Hub (HUBG) 5 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

Dave Yeager	Chief Executive Officer
Phil Yeager	President and Chief Operating Officer
Geoff DeMartino	Chief Financial Officer
Justin Long	Stephens
Scott Group	Wolfe Research
Thomas Schwartz	Stifel
Todd Fowler	KeyBanc
Jason Seidl	Cowen
Bascome Majors	Susquehanna
Brian Ossenbeck	JPMorgan
Tom Wadewitz	UBS
Brandon Oglenski	Barclays
Charlie Yukevich	Evercore ISI

Call transcript

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Operator

Hello and welcome to the Hub Group Fourth Quarter 2020 Earnings Conference Call. Dave Yeager, Hub’s CEO; Phil Yeager, Hub’s President and Chief Operating Officer; and Geoff DeMartino, Hub’s CFO are joining me on the call. At this time, all participants are in a listen-only mode. [Operator Instructions] Any forward-looking statements made during the course of the call or contained in the release represent the company’s best good faith judgments as to what may happen in the future. Statements that are forward-looking can be identified by the use of the words such as believe, expect, anticipate and project and variations of these words. statements release. cautionary the review in the Please

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

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

now begin. may You

Dave Yeager

peak customer Yeager, are fourth fourth strong to reversal with of Hub’s thank earlier lines. customers Phil help drive strong inventories. saw ongoing review with turn The you this continued sought to volumes the and replenish strong service high Chief import demand of the the today market for this market We quarter limited Group’s and depressed earnings and for Hub in I was joined able Hub’s on XXXX wins due call. capacity. that Much effective our positioned over with and as capitalize afternoon Officer for quarter Good coupled volumes by Operating season. a in Phil to dramatic President demand the Chief DeMartino, and cost a by year driven believe am call strategic to Hub surge to strong demand from I a was participating Geoff levels well solutions. business will customers’ our And market we conditions, that, Officer. to Financial

Phil Yeager

Thank you, Dave.

on have recent through most performance, like Hub women I men to managing would commend I the Group hardworking Before and we memory. our had business the at dynamic year in unit discuss successfully

year-over-year year volumes in X%. We to quarter, volume the the despite the of large first increased increased a due revenue X% and intermodal in deficit growth pandemic. the half XXXX For achieved

driven by transcon off and tight a depleted experienced East Coast the of the and intermodal X% significant capacity demand amount XX%, XX%, local increased strong truckload local and increased West as West For quarter, volume. volumes declined we inventory, import

fleet in of our percentage and margin year-over-year. container investment XXX enabler as supported growth the a demand our declined sales key points was Our basis of in our clients. a Gross meeting

in peak continues costs While improve, believe into in our demand and demand and of with Revenue as strong year-over-year. tight from are volume XXXX. environment, excellent and position our CaseStack repositioning to at capacity pricing points was management we leading revenue transportation to extremely operating with and and This mid-season, led increased declined improvements. along heading declined efficiency Logistics our surcharges, very basis declined XXX high services. We trucking lower season with in a along costs, offset those this an performance drayage strong, rail increased continued imbalanced. X% sales was earlier and percentage that to peak growth which, margin that outsourced gross

were with for margins as CaseStack costs, transportation profit of experienced we lower higher warehousing customers. compressed higher revenue the However, onboarding some and along

experience for NonStopDelivery, December. we service clients a significant model. executed part We our of excited growth, the showing logistics newest are which a of about of acquired our the our and year in NSD value business, non-asset-based best-in-class very

in the in and new us X%, XXX bid seeing the across increased and while segment a basis of while we the all a declined excited costs increased percentage volume stability and believe gross for maintaining of year-over-year. in sales are logistics this spot the but pipeline throughout as expand Brokerage well grow strong last-mile commitment across solutions. offerings, season. are in have service our offering now to declined upcoming in margin market logistics well we market. commitments Volumes customers our margin and growth are for We of this high-growth We our position this maintaining quarter, contractual revenue but executed business. our much points will XX% to declined all more Capacity

we generate market to and points Dedicated quarter charges As in prolonged continue force, a margin in declined were sales can headwinds. and more of insurance XXX gross we as invest increased the of conditions. a variety in revenue growth for technology well inside markets costs Large declined capacity sales percentage we as believe non-core and X%, year-over-year. as basis our restructuring search

we margin make now hand progress in to in XXXX. significant expansion I our commercial over anticipate continue financial our which performance. it to we generate and improving operational to However, discuss discipline will will Geoff

