Hub (HUBG) 30 Jul 192019 Q2 Earnings call transcript

Company Profile

Participants

Dave Yeager	CEO
Phil Yeager	Chief Commercial Officer
Terri Pizzuto	CFO
Scott Group	Wolfe Research
Justin Long	Stephens
David Ross	Stifel
Todd Fowler	KeyBanc
Bascome Majors	Susquehanna
Jason Seidl	Cowen & Company
Matt Young	Morningstar
Matt Brooklier	Buckingham Research

Call transcript

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Operator

Hello and welcome to the Hub Group's Second Quarter 2019 Earnings Conference Call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's Chief Commercial 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 expect, identified Statements the are of these and believe, and can review the cautionary Please statements in the release.

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

As a reminder, the recorded. conference is being

my call Dave host, to is It pleasure turn over to the your Yeager.

You may now begin.

Dave Yeager

Chief participating call. our Pizzuto, Officer Financial afternoon thank with and Officer. Yeager, have Chief Good Group's and second Phil in Today, you Operating I quarter earnings for Terri me and President Hub Hub's

the X%, by At increased revenue a today, operating reported income and Group close quarter XX%. record as second Hub EPS XX% by by

income brokerage, points. increased in operating type prices lines flat. Real on on of business our profitability the and improved dramatically. all in has over reducing was also by higher improving improved Union intense increase The result which Our service service. basis while performance as Pacific's focus for truck double-digits costs XXXX except has This

While performances the Norfolk is Southern's on levels. time at record

continue versus truck. rails we believe service competitive more we'll their the to As operations, improved enhance Intermodal continue to making see

operating good synergies expect the declines that to the the for disappointing sequential volume to for improvement second as half year. intermodal are is Phil moving the flattened, areas quarter. news down We're There upon. CaseStack also this to reasons along we the with acquisition was The boiling of XX% of numerous CaseStack continue second through see and identify exceeded will that is are elaborate well. which that The one forecast the extremely it The quarter. for profit continuing

lines. And the to review with business Phil call turn to our that I'll over

Phil Yeager

Thanks, Dave.

were and to great results Top-Five line as work. while are country's and a We're second we proud and now PL service with making and our best we is that said, customers. pleased of are the also As improving and recently the service discuss progress our our places our quarter performance. to improvement Dave I one efficiency recognized will continuous profitability we driving three

Intermodal and went to for due a was and down quarter. volume well X% versus as intermodal volume decline environment last revenue demand the competition. primarily increased up truckload year softening as The was X%

a we cancellations from X% In weather impact addition, lane and volume saw disruption.

improvement efficiency improved margins to However, our a through well our maintaining our XXX improved enhanced as purchasing basis miles extremely team and discipline. and we pricing executed third-party point in while loaded

believe a about on-time gross We we market, to technology performance. platform. we strategy improvements will percentage onboarding time our count generated our our excited be seeing and of in management and a in basis positioned customers. which continued point tightness service the economic strength and in with XXX a are and greater season. the Brokerage helped performance solid rail peak We are on drive in improvement that for the of us point basis as of operating a in XXX basis sales margin model, yield CaseStack This in load point improvement an new increase a improvement new XXX was result XX% implementing truckload

and a service in opportunity line. great are see invest We the and this our continue pleased progress in with business grow to transforming to

year. of which continuous several improvement to onboarding in sales. a seeing able half revenue XXX of With efforts margin the profitability logistics results benefit strong profitability. we're growth, our that our a in grow, improvement into improved next logistics were business yield legacy to both CaseStack management and will posted basis business as gross and continue and and win results significant can we logistics and the our led point of year quarter Our the our to value drive of new growth percentage to We talent in bring believe customer clients enhanced in and improve operating back model, engagements and during we CaseStack this

revenue XXX yield a basis sales. margin discipline, and our point through a achieved as increased continuous and with improvement Dedicated gross and improvement service executing improved profitability providing business, We of on in operational new winning strategy. this percentage our great management

Overall, have we can and performing extremely continue great the quarter while improving an we pipeline and to believe are well. had strong We grow business a returns.

