Hub (HUBG) 28 Oct 222022 Q3 Earnings call transcript

Company Profile

Participants

David Yeager	Chief Executive Officer
Phillip Yeager	President and Chief Operating Officer
Geoff DeMartino	Executive Vice President, Chief Financial Officer and Treasurer
Todd Fowler	KeyBanc
Jon Chappell	Evercore ISI
Elliot Alper	Cowen
Scott Group	Wolfe Research
Brian Ossenbeck	JPMorgan
Thomas Wadewitz	UBS
Bascome Majors	Susquehanna
Bruce Chan	Stifel
Justin Long	Stephens
David Zazula	Barclays

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello and welcome to the Hub Group Third Quarter 2022 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 this 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 judgment as to what may happen in the future. Statements that are forward-looking can be identified by the use of 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

David Yeager

third thank you for quarter Group's earnings and Hub call. afternoon Good in participating

and in Officer; to DeMartino, Hub's market. of strong the to The is President year-over-year more allows our strategy quarter Joining peak Financial all which The generally third of and We Hub's nature operating reflect the season. me shipping resilient be the today Phil Officer. Operating Chief diversification, are third Yeager, of the the fourth mitigate Chief quarter, cyclical helps doubling income. quarter transportation economic Hub Geoff had us a for which results resulted holiday during environments and our

the by clients, be versus feedback our judging However, will historic this muted norms. peak from

down our improve This in diversification to recent be percentage economy, businesses resiliency do based. agreements, based positioning market and significant our represent taken flow intermodal a more aggressively Beyond softening of value a non-asset overall will several continued our while which into our part cash as we also the we steps drainage, based begun for and believe free potential customers. results acquisitions along our that important We've and flexible to generate for to enhances organic of to higher with competitive deepening services, we acknowledge us are intermodal. allow our a we've in-source enhancements our to the in positioned XXXX, market. non-asset but With success our growth, a growing

to our Phil turn as And We expect over as model performance. our the I'll with to that, now benefit on continuing continue from to efficiencies. business focus call relentless well these adjustments to review operating

Phillip Yeager

West margin increased turn yield while and Gross declined service points in purchase times enhanced sequential and which Local you, storage strong revenue entire members. volume by to I on increased line driven an improvement a congratulating on organization Transcon discuss I their and which Dave. team initiatives was percentage, the by declined We on performance, offset is enhanced XX% to on-time customers our X% dramatically focus we costs now transportation XX%. XXX wanted lower X% ITS well utilization, customers. intermodal segments. and our will driven be in as volume the management service while Local percentage strike, impacted due revenue higher Thank deterioration our sales averted competitiveness to and our increased basis rail by haul in increased return East in a rail within increasing growth their shorter costs. performance. Volume start rail slower continues supporting Hub as driven XX% Group load as a quarter, per and was increase and X% a in year-over-year, of but through to the dedicated strong performance to intermodal in-source well by had our dedicated. as by

basis on of through increased economics in position offset sales believe with that our and continued have increased and customers growth a our We organic our transportation by volume drove was proposition. in as improve and existing profitable onboarded compelling chain is strong costs. Gross our and our new margin a on to this incremental acquisition and TAGG focus points warehousing Logistics dynamic increased environment. street XX% be We network as we'll opportunities rail capture our value partnerships, our through growth and focus service we continuous intermodal the supply purchase XXX savings with completed clients improvement. growth percentage revenue enhanced improved

solution, third-party Brokerage in of premier revenue addition year-over-year, believe are driven of by per increased XX% which XX% development long-term bring and customers. we the a our in the continuing With TAGG, will volume X% we increase value our and increase enable significant load. logistics to growth revenue

growth as the and addition due of LTL Our and offering. is growth Choptank to our in well as organic drive

points will improve ourselves Gross next from percentage fourth spot levels smaller sales of with we the as as a bid of more spot But improvement volumes shift aggressive and contractual our saw competition a service shipments. XX a for into year-over-year, help year margin mixed diversified market percentage our throughout continue to believe season. Our to capacity quarter XX% declined we year-over-year differentiate year-over-year in along offerings. amount and basis of as we'll see larger us

to to propelling service talent over are continuing growth. growing in focus in technology this assist in our and line discuss We performance. financial that, to our Geoff investing on important and I will it are to hand With

Geoff DeMartino

Thank you, Phil.

