Hub (HUBG) 31 Oct 202020 Q3 Earnings call transcript

Company Profile

Participants

David Yeager	Chairman & CEO
Phillip Yeager	President & COO
Geoffrey DeMartino	EVP, CFO & Treasurer
Justin Long	Stephens Inc.
Scott Group	Wolfe Research
David Ross	Stifel, Nicolaus & Company
Todd Fowler	KeyBanc
Bascome Majors	Susquehanna Financial Group
Brian Ossenbeck	JPMorgan Chase & Co.
Tom Wadewitz	UBS
Jason Seidl	Cowen and Company
Jonathan Chappell	Evercore ISI

Call transcript

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Operator

Hello and welcome to the Hub Group Third Quarter 2020 Earnings Conference Call. Dave Yeager, Hub's CEO; Phil Yeager, Hub's President and Chief Operating Officer; and Geofff DeMartino, Hub's CFO, are joining me on the call. [Operator Instructions]. A brief question-and-answer session will follow the formal presentation. In order for everyone to have an opportunity to participate, please limit your inquiries to one primary and one followup question. happen during release of good represents 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 the such and of variations forward the and words. these expect, words can identified as be Statements by are use of anticipate believe, project looking Please review the cautionary release. statements in the

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

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

You may begin.

David Yeager

participating and would like Good Chief Hub's Phil men third Hub I Yeager, Group's call. Geoff Financial of and Officer. by today begin afternoon and you Group. quarter Operating Chief DeMartino, women by and Hub President for Hub's Officer; in the acknowledging I thank to earnings am joined

significantly During while great this to families. announced pandemic, capacity they quarter our that of grew our QX. their volume Today, and levels. protecting highly reduced valued surplus, their in which market we third We've provide that pricing pricing was a and gone resulted that versus market with spot premium at to extraordinarily service earnings elevated health a and have continued constrained truck to clients a from at

any increases to in Norfolk But quickly the or volume, extremely customer impact being have very in have our and managed volume been significant resilient thereby intermodal mitigate partners Pacific service issues, the partners, rail network sequential Anytime have Union rail Our arise. avoiding to massive responded you significant and well. do our our issues levels. increases Southern, have the

continue remains Our to truckload intermodal the and constrained, capacity for strong. be clients' while demand levels inventory

I With trough strong the of rise capacity review result business to tight. demand forces, has to over will is as market turn pricing and and it continue will prices a Phil reached believe that, forward, our these going we a to lines. As

Phillip Yeager

like also each start on team in supporting their Thank for relentless and this clients to dynamic our thanking by other you, would Dave. focus environment. I our

We provide have to changing rapidly service the our and to have continued a market trough in great we customers. April participated in since

strong done this invest costs drive on while our have We growth. keeping in a continuing focus business to and long-term to our

growth. significant revenue For with XX%, as in leading and and local percentage local margin strategic east up intermodal demand increased experienced and increased was XX%, tightness points basis peak we strengthening Coast, to X% the increased an declined the West our season. the wins quarter, volumes Gross of Transcon earlier-than-anticipated declined year-over-year. as volumes west X%, customers environment for a sales X% volumes driving XXX as

rail repositioning from support our growth. prices, Our improvements offset trucking operations cost in volume costs growth and headwinds outsourcing could volume increased our increases, of lower elevated and equipment not our drayage to

positioning us As rail our has service customer wins a strong and solutions. This inventory experienced continued revenue well declined CaseStack levels in the Logistics the driven logistics to X% offset by for outsource service percentage expanding commitments, losses as excellent We pandemic in and declined our meet were year-over-year. mid-season. great costs. given XXX in have new a continued growth and tightness customer points as that gross proposition is have our of strong supplier while product. on-board margin sales a market continued tightened, we value invested as increased providing Strong to customer in we and XXXX was basis by our fleet,

we spot We the service. rates well volume to services excellent our and on lower committed declined commitments, customers XXX their year-over-year. find increased experienced while will while performed of points experiencing capacity We of as and creative tender for volumes Brokerage accelerate pipeline more than revenue quarter. our markets our a managing declined of moved as business, compression productivity clients have spot to to basis We early yield primary demand continue meeting percentage have onboardings. improved acceptance challenges. need given increased sales gross to XX%, anticipate our to solutions into as costs the who maintaining more and strong continue the supply customer quickly support were excellent XX% margin a margin our chain in We

negative and during a project had declined LTL also volumes mix We as the quarter. impact

seeing declined revenue clients from Dedicated peak are our and demand season sales year-over-year. the supporting on margin We a during percentage and are points gross climbed strong of quarter X% for focus beyond. XXX them and continuing as to basis

as have continued and to unprofitable surges new customer demand our their onboarding clients business shedding support while We wins.