As results customers. to provide our best-in-class we I've not our to and them all know for profitability continuing without still great their see team passion opportunity before, thank possible we and mentioned members these are We while to want service effort. improve efficiency our and to

turn will now to Terri performance. over discuss to our it I financial

Terri Pizzuto

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

operating increased bringing income X% operating impressive to First, us stated X.X% of margin an goal. resulting XX% in our closer

to was increase lines. in EBITDA four million. growth third Second, $XX.X service million XX% million XXXX, gross due XX% or $XX.X $XX.X all And over grew margin an a or

first of provided six cash $XXX cash this at free six total totaling months an earnings half for the of to record activities second compared primarily Now up XX%. in margin increased at diluted logistics. our sales XXXX related was since That's first quarter. $XX first by exclude service margin let's Operating the of $X.XX. share more look every X% XXXX flow from a Gross earnings to operating to compared Free revenue as points percentage to a year. highest a million million. XXX XXXX Group's million to been This is million. it's a line Hub acquisition diluted with in year. XX.X% take margin basis $X sales in-depth increased $XXX $XXX Gross of Average totaling was of XXXX. compared that performance of in with by flow the as $X.XX X.X%. to was last of expenses share per a the Cash operations months per adjusted the percentage increase million continuing driven and

in Turning share half second believe now very we we our quarter the of the earnings $X.XX. be per for it's the to than from year. back quarter XXXX per the that year, We We share our be the range year last of second XXXX diluted in will third similar and will revenue share guidance, projected higher lower Earnings earnings slightly earnings growth projected April. estimate that mid-single-digit than what to $X.XX to per to per project share. full

capital million as margin our costs of our of and tax projected a the authorization. the XXX,XXX $XX effective We million. stock year. back with an expenditures million to XXXX aggregate fund range quarterly to we from believe We shares and $XX the these purchases million XX.X% in at cost million remained $XX will in We range debt. $XXX will million. about $XXX rate XX% plan combination of to on half and sales of expect that of gross $XX year. a expenses We second in today, of XX.X% about purchased percentage be cash half to spend between the the and current between Through and on

wraps closing to Dave, for our you, That financial over remarks. up performance

Dave Yeager

results thank believe we'll for with you. Great, and a to financial second XXXX. quarter Terri, positive continue the have pleased We're remainder of strong very and

our delivering efficiency service our to We improving best-in-class while productivity focus to and on clients. continue

With that, the to open up we'll line questions. any

Operator

from comes Our Group Instructions] Research. from Scott question Wolf [Operator first

open. Your is line

Scott Group

half then your I you weaker about talk in And half? volumes Intermodal you and monthly the volume know maybe trends market. guys. second Intermodal a afternoon in Can expectations Thanks, for in talked more the second Is think this and you less about pricing? manifesting and or competitive then you

Terri Pizzuto

in down I in July, can June. and monthly the It down X% so And April, X%. was down in through we're then May X% you give volume, XX% down yesterday in Scott. far

Phil Yeager

the half. rail we of now customers finalizing right past we're that the We're range. starting confidence currently that are planning. optimistic see see weather that in add see just up. XX% in compliance peak some process back in improvement is around XX% disruptions would we're now Typically to service, pretty on I the our build Work and sustained and low the

that similar peak, will was tighten compliance as come up a see that in in type perform if think to the economy consumer which you well. continue will strong. well, result I to work something should XXXX truckload And up

Scott Group

make of to July? X%, ask pricing driving then are trends uptick What's that? maybe seeing June pricing, on And minus XX% you to from from to you now that right going do What contracts? minus what more that directly on

Terri Pizzuto

June at Scott you If day look X.X%. it on per with down a business basis, about

So was some of in than left that year. There last day was June one it.

business at May. and April look in you a were if sequentially June actually it on day basis, up per so we from And

think by So bogged did the Coast. we up think although off little we we June, get the flooding better rails. in the West a down that happened picked on things And

right of plus we've the a July. that's So we think that in And seen month now.

tightens we're continue. and And think a that a peak that anticipating pretty truck see see. mentioned, we good So market still to little assuming we're that up strength we the economic that'll continuing bit Phil as the

Dave Yeager

paid not able pricing aggressive And would the middle the of mid-single had quarter pricing because Intermodal going at targeted. From we as they that more forecast first puddles we this digit the in highest a of negative. the like originally, XXXX the point are It certainly increases. more part get Scott is And your least. questions, at to that we a we see in was it little one year the we did perspective, be very of market, anticipated towards

at And so, basis. look to have it over you two year a

I completed. those mid-single probably bits So hose are now of that And imagine low clients. in XX% digits would our the for be will

