Hub (HUBG) 2 May 202020 Q1 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
David Ross	Stifel
Todd Fowler	KeyBanc Capital Markets
Bascome Majors	Susquehanna Financial
Tom Wadewitz	UBS
Brandon Oglenski	Barclays

Call transcript

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Operator

Hello and welcome to the Hub Group’s First Quarter 2020 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. 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 inquires 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 such believe, of words these forward-looking use and and as be by expect, identified Statements the are of words. project anticipate variations can review cautionary statements the in Please the release.

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

conference a reminder, being As this is recorded.

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

may You begin.

Dave Yeager

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

and safety providing the we home, business. office that the from pandemic. working reviewing the tirelessly and women like goods. Like all quarter, deliver have customers are team is Hub essential would we to of is job over serving during men I worked that XX% begin Before Today, who customers in to Group suppliers our of ensure our logistics service to acknowledge the first our one businesses,

putting greatly frontlines on compliments thank goods, appreciate And We the are service commitment. are delivering and effort as We the entire extraordinary who have we for day and drivers the team been on forth. your many your clients those from they you. that thank receiving our our level of every for dedication essential the

for as Today as relationships to ensure Terri, was diligently her analysts successful. Hub. and making who while that cover She financial clear who Terri our to like of XXnd earnings Thank building this accurate, you, I years worked contributions reporting has to year. your On of acknowledge is Hub and concise, would also XX shareholders with another the announced has retirement service her and the June CFO, Pizzuto, of CFO. call our front,

margin compression the modal competition Obviously, competitors. both from first over-the-road quarter price the to challenging. due experienced We and was

In of on addition, a as area our our time. near we thereby lack network. focus team key have equipment incurred additional continue result preservation and unbalancing a We for benefits of our during A both that this to is of in costs to long-term. and capital intermodal intend invest business volatile technology imports some

placing additional However, of we have non-essential a measures construction building. taken CapEx as in headquarters to our the reduce such hold

deteriorate, pipeline conditions business believe will all we do have business growth. that across economy part a we return that We to of the and the in Although recover XXXX. that and will are quarter will further increase as latter begin volumes seeing volumes lines wins strong second for long-term believe normal

lines. to Phil call over turn now will review our I the business to

Phil Yeager

all of I Thank team, priority. thank remains of would this team their Terri to during her our for customers families you, also of to like challenging I continued to for support our of thank our our service wanted The safety Dave. drivers, time. their also Hub. vendors top members and dedicated our years and customers

your been have an immense see contributions we have left you company, And sad are while position leave us you Your to the and excellent impactful. know with and we in successors. team

transition home. service environment a to seamless we our to Our from as work resilience customers character with have our this team shown maintained unprecedented has through and excellent

workers by and supporting have protocols, to healthcare safe new healthy remain and the community been we measures also drivers Our banks. food giving extensive back and through and

we our to to in environment, areas and add $XX help and of notably, year. for we continue on improvement Skocir, well able is success the these ensure for significant talent trucking, In Our he schedule and profit improvements will dynamic in cost have focus trucking hired efficiency in make us to ahead order savings, procurement new we President will on our improving this a networks. million during be initiatives continue reducing maintenance, to to drayage serve both are believe delivering economic who operation, technology, Most us our company, dedicated our our sales. across we a Dario proven including and leader. And on

was I shorter X% quarter. and respectively. X%, X% will down was volume haul segment west for performance. declined local declined revenue X% the now east discuss while volume Intermodal our business Transcon and and down volume X

the done team in decreasing are offset of with costs the third-parties. own increased as our sales and year-over-year. We has pricing hope truckload latter utilization well the rail increased as our actions led to of and reopen. drayage demand and and intermodal replenishment this through return capacity cost job with of These as to competition, aggregate down a costs. point challenging insurance driving in demand Our headwinds margin our a of factors from economy These environment efficiency XXX as and a basis gross decline in a network great year to and increasing portion a helping in in begins see percentage to

Our that pipeline levels, a set and during has revenue improve service on XX% have margin which gross growth. we difficult has our focused of excellent well drive sales we we opportunities to growth. improved leveraging and CaseStack this XX that continued service year, basis performed to environment, percentage economic our declined and are of continue for points extremely as year-over-year. Logistics maintained improve over last to the record

has management growth and transportation a has for profitability on-board. Our strong pipeline in improved business

utilize drive to opportunities We are completion technology further efficiency. scale and our nearing transformation many and also the platform of our leverage in logistics the see to

for declined revenue XX% quarter. XX% and the was down volume Brokerage

improved LTL volume portion offset margin decline points spot was of in year-over-year. a driven in a was However, increase truckload XXX the gross as by of an in decrease the by The and which in activity basis contractual latter sales percentage quarter. demand,

growth. for a is opportunities doing our costing team profitable Our identifying of improving tremendous job and

year-over-year, believe this dividends productivity We technology. increasing processes, saw pay and load the XX% organizational reopens economy increase will also increase. driven associates structure, a our as We and of counts improved our in by

growth. our service to wins strong drive we Lastly, are see and to profitable continue new leveraging customer

We are dedicated a quarter points as our still for declined of transformation. margin XXX trucking the year-over-year. XX% early the sales Revenue basis stages percentage and declined of gross in

end quarter, improvement However, the pleased and business. at of to I’m in our there margin the was highest was note dedicated that March

are wins We shed have performing poor on-boarding new profitable and accounts.