to hand the pipeline performance. are continuing over in our see strong growth. returns will now it and business We Geoff I a improvement in for to discuss financial have our to

Geoffrey DeMartino

Thank you everyone. Phil and hello

led growth X% up our and in quarter brokerage third to returned business with our that truck pleased the are by businesses. intermodal We revenue

expected, high the strategic volumes in single As digits benefiting from strong from intermodal our customers. demand grew quarter,

as of declined level highest million to QX revenue XX.X%, margin the gross a achieved year. this gross was While $XXX percent margin of

We continue XX.X% to quarterly strong exhibit equal costs year. to X% to revenue with last of cost as expenses and control compared

efficiency XX% technology our Our non-driver over and headcount is due initiatives. down to by

remain for XXXX our rate savings goal and improvement $XX operating of to We have we of initiatives efficiently. our run committed achieved profit million

over driving declined over trucking quarter Salaries our expense to expenses. We continue the administrative the benefits to prior $XX improve for reducing million as by General operating million. higher down and our while compared year. was $XX utilization costs also by operations, and

million, impact the services. reduced share year, several travel including in declined the diluted $X.XX cost consulting. and quarter consulting the for areas EPS $X G&A last as of Hub XXXX, of and which This included our approximately third compares of by we Excluding earnings diluted legal $X.XX. settlements professional in quarter expense per spending was to settlement Group's $X.XX and legal for

of reserve. XX.X% quarter benefited tax and was the for a rate the state tax as a from tax federal we Our reversal credit

year, to full tax the rate of QX. which XX.X%, we implies the rate expect a be around XX.X% in For

we model, $XX of EBITDA with resilience as Our the to our cash. million of of ended generated results continue $XXX over quarter, demonstrate million operating the in

to continue our levels an net priority of our solid We structure in and expenditures the to view have We as acquisitions. continues through reinvested be asset and debt. capital and strategic low liquidity business capital

offset For quarter, year, in container which in units decline fourth impact non-intermodal intermodal the growth due will on is digit volume wins. upcoming our recent revenue fully our and not business new yet the demand continued and We sequentially business the lost we expect our anticipate high-single earlier to customer deliveries. business of by based being

fully gross QX including by costs enhancements due in will for from somewhat dollars that margin profit to expect decline operation costs our We in rising improvement revenue are not insurance levels trucking our initiatives. in offset our QX,

in $XX For $XX expenditures growth the year, remainder of to spend to of support and million business. the capital between we the expect

For grow the be our technology. while purchasing intermodal you X,XXX over fleet, Dave, over and invest will back to continuing containers to in refresh year, we to for and remarks. XXX tractors closing

David Yeager

the environment. the for you, are being Great. economy Thank that capacity, Despite that by Geoff. encouraged pandemic with positive creating by us, demand remains freight pricing is strong a driven we the fact

And year expect and XXXX. strong the through We open this will end to demand the that, of we with any into continue line the questions. to

Operator

first from our have Justin do we from Stephens. And question Long Instructions]. [Operator

Justin Long

afternoon. and Thanks good

thoughts I some intermodal, season. contractual on your just could in rate with start around to expecting you this to was how cadence initial color terms the bid wondering business forward, then going are any maybe bid if season And of into well. quarterly for provide this you reprice increases as So, going next

Phillip Yeager

do Happy Phil. is Sure. Yes. that. This to

I think a little early it where on going. will to make exactly season a be bid is call

will XX% quarter the year. in repricing are the of X% first about about here quarter in reprice We our business of fourth and next

will think, our we to whole more lot So detail provide, a call. have QX on I

low very inventory nice A the capacity, of levels given and staying tight and very our we orders think, a think levels, intermodal with have truck servicing I customers. class done backdrop, replacement job truckload However, at demand, are I strong

and in as continue to I backdrop we also an that think be grow to organization. of the all will position improve paint a pricing where

So feeling that magnitude year, will very the pricing point. strongly of a this that be not know it just don positive at

Justin Long

of what provide the was And headcount in third thanks. you head on terms could count, update in an quarter. Okay,

type into next continues we revenue saw about change to recently think as hopefully headcount year-over-year are how and curious starting of you sustainable that and sequentially year, the made? Just come you what back have that here reductions

