HUBG - Earnings call transcript Q2 2021

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Operator

Hello and welcome to the Hub Group Second Quarter 2021 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. [Operator Instructions] Any forward-looking statements made during the course of the call or contained in the release represent the company’s best good faith judgment as to what may happen in the future. Statements that are forward-looking can be identified by the use of such words as believe, expect, anticipate, and project and variations of these words. Please review the cautionary statements in the release.

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

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

You may now begin.

Dave Yeager

you Group’s second call. Good Hub quarter in afternoon for and participating thank earnings

Chief is Phil created and Yeager, Hub’s Officer. Chief providers, and logistics Officer customers, Hub’s of a risk have today President Geoff for but Operating these DeMartino, distinguish to vendors, Hub among me opportunity our Financial deal times our many and Like employees Group, Joining unusual tremendous company also great shareholders.

performing quarter. the grew longstanding we to are well clients. service strong fulfilling as have All and Demand to very capacity of second focus on and our continue the business during is we our commitments lines

Hub Before a the market we be growth macro congestion, story half quarterly would imbalances. market well impacting many there Currently, such as first positioning, performance, of demand tailwinds and are Intermodal, strong has XXXX. opportunities several I discuss at we port believe to that our current are growth sustained specifically to through our The leading where Intermodal Group’s trends carry the labor beyond and least important shortages conditions. equipment business, transportation long-term secular and focusing on will issues review network freight will that like

more growth manage Intermodal’s that ratio spending driver period which the beyond reach distinctive to in post-pandemic believe on Intermodal recent lowest believe history. we the result are testing the we growth drivers. a and legally key the inventory workforce while drug shortage of The goods the number within is will in increasingly sidelined This of becoming population of far a the following by issue has and inventory the the exacerbated to can reflects importantly, into for near-term the story new real fueling of due a has and driver it’s alcohol obvious, miles and of drivers structural entrants consumer shortage restocking, stay. limited E-logs database. elevated retail we as aging lack is sales clearinghouse a challenge here and centralized outlook. to Intermodal day, drivers the advantages the More an XX,XXX face

will Intermodal benefits while motor strong choose New new drivers receive home in equipment, a to daily, and driving that earning drivers for versus will all are These have drive over-the-road options be wage. carrier.

Hub Another significant verdicts being in continues more and to prominent juries focus, by the customers higher is trucking to rising rapidly is nuclear sustainability is drive operating becoming for a trucking that insurance for costs, both assisted more which X.XX plaintiffs. efficient emissions invest on This driven the conferring XXXX, freight of in institutional barriers our their as the XX% than shareholders. our way phenomenal to a improve a million clients Intermodal environmental over-the-road impacts more Intermodal converting over-the-road transportation. carbon fuel-efficient is in to tons supply result by Intermodal fleets. issue expansion carrier’s are our Environmental for and of to resulting dynamic premiums chain. is up companies, transportation. In far reducing

their fuel oil distinct prices. Intermodal transportation allow high of during advantage, a efficiency reduce has addition, In which times spend shippers to

competitive build costs will supply mile strategies, out mile The which middle rise. more Intermodal to underlying result spend. last economics, As like Longer key of the today fleet of industry. size term, and technology provide are as the particularly helpful not becomes growth are the their more truckload, investments a Intermodal tractors, our significant when is in our that Last costly non-asset-based significant more is chain containers, IMCs. least shippers, larger railroad a but in in and engine competitors, in as Intermodal make Hub capacity for entry barriers to to the the on important becoming These of times is that be and than the people to advantage trucking continues relative less development particular, a is our customers reducing issue.

over for Our discuss factors, lines. that, grow solution it integrated and suite and a providers offering that Intermodal of partners will taken continue also bring compelling ensure Hub are of to will Phil believe And together, like we our full which investing to provide significant who I performance Group to the can for these clients. can We service with capital services to to competitiveness. hand Intermodal, their a service enhance support our backdrop growth