Phil Yeager

continuing competition. just lanes the seeing really would some add, And we're within to shorter our I think best where it's are increased transcon our where perform volumes I network, haul in

volume we anyway. lot would over come see with that of that some we in tightness So a back that anticipate

Scott Group

Okay. you through Terri, pieces a us of quarter. walk guidance's revision? us higher can what last gave margin that upward you, the lot Can than what's you gross the causing just I ask

Terri Pizzuto

that for his operations, loaded benefits brokerage more than a drivers couple And of of points due XXX talked efficiencies percentage improvement, basis about gross we about to basis had forecast truck continuous Scott. focus of our as came Yes, on there to because yield are procurement management, from and about higher of Intermodal remarks. in improvement technology XXX sales efficient the example, in better margin points that, big similar prepared higher cost platform. projected in our then and secondly, came a mile Phil than

So those two were biggest drivers. the

Operator

Robert The next question Hartford, Benjamin from Baird. comes

line open. Your is

Unidentified Analyst

the on Ben. that? I taking to the some Andy Hi, thanks This the driving what question. for on for year is is Thanks. get and additional for [ph] exactly guidance perspective lower CapEx want full

Terri Pizzuto

Sure. tracking. Group dedicated Group tractors and less It's for Hub and trailers Hub

Unidentified Analyst

we on there? Thanks. CapEx expect or it be should XXXX, to to lower? XXXX then similar you follow-up And that, be just seeing higher are should to What

Terri Pizzuto

$XXX at higher where probably this we and the It'll end we've of for higher the bit the be so got cause on piece year truck we've a of got and building. next year some a truck spend remaining replacement and high think then with

maybe $XXX, So probably $XXX next closer year. to

Operator

And the from Long next question Stephens. comes of Justin

Your line open. is

Justin Long

Thanks, good afternoon.

back in in could more price spread If intermodal that what So the could lines, intermodal I West but mentioned versus to pricing missed at east, it, look the for volumes looks circling give you in right Intermodal you along then by we I'm you sense trend in competition now? bit maybe the Phil, like? east also pricing sorry us in those but the a and volumes, give little if geography a

Terri Pizzuto

X% X%, on other local Sure. down down give East is Phil was and was let West then down trashcan elaborate Local two and you and Mexico which numbers Canada XX%. the I'll was down the with pricing.

Phil Yeager

from tightening. would the say, And spread is certainly perspective, I a Sure. pricing east

truckload is gap haul a also shorter the get total, of some with think we recent Somewhat, around price. somewhere get Intermodal still you around into lanes, is in XX%. that the down and But from aggressive bits we've when to more those But it around XX%. can heard market pricing

think we to see that we that's though. if So long-term, don't for see well. short-lived We continue the the especially continuing perform economy

Dave Yeager

Dallas, LA, there's during that there. the we've when an Chicago, of of do that's type those Harrisburg, kind in of historically of out seen truck competition capacity type But capacity, you Atlanta excess lot see periods a Chicago, lanes, aberrational

You competition do the truckers, long. price came point. see doesn't lead to to but some from Phil's it It last

Justin Long

know thoughts next any intermodal into high about I early little of And progress about talk we but level see ask as helpful. a I we just did a If to That's to still intermodal XXXX, want continuation the regarding year. operations, your seeing you Okay. better, margins thoughts it's currently changes around? we're an some rail environment that can think drayage that where you gets etcetera; service start environment making intermodal pricing today, still improve just margins you're to your is as of you in implement the

Phil Yeager

Sure.

in margins have big to operational assets continue market, visibility improve levers cost and that a I the more think room particular open side. good have buying to we better In effectively. our rail there's to on our few increase utilizing the excellence

think customers money. continuous still we a I and yield our opportunity and from perspective, there have save improvement great provide to lot a of service

And continue us so, that's to another opportunity grow. help great that'll

decisions. to as which be I I in We're RPA. the lot to office a take think make be both in line that think and really still then organization process and focusing focusing organization. And organization. more the we on line well, integrating our we're through technology us other automating was really is and the streamlining our piece of back hold on allowing can platform better efficient is front scaling the front would our our starting We're

pricing there's continue of all margins. opportunities I think environment grow in the continues, we our still I to those would if anticipate and So could