Geoffrey DeMartino

metrics. that a pretty Yes. Sure. going on efficiency hold down revenue organization to for count in extent we XX% the any as efficiency We we're to head rigorous Until can at the through September have looking about do and to process We're return. line head about were year-over-year. count manage drive for XXth, we X,XXX, the was

Phillip Yeager

to I'd to want help The is our continue by Phil. as of reduction is develop areas headcount few a strategic is the there growth. This opportunity only there think invest in in drive the thing that well and sales network brokerage to our inside addition margin maintenance add we us cost being organization are continuing volume as where we to

Justin Long

in quarter, you it some the can be happening because count will be be I with to it of sequentially, But, down do reductions? income with Okay. cost that and up Geoff, what's sequentially. head holding margin the the down know line sounds you on your and focus fourth like said operating gross of think should dollars there, or flat

Geoffrey DeMartino

leverage to some of a costs. number side. pretty and rate The able be is expense on those should we good cost the Yes, QX run

Justin Long

great. time. I that. leave it you. at Okay, Thank I'll the appreciate

Operator

have Research. next Group we Scott And Wolfe our from question do from

Scott Group

in when Hey, like peak it case thanks. quarter, third typically why and higher, a quarter, is there years quarter good we're it revenue Afternoon the fourth having, some not about pricing meaningfully this typically guys. some like is there we see opportunities, year? net I than fourth is season think When higher peak, feels

Geoffrey DeMartino

Yes. question. Thanks the Sure. for

some year, coming have this I sequentially we do in areas. think certain headwinds cost

to with add spend think do pressure. mitigate drayage tractor our some is we this cost working But there's sequential one. that year. Our We're

that you're two had not And to those big may in also be years. have insurance drivers. have comparing to if us costs the We be that extent rising prior we may not the would seasonally, that past

Phillip Yeager

I did with somewhat third Yes, other into pricing rail cost that obviously take quarter the was and we fully September are baked think results the highlighted, that in challenging. pieces that wasn't increase

as drayage. continue much the So on is we growth as of we our our mentioned, costs quarter outsourced support coming repositioning reducing to job Geoff expense. think, more to our And I reduce opportunity a but are have volume then doing, of better

margin We tax are change, strong. and to insurance that's well anticipating rate continue the growth that but not going it a impacts gross that I But to obviously, given is impact, be as well. think as very

that main there are really are the play. factors those at So

Scott Group

and this XX those $XX bit Can peaks, because are doing different, headwinds? rail you and I quantify it's revenue we peak at season struggling XX had good net just doing little time in surcharges maybe something a not I'm different like uplift costs or when you around? look million something the are so

Geoffrey DeMartino

Yes, the the because than market QX had might I think the the in higher numbers are going just probably difference they were earlier. this year past tightening started in be

probably improvement So, years. you not have there earlier of as a in that sequential much seen is may

Phillip Yeager

certainly certainly lot those was quicker peak it really locked the and Yes, have volumes a we of I this in given than strength peak before the volumes that we anticipated would increased. and import those think plans a

surcharge somewhat but the at been to a same lower than time it garner typically is able of we it's contractual a have had commitment. So,

those we're we are the cost of help it able surcharge. surcharges other have that when increased getting cost. spot think do side, we spot to repositioning But the obviously I garner returns that incremental offsetting to is very volumes, of side that, the cover on of strong some On

Scott Group

I Okay increases you that and can your given get just rail next last or to of then you've for just you think years margin year? gross next points And a couple that this or on think just, take of give take year. Can a up, talk two cost get it about year? back back? you question, visibility do Does

David Yeager

This is Dave. Scott. Hi,

season, bid of As will, think the upcoming quickly. but anticipate remains it during do can far demand points, I we providing we very that very if that particularly back which strong, get as two this yes,

So that next I think can accomplished year. that be within the

Phillip Yeager

going we that's season, that bid good and the in given transition want to to they've and capacity capacity opportunity customers, having really next the their seen to our with supply discussions truckload and into setup going fluid ensure think are really rates, they I intermodal that in for for a see good and a lock stay we're chains inter-modal pricing. Yes, year

because back more more haul, the reduce spin percentage us assets is day per seeing load to shorter think intermodal, able I and to volumes to in that transition other start higher margin the we costs. good our for higher gross local which are east we're balanced manner a sign margin repositioning and generates a

balance feel we well pricing. there as as an both is though our in yield So, operational and opportunity

Geoffrey DeMartino

answer And first your question to too.

the As far visibility that clear for real very price on with visibility next increases, as we year. have

Scott Group

Okay, great, thank you guys.

