Hub (HUBG) 7 Feb 202019 Q4 Earnings call transcript

Company Profile

Participants

Dave Yeager	Chief Executive Officer
Phil Yeager	President and Chief Operating Officer
Terri Pizzuto	Chief Financial Officer
Scott Group	Wolfe Research
Justin Long	Stephens
Ben Hartford	Baird
Todd Fowler	KeyBanc Capital Markets
Brian Ossenbeck	JP Morgan
Bascome Majors	Susquehanna
Mike Triano	UBS

Call transcript

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Operator

Hello and welcome to the Hub Group fourth-quarter 2019 earnings conference call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's President and Chief Operating Officer; and Terri Pizzuto, Hub's CFO, are joining me on the call. [Operator instructions] Any forward-looking statements made during the course of the call or contained in the release represent the company's best good-faith judgment as to what may happen in the future. Statements that are forward-looking can be identified by the use of the words such as believe, expect, anticipate and project and variations of these words.

Please review the cautionary statements in the release.

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

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

You may now begin.

Dave Yeager

have variety officer; year per service president you economic a diversified Group's chief reinforce Hub fourth-quarter yet for another conditions. Terri results Today, These I belief Good fourth-quarter our and our Hub with earnings Hub's Yeager, offerings in enable operating in record afternoon constrained with for results and financial of Phil environment. earnings participating finished and a share us Hub's thank solid to that Pizzuto, volume XXXX chief me, in profit call. officer. with

continue We and throughout network, service while on improving lines. seeing all business expenses to focus our in our profitability reducing of

pricing will the truckload down to the as half expect XXXX, in second be tightens. positive We recovering of half be market while intermodal first in the to flat

logistics, call We and I'll review margin continue to intermodal, our business through improvement dedicated our and over the to to lines. through Phil in now business our growth turn initiatives units. growth expect profit drive brokerage to

Phil Yeager

Dave. Thanks

control customers the We cost our our As efficiency goals we to our on focused remain have improving the quarter efforts. environment. drove given results delivering year. and continued our earnings demand value for said, Dave structure surpassed challenging are pleased fourth-quarter our with for strong the We cost and record our which

through and improve discipline to talent. enhanced operational technology investing feel We while we confident continue our in cost can structure

The XX% truckload a well performance. as decline discuss Intermodal saw volume we demand intermodal for our and was lighter quarter. the business and down as as peak Now I was increased due primarily soft down will to X% revenue competition. was volume unit season

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

Our and maintained as our team well pricing operated we operational discipline.

point margin to last costs year compression sales rail we costs, surge a However, volumes. in basis lower increased a percentage of and and as XXX gross increased claims due insurance to saw compared

highs Our on focused as a partners Hub at our rail record experience. and world-class were service both delivering levels customer

We but are this X% in are Brokerage load a our season business. this to to early year expecting growth in see we the intermodal decreased count quarter. return in

However, a environment decline led which we to basis year lighter activity as volume. sales. XXX spot demand percentage less saw We in the improvement than a in point saw margin gross last of and

with brokerage this strong pleased are our our with transformation We of and our offering positioning service customers. seeing progress are high in

growth significant other for our believe opportunity customers. there cross-sell brokerage poised and are to to is We a

investments, model percentage revenue Our cross-sell our and continuous in products, technology small clients point margin in logistics access and operating business is well us has midsized other to to enhanced also improvement. continued new perform continue CaseStack strong and solutions. and basis gross XXX to Hub with enabling focus profitability to decline improvement the on see We a a posted with results though benefits of

from are point basis strong year a and percentage a year degradation continue in headwinds have in margin decline anticipating and pipeline over very improvement insurance a a claims this revenue and XXX-basis-point We saw dedicated XX despite growth sequentially, to gross year. significant but costs.

operational systems and talent enhancing business are performing discipline improving our and progress poor rationalize to continued our process. through making in have We

improving upside this We the have ample year. service line in

Hub strong difficult plan. our the execution of team is a a record a in had freight And quarter and on entire environment that year. focused

of are we our is in Our improvement continuous seeing investments. on team benefits focused and efficiency the

both our our our service structure. growing lines and improving intent street are operations cost and improving while on dedicated in We drayage,

we and profit improvement the last quarter invest in continue will track remain We and with that discussed to on technology. talent initiatives we

also year all for a Hub of I effort their to Group. thank in record would delivering team Finally, for hub entire our like

hand will it I financial Terri over Now, to performance. to discuss our

Terri Pizzuto

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

First, quarter in fourth the CaseStack brokerage primarily and gross sales was a percentage our to at of of the in of as December XX% margin business due transformation Hub the highest of business. history, XXXX addition the truck