Geoff DeMartino

Thank you, Phil.

continued with QX has intermodal our a led in lines. business up by X%, of challenging out pleased service and period are brokerage earlier We truck revenue to grow coming year, that the our

reserve As expected, benefiting XX.X% strong estimate. digits margin in million included and volumes QX was strategic demand or insurance claims from a the our from intermodal high to related million, single of charge our and $X.X grew customers. gross quarter, revenue, pretax $XXX

and We year over with equal to as a and decline headcount as compared cost and lower compensation compared year. due cost million X.X% the for to $XX the control, revenue declined expenses continue quarter of strong to by exhibit quarterly expense to in Salaries to last variable expense. X.X% benefits prior

$X.XX and the closure Group’s to XXXX. Hub transaction million of EPS the dedicated $X.XX, of the of acquisition, by share due operation the headcount was to acquisition a Our year quarter $X.X efficiency administrative and compared office our diluted technology $X expenses for an million general NSD. compares our impact declined the of million quarter initiatives. expenses by to earnings non-driver included as and the fourth restructuring related X%, per down prior diluted in to excluding supported is $X charge QX of that the and to related of NSD which

was Our XX.X% for we the tax state credits. as quarter tax benefited from rate several

quarter the the and million in acquire $X.X spending We in as year compared XXXX. ended $X.XX share For cash to was in approximately $X.X in XXXX, the full $XXX for $X.XX cash $XX generated was to December. billion of of earnings last NSD year, billion compared after Diluted revenue with million per to as $XX year. EBITDA million

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

we across will revenue revenue expect high single-digits of grow and our business NSD. double-digit all growth up with the including in addition volumes range, low XXXX, intermodal For of lines, the

We will revenue ramp progresses. growth year as expect year-over-year up the

margins increases. margin level year during gross consolidated a percentage the begin expect as increase and will rate and the we will the bid at progress We as to of revenue a similar project realize QX through year season

assumption will the continue conditions inventory demand restocking. need low levels to customer on economic that Our the will for benefit consumer based drive outlook that positive is continue and to

quarterly NSD incentive expect from spending. QX costs more increases, levels merit addition We of due and to expense, travel normalized the and expenses increase will compensation

For costs expect year, of the expenses $XXX and million we $XXX to million.

throughout For to in more million will QX, million increase we expenses with compensation overall $XX variable book costs $XX profitability. from range to expense year we and expect growth the as and line in

For tax the rate be we year, to XX%. our expect full

We to invest in the in continue will business XXXX.

Our to capital million expenditure forecast is $XXX $XXX million.

as retirements of approximately in after We net expect growth X,XXX add X,XXX which will refrigerated XXX containers. well containers, as result to

which for for closing planning add to approximately our of and in fleets. replacements also will drayage dedicated of XXX to remarks. support and are XXX you are of which growth XXX Dave, old units We trackers, back

Dave Yeager

demand be Demand quarter you, as our fourth volumes day Geoff. reflected to intermodal continues to adjusted in January on XXXX, strong customers very Thank up continue a restock. basis. strong XX% business The with

up the with We call we XXXX. of expect to this questions. continue And demand that will that, will strong open through much

Operator

[Operator Instructions] And comes with our from question Justin Long first Stephens.

Your line is open.

Justin Long

afternoon. Thanks. Good

Dave Yeager

Good afternoon.

Justin Long

trying you expecting from guidance, the But to what about margins first year and any the that? through an as don’t you the be maybe gross some give think way with guidance margins. color the EPS know well, start – anything provided So, curious for similar maybe quarter think us Geoff, get if to margins you help could fourth. to XXXX to and would operating I margins I said around to are gross us you for more specific full just

Geoff DeMartino

Sure.