Operator

comes next question Stifel. Ross our from And from David

David Ross

Yes, couple gave the gentlemen. to side. million, want fourth good for $XX-XX the you start, CapEx was afternoon a I number of CapEx on minutes that the full year? Geoff, The quarter or for

Geoffrey DeMartino

That is quarter. for the fourth

So upto and spent when on of deliveries and most in guidance We QX. the we gave earnings, that We QX the XX half about of we just million spend didn't QX. year-to-date. had the containers based of much second ended on tractors, timing

David Ross

XXXX, that go? on yet directionally, where And any should thoughts

Geoffrey DeMartino

now. We're on Yes. budgeting working right

more have will we we when say announce QX. to So

David Ross

for Phil, and what you last with all you, David. maybe just, that found months run the of And this you coming out business things All Are there helped to the have leaner the ups ultimately right. meaner? out And and through surprised about X then, any learned downs. maybe

David Yeager

interesting I've in resiliency you of nimble, before seen we've did learn think because of my career. never I that this question, changes, the types have Dave. fluctuations the do to substantially. be to is staff, pandemic to That's a year is some very extreme, I to that be This whether types down where that of it's quickly mean these price things be September from rather we able the and is experienced overall our certainly to very it I up quickly react April were leaner changes. have a been we to with when were we able significantly adjust but very

the to unusual during that with well able that smaller company, the pretty a working very sustain think been very of and the people the capable I with company, headcount So managers restructuring with at we've time. ourselves but

Phillip Yeager

year-over-year XX% think the productivity it's we'll ethics. improved in and on a brokerage, was work year-over-year a all testament of on their I testament in deliver our our that quarter to double-digits, sorts the it's up productivity to to X% basis stick to the are a team continue results the a just fact basis. by real given able The to our folks those fluctuation, driver

So were deepening with of our them their to a they've and step we're our that us And think really up well accomplished. very see ours customers because I we partnerships support think proud customers what it in company with able positions because and value I like of that.

David Ross

in the And out-of-kilter to where you little third versus want mentioned and party drayage last question side, you third-party on it's a Dray. of be? increased percentage in-house do terms the that What's of bit now

David Yeager

our the get higher lower to a driver the performing We productivity count, on were more year in at that. we gone actually down been through the to percentage earlier had we've our fleet during and driver and able bring identified count on year-over-year of opportunities that's drivers reduce XX% that we And basis. points into quarter, Yes, with a four drayage that's in operations. had out

doing with actually we're more So drivers. fewer volume

going we get think focus but long-term to XX% that XX% year. to get grow to are continue fleet. invest goal to in into getting So We around and the next to on

So that target we'll will our be as in we the look plan CapEx ahead. have that

David Ross

you. Thank Excellent.

Operator

Todd Fowler have question from our from KeyBanc. We next

Todd Fowler

anything point. market. sure is are on And tight your on truck a you and market prepared that that comments issues about intermodal seeing how like make competitiveness think intermodal truck the at significant a this little you Dave, the follow the more standpoint quarter, experience wanted kind can share interest then I versus you Great, service. didn't customer case a I to the as remarks of and was It prohibit sounds really rail in service seeing here just in a from given market that truck. bit. to thanks wanted would I that up and in from service mean you're what about coming just expand but evening. good any just and the the constrained standpoint to you

David Yeager

I the Yes. issues. you that have quickly, our have mean, or not negatively some able that we clients for the we've overall of partners our have very experienced, have that you But Thanks momentum anytime sequentially been question Todd. Rail to remediate those so will service. growth impacted type very, Sure. really rail service.

the So been service has good.

them. transit, that think a I always for want critical that's service, issue our consistency the major clients thing a or that most of X-day it's is transit X-day whether the

so to sequential And the partners, and Norfolk Southern going the how the very when and them is Pacific very railroads, have is type and you goals quickly can fact to that and be increase, nimble always key, Union quickly. you them issues those there solve fix able accomplish but been our have of

Todd Fowler

the third Okay. anything million a far compensation Geoff expenses, get to from And would for into good coming right run on then as significantly as the just Good. then incentive where quarter, there anything are And the total at about followup. that that the if need cost rate for a as we $XX it's we you're quarter. Great. fourth the think now. that change that the operating 'XX, back, for run or rate is

Geoffrey DeMartino

out Sure. There rate run that kind be is number a use. the in I would Yes, good was as QX, unusual to of so that number said nothing to for call number current to year. year budget then Typically, And point, don't trend with year, a quarter. then for this compensation. and to incentive that expect the we next the we your in pay

headwind. that as we'll have So a

Todd Fowler

should we think that coming What's would 'XX? ballpark I for range be back not what be But looking a number could about of kind me. just, think, that And mean, Geoff. a you would that