is believe customers and for returns want are of We efficiency this our to our focus their there on enhance I continuing dedication. all ongoing support ample to to opportunity operational Once our team improving business. again, in members thank and Hub our still and

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

Terri Pizzuto

hello Phil, you, everyone. and Thank

freight day. and begin I’d drivers as we through to It’s our navigate these quarter, country to I the rally see pandemic comments teamwork, unprecedented and challenges. delivering thank every helping the my dedication, on heroes Before and the tremendous the like who the the inspiring camaraderie together are of employees fight our

points Now quarter. to highlight first like I’d for three the

cash we First, $XXX end available are focused on of at million on and with March. revolver $XXX the the in liquidity, borrowing million of

Second, product performance value CaseStack operating proposition bright due is CaseStack’s businesses. a essential levels spot. Sales delivering to record are to and strong at

track solid from to year improvement Third, cost X% controls. on and down is are initiatives. profit we end we our benefits Headcount of achieve with the other continue

percentage service our X% largest and severance, increases, sales margin customer bonus soft XXX X% decreased was XX% and in partially Gross first XX%. at Rail to and $XX.X by benefits, compared revenue to to revenue declines and headwinds insurance a Logistics a The four demand. year the due decreased last a points gross mostly XXX down at more March was first headcount to to pricing, of $XXX Now million because intermodal was were X.X% decreased of basis offset to principally were the margin at decline lower logistics Operating decreased a XXXX. to in in due as intermodal year, X.X% Headcount revenue improvement last loads. lower in-depth of a let’s profit XX% million all or Intermodal revenue in compared decline. of lines. which Salaries included quarter. decline only and lower XXXX. in million point look to $X.X Group’s due compared take initiatives. in quarter decrease down compared dollar claims performance and margin. of XX.X%, was because of basis Hub cost

by earnings competition, and initiative. donations was consulting, partially to Group’s $X.XX. share to Hub Hub per of was the offset soft a and per profit intermodal earnings cost of share, decrease This to in of from our share COVID-XX truck by COVID-XX severance, impact diluted related $X.XX including relief driven diluted and the freight market, record of support savings per the includes is improvement equipment XXXX. $X.XX compared $X.XX in The high This earnings efforts.

and flow million. activities cash before totaled flow, million. was amortization, Earnings from $XX taxes, cash interest, at Looking the quarter our depreciation for $XX operating

the our continue balance generate cash. On front, liquidity to we is and sheet strong

Our to inflows limits, management review terms, monitor from and and credit cash outflows. team payment daily discuss any meets customers customer closely deviating

key last this Before thank leadership. that the working Phil and I chapter rewarding. best I Hub’s of years They so in to a world, you guidance especially years you and make the friends Dave, And the together. your part you to Congratulations my and miss for for I growth we’ve up, relationships Hub wrap XX and but It’s of at each remarks. special Kevin. making investment my thank Geoff my for making Dave journey for will the the be all, of and and I will to career developed colleagues success. treasure and and over along closing life

Dave Yeager

Great. Terri. Thank you,

challenging Group start a strong any to will a downturn and a customer the disruption, excellent relationships. The extremely but to sheet, With endure well we positioned economic that, the virus first year, to open the in questions. line Hub the activity. a was workforce, up permanent talented quarter balance not with reduction technology, is solid is

Operator

Scott question Wolfe Research. first Our instruction] [Operator comes Group from from

Your now open. is line

Scott Group

luck, and Alright, retirement. best thanks. everyone Terri in of Afternoon

Terri Pizzuto

Thanks. Thank you.

Scott Group

just or on hoping go revenue trends and was maybe can we business sort update volume in down an of us I lines give April? start each of you can the

Phil Yeager

Yes, sure. Yes, Scott, Phil. thanks. This is

to XX% are total seeing the a about month our of and organization surges us is up really on-boardings some Brokerage tender and outsource most be LTL as more decline transportation challenges the are the best, management we in non-essential and For truckload of surge intermodal CaseStack fuel spot of lower retail the demand the on holding accept offsetting bringing whole. customers. a the to with is activity as with retail revenue prices. logistics in home new import April, levels is in a in the see clients as impacted retail is and lower some marketplace. high with general particular, just for that XX% dissipating going with once demand the improvement significantly are continuing And then some of that’s loose as the our to with and well automotive. Dedicated Logistics seeing again with again challenges environment challenges some non-essential truckload anticipating once offsetting

So, better. and logistics of that that with of the intermodal impact then highest and all dedicated seeing brokerage kind XX% to together XX% comes and level faring

Scott Group

That the helps. can Do you down? think what are volumes intermodal you share

Terri Pizzuto

down about are XX%. They

Scott Group

Okay.