Phil Yeager

Dave. thank all entire to market. you, for our our this I wanted Hub Thank in efforts supporting clients also their team dynamic in

bring our as chain many We supply the a but trusted customers, will to challenges, have our partner. and has to team while deepening continue overcome worked we support value diligently

while was up and increased points year-over-year. was Transcon local basis a increased local flat, revenue and Intermodal quarter, XX%, as margin East year-over-year. of the percentage For XXX volume gross declined X% was volumes West XX%, X% up sales

remainder realized While pricing a believe the have the to in we strong taken strong the margin renewals been changes environment, has support our accessorial the were the throughout year. our program it of not actions quarter. expansion of benefits and will fully We

actions year-over-year. and XX% gross put believe, drivers in we pay strong and this grade container had largely percentage These fleet. year peak we facility actions, costs, to all inflation, have including are of place of which laser-focused retain of wage growth, our able we are rail continued X,XXX receive and support through mitigating. an support on margin in into order will as revenue to sales Logistics orders customer In and higher we growth results, elevated increase year. direct our this will incurring our we delivering with next be a in worked demand, recruit third-party season capacity injection, driver growth all in to to aggressively cost, flat However, ensure usage, have

have has for pipeline continued commercial facing and logistics to Outsourced growth on challenges today’s improving focus given across yield the growth excellent are enhancements transportation offerings. through an in top our many operational environment. difficult shippers line We and management

addition, our profitability. through In and are and technology efficiency scale we better leveraging

We of will strong plan onboarding. losses the pandemic overlapping now year in the customer to last at see and back be due peak growth to from the half

enhanced our have seeing We improvements margin, are sequential line growth. sustaining CaseStack strong processes at top and while in

ahead been a are will help but very our of as our and thus bring NSC sales experience solve powerful, that we synergy believe target synergies. solutions standalone Lastly, has most creating supply we for continue their together we our notably are seamless these more customers, are to a capture, integration and our on These challenges offerings ongoing great clients recent far, effectively. our we chain in

growth engine for very margin X% XXX brokerage us We to well the from increase end-to-end fact, the door In on foreign of quarter of XX% percentage factory’s compression we a year-over-year. future. NSC, in supply be since consumer, that growth into allowed revenue basis believe a had we’ve several had complete new strong with acquisition a volume points the will chain wins which to in manage and us the have gross

spot service successfully We in maintain on we our recovery business of commitments market, for strategic have customers’ while XX% and shifted the contractual needs, transactional ensuring to clients. support volume managing

and to opportunities growth in to longer-term enhance continue will while automating generation sales procurement, anticipate scale and further and which will lead and we plan As enhancement. growing We bids, efficiency operation growth. for and margin our invest in teams, capacity processes we our to renew

driven of a are effectively growth. clients. we a with X%, declined will it now revenues strong improving third-party financial higher percentage to percentage capital, and leadership and was minimize The to performance. gross on costs, our sales increased dedicated and as to the manage in as driver, points we business we our we basis expense while pipeline for insurance margin profitable to ensure Lastly, well Geoff discuss turn process increased capacity returns decline by have and working I over made which maintenance of are operational year-over-year. This gross enhancements margin all as XXX have

Geoff DeMartino

Phil. you, Thank

was revenue in basis lines performance, total basis XX half to the points relative and revenue, our to which all relative QX our with margin XX of is pleased of revenue points improvement million XX.X% second are company with Gross QX $XXX an We and up of XX%. of growth service or XXXX.

We continue equal partially and expenses due our and revenue quarterly lower cost to XX.X% with by offset cost quarter to benefits X.X% compared expense, increased exhibit incentive Salaries to year. expense salaries. for compensation to and of benefits as strong control, last primarily the

the expenses Our per non-driver and acquisition due NSC earnings trailer the million prior donation in excluding quarter year, as of expenses. our General quarter the to headcount to compares consulting share technology $X.XX. the EPS year-over-year, compared X% Hub impact diluted which This was declined significant and of is $X.XX by over $X initiatives. XXXX. of to the administrative efficiency by down and for refrigerated diluted second Group’s included