XX.X%. charge, adjust was QX’s the insurance kind out that I in a which about margin if that of So, you to think resident quarter gets you take and gross

will of driver our profitability to mid for to think that certainly impactful a important repricings closer in very that QX single-digits. we For maybe is the Price XXX points gross be QX. full margin high basis reprice year, off to The – cadence think of full think We on the half. what year. XXX and much we start will the from our more back is anywhere activity

QX, in of that happens we but of the example, quarter. the repriced XX% For of our the volume towards majority end vast about

of that price impact won’t margin see much we in So, as QX. on

Justin Long

gross XXXX points basis that clarify the full XXX is to year to margin the that XXX just relative And or Okay. of XX.X%? to improvement, relative to

Geoff DeMartino

the XX.X%. to Relative

Justin Long

you on mid high just then mentioned kind think And pricing, Okay. second maybe increases. of to I single-digit

have intermodal on been is I level above low think hearing what something single-digit in high range. more the double-digit to we that

I pricing am baked intermodal you and expecting the correctly what’s you general maybe reading that So just speak are on could or into about what into in guidance?

Phil Yeager

What Phil. the would tell you price high is we on guiding this for are effective the to I Justin, Yes, year. for single-digit is mid

QX QX mentioned, very Geoff the in amount quarter. and XX% in in the portion, then small second renewing XX% fourth quarter as in the a XX% So latter with in really

for but to it So that renewals the of as single-digits, are right. those we renewals rates think about that implies mid the also single-digit implementation should high be upcoming, high

in with – So, what but you really we I that’s are as and are hope the some what seeing hearing around that, we well. line just market clarification believe in

Justin Long

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

Dave Yeager

you. Thank

Operator

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

open. is line Your

Scott Group

Hello. Can you hear me?

Dave Yeager

a Yes, better that’s start.

Scott Group

headset. will I the Okay. pickup

so thinking have customer So, comps something about here gross low X to there losses not easy double-digit adds the XXXX. any than on and double-digit line, and acquisition guidance be about points that Are low gets to obviously, any of better think – I are churn? what you you alone offsets we revenue should or the that relative that, the got top

Phil Yeager

mean in I about have story some it’s did same we QX QX. XXXX. midyear talking customer think We have Yes. and I been in the losses

fully in working hole. kind – losses. some is losses It’s This been did of volumes, brokerage of the impact primarily, that We have cycling haven’t yet with the so customers offsetting wins and not the logistics logistics midyear filling see those to fully customer impact the just although and those XXXX brokerage then dedicated new as drove of that fill well. the

Dave Yeager

might Scott candidly be I customers. these these profitable not – overly that will were add, also

investment. our think able And we with our it where so will be will that a on more we we make backfill return fair customers to

Geoff DeMartino

And revenue between of the do see add too to down typically point step QX one a in we QX. cadence, other just in terms and

certainly well, would the throughout will we expect as ramping year. be believe but that So growth revenue they up I

Scott Group

‘XX. as XXXX at use Okay. on And we the to out started I we margin year? XX% we following this how example, close at is in about and thinking sort year around then of exiting the the XX% ended the gross the best are maybe beginning got XX%, if guess that you guidance, is of Directionally, We this year. plays playing a out as this year and

Phil Yeager

Yes, run rate level. think year pricing takes maybe full the strong that close to to rate, get of it I XXXX to years back exiting X that

Scott Group

Got it.