Geoffrey DeMartino

quarter. about. a think million Is per to $X right number Probably

Todd Fowler

right, help All for tonight. thanks the good. Okay,

Operator

from from Susquehanna. next Bascome Our Majors question comes

Bascome Majors

in free than of sheet, bought you stock looks like last mean, price EBITDA, over free hundreds looking XX stock's back debt that as Yes. next P/E to same and higher multiple and and of you in size a about millions today generate was. actually time back at you you'll in probably then was net trading cheaper turn the cash cash it balance lot a the it flow the it the But XXXX flow. year talked it's I leverage, low years. on or your XX at then, under back the bucks was two it the dollars half was

why now. So the buyback ramp up not

Geoffrey DeMartino

This Yes, is Sure. Geoff.

always our acquisitions. invest expenditures the in capital priority for is business reinvestment You to through know or

We pretty most through the debt. have been able fund Capex to rate of rated attractively interest

We I'll doing and to acquisitions. continue been have term something the since of years for active It's and CaseStack. We've tell been made looking anticipate last almost the short been we you, we've look here. been since. about in ever two acquisition

So you the be it return and the business. on continues when priority do discuss to be way the to our priority continue use that point we raised. exactly capital. reinvest to capital quarter will of point, the shareholders. to comes this every at Board our with But evaluate the We grow a in But we to

Bascome Majors

well, sounds the would size So to expect sometime like if you things next it year. go before have acquisition a of end decent

Geoffrey DeMartino

pipeline case. suggest Yes. would the the Certainly that's that

Bascome Majors

you. Thank

Operator

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

Brian Ossenbeck

Thanks for taking Hey, good evening. question. the

side of a to back the rail things Going second. for

a end-to-end, know call coordination were for the main didn't better there with contact going shippers. about your conference chain, make supply of needs that you to retail, last one talking to point say going point but week, real and throughout end they in partner the West for customers, the the mentioned visibility it be end-to- On they

it I it how happening and see early what process, onto is add is here. So that that, what can bottom far you really mean to guess line, that's does too benefits, any long

David Yeager

and would Dave. to is have This both Hub strong we on I value for Pacific very would fortunate of Brian. we work is very Norfolk say that that is diligently and rails. the to the that these I the that bringing you in relationships Southern been the the fact Union with Hi, reason suggest and that very relationships have stronger never strength relationship major

value to we as as on probably our fact, focus In bringing clients. much

of we as invest exclusive either these we're hundreds of the complementary our and to in result and very that tractors fact dollars and/or containers capital that are build and millions the the of So we Union so technology, Norfolk Pacific Southern. to a rails, of networks

is also closely these railroads. of and dwell as much get we very operations them an never thereby And the the to fluid. terminal be IMC on with empty the and to as from to work the back at quickest target we ramp, every we're their also we So allows up bring loads ramps a reducing ramps, perspective allowing that any very single always what time ourselves

long seat addition So the good partners. have and large bring in both we we feel a we customers we low-cost-to-serve-customer, very bring a rails, being our them, as though us in the as at believe to with our that very our rail value both table. puts value And to to strong we shape as

Brian Ossenbeck

convert then with contact highway, of Okay. don't when I and about they one trying through with to chain add they touch guess maybe supply more trying or deal truck. generally, what would really because the visibility can than to more want anymore anymore shippers if are of point we they put to shipping than it points would to off you the have comes to end-to-end want

on see anything that horizon in regard. you So do the

David Yeager

large in to we think a technology a lot just I do visibility. to that, enhance of and the on invested extent, work that diligently

as check doors on freight there container which device, freight our the the it the will have any because visibility, we an is intermodal see With they blind systems where is we is any still open. only example, on it moment, can containers are. exactly drayage that and box, we're when not cycle. I that in As to the tracking if It and the rail, have fleet with know whole the are shipments think either because identify know has if not only we spot technology given of the you end was XXX% at our in thing where know so where as well the sonar-type was GPS good we

visibility point go to to see them, that to we so at can offer where when it time to be allows our it's any push to clients app notice that we could in an that and at look the container on them delivered. they is, that going determine So they can

our that So partners we have right visible now the on that rail with consistently. is very and something work we