Our on cash in was for hand. We generated ended million of $XX quarter million the EBITDA tax the of XX.X%. over rate with quarter $XXX and

are zero debt priorities reinvest have net acquisitions. for We business and capital in through and our to flow cash the expenditures strategic

to per our the share, raising to $X.XX we $X.XX announced are XXXX expectation from $X.XX We May. to up in $X.XX EPS that

of the revenue range, expect XX.X% We our increases rate will up and as by of margin wages. as and drayage grow driver forecast offset we in a mid-single volumes XXXX, revenue gross growing Intermodal year, for to digits. higher third-party result of percentage transportation, percent rail For for high-teens the with partially a costs XX.X%

consumer driving for We and inventory continue levels, which to restock. need the see strong low retail is our to customers demand

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

be tax our for half. the expect second We to XX% rate will XX%

expenditure $XXX forecast at to million $XXX Our capital XXXX unchanged million. is

and along containers adding grow to our with will refrigerated tractors We containers this fleet. XXX be X,XXX XXX and refresh year, approximately

$X.X approximately $X.X We which annual By compound to and announce XX%. margin to to pleased revenue represents expect are targets. range X% from growth of XXXX, billion revenue long-term also will we billion,

and through our of containers customer investments growth proposition expect be organic experience, half superior We increase by strong and value in will ongoing driven tractors. this technology, our our

be core services, add logistics operations and continue suite strengthen will in We businesses to our of relationships. scale of active our build our that non-asset acquirers customer to

equipment X.X% remarks. We as Margins X.X%, Dave, efficiency. technology business, our back benefit focus will range from investments and you operating margins are range our income making closing to will expect continued will in long-term our to to cost both on from operating as EBITDA well and from X.X%. for X.X% we in the margins

Dave Yeager

Thanks, Geoff.

is at cost-efficient questions. XXXX Demand remains our of least half our as up the need customers any with And of will of very through that levels to solutions the outlook Our offer high optimistic. we open strong in service. continue all that, to first lines call business

Operator

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

Your line open. is

Justin Long

and good afternoon. Thanks

Dave Yeager

afternoon. Good

Justin Long

growth, on provide deployed can with I’ll that to amount on wanted needs for it’s be range. half the term as guidance. about to helpful one Any just you capital that hit a to start the the it and revenue longer organic operating was in like it’s Geoff, needs to wide clarify targets? that be feel hear we margins, but half range of the order capital think deployed. acquisition-driven, pretty color And to you these both

Is you a maybe or how talk about So that? key range the trough we kind that should of of on the about could both think spectrum? ends just drivers to peak

Geoff DeMartino

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

is M&A. of increase revenue and half to So, half going through forecasted organic be in our

the see. in acquisition We’re we growth the through will going reinvest organic to support business, rate through our continue CapEx both that then and spending that the obviously to

On single-digit going to mid CAGRs. the lead Intermodal side, is Certainly, we’re path organic looking growth there. the high to organic at

going tractor fleet and our invest build, our and container to to continue fleet. We’re both

our to own of the to look mix to do XX% fleet improve on trades that going over We’re up time. we

to investments. have to structure that’s We those very conservative a capital make going allow us

that that debt container the the currently penciled to believe $XXX capital that fleet. can fleet and so hit required million We growth We’re the to at zero, approximately level up the tractor time. to net we’ve X, the and per to year. be of we’re to X comfortable over expenditures these over can in the that, out look combined next And of deploy business years the investment acquisition meet spending given going we’re power of handle earnings we that with targets,

on cycle. point the We’re the meant EBITDA encompass, ranges both your operating ranges, peak is margin comfortable yes, reported to leverage pricing that To and trough and are those a with that we’ve that. from answer yes, the

do which, get efficiencies from continue the to We’re and going will that over the we’re the we to fleet own going where we’re to making on you as cost grow forward. operating cost the pursue, a the margins running well time returns we’re on there several over trade your on doing to investments based continue side, going is the business advantage that to going as look know, to been that as to those last significant years, we’ve more in

Justin Long

the dynamics? And we And achievable will could as operating think is bid that everything we do and year just be margin you next that the pricing into high look end range obviously, re-priced of have by season. then, implemented given something from