in today's with growth all lines XX% perform to business, revenue. total to well continued environment business Our of in strong a leading across increase

focus revenue margin recovery of X.X%. on gross operating pledge margin and Our a operating of income efforts and efficiency management, yield cost XX.X% of

tax by one down to expense from our of expenses Operating and consolidation expense from expenses use higher for from the office equipment. increase last X.X% X.X% equals our leverage our from and performance transportation due incremental gains at of expenses of continue cost of sale gross the We operating margin dollars last location cost Choptank with against to and legal year revenue, year. and TAGG offset

Our prior spent TAGG of and generated earnings which of quarter on for purchases. share million than share deliver a EBITDA million million the on the the $XXX and acquisition We $XXX quarter $X.XX, Logistics was $XXX per is more year. double

net which of have in capital invest continue acquisitions. us with We business strategic low indebtedness, to to and expenditures levels flexibility provides through our

of to the authorized $XXX part Class Board our stock. capital of repurchase As our of million our commitment common the recently shareholders, returning of A

per $XX.XX $XX.XX of between and we expect share. XXXX, For diluted EPS

approximately grow to revenue expect We $X.X billion. to

offset forecast will to volumes oil expect We driver transportation, XX.X% percent higher digits surcharges of for XXXX. rail revenues drainage We as a increases margin of as costs our revenue year, for for the wages. intermodal and and decline XX.X% single gross low third-party assets rate

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

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

Finally, is free balance sheet flow and generation. target. supported pristine introduced our our by In strong entire business revenue we cash margin and long-term our XXXX,

questions. recent purchases operator to in to offerings, new also Our that, equipment intermodal illustrative With while with the open are make we service acquisitions any strong Session scale line the will of cross-sell strategic and introducing it the business, our investments adding of over types our potential. turn I'll Question-and-Answer of to

Operator

[Operator the of your line with Fowler question KeyBanc. from first Please proceed Thank comes Todd Instructions] with Our you. question.

Todd Fowler

to at between are take for think fourth Great. the wants the and lot Maybe who of some high if question guidance puts versus kind you quarter, But for my you kind the difference of implied Thanks year, first there's end fourth out the just high just Dave and the I the cross of the don't and Phil variables end the macro, about for of we now? to what the obviously the the gets good what quarter. between it. end question, to term end, range still currents right or but low what finish a low the evening. in guidance a It's wide on shorter Geoff pretty a know

Geoff DeMartino

Geoff. Todd, this is Sure.

primarily is pricing our set at this point. So,

volume, gain would factors volume are or for decline we then the sequentially, real the surcharges, us expecting factor. So growth sale would which swing be be volume to decline, and on third

Todd Fowler

the in the year, third full see maybe what as what seeing now maybe a volume you're trends, the color just XQ. quarter XQ single far as you can and we Geoff, little And decline right most of talked on for bit about the digit was and but

Geoff DeMartino

volume third rather about that had we threaded Year-to-date months with basis September business around X%, basis. was in October, strike. is on from estimate activity sequential are down around X% the but In XXX we points or day a quarter, improvement today rail a our to year-over-year, it the do down Sure. of

Todd Fowler

way asset Thanks. viewed past comments and other light think about the way that about and the that cyclical? kind right what there what for Or cyclical anything it portfolio Is you you of is now sensitivity not you then but resiliency Okay. us Got XX% follow-up, in then into is and -- at And that to levers your a Is in it? changed. around my we has is this particularly about can any of the granular, as there can the a the Dave, much I'm a and about it. business truly that the that we've you've exposure looking improved little more of just had point, think seen model bit less think help then maybe that comments pull? diversified has that kind for can

David Yeager

Sure.

some begun also advantage a capacity, they where asset between have light. quarter our They drainage. revenue in In market So, they're flexibility continue XX% third to which a the powerful more we of XX% phenomenon the that about well. do that in but been contracts. can more and markets XXX We have as as points service have the trend is of has do tuned have to We past. down, rail basis property -- pretty we we're We've We'll XX% at in own up advantage, last in-source of lot over go a more have that up time. and much around and our didn't of now levers also year-over-year. based lot than our of a

XXXX. to to leave and decline a that and cost last of from We about we'll start of that. one a our then So, in see downturn. information, begun anticipation playbook in do piece to already back in around XXXX The that EPS last reduction look to peak to We collect ran time to you. we implement XXXX trough. did for savings in We've had opportunities. XX% just a continue And