initiatives, September X of we're our the excited and since in in January a about include since a Second, X% relentless which headcount XX. execution profit decrease XX% decrease improvement headcount

operation, as the profitability. as drayage Third, result XXX of sales basis opportunity trucking, points one We including percentage of a believe a margin remaining and of management greatest improved initiatives. dedicated sequentially operational improve is our gross revenue to

take let's to XX% quarter. four lines. our revenue look a of decreased Hub Group's a in in more at $XXX revenue all fourth service performance in in-depth Now because decline million the

of The in work. a project and at of in because as decline quarter a XX%, business XX% primarily intermodal history. largest spot declines fourth percentage at was intermodal were because an down and in Gross truck was of in highest X% Hub decreased brokerage revenue loads. Truck revenue XX%. sales margin brokerage the decrease

of were percentage in and insurance down and the headcount in to sales dedicated year offset percentage a gross truck in XXX-basis-point gross by costs to X.X% last of from lower bonus claims. and compared due prior-year was to XXXX. to resulting benefits million increase a $X improvement unfavorable development lower fourth quarter basis gross sales, Gross XXX-basis-point improvement and margin partially compared intermodal an margin a XX due X.X% Salaries by Operating primarily partially were as year. logistics claims brokerage increased of and in margin as driven margin last declines margin. These of points a over increases

share soft compared savings earnings of improvement was Hub decrease is continuing operations from $X.XX, a of the the share initiative. offset profit a market XXXX per to from $X.XX. driven our per This diluted XX% by diluted partially earnings by Group's freight

Looking the totaled year from for million. flow. cash Cash at our $XXX operations

last year to or an EBITDA million Free $XXX $XXX $XXX million. cash million XX%. flow was the increase was year of for compared

at $XXX December balance Our cash the end was million. of

XXXX. for guidance our to now Turning

share We XXXX to to We range per $X.XX. low believe will earnings revenue $X.XX that project be will from up digits. mid-single our

to full to will our $XX range and million of between year from We and as believe range $XX expenses for costs gross sales expect XX.X% XX.X%. quarterly million. margin a We the that percentage

Over our between and believe for for We effective be cash a debt. $XXX XX%. you plan tax $XXX that closing XX% capital spend and That performance. to We these remarks. between to with will expenditures and the expenditures on wraps Dave year rate financial the combination of and million to million up fund

Dave Yeager

be Group environment. Terri. to you, Hub yet Thank another a XXXX difficult of in freight profit for proved record year

$XX reflecting business diversified great remain Hub's costs contributed in our of network, in in the record removing service yet we and We reducing had of offerings. lines All to on value XXXX. million costs success in $XX performance, our million another focused this within

with open And now lines we'll the to up any that, questions.

Operator

Wolfe [Operator Group instructions] And from comes our from Research. Scott first question

is line open Your

Scott Group

guys. Hey thanks. Afternoon

much way you out is how XXXX? have did realize figure think to can us -- So do help you you in the then total think cost in you about right And what XXXX?

Terri Pizzuto

a was on Scott. opportunities million realized We that Yes, of in that time of we that about savings. track. cost that We're announced identified had And lot had the for quarter at August. $XX third

of this on will that lot year we year. in next continue quarter to savings that so saw And the a fourth of

by we'll half that, cost $XX on XXXX. we identified, top of saw estimating had see we of by And not be in taken we take you savings million anticipate completed XXXX. during that of that on and on, of we and that we'll the in will So We maybe the have and in started action that then. will that that quarter then realized quarter half that have XXXX that another that we the fully to action fourth continue it on third

will it So ratable XXXX. be through

Scott Group

of So in that maybe bucket get half XXXX? second

Dave Yeager

Yeah.

Terri Pizzuto

-- of million, gross split SG&A is it's And the of know and SG&A. it about -- it's about XX-XX. sorry, XX% margin between the to million you $XX margin if -- wanted to $XX what of XX% half gross $XX about to And and and I'm million, margin to Yeah. the

Phil Yeager

is at Yeah, categories Really, our four $XX you related I driver tell procurement, being to key Phil. of our there, the would and Scott. the XX% operations. utilization. is looking we're retention This trucking million maintenance, mostly

our then revenue continuing management push improvements. to And on lastly,

going to they're push And our that on so to we're that ability forward. feeling very and confident deliver continue to in

Scott Group

all guys with guidance? quarterly the why that, cost raising are So you

Terri Pizzuto

of QX, basis I is to things. you I to look guess, way if different due $X.X mean higher a couple quarterly at have you million. will, that's going to QX, on if to That one of about a We're compare wanted to it. D&A

benefits QX, have we'll to and salaries about higher from $X.X also million. totaling We think, QX

be quarter, few also from planning because flat things. to and out. That's G&A In taxes haven't really higher commission on benefits payroll different QX. the should We're maxed higher a first people compared are and

Phil Yeager

trucking SG&A a we'll have the is do also then investment now I that improvement, half an would in supporting of in first we the that seeing highlight, just year. place impact And engagement increase an the of right in larger that the in that the lastly, is be consulting

Scott Group

Okay.