Geoff DeMartino

key to and Yes. a certainly pricing be driver out we That’s next year. certainly could cycle, that going it’s possible achieving another is be range coming of strong

Justin Long

I guess, for really saw of stood terms actually And We a outperformance me, quarter decline. sequential last the expenses question in out. this operating

like? half that in So any expenses color cadence and operating give the second on you could can what look quarterly

Geoff DeMartino

Yes. Sure.

just is more talked We’ve later midpoint, use The for So big year that had factor the there And swing part if year. compensation the expense. of going our our to have $X.XX forecast. as the that. doing about $X.XX. you in incentive We’ve are we is expense the to guide math,

the and we’re as is intention for later we’re to margins that our that the expense in achieve well. year intending to way accounting gross more with that line So in higher of book

we sequential towards expenses – improvement and So growth costs sequential the of the second in a will half or see year.

there, too, swing other factor The sale. gain is on

year-to-date, So QX or impacted I that about gain million on and sale $X the of generated benefited – number guess, of well. as equipment, we’ve

Justin Long

assuming the gains rest Okay. year. no the And you’re for of

Geoff DeMartino

factored going – but forecast, we haven’t have it’s likely that have Yes, some. our I we’re think to certainly into

Justin Long

time. will I there. the leave I appreciate great. Okay,

Geoff DeMartino

welcome. are You

Operator

Scott next from Wolfe question Group comes Research. from And

Your line is open.

Scott Group

afternoon thanks. Hey, Good guys.

If margins want we more to do from operating or – see become I drayage? a better just Intermodal of that business the that shouldn’t I the own more to guys So things. follow-up is of their some few on going like guess, intensive, asset warrant require, other

Phil Yeager

model. our yes, margin chassis partners capital we towards gone And we increase. Phil. there, with working would should have and model is operating are that. rail with differences our our This Obviously, that Yes. in-house, a don’t agree few have bring There as Sure. I more with non-asset a going really on

those capital obviously and to a that should our But would I during perspective. range getting going will about a driver well bit little to a with us be the be there come is maintain that adjustment that’s cost end So we years, and from XX%, yes, trough stronger inevitably structure high the market that the and pricing margin higher focus in future margin will help as is read drive help a of an mix, to but and higher that, think, some different of margin. company think us sustain getting that on and

Dave Yeager

continue are but brokerage And ROIC our a add businesses, are I attractive grow very of are going both typically our to so too, and just that, have profile. – to asset a we logistics in non-asset-based, to profile, margin which would lower have obviously

Scott Group

And sort like? of if Right. look preliminary and fourth? about thoughts Can on could margin gross cadence have the you initial you third you in ‘XX expect what talk of how any

Geoff DeMartino

Sure.

year we guide the margin million, north expect so the $XX.X gross for the year. $XX.X of is So exit certainly XX% to be to we as for

year-over-year We’ve I got at as trough customers with on QX second in at, terms the that their so think cadence of rates basis the happened chunk of and expect our May June another going actually significant days QX, is to went about XX well, where XX% the QX the the we’re those today, – most will this of last last to that on had end set saw year. volume point at we over that being quarter, through just repriced just from repricing have path. the here repriced. you the We’ve in, stand continue XX% a got, big we

in So now will pretty in result half. that in be significant and is a pickup the pricing there a we second as margins realizing

Scott Group

embargoes, quarter? of the or thoughts Okay, volumes more thanks. that costs more, impacting one But the international on it’s in And are, maybe can think than third rail domestic. if on I some thoughts and some how and just it’s that just whatever I any they ask

Dave Yeager

believe, actually network and down is does between to that’s did I the recently. better. slight if their now, far and allow was Hi, this Pacific X Los Angeles strictly anything, operate the so UP Right it Scott, probably negatively but days impact enhancement. not clear service is Chicago, as shut Union did on for, was it up bound really And intermodal us. East actually like a or their network Dave. X little them candidly, international, as I skeptical, And it a

are a it’s it’s and operating think I given people thought obviously they help that I did the to So think somewhat. something actually fluidity unconventional, while of somewhat lot have

Scott Group

it. Got Thank you, guys.

Dave Yeager

Thanks.