So consider this to other factor that's time around. one

Phillip Yeager

add, we great an in opportunistic there playbook That's to creative to that's but focus that We're into continue significant I us the I going we've to model good a Phil. going business, really a a the run with our think diversification is continuing this comes for going continue really it be cash to I ours. acquirer. in we're of a have have kick think to of kick just acquisitions. to free as allow also reputation and to of and piece investing off play. going off And look be amount now And flow

look warehousing of particular delivery. resilient consolidation most the TAGG all the and profile in recent business think as as -- acquisitions from a our and margin well Choptank the and at of more I home with in stickiness mile NSD, those much both are if you final we find models,

the on the good we've stickier about more which it's also made intermodal much to the brokerage because to very side, services and be historically. our feel make volatile of So, adjustments can suite helping business

I of which So, a play that place changes and is seeing think lot good out, great. put we are them into we've

Todd Fowler

but to was that you changes of rail just decline And in that XX% be good. Yeah, in had contracts put also the and some then XXXX, the before …

Phillip Yeager

Yeah.

Todd Fowler

Good. Okay.

Phillip Yeager

diversification continued the acquisition. through right. That's the Without

Todd Fowler

just It we to reference Yeah. correct. wanted sure was Understood. frame that make got of

So time tonight. thanks for the

Phillip Yeager

Thanks Todd.

Operator

And with our Jon Evercore you. proceed ISI. the Please question Chappell of next Thank comes question. from line your with

Jon Chappell

Geoff, you referenced fourth Good you related to afternoon. quarter. you. Thank the as this kind

the as said pricing July, bid At the of through season effectively the you that the last were peak, said You you fixed. call the in is well. time

year? part now other is think pricing? to the weigh of see start where the and on of some intermodal that concerns in we other segments the of step pricing transport, maybe significant So insinuated, next early start baked think some renewals about the I demand as first half really do weakness they've if could some through factors to get we down Or you

Geoff DeMartino

XX% Yeah. The will March timeframe. probably reprice in of About is XX% of to our QX. in volume that the bulk

of through part we certainly the year. middle the by of But next carrying year a XX% us have So tailwind repriced. the is first

David Yeager

customers well also I lot our a and so in pretty of would are in the timeframe, larger come highlight place. those third quarter

as intermodal has little going play to but a moved I how exactly vertically quite think early it's truckload. as significantly not think historically out, season's good tell I to

going to our maximizing to load that's on for within generate is really continue how That's focus the to return be per us. going And the day. Intermodal we the be focus highest Our margin segment.

think the to I is balance opportunity we in more So, have create network. an

with an costs that's repositioning on at and year-over-year turn opportunity we time. have season out empty help Our really we're looking as bid also and we're increased enter basis, and a freight that'll offer volume that truck from right truck at now to customers savings on the our as well service have versus with as as focusing that improved we we look products intermodal. folks converting the But have,

Geoff DeMartino

to looking add XX% West and market you're lower And long at XX% I even Local still. today's haul, rate Transcon, too, relative would just a in to intermodal truckload

Jon Chappell

tremendous. the makes question, led there look That mentioned and if resources, my you part underperforming of the to of sense. to you equipment which amount West I East best kind something been of even Okay. me has down have cetera, your the network I of think truckload network and you the that turns especially is, maybe the entire is of we to it quarters, and was have has where really the And do last market, When can of And the equipment before you're couple think still your really, investment and even your about down XX%, an you on in maybe -- and Phil, the capital, kind balance? Is part contract the lagger balance, was best XX%, come et part that quarter at the second East your positioning getting think decelerate, returns? variance of follow commitments, same this up between region? prioritize Or deemphasize down. truckload

Phillip Yeager

Yeah.

margin question. think model, network we that our And I run per a again, focusing on once it's So, we're load. great when maximizing

I of which lanes to a load, how up think think that story per I our bright focusing trying maintain on our tells see in discipline, been the you for pricing we've can network. revenue showing

we non-controllable mentioned think factors we point I look ones, ones. But I XXX down certainly end there's averted when rail that's have the the hoping from factors, bit. impact a look look the and volume, in the discussions. our at basis think non-controllable some I strike, all markets little we're I resolved at slowed When at some controllable controllable when upcoming

from Inventories down so up customers. very slow obviously, in those seen and a e-commerce centric. demand and are have retail We moved we've overall

tail. deeper focusing and adding we're to with So, long on client clients, base but also that those getting diversifying our