And costs and rail culprits on heard gross margins so sounds of the are it big like insurance right. the if sort I intermodal in

those impacts, impacts. regardless to feel least compounding we you now at like quarter, environment? gross in the quarter, are about lines, are then with of is to that margin sort year those going on business So necessarily that? we volume along And in worse that intermodal thinking with don’t the the decline I So, feel do all need any volume just Am second the those thoughts COVID just think in of these are that if second all deal headwinds like right? just

Dave Yeager

that balance due second else Scott, be if of as better a back, It costs. That the open think our up imports. our suggest better where the to just to will coming comes in products lack think to this the begins quarter volumes is will will we I Dave. would flowing. be will that will networks. of reduce the non-essential and country demand a lot be we you And see quarter we down do nothing will

rail is the So, not it increases.

still We competitors. of have which This well is in, as visibility with very – that both remains very traditional are aggressive a it’s competitive our really clear competitors them. environment as a motor over-the-road we dealing

are do we it’s and An point clients, also that that’s is related XX% our this versus top which currently in time. revenue our believe so our statistic And XX% of XX% interesting XXX, open, at volume are closed. just again, that of

but that March. that are up it forecasting believe well as exist second open for just back again. and not So, revenue for the does did exist quarter, most to not will And we of begin

Scott Group

is and quantify Okay. impact that way any we piece, to about all continuing think that And what about if year? should then insurance there the

Terri Pizzuto

Yes, I get in costs. our will probably year that that as Group might continue of year will as last we the that some well drayage are say overall costs, second trucking for drayage the half half Hub lower back. But our third-party than

So margin we little had the I that. that that as thing business pricing And planned was helps more planned well. and to of mean, impactful unfavorable the our was of challenging the other we offset mix. environment we be than would on because a pricing lower than mix

Scott Group

comfortable you the just sharing, then are you And quarterly guidance lastly, I guidance, is us or anything? margins, any it if to either not OpEx gross Okay. earnings feel but whatever on pieces take giving there you want give

Terri Pizzuto

done surrounding the have flatten. quite the economic indicators in we when about with uncertainty – is COVID freefall to pandemic the pandemic curve mean, we of Yes. the there a and see will uncertainty start bit the I

is giving guidance So difficult.

recession various do generate we we We footing every available. case once of come to believe modeled cash scenarios flow liquidity. flourish on we the the will of out and we modeled that substantial from in have pulling free are dire scenarios be believe we and downside And have solid we lever all to and base

very with service get where again, are out our time will ready customer once accordingly, as has businesses during been opening because comfortable very Dave and start this and this we to excellent. pandemic feel mentioned we we at. of react So, also And we previously, strong be

Scott Group

you. I somebody else. thank on Okay, pass will

Operator

you. Thank

comes question next Long Stephens. from Justin from Our

now Your line open. is

Justin Long

and Terri, career. Good afternoon great Thanks. congrats a on

will You definitely missed. be

Terri Pizzuto

you. thank Well,

Justin Long

helpful, on just wondering business if basis, well line April a if get the up bit it gross pronounced how is how be So pressure for would in that any well. think And to quite know wanted the that I top mentioned consolidated maybe given really volumes, was March. give commentary, following on it’s could was to us to there pressure? I as quarter color as the then you Phil. I April that margins was. first that flexing a on volumes on see monthly helpful you intermodal Dave, was of just even the in

Terri Pizzuto

in Sure, XX%, the last of were March. so February, started the I looked volumes We were down X% monthly X% in for down can we impact and if give you And feeling we down weeks intermodal. March, January, X%, you really at of in X% March. down couple the COVID in

Phil Yeager

this And is Phil. Sure.

where up. middle. brokerage On to margin, tell exactly gross to dedicated I what gross logistics going the yes, in is being highest difficult the lowest, been and business, our wind margin But give the with has it’s could it’s you intermodal

impact, that the as but mix really we So significant see is happens, mix that don’t direction. change a

So continue we that will rather be if would anticipate it similar, sense. to makes

Justin Long

and was give wondering an update at with for roughly up on I your season, so secondly an priced was maybe That that how bid much come does. And business where up for you coming kind the update that That��s maybe has if bid, what the getting I business that’s bid on just then of actually changes. is front, on mix primarily could far.

Phil Yeager

Sure.

are we digits down year. anticipating pricing So low be to for single the

bid business XX% We’re about way with intermodal full is active. through season our XX% the and point of at awards, of this

on. good seeing are wins come we So

the their about capital to the side capacity. capacity long-term seeing think more trying limited customers in seeing expenditures truckload We’re availability they’re now intermodal on given lock and of

feeling are bid season. about good we So

certainly excited to wins economy start once come those clients. continuing on come get from the to our feedback back to really And reopens. We’re good we’re see and

Justin Long

million what much Can that mentioned. scenarios those that’s of could and that you’re to that that the the maybe comfort And maybe And that, various lastly will recognized plan, in in you ahead go Terri feel was million incremental guidance. improvement be this something about as achievable all on how through forward? Okay, in like going scenarios? talk schedule profit you in share is you quarter $XX the guidance this of Do on front. like you your It sounds you great. stuck $XX first of

Phil Yeager

yes. Sure,

As you in that of recognized schedule. ahead are mentioned, quarter amount A small we the fourth really of million. was $XX

making headway really more schedule do the first with there. improvement being have initiative, though. would ahead significant making to the key ways technology. on say, we’re progress been efficiency, is headcount a profit and categories There We few find are continuing utilizing of most less and really I That, to of the

some we earlier in where Terri a as in the the in The strides and strategy costs load making have, operations are transformation also down excellent significant procurement our of focus. our we network. as cost trucking are doing is in in have still areas our We’re core our opportunity really job driving business per drayage trucking mentioned, stages reduced an and where

very drivers. maintenance program and that improving the our going of We’re retention early our also the But we’re we’re there. through evolution stages in

So still that full those going amount scenarios. feel to I the in achieve we’re confident

focus adding to Dario, and on as on think going we’re like to help continue we deliver well delivering on who really can organization us that, that. to why We’re that’s the talent

Justin Long

Okay, that. time. it Thanks great. for will I leave the at

Operator

Thank you.

from Our comes next Hartford Baird. question from Ben

is line open. Your now

Ben Hartford

that the Phil, through project amid projects have here? IT a been the how the through able of changes about the the for etcetera, do and you talk on changes from whether tech the that COVID, changes, and just thanks the we work bit bit perspective the so organization you’ve Maybe a Hi, given responded home, little could underway? accelerate to the some little timeline get on of much time.