Operator

Fowler next KeyBanc. from And comes question our from Todd

line Your is open.

Todd Fowler

and Thanks Great. evening. good

can the for On you the give inorganic large targets, sense about would acquisitions? the one be do Is of – this came or in piece? versus us leverage – comfortable to acquisitions a acquisition later a two inorganic the came larger longer the level smaller equation, piece of a you’d term looking something get of And then how there to you you be if series sooner process? of the think that is or with

Geoff DeMartino

Yes. Sure.

the scenarios. modeled of kind in million to the both modeled and out X So of years. larger of years, we’ve $XXX actually next a million $XXX we’ve X one revenue deal for or modeled We’ve

certainly either our comfortable support capital think We’re with both. structure one. We can

have investment high X on within can get the up support level we’re to manageable year more We’re confident Xx. capital a of side, down X.X structure that that or down comfortable to going the of needs. But like EBITDA Xx would we kind under leverage as as capital but to that first the

Todd Fowler

margin a be maybe efficiencies that large overheads a costs more you just corporate some mean, spreading doesn’t the helpful, across Is organization? within another Or I side, wouldn’t you’ve some base. overhead you see there And organization, that’s operating one some implied why would leverage reason then short-term? It That’s back got holding revenue as seem guidance. in think is I within margin the on like a the the there there something larger larger Geoff. getting Okay. and guidance, there from from that, would

Geoff DeMartino

to intend in more that. doing certainly expense overhead, corporate would to which We fixed No. be the nature. been We’ve tends leverage

continue and really do to perspective. we look you’ve you of down range if think, up encompassing to we seen was I The the XX gave markets months, from last more rate expect do meant to be XX a that, markets would that. over us and to

Todd Fowler

Got it.

Okay. just That one helps. the updated I’ll Thanks. over. wide kind would ends both at put range the half, takes of quarters what it the or we’ve But end so go, It’s the guidance low what got a think and about still And then at end and relatively last given second fact the in the just of the on the of as you curious are of got some eye turn your I’m you the high range? two that puts that just to you range.

Phil Yeager

Phil. This Todd. is Sure, Yes.

of will the turns is I certainly obviously, have. the we ability season. very puts in in obviously to chassis is terminals, strong Intermodal that of shortages. the we’re service congestion Network we’re peak on strong rail, out capacity line and we There challenges closely be, very rail have watching segment, get think think the something pricing takes a that realize and going to really fluidity

as our You with well as facility congestion. drivers customer own our have parties and drainage third congestion, both

new with we’re wage So all large put challenges mitigate or and that done in driver We’ve retention performance, we’re beneficial of partners. solving and night in align proactive accessorial going whether some or aligned productivity pay, rail We’ve very bonuses work, in and safety behavior putting all incentives those adjusted customers better there, are our our their really our have actions very increases. things, to that. those it’s programs operationally very are being to think to We’ve with be our weekend I facing. with

largest mitigate we’re fluidity continue to that factor through able would feel be that though we’re improvements. to is challenge. time, to get that the I QX to fluidity We quarter-to-quarter, that progress as need We probably same QX. the at network the we So watching making QX. can right But to be saw that maintain

the feel we about very Beyond good market. that,

very onboarding on brokerage margin We strong to have well. that Logistics coming really support division, expansion then in Dedicated our and will just coming And growth. in continues performed

a to would going watch So great network biggest end just making hit in to range. continue high of that that and get say sure I to the fluidity Intermodal, will we is out we the in up the position be be

Todd Fowler

good. time. sounds for It Good Okay. luck. the Thanks

Dave Yeager

Thanks, Todd.

Operator

next question from Jason from your Seidl comes Cowen. And

is open. Your line

Jason Seidl

own operator. bit good little XQ, going Wanted was afternoon. versus talk capacity, Gentlemen, Thank business of in about the you, party your third your percent a to drayage? what drayage internal

Geoff DeMartino

In our on we did Yes. QX, about XX% fleet.