We have deliberately in focused long over time segments. on haul growing

I seen West Local lastly, perhaps see think gap associated of Local mainly Transcon last out flip business the really because years has stickiness has the play that with that sensitivity. versus saw nearly of as move intermodal don't couple that's our that and it you've then intermodal more over and than probably much we truck intermodal in I truck. really our it were where And outgrown moving, forth East the moved. and in in both between flip and price back between or have and East providers We or rate think truck transit around we the quickly,

as to for And where return, maximize running our so, balance look we're I We we at low going margin it that. day, do think our back do that for and as of we need capacity to us, I maximize allocate velocity equipment can and times. well. But to improve turn the a network think have network. is we part that creating capacity latent getting in that and

Jon Chappell

Geoff. Thanks Phil. Thanks helpful. Super

Operator

next our Alper Please proceed comes with of Cowen. with your And Elliot question line questions. you. Thank from the

Elliot Alper

the question. Thanks for Great.

of quantify volumes on volumes? you guidance, there high disruption a part come the whether of I significant level range not maybe is a new increased the the based potential Some any guess strike. of fourth speak are assumptions or on So in any across or rail have impact quarter? holding headlines at rail the to guidance on back can

David Yeager

XXXX. Yeah. an volume from But per improvement We've outcomes into factored XXXX on a sequentially in we the day October. within on range seen basis of the potential September to have

yet. that impact news So it as seem like doesn't to of there's any

Elliot Alper

Can Maybe follow Understood. crossing what's recent the the clear all, helpful. with guys success multiples your or how color acquisitions. trends any at up, would then about come down market? maybe within you talk there some Okay. M&A you. recent desk, some you And had for Thank have be

David Yeager

or We desk. probably seven a seen a six come on slowdown new have across Yeah. our opportunities actually the that weeks last

been little leading bit time we companies of really get So to much I But a financing outbounds sellers. to more in sure with a had on with the and slowdown. think that doing either acquisitions cultural have bilateral we've success and have a on that know to are or probably good spend conditions economic of combination negotiations of they're frankly, on able fit a kind make and success markets

there think slowdown. is a be going to I So,

I to for is sector we think the going back in private interest to through some their going of continue equity pull probably impact time. ability grow But think our that's from acquisition. period to to don't

Geoff DeMartino

going we that us selling sheet, offerings, for that can additional getting out our the adding with timing the good benefit is balance in companies it playbook from our we're investment same our be with opportunities. market service to and deeper have, customers, actively think We And great and very continuing diversifying to run really though. cross

Elliot Alper

it. I Okay. Great. Thank appreciate you.

Operator

Thank the And Research. Scott Group you. line Please proceed Wolfe with of with question. from comes next our your question

Scott Group

Afternoon thanks. Hey, guys.

David Yeager

Hey, Scott.

Scott Group

less variability, gross about So, be gross more when you about to earnings volatility? of earnings ultimately it driver more the less What's variability? talk OpEx going variability, revenue, is less margin

David Yeager

past. levers in have in that executed we and didn't think around those factor contract biggest is those have down rail of past cost I a downturns, on to prior we've I we're up, business. key features in we price line our in factor this that obviously time, price we've going had biggest we That's have Well think the the pull, the and the really

conditions, volatility and is so, in to that the And going less based lead think earnings. on flex with to market ability down flex we to up

Geoff DeMartino

our margin gross I And seen we And think and cost hold structure at levers ask below think and services, stickier our also -- maintain the contractual with levels I past margin Yeah. it's we'll the in well a are continue to think to more just in can us, gross as are you've Scott, with as in do very from additional then both that these line, on a higher I than but we adding perspective, would continue disciplined history. we and that. we'll perspective,

Scott Group

is what like of you and down? go think mean, talk what gross recycle I to maybe there now these that like -- and that to will that up margin about any range intermodal new with rail historically contracts was way like range be what

Geoff DeMartino

obviously now. Sure. strong environment pretty a price I we're I right think, mean, in

back higher and certainly and margin. Where this XX% we've levels. exit where can low XX% off where ago. of we You than our were kind year, the we're guide much X QX X, going come in down years to see we're the to But X, gross

I don't think it's points our basis north where that back a we're give now, probably XXX next on think year. frame least so But with we come have think call. at to concrete number be that term. or right budget XXXX XXX a for of that's start good We're just to reference going is next I to of I longer more process starting you obviously We'll our with. to

Scott Group

No. base trying variability is be we gross historically different the I I was more in peak point margin now it'll meaning points. to XXX with contracts, margins mean, rail like think trough guess I there's and ask like, a of what the base XXX

Geoff DeMartino

variability feature. That's We'd probably able be half through of that Yeah. the half cut seen in the past. we've to

Scott Group

of have And how down we last we Okay. potential about thing, offset? just of comp then next a a earnings as do think incentive do year, the if what sort year

Geoff DeMartino

year-to-year. $XX expense million swing the of single much -- line. a as -- be could a driver operating on about the That's Sure. biggest probably That's the as

David Yeager

would have that Our be to happen. goal not

Scott Group

I'm sure.