Phil Yeager

of is as I’m team we really how to with Yes. in how that put we’re of clients come place our has how and with our to with that supporting extremely it to it handled impressed pleased team training them our it, ensure transition through there. logistics we’ve and the kind the in our we’ve I’ve effective. conclusion particular been OTM handled that

very that to We to in focused continue opportunity available and to dedicated markets plan planning we’ve continue teams. throughout year. forth. on the We there really there think are push tools we’re the improving that good that significant are seeing that the roll we also where put results and is intermodal forward, our And to to out

on very information I what early continuing say piece positive. getting and opportunity, the continues experience, on we’re there them that would doing last focused feedback our we’re on better The would other And say is automation. is we’re of The piece customer be more to quickly. very this, stages customer I to drive somewhat

We lot as we’ve of succeeded fully continue a even we we have platform, already to think an But that and into which is get opportunity we areas past out find more opportunities, in. this year. I exciting the look very integrated as

Dave Yeager

productive frequently. Chicago, this downtown hours, But very Yes on just in to surprising. and And considering elaborate that And guess that our I that’s Dave. to and The maybe work been three not people home, we’ve that I been receiving amount reverse have surprised. productivity two surprised a candor in a is been little live have commute all just bit fair I’ve a our quite from of are. the compliments people it’s how was from levels from anywhere the clients

this of that the we our So pandemic, work. I we change and work ultimately conduct do how way learn things we’ll think it is may one the that

Ben Hartford

given year, weeks I to of variety million side, that those the can the $XX this as come and had previously way the six but to steps cost cost had obviously the undergone there cost scenarios savings what end of XQ? outcomes have above you targets declines the number, a relates of year, and Terri taken beyond over $XX past action it are that you we’ve at under identified the what the we stated, have million know million opportunities see, and anticipation previous and here you through this above beyond further during On said and $XX here

Phil Yeager

is Sure. Phil. This Yes.

find to those. opportunities continue executing We we are additional on and

on can. not say it’s everybody’s that but just because as would the work directly I put of efficient COVID, in as us possibly hard being we because of So

be. continue we of all and what going those opportunities is to find continue we we to on your So environment to execute to point, really independent of the plan economic

Ben Hartford

you on in priorities free Terri, about reengaging year, I and cash benchmarks baton returning Terri, to half to you back of of the of the of the things will growth the get mentality type congratulations headquarters beyond pass to redeploy perhaps there think then or as as in flow obviously Okay. repurchases kind the of here retirement, to that’s about focus, kind and the you you As are normalizing guess or begin cash back when of your in and at be that expansion the think acquisitions? the Geoff, capital or or criteria quarters to the weeks some share what forms here from for and deploying capital now? pulled in the you looking bunker moment, some we of are been on down months even coming volumes

Terri Pizzuto

be have environment and continue we to us Yes, liquidity, causes of in thoughtful the for active And to financing. valuation, Ben. an the pipeline M&A, terms current

we’ve about got able so we board that do repurchases like talk acquisitions. free use adequate potential when good on to every due we’re share at of Also opportunities to cash those some some diligence And meeting. our we’d for flow there

coming May, through have in once well. as up get on we’ll board this now pandemic, through But and because right sure meeting this. so making We that’s we liquidity we’re about we focused a talk get that that

having of up help will we’re back to give as it that work reduced we to efficiencies month to only have that of $XX that on investments our cash start ranges million or can the $XX of IT there’s and back going well, – that will going start $XX the building, as million. is liquidity want. million building lot a And for so on. a for as that We stopped until we we’re adequate and have have then on stop can CapEx, see of we’re $XX million, And the to anytime we actually discretionary based And the but next our is year are that confident you home million, the in And And you take, very that that. to more from rest we flow. CapEx mentioned, able rest from that we’ve And we result free the we make that $XX for growth. to building. got

So that’s cash. of the other use our

Ben Hartford

Okay, that’s helpful. Thank you.

Operator

Our from next question Stifel. from David comes Ross

now Your open. line is

David Ross

Good afternoon. Terri, to miss going you.

Terri Pizzuto

miss you I’ll too. Thanks.