Thank alright. guys. Okay, you

Dave Yeager

Scott. Thanks,

Operator

next And from from Schwartz question our comes Stifel. Thomas

line open. is Your

Thomas Schwartz

Good you for my in taking Dave Ross. am call. afternoon. I filling Thank for

bit So unusual very a was it’s XXXX a that of a platitude year.

going level, XX aren’t company to very look as a like Just they from as a your typically you. successful what meaningful suppose given Thank more would for theoretical – I be would year-over-year that a XXXX comps be? perhaps curious

Phil Yeager

Yes. Phil. is This

I of is to our to a investing we key great, very job final this year addition with a single-digit a nice think great can we of got growth Brokerage really so think That think we growth fines, the get – year. few growth at at great high another marketplace customers cost us. space, to that. back and saw solutions story a are factors lines. trajectory. the that that the for Logistics, are in in strong want is showing we think another there high all NSD high have continues pricing, or going this nice the and OTIF have that increases of think, opportunity. clip and be with are CaseStack, that grow Obviously, really a is a and varies. increasing with did in on we a there we that. pandemic. and looking opportunity single-digit mid growth we mile need and Intermodal, and volume – to double-digit story great deliver service really the We well a for across we story to think we in to to in is good offset area growth cost good great revenue great they spot single-digit through our I high position the is ensuring structure a additional there opportunity to as We

So great one-way think our well and year. place off guard transportation caught rates people truckload as management really then is right, a I service dedicated, this

for And dedicated in intelligent the so We dedicated there services. in is significant a particular demand to be growth. need

I So sure us meter business we asset return bit Obviously, the that right capital-intensive will want we given to see the think that it’s little in they more a are make more. generating and intensity.

our that them. cost it’s the and service So varies more it’s leveraging be growth structure across all to lines then think I continuing across And efficient.

productivity really to the enhancements I that things think pleased is with drive. we of I this year able that the were one was

as brokerage XX% our QX productivity example, Just was up an year-over-year.

was year-over-year. X% productivity Our intermodal driver in up

is the to continue drive take of that that improve through well pricing. cost and and the advantage an there obviously opportunity structure as forward to So

So, think I feasible year and all customers. know both our things very very a but need we will a lot financially to deliver good and we do of for there,

Thomas Schwartz

much. so you Thank

Operator

Fowler your KeyBanc. comes from from next And Todd question

line open. is Your

Todd Fowler

Thanks and good Great. afternoon.

‘XX you do market expectation you rates below market? the the got about as is think are intermodal with am comps year year. starting the or what the opportunity grow planning just the the are of a pricing versus growth in at the you high ‘XX look curious strong to being that’s maybe XX% of that, share year? some high on for in the January, Do the in On with think market or side little on growth expecting single-digit single-digits how kind you you volume this kind bit have I you first obviously, going are very of half where you in up easy

Phil Yeager

any question. are market. under-price stepping organization think to we customers to we phenomenal the the it’s Yes, job market a up But Yes, that way probably we above will anticipating a grow what are continue looking an we during for to great as did up. in we is going not are and that our yield We peak And we opportunities remember. improve marketplace some improve to hectic of is to us most or in also season opportunity and continually of in the had our to the any balance while that recall productivity improving network, continue share And an us grow can the yields. we give drivers. to going our great take think

and a very going is cost out in side opportunities of we are assuming So and there on lot there are continuing both price – well. growth we focus share we the but to very, would to and volume both,

Geoff DeMartino

down and container investment. half off think And We continue in I with equipment I would just our to second investing with the that – add, our strategy Geoff, XXXX paid certainly this of strategy in in the of is XXXX. that are market going outgrew we

Todd Fowler

Thanks. I in-house I a of fosters then learned that offerings and And months maybe or X.X you have opportunity now second that now helps. anything your kind question, of about relationship additional better look had have that with for and is guess so, my or about you going the that there forward? kind thinking that how at had you are additional NSD you am how service if Yes, that have just good. the business of other and growth kind Okay, just business curious for

Phil Yeager

excited about that excited diligence would the that. Yes. and about become process, felt we we so the just really we start No, more that acquisition. excited really are about alignment culturally have I more during

I and experience that that. they lot heard service that opportunities is in the we while And that the have, in NSD won opinion going is since the able think have fit multiple what do to we have they the were extremely profile awards highest customer are about excited and great year active a growth long-term was really think the the picking is and so the after cross-selling are really go support is us I base mile. bigger significant that really acquisition right multiple to to ensuring Our network they to continuing challenge their and year. pipeline provider right with have have this what year clients carrier customer of And of customers service last the in or that from deliver we challenges of my already