Thank guys. Okay. it. you Appreciate

David Yeager

Thanks Scott.

Operator

the And with Brian our Please JPMorgan. comes with you. of question from Ossenbeck proceed your Thank question. next line

Brian Ossenbeck

I only Wanted house. for had in It's could to months little a Thanks into afternoon. more that see on good question. taking a if go since guess Hey, been couple you now, detail acquisition. TAGG you

it's fits maybe the those you You How initial what portfolio? all and the to in kind can far. of goals as would sense see on are strategic how What's progressing be so the things, here helpful a to feedback, get and cross-selling elaborate how progressing. those

Geoff DeMartino

really the been which two they back the we and us gives that serving We've in we The There of really past. acquisition, an factors made small fulfillment acquisition some midsize looking warehousing in e-commerce have didn't goods TAGG consolidation consumer us an been were we've business companies, let space our acquisition for main this in that, a got great didn't but since that Yeah. CaseStack model fulfillment really of e-commerce Sure. CaseStack XXXX. have capability that in capability. do time. and And

so and business. were were pursue add We part to customer's not And we we only to obtain able wanted a that capability. of wallet able to of share

now can have so, -- And that to. list of service both existing of can got of now were customers for who our had our we've list also that back have we the business But that was, footprint offer customers go and we a who based win we us looking about and had, in acquisition of factor X million some spoke gives as partners, warehousing we to footprint a the X the the CaseStack of costs other million ability opportunities. That us -- understanding had with now well. around to for new have million space That we partial with non-asset non-asset It to on And when of that. non-asset. the past cost, a quickly a that rates didn't we space, better more to gives also us asset gives market. based feet a where that square given adds between XX-XX of it serve with that the close and mix so our leverage we scale square asset for. based we negotiating based we're feet TAGG up new $X in type

Phillip Yeager

business. with customers in-sourcing balanced a it optimize only third cross-selling also we're our margin with perspective, And right much to Since I the thought now. our I would and the But do base the been phenomenal the seeing think that partners asset, that not demand, it's model, actually has acquisition, we're add, would from just growing on receptivity take we're we been party by far perspective customer anything from non-asset play from right our and that exceeding I able in a but out quicker.

it's the didn't great very and exceeding and really was the team. has reputation expectations worked I team think have that that before the with supply expertise them just So, to legacy them my us bringing entire us TAGG, to outsource want their TAGG a have to a seeing we a And versus They we're component. by that piece customers, so, give other together chain in that deeper get more well. TAGG it's and And tying great that have transportation. for we're in been business

really see And So, I thus it what phenomenal to to think has a just excited can been continue we acquisition far. do.

Brian Ossenbeck

And on the actual fulfillment side, contractors is that as done by well? third-party

Phillip Yeager

We've And seasonal it's XX are primarily No. about by We got employees. warehouses contractors the use but company those primarily across country. do spikes, for done employees.

Brian Ossenbeck

sort was just Then the at in-sourcing. look and constraints second do increase for on of some quarter? percentage, point and you you offer and extent next follow when sort of of also any Okay. that have the terms rough up this exiting percent on the in of we the year, want goal given what see a sequentially year equipment, sensitivity for expect Where that you be or helpful? quick drayage line, be the would to drivers margin versus to on What to mean a bottom the and

Geoff DeMartino

Sure.

about year-over-year. which the in quarter drivers, profitability at incremental a were we about points. So, XXX XX% It's million half points basis basis sequentially. had own our of points about and We for recognize of every hundred of markets XXX in-sourced in a basis that's we

to get to is XX%. long-term Our goal

our we're working through think I budget.

of going of for will through probably capital the the year. new around we're XX% productivity. coming actually be some require for end That think targeting bulk next trackers. is to that I But

seating plan So, of day. become running days. more we're truck the per from perspective. more that loads going drivers through how And benefits Each and those efficient We've running. seeing to in slip per run efficiency we driver's more an driver

Phillip Yeager

efficient. recruiting. feeding significantly from fleet. to at our not some be, and markets really where We're and as couple a see to our We're We're a more important X.XX now, share still X.X higher get in but drivers more nice capabilities. of our to Yeah. tractor We opportunities improving enhanced We've driver a able have in ago. years progress want become in-sourcing went we been clip adding that for recruiting we've ratio near to we're to and continue we about very slip us

So, every nearing average be invest offering age be in I it's got value. a great market, get they to of and years, our X.X of and The to at night, the just great where go is a them to high home the end newest drivers the we've show be to drivers fleet think equipment. asset can that paid and able

we're well. our turnover So, that drivers, seeing a in and numbers up this point at for I think, show we're as destination

Brian Ossenbeck

for All right. Great. Thanks the detail.