Jason Seidl

prior the What that does year? compare to

Geoff DeMartino

season at XX%, were end last on beginning of at the we year, July last volume starting very really in of a really last year, took But really of did we well starting year QX and Last the year. about at bid QX. lot

second And half come in so on the did our down own year the to percent mid-XXs. start last fleet of our to

we’re of QX. range that the so in lower kind end of And now at

Jason Seidl

expense market Okay. capacity, now? much how this for right current And is you in that third-party more

Geoff DeMartino

of be lower increase it’s a basis, is higher basis. haul, a a – obviously, typically cost that on longer going a the maybe percentage Yes, on dollars lane, gap to if to but amount regional XX%. Can or depending XX% be on is

of really in So loads and But capacity. a it’s is seen a There – available. third-party lot we’ve yes, that varies there. certainly in range tightness

relationships we’re the strong also these we competitive in us fluctuations, rates make have need third manage our of parties that to that paying. we’re market sure help sort We with through but staying

Jason Seidl

to up raise trying I most And companies rates. are to keep and what’s the because to get plan up XX%? trucking mean, always

you are ‘XX? XX% going to by from now XX% get how to So

Phil Yeager

Sure.

to a work, our day. have sure the behavior, what have celebrating every So a making so great strong of mix incentive, wages, competitive are it’s right that drivers to we place doing

offering great a new fleet. we where a have have We very

night. Our are home drivers every

And we in making great intermodal, think good have very home, a able his from opportunity to we in a be mentioned just wage, experience. Dave and particular, that a prepared choice. great strong remarks, consistent career and being having very drivers have work within As equipment

So really, driver great think now, be a to certainly sure challenging and wages we those making doable. going we experience. it’s very Right I it But it’s is that maintain competitive sure that stay that do making with very in anticipate, hiring and are drivers drivers. currently maintain kind we in I wages somewhat, adding of that the maybe that more inflation high though, time will level don’t we a – we see of as as consistency normalize seeing.

So, be challenging in approach, will plan market, it’s forever, we and sure a very certainly staying but make that not to so the hit we our can market are level. consistent we

Jason Seidl

Okay. somebody it. over appreciate else. will turn it I to I

Dave Yeager

you. Thank

Operator

And from question from our Majors Bascome next comes Susquehanna.

open. is line Your

Bascome Majors

Yes. Good taking for questions. evening my and thanks

the benchmark that bit you truckload have to how any you between you that like implemented other in talk gap compares years, the about East a With and the recently, against? period very the West little and would last bids pricing can few to

Phil Yeager

capacity in obviously is conversion This – is a less truckload Phil. becoming or space availability to There more and as continued Yes. the Sure. intermodal prices available. are

effective our we about we been So, able of August – are to in have XX% bid, Xst. as

long-haul able that that there That convert at seen. we to where longer higher rates gap. high-teens, price, our is in truckload. that truckload. even was then we quarter and you going to make were, that getting XX% that, rate in in depending rate We on sort but focused on staying term shorter-haul XX% I for volumes is differential. business that XX% obviously have base where XX% intermodal the in it that you the well. might the up have been to that that’s East is on we are And larger point. as as there up depending the XX% to are increases, low gap differential are closing seen on a business. And would high see to increases have Obviously, the shorter-haul closing That Transcon and as and the focused some why lanes, of think of be Transcon a this say be, That’s versus lane, might business somewhere in part about look versus grow larger in we gap why back chasing have gap And that’s to XX% range to

as that some we customers with that We times, we but costs, not we letting have that slow seen our increased compress with and return are yields around mentioned, are being third sure drivers, either. parties, making transparent

those still increases think there, as be we coming the got of I last last of the and soon, on and will well them front will kind So, those through as as opportunities bids that prices get that associated benefit new of come significant of this have with year out we to quarter season. – cycle see maybe the end of being on in

Bascome Majors

in how to changed forward I capacity opportunity duration into the But environment are of discussions business about that having much grow would like to and And you today. as you is for discussion Thank convert mean, as longer beyond? term of visibility conversations that detail. I the any realize XXXX and next capacity convert or the this look simply not kind year? early to has and there people this

Phil Yeager

Sure. Yes.