Phillip Yeager

product, I there closely between on Yes. the that, we that would to be hand-off to last on truck-competitive just a though highest that competitive, minute, from more cost, us with product. work more things it to make operation, cycle partners terminals. compete to in a continue improving the our making or our even even better-than-truck to where driver And fluid are great shipments that are be improve intermodal I through closely to think, add it very the them and experience be with technology of anything are that opportunities partners reduce that getting our priority rail have we working improve create with truck continue and the we're but the make going continuing top it always times our loaded, could Those sure that to very might

Bascome Majors

trying one just logistics. But of update saw quick long to mentioned already I I it find need pretty you meet us business. and the Can they on not too good customers that CaseStack. where ago for return think OTIF One guess on capacity. you that's probably then an We the we Okay. can then and give

growth in benefit OTIF the quarters. business that tightening CaseStack, change back and on coming the how that update should an just opportunities, the maybe of So

Phillip Yeager

tailwind Phil. for business. is tightening The OTIF this certainly Yes, of is a that

significant important the as of proliferation to seeing think growth. increased grow is We've there I and costs, continues number sensitivity a a diligently are we diversify retailers to just we And a working going double-digit at skews nice challenges to be growing of different done service are improved. retailers of to a although continues drive margin rate. that and job get in is some with with continuing short-term that business to extremely some

So great opportunity is we ahead. think a growth there

tying even base. and and I to seeing think, bring outside traditionally, We had in further customer it cross-selling we all into consumer solutions products we're customers, also they've to product, going to mid-sized typical existing are success the the which to scale position larger the our extremely that drive of smaller client our well great really that is continuing

how So pleased the has continue of us. ahead to be we with have and very acquisition gone what

Bascome Majors

Okay, the thanks for time today.

Operator

UBS. we do have [Operator question from from And next our Wadewitz Instructions]. Tom

Tom Wadewitz

afternoon. good Yes,

I pretty volume at and your X% if for notable B. big down that in look Schneider competitors, performance are intermodal it's Hunt quarter. X% you I around the at X and think intermodal the up J.

accrue X if ride for I -- or kind are So things, the advantage, on those you UP I can significant be to there how an and you wondered key think a just the they you if some that's then mean is it of aggressive offer you some factor, drivers of factor what maybe that what of could thoughts were could it do obviously ride think in both a UP, you is the continue a of rates. price outperformance on of between how more BN but you is running, do with in and

on So some thoughts dynamic. just competitive that

David Yeager

Yes.

it's think a combination. I

UP a the was very continue service we we've developed strong improve combined it on mentioning just to fantastic. operational is more as them, with I that is partnership and with seamless Our to the service create

So, and that the is that we've certainly think flexibility service differentiating. had I product

made. were with our that were larger given drove during customers fallout the aligned also of other some customers initial we market, to certainly, bid some the that to the we from The of and them also during wins able truckload we with very during ours that growth support get season, is ad piece strategic container

repositionings only in the a market. where new West Coast, the not differentiation, demand big helped that have has of and had coming think containers we been the supporting that portion imported into in significantly that I but our us our in has capacity in empty

to up really set market. our us we're though a able the a in where we both picture dislocation discuss support be can provide in for a position they during So, nice to very with clients the

forward. very it think So going well sets I up us

Tom Wadewitz

year as next well? Would more you containers expect to add meaningfully

David Yeager

Yes.

We fleet. are anticipating to continuing the grow

process, we The truckload be with at we requirements their count, of grow As approach be Geoff but working don't market our based above balanced what but We improve customers a with set have also and to our conversion budgeting to freight are specific on an intermodal needs looking mentioned, we continue to back will opportunity. up forecasts to to understand and and our in very our know. in so should this be want pricing. high our

Tom Wadewitz

Great.

about out good think of were announced seemed one transports there maybe at Just is M&A, least was bit there, dividend the be partial special at M&A. it to what sellers followup, right a thoughts doing happening number actual in to little people market, asked a one indication which a mean tough seems that on necessarily lot of not are is, find the it you is kind going deals? looking pretty I that interested buy. related, of the maybe but our price, a do what's high in is M&A for with just on your What looking to it number you least there're a today, companies or I other of COVID looking too that think to, It that a

David Yeager

acquisitions reputation actively active in way. the of launching a of have the has been knocking on on off We've front, engaged that where worked and kicked things found diligence and on company we knocked been that quality situations searching frankly haven't of that On kind high we seen or been with that those a we past kind we sale door of Yes. a the doors, companies types processes. lot really we've in and either on have

if or of the had to diligence the looking in our, But and we've the some aren't along So, opportunities. think in you're opportunities places. other to term. I referring we're And something I phase just seeing in right good of short hopeful in success know done maturing don't not companies these some the get

Tom Wadewitz

thanks time. great, Yes, for the Okay.