And pitch of a and sales so as are quickly. we gaining we other lot doors to that the are new really clients credibility a opening very lot of with going and

to it flexibility. and a piece customers other a The because So we only us lot opportunities of recognizing going improve are and more there and had. strong to NSD excited has. to the more able we gives by in the grow about that non-asset margins is are is we I already of And very finding significant model, think just opportunity to more highlight marketplace here while think the that transportation that’s a costs think that competitive based great are I so, continue doing And be the would maintaining be even NSD we important. amount

So, we base, with there is our XX% just very really point, retail of are so about seeing customer huge this base we which opportunities is excited are at excited. customer and around our what think

Todd Fowler

Thanks Yes, Well, thanks okay, that’s the for there. time. the for interesting. all color

Dave Yeager

Thanks, Todd.

Todd Fowler

Yes. Thanks, Dave.

Operator

Cowen. the question next comes Jason And from Seidl from

is Your open. line

Jason Seidl

I a wanted you Thank you, ask just little Good that operator. since brought your up. base about bit gentlemen. to afternoon, customer

this after think bunch that’s side. of any do restocking that’s a Is exposure of sort lot expected long a hit There a And we to You retail done? might this do a little year. continue? year, pocket there you on bit how for the of sense have has of been

Phil Yeager

Sure.

is So Phil. yes, this

restocking be think continue is significant place. a I taking to to there going

that is in and number – amount seeing sitting And improvement space, vessels that, are import the clients in out spring be from are of to home the and come there. retail to we the is Coast comes surge going is active. demand West there at look we’re large what particular, volumes, on, really that off, the you massive that be If in, now to off extremely right of our going in just a hearing is typically ready very

take down, e-commerce, that demand even our customers, traditional And are We’re a to going that. beyond more it’s retailer, to up continue hearing to slows X-month even a to other period restock. catch who after need them

through really see, people that – we We of customers peak during this of our that least a went slowdown. quarters there’s season. the first at the that this challenges So pull don’t three do inventory forward be the avoid think of some year to year, going past a to through

through So should volume, and level the year. higher past of be, probably than but this stable less much quarters, spiky we it a first saw what more three

fourth the on, much the but any drivers tell capacity And be So something the in I and bringing tight much first soon to would online higher don’t quarter, remain coming certainly delays for expect that with three, we amount down we’re to obviously, capacity it’s demand, and we either. slowing time watching volume. of you, continues higher see

Jason Seidl

drayage. abate? and throughout to I move going as will year, bringing sort cost. Also bit sort to Should probably out of some you nature, That’s rail like look you’re about in the tractors these particularly the outsourced some as there wanted we transitory of the little It helpful. super forward. of we expenses, at more of some the congestion those on help a looks talk

Phil Yeager

Sure.

we led the over very this were as markets add we we key in increase at. on are to really to What third-party have. large and key tractors what happened perspective, running So was going continue we markets, significant that some significant our from third-party to that a had growth in year – yes, drayage a

in Now of I made better. with drivers, the pleased can am be the still really but our we’ve improvement productivity we

service So tractors that, see the throughout a in to as rail continue and more on. year. are seeing from drivers coming that and think, improve And that we going I would we we be line to more see – congestion are sequentially issue, bring

would Dave, anything? add So – if I and don’t you know

Dave Yeager

I add impact to COVID was, a creates of quickly. labor did, It creating would shortages, congestion. to was which some the that lack just warehousing, large there extent, capability in fact, virus lot a of unload

chassis containers we and costs So locations, certain caused also in see did bunching shortages. chassis which

we quarter sequential into was have things. combination improvement the So seen a fourth both to there of January. But throughout Phil’s and point,

So we back on-time get service that, we hoping our are the we levels up fact, in can to targeted.

Jason Seidl

time. the Encouraging signs gentlemen. Listen appreciate

always, everyone As safe. be

Dave Yeager

Thank you.