Operator

Thank you. Tom your next with our question. with proceed the And question Please from Wadewitz UBS. comes line of

Thomas Wadewitz

growth where better know interest dynamic of But Yeah. bit which Good different the intermodal afternoon. some you're players. purchase think I in or volume competitive you've Wanted in lot the to I how on flexibility seems don't rail -- focus. transportation, terms got growing there in from ask you at of guess a you in about about new XXXX. you pay. mean, it I like a pricing, there's

you aggressive about think So, how competitive dynamic. wondering I'm the be you more want. you just could if

be to going competition there's in in it's think because do stable, risks market think some kind grow of you You or increase to there's volume? people that wanted

David Yeager

we Yeah. about of this our pulling our levers This focused beginning been have I control, some but market growth, we're seen is the at I've that our think that more a in all road. over is it, reduce that to Dave. also margin. at would for that just in very softening Phil a bit in as costs talking the time I and competition on do suggest point stable as particularly focused Hub, from time, speaking stable see point on very costs. as fact to this little We're are control Geoff are very of within you the we're and focused and to on

So, it's allow believe impossible reasonable invest us that'll volumes, going overall continue continue intermodal. to grow to I that the to maintain also but in don't to margins be to not only

Thomas Wadewitz

just you're to in that with persist in price terms the that maybe course Do volume, or bit you going change? focus think your of focus may on less profitability stay Is to on you think going is a and more that,

David Yeager

we'll do both. again, think, I

on we'll that deliver the particular And in shareholders. growing same lanes. think our as competitive focusing though be I we'll continuing be solid results financial on a for to volume we advantage. We have feel time, focused at

Geoff DeMartino

the a I intermodal balance we've grow over and years, the think in Tom, volume really long network strategy really in But more drive haul And providing as also segments that service. creating good more it several continuing goes last really velocity. those long to on sticky Yeah. the stay executed you're to to as that

to be both. to both. opportunity think I do has it we And have So, the

Thomas Wadewitz

Right.

Okay. That sense. makes

it one lag contract rail about it contract And market the the is a the or that What's it we rates? driven type like you've Or by what quick rates do of think talked drives on Is truckload bit one, realize? a some know, quarter the intermodal and or adjustment? don't how pricing the is timing is you Just longer? about cost. on more that kind flexibility a one for, a I metric of

David Yeager

talk We Dave. don't is contracts. this Tom, about Yeah. our really

delve can't just something And so, that's into. we

Thomas Wadewitz

the All Fair Thanks time. Okay. right. enough. for

David Yeager

Tom. Thanks

Operator

Majors comes Bascome question with of proceed you. Thank our Please next from your And with question. line Susquehanna. the

Bascome Majors

Thanks for my questions. taking

kind on the quarter long the of pricing year, months pressure and to or that the to the the we Just rail a next third that sometime level How as call pricing psychical is to get it getting peak. quarter PT high side? were on last If of just peak and up would take, few reaction in a feel intermodal reverses it counts it follow you're question.

David Yeager

Yeah.

of itself west to both on assertion in shifts, So, fully the moving I of at rate. a over period. a we as And in would it I call go it but itself, and would I mechanics. would, into a don't that. detail, not year see which delve you, just as tell too out on be would gear way over but evenly quality our a period market linear my contracts, it some think, the it be relatively Factoring manifest want probably far differ works kind east

Bascome Majors

sometime the the year would trough trough XXXX. the of next in second half second and half to first So between next probably if your half intermodal contract year, pricing of and rail were PT

David Yeager

Yeah. I accurate. probably think that's

Bascome Majors

its don't And gets to the the differences it to some downturn I there's business that in about, expect your look here. downturn. Just and to the what free fall next downturn? don't you. that Can to call in Any more about power talk and a Thank it that business would mean, hit in $X profile EPS power earnings we at the hypothetical on like cash downturn. in or call of comments thoughts cash expect flow decline the you the XX% in earlier resiliency less? might one-third that you any generation you