David Ross

the this Dario, truckload hire, On background? guy, what’s new his in, coming

Phil Yeager

Dario about and This ran work Phil. his Sure. a great years obviously is focus really for XX to UPS for Yes, he help think network, really an technology for extremely fleet transportation discipline and large then going which to us and operational most Foods, on us is I improve all warehouse recently significantly. background U.S. is where private

we’re have on-board. him excited And to really so

David Ross

going he well? or is Is he side, with more dedicated time get spend involved to going the to on drayage as

Phil Yeager

significant That’s primarily more drayage, It we focus are then to continue And we but will will the obviously, be opportunities we’re dedicated. still making network, we on that have the on think a start. be have will priority in be progress drayage our there, dedicated initially, making both. But progress his opportunity. where so to given we

David Ross

have that translates expected intermodal in a the to reduction think service, And better side, single do so you have you down Maybe shouldn’t pricing? when to seems year. you of the be Service low pricing have you to digits could argue rates? into better because said improved, that on for

Dave Yeager

is good Yes, there question as we’ve now right seen exceptional. Yes, this it. as the no service is is It’s Dave.

the And competitive to of the demand structure that is will. now. are carriers running result, you issue cheap. of for extraordinarily the if fuel a just over just Obviously, I as a motor lot rate think kind basically right road is the truckload survive, Obviously, not the capacity there. is

have do in up. be we’ll normal pick point So I we’ll think to see time, back demand that at And economy a good that fact in able as to I pricing. that come opportunity increase does the to think

David Ross

West? East at seeing point the between the And are differential service you this any and

Dave Yeager

Southern. very honestly. constant our very, well are both They And from the we and as Union both see good, carriers, improvement Norfolk Pacific the of

So ago it of substantially great and, years they’re as no, consistency than said, doing job and better improve. I been a the is to service continues several both had

David Ross

you. Thank Excellent.

Operator

Thank you.

Our from Markets. next from Capital Fowler KeyBanc comes question Todd

line Your now is open.

Todd Fowler

evening just good margin and I wanted revenue follow-up the and again. congratulations conversation. to thanks net Great, Terri on

margins a that the quarter XX.X% XX%, kind of that has do So just of and think revenue pressure pricing right to is compress you’re it sequentially that range the year of the to then half the going of given see more seeing? we the the volumes in And of to are second kind back that some normalized if revenue net into into had, rebound to with margin previously back expectation more environment, changed back we can the get costs, or the you almost get the of environment intermediately? some net and

Terri Pizzuto

of recover what And by We’ve April hope will peak on as as well. now, for say. goes. we it but take but things it happens half. a And We second to think hard the half depend second kind it got we’ll sure. will, not really it’s Todd, visibility the Yes, in for it certainly

impact significantly if it a impact have could – peak, strong for example. our that So margins we will

take as So quarter. more second you we’ll comes it color it I give just think and

Phil Yeager

advantage then really we we see demand our And And of help if going take come our well. our structure do miles. cost to able to and improved that’s are loaded as going back to be asset with utilization

now. strong going would a certainly right ton of like that’s what have be to the back don’t look our So half, to visibility we hope but in

Todd Fowler

you environment volume realistic? get got than at the year. And be back where what normalized has trying that the expectations of to that and and of situation, volume were understand prior the Yes, we piece some does those is, to was changed, feel pricing kind beginning and I we dramatically but with Really has still revenue commentary changed helps. different at of of the that more if the would a that costs,

Terri Pizzuto

if and Yes, helps the truck tightens, too. that market

on another fire Phil businesses. for businesses, And us. earlier, be job a continue do Their where our a serving XX% said of course, and XX% CaseStack’s this great been currently that’s other lot essential would a seeing that it’s than to they fantastic been So factor like right they’re business plus higher well. normal. peak quarter, now, and normal sometimes past about up service have of and during demand than has done higher

warehouses And with as to is worked compared e-commerce prioritize up prioritize demand. QX. CaseStack supply QX It’s to well. and XXX% they’ve up retailers to and So with in customers

So we’ve well as great CaseStack, pipeline logistics. a in as got there legacy

not but strength in intermodal the have And very we’re a our foundation second other of for and well so good lines. – half only business year lot the in a of

Todd Fowler

helps. Okay, volume And kind in if you through XQ. you the then that seasonal moved quarter just the last year, the XX% as down do intermodal that didn’t of second on remember I of build April, commentary,

is months remind going is us, that May And the the the limited, could did kind of couple – indications what hearing point what June? you in from forward, get and quarter? of last but for I comparisons of or the the you’re visibility the of know see is and this kind down customers, comparisons can So easier XX% stable a we level from kind do impact of

Terri Pizzuto

the wasn’t were the off what was of We by QX remember year peak of right. I top month, in I it volume – see the think, intermodal last either. down don’t Our you’re but didn’t X.X%. my volumes head last year seasonal

Phil Yeager

from really just saw deteriorate. be those year we last this now, would those RFPs. and I in and disciplined comps are very really a year get is will as right that, intermodal so the during Obviously, stayed progresses, the we’ll easier. time and pricing renewal so we of truckload up for and And Yes, the competitors where lot highlight participating that

Terri Pizzuto

do in give QX. comps get easier Yes. you Phil as our And numbers, mentioned, just to those

Our volume it X% was down was down XX%. before

Todd Fowler

and you month every us Terri, you XX memorized could that. thought all give I that quarters you had like

Terri Pizzuto

I do not. going. My memory is

Todd Fowler

expenses? with operating can last quarter was first operating a or just we bit can on happening, around us earlier to Hey, the if expect and There quarterly a some one, there the could. the it. and I of commentary directional should kind trend $XX little in of severance, Thanks. you of directionally takeout of cost But a with that’s the you that about question there is any quarterly here million give color expenses, sort – was down