Phil Yeager

you. Thank

Operator

Susquehanna. question And from our with Majors comes next Bascome

Your line is open.

Bascome Majors

onion to Thanks improvement how bit gap really Could XX%, exclusive who potentially margin not if the be The on see taking but lot to seem on cooperate? to focused a see tracking you margin over to were the my opportunity ride front peers and years made your at stand, Yes. efforts where we if more make couple of those. to And you efforts to could talk of XX% back bridge call we more last intermodal the little pricing on for it you look that operating businesses of starts that compares certainly for, to you non-intermodal alone, margins? were a that question. and that some peel as Thanks. were stand BN that about the it, the what

Phil Yeager

Yes. question. Good definitely. Yes, Sure.

tell largest segment. would you our I that is intermodal So

a would lower our But compared. as the asset-intensive at carries But have certainly margins well. portion corporate it larger a So, costs. same our we as model of less be time,

drayage, outsourcing chassis the remainder the investment and year, We’re XX% running don’t into obviously as of about around for own our we – have full a capital well.

productivity of tell that have. But model, continuing you a so those still we it’s opportunities profile. have somewhat the the a different of and to we to improve, drivers around margin we’ve So improve different highlighted would I

our load of X% in fourth point in quarter, for the mentioned, improvement I basis productivity miles. XXX drivers As improvement

reliance to peak in really think tractors running are another those area in repositioning the create this a during network, and focusing perspective, and reduce year cost particular, on our empty that’s season. we repositioning, is we’re the better. more I from And costs So targeting on balance

can we’re help then that more alone our drive take we in buckets us we and tractor investing, two is And in earlier, fleet to significantly to continuing to Geoff close drayage, to need the that. lastly as gap. do agree those that continue So mentioned of control

Bascome Majors

walk-through appreciate different that. and Thank I for that. there the you of tops follow-up the maybe down drivers to

run it challenging be to operating and pretty that answer still margin that Thanks. for for kicks – you year, year and basis the rate X% this means potentially year? in on or and like what the depending about you shake to about are to breach margin. could talked how you that feel below if get level or talk exit it target levers in things ‘XX given a could the what that when a can out going above maybe, the You’ve Does is pricing get on that,

Geoff DeMartino

is Geoff. Yes. This

we get we I we another economic and – possibilities in environment, conditions, the stable favorable level market realm XXXX. can capacity that certainly could be truckload think exiting think that strong can I there. it’s at of And with pricing

as but going as XXXX, did to expenses, the expenses in focus years leverage really look continue we in continue on the driving of focused of which We’re price, we’re and transportation well X the more side through we’re better going spent the operating as cost last in of efficiently, expense only operating and on side P&L margin P&L. not side the the grow, to the future. through the we We’ve business. expansion, that to optimizing both operating to to And those

Bascome Majors

you. Thank

Operator

the from from next Brian Ossenbeck JPMorgan. comes And question

Brian Ossenbeck

able the you I rail the afternoon. Volumes as you go to how truck and expect improves it isn’t question a local where East do guess, ask general, gets and off versus as balanced? around that put also to conversion, But about maybe can I to the pricing the volatility how and you highway? Good down, about do more network the into your been guess, last see maybe conversations current that a in a then market. conversion the the the lot in just if gap to a bit and little maybe So up are barometer? start forward has some in I take you that quarters. tracked little freight two service some rail be you bit expectations much context expect Clearly, year East. And stands, looking the wanted freight of primarily thanks. pick best next to Hi, between there’s

Phil Yeager

Sure.

convert we yes, tell service I and So going business are is off to allow improvement very obviously, more continual targeting that highway, would us the to aggressively. you that,

differential truckload certainly I given will that and of in market going obviously, rates current and be think the is where the quickly. catching expanded very where spot faster rates are we the market, were some up

probably And to are XX% and that range as customers do anticipate especially both from in was what So during outside year, of a will gap, looking I at contractual seriously time. of now, rates strong RFP constraints those large and the which nice the close is very seeing commitment XX% renewals events busy are our back of given online. but pipeline to of right conversion the throughout – would Intermodal, also in a RFP come lot events. we opportunities, very very A lack conversion

service, see again, expand. is as trucks, continues once really as improved opportunity just need to as mentioned, I looking doesn’t that we opportunities. And significant think just to it what And be you but with, fast as So we’re consistent necessarily for.