Terri Pizzuto

the piece people going raises. our And give salaries to of of course benefits other and the is we're

got in its merits So there too.

Scott Group

seeing this talk pricing and versus rail is pricing more maybe And up. intermodal year are I'm Can is costs. your costs you where Okay. you're a about with then season? just guessing what than that bid rail compare up

So net impact assumed within the to the net revenue? guidance, what's you've

Phil Yeager

Sure.

We're management competition. environment, you, we strategy So repositioning and yield season, competitive balancing that bid we a early in network continuing also sure and and performing truckload have it's on into know our drive but well. where reducing We tell we we to continuing execute our costs intermodal and our advantages. and I cost are believe seeing would are with with both focus, structural business making we're to

will and early on I what you, have focused somewhat pricing our that it environment But tell little competitive tell we out sure a the to right is a for business there network. like. exactly It's making would we're be

Dave Yeager

clear rail and think, So will this our we in year. we say candor all line in increases do probably, XXXX well. be they're visibility Dave, also I have those on had And what what for we would with as though costs

regain We at cost some it's well as attempt increases going to So put we've are as clear the got understand the rail where and to bottom to going be visibility. line. to all

Scott Group

I to bit. cost you've that's these flat pieces a to little understand guidance up you've like got then wanted earnings just and got

a are that So cost rail risk? the spread a assuming negative price Or guidance already? is in potentially you like,

Terri Pizzuto

of down. half are we're the the are, In first assuming We prices that year, Scott.

And so that's...

Dave Yeager

But we over. think do it

Terri Pizzuto

the But then in of half second year... the

Dave Yeager

would and being of single from a flat They believe going positive. I do in half digits. but to We price to year. second be the Not increasing it's mean down the bit a go go lot to

Phil Yeager

claims we that. costs warehousing And then insurance just top do on some in top as of have increases of on built and costs that, in well

in other be just the would margin. we those headwinds So have the gross

Scott Group

Okay.

some thoughts that just question the that maybe last and it quarterly expect? pass with cadence on. on Terri, just I'll So then Maybe you

Terri Pizzuto

We compared of XXXX that will the of first believe flat be Yeah. XXXX. first approximately half half the as to

we'll truckload The really how quickly it and second half the market depends when does. quickly react on tightens,

is the the than expectation half of second the So half our that better year of first the year. is

Scott Group

All Appreciate right. Thank guys. the you time.

Phil Yeager

you. Thank

Operator

question next from Justin comes Stephens. from Long our And

is open. Your line

Justin Long

on congrats the and Thanks quarter.

clarify on reference Just in to question. Was to EPS? that last that

Terri Pizzuto

Yeah.

Justin Long

Okay. you know you into out how Phil course getting maybe that this over order volumes in you and mentioned baked can with you But I us help that's well. the the could give guidance of magnitude year? that And out in terms year. remarks the as the us intermodal something play of expect prepared you see growth of the

Phil Yeager

Sure.

the growth year. we're So to low for anticipating volume mid-single-digit

we we're to largest increasing throughout quarter quarter, are the of that capacity last to being have to the have start percentage we going but are bid and year the see make just to continually continue available. year, a as customers sure rest obviously, to given, First think a comparable, more fourth about being also as negative lower with intermodal converting we year the seeing start wins. we long-term very increase, to anticipating of the And progress a did lot strong back they

we So to progresses year do feel improve. continue we'll see volume as the

Dave Yeager

we got year, had eventually no question out Last moderate a because comparables we because again, Last Christmas started There's XXXX, no year, easier Justin, obviously, peak. spring had strong is and this very are holiday weaker. peak. Dave. then the And

order a So avoid of little think or also last year versus drained in the flatter inventory tariffs. lot that that levels forward when a inventory kind we have had bit pulled people to the of been

it going So a of there but is some tale tailwinds, halves. to is two be

Justin Long

maybe of competitive that could a out helpful. that's you Okay, a Obviously, there. talk was wondering on one you both some I could top maybe some And it's And the year? brokerage. that through market go segment your and of perspective? play from could through company-specific line assumptions if margin this out for benefits