Geoff DeMartino

around more time We have We're really We cash flow. at our our is ability XXX average. the Yeah. fleet scale to fleet expect XXX range the expect Over of free year we'd by This heavy CapEx. have down XXX year. Absolutely. XX%. to XX% -- would do up growing strong the a a to on scale or pretty container or

the right we're but again, which to put XXXX range. assumption high XXX the growth, my will in point our percent to XXX our container to would end budgeting single through -- CapEx kind of this mid at the So, probably of digit be range is going for our now,

ability $XX is, know we as million to have does So the which building, you is headquarters down. -- year on this do complete. scale include We the do and about

Bascome Majors

you. Thank

Operator

Thank you.

proceeded Our Bruce of next with from Stifel. question the comes Chan question. your line with Please

Bruce Chan

question. Thanks Hey the everyone. for

question. big picture want Just a maybe you with to here start

that's portfolio about of the think mix various valuation, point the or reflected the in about the do is each You profiles Even you talked a getting years? now, where half when growth see when at about M&A being and businesses, if this almost you five lot the say you but think portfolio. to how three next not the non-asset in,

Geoff DeMartino

Yeah.

we to think allow I several acquisitions continuing and direction our focus continue will will over think if in of accretive our in the segments the which mix to, we've it to us majority years, continue overall while side invest to seen where that segments. asset non-asset the near our past revenues, to become our non-asset in the on growth shift not

inorganic grow because anticipate at because are factor and of non-asset to because our based the organic a growth. side So, clip asset businesses shrinking, of are we components the I would continuing not it's but

Bruce Chan

there? were fast helpful. And a assuming you you I this like spot, a that of market. Great. cycle, mix, of what the a Okay. brokerage artifact in move you do think up That's that's seems little not of for mentioned follow part this might be can you the mode just challenge And XX% an does just think then side, which you right still and look bit like here the in on how ratio it

Geoff DeMartino

Yeah.

our we that close highlight I XX-XX So, to would about spot contract. XX-XX a Choptank, shifted split to purchase to to that when mix

actually So normalized a come that level. we're back more seeing to

to transactional are while is more focus because drive We're to really of and continue time opportunities business this Choptank with a is Choptank winning together Hub of the going because on the support think relationship where customers. would've on lot seen tactical momentum show, and our a that a I better inside. the benefits a bid that we of more model, team really they're difficult lot helping the traditionally is and bringing and that contractual spot. to with us wins expertise pricing develop Salesforce coming

to benefit see appropriate that's time. mix and help think see to there's I more we're us more contract over you'll to bid the in that's be season toggle mutual even I off, balanced much to that that'll us have XX broadly. And starting to sort and it ratio. now think spot mix that But And call shift of kick long-term. XX a I So between, here you'll continue back over think going forth this the model a

Bruce Chan

Appreciate Great. the color. Okay.

Operator

Stephens. Thank Please with you. line from comes next Justin your [Operator proceed Instructions] Long with Our the of question. question

Justin Long

question in recover start I the numbers normalize? sounds we you then rail Thanks. recently utilization some and service. that like to was here if with pressure think you've put wondering It around under seen how where but wanted the might could utilization you and was I on quarter, third

Geoff DeMartino

Yeah.

as basis on both sequential is that improve, that and year-over-year sequentially deteriorate a down. are to utilization We [technical need continue well. But to the with dwell. actually news on really we basis. year-over-year long difficulty] rail is saw us a work for customers to to draw Where did our see continuing So customer on I we transits think our the good transit

as think in our customers are on that. our being a inventories some closely unit ways storage in ways, containers are and I many used high, as we're very with changing working

gotten really more customers, is also just are customer more both our think I in the basis, experience. not network as drivers allows rail where we've seen in part more in well, that's has we'll streets only but more, down, improvement. And that I our well. and going overall that it it use which I to just product. allows better, give as has well appoint we're improved better as better get as little service better out we bit us inventories on we'll But see and of that customers get And the back East the service which seeing. what that but presenting our help a West, of the balance overall a effectively, going that's in think velocity to really improvement percentage a we're to stabilization just a longer see highlight network stabilization an also us to is drawn to and normalized, visibility would us

been that. So, we pleased have very with

David Yeager

of that And to I estimates by three think a in a good example transit reduced lanes of that have number we -- days. up the is

seeing sequential are definitely we improvement. So, some

Justin Long

volumes. wanted thoughts That's intermodal you update intermodal but volumes in quarter? intermodal to heard have the monthly then I And the Okay. the XXXX? secondly, on helpful. volumes third ask October, on about do any for I've And

David Yeager

September talked the down call. impacted and was XX obviously up QX, about In was by rail August nine, down news. July last Sure. about was stroke which our we about X.X and

Geoff DeMartino

look our is goal growth, and at margin below XXXX, think yields I we enhanced that will but day, margins. to balance, and through be as which growth going maximizing overall But improve

Justin Long

Okay.

you're So a on planning mild growth scenario? recession even in

Geoff DeMartino

Correct.