Terri Pizzuto

little Yes, as you different food read and I with we that equipment press worth as you see connection give hospitals can will sure on QX. donated in release organizations, COVID. $X of Sure. a am about we well you to the bit million

in out. Much comes did first the raises quarter, some only So reduce because but part see year’s that the as from so mid obviously And came at in that also Severance item nonrecurring headcount see about – you’ll quarter. X%. the a headcount of the you’ll end the reductions don’t effect It’s raises of had then, until our of of February. year-end those quarter into we very we in second go our quarter. of the sequentially And then second terms in non-cash.

like but they maybe we say net-net, if it’s things better not don’t the bonus have assuming – get get stay we we And quarter. recorded. things to recorded So things bonus similar first same. are, any have some, hope in record any We would the do and

Todd Fowler

Okay, the Thanks time. again got it. for

Operator

you. Thank

Our Ossenbeck next Chase comes Company. question JPMorgan from Brian & from

open. is Your line now

Brian Ossenbeck

Geoff, the Terri, for much what’s role you very taking and Kevin, congratulations on new and questions your and Thank next.

on So something on up volumes can structural expects to service put go follow kind a the just degree? to second think lot the the much count when that much can everybody question do of right to in back of rail as having on you the now? some you is half really improvement just return maybe if do structural versus to how that, less we network that you think is of How really from volume

Dave Yeager

a operational and is of lot it think structural. I Honestly,

of, think PSR, skeptical which working. little I is always I bit was that a

but is efficient. it’s all issue, that taking not same more the making addressing of only we’ve railroads done, at They’re And taking the key that transit out point they’re costs making out, think our and always concern consistent. surveys them they’re the customer time with more clients have. our I so service really the in it’s consistency

and process it that over sustainable see to improve term. near very a we’ll the continue least at it’s think I So

Phil Yeager

that can on Yes. going where partners that when and the us prove just surge, return our do maintained, to growth And bring rail we add a I help to and this is volumes in Phil. more that opportunity and think be service going constant can trust and and do that that clients to would is see task is intermodal really there. that with more they reignite story our rely of going it of consistency that we from be kind

Brian Ossenbeck

it. got Okay,

fire there then topic I’m they of does the XX% types so your happens things on think On does assuming stranded. stuff have that there’ll think of but is to that or looks reposition that or to this back-to-school peaks, the they seem what time front? that, customers is down. when stranded seen you stuff to your curious plays the all you you one are whatever there’s past, back-to-school, backup, be It in not actually year have maybe last going out. do I’m that mentioned that happen assuming do shut do like open how same activity Do some it, sale work – with hear happen. and stuff like? didn’t really with on And thoughts the we’ve so how What

Phil Yeager

Yes, is Phil. Sure. this

do think demand advantage to be when we position to we’re reopens that that. a of take So import going really good that in

certainly, take our confident does if to hope. a our feel see that We of service good out at in to very But some that hopefully during to it that position and come that. time in There’s clients. period. And around good we year holidays our jump in certainty feel have comfortable the advantage get get really and people around. equipment end to back Obviously we’re think do of no occur, we more ready ability provide the the that’s service money, and as spending will

Brian Ossenbeck

sounds CaseStack, the intensity bigger still like acquired major on environment. outperform, by And that footprint context the just other one the bit the low and way of last level that a you it’s now it? especially has industry? players more it you the a been the and move acquired like continuing Can a at grown Can what’s to expand provide with you’ve in on of current competition look one if capital in since a broker big it’s

Terri Pizzuto

Yes.

We business. revenue basis how as very to there allowing strong can’t first And the with exactly that, of a pipeline prioritizing get was that to percentage Phil grew. customers and a but up will about tell grew full, retailer Margin During talk have terms let just sales much, you XX%. the a time, the quarter, they of product the points CaseStack margin about supplier. also gross for product logistics great and XX the I in continue on the value should the proposition be in for to about

Phil Yeager

Sure. in sizable Yes. scale And CaseStack, what is we with I is fantastic, would business. this which the highlight have do most

sales service building great what with the to would see in starting is this At our in we brought wins is clients have And together. We some pipeline have and have groups than amount actually we’re point, well. significant as customers. our a and we our larger past, that up to solutions

some product their this we to customer volume while SKUs we some can introduce to money. that, clients of larger to think is be lower of them save continue going PPG that, some to So of the of product CaseStack core small help legacy a and midsize a on consumer our

with retail to customers continuing item a So to do And an they utilize this up effectively, going our for is their consolidation programs. opportunity. how is additional setting about as we’re be headway more them, critical think space, make which also continue to

the of going we’re very continue grow doing, to pipeline, excited other we’re what excited headwinds. about regardless to business think about the we’re So significantly and

Brian Ossenbeck

something is light can footprint much the in the still pretty fashion? you expand asset And

Phil Yeager

Right.

Brian Ossenbeck

that will require more get when Or capital you there?

Phil Yeager

grow And that this plan geographies be a at already we set as continuing same a of No, in, which partners us footprint it geographic point. current really great operate grow I we great the we thing in for a to format. to is continue warehouse and have to in we have well. great think Yes. the We’ll

Brian Ossenbeck

Okay, thank Congrats you. again, Terri.

Terri Pizzuto

you. Thank Thanks.