Terri Pizzuto

line awards double-digit investments to in as based from and as Yeah. the business and on truck We're capacity customers, new the our business better top of low source allow well existing to made efficient. growth our structure because new single-digit brokerage that new be on us high technology we more projecting

our to focus inside grow we're planning on account -- a also expect and on volumes spot development XXXX. We in expanding inside was sales team brokerage. our our And

gross We market those because sales of a the expect levels margins probably a achieved get XXXX of tighten, will XXXX. to begins as slightly still margin the will as in bit. percentage we that pressured strong And decline that truckload in

Phil Yeager

to we continuing Yeah. I add, see would wins. just are

productive. And trust finding garnering with that is we're reps our offering service Our think becoming is which clients more fantastic. carrier are I much our

freight, is make is we're continue well do to right to sure job what going layering they're to high-quality that now. reps carriers in the really, doing so And so that our allow to

We good ability and technology, improve service continue really have to leadership feel our improved line. that enhanced about great great and baseline, a to very

really with far So happy thus we've the though. results seen

Justin Long

Great. I'll the appreciate time. the in I hop queue. back

Operator

next Ben question Baird. comes your Hartford And from from

Your line is open.

Ben Hartford

thinking helpful was logistics how that the growth for same the for Can you're you Terri, the other do revenue brokerage. on segments, about everyone. evening two Good dedicated? and XXXX

Terri Pizzuto

Sure.

We talk expect logistics about -- first. I'll

a good. will expect have logistics strong is Pipeline year. We

impact within in full logistics have of service wins. big We'll And new got the some group. addition, recent several we've our lines

from expect benefit there to we So -- that.

to on and logistics expect also low we're top side. growth growth on so in pretty single-digit expecting the high And good double-digit, significant be line we the margin the -- most really will

we in other gross expecting of And percent intermodal, So to margins margin the similar you costs, little for by to XXXX. fairly as of that expectations rail slightly. carryover second the to we and expect gross half for a in a a be offset We're which pricing our percentage to that And second on as the the wanted? the the compared profit first gross the top-line was first slightly of have. customers based sales expect the we growth it due half. up intermodal what lower that improvement sales initiatives in in compared decline partially be to to pricing the will will is are year And as have then for we XXXX margin half half be

Phil Yeager

we -- the pretty that through in looking I anticipating business. revenues -- We're flat the right and we're on to making processes right growing think then with And yeah focused getting the management, you right customers dedicated. down we also and very in place for dedicated are right and business the sure transform revenue that

stages flat So a on year we're that's dedicated. you, we're for why and would progress I early tell we're anticipating that. making

Ben Hartford

Okay. That's...

Terri Pizzuto

percentage But be between of XXX dedicated. we gross points as up expect a XXX do sales margin and to basis for

Ben Hartford

do can to of bid tough Where front you be Dave, year. versus some do Because half the on -- volume the you the intermodal able going to what bit you're great. the talk expect the environment. to to meaningful Okay little And just east. on to your be be back And west? going going understand is you see obviously you headwinds that? XXXX trend? a to how I I about mix think in why east growth, to there's it's mean, perspective Do approach?

those of some talk can dynamics Just through you specifically?

Dave Yeager

We as because as a large Yeah. intermodal is last there we but Certainly converted competition. headwinds again the going truck XX% just it's intermodal of leased competition, we're much several first right in of is little I had in to year customers to half. a market. year the capacity the it fluid that in rough to that lot now east, of truck, think do local that going be know truck this not the back over their because

so very our a lot going of think, But to business that and we focused, we increase fits value I making tighter. after than very, add sure to do to We're to we're aggressively, we're is more do that see opportunity get continue the the truck our ever, see and go capacity going going pricing, it. to believe in to network

So I of year. low. forecast very are think confident feel kind I the that our for -- again, And this comparables in they're

you more look ever peak seen was less was I've that's a function I last it first at I when nonspring the just or year, and mean forward. inventory -- think, having not also the just but of of the spring pull

consumer So the -- is and doing at broader if you economic climate, look well.

by believe half, be -- we gradually it environment. should the that and a second strong do pretty again, demand So

Ben Hartford

you for back you kind and minimize well? much what have little much do -- those really the capabilities we cost more is far. IT guys bit you you complete have. to of Recognizing that. inflection want Some timing get go? whatever of to to reason, If thus the incremental can you cost work year of and Where on half muted But the begin don't I further projects thought. side? done layer a solid can into of the go? when how how opportunity still maybe that the And that opportunities can as And about on the talk may some you've

Phil Yeager

is Sure. Phil. This Yeah.