Dave Yeager

our Although look a we've what perspective. now Rear directly going we're we do right a forecasting with that which think It's not partners as very both of was from had to XXXX from a operational. lot strong Lake And to customers, like that of XXXX suggest XXXX, a peak, which but I as the would discussions have peak pricing season. of will to type like kind we're was rail our well going

Justin Long

baked volumes, Okay. the last you're half What's second And what point, on you into so for the over one share year follow-up change? that guidance? intermodal getting year assuming could

Terri Pizzuto

slightly. down to Flat

Operator

Stifel. from next question Ross David from comes The

Your line open. is

David Ross

the the year? much. about very Talking of been the fleet expect next to the volumes? there container that has you one And for do be CapEx the that side with there where any Intermodal, going changes things on week you Is Thank other into container impacted decision?

Terri Pizzuto

this purchasing We about X,XXX year. are containers

XXX the containers, So about containers. with we'll about end year are only our net assets XX,XXX so

there all. growth much at not So

David Ross

time the is Is you to run then pretty XXX for in you I performance it to when room a customers, there want it's And where good talked of be? on point your where and close? in improvement amount getting or past where basis still versus been about guess the Hub Groups that are you there

Phil Yeager

I dramatically. think we've improved

is great job related our a how on at. great done has team Our score to customers focusing service. The actually

So, stable at, with score with room that. level that significant rail more is I And the really there's there's where We're we is always certainly still to improve. helping pleased think think a and the rail service for can is network, improve still legitimate us a to and be which better. to improving opportunity And fluid keep on planning at there. a I

So lot of opportunity there's a left.

David Ross

lastly, business? for then what's the pipeline what demand side of the things, dedicated the just that like? slowed on Has outlook And look

Terri Pizzuto

still good. got pipeline. about $XXX in Pipeline We've million is the really

and business. on new of We some pricing. continue mid-single-digit did on brought pricing, end to bring second near the quarter We the good got

the performance. with So we're happy

Phil Yeager

well. And to we're pricing continuing and operational our as discipline our improve discipline

that with us returns are pleased because generate, in investing mainly to systems company our that make market on, we're also the strong. So pipeline and very business the is as going the we're the customers we're focus on generate want the in We're really business talent to return actively for help well. bringing But to long-term. we're the still out that and going a

expand so And please. to opportunity those there's dedicated an

Operator

question next from And the KeyBank. from Todd Fowler comes

line is open. Your

Todd Fowler

a there thoughts freight. think you you I this more where your there volume isn't in some but volumes time maybe some efficiencies. low back just some some this I that and of versus were years the environment the margins Is now this want about think numbers improve margin it's capabilities to in of function right the still and that a improvement growth plus I at XX get if in in on margin When can when was and to Dave, feel call volume how of been historically, we with opportunity we're point, that there environment. got participate that you've of you there, or kind is kind the see the

growth are now? you volume versus how margins Just balancing right

Dave Yeager

we're making much sure focused in optical and We understanding network our pricing. very network are that now deeper have on making a our of decisions

to we get aggressive, XX% in We're there focus that's to needs we certainly is up continue are discipline. of are time we the continuing be out or what we on areas to call our network. and same compete So where want at maintaining our will but anything bottom it, either that pricing to our

of And the and focus price so, continue to yield we strategy balance to to on plan to that type a keep fluid network continue operation. and

Todd Fowler

expecting that of you're of broadly is low range. Okay. do you're think to the your comments you the kind pricing feel right digit I in now be that that is kind last that, bids above think on And Do the the then market Intermodal where pricing, mid-single said you that's or to Dave, of XX% more you the to market industry-wide?

Dave Yeager

bid At the took the right XXXX, year, this this Again, that just from last Todd. largest where that's whereby the took of in increases, in the now, increases is the curve is at cycle, industry because kind this anybody point, largest of increases of the point XXXX. during fact clients

to see, had so fact in And that natural stick let's that right. gone just down the hockey

Todd Fowler

Okay.