David Yeager

Thanks, Tom.

Operator

And question Cowen Seidl next we our Jason do and have Company. from from

Jason Seidl

it some one-way obviously on lot those going sort hope obviously the repair to than expenses side, a is pricing? costs got I I Dedicated is different by How to side. ask of take gentlemen, everything of with to about back insurance you truckload. sort through is well. and dedicated wanted the you for Hey get higher the long hit

Phillip Yeager

we're tell put improving our I would in business. and I disciplines, compression, gross much of cost still what better that you in although middle returns that saw margin in We evolution the we innings business. is, we're Yes, think some

We are of get to wins unprofitable tail new shedding on technology. bringing the business nice through of end and continuing there and some implementing

is think configuration. fleets there driving truckload is dedicated that pipeline be to going our a one-way really And I or opportunity higher over what to private that's the cost to right now. is out convert

we that customers those going has the insurance recruit about understanding what look we to are levels we're to rate that we're wage I seeing our challenges. to of with and market not able need that and inflation stated and been able And we're need service provide what desire and not a execute those there discussions, offset to very given the wage and of same and truckload continue to think customers drivers, to going If As see demand challenges. costs, our to we're renewals, competitive increases at be to is ourselves. on have

profile very a forward a to grow but it's there being and dialog, business very is to I open out able given that that see going there. the still baseline we've collaborative opportunities that think at ourselves healthy are set So we'll continue

Jason Seidl

guess to brokerage really quickly. that. Okay. I I want hop appreciate And to the I color on

out declined brokerage of those get reprice repricing percentage and How amount of Your percentage business XQ? because business, we in just of do and look marketplace. in terms in what the to to reprice I'm XQ you in get what the should assuming contractual the in transactional contracts percentage guys at of like that's businesses

Phillip Yeager

first intermodal see it our through XX% repriced say where you about of to down a is year. break business, will similar would the I quarter Yes, the

we've obviously, So, cost contraction. seen contractual some

We have seen transportation costs. inflation our of purchased

managing offset that the We we obviously much to through diligently we are be a that, But anticipated do into in very will market had latter do would of better year. year portion changes, see the next I to we that job this think working and given that. able

we relatively higher though, and be for remarks there it That's of only gone significantly. has a growth nice and in back as reprice at is from high be anticipate line in think with Based our and The is are given point little prepared a So XXXX volumes, had a potentially hearing well the large really given dislocation an our our for business. is a in to be other my even intermodal, just typically the contractual on at we customers, should level, addressed time. percentage probably know what I that this that come higher margin volume match opportunity be the our intermodal volumes, I well. we've project LTL I in going us impact, just should us. point as and an which inventory going has bit profile tailwind clients And to than our seeing this of piece been discussions to down at a

signs productivity very made brokerage enhancements think positioned positive and in the seeing business. we've that we're I well to So given

Tom Wadewitz

always. Gentlemen, enough. Fair appreciate I as the time

Operator

from Jon Chappell our from next comes And question Evercore.

Jonathan Chappell

logistics Phil revenue in Thank that meaningfully from in sequentially category, XQ sequentially in early guys for you every yet and will mentioned the up what said you. exactly in brokerage. it decline the XQ Good the that's and to losses non-intermodal afternoon, guys. pretty year, in just customer outlook XQ was relative categories

be of that So that really market customers aggressively how of how we XQ you last then latter, versus some it's wins, market online; XQ share versus the that at as macro brought wouldn't months the kind capacity, XQ?. the to moved repeatable come in if available your trend X XQ quarter the much and just of look was

Phillip Yeager

our recognize going There bit softness. be logistics we impact say where QX spot unfortunately us us. heavily some the the business well. the A full of third forecast. that those some some as little surprise that we the business other to But numbers brokerage, line, in there up of QX that actually of business in did the And a is we market of opportunities. and do revenue retail the had dollar of lot was beat same surprised revenue the on I'd generally higher we than The that The brokerage internal biggest degree better expected, was not did frankly, again Yes. piece were quarter. frankly was. COVID losses impacted will by clients brokerage from revenue impact non-essential to that not well think in the is some did as in seasonality were

the quarter. will We in recognize that fourth

bringing we're say, every would day keep I working However, on wins. to new hard

And new that profile supporting expand that certainly margin for opportunities are have do brokerage, We business we a in in us topline if margin a better continue going reference. our the lost and in bringing customers, is day we better and to than team to every to to that that the on logistics there much focusing are to on have holds, wins profile. is demand our

not say not push that throwing third this quarter, ourselves might we're of to going know you we be better but to fourth point. quarter to certainly trying we're just the view So at and what going given to from best give in be towel our what to