So early achieving trucking think stage laid the large, as in savings. we're I very in our organization is out, opportunity the and we very

be more opportunities numbers we've the we're improvements. to think out, I hit. to drive continue that able confident And we to laid we're that to going find

that forward. the really business, we're in, within we going all to as opportunities finding continue we're are as are to us significant looking through So digging the details drive

very in trucking division. the upside So good about I feel

particular, drive to of in But in in get as the made really that as and we also Logistics way the the back And we've back we're investments mentioned, you optimize dedicated our our technology drive able then will rid to drivers in doing start legacy more will software. half, particular, LTL, the That in redundant we in businesses, will really things half. in that in continue better We're to have creative best-in-class we're in to think us provide purchase way think solutions our some our forward, leverage to I and move allow and able to I solution. network where effectively. customers that logistics to a the

those to eliminates well. top our again, right costs, that And system we redundant are on which participate customers, that us of in now. savings get really once So -- to as

continue to identifying we're we're have keep we push we opportunities. upside -- So think do to going and to more

Ben Hartford

Got it. Thanks.

Operator

our Fowler from And from Todd question KeyBanc. comes next

open. Your line is

Todd Fowler

Great. good Thanks evening. and Hi.

of guidance. that I bolts kind and tackled the we've So think nuts of the

But at back it the the think you maybe to what guess, end about low range And mean, I how of take maybe, versus what step of range? about a can curious about and talk the end low higher a level, has you would end I'm put the high the -- range is, of I the at to been of better stress there? differences range and And of of tested? high get the a So pricing? And what outlook intermodal? it in the will you just the between then end that to maybe high guidance? low you some contingent on? Is end sort volume get the really what's that high-level Is volumes better

Terri Pizzuto

quite high season, truck it's market anticipate, the get If if Todd. a to we getting peak if would more this than Sure, be the year, Yeah. is of than aggressive possible. spring we we upside have past end. stronger have we and than tightens sooner and a higher -- second the end half the would to be -- XXXX It which be would peak

-- mentioned savings. list we're to we just constantly cost if Phil then a bit opportunities our for little as And of adding earlier,

improvement And than -- initiatives be range. be from that we end the growth we've cost the pipeline Truck realize out, intermodal even our service lots will the great initiatives top to got brokerage. well. extent volume intermodal then only laid Logistics, there probably would savings we've dedicated, though or certainly, in So -- up opportunity revenue profit the more slightly, We've got of lines, will include as of in

percent higher than sales intermodal. margin have some of as a lines, them business gross Those of

and along we And a would if so like -- everybody them will. actions tighten the The recession pricing or coming in intermodal competitor be we that upside truck also market we it anticipate. than -- thinks will could be doesn't more grow downside

So there's we downside. don't think of whole lot a

Todd Fowler

first I point, getting Sorry. didn't Terri, so better. to that to that in quarter, some basically think gave then I mean interrupt. Phil the down and volume and cadence progressively but just then Yeah

would remain the something would imply be that of would whole at negative it volumes flat Or So low volumes? would intermodal actually end the -- that year? for guidance, the

Terri Pizzuto

the said... -- it be Phil it So but would low for would, mid whole digits to mid-single like year,

Todd Fowler

Low to volume? for mid-single digit

Terri Pizzuto

Yeah.

Todd Fowler

Great.

Okay. sounds by an And just know your for a margins you Can from segments, has specific follow-up. opportunity really I then opportunity my the -- lot And of are? that give operating don't talk where, dedicated it you but rank can from set, you the margin really, profile. margins then still a like

when think be? you maybe the cost of at see can some about of when or you sense implement how of of currently where a initiatives, But margins you the initiatives can think magnitude improvement order you of kind much cost you're kind the to margin where from

Phil Yeager

Sure.

So this is Phil.

intermodal done margin So I excellent And improvements in and strategy. our driving highest been think, there we've business. pricing network job, our has our in an operating

if trucking Within a in we both have to We marketplace, our there. us a we've think, in get I the a of to can still street right, also improve growth. done But differentiator drive be profitability. transformation that the though. And our great for operations, brokerage, operations, lot room above-market

very quarter, done. what with margin the I'm our margin pleased in able line, been actually our team And business to highest the and accomplish highest and what has was it's we've there -- it

so fantastic that a been evolution. has And

we have Now I even if of on record great margins brokerage. that, to able top think within in upon significant growth infrastructure, is we're the opportunity those expand that to layer

which laid For we've and clearly. opportunity, significant that would very have out third, we be dedicated,

and key that to revenue procurement, and on retention. I we're the maintenance, driver four think utilization the continuing focused sure it's management categories make of

of the very and focused we're way so And well. as systems through process that. We're XX% on new putting that in

significant there's upside So I there. think

a And and from a add this the we're where percentage brokerage, bringing headcount, margin the that operating you again, evolve I with expansion finally would growth business now, And have our to as our pretty pricing tell highest once to we we with and And go-to-market very margin story model, improved then we've our year. logistics, changed we what strategy, enhanced similar that would done be opportunity we on our not we're top service and bring that our to be can solutions significant. the layering once of customers. more that continuous to again, customers. we're that continuing to and improvement having And line in just