sort there think agreement. around taking place of term many discussions are longer I

you to relationship right has live other, strategic up it Now built are customer, really going you are arrangement. have be that because, sides value the both track whether a with and to and of have of to long-term the obviously, only you where each the

to to are be I rate very next with the going right is – remains of year. certainly inflation continue It we making but there open those clients. believe into So, arrangements, going sorts to

margins. they with what aren’t we network-friendly with to growth having in business for expand to That need taking to visibility So, and that right make capital we ensure down is and structured customers, going sure on our want locking to certainty. there that gives helps those agreements correctly isn’t allow us helps are which us to expenditures do need freight. with to support now, us That what we

relationship. So, longer into continue – be But see move sort will contracts we think discussions parties as something more will you on we of I that – that a term more have for and forward. that good move to and all is index-based

Bascome Majors

Thank you.

Operator

Wadewitz comes question Tom UBS. next our from And from

Your is line open.

Mike Triano

is Mike wanted the guys. This I intermodal Hi container ask adds. Triano for to Tom. on about

the you mentioned in be you can get or in to you that whether still XQ think XQ those full this You weighted? more X,XXX getting you just start expect year. talk Could about

Phil Yeager

Yes.

We to are in those we think. get going to XX% QX, of XX%

that ensuring have been in. We aggressive very in get those

ships, We that’s loaded Also a are have status, we more imports. loaded in customers order those helping prioritization. us capacity to than on get converted to helping that for empty. and we the bring bringing past. in get in But our in we Typically, get have more

really new have a that on. that’s So, worked hard program we

think great team done the job there. I has a

So that and once in then over October XX% are we the remainder again, going get QX anything. are of kind to to QX. into December in timeframe – first we or XX% November in of week spill anticipating the but really Those to won’t

feeling we So, are good that. very about

Mike Triano

the would well. That’s volume Okay. have growth be that by you And as provide a the July great. great intermodal in got And could if month then you quarter? month-to-date,

Phil Yeager

about was year-over-year, was we Sure. Yes. July, Month-to-date flat. X% June X% XX% year-over-year. April, up up May and are down

Dave Yeager

when in are is lot this add as, July, as basis would container that term what focusing I is Although awful days the, it we is idle. Dave, we improving, would dead weekly on a in an sitting a

is with a But we the the warehouses. with far is there within to only amount continue that which that. so as control focus have. our areas times, on enhance believe can We can much or so there we we enhance our of capacity term as And service control destination will lot of

Mike Triano

Thanks for time. great. the Okay,

Dave Yeager

Thank you.

Operator

from comes Instructions] Evercore. the [Operator And Charles question from next Yukevich

open. is line Your

Charles Yukevich

electric thus pilot I with potential what an electric experiences the you truck fleet you give your my you taking Could ask afternoon. Good and like far to Thank about see for and trucks within us update question. on dedicated Daimler. would for drayage?

Phil Yeager

Yes, a it’s question. great

We about Southern the are really we are in California. excited running. pilot It’s

have far. thus We a learned deal, great

truck. Our drivers really smooth very ride. a enjoy the It’s

the usage miles gotten to the XXX the regenerative have good beyond allows which very with it of us had. elongate braking, We baseline that battery

us very exciting, gives think a that lot of and that’s So, something I opportunity.

with fits basis. the is a is we of of length electric turns miles, daily XX application for get the that Our so out haul on drivers around and our typically phenomenal and

on that that which on. really, of work going And more to on the with then about is going that more more for about utilization an to make turn a right, a partners that getting it of hour, can large asset, are because scale can to are get cut investment. down more, high of charging out support sort and need eight that having If be to expensive we electricity, it’s hours. return a the to to of we that higher infrastructure, weight, we and, feet cost it’s current asset So do is level to a ability the we the charge that – do how more flip you continue be sure make getting not capital-intensive, sure and our issue keep we we how therefore,

So very seen we far. what have with though, thus excited,

I great. applications are think the

that about very we have We and very put in are but well. of – trucks, and electric so gone for some excited orders receipt overall, XXXX a

Charles Yukevich

That’s great. the update. for Thanks

Operator

next Ossenbeck comes JPMorgan. from from our And question Brian

Your line is open.

