers. then, we the the and cost how very about think that a efficiencies to to market we we efficiencies targeted after, We're through our on well. in organization I have point very our it's that were the positioned street managing and think I approach disciplined Phil's underlying

few we you market. at a So prior look focused years in the go you've to seen if on very, last how the approach

Todd Fowler

growth the That's side, follow-up quarter. And my dedicated this Good. perspective. was good just Okay on good there here

guided you I do Terri to that? you to do need what standpoint. low the had dedicated got. to grow I've digits that Thanks. That's have to And then business revenue standpoint, an support a a add growth? from capital update from think capital previously single for you

Terri Pizzuto

have we growth pipeline terms I significant could there low-single-digit not although, will very year do for there your got We've planned CapEx whole this and of all, for materialize, the say dedicated, all at in strong minimal. question CapEx dedicated a if growth year very Yeah. be for those so upside

Dave Yeager

of the was candidly part $XX was at very as did and we of business had Todd losing Right, about dedicated money. we what closely million revenue do looked we that

so, pressed we And were upon prices.

clients have chosen Some elsewhere. those go to of

adds up productive. to our frees customer it obviously more assets for those also net income, and So that actually departure that's just a their

Todd Fowler

So think I low we call fruit. hanging what

So that sounds good. time for Well! guys. Hey! the tonight Thanks

Dave Yeager

Thanks Todd.

Operator

next from comes Susquehanna. Bascome from question The Majors

line Your is open.

Bascome Majors

your it reverse? ago it's been I'm Yeah. couple Thank was you. have And seeing guys Jamie any business if any said if not their or as in if you low why should on have of that is from -- in bid their if compliance you wondering intermodal as years. a kind you weeks customers are report of that. so, that and whether

Dave Yeager

the that of foremost it of the things couldn't of weather only of time, just and also transit converted is but that, the And I we the of because length But do awards. I couple did lack receive we various think not be that some consistency. It's Bascome. first was experiencing. a think transit were it just Sure, business the

changing performance that is on-time the at I increasing As said is rails, with the very dramatic rapidly levels.

performance I do we that can there intermodal And is believe bid so, on-time those past clients. the our we've the that back for to that prove received convert will awards in as

Bascome Majors

you last. EBITDA on from what Okay. you so an looked And million gave Terri, I up or update at $X think us

bit free I anything reasonable making. you for between range building taxes the a that items. was little that up CapEx or other few flow expectations a Net-net changed cash investment a us on gave believe guys of year? and are those this may on You items have anything what's that cash

Terri Pizzuto

EBITDA Probably it close -- we have $XXX million CapEx to million then assume $XXX or you should and more. assume of be well, know we'll

Bascome Majors

you. Thank

Operator

Jason Seidl Cowen. from comes question from next our And

line Your is open.

Jason Seidl

words we everyone. the and Thank you they of circle pricing the figure a can to grow see Intermodal that? think let's going they one operator. Do then need be good out will be little their Wanted statement. an up. They other day made where that back it push on deter so to of the out growth term bit said, sort east of feet evening, to growth and bit Hey, the market-based of in were sort you, little in high beyond more of can near interesting you find testing conference a limits how call --

Dave Yeager

rails of prices. -- be prices and now in in We may have very comfortable feel competitive levels see they're that this we be market. where But -- very at we going. really the some believe we in Norfolk to the be all will with we're again, and time a have market and the the in to clear where the candor going where that in promoting we understanding right we're currently And that very I there at are is increase the east to that increasing our point Southern

understands very I pursuing Southern and is value. actively their market Norfolk the to well optimize think that

Jason Seidl

look and important new here to there Intermodal And the is customers talk in how attracting some improvements your that as marketplace we you of business? out look PSR, see and from in the