So margin good growth about we there as really feel the and expansion well. opportunity

Todd Fowler

all see that's I helpful Phil. now Dave, expectations and meet No, with Okay. that. if Flyers really have we'll too. appreciate they catch super up can color ranking the on right of And to the

Dave Yeager

Number six. some get final to tickets X. for the We'll have

Todd Fowler

All for right. time Thanks the guys.

Dave Yeager

Todd. Thanks

Operator

question Brian from JP Ossenbeck Morgan. next comes from our And

open. Your line is

Brian Ossenbeck

question. Hey taking evening. good Thanks the for

hear just out factors how carloads, you those intermodal doing think think it's those playing all you to best next what talk them. if about out on rails see this can it's wanted side? you into if the doing you see Recognizing in front? And you How you year what you how year? reopening or Just hearing do lay intermodal opportunities little see bit new lean on from that also, a what might could more that will And and from rails not we've do been margin for growth? they of the view think the -- opportunity for with coal where partnership are, the do

Dave Yeager

Yeah.

right that running and margins say enhanced as increased would a as overall rails by it. on is they been far good rails. certainly implementing service we've before levels. the as like the PSR of They're ever much their -- more has to varying it intermodal have result at think seen that as I the efficiently than had also as ever now, I

And efficiently, the I line margin, you're you're that makes business you're gross running of profitability the think of but consistent, much that when time, on better.

are our very with strong. relationships railroads Our

with drayage strong to they I with very are to a base positioned really our on our size I strong that think well asset partner fleet their beneficial with we're and be networks that and mutually partners, able with players. very have our think extremely And and rail certainly looking to balance our relationship.

Phil Yeager

would most asked Yeah. is just that as And add, And you canceled were through Phil. of of on a the service specifically, we maintain us, intermodal outside the lane openings this few. I lanes for that disruption just on

side, transcon we the lot of on a maintained service. Specifically that

the wheel. over rubber us Just taking

announcement. it appetite large to to showing pushing have great an at as on-time are to recent given once didn't mentioned you and a service they're would we have But expand And that obviously reopened hopeful right the impact So very the now. lanes and performance again are like grow.

Brian Ossenbeck

back -- of if the chunk thoughts conversion other you quickly happen? might that on if some then big east, And give do And happened Okay. early the you the you what get that maybe just to think of you you're on converted who think than maybe how targeting expect switchers do drive pace the back How shippers last sustainable? local will year, the in expect the something that's conversion, a little bit and more price? or

Phil Yeager

chase our continuing cycle to not year, truckload bottom Certainly, do of that order We spot being in that in think of over is spot get rates that first to the Yeah, this to tightening. see Phil. the hope is half business want put do we a we time, convert will there market through on back. the a that market. see is And

could and A very from back a business tightening looking that the currently lot RFPs, of that the will converting at half. opening that occur significant in impact our have, the back truck, customers, that seriously likelihood recognizing to intermodal who are are

portion certainly help change to going So to back, spot we supporting create but sure balance. truck we providing. make that good right are also. the that's pricing that We customers are anticipating for again to a once freight want don't the we value to right more And we're that think want coming the that but we we're of us

Dave Yeager

The the thing think that to consistency good. very, is that I rail I'd is only the add of right very now service

us competitive. so it and truck much more truck And like makes

part, those the with with the do again, intermodals' that more have for think will some I and tightens. to -- costs consistent see if environmentally conversions we you as overall So market the have begin we -- just friendly. And service, better truck

Brian Ossenbeck

update quick of All you after last the quarter? us last right. an some give take but for the kind you step last what up buyback One having on it just Terri. parameters seen one a pause this year in Can program, expect maybe for

Terri Pizzuto

Yeah. Sure.

in reinvest in We share acquisitions do and so. expect use at through expenditures every coming capital or there's meeting, We talk to up first. to the one buybacks business board next our cash about the week

And million about you look at talk worth that we did it's execute of this So we said, stock year so routinely. as -- past this it something we'll year then. $XX

Brian Ossenbeck

Thank the time. it. you for Appreciate

Operator

And Seidl from from Company. next & comes question our Cowen Jason

is open. line Your

Unidentified Analyst

for ask, in Hey chain you guys. terms of to just contacts This this in to ask wanted has or whether Jason. you're port impact is all, supply from guys with of supply volumes? slowdown that Adam any potential I chain, had on if the first in now, anything hearing or in from wanted people coronavirus have about China I seen