still and targeting we our massive that partners. it’s a are conversion rail with So opportunity

Brian Ossenbeck

you the year. And in containers, a terms timely it. got then purchase of made Okay, last

growth bit that’s not maybe like to more assuming pivoting probably the have than helping that helps, this would growth that seen point. a quarters you at talked otherwise? harder. like fuel And a you you a that you Do So about bit ago, more you get the feel that, little would of turns couple

pretty now adding work seems benefit those the you’ve because like more those of full well. these timing extra providing to you little gotten right some balance the bit feel considering are or to are containers? congested how the things do So have But you a network actually

Phil Yeager

customer Yes. and transit in those we improvement sequential or that, but loading – seeing I that we we Those challenging. be both expect times. that would tell long-term, are you the can desire of rail as as in aren’t are both well turns getting would

sporadic And particular, seeing see changes with see down seeing and some we large I levels off the staffing weather, us the you to to I of But think, certainly market, clients, things volumes congestion. that, an to like the grow grow taking you And opportunity, continue And right retail tell our really Coast. winter advantage amount at the little would in bit they certainly that in sit of improvement. in go you that some especially that a boxes above sequential giving longer. are us with investments volume led enabled West that, we particular, nice If now, were made level. to the can of it’s

Brian Ossenbeck

time. great. Okay, Thank for you the

Dave Yeager

Okay.

Operator

And next from from comes Tom the Wadewitz UBS. question

open. is line Your

Tom Wadewitz

Yes, level think Wanted the volume bit you ask East one where see to are growth you little you about about versus in and West of good in Do or stronger it’s of intermodal. you growth afternoon. in another? a the more optimistic kind balanced region opportunity

Phil Yeager

Sure.

bid and tell continue in local to local year, a I start online, So until initially I see really go similar as half West come volumes on transcon anticipating also place to basis. awards first as come we’re into East effect, But increasing conversions anticipating, clip. you we’re would to the awards with pick will tell permanent that up of higher the a would we’re into you, at more that going trends volume

Tom Wadewitz

brokerage little to Right, business. okay. wanted about you the ask I And bit a then

that get in think think differently But in think brokerage comments. see us apologize XXXX? brokerage little the expecting typically of. on you business for in responds environment strong if how some strength if bit pretty improvement? might see how missed us net general, as you give Do performs rate to you the business brokers. do wanted perform a contract could give we just think I And business in I rates in I you to just But how thoughts we’re could environment did your thoughts on I truckload? revenue I what than good your rising a quarter? move some the a you the maybe

Phil Yeager

Yes. that’s question. No, great a

In we’re traditionally, So about quarter, I the at fourth contract. think run we XX%. XX%

wanted there. basis XXX spot are the tied XX% our that our growth to into of more shift was on have, year-over-year some making that’s as that contractual commitments basis have saw really a And market So the compression, obviously, support business. revenue we did with our why to you the customers. strategic we We did they sure maintain We margin still that. points. to, the aware Obviously, customers, increase

would good that to they tell So price a very growth, rely incumbency, have take not that us something align done. you partner up but as of would also traditionally, for bid on. that as that see we we’re a position our going in season, be I would they can us into advantage

sales success now on really lot And that. building What to our of did cross-selling year. intermodal we’re reliant very we so going And I’m pleased drive growth that were Traditionally, our force, this we space is brokerage are in our focusing see to segment double-digit very opinion, to, the customers. inside which we have. in not my in we’re logistics on a traditionally traditional seeing

is we in have The other very one opportunity that grow. a we’re a think the that streamlined really area CaseStack leverage area as we process and it’s and and that investing that we the and we an to continue acquired lot that we brokerage in LTL of well. through acquisition, And can is like automated

you I we’re too. high full weather, hurricanes, as or focus well. at strong And kind think, we So LTL, our segments, project giving support inclement this then demand year. servicing have job and they tailwinds, a phenomenal continuing as service look see in If that, of customers truckload on to those surges do in both

we a structuring basis lot we’ve aligning more what investments market. given as regional think more technology, a made we’re win a and I position traditional this much – done on in we’ve much I the have in we’re to better of of in and opportunities. So brokerage, And think a in