Dave Yeager

transparent. it and as all candor, communicated it. effectively way I I've They've the us Norfolk seen It's the with I Southern PSR have the really biggest wasn't Union very Pacific been interesting. gone the have about, In extraordinarily fan, that applaud but

seeing minimal a by disruption have again thus We seen as intermodal and seen really we've I'm quarter. it's additional record are we lanes. going in on first far ramps you yet -- it's very costs just very of the the change track some But -- amount may it's specific

there. the on-time performance both is We are -- consistency also carriers. seeing in And by that's that thing the dramatic key and rail increases is

Phillip Yeager

that's the heard that from is NS to really of so customers what we've and that goal a to want customers right? product service on UP time, Our And deliver really and predictable service. seems be predictable the our is that

I to And conversion think through simplification of with that drive they're pleased going network Intermodal. going rationalization continue really now as it's are we're things Dave where right I said, their to to think and and heading.

Jason Seidl

price is they're to in guess Okay. you states future aggressive to My other the here But out Amazon word testing that and kind they question beta We discounts. northeast a and other couple threat started I a seems brokerage Amazon of competitor view when is it announce might Uber going there a brokers? saw side. How the fairly what do in up be they're just what the represent to offering out. they as similar did

Dave Yeager

strategic Well not uses many top-XX services. their of of But this do brokerage business our of Hub that Amazon time. we at is a Sure. client any handle truck

view saying pressures. revenue been we've downward for time face it, So that the longer-term brokerage I quite some will truck as

transactional, I focused focusing strategy business on will as versus mentioned. think power And productive, been heavily the Ubers investing technology in technology e-commerce invested people of value our more the risk. as but our you and of it's from is been Just we've productivity be philosophy clients. in contractual make as providers, well to we've had whether industry be where bring more to changing developing, to we've can maintaining been which that on the our we And at a as very enhanced also lanes some lot

continue event. this So for monitor disruptive to could But closely we we've as sure, the for grow. all it very situation brokerage think most overall that plan progresses. industry, to a be got believe of do a we'll solid truck also But I the

Jason Seidl

time the always as Appreciate everyone. Okay.

Operator

from question next comes Tom our Wadewitz And Instructions] from UBS. [Operator

line open. Your is

Mike Triano

Tom. is Mike Triano this on Hey, for

Dave Yeager

Mike. Hi,

Mike Triano

I could Hey, in logistics? know so it year-over-year remarks, you for -- wanted brokerage to truck prepared segment change the provide I I intermodal but and margin in don't if missed the

Terri Pizzuto

Sure. No miss you didn't it.

basis XXX up that is XXX from gross points dedicated percentage as XXX Truck basis to brokerage you. margin margin year. percentage gross gross as up sales percentage of a points. Let up XXX, Logistics as me and sales of basis give last of up points. a margin sales a Intermodal was

Mike Triano

just helpful. then Yeah, more one Okay, that's ask wanted to volume. intermodal on the And great.

you you think are year? have underpin mid-single to inventory being I in Dave what potentially little a at the improving more that the you do So, some said digits. that? Or it capture freight I some seeing mean, related or yet more destocking share there mean, rails truck? that to I allowing later on visibility service you're assumptions the the from is and better

Dave Yeager

just I thought digits. First be digits. myself. did will had it do believe misspeak. thought I be We low-single the meant record, we that I for all, But do just it I of would mid-single I quarter, corrected apologize. low-single at we've surprised. high start of to love but pleasantly -- the achieve would although don't mid-single we at we'll last the those with end digits, believe be levels digits slower the we had,

-- from One going they I they of as spring were very will service the as volumes. intermodal conversion been in Those has not result see growth more when We really confidence with award lastly a confident clients, but things. obviously strong. we're certainly with as economy that bids is that And of going that speaking happen. to we've late to believe has be on spring very see to level of positive. several we're back comes Our And but think the the is a just that. well our least restocking as improved based lot the awarded have will we're overall very projected feel been we that with been

digit very early, are So single those do that believe while volume it's achievable. still we numbers low

Mike Triano

you. Okay, great. Thank

Dave Yeager

Thanks.