Phil Yeager

in delayed coronavirus. with Coming out Year, is New Lunar going pickup see of typically, demand. Obviously, the that's you This Sure. Phil. a be to

they delay and believe And magnitude contacts to a customers, we shipments, the once the forecast. exact well, demand, customers We it then close, time. again, drive a shippers sure very the little as We at additional they is are don't there our have information with like. peak but overseas, our be two in We close that ports as look all delays. that do our import forecasts make to need seeing in demand -- know on staying contact mentioned, here this sharing beyond of I we're month do could surge we bit do as those and spring being of a say a so to created anticipate of of prolonged, which will if even actually somewhat weeks of a bottleneck a what we're

would close impact. right now. just that at So again, where we're looking and once to be it at we're very staying that And

Dave Yeager

impacting I a believe, certainly was closed term, a a of see term tailwind just be could supply And surge it of short demand down Hyundai as like it a could obviously, coming it basically So could bit you as as a is chain. there. But result be negatively large their in plants business several longer headwind.

Unidentified Analyst

it. Got to the there. of kind were follow-up, a I we the that having And Appreciate before. conversation as just revisit color PSR wanted

been You far. kind mentioned PSR that implemented you've successfully from thus has what of seen,

in But a mid to an digits, fourth high in down and single with volumes down obviously, seven has happened this environment percent half quarter.

so And that be of kind should And continue successful? the come levels confidence gives volumes implementation wanted and kind PSR will of continue to improved be service I will to ask once back? to you what

Dave Yeager

the about then gone that I that repeatable. Yeah. This this that implementation PSR sustainable have railroads as way and is the the is Dave. also such would say

I their think that they've really networks. studied

They equipment. turns have their intermodal They've taken their overall on the out improved transit costs. and

with could any within increasing? as less the be or it's some given the overall as -- will in hiccups levels. consistency XX% So we don't while long at see any see think the downturn there. volume I that service I time

way operate, the the the think on with just having networks volume issues. can changing without XX%, have again, But really had historically, negative efficiency more lot service I and any a that going impact. rails take they that about I way their they're think some

Unidentified Analyst

it. you. Got Appreciate color there. Thank the

Operator

next [Operator our Majors with instructions] And from Susquehanna. question Bascome comes

Your is open. line

Bascome Majors

Yes.

will this anticipate your intermodal that clarify. you bid Does inflation your to season? more guidance rail Just pricing than raise

Dave Yeager

It's would we'll believe to -- in will digits Obviously, pricing certainly now, we say something the pricing able toward. improve, be right year by do to single but no, going get I half. that throughout the the to low we're in environment the and work that the second environment

answer if is the stays be just would So today, it -- no. but it like

Bascome Majors

So low you half full the explicitly? average mean second in the on digits, or say single when for year you

Terri Pizzuto

half. Second

Bascome Majors

cash cash extra walk building here. your million implications on that in And cash the the is what us give Terri, there of flow assuming at some that you is or And or capex more any your of it? 'XX a $XX look from both, in capex. investment, we budget, can this like flow Thank would Can or through free roughly you. operations look

Terri Pizzuto

this The the it. in building is No, this be of year. fall will completed

So with that. be we should done

that EBITDA for you we can the will from to I $XXX think So year million. $XXX tell that million range

then and we year year, a that last have capex we free going we're million. be could more a flow, have little bit $XXX between Our and little about to taxes. more this had cash cash million million $XX We're $XXX guestimating, higher

best current guess at So time. that's the our

Bascome Majors

of you've And funding with like comment earlier about $XXX hand. capital mix and million, budget your a made got on you now. cash looks cash And debt a excess it $XXX million

just like You year. you're going over to this generate million $XXX

and about that's And implications me. there? the curious all Just decision the financing for

Thanks.

Terri Pizzuto

is in pay paying the the have makes more our then to every you're see we correct. do building what for and it $XXX sense cash the look company. cash Yeah. finance it if just for million do And at And because Well for we'll of it. end best at are or to year, purchase we cash we

Phil Yeager

of acquisitions done offer a to have an those and powder to I utilize more this for robust our is investments dry cash We continued suite is so we for customers acquisitions to well. solutions and is plan and our important diversification adding continuing as strategy. to for continue on hand value, priority continuing us think When think the

Bascome Majors

Thank you.

Operator

And next UBS. from Tom our comes Wadewitz question from

Your open. line is

Mike Triano

for This Mike on Triano Hi. is Tom.