So it's the comps.

me, for come have one guidance. two last in operating below Terri, then last quarters And the side, the expenses the on cost Okay.

and fourth and fourth year? can there the in about third kind little Is up still side versus embedded expectations step a a in a what's of of got And the Thanks. costs on talk half quarter, bit and bit you benefits the up for quarter? in little quarter better the the back the in of actually you cost then the can step do You've potential XQ. bit XQ little sequentially but for the third was down that salaries

Terri Pizzuto

Yes, sure.

from benefited because we We're we've what from we've our right. from we've than QX. performance many and increased We We of and IT quarter down QX of benefits and cost forecast with our from as salaries QX QX most we people to lower people get cost about beat coincide have also will scaled time IT to flat are costs. You're going are the had up, $X as how to We're slightly at terms last that this increased quarter. relates -- year our to XX about not increased expenses from hired XX exactly of our technology. down in forecast the And resources last and forecast. the that million the stayed estimate and while and costs this

Logistics, increase the ERP systems also our counted our had OTM IT. fluctuate the depending EPF bonus relates our to So too additional is migration on and to in that performance will in guidance. new packed And plant then

Todd Fowler

Sure.

$X XXXX years? point? Does million some Okay. at forward carry into off tail the That

Terri Pizzuto

XXXX. you number have we'll don't Well, guidance give that now. right? in All I

Operator

And the from Brian next question of Morgan. [ph] JP comes

Unidentified Analyst

evening. good taking Hey, the for Thanks question.

about management a just bit it's business little but already, lines. across generally talked pretty pervasive You speaking, a your it like theme seems the more all

one? So, you and in you're the things on in into disciplined cycle differently and you this yield of little it doing what segment next you're can previous maybe the have cycle on which more think what sort more ones, throughout stick to most to opportunity versus and elaborate bit be the a has

Phil Yeager

Sure.

be strong where them be opportunities great to find so So, we're a I provide address in we think a generate and there, few we're service our I'll them. mutually But questions going beneficial generally, try philosophy we've -- to savings able with where I to to taken return. say would to there going and customers want were key

density a built In on And do density better really purchase of again we market. and can where us. dedicated, that Within building where have That structure of stronger a we of better of balanced. we've we structure can line very Once really areas in in is the actually a that have big return. so, more where intermodal and And brokerage, and fluid to now compete. a that. our generate is have understanding deeper can cost much I a effectively think focused out a truck we we have much those understanding cost we gotten a for focus network

there's of finally, perspective we we're again, the customers our all performing then we would processes lastly, I opportunity. And But those and would moving savings to great logistics, we just quickly. can are, still we business return across that deal ensure provide I bringing we're very to profitability. pricing and manage service inserted strong of know, say that once business our maintain, we've from to lines say up value and know a that ensure you a bottom you lot know, a the

Unidentified Analyst

you Phil. truck ago, new tech a that. some couple maybe for on And fall you traction on line, topic kind Again, if bottom initiatives, then them a Thanks sounds and great. platform. you've come? give through that though, quarters seen brokerage It of model. Okay, more like I management that, operating you what's in new to bit think on the little started have to you're getting But of what left detail could the the still

Phil Yeager

Sure.

the was foundation could trust with start to with build For we me, we service that it them to customers our and of perform. had

done think I that. we've

and more helping that Now getting that as [indiscernible] And rolled better we our the of that that started still that's there. become we've we're -- and in headcount really piece our well. efficient lot of pricing a us platform technology really that processes opportunity next is in think through and place, ensuring we're and out, early we're the innings purchasing improve there's in the

We've So we're feel now winds the great seen so about up come wins that excited and to right building this ramping think good and trust. about. we're -- ability customer we're business on some our we that some grow I very

Unidentified Analyst

if business. the Last of was you changes make quarter, know or was to forward in one Okay, I just kind the other that thing want mentioned there. something -- up sure same for to as well, that to last dynamics on tide. want just last the quick seen I carrying me, clean you've dedicated any

Terri Pizzuto

still carrying forward. that's No,

into end onboard carry million here and we did done, quarter, $XXX the fourth -- tail of optimistic that'll you second the As pipeline. some low third we're We've business over sales got new know, year. third to for dedicated at net-net mid-single-digit the that mentioned expect full We're and but growth about earlier, quarter. when I we still

Unidentified Analyst

appreciate Okay, thanks I it. for time. your

Operator

question Majors Bascome the comes Susquehanna. And from next with

is line Your open.