Operator

Our next Matt Research. question comes from Buckingham from Brooklier

open. Your is line

Matt Brooklier

Hey, side terms thanks. intermodal for your also been to with know could in potentially lot kind the on of truckload was market and you I pricing dedicated of within your -- your and anticipated curious thoughts brokerage year, into good guidance a call truckload the hear contract your your and Good the on truck in to in reason, rates market baked on garner pricing of businesses? that for respect what's focus of there's but this I the afternoon.

Dave Yeager

Yeah. There's right very no market very, certainly question now soft. spot that is the

lot garner converted of at does business is because perspective. of it be from able to some is appear XXXX that contract of except truckload There the But spot to pricing being costs. from was premium capacity portion as a a customers to market a a softer. the result Now not within probably, breaking

when between some demand overall this and broker truck advantage certainly, superior of time supply take is a arbitrage and margins. garner that can good So a

Phil Yeager

pricing drive and on in well. the grow value on and to to we focus some think Yes. our purchase transportation I to philosophy dense with therefore, our great costs, as network, the down cost customers some continue change have and And building bring ability more out a

hold focused out that really that that takes on and we're building making density. sure philosophy, So pricing

Matt Brooklier

rate is price, contract mid contract think there Okay. side? the a the on increases I'm this single-digits, low pricing? customer about But get a contract general thinking about the of one to truckload I some trying about talked increases. the is about side, truckload if for to what know about year single-digit sense way price I'm carriers to thinking rate on how Hub But contract have talked just

Phil Yeager

Yes. under contract pressure. We on significant pricing. think flat is Spot pricing

So that best our be would read this point. at

Don Maltby

grow the as accounts that, we're our And to to to solution, I with them yes. get Right. to sell will be fine. a in there aggressive agree try ability with multimodal that

Matt Brooklier

Right.

then Okay. offered some million and the your range lower in be you of your anticipated? operating down What's What's bottom puts expenses, Understood. delta? million. that Terri, potentially And $X previously came you'd end of to driving takes than terms costs $X that

Terri Pizzuto

headcount. Lower

Matt Brooklier

Okay. helpful. Appreciate time. the That's

Dave Yeager

Thanks, Matt.

Operator

with take Mr. Dave call concludes the ahead. one more this Majors, I Yeager. And to question-and-answer did go have the over Bascome please that turn We Majors Susquehanna. now Oh, back question. I'll session. back.

Bascome Majors

of what's guys your do investment Thanks. impact going -- headquarters? estimates what any the that's follow-up Terri to the a net running? I once at couple wanted and on on up have here. was driving a saw need for and places Is net just a more the head comments to count of the or space you curious consolidation I And overhead Thanks yeah. I this be building just Yeah, growth for is move? the

Dave Yeager

areas. It’s people have consolidation. off-site about of XXXX. It building -- the not currently we headcount in construction is yes, Bas. XXX actually growth certain in We It's that began

everything is we of the know for but now, that for is helped But seeing honestly, I need increase. an our that And it. ever ongoing growing, before. lot a you So business been it's personnel. headcount know but in take with you've that don't with there And believe I upon it's we're I attract it that here helped Obviously that's right here, us dependent have people. all young back. us been

to work. nowadays they're people all in like think think I a enthused I that that It's collaboratively. to to come work structured manner

that the right believe investment we that people. we it's So continue a to good attract so can

Bascome Majors

and Thank and means on for think you the in and Just about to for once Any things beyond. what expenses overhead that. running? XXXX trying are sense cost up that costs

Terri Pizzuto

with for got normally got. Yeah. Not we’d the space that. no renting I much. mean that more have we've associated what than costs We’ve overhead

more. shouldn't much be it So

Bascome Majors

right. All you. Thank

Operator

to the for remarks. concludes over Yeager that call the now back I'll And Dave question-answer-session. turn closing

Dave Yeager

Well, this Great. you thank for joining afternoon. again us

additional will is As all questions and there Don, may I Terry, available. always, have, you be Phil if

you evening. So joining again for thank a good us. Have

Operator

today's and conference you for concludes call. That ladies you, Thank your gentlemen. participating. Thank

disconnect. You may now

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