Operator

Thank you.

from Cowen Company. Our & question comes next Jason Seidl from

now line Your open. is

Unidentified Analyst

guys. Hey, Jason. is This Adam on for

significantly Just seen drop providers, competition any of intermodal, with soft pricing a with ask makes it pricing about freight is little obviously to still rational? competition kind sense guess quickly fuel, intermodal in between but kind of what’s going the you competitors, the on other kind get other aggressive I competition providers, market, between bit wanted space? or intermodal the Have in more of truck,

Dave Yeager

supply, been seen so is a and And been time I down. I’ve environment last we’ve demand It’s pricing year the lack aggressive of as because extraordinarily any think it’s a as aggressive, of prices there basically this since seen. has just and come lot

Unidentified Analyst

tried the of were are brokerage, the seeing they to aggressive are they kind on in share to a the question with competitive brokers, and maybe market mentioned or bit maybe more brokerage? or environment as margin trying have year of share. year little And in recently a Got of earlier in it. gain similar of of more a larger be kind bit of app-based guys more maybe of more? kind also time one focused were last then you as this them little gain kind And in specifically brokers you that some seeing electronic terms What this aggressive they

Phil Yeager

market a other companies competitive. to extremely And we to demand be truckload still oversupply customers and of service that brokerage a certainly market. this in there less competitive that We’ve it’s seen effective gains, now still a top us cross-sell believe going like highly to is capacity Obviously opportunity XXX. of around Yes. is great an go where share provide but to level that a for is cost a platform and foundation at more built for there a to go can our we’ve our an high

long to even this at not penetrated a near go. so point, is or have that there fully runway that We still

market, lanes can we brokers. we buy with have wins we have better our other seeing for than are the call pricing our we on and since we customers what customers, as power what than honed where strategy We those especially better focus asked

that So run variety of in we think now. the in are It’s are kind more Who market. Fortune a customers who of and to referring nature. it XXXX wins. we our players seeing legacy into Fortune XXX, are are you competitive obviously more I players There’s highly

Unidentified Analyst

time. helpful. you That really the Got was got for Thank all it, it.

Operator

you. Thank

Bascome from Majors Susquehanna comes question next Financial. from Our

Your is line open. now

Bascome Majors

well. us from congratulations Terri, as

Terri Pizzuto

you. Thank

Bascome Majors

of wringer testing I about that framework remarks. in declines business or don’t ran you could kind used models talked through? or shed the declines of maybe your you volume you kind the your think revenue know was can of little you on that light stress that hoping that’s else a the that I you if anything in prepared

Terri Pizzuto

The about only The dire is significant. pretty fixed our of was It lot are is a very case margin which cost $XX really And quarter. purchased and depreciation, within costs significant variable. revenue transportation transportation our declines. this was million

so there. And we the have flexibility

and kind that down then profit that quarter that we or went we’re today modeled at improvement of case. we the what – initiatives And but where we business thinking tough the well, second last recovery. and then months substantially. okay, some the for if couple modeled said, more took dire have, also maybe of our that And after took be will that, we was the base we see case, We pretty

benchmarks we did. that two So those the were

Bascome Majors

second-quarter an based to work. the Thank you. own basis, in remains those think the the sensitivity your except dire scenarios, among on maybe EPS And do I’m on you just trying think about that case? breakeven

Terri Pizzuto

Yes, we do.

Bascome Majors

Thank you.

Operator

Thank you.

UBS. from Wadewitz Tom from comes question next Our

now Your open. is line

Tom Wadewitz

we and you talk. for over I your the best. in fun retirement, the lot I I tend good afternoon a wish when to patience and have me years. thanks questions Terri, you with hope Yes, of have

different recovers, on how anyways, happened one. then, you for of thinking framework be think framework and the be volumes different recover, about what you Obviously going what place good relative or had is pricing it’ll timeframe. and that’s that in how terms would might current call. – lot just So very obviously were see. in a think market you the a from than XXXX? but think be of questions about whether I the to a let’s you Hub just in back good have to Dave, XXXX how I whether

Dave Yeager

in if should in supply it a and I pent-up economy crisis large least lack really a financial it’s if U-shape, up, the a it was is time – issue. that course, of really of is a money to open V-shape people a social It’s fact Well a back This that, there think demand. Sure. the issue. extent not be There it do we within a was ‘XX/’XX, at economy. recovery.

a everybody’s home. little hanging at think of out I sick

opened this think domestic everything’s as will I for I we open depending think that up in for production. do see stressful that and how up upon it’s well how they more And imports, environment. very as quickly demand

people to XX% One quickly meals don’t that’s that New of the how I statistic all begin questions do is if big were go eaten in But of in – out York heard one restaurants. factual. I people again know back is with the and it. So full do will and I a here that do we the bit achieving expendable thereby so think had near employment administration funds? have pro-business before I it’ll think that be be proactive more quicker.

the And strength will And the that think demand so in some see can year, but it near term. definitely I’m the back hopeful. certainly be by we It’s not of head normal in I direction. to end going in to

Tom Wadewitz

would, bounce weigh or if a intermodal kind Would potentially the pricing optimistic is opportunity? that on that XXXX, thinking lot pricing of stays fuel back I’m down, you be

Dave Yeager

aren’t think just significant. there going a difficult though, The a carriers it. going demand, to to fuel some motor be that able It’s if impact is see is to pickup we do I are cut in very environment.