Bascome Majors

thanks Yes, here. my taking for questions

You normal in XX%. XX-something outlook range normally In that with are the because the for are to big percent more coming? said half modal earlier is range lower if the the some rebuild is your is in that big compliance you in assuming in And you've wars? commitments compliance the or volume improvement so, that customers get second it you because you back telling your was sequentially, freight

Terri Pizzuto

We all are we haven't back -- built guidance our on. it in

And, Dave We mentioned, know, you XX% XX% like you know, built-in, have now. right compliance. it's about we're normally as

to some have we not of to high recovering of of that guidance built-in but get the end the that, all So

Dave Yeager

very, Our which are a with telling a aligned expect strong closely that to XXXX not very us in a still customers lot that was peak fact, Again, of but strong more with peak. demand. XXXX,

Bascome Majors

Thank you for that.

Dave Yeager

I'm sorry.

And little certainly to bit early off a overall Coast. volumes bit had peak, mentioned tightness obviously, LA see in pickup in we're but little Terri the a of elaborate to see it's earlier to for Just and beginning some West beginning coming further. some we're that

Terri Pizzuto

So with our bit guidance. we think realistic we're a

Bascome Majors

what it's, today without talk about, lot feels of the you again, you that back margin that demand bit Well, looking into are I improve time last initiatives to improvements the And on have, going inning better are guess mean, more Thanks. doing to having of color. and that. And maybe see I at is -- questions And all processes Phil outcomes. and happening but can a other ago. market-wide are this know, years little qualitatively, like we know, through appreciate I it's you I intermodal XXXX? bottom-line it people for appreciate company X much through guys those -- at downside improvement us the a know, you some these the you Can if the of year, the surprised structural walking a there lot level and you're you're of doing. pricing

Phil Yeager

of we've to believe we we -- improve. I'm and of lot still made middle going a room what really to think we're progress. but here done, There's team improve. I I we room room have still be our always game to have proud to has go. the of

think the haven't of gotten investments, be full our I benefits substantial. will technology We which

take more think advantage of becoming shift the you have us I an to and intelligent efficient know, for that. But is really, So we as to now technology be going the through organization. processes big a

say game there's So middle I the upside know, going for would like organization we're of forward. still feel the and you

Bascome Majors

housekeeping one, And for last that. Terri, you Thank a just item.

on talked EBITDA I $XXX a you You translating had what's earnings little -- EBITDA? Thanks. And the about to said translate bit $XXX million. to million last quarter. believe ups you translation

Terri Pizzuto

Yes.

million We are projecting now $XXX to $XXX million.

Bascome Majors

you. All right, thank

Terri Pizzuto

Sure.

Operator

Next question comes from Jason Seidl from Cowen & Company.

Jason Seidl

Thanks, operator. Everyone, afternoon. good

said you truckload Historically, how the long. lasted? pricing but at last of You pricing, it long some sort it intermodal of actually doesn't mentioned has that is

Dave Yeager

-- Well, lot it the economic of lasts through a the generally, cycle.

that networks. even aggressive economy more you So level if a monitor trucking quarters. see the again, little kind fits that of better that freight shorter some doing begin they'll is industry can we doing level is or to hauls, they shorter by just how at the of haul The how I that the demand, their to get normalized to seeing and how go in bit begin think better back see you'll look XXXX

there. So, a cycle that's dependent out again, an you time. know, amount it's of exact freight available of I on and can't lot the the economic really But pinpoint

Jason Seidl

pricing XXXX on you with of season two think peak do statements some together, like see ease? pressure these your So think looking do you commentary to linking that we'll start

Dave Yeager

Yes.

Jason Seidl

great. Okay,

fact space, interested question had lower in other the on companies they're acquisitions. transportation a that few I was and The getting again. had multiples out that are We've call the getting

been over You few last years. guys acquisitive know, you the have

potentially what so, at good the are looking Should you'd interested be You that generate areas if And anything free be some for we cash XXXX? flow. in?