Geoff DeMartino

Got time. it. for the Thanks

Operator

you. with the question Thank our from with question. David next Zazula comes Please Barclays. proceed your And of line

David Zazula

quick. Real

to year? you can that Is You'd some in into lean you're that in mentioned you'd there XXXX? seen somewhere acceleration is dedicated. event softening that think the Is in something next you some demand that of grow planning

Phillip Yeager

in I of Yeah. want right really David, our this a to customers though have is where that's put work grow. we our it as right is We regions And been think an business improving and into can mix. grow we with area improving And feel contracts Phil. the customer lot our that dedicated we We've density. the focus.

that but their to set like drivers give long-term to we're view as disciplined, think contracts wage going a these I for escalators we price well. us, stay our So, do with good

it, good continue to And that in and so, it's business We do plan to service for line. us. grow

to it's So -- see but also to but a great growth, margin return improvement.

David Zazula

you And count, then clean employee have a do Geoff? as the up,

Geoff DeMartino

Bear do. one I with me moment.

we have that -- obviously quarter, so we at So had, have the drivers end employees. the who's of warehouse about and includes XXXX. are now now always And we

is office that number number. an headcount So

David Zazula

time. Thanks. the Appreciate

Geoff DeMartino

Yeah.

Operator

proceed with Thank comes your question you. Group from of And Research. line Scott next Please with Wolfe questions. our the

Scott Group

Hey guys. Thanks for the follow-up.

Just a things. couple last quick

M&A a less You -- little talked maybe activity. about a little

going buyback. are buybacks about forward? thinking You How a just reauthorized you

Geoff DeMartino

to in We free at double-digit the quarter going a stock bought yield. be cash We're opportunistic. Yeah. back flow

these attractive pretty of a at we're low investment trade us. that. of going valuation levels, kind to for continue that's take If to advantage So, we ridiculously

around don't year, we balance to with million, set any where times lately on make And levered. we'll is EBITDA. have very the We're well $XXX So performance were timeframe as a this at last again, investment. that our decision but sheet we under financial X.X our quarter debt

a shareholders. And for certainly a to the return we of So as our capital financial investment have CapEx think, and also current capital acquisitions. you flexibility to in environment, we know, priorities do are

Scott Group

Okay.

that this had You've haven't healthy the How tractors, How is on this do we year. an Is that in it -- earnings risk is had that containers? that sales downturn? some past? do we a think maybe gains we in about cycle

Phillip Yeager

been nearing used equipment. We've of on all that. tractors. obviously market been for It's We're Yeah. the benefiting strong from end conditions pretty

conditions we're there's on than past, come of had frame never I of the these in market types number it's of we've other also have equipment going something end. looks is gains think think types these we to of This going -- one, real no what continuing. pieces to just -- that to number to like the for going reference planning so an think market's I we not this forward, sell, of level but -- of the left certainly

Geoff DeMartino

before. advantage ratio -- tractor to the I a driver think strong we're months. to at attributable the of getting the really though, it are to age over we optimized six near that M&A improving the on And And -- of term take to the those it's us seating, for and expenses, the pointed where us helps to better gains. slip our by but probably see continuing allows utilization. which for reach also I least that fleet, next we'll threshold

same. equipment And we would -- would even sell are so conditions if down of the staying our market the amount then come deteriorate the or

our a So, anticipate time but in the us help it's I at expenses. should would headwind, same

Scott Group

then And Okay. thing. last

impact you So the in those through costs they sure have customers. I'm pass of contracts, your to costs? new labor would that Does rails like to some their rail

Geoff DeMartino

No.

we and anything that. or agreements anticipate do expect We have like contractual not

Scott Group

you Thank right. guys. All

Operator

Thank would you. End back to turn I Q&A remarks. now to of closing Dave for the like Yeager conference

David Yeager

you for this thank afternoon. again, joining us Well, Great.

questions, would any you and available. us and good have I Geoff Phil, evening. be As joining a Thank for certainly always, if there's

Operator

today's and conference concludes for participating Thank call. may now disconnect. you This you

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.