Brian Ossenbeck

appreciate Hi. question. taking Thanks. the I you

investments longer to, long-term day. probably the targets? can of those come coming range, into focus the a opening you So, you every financial have the conversion on sort Can environment do or I a because have are mean, and as kind intermodal. and through story us the for remarks more give around the want the of of is I guess, I to embedded potential and but bit from is conversations term little you this into into rolls – service, up level think willing given service But think a the just maybe harder that? ESG all to what there of sell people growth it conversion you context to I to look kind bit that of made given what are reasonable back of everything around your

Phil Yeager

would we to point, an continue Yes. to be same as our we convert segment, seen more which think that. with consistent the the are and I would your is rates, with anticipating, there what growth on mentioned, Geoff organic have high-single pretty to in though, that I do say would past. Intermodal double-digit opportunity be that to

a in what emission a financial more the reduction. from COX our seeing component. come actually The to are metric efficiency are ESG environmental as committing customers fuel friendliness We given large and

And so the and something will important that in is that more become calculus. more

and to a into say that short-term, that that has invest folks we would been the those the so In challenge plan can are exceed certainly availability targets. I more capacity And and more for looking options.

utilize selective to we make our our as to we that, an effectively sure going service. We going possible, We third drivers and effective parties on. and it’s allow our provide business as turn to us are able want are assets, to what to on be operationally, that being take

this might that mean Now to people different things at time. in different moment

the and Others just fine. get Some to pick standard of you continue dock, to – service. see it customers hold really high off up to that’s us box get that want and their

a on be freight so right supply But to they say, different to there customers tolerance, for what network depending are in getting their moving the on yield well. options of from to are to and amount as their and other right selective different And is ability what’s activity to across I we a would the in keep good continuing the chain going now, generate providers. us stay continue fit

Geoff DeMartino

a allows been longer investments to service and take based offer we we And both expect share marketplace. superior to would on our our making, players to and fleet, intermodal tractor the add, fleet just the are term, in other have us to container product I non-asset which from continue

Brian Ossenbeck

And ESG. you it. Got mentioned

out your been earlier scorecards, Is commentary have on it’s nice – some those on into customers. saving bids? sort that much was figuring forward? have it’s the more of aware and at in there going getting about ways them to how to to Is their emissions really are a it’s it point people or least of numbers or scope-free reduce be think you dialing where I the emissions

Dave Yeager

are are they COX are for. is focused responsible that Dave. a the This sophisticated amount they very with clients, more of our reducing their And emissions on and monitoring larger, certainly lot Yes.

not to we of think emphasis it’s are upon a transportation question I many So, time, it’s execute going continues part and as them now. it. of to when think evolve, based on a just that, it monitoring in they but more bid providers actually this that of it. certainly, And are on do see And point at their selection I more this

Brian Ossenbeck

some rail you everywhere, we can East? but and If ask some Can from the as chassis follow-up, I the mentioned Great. give comments quick in service just some we things Obviously, just are and seen on the us well quick have one are you facilities. of West, embargoes tight metering with seeing EP there. those

to some part that are why bit can tough us is you. things Thank as And So, to July? the of you how from reason give start it’s improving here? context a little maybe

Phil Yeager

Yes. Sure.

you and challenges are we shortages and and the of and chassis some terminal are aware in think other the facilities, improve. I includes of congestion, East, in some yards seeing that those challenges

seeing having fluidity, down in to are long chassis QX We sequential as was and has are That sequentially. had a close boxes with all big issues availability back looking the with And we improved, QX in dwell we to been forward half come to part that July. and improved same well. a the strong that of

Brian Ossenbeck

you. Thank the appreciate Alright. time. I

Phil Yeager

Thanks.

Operator

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

Dave Yeager

the thank you on call. joining earnings Well, again us for

and you any always, additional have if questions. Geoff As available would Phil and I be

again. thank So, you

Operator

gentlemen. Thank today’s you, conference ladies call. This concludes and

You now may disconnect.

Hub (HUBG) 1 Aug 212021 Q2 Earnings call transcript