Phil Yeager

looking. We are that out expectations are We would we agree normalizing. think

or focus fulfillment, we can of our so in the our of Mostly solutions now. whether we scale new opportunistic main customers. certainly intermodal looking it's to logistics would out organizations, non-asset geographic based on are -- that areas are filling be really special And or we companies types footprint right out and and drive not well. But as are us asset-based dedicated, help for brokerage

Terri Pizzuto

We're quarter. powder you the acquisition those, revolver cash a know, $XXX plenty million so well. million was borrowing was on as CaseStack $XXX And we're, know, dry at we got our very end the so well. dedicated. of in that of you And -- we've integrating had No great

Jason Seidl

Appreciate position. good a the as in you're like Sounds time always.

Operator

Wadewitz And [ph]. from our next comes Tom question

open. line Your is

Unidentified Analyst

to Or was more you're like in in I lose of I could just go that freights? that contracts pretty the move afternoon. player wanted see impact I And of you've weakness -- intermodal. seems in you it expecting you to, But just the more market? on decline was your sound Good Did you weathered back competition commentary second that to see it you offer a competition kind half know, of guess volume. intermodal Do increased know, well. function to you if on market of a some like guess in competitive the Yes. think in doesn't share. some in second comments I wanted it the -- on quarter to

Dave Yeager

mean, we to we of decline single-digit. the would in the we second I the anticipated. a lot low if certainly were bids. will we what grow variance huge issue half, that's the XX% actually -- with into compliance would intermodal in build was mean, the just a know, -- for You I fact, from

in few left process, know, what's which we of lot but multiple in a -- is a did the you normal also cases, during we gained So bid instances. lose

say lost that wouldn't I we share. So

and a the the shrink smaller we took I think most of -- I a is bit think pie little that players just did. like the

Terri Pizzuto

were Tom so the didn't than competitors don't were. we and whole -- down we only the more we was market intermodal domestic Yes, we X% think down share X% down we and were lost

Unidentified Analyst

it trucking clearly okay. compare mean, know the how like and the or the cycle? Right, to had you market would prior to Dave side. this you, truckload cycle seems would on some capacity side How you coming Phil, I -- is you've

weakness a kind XXXX forward it just Is to mean, of it seems How protracted -- -- discipline optimistic it of in given shipments rail half the and cycle like how among fairly different? pretty this the XXXX. do had at cash you You've narrow to in had the this not this period you're weakness more index the I seem freight rate intermodal straightforward like if sounds looking we that players? want in do Because is in it think you weekly of or to think, I freight you volume more look think does have first that. weakness but and year. expecting you're some

Dave Yeager

a anomaly a that, recessions that market was key. think threat the this as forward such pull at of of through the the the and into bit filter an did a time. a consistent added We've economy. it from by there And that is point the I will And overall as driven little seen we see it -- XXXX we'll lot And see Tom, That's stronger capacity again, more fair and before. tariffs. many freight in as amount we well, shipments of does was tighten, get lot because

We we that set seen will have do the out to -- like positive is it's we've strong talking be that is XXXX, to like the of going some a that our from again recessions severe rail really And and to just up peak think that the flattening a of partners I feeling in XXXX clients short-lived. our as So believe well. this nothing that and it's be our year it's to past. in process going as

Unidentified Analyst

talked next down XXXX you from bit pretty that truck contract issue year? of in the are be rates know, know, contract in is able kind I that you think tough or truckload and XXXX. the, up know, if bid on intermodal and -- The a season? in -- were will be see you capacity truckload intermodal you XXXX. potentially it be rates Would view How you is intermodal to decouple to you if an expect would are think up rates saying down rates resilient think see you about You it would to, about you rates the

Dave Yeager

it's it trucking it discipline the Well, we've we've a that shorter under point, all more within it's to I and rates Again, capital pressure intact intermodal lot seen think but would I been do your -- on should haul down. lengths on think hasn't of earlier at invested be. hypothetical return looked put what the that the players. are We a

towards all profitability. And enhancing we're working so as far individually as

that be awful that -- drive this and I settlement don't So of that really Certainly, the consumers this question that that's just no there's But consumer through results the June roof truck the truck heard of be know Shorter links believe lot again, of point. was going again, challenging. there's I case a market. an economy. at loose to haul more we would

Unidentified Analyst

Right.

and gross great. your working you in trade, weakness and Yes, model the in Okay. know, good Seems margin. well period is of like performance

for you thank anyways, time. the So,

Dave Yeager

Thanks, Tom

Operator

next Your Matt from Young Morningstar. from comes question

Your line is open.