Jonathan Chappell

on, it this but at of customers opening followup the shut been as shut broadly And things much you period balance want customer your Okay, customers down, I guess the seem this span is like, you to entire to to about thanks of back And come ability does brokerages I that ask the business. have that has your was to across weeks take some as my conversation, down intermodal new have can base and how did might capacity for How of again. time speaking, up logistics different some especially ago a been a are the for on. brought that. of X that non-essentials

Phillip Yeager

Sure.

brokerage, crack continue the are And say customers And able we've support for contract in past say, challenging the new wins been effectively. we've who've onboarding much but our dollars, have clients during that the are some brought compression times group growth we that very have our on side our in to higher to to well like intermodal us doesn't rewarded longer but we've and the cost new dislocation And process strategically revenue more focused strategic verticals and although focused and with really would Q, of that in productive so that see opportunities term So to the market. that supported as on participate commitments core spot clients to that of plan much improved supporting offset think of on-boardings aren't are mainly in strong. our seen I some on have would despite as I more there. are to completely logistics, business on margins stuck us we we for operating important our industry our would given supporting we customers in significantly, we much able They we in And just that we and become the float new those yield, in scale also the are business, in again. COVID. have high

are really what scaling great have in helping service. And made we've to technology to that to business continue investments continuing that. the provide us focus we're we to on the a using do So continue

basis. is there and improvement of XX year-over-year our result brokerage As productivity percent a fantastic plus I mentioned,

So through their But non-essential just we those had on well, to add work impact position. weren't some with and unfortunately from we're scale as new that of the retailers our be about given good customers. continue we to make feel to selective to who we financial ability trying able who it given

So be the and we of are customers. to financials partner with going to scrutinizing winners We want our the continue forward. focus our that'll

Jonathan Chappell

Great. That Thanks, Geoff. Phil. Thanks, makes sense.

Operator

[Operator next Fowler your we do Instructions] And KeyBanc. line is question our from have Todd from Todd, open.

Todd Fowler

hear about me. guys you Sorry Can that.

don't to growth followup. quarter, a the wanted guess transactional a little Okay, follow during about think taking up the just having about presence. traditionally brokerage the brokerage the I bit on I large US thanks for question I

convert some sticky that some into So it Is a the more customers. being like can that helping to existing out was sounds future. that lot in volume you of increase business business the

quarter? you volume of transactional saw how brokerage sustainability on of kind the So the about, that side some think you the this of do

Phillip Yeager

we were in contracted convert also, for win selling No, is that's had that land contract it's Hub. past it the are the cross transactions only Yes, a to coming providing. exactly right. seeing service continually a on not brokerage to difficult basis time that But we across a carrier given a our spot to

I opportunities up us as the that have grow an as continue contractual especially think spot to and and the service get to to in basis and product in dialog well our improved market we on that on well. have our sets completely business. board And spot ongoing the grow as

the we're board their that during well spot continued opportunities to the RFP is support So to to well. those business giving wins and participate contractual events as that customers strategic in over going lead anticipating business larger as we're to convert as then

they strong these customers, brokerage we're their support hopefully needs. can So that as strong with cycle there to where a option really us see a create working

Todd Fowler

see XXXX. you margin that good. there Okay done that take get that then from talked talked you've about me. that half target that It Yes, business sounds the you you've the need on to things And as about in think the just helps as past? Phil. ability you that operating past margins, then to to achievable which had into basis quarterly think the one I out hit the in year. Are you've other and the progress Is some some something the the here that's you cost get repricing last in a of X% of on back of next you the to maybe about

Phillip Yeager

Yes. our longer-term be It to does target. continue

I next to going that. at optimistic. end At cycle be to but we a year, get the be it's I'm need not that going so stronger beyond rate, of pricing to probably think may a we're there, little run

Todd Fowler

season something season, Okay, maybe not bid up that? pick another so maybe it on would you one be bid after

Phillip Yeager

been but think very our costs, is don't a margin operating the saving certainly powerful in I by driven business. We've lever price on focused so. gross

Todd Fowler

understood. Yes,

tonight. thanks time for the Okay,

Operator

turn no for Yeager now the have closing further call remarks. Dave will to questions we And this I over time. at

David Yeager

Well, third earnings thank us for you joining our for call. quarter

questions available I and have. may you that any always, As are Phil, additional for Geoff,

again So evening. have you good thank and a

Operator

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

now may You disconnect.

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