Tom Wadewitz

accelerate is fair your net coincident with think pretty pricing growth Is So to when contract truck? revenue really... that it would that in you

Phil Yeager

Yes.

Tom Wadewitz

top Obviously, fourth had gross but margin the line quarter. in the compression

and up really the rates contract revenue in harder. get you net kicks like of kind it’s So

Phil Yeager

think That’s a to it. good way about

Tom Wadewitz

Yes, okay. the for time. Thanks

Operator

from [Operator Barclays. comes Brandon from Instructions] next And the Oglenski question

line is Your open.

Brandon Oglenski

the items XX%, afternoon. It to a in guided were remind me, be the that’s cost XX% what think of questions. or caught. some my like little first does you Hey, thanks bit called taking for discrete to a where from we seem And you good quarter, consider I fourth if I out. Geoff, quarter think of I step-up you especially

the potentially that talk business potentially in you this yet? you’re is can So seeing costs acquired to haven’t seen inflation what business? And we just

Geoff DeMartino

a of couple Yes, things.

really So going a our a be personnel couple have is bonus operating to there. The of – we though the quarter acquisition for on cost so of driver took place the expense XXXX. in the missed we’ll side, middle of bigger December, targets full

more QX for we’re year. to payroll of And typical is to improvement items. then that the at goes We higher in increase throughout there XXXX, of annual accruing compensation kind up other the of into rate as mid-February. ramp year expense. to that going and our So commensurate merit expect And The effect QX be profit there do with throughout well. variable a couple some is tends normalized a be

the So number. those are biggest drivers the QX from

Brandon Oglenski

my that. year Okay, a longer because then talk to more normalized wanted term this a more Can think quite to this speak capital up about I year. or a just be is budget the what year know would you bit question, appreciate you normalized for is And Hub? I second spending

Geoff DeMartino

it’s $XX I’d representative this to say be more going year about also last headquarters Last is the a have building. for than – did year year. million

on growing in do also just spend. those pure benefits customers, the year growth equipment. – as our of is to tractor this our So this normalized fleet, that own serve could we the cycle drive Both fleet. container more of a well having to growing available talent seen the assets our level amount drayage as an is of We’ve upgrade year drayage

Brandon Oglenski

Thank Alright. you.

Geoff DeMartino

Thank you.

Operator

Yukevich comes question Evercore from ISI. next the And Charlie from

open. Your line is

Charlie Yukevich

PSR my that throughout implementing Thank and contributed efficiencies this implementation and just My significant to saw Both they that you PSR Could partners you you for rail you about efforts is question progress around the year. think these taking question. your any changes rail throughout of your partners. made the year?

Dave Yeager

specifically recover and this, January to a This than improved that when do manage think that to as railroads, has high-growth past. they always to quicker I the of that dramatically. much they’ve quarter but have of made. occur, such the market up come it to the issues seeing It’s and a issues that impact that but is as particularly that has comment prior result is ability PSR and been Dave. the the in I I a would that railroads’ possibly as PSR, occur, is there to and fourth we’ve investments of been the well, even part in during can’t speak in

Charlie Yukevich

Okay, great. Thanks for the answer.

Operator

And question-and-answer call final Yeager remarks. session. that back Dave the I’ll our concludes for turn over to

Dave Yeager

much again, for Once joining fourth conference great. quarter thank you on call. our so us Well,

Geoff and have Thank I if a are you questions. always, Have additional good Phil, any As evening. you. available

Operator

and Ladies you. this conference participating. Thank today’s for gentlemen, Thank concludes call. you

You now disconnect. may

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