Matt Young

Thanks. afternoon. Good

clarify Just quickly the in last to question.

that truckloads the I'm what XXXX. in you've XX% haul, seen truckloads that better saw rates that rates last -- than guys shorter So spread in meaningfully the versus correct? truckloads time is you guessing fell, The

Terri Pizzuto

between about Are difference rate? you intermodal and talking the truck

Matt Young

Yes.

Terri Pizzuto

Actually, as think XX%. mentioned the I Phil average.

Matt Young

I thought I but. XX% Okay. heard shorter lanes, haul on

Phil Yeager

I get around and that XX%. we know, it generally, think you see low can

Matt Young

Okay, -- The truckload around markedly XXXX. saw guessing you what XX% I'm in rates that guys corrected. time but better that's last than

Dave Yeager

absolutely are correct. You

Matt Young

demand better overall conditions it that sounds in the time like in they intermodal to also And and Okay. -- improve last are half. guys pricing for them see second you than rates position better just were are and a are

Dave Yeager

are expecting that. we and yes Absolutely,

Matt Young

quick one then And margin. truck the brokerage Okay. gross about question

gross trended from impact ignore legacy shift truckload for operations the how you margins If CaseStack, those wondering I'm mix brokerage year-over-year? up the for

Terri Pizzuto

year-over-year. yes, basis. -- They XXX About up were they

Matt Young

internal with that with the opposed of those? anything have of do kind both your cycle IT of to to efforts Would or some as

Phil Yeager

both. say just would I

Matt Young

Okay. Thanks. That's All all had. right. I

Phil Yeager

Thanks, Matt.

Operator

next [Operator from Research. question comes Matt from And Brooklier Instructions] Buckingham our

Matt Brooklier

to Good should up contract of circle contracts next percentage that about, know, curious afternoon. -- are months. the of your just on back I'm Yes, to think you coming the your you to length I us how business? as thinking what's wanted remind what we thanks. be dedicated XX Could average business. for over renewal

Phil Yeager

a typically contract. It's X-year

them so, the you visibility to year. every have work We we renewals know, through

next won't versus be traditional. So, year outsized

Matt Brooklier

maybe through Okay, your, the dedicated think on or that average. similar just on state given your think than you achieving you pricing contracts expectations know, first current do And mid-single-digit kind the increases a got Are little you of you of I half second half to then increases, that on for bit the price it. the maybe, -- lower know, market? broader talked tier

Phil Yeager

Sure.

wage wage make competitive right to I driver subsided A staying to customers the we need lot has competitiveness we're the somewhat. renewals in our those the would were I sure market driven. think service of driver way. has inflation And subsided in say somewhat.

we continue So out we also do but look underperforming see you to going know, forward, are we are balance -- you we generate you'll can well. to excited and you us focused know, as as would know, renewals sure if if I that continue say, return making a we we when somewhat, at --

Matt Brooklier

I Okay, that's got. Thank all you.

Operator

And Research. the Scott Group question comes from next Wolfe from

Your is line open.

Scott Group

Hey, follow-up. thanks for the

maybe because of margins dynamic. So, east this margins better on do of not that is the for gross of to going competition -- think better locals we transcon What truck implications Terri, local Transcon if and you? than are sort

Terri Pizzuto

It's haul haul. length length of longer Transcon. It's to for longest our a

really of margin all percent margin higher across our that's of is different sales gross dollars. as So a consistent pretty And geographies.

So unit on really per revenue because dollars, the also higher revenue it's higher it. is more

Scott Group

our then And margin?

Terri Pizzuto

Similar.

Scott Group

lower back think quarter? Okay. margin third they're then, lastly, in just And half, gross do you the the for higher, or fourth guidance on

Terri Pizzuto

the season I peak think margins due seasonality Typically quarter. to higher are surcharges. and in fourth Gross that's

Scott Group

Great. Thank guys. All right. you,

Operator

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

Dave Yeager

second you quarter Well, for thank Great. us again, call. for earnings joining our

I and have. would that Thank may again. available if any Terri you be always, there's As and questions Phil you additional

Operator

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

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