I through XQ, run how for bids could the many of XXXX, in just you are of intermodal XQ? bid in So up terms XQ, timing in just coming mean,

Terri Pizzuto

-- it's In In the first XX%. I'm can. sorry. it's Sure. the second about We quarter, quarter, or about

XX%; In quarter, quarter, quarter, second XX%; third X%; the fourth quarter, first XX%.

Dave Yeager

point. So at we're X% through this

Terri Pizzuto

XX% in Yeah. With progress.

Dave Yeager

Yeah.

Mike Triano

I growth missed Sorry if provide did volume for it. number you And January? Okay. an intermodal

Terri Pizzuto

about not. did We was It down X%.

Mike Triano

But can X%. just... then if we Down

Dave Yeager

vortex take when first that that. out, about week X.X% the on is the have The down X.X%, February, you news for the of polar it that you was good it was so actually X, to account week for although up

in the trend positive. we it still running So running we'll comparables. We're the what are shortly negative certainly be seeing territory, also is across is but we're And positive. across, lower

Mike Triano

in Okay. out, cooperates? want the And two mean, segments be, get I assuming them we out? back just long you that? will think you the are where about discussion. think I macro to mean, to How how should trucking take the it do the to go to margins years year to opportunity margin we one

Dave Yeager

margins are that think any anticipated significant operating we piece drayage at Sure. load we're within somewhere very I'm a on our between that obviously and XXXX, focused cost With very a XX% With is of intermodal, stages. segment. dedicated, early would competitive in I the cost. say, being reducing of so and I XX% structure,

well, And environment margins we have think that that intermodal pricing that improve will as obviously good overall our you, although But given for to I continued a truckload we would tell significantly. operating improve with operating see feel good dedicated we again. as that's the once story well. will expand about say the progress though, more margins XXXX we intermodal, I very And making. and we're would a

Operator

Stephens. Justin question Long from your And next comes from

Your line open. is

Justin Long

follow Thanks up. cadence Wanted the up on for the actually question that season. of follow to about bid taking

in the know be second pricing XX% half not first are your like of really you that lot cadence. impact on like sounds And the to that's should bids of it bids going it but over of better So the to said in half, a based get year, going I sounds repricing? the

whole? for is So just you a XXXX could pricing speak assumption intermodal all-in your as for what to

Terri Pizzuto

our Yeah. assumption is. flat slightly. Overall, it's It's to down what

season. also And peak say so of -- because like pricing is, -- what one happens during element and you

been we've pretty there. realistic And

some similar upside and we And to hope 'XX in have compared our so in pricing to XXXX season assume XXXX we peak guide. we might

Dave Yeager

peak There driver. place. better half obviously are the take would second and that tell larger should you bids in in a be is a big I there XXXX also much that that

of of there pieces an business. So contractual the then some other these we book And break a pretty some if opportunity pricing on see do or is forward was the is, I on terms significant market, there piece would to bids. the just in of pull highlight raise a of a solidifying

discuss is opportunity those we're an we forward, right? that some we're what market -- pull to us. decided having with customers sure where does And on the rates turn, with so the And participating those, of who -- the anticipate in if but those so customers market, making we discussions will happens, market do that to on that we're have telling

Justin Long

And helpful. then couple really maybe That's things. a

Terri. on quickly the Just guidance,

guess, half. the bit about challenging, I to For that talk and first you the Could It's cadence, the year rolling the brokerage on. timing specifically over the logistics you and year little talked trends when cadence flat not quarterly more in quarter. knowing EPS pipeline about model that's with of a in just first

were then share So quarter color to on in the XXXX buybacks any I contemplated also the first ask wanted if and guidance?

Terri Pizzuto

we're successful the to acquisition. cash hold in not great be a guidance buybacks XXXX expecting XXXX going in Yeah. are we're because Share to in and contemplated acquisition, our burn getting

to gross to Maybe your to due percentage in first XX of expect, be expect sales as expect quarter. seasonality. a XX quarter? the for what to the compared do terms basis We first we We points question, of down margin fourth

peak flat will help intermodal compared projected XXXX. realize see initiatives the to believe although improvement did some profit CaseStack, But fourth costs that do year. We we to down headwinds as to and finally, half claims headwinds. quarter, we'll the also are offset our from to have of not the as And savings insurance those increase We'll at some expect a first in cost be and the significant of the pricing XXXX. to we in

XX down it quarter. be fourth So the overall, that why that's could basis we XX to think from points

Operator

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

Dave Yeager

much very you on earnings quarterly call. thank Hub's Again, for participating

for Phil As if questions and additional I always, are up. But Terri, available again, participating. you come thank

Operator

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

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