You gas for for can long. only so run money

year. environment, XXXX, seriously see be but like pricing fondest So I should doubt improved do think an that I XXXX it will that my

Tom Wadewitz

time. the for you Thank great. okay Yes,

Dave Yeager

Thanks Tom.

Operator

Brandon Oglenski [Operator instructions] from Our Barclays. next question comes from

Your line open. is now

Unidentified Analyst

taking This Thanks on is David for for my Brandon. question. [indiscernible]

in look holding in dedicated scenarios question will the prioritize a scenario? guess you the of carriers kind of adverse feel space maybe the dedicated how did up fleets? dedicated just Do about ran, view I you to an you still space, some the So

Phil Yeager

is, retail home-improvement to home delivery. our retail, very again, distribution I well, Sure. to position mostly in particular customer general dedicated handling, and base in very which a essential This think, This center our is our business, we’re center really sets heavy great retailers, heavy the customer sectors. with base, up very us Phil. Yes, or for where distribution with once we’re with store

that So up. will we good feel hold revenues

year. of portfolio we that last are wins We’re year earlier that more on bringing new also late profitable this shed than and the some

on those back reducing to So as there. costs our start and trucks anticipate utility full we getting really up, from

profit organization. mentioned improvement as heavily in initiatives anticipating tied there, improvement costs our And to efficiency space. our I we trucking are As improve also to before, the and dedicated continue take profit out are we

Unidentified Analyst

as is Great. or of respect the talked in it And rate is shaping XQ already second to then run the April specifically just how how to deterioration relative about stats you follow-up, was? quick when to kind a up, that mentioned the you was with quarter,

Terri Pizzuto

to the relative the Yes, and run April volume declining and with rate we’re where it’s at really revenue.

Unidentified Analyst

congratulations the and Terri, retirement. Thanks, on Alright.

Terri Pizzuto

Thank you.

Operator

you. Thank

Scott We Group follow up a Wolfe have Research. from from question

now line Your open. is

Scott Group

things. guys. thanks of just Hey, quick couple I had a just

on on PT, there volume So was the OpEx but side, OpEx as to OpEx. no understand about I I just fall? variability is we wondering the have that volumes

Terri Pizzuto

volume Oh, is variability. there

Our biggest gross we’re below the margin to line cost pull pull. all the going and levers to salaries, need is we

customers. a our our of March, invest is the plan, mentioned we of and it year. that, most saves And I the automation, a we and also in the earlier, As and to year, so so mentioned efficiently second out be do able force well we’ll that in should, ramp end providing the the we and while quarter us earlier, with bonus technology earnings. second did half to I rest in more see effectively as it always varied, like and those up service And to then which continue little for the bit have as as do little with do that is great less, assuming resources come a reduction Phil of people the at mentioned,

And we’ve carefully that’s and so G&A costs. entertainment go so certainly other we’ll on cut invest we’re out, at you flexible. we that’s can’t can’t some and And some Travel one cut wanting at where necessary, areas looked you of back costs. But we’ve watching our is and that it’s those kind to as not well We’ve not continue any if also right because – costs. look now contractors spend easy. money, are to is

Scott Group

PT. gross revenue comment? revenue be or was about biggest I truck that the And Okay. comment seeing relief thought net would’ve seeing headwinds, some on a Phil, brokerage then a would that earlier brokerage your

Phil Yeager

perspective. Yes. top actually. Yes, still line it’s a a very revenue just gross Yes, margins net comment, from revenue are holding It’s strong.

Terri Pizzuto

sales up year Yes. prepared over brokerage remarks, Phil of basis a gross margin mentioned his think, percent I that XXX was in points truck year. as

the So had in changes made, with we we we’ve our that technology result continue the purchasing we changing have benefits to made, deal a of from changes how see the the as carriers. and we’ve leadership changes

Scott Group

plans just for maybe then the And canceling last Okay. for headquarters? it’s mentioned about Do new remotely thing a about Dave, you you few times working permanently and working. think the

Dave Yeager

That’s really Scott. interesting don’t And know. I question, a

have that how we’re relook at working to feel about think it is our us people working, home. at I how from going

albeit that, I’m the separation of aspects people I think in that are between – there you’ve cubes, feet are there just building, relatively they’re I to work it’s you to but more There been which not And that now, take is they dense consideration. productive they’re social sure is need the if six more many think think is I called Plus not to dog cubes. now. bones. but into not

space. And going I to how be there’s on if don’t governmental know much regulations so

so because have may the we the density. just And can’t we require space

certainly very it is for think we’re have you I answer a to at that I good So but something going look now. closely, don’t

much – I’ll we not reengage has when probably still It speak far a the build to now. that direction until as are basically quarter idea the for as better six and next think we a another come we’re what But is. down we the I months have with building decision. before second shutting going to

Scott Group

you Okay, guys. thank

Operator

further this Dave I back At We will in questions closing for call comments. have turn to no Yeager queue. the time,

Dave Yeager

Well of working team, the management the conference thank us been great you call. pleasure Terri, a work. your last XX for all everyone again, joining And for with it’s on plus you years. on behalf thank for you the And

Terri Pizzuto

you. Yes. And thank

Dave Yeager

We well in you do retirement. your wish

thank you So again.

you. always, Thank questions, feel if any As do free call. please there to

Operator

Thank gentlemen Thank participation. today’s you that your you. for conference. and concludes Ladies

now may You disconnect.

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